N
E
W
J
E
R
S
E
Y
R
E
S
O
U
R
C
E
S
2
0
2
1
A
N
N
U
A
L
R
E
P
O
R
T
THE CLEAN
ENERGY FUTURE
STARTS HERE
2021 ANNUAL REPORT
WE ARE COMMITTED TO ENHANCING OUR CUSTOMERS’ QUALITY OF LIFE
WE ARE COMMITTED TO ENHANCING OUR CUSTOMERS’ QUALITY OF LIFE
AND MEETING THEIR EXPECTATIONS FOR SAFETY, RELIABILITY AND VALUE
AND MEETING THEIR EXPECTATIONS FOR SAFETY, RELIABILITY AND VALUE
IN A SUSTAINABLE AND ENVIRONMENTALLY RESPONSIBLE WAY.
IN A SUSTAINABLE AND ENVIRONMENTALLY RESPONSIBLE WAY.
SAFE, RELIABLE AND COMPETITIVELY PRICED SERVICE
SAFE, RELIABLE AND COMPETITIVELY PRICED SERVICE
CUSTOMER SATISFACTION
CUSTOMER SATISFACTION
GROWTH AND INNOVATION
GROWTH AND INNOVATION
QUALITY
QUALITY
VALUING EMPLOYEES
VALUING EMPLOYEES
CORPORATE CITIZENSHIP
CORPORATE CITIZENSHIP
SUPERIOR RETURN
SUPERIOR RETURN
TABLE OF CONTENTS
Financial Summary
Performance Highlights
Letter from the President and CEO
2
3
6
12 Corporate Profile
14 Directors and Officers
16 Presenting Our 2021 Form 10-K
17
IBC Shareowner Information
Form 10-K
Cover: The green hydrogen project by New Jersey Natural Gas — the first of its kind on the East Coast.
THE NEXT
GENERATION OF
CLEAN ENERGY
OUR MODERN, WORLD-CLASS INFRASTRUCTURE WILL DELIVER THE
NEXT GENERATION OF LOW- AND ZERO-CARBON ENERGY TO CUSTOMERS.
11
FINANCIAL SUMMARY
NET FINANCIAL EARNINGS PER SHARE *,†
DIVIDENDS DECLARED PER SHARE
$2.71
8.3%
NFEPS CAGR
$2.16
$1.57
$1.74
$1.45
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
$1.50
$1.25
$1.00
$0.75
$0.50
$0.25
$0.00
$1.27
$1.19
$1.36
$1.04
$1.11
FY2017 FY2018 FY2019 FY2020 FY2021
FY2017 FY2018 FY2019 FY2020 FY2021
* Net Financial Earnings (NFE) and financial
margin are financial measures not calculated in
accordance with Generally Accepted Accounting
Principles (GAAP) of the United States as they
exclude all unrealized and certain realized
gains and losses associated with derivative
instruments and the impairment of New Jersey
Resources’ (NJR) investment in the PennEast
project and net applicable tax adjustments. For
further discussion and reconciliation to GAAP of
this non-GAAP financial measure, see our fiscal
2021 Report on Form 10-K.
† All periods revised to reflect the deferral method
of accounting for federal investment tax credits.
Utility Gross Margin is a non-GAAP financial
measure, which is defined as natural gas
revenues less natural gas costs, sales and
other taxes and regulatory rider expenses, and
may not be comparable to the definition of
gross margin used by others in the natural gas
distribution business and other industries. For
further discussion and a reconciliation to GAAP of
this non-GAAP financial measure, please see our
fiscal Report of 2021 Form 10-K.
Forward-Looking
Information Regarding
forward
Statements — This
looking statements within the meaning of
Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange
report contains
Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995. NJR
cautions readers that the assumptions forming
the basis for forward-looking statements include
many factors that are beyond NJR’s ability to
control or estimate precisely, such as estimates
of future market conditions and the behavior
of other market participants. Words such as
“anticipates,” “estimates,” “expects,” “projects,”
“may,” “will,” “intends,” “plans,” “believes,” “should”
and similar expressions may identify forward-
looking statements and such forward-looking
statements are made based upon management’s
current expectations, assumptions and beliefs
as of this date concerning future developments
and their potential effect upon NJR. There can
be no assurance that future developments
in accordance with management’s
will be
expectations, assumptions and beliefs or that
the effect of future developments on NJR will be
those anticipated by management. Forward-
looking statements in this report include, but
are not limited to, certain statements regarding
NJR’s NFE guidance, dividend payout ratio,
the impact of a change to the accounting and
financing of solar investments at NJR Clean
Energy Ventures (CEV), efforts to de-risk our
financial outlook, future growth of New Jersey
Natural Gas’ (NJNG) customer base, Leaf River’s
contracted revenues through fiscal 2025, future
NJR capital expenditures, investment programs
investments, growth of
and
infrastructure
CEV, including expansion of CEV’s footprint
to markets outside of New Jersey, NJR’s
environmental sustainability and clean energy
goals, emissions reduction strategies, initiatives
and targets, our investments in infrastructure,
renewables and emerging technologies such as
renewable natural gas and hydrogen gas, and
completion of the Adelphia Gateway pipeline.
Additional information and factors that could
cause actual results to differ materially from
NJR’s expectations are contained
in NJR’s
filings with the U.S. Securities and Exchange
Commission (SEC),
including NJR’s Annual
Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q, recent Current Reports
on Form 8-K, and other SEC filings, which are
available at the SEC’s web site, http://www.
sec.gov. Information included in this report is
representative as of today only and while
NJR periodically reassesses material trends
and uncertainties affecting NJR’s results of
operations and financial condition in connection
with its preparation of management’s discussion
and analysis of results of operations and financial
condition contained in its Quarterly and Annual
Reports filed with the SEC, NJR does not, by
including this statement, assume any obligation
to review or revise any particular forward-
looking statement referenced herein in light of
future events.
2
2
FISCAL 2021 PERFORMANCE HIGHLIGHTS
$207.7million
Consolidated NFE, or $2.16 per
share, compared with $165.3 million,
or $1.74 per share, in fiscal 2020
$117.9 million
Consolidated net income,
compared with $163 million
in fiscal 2020
$71.1 million
NFE at NJR Energy Services,
compared with a net
financial loss of ($7.9) million
in fiscal 2020
35%
Increase in NFE earnings from
the midpoint of the initial fiscal
2021 guidance range of $1.55
to $1.65 per share
9%
Dividend increase to an
annual rate of $1.45 per share
approved in fiscal 2021
26th
Consecutive year New
Jersey Resources
increased its dividend
7,854
New utility customers added;
New Jersey Natural Gas
now serves nearly 564,000
homeowners and businesses
throughout New Jersey
30
Mile Southern Reliability Link
project complete, operational
and delivering safe, reliable
service to customers
590
Miles of unprotected bare
steel in total replaced through
the Safety and Facility
Enhancement program
$1.1billion
Saved by customers through
basic gas supply incentive
programs since 1992
1st
Natural gas utility on the
East Coast to blend green
hydrogen into its fuel stream
to serve customers
$259 million
Largest energy-efficiency
program in company history
approved by the New Jersey
Board of Public Utilities
3
3
FISCAL 2021 PERFORMANCE HIGHLIGHTS CONTINUED
87,600
Customers saved
energy and money with
The SAVEGREEN Project®
since 2009
6th consecutive year
Named an Environmental
Champion according to the
2021 Cogent Syndicated Utility
Trusted Brand & Customer
Engagement™: Residential
study by Escalent
60%
Emissions reduction goal by
2030 and net zero by 2050
from New Jersey operations
$500 million
Cash proceeds expected over a 10 year-term through asset
management agreements executed by NJR Energy Services for
the release of natural gas capacity contracts
100%
Of the Adelphia Gateway
Pipeline project facilities
permitted and under
construction; several facilities
to be placed in commercial
service by the end of 2021
$45 million
Firm service revenue
contracted by Leaf River for
2022 through 2025
1st
Out-of-state commercial
solar projects placed into
service in Connecticut
367.8
Megawatts total installed
capacity operated by NJR
Clean Energy Ventures
85,000
Service calls and 3,500
HVAC and plumbing
installations completed
by NJR Home Services
5-Star
Rating from more than 6,500
Shopper Approved reviews
1,900
Community and nonprofit
organizations supported by
New Jersey Resources and
its volunteers
4
4
LEADING THE
WAY TO A CLEAN
ENERGY FUTURE
OUR CLEAN ENERGY AND SUSTAINABILITY LEADERSHIP PROVIDES
A STRONG PLATFORM FOR NJR TO GROW AND THRIVE.
55
In fiscal 2021, we exceeded our original expectations
and delivered NFE per share of $2.16. These impressive
results were driven by the outsized performance at NJR
Energy Services (NJRES), our unregulated wholesale
energy marketing business. During times of high
demand and widespread cold this past winter, our team
utilized their expertise and portfolio of storage and
transportation assets to supply natural gas where it was
most needed and underscored the high upside value of
our long-option strategy.
We delivered a dividend increase of 9% for a new
annual rate of $1.45 per share. This increase fell in the
upper end of our forecasted dividend growth target
range and marked the 26th consecutive year we
increased our dividend.
New Jersey Natural Gas (NJNG), our regulated utility
and principal subsidiary, remains our largest business
segment and accounts for the majority of our capital
allocations. Today, NJNG operates a premier energy
distribution system that keeps our customers’ homes
warm and businesses running.
As the world continues to focus on emission reductions
and transition to cleaner forms of energy, New Jersey
set an aggressive goal to reduce greenhouse gas
emissions to 80% of 2006 levels by 2050. To meet this
target, it will take more than just smart investments;
it will take innovation.
NJNG is ready to meet this challenge and leverage
our existing infrastructure to deliver the next generation
of low- and zero-carbon energy to customers. In doing
so, we can play an important role in helping reach
climate and emissions reduction goals more quickly,
more affordably and with the reliability our customers
expect and deserve.
NJNG’s world-class pipeline network can integrate
low- and zero-carbon energy, such as biogas and
green hydrogen, which can be blended with natural
gas to decarbonize fuel streams and lower emissions.
This year, NJNG completed construction of a cutting-edge
green hydrogen project and was the first natural gas utility
on the East Coast to inject hydrogen into its delivery system.
To Our Shareowners,
Fiscal 2021 was an outstanding year for New Jersey
Resources (NJR).
Our team executed on the business strategy we
outlined at the start of the fiscal year. We focused on
disciplined investment in regulated and unregulated
infrastructure, expanding our solar footprint, increasing
the predictability of our net financial earnings (NFE)
and showing clear leadership in advancing new
technologies. We delivered on these key initiatives that
provide a sustainable platform for growth and drive
long-term value for our shareowners.
This was also a pivotal year for the energy industry,
which continues to move through a sweeping transition
to reduce emissions and meet society’s climate
goals. Federal, state and local policy has continued
to evolve to meet this challenge and has created new
opportunities for our company to grow and thrive.
As a premier energy infrastructure company, NJR is at
the center of these developments. Through our clean
energy and sustainability leadership, disciplined capital
allocation, strong financial performance and record of
delivering for our stakeholders, we are well positioned
to play a leading role in the clean energy future.
Our performance and accomplishments in fiscal 2021
reflect this leadership. As you will see throughout this Annual
Report, the clean energy future starts here at NJR.
This milestone project demonstrates the long-term
value of our infrastructure in the clean energy future —
6
6
DECARBONIZING
OUR FUEL STREAMS
BY INVESTING IN INFRASTRUCTURE, INNOVATION AND EMERGING
TECHNOLOGIES LIKE GREEN HYDROGEN, NJR IS AT THE FOREFRONT
OF DECARBONIZING THE FUEL WE DELIVER.
How Our Green Hydrogen Facility Works:
1
Renewable energy
powers the electrolysis
process, creating
zero-carbon
green hydrogen
from water.
2
This green hydrogen
is safely stored and
blended into the
existing fuel supply.
3
The result is lower
emissions from the
energy we deliver to
heat homes and
power businesses.
NJNG
System
7
7
delivering zero-carbon fuel alternatives to achieve
significant emissions reductions on the existing natural
gas system, while meeting customers’ energy needs.
7,854 new customers this year and now serves
nearly 564,000 customers. This growth demonstrates
customers’ preference for the reliability, savings
and environmental benefits provided by natural gas.
Through our commitment to safety and reliability and
our consistent infrastructure investments, NJNG achieved
a number of other accomplishments in fiscal 2021.
After years of hard work, construction was completed
and the Southern Reliability Link placed into service.
This 30-mile intrastate feed is now flowing natural gas
into the southern end of our distribution system and
serving customers while enhancing our distribution
system and adding long-term value.
Energy efficiency is one of the best investments to
help customers save money and reduce emissions.
As a leader in promoting commonsense energy-
efficiency programs, NJNG has one of the most
successful energy-savings programs in the state.
Launched in 2009, The SAVEGREEN Project® provides
rebates, incentives and on-bill repayment programs
to help make energy-efficiency upgrades more
accessible and affordable.
We also concluded two other significant infrastructure
projects, our Safety and Facility Enhancement and
NJ Reinvestment in System Enhancement programs.
Through these projects, NJNG replaced a total of
590 miles of unprotected steel main and services
over the life of the program and strengthened our
distribution system in the most storm-prone areas of
our service territory.
Through SAVEGREEN, NJNG has invested nearly
$231 million, including approximately $31 million in
fiscal 2021, and helped more than 66,000 customers
realize the benefits of energy efficiency. These efforts
contributed a total economic impact of over half
a billion dollars, including support for many small,
local businesses. Since 2009, customers have reduced
their natural gas usage by about 11% of 2006 levels.
NJNG is committed to building on this record of
accomplishment with its Infrastructure Investment
Program approved by the New Jersey Board of Public
Utilities (BPU) in fiscal 2020. This $150 million, five-year
program will further improve the safety and reliability
of our distribution system.
These investments, along with our maintenance
and integrity work, have significantly strengthened
our delivery network and reduced emissions by nearly
1,200 metric tons since 2015. Today, NJNG operates
the most environmentally sound natural gas system
in the state as measured by leaks per mile.
NJNG also is recognized as a national leader in
customer experience. According to the 2021 Cogent
Syndicated Utility Trusted Brand and Customer
Engagement Study by Escalent, NJNG is recognized
as one of the Easiest Utilities to do Business With and a
Most Trusted Brand. It was also named one of America’s
Most Responsible Companies by Newsweek. This
reputation for service excellence reflects customers
confidence in our company.
In fiscal 2021, the BPU approved the largest
energy-efficiency program in the history of our
company. We offer a broader range of solutions to
help more customers than ever before, including
special programs to focus on the needs of low- and
moderate-income and multi-family customers.
Energy efficiency will continue to be an important
part of helping customers to save energy and
lower emissions.
Solar will also continue to play a critical role in
the energy future. Federal and state clean energy
strategies call for massive growth in renewable
generation capacity in the coming years, creating
robust investment opportunities. NJR Clean Energy
Ventures (CEV), the largest solar owner-operator in
New Jersey, is capitalizing on this landscape with
over $1 billion invested in residential and commercial
solar projects.
This year, CEV expanded its footprint of solar assets
beyond New Jersey, completing its first out-of-state
commercial solar projects in Connecticut.
More than 82% of households in our service territory
use natural gas to heat their homes. NJNG added
CEV’s portfolio of solar assets now consists of 53
commercial solar projects, over 9,700 residential solar
8
8
DELIVERING
SAFETY AND
RELIABILITY
OUR PREMIER ENERGY DISTRIBUTION SYSTEM SAFELY AND RELIABLY
KEEPS OUR CUSTOMERS’ HOMES WARM AND BUSINESSES RUNNING
IN AN ENVIRONMENTALLY RESPONSIBLE WAY.
9
9
COMMITTED TO
SUSTAINABILITY
THROUGH OUR COMMITMENT TO SUSTAINABILITY, WE ARE DRIVING
TOWARD OUR GOAL OF REDUCING OUR NEW JERSEY OPERATIONAL
EMISSIONS BY 60% OF 2006 LEVELS BY 2030.
1010
customers and a total of 367.8 megawatts of installed
capacity. That’s enough clean energy to power 56,323
homes annually.
Our Storage and Transportation business focused
on generating stable, long-term contracted revenue.
During the fiscal year, Leaf River Energy Center,
located in Mississippi, executed key service agreements
with new and existing customers, increasing its
contracted revenues through fiscal year 2025 by
more than $45 million.
Adelphia Gateway is repurposing the southern end
of an existing oil pipeline to deliver low-cost, locally
produced natural gas to consumers in southeastern
Pennsylvania. The project received a Federal Energy
Regulatory Commission notice to proceed for phase
II of construction. We expect the Adelphia Gateway
pipeline to be fully in service by the end of 2022.
NJR Home Services (NJRHS), our unregulated
appliance service business, continues to meet our
customers’ home comfort needs. Our team at NJRHS
completed over 85,000 service calls and 3,500 HVAC
and plumbing installations in fiscal 2021. For the sixth
consecutive year, NJRHS was named a National
Pro Partner by Ruud for consistently demonstrating
excellent customer support and overall service.
Looking ahead, NJR will continue to align with public
policy goals and execute our vision for the energy
future. We will capitalize on our expertise and existing
infrastructure. We will focus on achieving growth at
our core businesses, NJNG and CEV, and invest in
emerging technologies to meet customers’ energy
needs in an environmentally responsible way. We will
take action to improve the predictability and stability
of our earnings. And, we remain committed to ensuring
long-term value for our shareowners.
NJR is guided by core Environmental, Social and
Governance or ESG principles. This commitment is
reflected at every level of our company, especially in
the communities we serve. This year, we launched the
Coastal Climate InitiativeTM to help support the work
of the Nature Conservancy in New Jersey to restore
saltwater tidal wetlands in the Barnegat Bay region
of our service territory. These ecosystems play a vital
role in reducing emissions, protecting our environment
and strengthening our communities.
As a responsible corporate citizen, we helped over
1,900 community organizations throughout our service
territory, and we began hosting in-person volunteer
activities again. As more COVID-19 restrictions are
lifted, we look forward to doing even more to support
the communities we serve.
Our accomplishments in fiscal 2021 and our outlook
for the years ahead demonstrate the strength of
our portfolio of complementary businesses, the
effectiveness of our strategy and the contributions of
our employees. I would like to thank our entire team,
including the members of IBEW Local 1820, for their
dedication and exceptional efforts throughout the
pandemic. It’s their hard work that drives our company
forward, earns us the respect of our customers and
positions NJR as a leader in the clean energy future.
We also value the collaborative relationships we
have with our regulators and policymakers. We are
committed to helping achieve the State of New
Jersey’s 2050 energy and emission reduction goals
in a manner that preserves affordability, maintains
reliability and generates value for investors.
We have an exceptional board of directors.
I appreciate their insights and expertise as we focus
on building a platform for continued growth and
delivering performance for our shareowners,
customers and communities.
I hope you will join us at our Annual Meeting on
January 26, 2022, at 9:30 a.m. EST, via webcast. Please
see your proxy statement for details.
Thank you for your investment and confidence in NJR.
On behalf of our more than 1,200 employees, we will
continue to give our best to reward your trust.
Sincerely,
Steve Westhoven
President and CEO
11
11
CORPORATE PROFILE
New Jersey Resources (NYSE: NJR) is a Fortune 1000 company that, through its subsidiaries,
provides safe and reliable natural gas and clean energy services, including transportation,
distribution, storage, asset management and home services. NJR is composed of five
primary businesses:
New Jersey Natural Gas, NJR’s principal subsidiary, operates and maintains over 7,600
miles of natural gas transportation and distribution infrastructure to serve over half a million
customers in New Jersey’s Monmouth, Ocean, Morris, Middlesex and Burlington counties.
NJR Clean Energy Ventures invests in, owns and operates solar projects with a total
capacity of more than 365 megawatts, providing residential and commercial customers with
low-carbon solutions.
NJR Energy Services manages a diversified portfolio of natural gas storage and
transportation assets and provides physical natural gas services and customized energy
solutions to its customers across North America.
Storage and Transportation (formerly NJR Midstream) serves customers from local
distributors and producers to electric generators and wholesale marketers through its
ownership of Adelphia Gateway, Leaf River Energy Center and 50 percent equity ownership
in the Steckman Ridge natural gas storage facility.
NJR Home Services provides service contracts, as well as heating, central air conditioning,
water heaters, standby generators, solar and other indoor and outdoor comfort products,
to residential homes throughout New Jersey.
NJR and its more than 1,200 employees are committed to helping customers save energy
and money by promoting conservation and encouraging efficiency through Conserve to
Preserve® and initiatives such as The SAVEGREEN Project® and The Sunlight Advantage®.
For more information about NJR, visit njresources.com, follow us on Twitter @NJNaturalGas,
“like” us on facebook.com/NewJerseyNaturalGas and download our free NJR investor
relations app for iPad, iPhone and Android.
12
12
ALIGNING WITH
NEW JERSEY’S
CLEAN ENERGY
GOALS
HELPING REACH CLIMATE GOALS MORE QUICKLY, MORE AFFORDABLY
AND WITH THE RELIABILITY OUR CUSTOMERS CAN COUNT ON.
13
DIRECTORS AND OFFICERS
NEW JERSEY RESOURCES
Directors
Donald L. Correll, 71 (A,B,C)
Chairman of the Board
New Jersey Resources
Chief Executive Officer, Co-founder
Water Capital Partners, LLC
(2008)
Gregory E. Aliff, 68 (A,B)
Partner (retired)
Deloitte & Touche LLP
(2019)
James H. DeGraffenreidt Jr., 68 (A,D)
Chairman and
Chief Executive Officer (retired)
WGL Holdings, Inc.
(2019)
Date represents year director joined NJR board.
(A) Member of Audit Committee
(B) Member of Executive Committee
(C) Member of Leadership Development and Compensation Committee
(D) Member of Nominating/Corporate Governance Committee
As of January 1, 2022.
Sharon C. Taylor, 67 (B,C,D)
Senior Vice President
Human Resources (retired)
Prudential Financial
(2012)
David A. Trice, 73 (C,D)
President and
Chief Executive Officer (retired)
Newfield Exploration Company
(2004)
Stephen D. Westhoven, 53 (B)
President and
Chief Executive Officer
New Jersey Resources
(2018)
George R. Zoffinger, 73 (A,D)
President and
Chief Executive Officer
Constellation Capital Corporation
(1996)
Robert B. Evans, 73 (A)
President and
Chief Executive Officer (retired)
Duke Energy Americas
(2009)
M. Susan Hardwick, 59 (A)
Executive Vice President and
Chief Financial Officer
American Water Works Company, Inc.
(2020)
M. William Howard Jr., 75
Pastor (retired)
Bethany Baptist Church
(2005)
Jane M. Kenny, 70 (B,C,D)
Co-owner and Managing Partner
The Whitman Strategy Group, LLC
(2006)
Thomas C. O’Connor, 65 (A,C)
Chairman, President and
Chief Executive Officer (retired)
DCP Midstream, LLC
(2017)
14
NEW JERSEY RESOURCES AND SUBSIDIARIES
Officers
Stephen D. Westhoven, 53
(1,2,3,4,5,7)
President and
Chief Executive Officer
(1990)
Date represents year of affiliation
with an NJR company.
Affiliations:
(1) New Jersey Resources
(2) New Jersey Natural Gas
(3) NJR Clean Energy Ventures
(4) NJR Energy Services
(5) NJR Midstream
(6) NJR Home Services
(7) NJR Service Corporation
Sean N. Annitto, 53 (4)
Vice President—NJR Energy
Services
(1996)
Roberto Bel, 49 (1,2,3,4,5,7)
Vice President — Treasury
and Investor Relations
(2019)
John B. Bremner, 63 (5)
Vice President—NJR
Midstream
(2019)
Amy Cradic, 50 (1,3,4,5)
Senior Vice President and Chief
Operating Officer—Non-Utility
Businesses, Strategy and
External Affairs
(2018)
Keith S. Hartman, 60 (7)
Vice President—NJR Retail
(2015)
David Johnson, 53 (1)
Vice President—Corporate
Business Development
(2002)
Mark G. Kahrer, 59 (2)
Senior Vice President—
Regulatory Affairs, Marketing
and Energy Efficiency
(2017)
James W. Kent, 52 (1)
Vice Preseident, Corporate
Risk Management
(2013)
Thomas J. Massaro Jr., 55 (6,7)
Senior Vice President—NJR
Retail and President—NJR
Home Services
(1989)
Patrick J. Migliaccio, 47
(1,3,4,5,6,7)
Senior Vice President
and Chief Financial Officer
(2009)
Amanda E. Mullan, 55 (1,7)
Senior Vice President and Chief
Human Resources Officer
(2015)
Richard Reich, 47 (1,2,3,4,5,7)
Senior Vice President, General
Counsel and Corporate Secretary
(2006)
Ginger P. Richman, 57 (5)
Vice President—NJR Midstream
(2003)
Kraig E. Sanders, 56 (2)
Vice President Operations,
NJNG
(1987)
Jacqueline K. Shea, 57 (1,7)
Vice President and
Chief Information Officer
(2016)
Timothy F. Shea, 56 (4)
Vice President — NJR Energy
Services
(1998)
Mark F. Valori, 58 (3)
Vice President — NJR Clean
Energy Ventures
(2010)
John B. Wyckoff, 54 (2)
Vice President Energy
Delivery, NJNG
(1989)
15
PRESENTING OUR FISCAL 2021 FORM 10-K
Our fiscal 2021 Report on Form 10-K includes
financial statements for NJR. It also includes
detailed information about each of our subsidiaries
and the competitive environments of our
businesses, properties we own and other matters.
All publicly held companies in the United States are
required to file a Form 10-K report with the U.S.
Securities and Exchange Commission (SEC) every
year. Our Form 10-K is required by the rules and
regulations of the SEC to contain certain company
information in addition to the financial information
included in our previous annual reports to
shareowners. We are supplying our 2021 Form 10-K
(without exhibits) consistent with our commitment
to provide transparency and full disclosure to
our shareowners.
The fiscal 2021 Report on Form 10-K is amended,
supplemented and updated by any amendment
we may file, and by all of the quarterly reports on
Form 10-Q and current reports on Form 8-K we file
or furnish with the SEC during the year. We urge you
to read all such reports. Copies may be obtained
as described under “Request for Documents” on the
inside back cover of this Annual Report.
Form 10-K Overview
This Annual Report is not a part of, and should not
be considered to be included in, our 2021 Form
10-K. Use the following listing, which includes
highlights of the 2021 Form 10-K, to help you find
information easily. A comprehensive Table of
Contents with the page number for each item can
be found on page “i” of the 2021 Form 10-K.
Part I: NJR’s Business includes:
• Detailed descriptions of NJR subsidiaries
• Risk factors related to our business
• Information about our executive officers
• Description of properties owned and operated
by NJR
• Legal proceedings
Part II: Market for Common Shares and Financial
Statements in Items 5 and 6 include:
• Selected financial data for NJR
Items 7 and 7A include:
• Management’s Discussion and Analysis of
Financial Condition and Results of Operations
• Quantitative and qualitative disclosures about
market risk
Items 8 and 9 include:
• Management’s report on internal control over
financial reporting
• Report of independent registered public
accounting firm
• Financial statements and notes for NJR
• Supplementary financial information (unaudited)
Part III: Information about Board Members,
Executive Officers, Governance, Shareowners and
Auditors includes:
• Members of the board of directors and
executive officers;
• Corporate governance;
• Executive compensation;
• NJR’s shareowners and related matters;
• Related-person transactions;
• Director independence; and
• Accounting fees, each of which are incorporated
by reference to NJR’s proxy statement.
Part IV: Exhibits and Signatures include:
• Index of exhibits
• Signatures of members of the board of directors
and certain officers
16
16
Form 10-K
17
18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-08359
NEW JERSEY RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey
(State or other jurisdiction of
incorporation or organization)
1415 Wyckoff Road, Wall, New Jersey 07719
(Address of principal executive offices)
22-2376465
(I.R.S. Employer
Identification Number)
(732) 938‑1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class
Common Stock ‑ $2.50 Par Value
Trading symbol(s)
NJR
Securities registered pursuant to Section 12 (g) of the Act:
None
Name of each exchange on which registered)
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
☒ Yes ☐ No
☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of
the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report.
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
The aggregate market value of the registrant’s common stock held by non-affiliates was $3,824,984,427 based on the closing price of $39.87 per share on
March 31, 2021, as reported on the New York Stock Exchange.
The number of shares outstanding of $2.50 par value common stock as of November 15, 2021 was 95,949,116.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareowners (Proxy Statement) to be held on January 26, 2022, are incorporated
by reference into Part I and Part III of this report.
New Jersey Resources Corporation
TABLE OF CONTENTS
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information Concerning Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 5.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.
PART III*
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
PART IV
ITEM 15.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reporting Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Natural Gas Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clean Energy Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Storage and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Business Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Home Services and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Human Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information About our Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Report on Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 1. Nature of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 2. Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 3. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 4. Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 5. Derivative Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 6. Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 7. Investments in Equity Investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 8. Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 9. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 10. Stock-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 11. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 12. Asset Retirement Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 13. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 14. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 15. Commitments and Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 16. Common Stock Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 17. Reporting Segment and Other Operations Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note 18. Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index to Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* Portions of Item 10 and Items 11-14 are Incorporated by Reference from the Proxy Statement.
Page
1
3
4
4
5
7
10
11
12
13
13
13
13
15
15
26
26
27
28
29
30
62
66
66
67
70
75
75
75
89
96
98
104
107
108
108
112
115
120
121
124
126
128
129
133
134
134
134
135
135
135
135
135
136
137
139
146
i
New Jersey Resources Corporation
GLOSSARY OF KEY TERMS
Adelphia Gateway
AFUDC
ARO
ASC
ASU
Bcf
BGSS
BPU
CARES Act
CIP
Clean Energy Ventures
CME
COVID-19
CR&R
Degree-day
DEI
DRP
Dths
EDECA
EE
EMP
Energy Services
EPS
Exchange Act
FASB
FCM
FERC
Financial Margin
Fitch
FMB
GAAP
GWRA
HCCTR
Home Services and Other
ICE
IIP
IRS
ISDA
ITC
LDCC
Leaf River
LNG
MGP
MMBtu
Moody’s
Mortgage Indenture
MW
MWh
NAESB
NAV
Adelphia Gateway, LLC
Allowance for Funds Used During Construction
Asset Retirement Obligations
Accounting Standards Codification
Accounting Standards Update
Billion Cubic Feet
Basic Gas Supply Service
New Jersey Board of Public Utilities
Coronavirus Aid, Relief, and Economic Security Act
Conservation Incentive Program
Clean Energy Ventures segment
Chicago Mercantile Exchange
Novel coronavirus disease
Commercial Realty & Resources Corp.
The measure of the variation in the weather based on the extent to which the average daily
temperature falls below 65 degrees Fahrenheit
Diversity, equity and inclusion
NJR Direct Stock Purchase and Dividend Reinvestment Plan
Dekatherms
Electric Discount and Energy Competition Act
Energy Efficiency
New Jersey Energy Master Plan
Energy Services segment
Earnings Per Share
Securities Exchange Act of 1934, as amended
Financial Accounting Standards Board
Futures Commission Merchant
Federal Energy Regulatory Commission
A non-GAAP financial measure, which represents revenues earned from the sale of natural
gas less costs of natural gas sold including any transportation and storage costs, and excludes
any accounting impact from the change in the fair value of certain derivative instruments
Fitch Ratings Company
First Mortgage Bonds
Generally Accepted Accounting Principles of the United States
Global Warming Response Act of 2007
Health Care Cost Trend Rate
Home Services and Other Operations
Intercontinental Exchange
Infrastructure Investment Program
Internal Revenue Service
The International Swaps and Derivatives Association
Investment Tax Credit
Leadership Development and Compensation Committee
Leaf River Energy Center LLC
Liquefied Natural Gas
Manufactured Gas Plant
Million British Thermal Units
Moody’s Investors Service, Inc.
The Amended and Restated Indenture of Mortgage, Deed of Trust and Security Agreement
between NJNG and U.S. Bank National Association dated as of September 1, 2014, as
amended
Megawatts
Megawatt Hour
The North American Energy Standards Board
Net Asset Value
Page 1
New Jersey Resources Corporation
GLOSSARY OF KEY TERMS (cont.)
Natural Gas Distribution
NFE
NJ RISE
NJCEP
NJDEP
NJNG
NJNG Credit Facility
NJR Credit Facility
NJR or The Company
NJRCEV
NJRES
NJRHS
Non-GAAP
NPNS
NYMEX
OASDI
OCI
O&M
OPEB
PBO
PennEast
PEP
PIM
PPA
RAC
REC
SAFE I
SAFE II
Sarbanes-Oxley
SAVEGREEN
Savings Plan
SBC
SEC
Securities Act
SREC
SRL
S&P
Steckman Ridge
Storage and Transportation
Supreme Court
TETCO
The Tax Act
TREC
Trustee
TSR
U.S.
Union
USF
Natural Gas Distribution segment
Net Financial Earnings
New Jersey Reinvestment in System Enhancement
New Jersey’s Clean Energy Program
New Jersey Department of Environmental Protection
New Jersey Natural Gas Company or Natural Gas Distribution segment
The $250 million unsecured committed credit facility expiring in September 2026
The $500 million unsecured committed credit facility expiring in September 2026
New Jersey Resources Corporation
NJR Clean Energy Ventures Corporation or Clean Energy Ventures Segment
NJR Energy Services Company
NJR Home Services Company
Not in accordance with GAAP
Normal Purchase/Normal Sale
New York Mercantile Exchange
Old Age, Survivors and Disability Insurance tax
Other Comprehensive Income
Operations and Maintenance
Other Postemployment Benefit Plans
Projected Benefit Obligation
PennEast Pipeline Company, LLC
Pension Equalization Plan
Pipeline Integrity Management
Power Purchase Agreement
Remediation Adjustment Clause
Renewable Energy Certificate
Safety Acceleration and Facility Enhancement Program, Phase I
Safety Acceleration and Facility Enhancement Program, Phase II
Sarbanes-Oxley Act of 2002
The SAVEGREEN Project®
Employees’ Retirement Savings Plan
Societal Benefits Charge
Securities and Exchange Commission
Securities Act of 1933, as amended
Solar Renewable Energy Certificate
Southern Reliability Link
Standard & Poor’s Financial Services, LLC
Collectively, Steckman Ridge GP, LLC and Steckman Ridge, LP
Storage and Transportation segment
Supreme Court of the U.S.
Texas Eastern Transmission
An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution
on the Budget for Fiscal Year 2018, previously known as The Tax Cuts and Jobs Act of 2017
Transition Renewable Energy Certificate
U.S. Bank National Association
Total Shareholder Return
The United States of America
International Brotherhood of Electrical Workers Local 1820
Universal Service Fund
Page 2
New Jersey Resources Corporation
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in this report, including, without limitation, statements as to management expectations, assumptions and
beliefs presented in Part I, Item 1. Business and Item 3. Legal Proceedings, and in Part II, Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations and Item 7A. Quantitative and Qualitative Disclosures About Market Risk, and in the notes to
the financial statements, are forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the
Exchange Act. Forward-looking statements can also be identified by the use of forward-looking terminology such as “anticipate,” “estimate,”
“may,” “could,” “might,” “intend,” “expect,” “believe,” “will,” “plan” or “should” or comparable terminology and are made based upon
management’s current expectations, assumptions and beliefs as of this date concerning future developments and their potential effect on us.
Forward-looking statements made in this report apply only as of the date of this report. There can be no assurance that future developments
will be in accordance with management’s expectations, assumptions or beliefs, or that the effect of future developments on us will be those
anticipated by management.
We caution readers that the expectations, assumptions and beliefs that form the basis for forward-looking statements regarding customer
growth, customer usage, qualifications for ITCs, RECs, base rate case proceedings, financial condition, results of operations, cash flows,
capital requirements, future capital expenditures, market risk, effective tax rate and other matters for fiscal 2022 and thereafter include many
factors that are beyond our ability to control or estimate precisely, such as estimates of future market conditions, the behavior of other market
participants and changes in the debt and equity capital markets. The factors listed in the foregoing sentence are neither presented in order of
importance nor weighted. The factors that could cause actual results to differ materially from our expectations, assumptions and beliefs
include, but are not limited to, those discussed in Part I, Item 1A. Risk Factors, as well as the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
risks related to the impact of COVID-19 on business operations, financial performance and condition and cash flows;
our ability to obtain governmental and regulatory approvals, land-use rights, electric grid connection (in the case of clean energy projects) and/or
financing for the construction, development and operation of our unregulated energy investments, pipeline transportation systems and NJNG and
Storage and Transportation infrastructure projects, including Adelphia Gateway, in a timely manner;
risks associated with our investments in clean energy projects, including the availability of regulatory incentives and federal tax credits, the
availability of viable projects, our eligibility for ITCs, the future market for SRECs and electricity prices, our ability to complete construction of
the projects and operational risks related to projects in service;
risks associated with the integration of acquired assets with our current operations, including of Adelphia Gateway and Leaf River;
our ability to comply with current and future regulatory requirements;
volatility of natural gas and other commodity prices and their impact on NJNG customer usage, NJNG’s BGSS incentive programs, our Energy
Services segment operations and our risk management efforts;
the performance of our subsidiaries;
access to adequate supplies of natural gas and dependence on third-party storage and transportation facilities for natural gas supply;
the level and rate at which NJNG’s costs and expenses are incurred and the extent to which they are approved for recovery from customers
through the regulatory process, including through future base rate case filings;
the impact of a disallowance of recovery of environmental-related expenditures and other regulatory changes;
the regulatory and pricing policies of federal and state regulatory agencies;
operating risks incidental to handling, storing, transporting and providing customers with natural gas;
demographic changes in our service territory and their effect on our customer growth;
changes in rating agency requirements and/or credit ratings and their effect on availability and cost of capital to the Company;
the impact of volatility in the equity and credit markets on our access to capital;
our ability to comply with debt covenants;
the results of legal or administrative proceedings with respect to claims, rates, environmental issues, natural gas cost prudence reviews and other
matters;
risks related to cyberattacks or failure of information technology systems;
the impact to the asset values and resulting higher costs and funding obligations of our pension and postemployment benefit plans as a result of
potential downturns in the financial markets, lower discount rates, revised actuarial assumptions or impacts associated with the Patient Protection
and Affordable Care Act;
commercial and wholesale credit risks, including the availability of creditworthy customers and counterparties, and liquidity in the wholesale
energy trading market;
accounting effects and other risks associated with hedging activities and use of derivatives contracts;
our ability to optimize our physical assets;
weather and economic conditions;
the costs of compliance with present and future environmental laws and regulations, including potential climate change-related legislation or
regulation, or legislation resulting from the 2019 EMP;
uncertainties related to litigation, regulatory, administrative or environmental proceedings;
changes to tax laws and regulations;
any potential need to record a valuation allowance for our deferred tax assets;
the impact of natural disasters, terrorist activities and other extreme events on our operations and customers;
risks related to our employee workforce and succession planning;
risks associated with the management of our joint ventures and partnerships; and
risks associated with keeping pace with technological change.
While we periodically reassess material trends and uncertainties affecting our results of operations and financial condition in connection
with the preparation of Management’s Discussion and Analysis of Results of Operations and Financial Condition contained in our Quarterly
and Annual Reports on Form 10-Q and Form 10-K, respectively, we do not, by including this statement, assume any obligation to review or
revise any particular forward-looking statement referenced herein in light of future events.
Page 3
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS
ORGANIZATIONAL STRUCTURE
New Jersey Resources Corporation is a New Jersey corporation formed in 1981 pursuant to a corporate reorganization.
We are a diversified energy services holding company whose principal business is the distribution of natural gas through a
regulated utility, investing in and operating clean energy projects and natural gas storage and transportation assets, and
providing other retail and wholesale energy services to customers. We are an exempt holding company under Section 1263 of
the Energy Policy Act of 2005.
Our primary subsidiaries include the following:
New Jersey Natural Gas Company provides regulated natural gas utility service to approximately 564,000
residential and commercial customers throughout Burlington, Middlesex, Monmouth, Morris, Ocean and Sussex
counties in New Jersey and participates in the off-system sales and capacity release markets. NJNG, a local natural
gas distribution company, is regulated by the BPU and comprises the Company’s Natural Gas Distribution segment.
NJR Clean Energy Ventures Corporation includes the results of operations and assets related to the Company’s
unregulated capital investments in clean energy projects, including commercial and residential solar projects.
NJRCEV comprises the Company’s Clean Energy Ventures segment.
NJR Energy Services Company maintains and transacts around a portfolio of physical assets consisting of natural
gas transportation and storage contracts in the U.S. and Canada. NJRES also provides unregulated wholesale energy
management services to other energy companies and natural gas producers. NJRES comprises our Energy Services
segment.
NJR Midstream Holdings Corporation, which comprises the Storage and Transportation segment, invests in
energy-related ventures through its subsidiaries. NJR Midstream Company, which includes our wholly-owned
subsidiaries of Leaf River, located in southeastern Mississippi, and Adelphia Gateway, located in eastern
Pennsylvania, are subject to FERC regulation along with our 20 percent ownership interest in PennEast; and NJR
Steckman Ridge Storage Company, which holds our 50 percent combined ownership interest in Steckman Ridge,
located in Pennsylvania. See Note 7. Investments in Equity Investees for more information on PennEast and Steckman
Ridge.
NJR Home Services Company provides heating, ventilation and cooling service, sales and installation of appliances
to approximately 106,000 service contract customers, as well as solar installation projects, and is the primary
contributor to Home Services and Other operations.
Page 4
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
REPORTING SEGMENTS
We operate within four reporting segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services and Storage
and Transportation, formerly known as Midstream.
The Natural Gas Distribution segment consists of regulated natural gas services, off-system sales, capacity and storage
management operations. The Energy Services segment consists of unregulated wholesale and retail energy operations, as well as
energy management services. The Clean Energy Ventures segment consists of capital investments in clean energy projects. The
Storage and Transportation segment consists of investments in the natural gas storage and transportation market, such as natural
gas storage and transportation facilities.
Net income by reporting segment and other business operations for the fiscal years ended September 30, are as follows:
Our Storage and Transportation segment incurred a net loss of $67.8 million during fiscal 2021 and Energy Services incurred a
net loss of $11.0 million and $1.3 million during fiscal 2020 and 2019, respectively, which is not shown clearly in the above graph.
Assets composition by reporting segment and other business operations at September 30, are as follows:
2021
2020
Page 5
($ in Thousands)$117,890$163,007$123,935$107,375$126,902$78,062$16,789$22,111$31,903$58,957$18,311$14,689Natural Gas DistributionClean Energy VenturesEnergy ServicesStorage and TransportationHome Services and Other202120202019$0$20,000$40,000$60,000$80,000$100,000$120,000$140,000$160,000$180,000$200,000$220,000$240,000Natural GasDistribution,62%Clean EnergyVentures,15%EnergyServices, 6%Storage andTransportation,14%HomeServices andOther, 3%Natural GasDistribution,63%Clean EnergyVentures, 15%EnergyServices, 4%Storage andTransportation,15%Home Servicesand Other, 3%
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
Management uses NFE, a non-GAAP financial measure, when evaluating its operating results. NFE is a measure of the
earnings based on eliminating timing differences surrounding the recognition of certain gains or losses to effectively match the
earnings effects of the economic hedges with the physical sale of natural gas and, therefore, eliminates the impact of volatility to
GAAP earnings associated with the derivative instruments. Energy Services economically hedges its natural gas inventory with
financial derivative instruments and calculates the related tax effect based on the statutory rate. NFE also excludes impairment
charges associated with equity method investments, which are a non-cash charge considered unusual in nature that occur
infrequently and are not indicative of the Company's performance for its ongoing operations. Included in the tax effects are current
and deferred income tax expense corresponding with the components of NFE.
Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP, and should be considered in addition
to, and not as a substitute for, the comparable GAAP measure. The following is a reconciliation of consolidated net income, the
most directly comparable GAAP measure, to NFE for the fiscal years ended September 30:
(Thousands)
Net income
Add:
Unrealized loss (gain) on derivative instruments and related transactions
Tax effect
Effects of economic hedging related to natural gas inventory
Tax effect
Impairment of equity method investment
Tax effect
NFE
Basic earnings per share
Add:
2021
2020
$ 117,890 $ 163,007 $ 123,935
2019
(9,644)
2,296
12,690
(3,016)
—
—
54,203
(12,887)
(42,405)
10,078
92,000
(11,167)
2,881
(711)
4,309
(1,024)
—
—
$ 207,712 $ 165,333 $ 129,390
1.39
$
1.72 $
1.23 $
Unrealized loss (gain) on derivative instruments and related transactions
Tax effect
Effects of economic hedging related to natural gas inventory
Tax effect
Impairment of equity method investment
Tax effect
Basic NFE per share
0.56
(0.13)
(0.44)
0.10
0.96
(0.12)
2.16 $
(0.10)
0.02
0.13
(0.03)
—
—
1.74 $
0.03
(0.01)
0.05
(0.01)
—
—
1.45
$
NFE by reporting segment and other business operations for the fiscal years ended September 30, are as follows:
NFE at Energy Services was a loss of $7.9 million in fiscal 2020 and had income of $2.9 million in fiscal 2019, which is not
shown clearly in the above graph.
Page 6
($ in Thousands)$207,712$165,333$129,390$107,375$126,902$78,062$16,789$22,111$31,903$71,117$13,046$18,311$14,689Natural Gas DistributionClean Energy VenturesEnergy ServicesStorage and TransportationHome Services and Other202120202019$0$25,000$50,000$75,000$100,000$125,000$150,000$175,000$200,000$225,000$250,000
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
Natural Gas Distribution
General
Our Natural Gas Distribution segment consists of regulated utility operations that provide natural gas service to
approximately 564,000 customers. NJNG’s service territory includes Burlington, Middlesex, Monmouth, Morris, Ocean and
Sussex counties in New Jersey. It encompasses 1,516 square miles, covering 108 municipalities with an estimated population of
1.5 million people. It is primarily suburban, highlighted by approximately 100 miles of New Jersey coastline. It is in close
proximity to New York City, Philadelphia and the metropolitan areas of northern New Jersey, and is accessible through a
network of major roadways and mass transportation.
NJNG’s business is subject to various risks, such as those associated with adverse economic conditions, which can
negatively impact customer growth and operating and financing costs; fluctuations in commodity prices, which can impact
customer usage; customer conservation efforts; certain regulatory actions; and environmental remediation. It is often difficult to
predict the impact of trends associated with these risks. NJNG employs strategies to manage the challenges it faces, including
pursuing customer conversions from other fuel sources and monitoring new construction markets through contact with
developers, utilizing incentive programs through BPU-approved mechanisms to reduce natural gas costs, pursuing rate and
other regulatory strategies designed to stabilize and decouple gross margin, and working actively with consultants and the
NJDEP to manage expectations related to its obligations associated with its former MGP sites.
Operating Revenues/Throughput
For the fiscal years ended September 30, operating revenues and throughput by customer class for our Natural Gas
Distribution segment are as follows:
($ in thousands)
Residential
Commercial and other
Firm transportation
Total residential and commercial
Interruptible/off-tariff agreements
Total system
BGSS incentive programs (1)
Total
Bcf
2021
Operating
Revenue
$ 484,407
103,341
69,353
657,101
7,239
664,340
67,456
46.2
8.6
13.7
68.5
22.9
91.4
20.8
$ 731,796 112.2
2020
Bcf
Operating
Revenue
44.6
$ 500,271
8.2
98,463
13.3
66,871
66.1
665,605
30.9
6,322
671,927
97.0
57,996 118.4
$ 729,923 215.4
2019
Bcf
Operating
Revenue
$ 450,515
104,372
57,513
612,400
6,637
46.0
9.7
13.7
69.4
39.0
619,037 108.4
37.8
91,756
$ 710,793 146.2
(1) Does not include 80.5, 86.3 and 86.0 Bcf for the capacity release program and related amounts of $3.1 million, $3.1 million and $4.1 million, which are
recorded as a reduction of natural gas purchases on the Consolidated Statements of Operations during fiscal 2021, 2020 and 2019, respectively.
NJNG added 7,854 and 8,349 new customers during fiscal 2021 and 2020, respectively. NJNG expects its new customer
annual growth rate to continue to be approximately 1.7 percent with projected additions in the range of approximately 28,000 to
30,000 new customers over the next three fiscal years. This anticipated customer growth represents approximately $6.2 million
in new annual utility gross margin, a non-GAAP financial measure, as calculated under NJNG’s current CIP tariff. For a
definition and reconciliation of utility gross margin to operating income see Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations-Natural Gas Distribution Segment.
In fiscal 2021, no single customer represented more than 10 percent of consolidated operating revenues.
Seasonality of Natural Gas Revenues
Therm sales are significantly affected by weather conditions, with customer demand being greatest during the winter
months when natural gas is used for heating purposes. The relative measurement of the impact of weather is in Degree-days.
Degree-day data is used to estimate amounts of energy required to maintain comfortable indoor temperature levels based on
each day’s average temperature. Each degree of temperature below 65 degrees Fahrenheit is counted as one heating Degree-
day. Normal heating Degree-days are based on a 20-year average, calculated based on three reference areas representative of
NJNG’s service territory.
Page 7
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
The CIP, a mechanism authorized by the BPU, stabilizes NJNG’s utility gross margin, regardless of variations in weather.
In addition, the CIP decouples the link between utility gross margin and customer usage, allowing NJNG to promote energy
conservation measures. Recovery of utility gross margin is subject to additional conditions, including an earnings test, a
revenue test and an evaluation of BGSS-related savings achieved over a 12-month period. The BPU approved the continuation
of the CIP program with no expiration date.
Concurrent with its annual BGSS filing, NJNG files for an annual review of its CIP, during which time it can request rate
changes, as appropriate. For additional information regarding the CIP, including rate actions and impact to margin, see Note 4.
Regulation in the accompanying Consolidated Financial Statements and Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations-Natural Gas Distribution Segment.
Natural Gas Supply
Firm Natural Gas Supplies
In fiscal 2021, NJNG purchased natural gas from approximately 57 suppliers under contracts ranging from one day to
seven months and purchased over 10 percent of its natural gas from one supplier. NJNG believes the loss of this supplier would
not have a material adverse impact on its results of operations, financial position or cash flows, as an adequate number of
alternative suppliers exist. NJNG believes that its supply strategy should adequately meet its expected firm load for the
upcoming winter season.
Firm Transportation and Storage Capacity
NJNG maintains agreements for firm transportation and storage capacity with several interstate pipeline companies to
take delivery of firm natural gas supplies, which ensures the ability to reliably service its customers. NJNG receives natural gas
at 11 citygate stations located in Burlington, Middlesex, Morris and Passaic counties in New Jersey.
The pipeline companies that provide firm transportation service to NJNG’s citygate stations, the maximum daily
deliverability of that capacity and the contract expiration dates are as follows:
Pipeline
Texas Eastern Transmission, L.P.
Columbia Gas Transmission Corp.
Tennessee Gas Pipeline Co.
Transcontinental Gas Pipe Line Corp.
Algonquin Gas Transmission
Total
Dths (1)
383,588
50,000
25,166
340,606
12,000
811,360
Expiration
Various dates between 2022 and 2025
Various dates between 2024 and 2030
Various dates between 2023 and 2024
Various dates between 2022 and 2033
2023
(1) Numbers are shown net of any capacity release contracted amounts.
Eastern Gas Transmission and Storage, Inc. provides NJNG firm contract transportation service and supplies the pipelines
included in the table above.
In addition, NJNG has storage contracts that provide an additional 102,941 Dths of maximum daily deliverability to
NJNG’s citygate stations from storage fields in its Northeast market area. The storage suppliers, the maximum daily
deliverability of that storage capacity and the contract expiration dates are as follows:
Pipeline
Texas Eastern Transmission, L.P.
Transcontinental Gas Pipe Line Corp.
Total
Dths
94,557
8,384
102,941
Expiration
2023
2028
NJNG also has upstream storage contracts. The maximum daily deliverability and contract expiration dates are as
follows:
Company
Eastern Gas Transmission and Storage, Inc.
Steckman Ridge
Stagecoach Pipeline & Storage Company LLC
Total
Expiration
Various dates between 2023 and 2026
2025
2023
Dths
286,829
38,000
25,337
350,166
Page 8
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
NJNG utilizes its transportation contracts to transport natural gas to NJNG’s citygates from the Eastern Gas Transmission
and Storage, Inc., Steckman Ridge and Stagecoach Pipeline & Storage Company LLC storage fields. NJNG has sufficient firm
transportation, storage and supply capacity to fully meet its firm sales contract obligations.
Citygate Supplies from Energy Services
NJNG has two citygate supply agreements with Energy Services. NJNG and Energy Services have an agreement where
NJNG releases 7,150 Dths/day of TETCO capacity, 2,200 Dths/day of Eastern Gas Transmission and Storage, Inc. capacity,
10,728 Dths/day of Tennessee Gas Pipeline capacity and 1.6 million Dths of Stagecoach Pipeline & Storage Company LLC
storage capacity to Energy Services through March 31, 2022. NJNG can call upon a supply of up to 14,300 Dths/day delivered
to NJNG’s TETCO citygate through March 31, 2022. Energy Services manages the storage inventory and NJNG can call on
that storage supply as needed at NJNG’s Tennessee citygate or storage point.
NJNG also had agreements where it released 80,000 Dths/day of its TETCO capacity to Energy Services for the period of
November 1, 2018 to October 31, 2021. Under these agreements, NJNG could call upon a supply of up to 80,000 Dths/day
delivered to its TETCO citygate as needed. See Note 18. Related Party Transactions in the accompanying Consolidated
Financial Statements for additional information regarding these transactions. These agreements were not renewed after the
October 31, 2021 expiration date.
Peaking Supply
To manage its winter peak day demand, NJNG maintains two LNG facilities with a combined deliverability of
approximately 170,000 Dths/day, which represents approximately 18 percent of its estimated peak day sendout. NJNG’s
liquefaction facility allows NJNG to convert natural gas into LNG to fill NJNG’s existing LNG storage tanks. See Item 2.
Properties-Natural Gas Distribution for additional information regarding the LNG storage facilities.
Basic Gas Supply Service
BGSS is a BPU-approved clause designed to allow for the recovery of natural gas commodity costs on an annual basis.
The clause requires all New Jersey natural gas utilities to make an annual filing by each June 1 for review of BGSS rates and to
request a potential rate change effective the following October 1. The BGSS also allows each natural gas utility to provisionally
increase residential and small commercial customer BGSS rates on December 1 and February 1 for up to a five percent increase
to the average residential heat customer’s bill on a self-implementing basis with proper notice. Such increases are subject to
subsequent BPU review and final approval.
In addition to making periodic rate adjustments to reflect changes in commodity prices, NJNG is also permitted to refund
or credit back a portion of the commodity costs to customers when the natural gas commodity costs decrease in comparison to
amounts projected or to amounts previously collected from customers. Decreases in the BGSS rate and BGSS refunds can be
implemented with five days’ notice to the BPU. Rate changes, as well as other regulatory actions related to BGSS, are discussed
further in Note 4. Regulation in the accompanying Consolidated Financial Statements.
Wholesale natural gas prices are, by their nature, volatile. NJNG mitigates the impact of volatile price changes on
customers through the use of financial derivative instruments, which are part of its storage incentive program and its BGSS
clause.
Future Natural Gas Supplies
NJNG expects to meet the natural gas requirements for existing and projected firm customers. If NJNG’s long-term
natural gas requirements change, NJNG expects to renegotiate and restructure its contract portfolio to better match the changing
needs of its customers and changing natural gas supply landscape.
Regulation and Rates
State
NJNG is subject to the jurisdiction of the BPU with respect to a wide range of matters such as base rates and regulatory
rider rates, the issuance of securities, the safety and adequacy of service, the manner of keeping its accounts and records, the
sufficiency of natural gas supply, pipeline safety, environmental issues, compliance with affiliate standards and the sale or
encumbrance of its properties. See Note 4. Regulation in the accompanying Consolidated Financial Statements for additional
information regarding NJNG’s rate proceedings.
Page 9
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
Federal
FERC regulates rates charged by interstate pipeline companies for the transportation and storage of natural gas. This
affects NJNG’s agreements with several interstate pipeline companies for the purchase of such services. Costs associated with
these services are currently recoverable through the BGSS.
Competition
Although its franchises are nonexclusive, NJNG is not currently subject to competition from other natural gas distribution
utilities with regard to the transportation of natural gas in its service territory. Due to significant distances between NJNG’s
current large industrial customers and the nearest interstate natural gas pipelines, as well as the availability of its transportation
tariff, NJNG currently does not believe it has significant exposure to the risk that its distribution system will be bypassed.
Competition does exist from suppliers of oil, electricity and propane. At the present time, however, natural gas is used in over
95 percent of new construction due to its efficiency, reliability and price advantage. Natural gas prices are a function of market
supply and demand. Although NJNG believes natural gas will remain competitive with alternate fuels, no assurance can be
given in this regard.
The BPU, within the framework of the EDECA, fully opened NJNG’s residential markets to competition, including third-
party suppliers, and restructured rates to segregate its BGSS and delivery (i.e., transportation) prices. New Jersey’s natural gas
utilities must provide BGSS in the absence of a third-party supplier. On September 30, 2021, NJNG had 21,882 residential and
8,815 commercial and industrial customers utilizing the transportation service.
Clean Energy Ventures
Our Clean Energy Ventures segment invests in, owns and operates clean energy projects, including commercial and
residential solar installations located in New Jersey, Connecticut, Rhode Island and New York.
As of September 30, 2021, Clean Energy Ventures has constructed a total of 367.8 MW of solar capacity in New Jersey
and Connecticut that has qualified for ITCs, including a combination of residential and commercial net-metered and grid-
connected solar systems.
As part of its solar investment portfolio, Clean Energy Ventures operates a residential and small commercial solar
program, The Sunlight Advantage®, that provides qualifying homeowners and small business owners with the opportunity to
have a solar system installed at their home or place of business with no installation or maintenance expenses. Clean Energy
Ventures owns, operates and maintains the system over the life of the lease in exchange for monthly lease payments. The
program is operated by Clean Energy Ventures using qualified contracting partners in addition to strategic suppliers for material
standardization and sourcing. The residential solar lease and PPA market is highly competitive, with a large number of
companies operating in New Jersey. Clean Energy Ventures competes on price, quality and brand reputation, leveraging its
partner network and customer referrals.
Clean Energy Ventures’ commercial solar projects are sourced through various channels and include both net-metered and
grid-connected systems. Net-metered projects involve the sale of energy to a host and grid-connected systems into the
wholesale energy markets. Project construction is competitively sourced through third parties. New Jersey has the seventh
largest solar market in the U.S., according to the Solar Energy Industries Association®, with a large number of firms competing
in all facets of the market including development, financing and construction.
Our solar systems are registered and certified with the BPU’s Office of Clean Energy and qualified to produce RECs. One
REC is created for every MWh of electricity produced by a solar generator. Clean Energy Ventures sold SRECs generated to a
variety of counterparties, including electric load-serving entities that serve electric customers in New Jersey and are required to
comply with the solar carve-out of the Renewable Portfolio Standard, a regulation that requires the increased production
of energy from renewable energy sources. Solar projects are also currently eligible for federal ITCs in the year that they are
placed into service. In December 2019, the BPU established the TREC as the interim program successor to the SREC program.
TRECs provide a fixed compensation base multiplied by an assigned project factor in order to determine their value. The
project factor is determined by the type and location of the project, as defined. All TRECs generated are required to be
purchased monthly by a TREC program administrator as appointed by the BPU.
On July 28, 2021, the BPU approved the first portion of the solar successor program for net metered projects under 5
MWs. The new program opened to new applications on August 28, 2021 following the closure of the TREC program.
Incentives are structured as a 15-year fixed incentive ranging from $70-$120/MWh depending on market segment, project
siting and size. The second phase of the successor program rollout is expected to include a competitive bid solicitation for
projects greater than 5 MWs, with the solicitation program format and rules operational in 2022.
Page 10
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
Clean Energy Ventures is subject to various risks including those associated with adverse federal and state legislation and
regulatory policies, supply chain and/or construction delays that can impact the timing or eligibility of tax incentives,
technological changes and the future market of SRECs and TRECs. See Item 1A. Risk Factors for additional information
regarding these risks.
Energy Services
Our Energy Services segment consists of unregulated wholesale and retail natural gas operations and provides producer
and asset management services to a diverse customer base across North America. Energy Services has acquired contractual
rights to natural gas transportation and storage assets it utilizes to implement its strategic and opportunistic market strategies.
The rights to these assets were acquired in anticipation of delivering natural gas, performing asset management services for
customers or identifying strategic opportunities that exist in or between the market areas that it serves. These opportunities are
driven by price differentials between market locations and/or time periods. Energy Services’ activities are conducted in the
market areas in which it has strong expertise, including the U.S. and Canada. Energy Services differentiates itself in the
marketplace based on price, reliability and quality of service. Its competitors include wholesale marketing and trading
companies, utilities, natural gas producers and financial institutions. Energy Services’ portfolio of customers includes regulated
natural gas distribution companies, industrial companies, electric generators, natural gas/liquids processors, retail aggregators,
wholesale marketers and natural gas producers.
While focusing on maintaining a low-risk operating and counterparty credit profile, Energy Services’ activities
specifically consist of the following elements:
• Providing natural gas portfolio management services to nonaffiliated and our affiliated natural gas utility, electric
generation facilities and natural gas producers;
• Managing strategies for new and existing natural gas transportation and storage assets to capture value from changes
in price due to location or timing differences as a means to generate financial margin (as defined below);
• Managing transactional logistics to minimize the cost of natural gas delivery to customers while maintaining security
of supply. Transactions utilize the most optimal and advantageous natural gas supply transportation routing available
within its contractual asset portfolio and various market areas; and
• Managing economic hedging programs that are designed to mitigate the impact of changes in market prices on
financial margin generated on its natural gas transportation and storage commitments.
In an effort to deliver more predictable earnings contributions, reduce earnings volatility, and monetize the value of its
natural gas transportation portfolio, Energy Services entered into a series of asset management agreements with an investment
grade public utility to release pipeline capacity associated with certain natural gas transportation contracts. The asset
management agreements include a series of initial and permanent releases commencing on November 1, 2021. NJR will receive
approximately $260 million in cash from fiscal 2022 through fiscal 2024 and $34 million per year from fiscal 2025 through
fiscal 2031 under the agreements.
During fiscal 2021, Energy Services did not purchase over 10 percent of its natural gas from any one supplier.
Transportation and Natural Gas Storage Transactions
Energy Services focuses on creating value from the use of its physical assets, which are typically amassed through
contractual rights to natural gas transportation and storage capacity. These assets become more valuable when favorable price
changes occur that impact the value between or within market areas and across time periods. On a forward basis, Energy
Services may hedge these price differentials through the use of financial instruments. In addition, Energy Services may seek to
optimize these assets on a daily basis, as market conditions warrant, by evaluating natural gas supply and transportation
availability within its portfolio. This enables Energy Services to capture geographic pricing differences across various regions,
as delivered natural gas prices may change favorably as a result of market conditions. Energy Services may, for example,
initiate positions when intrinsic financial margin is present, and then enhance that financial margin as prices change across
regions or time periods.
Energy Services also engages in park-and-loan transactions with storage and pipeline operators, where Energy Services
will either borrow (receive a loan of) natural gas with an obligation to repay the storage or pipeline operator at a later date or
“park” natural gas with an obligation to withdraw at a later date. In these cases, Energy Services evaluates the economics of the
transaction to determine if it can capture pricing differentials in the marketplace and generate financial margin. Energy Services
evaluates deal attributes such as fixed fees, calendar spread value from deal inception until volumes are scheduled to be
Page 11
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
returned and/or repaid, as well as the time value of money. If this evaluation demonstrates that financial margin exists, Energy
Services may enter into the transaction and hedge with natural gas futures contracts, thereby locking in financial margin.
Energy Services maintains inventory balances to satisfy existing or anticipated sales of natural gas to its counterparties
and/or to create additional value, as described above. During fiscal 2021 and 2020, Energy Services managed and sold 382.0
Bcf and 526.7 Bcf of natural gas, respectively. In addition, as of September 30, 2021 and 2020, Energy Services had 18.8 Bcf
or $77.8 million of natural gas in storage and 34.3 Bcf or $57.4 million of natural gas in storage, respectively.
Weather/Seasonality
Energy Services activities are typically seasonal in nature as a result of changes in the supply and demand for natural gas.
Demand for natural gas is generally higher during the winter months when there may also be supply constraints; however,
during periods of milder temperatures, demand can decrease. In addition, demand for natural gas can also be high during
periods of extreme heat in the summer months, resulting from the need for additional natural gas supply for natural gas-fired
electric generation facilities. Accordingly, Energy Services can be subject to variations in earnings and working capital
throughout the year as a result of changes in weather.
Volatility
Energy Services’ activities are also subject to price volatility or supply/demand dynamics within its North American
wholesale markets, including in the Northeastern, Appalachian, Mid-Continent and Southeast regions. Changes in natural gas
supply can affect capacity values and Energy Services’ financial margin, which, as described below, is generated from the
optimization of transportation and storage assets. With its focus on risk management, Energy Services continues to diversify its
revenue stream by identifying new growth opportunities in producer and asset management services. Energy Services monitors
changing market dynamics and strategically adjusts its portfolio of transportation and storage assets, which currently includes
an average of approximately 29.5 Bcf of firm storage and 1.2 Bcf of firm transportation capacity.
Financial Margin
To economically hedge the commodity price risk associated with its existing and anticipated commitments for the
purchase and sale of natural gas, Energy Services enters into a variety of derivative instruments including, but not limited to,
futures contracts, physical forward contracts, financial swaps and options. These derivative instruments are accounted for at fair
value with changes in fair value recognized in earnings as they occur. Energy Services views “financial margin” as a key
internal financial metric. Energy Services’ financial margin, which is a non-GAAP financial measure, represents revenues
earned from the sale of natural gas less costs of natural gas sold including any transportation and storage costs, and excluding
any accounting impact from changes in the fair value of certain derivative instruments. For additional information regarding
financial margin, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Energy
Services Segment.
Risk Management
In conducting its business, Energy Services mitigates risk by following formal risk management guidelines, including
transaction limits, segregation of duties and formal contract and credit review approval processes. Energy Services continuously
monitors and seeks to reduce the risk associated with its counterparty credit exposures. Our Risk Management Committee
oversees compliance with these established guidelines.
Storage and Transportation
Our Storage and Transportation segment, includes investments in FERC-regulated interstate natural gas storage and
transportation assets and is comprised of the following subsidiaries:
• NJR Midstream Company owns and operates Leaf River, a 32.2 million Dth salt dome natural gas facility, located in
southeastern Mississippi and the FERC-regulated Adelphia Gateway, which owns and operates an 84-mile pipeline in
southeastern Pennsylvania. NJR Midstream Company also holds our 20 percent equity method investment in
PennEast; and
• NJR Steckman Ridge Storage Company holds our 50 percent equity method investment in Steckman Ridge.
Steckman Ridge is a Delaware limited partnership, jointly owned and controlled by our subsidiaries and subsidiaries
of Enbridge Inc., which built, owns and operates a natural gas storage facility with up to 12 Bcf of working natural
gas capacity in Bedford County, Pennsylvania. The facility has direct access to the TETCO and Eastern Gas
Transmission and Storage, Inc. pipelines and has access to the Northeast and Mid-Atlantic markets.
Page 12
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
OTHER BUSINESS OPERATIONS
Home Services and Other
Home Services and Other operations consist primarily of the following unregulated affiliates:
• NJRHS, which provides heating, ventilation and cooling service, sales and installation of appliances to approximately
106,000 service contract customers, as well as installation of solar equipment;
• NJR Plumbing Services, Inc., which provides plumbing repair and installation services;
• New Jersey Resources Corporation, a diversified energy services holding company;
• CR&R, which holds commercial real estate; and
• NJR Service Corporation, which provides shared administrative and financial services to the Company and all of its
subsidiaries and affiliates.
ENVIRONMENT
We, along with our subsidiaries, are subject to legislation and regulation by federal, state and local authorities with
respect to environmental matters. We believe that we are, in all material respects, in compliance with all applicable
environmental laws and regulations.
NJNG is responsible for the environmental remediation of identified former MGP sites, which contain contaminated
residues from former gas manufacturing operations that ceased at these sites by the mid-1950s and, in some cases, had been
discontinued many years earlier. NJNG periodically, and at least annually, performs an environmental review of the former
MGP sites, including a review of potential estimated liabilities related to the investigation and remedial action on these sites.
Based on this review, NJNG has estimated that the total future expenditures to remediate and monitor the former MGP sites for
which it is responsible will range from approximately $115.4 million to $178.4 million.
NJNG’s estimate of these liabilities is based upon known and measurable facts, existing technology and enacted laws and
regulations in place when the review was completed in fiscal 2021. Where it is probable that costs will be incurred, and the
information is sufficient to establish a range of possible liability, NJNG accrues the most likely amount in the range. If no point
within the range is more likely than the other, it is NJNG’s policy to accrue the lower end of the range. As of September 30,
2021, NJNG recorded an MGP remediation liability and a corresponding regulatory asset of $135.0 million on the Consolidated
Balance Sheets, based on the most likely amount; however, actual costs may differ from these estimates.
HUMAN CAPITAL RESOURCES
Employee Overview
NJR fundamentally believes that its employees make the Company a unique, successful organization – in creativity,
commitment, ingenuity, hard work and innovation. NJR employees fulfill the responsibilities that enable the Company to
deliver natural gas service to its customers; to be a leader in clean energy investments; to grow its storage and transportation
energy business; and, to earn the loyalty of its retail home services customers. NJR also is committed to provide every
appropriate resource to ensure its employees’ safety. Through initiatives that start at the top, NJR has invested time, energy and
manpower to foster a culture where safety is top-of-mind at all times, and where achieving safety goals is a shared priority for
every NJR employee.
As of September 30, 2021, the Company and our subsidiaries employed 1,251 employees compared with 1,156
employees as of September 30, 2020. Of the total number of employees, NJNG had 492 and 469 and NJRHS had 108 and 101
Union or Represented employees as of September 30, 2021 and 2020, respectively. NJNG and NJRHS have collective
bargaining agreements with the Union, which is affiliated with the American Federation of Labor and Congress of Industrial
Organizations. NJNG and the Union recently negotiated an extension of their current collective bargaining agreement extending
the term through December 7, 2022. The collective bargaining agreement between NJRHS and the Union is scheduled to expire
April 2, 2023. The labor agreements cover wage increases and other benefits, including the defined benefit pension (which was
closed to all employees hired on or after January 1, 2012, with the exception of certain rehires who are eligible to resume active
participation), the postemployment benefit plan (which was closed to all employees hired on or after January 1, 2012) and the
enhanced 401(k) retirement savings plan. We consider our relationship with employees, including those covered by collective
bargaining agreements, to be in good standing.
Page 13
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
The Company depends on its key personnel to successfully operate its businesses, including its executive officers, senior
corporate management and management at its operating units. NJR seeks to attract and retain its employees by offering
competitive compensation packages including base and incentive compensation (and in certain instances share-based
compensation and retention incentives), attractive benefits and opportunities for advancement and rewarding careers. NJR
periodically reviews and adjusts, if needed, its employees’ total compensation (including salaries, annual cash incentive
compensation, other cash and equity incentives, and benefits) to ensure that it is competitive within the industry and is
consistent with our level of performance. NJR has also implemented enterprise-wide talent development and succession
planning programs designed to identify future and/or replacement candidates for key positions. To promote a collaborative and
rewarding work environment and support the communities we serve, NJR sponsors numerous charitable, philanthropic, and
social awareness programs.
Further, in order to take advantage of available opportunities and successfully implement our long-term strategy, NJR
must be able to employ, train and retain the necessary skilled personnel. As a result, NJR supports and utilizes various training
and educational programs and has developed additional company-wide and project-specific employee training and educational
programs. NJR continues key programs focused on employee safety, leadership development, work-life balance, talent
management, health and wellness, DEI as well as employee engagement. Moreover, DEI and employee engagement are integral
to NJR’s vision, strategy and business success. NJR prides itself on a culture that respects co-workers and values concern for
others. Fostering an environment that values DEI and ethics helps create an organization that is able to embrace, leverage and
respect the differences of employees, customers and the communities where we live, work and serve. We are proud of the
strides we have made in furthering our DEI strategy and increasing employee engagement. NJR is committed to this journey
and knows our success makes us stronger as a company and community. Complementing our efforts are a DEI Council and our
six employee-led Business Resource Groups, cross functional teams of employees whose core mission is to advance their own
professional development and cultivate deeper connections with co-workers and communities.
NJR regularly evaluates employees and their productivity against future demand expectations and historical trends. NJR
employees continue to maintain high levels of engagement, satisfaction and retention according to NJR’s most recent employee
survey.
NJR’s Board of Directors’ Role in Human Capital Resource Management
NJR’s Board of Directors believes that human capital management is an important component of the Company’s
continued growth and success, and is essential for our ability to attract, retain and develop talented and skilled employees. We
pride ourselves on a culture that promotes DEI, respects co-workers and values concern for others.
Management regularly reports to the LDCC of the Board of Directors on human capital management topics, including
corporate culture, DEI, employee development, compensation and benefits. The LDCC maintains oversight of matters related to
human capital management, including talent retention, development and succession planning, and the Board of Director’s
provides input on important decisions in each of these areas.
NJR regularly conducts an employee feedback survey, which is reviewed by the LDCC, designed to help the Company
measure overall employee engagement. The feedback employees provide during the survey helps NJR evaluate the Company’s
culture, employee programs and benefits and monitor its current practices for potential areas of improvement.
Employee Benefits
The LDCC believes employee benefits are an essential component of the Company’s competitive total rewards package.
These benefits are designed to attract and retain our employees and include medical, vision and dental insurance, short- and
long-term disability insurance, accidental death and disability insurance, travel and accident insurance, and our 401(k) Plan. As
part of the 401(k) Plan, NJR generally matches 85 percent of the first 6 percent of compensation contributed by the employee
into the 401(k) Plan, subject to the Internal Revenue Code and NJR’s 401(k) Plan limits. Additionally, for employees who are
not eligible to participate in the defined benefit plans, NJR contributes between 3.5 percent and 4.5 percent of base
compensation, depending upon years of service, into the 401(k) Plan on their behalf.
AVAILABLE INFORMATION AND CORPORATE GOVERNANCE DOCUMENTS
The following reports and any amendments to those reports are available free of charge on our website at https://
investor.njresources.com/financials/sec-filings/default.aspx as soon as reasonably possible after filing or furnishing them with
the SEC:
•
•
•
Annual reports on Form 10-K;
Quarterly reports on Form 10-Q; and
Current reports on Form 8-K.
Page 14
New Jersey Resources Corporation
Part I
ITEM 1. BUSINESS (Continued)
The following documents are available free of charge on our website at https://investor.njresources.com/governance/
governance-documents/default.aspx:
•
NJR Code of Conduct;
•
Amended and Restated Bylaws;
Corporate Governance Guidelines;
•
• Wholesale Trading Code of Conduct;
•
Charters of the following Board of Directors Committees: Audit, Nominating/Corporate Governance and
Leadership Development and Compensation;
Audit Complaint Procedure;
Communicating with Non-Management Directors Procedure;
Statement of Policy with Respect to Related Person Transactions; and
Legal Procedure.
•
•
•
•
In Part III of this Form 10-K, we incorporate certain information by reference from our Proxy Statement for our 2022
Annual Meeting of Shareowners. We expect to file the Proxy Statement with the SEC on or about December 16, 2021. We will
make it available on our website as soon as reasonably possible following the filing date. Please refer to the Proxy Statement
when it is available.
A printed copy of each document is available free of charge to any shareowner who requests it by contacting the
Corporate Secretary at New Jersey Resources Corporation, 1415 Wyckoff Road, Wall, New Jersey 07719.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The Company’s Executive Officers and their age, position and business experience during the past five years are below.
Name
Stephen D. Westhoven
Age
53
Officer
since
2004
Patrick J. Migliaccio
Amanda E. Mullan
Amy Cradic
Richard Reich
Jacqueline K. Shea
Timothy F. Shea
Mark F. Valori
47
55
50
46
57
55
58
2013
2015
2018
2016
2016
2017
2017
Business experience during last five years
President and Chief Executive Officer (October 2019 - present)
President and Chief Operating Officer (October 2018 - September 2019)
Executive Vice President and Chief Operating Officer (November 2017 - September 2018)
Senior Vice President and Chief Operating Officer, NJRES and NJRCEV (October 2016 -
October 2017)
Senior Vice President and Chief Financial Officer (January 2016 - present)
Senior Vice President and Chief Human Resources Officer (January 2017 - present)
Vice President and Chief Human Resources Officer (April 2015 - December 2016)
Senior Vice President and Chief Operating Officer of Non-Utility Businesses, Strategy and
External Affairs (March 2020 - present)
Vice President, Corporate Strategy and External Affairs (January 2020 – February 2020)
Vice President, Government Affairs and Policy (January 2018 – December 2019)
Chief of Staff, Office of New Jersey Governor Chris Christie (April 2016 – January 2018)
Senior Vice President, General Counsel and Corporate Secretary (September 2021 - present)
Corporate Secretary and Assistant General Counsel (January 2016 - September 2021)
Vice President and Chief Information Officer (June 2016 - present)
Vice President, Energy Trading (January 2017 - present)
Managing Director, Energy Trading (January 2014 - December 2016)
Vice President, Clean Energy Ventures (November 2017 - present)
Managing Director, Projects and Asset Management (January 2016 - October 2017)
ITEM 1A. RISK FACTORS
When considering any investment in our securities, investors should consider the following risk factors, as well as the
information contained under the caption “Information Concerning Forward-Looking Statements,” in analyzing our present and
future business performance. While this list is not exhaustive, management also places no priority or likelihood based on their
descriptions or order of presentation. Listed below, not necessarily in order of importance or probability of occurrence, are the
most significant risk factors applicable to us. Unless indicated otherwise or the content requires otherwise, references below to
“we,” “us,” and “our” should be read to refer to the Company and its subsidiaries and affiliates
Page 15
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
Risks Related to the Ongoing COVID-19 Pandemic and Other Extreme Events
The Company and our subsidiaries and affiliates are subject to risk associated with the ongoing novel coronavirus,
COVID-19 pandemic, which could materially and adversely impact our business, including our financial condition, results
from operations, liquidity, cash flows and the market value of our common stock.
COVID-19 has been declared a pandemic by the World Health Organization and the Centers for Disease Control and
Prevention and has spread globally, including throughout the U.S. In response, the U.S. federal government and many
jurisdictions, including without limitation, New Jersey, Pennsylvania, Mississippi and Texas have instituted emergency orders,
restrictions on travel, limitations on public gatherings and non-essential business, shelter-in-place requirements and government
shutdowns. While some jurisdictions have relaxed some of these restrictions, many of these restrictions remain and there is no
guarantee restrictions will not be reimposed in the future. These emergency orders and restrictions have significantly disrupted
economic activity in the jurisdictions in which we operate and have caused volatility in the capital markets.
The effects of the ongoing COVID-19 pandemic and related government responses could include, and have at times
included, extended disruptions to supply chains and capital markets, reduced labor availability and productivity and a prolonged
reduction in economic activity. We are currently evaluating the potential prolonged impacts that the ongoing COVID-19
pandemic may have on our future operating results and liquidity, which include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
impacts related to the health, safety, productivity and availability of our employees and contractors;
reduced demand for energy and forecasted customer growth;
our ability to develop, construct and operate facilities;
suspension of collection activities and the inability to shutoff natural gas services for nonpayment;
reduced demand for commercial, industrial and residential natural gas services;
deterioration of the credit quality of our counterparties;
increases in costs and supply chain delays and disruptions;
delays and disruptions to capital construction and infrastructure operations and maintenance programs, including
delays in the permitting process and base rate cases;
delays and disruptions to financing plans and increasing costs related thereto;
impacts on pension valuations and increased pension and post-retirement plan costs and funding requirements;
deterioration in our financial metrics or the business environment that impacts our credit ratings;
impacts to our liquidity position and cost of and ability to access funds from financial institutions and capital
markets;
impacts on our legal and regulatory matters, including the potential for delayed state regulatory filings and recovery
of invested capital, as well as delays in newly enacted and proposed state regulatory actions and federal laws;
exacerbation of other risks that may impact us; and
other unpredictable events.
These uncertain economic conditions have also impacted the ability of certain customers to pay for utility and certain
non-utility services, which could affect the collectability and recognition of our revenues and adversely affect our financial
results.
While we have implemented our business continuity plan (including without limitation employee travel restrictions,
employee remote work locations and cancellation of physical participation in meetings, events, and conferences) to conform to
government restrictions and best practices encouraged by federal, state, and local government and regulatory authorities, if a
large proportion of our employees in essential capacities were to contract COVID-19, there is no certainty that such measures
will be sufficient to mitigate an adverse impact to our operations.
The situation surrounding the ongoing COVID-19 pandemic remains fluid and the likelihood of material impacts may
increase the longer the pandemic impacts activity levels in the U.S. As of September 30, 2021, the ongoing
COVID-19 pandemic has not had a material impact on the Company and our subsidiaries and affiliates; however, the ultimate
severity and duration of the COVID-19 pandemic and the responses thereto are uncertain and we cannot predict whether they
will have a material impact on our liquidity, financial condition, results of operations or cash flows and when and to what extent
normal economic and operating conditions can resume.
Page 16
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
We may be adversely impacted by natural disasters, pandemic illness (including COVID-19), terrorist activities and
other extreme events to which we may be unable to promptly respond.
Local or national natural disasters, pandemic illness (including COVID-19), terrorist activities, catastrophic failure of the
interstate pipeline system and other extreme events are a threat to our assets and operations. Companies in our industry that are
located in our service territory may face a heightened risk due to exposure to acts of terrorism that could target or impact our
natural gas distribution, transmission and storage facilities and disrupt our operations and ability to meet customer
requirements. In addition, the threat of terrorist activities could lead to increased economic instability and volatility in the price
of natural gas that could affect our operations. Natural disasters or actual or threatened terrorist activities may also disrupt
capital markets and our ability to raise capital or may impact our suppliers or our customers directly. A local disaster or
pandemic illness (including COVID-19) could result in part of our workforce being unable to operate or maintain our
infrastructure or perform other tasks necessary to conduct our business. In addition, these risks could result in loss of human
life, significant damage to property, environmental damage, impairment of our operations and substantial loss to the Company.
Our regulators may not allow us to recover from our customers part or all of the increased cost related to the foregoing events,
which could negatively affect our financial condition, results of operations and cash flows.
A slow or inadequate response to events that could cause business interruption may have an adverse impact on operations
and earnings. We may be unable to obtain sufficient insurance to cover all risks associated with local and national disasters,
pandemic illness, terrorist activities, catastrophic failure of the interstate pipeline system and other events, which could increase
the risk that an event adversely affects our financial condition, results of operations and cash flows.
Risk Related to Our Business Operations
Uncertainties associated with our Adelphia Gateway pipeline project could adversely affect our business, results of
operations, financial condition and cash flows.
In January 2020, our subsidiary Adelphia Gateway, LLC acquired Interstate Energy Company LLC, owner of a
transmission pipeline extending approximately 90 miles through eastern Pennsylvania that it operated in either oil-only service
or in dual-phase oil and natural gas service. As part of the Adelphia Gateway pipeline project, Adelphia is continuing to operate
a portion of the pipeline in natural gas-only service, is converting the remaining sections of the southern mainline of the
pipeline to transport natural gas and is constructing certain new facilities, including two compressor stations in Bucks County
and Delaware County, PA and two new pipeline laterals in Delaware County, PA and New Castle County, DE. Timely
completion of the project is subject to certain risks, including those related to regulatory proceedings regarding permitting and
adverse outcomes from legal challenges related to the project's authorizations from federal and state regulatory agencies. Any
delays in the expected timeframe for completing the conversion of the southern mainline of the pipeline to transport natural gas
and constructing the new facilities could cause disruption and create uncertainties, which could have an adverse effect on our
business, results of operations, financial condition and cash flows.
We may be unable to obtain governmental approvals, property rights and/or financing for the construction, development
and operation of our proposed energy investments and projects in a timely manner or at all.
Construction, development and operation of energy investments, such as Leaf River and other natural gas storage
facilities, NJNG infrastructure improvements, such as SRL and NJ RISE, pipeline transportation systems, such as the Adelphia
Gateway pipeline project, and solar energy projects are subject to federal and state regulatory oversight and require certain
property rights, such as easements and rights-of-way from public and private property owners, as well as regulatory approvals,
including environmental and other permits and licenses for such facilities and systems. We or our joint venture partnerships
may be unable to obtain, in a cost-efficient or timely manner, all such needed property rights, permits and licenses to
successfully construct and develop our energy facilities and systems. Successful financing of our energy investments requires
participation by willing financial institutions and lenders, as well as acquisition of capital at favorable interest rates. If we do
not obtain the necessary regulatory approvals, property rights and financing, our equity method investments could be impaired.
Such impairment could have a materially adverse effect on our financial condition, results of operations and cash flows.
Our investments in solar energy projects are subject to substantial risks and uncertainties.
Our investments in commercial and residential solar energy projects are dependent, in part, upon current state regulatory
incentives and federal tax credits in order for the projects to be economically viable. Our return on investment for these solar
projects is based substantially on our eligibility for ITCs and the future market value of SRECs that are traded in a competitive
marketplace in the State of New Jersey. These projects face the risk that the current state regulatory programs and tax laws may
expire or be adversely modified. A sustained decrease in the value of SRECs could negatively impact the return on our
investments and could impair our portfolio of solar assets.
Page 17
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
In addition, there are risks associated with our ability to execute on our investment strategy of clean energy projects,
which includes our ability to develop and manage such projects profitably, including logistical risks and potential delays related
to construction, permitting, regulatory approvals (including any approvals by the BPU required pursuant to solar energy
legislation in the State of New Jersey, and similar approvals required by the States of Connecticut, Rhode Island and New
York) and electric grid interconnection, as well as the operational risk that the projects in service will not perform according to
expectations due to equipment failure, suboptimal weather conditions or other economic factors beyond our control. All of the
aforementioned risks could reduce the availability of viable solar energy projects for development. Furthermore, at the
development or acquisition stage, our ability to predict actual performance results may be hindered or inaccurate and the
projects may not perform as predicted.
NJNG and Energy Services rely on storage, transportation assets and suppliers, which they do not own or control, to
deliver natural gas.
NJNG and Energy Services depend on natural gas pipelines and other transportation and storage facilities owned and
operated by third parties to deliver natural gas to wholesale and retail markets and to provide retail energy services to
customers. Their ability to provide natural gas for their present and projected sales will depend upon their suppliers’ ability to
obtain and deliver additional supplies of natural gas, as well as NJNG’s ability to acquire supplies directly from new sources.
Factors beyond the control of NJNG, its suppliers and the independent suppliers that have obligations to provide natural gas to
certain NJNG customers may affect NJNG’s ability to deliver such supplies. These factors include other parties’ control over
the drilling of new wells and the facilities to transport natural gas to NJNG’s citygate stations, development of additional
interstate pipeline infrastructure, availability of supply sources, third-party pipelines or other midstream facilities interconnected
to our gathering or transportation system, such as the Texas Eastern Transmission Pipeline or Transcontinental Pipeline,
becoming partially or fully unavailable, competition for the acquisition of natural gas, priority allocations, impact of severe
weather disruptions to natural gas supplies and the regulatory and pricing policies of federal and state regulatory agencies, as
well as the availability of Canadian reserves for export to the U.S. Energy deregulation legislation may increase competition
among natural gas utilities and impact the quantities of natural gas requirements needed for sales service. Energy Services also
relies on a firm supply source to meet its energy management obligations to its customers. If supply, transportation or storage is
disrupted, including for reasons of force majeure, the ability of NJNG and Energy Services to sell and deliver their products and
services may be hindered. As a result, they may be responsible for damages incurred by their customers, such as the additional
cost of acquiring alternative supply at then-current market rates. Particularly for Energy Services, these conditions could have a
material impact on our financial condition, results of operations and cash flows.
Energy Services’ earnings and cash flows are dependent upon optimization of its physical assets.
Energy Services’ earnings and cash flows are based, in part, on its ability to optimize its portfolio of contractually based
natural gas storage and pipeline assets. The optimization strategy involves utilizing its physical assets to take advantage of
differences in natural gas prices between geographic locations and/or time periods. Any change among various pricing points
could affect these differentials. In addition, significant increases in the supply of natural gas in Energy Services’ market areas,
including as a result of increased production along the Marcellus Shale, can reduce Energy Services’ ability to take advantage
of pricing fluctuations in the future. Changes in pricing dynamics and supply could have an adverse impact on Energy Services’
optimization activities, earnings and cash flows. Energy Services incurs fixed demand fees to acquire its contractual rights to
transportation and storage assets. Should commodity prices at various locations or time periods change in such a way that
Energy Services is not able to recoup these costs from its customers, the cash flows and earnings at Energy Services, and
ultimately the Company, could be adversely impacted.
Weather and weather patterns, including normal seasonal and quarterly fluctuations of weather, as well as extreme
weather events that, individually or in aggregate, may be associated with climate change, could adversely affect our ability to
manage our operational requirements to serve our customers, and ultimately adversely affect our results of operations and
liquidity.
NJNG’s business is seasonal, and weather patterns can have a material impact on our financial performance. Demand for
natural gas is often greater in the summer and winter months associated with cooling and heating. Because natural gas is heavily
used for residential and commercial heating, the demand for this product depends heavily upon weather patterns throughout our
market areas, and a significant amount of natural gas revenues are recognized in the first and second quarters related to the
heating season. Accordingly, our operations have historically generated less revenue and income when weather conditions are
milder in the winter and cooler in the summer. Unusually mild winters or cool summers could adversely affect our results of
operations and financial position. In addition, exceptionally hot summer weather or unusually cold winter weather could add
Page 18
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
significantly to working capital needs to fund higher than normal supply purchases to meet customer demand for natural gas.
Our sensitivity to weather volatility is significant due to the absence of regulatory mechanisms, such as those authorizing
revenue decoupling, lost margin recovery, and other innovative rate designs. While we believe the CIP mitigates the impact of
weather variations on NJNG’s utility gross margin, severe weather conditions may have an impact on the ability of suppliers
and pipelines to deliver the natural gas to NJNG, which can negatively affect our earnings. The CIP does not mitigate the
impact of severe weather conditions on our cash flows.
Future results at Energy Services are subject to volatility in the natural gas market due to weather. Variations in weather
may affect earnings and working capital needs throughout the year. During periods of milder temperatures, demand and
volatility in the natural gas market may decrease, which can negatively impact Energy Services’ earnings and cash flows.
Severe weather impacts, including but not limited to, blizzards, thunderstorms, high winds, microbursts, fires, tornadoes
and snow or ice storms can disrupt energy generation, transmission and distribution. Extreme weather conditions, especially
those of prolonged duration, create high energy demand on our own and/or other systems and increase the risk we may be
unable to reliably serve customers, causing loss of gas supply. Risk of losing gas supply during extreme weather carries
significant consequences as without our services our customers may be subjected to dire circumstances. Additionally, extreme
weather conditions may raise market prices as we buy short-term energy to serve our own system. To the extent the frequency
of extreme weather events increases, this could increase our cost of providing service. In addition, we may not recover all costs
related to mitigating these physical and financial risks.
There is also a concern that the physical risks of climate change could include changes in weather conditions, such as
changes in the amount or type of precipitation and extreme weather events. Climate change and the costs that may be associated
with its impacts have the potential to affect our business in many ways, including increasing the cost incurred in providing
natural gas, impacting the demand for and consumption of natural gas (due to change in both costs and weather patterns), and
affecting the economic health of the regions in which we operate.
Failure to attract and retain an appropriately qualified employee workforce could adversely affect operations.
Our ability to implement our business strategy and serve our customers is dependent upon our continuing ability to attract
and retain talented professionals and a technically skilled workforce, and being able to transfer the knowledge and expertise of
our workforce to new employees as our aging employees retire. Failure to hire and adequately train replacement employees,
including the transfer of significant internal historical knowledge and expertise to the new employees, or the future availability
and cost of contract labor could adversely affect the ability to manage and operate our business. NJNG and the Union recently
negotiated an extension of their current collective bargaining agreement extending the term through December 7, 2022. The
collective bargaining agreement between NJRHS and the Union is scheduled to expire April 2, 2023. Disputes with the Union
over terms and conditions of the agreements could result in instability in our labor relationship and work stoppages that could
impair the timely delivery of natural gas and other services from our utility and Home Services business, which could strain
relationships with customers and state regulators and cause a loss of revenues that could adversely affect our results of
operations. Our collective bargaining agreements may also increase the cost of employing our natural gas distribution segment
and Home Services workforce, affect our ability to continue offering market-based salaries and employee benefits, limit our
flexibility in dealing with our workforce and limit our ability to change work rules and practices and implement other
efficiency-related improvements to successfully compete in today’s challenging marketplace.
Our success as a company depends upon our ability to attract, effectively transition, motivate and retain key employees
and identify and develop talent to succeed senior management. We depend on senior executive officers and other key personnel
to develop, implement and execute on our overall business strategy. The inability to recruit and retain or effectively transition
key personnel or the unexpected loss of key personnel may adversely affect our operations.
Risk Related to Technologies
Cyberattacks or failure of information technology systems could adversely affect our business operations, financial
condition and results of operations.
We continue to place ever-greater reliance on technological tools that support our business operations and corporate
functions, including tools that help us manage our natural gas distribution and energy trading operations and infrastructure. The
failure of, or security breaches related to, these technologies could materially adversely affect our business operations, financial
position, results of operations and cash flows.
Page 19
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
We rely on information technology to manage our natural gas distribution and storage, energy trading and other corporate
operations; maintain customer, employee, Company and vendor data; and prepare our financial statements and perform other
critical business processes. This technology may fail due to cyberattack, physical disruption, design and implementation defects
or human error. Disruption or failure of business operations and information technology systems could harm our facilities or
otherwise adversely impact our ability to safely deliver natural gas to our customers, serve our customers effectively or manage
our assets. Additionally, an attack on, or failure of, information technology systems could result in the unauthorized release of
customer, employee or other confidential or sensitive data. Recent widespread ransomware attacks and cybersecurity breaches
in the U.S. and elsewhere have affected many companies, including the cybersecurity incident involving SolarWinds Orion in
December 2020. While these attacks did not affect our business operations, future events of this kind could adversely affect our
business reputation, diminish customer confidence, disrupt operations, subject us to financial liability or increased regulation,
increase our costs and expose us to material legal claims and liability.
There is no guarantee that redundancies built into our networks and technology, or the procedures we have implemented
to protect against cyberattacks and other unauthorized access to secured data, will guarantee protection against all failures of
technology or security breaches. Furthermore, despite our efforts to investigate, improve and remediate the capability and
performance of our information technology system, we may not be able to discover all weaknesses, breaches and
vulnerabilities, and failure to do so may expose us to higher risk of data loss and adversely affect our business operations and
results of operations.
Failure to keep pace with technological change may limit customer growth and have an adverse effect on our operations.
Advances in technology and changes in laws or regulations are reducing the cost of alternative methods of producing
energy. In addition, customers are increasingly expecting enhanced communications regarding their electric and natural gas
services, which, in some cases, may involve additional investments in technology. New technologies may require us to make
significant expenditures to remain competitive and may result in the obsolescence of certain of our operating assets.
Our future success will depend, in part, on our ability to anticipate and successfully adapt to technological changes and to
offer services that meet customer demand. Failure to adapt to advances in technology and manage the related costs could make
us less competitive and negatively impact our financial condition, results of operations and cash flows.
Risk Related to Acquisition and Investment Strategies
Any acquisitions that we may undertake involve risks and uncertainties. We may not realize the anticipated synergies,
cost savings and growth opportunities as a result of these transactions.
The integration of acquisitions require significant time and resources. Investments of resources are required to support
any acquisition, which could result in significant ongoing operating expenses, and we may experience challenges when
combining separate business cultures, information technology systems and employees, and those challenges may divert senior
management’s time and attention. If we fail to successfully integrate assets and liabilities through the entities which we acquire,
we may not fully realize all of the growth opportunities, benefits expected from the transaction, cost savings and other synergies
and, as a result, the fair value of assets acquired could be impaired. We assess long-lived assets, including intangible assets
associated with acquisitions, for impairment whenever events or circumstances indicate that an asset’s carrying amount may not
be recoverable. To the extent the value of long-lived assets become impaired, the impairment charges could have a material
impact on our financial condition and results of operations.
The benefits that we expect to achieve from acquisitions will depend, in part, on our ability to realize anticipated growth
opportunities and other synergies with our existing businesses. The success of these transactions will depend on our ability to
integrate these transactions within our existing businesses in a timely and seamless manner. We may experience challenges
when combining separate business cultures, information technology systems and employees. Even if we are able to complete an
integration successfully, we may not fully realize all the growth opportunities, cost savings and other synergies that we expect.
Investing through partnerships or joint ventures decreases our ability to manage risk.
We have utilized joint ventures through partnerships for certain Storage and Transportation investments, including
Steckman Ridge and PennEast. Although we currently have no specific plans to do so, we may acquire interests in other joint
ventures or partnerships in the future. In these joint ventures or partnerships, we may not have the right or power to direct the
management and policies of the joint ventures or partnerships, and other participants or investors may take action contrary to
our instructions or requests and against our policies and objectives. In addition, the other participants may become bankrupt or
have economic or other business interests or goals that are inconsistent with those of NJR and our subsidiaries and affiliates.
Our financial condition, results of operations or cash flows could be harmed if a joint venture participant acts contrary to our
interests.
Page 20
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
Risk Related to Regulations and Litigation
We are subject to governmental regulation. Compliance with current and future regulatory requirements and
procurement of necessary approvals, permits and certificates may result in substantial costs to us.
We are subject to substantial regulation from federal, state and local authorities. We are required to comply with
numerous laws and regulations and to obtain numerous authorizations, permits, approvals and certificates from governmental
agencies. These agencies regulate various aspects of our business, including customer rates, services, construction and natural
gas pipeline operations.
FERC has regulatory authority over some of our operations, including sales of natural gas in the wholesale and retail
markets and the purchase and sale of interstate pipeline and storage capacity, including Steckman Ridge, Leaf River and
Adelphia Gateway. Any Congressional legislation or agency regulation that would alter these or other similar statutory and
regulatory structures in a way to significantly raise costs that could not be recovered in rates from customers, that would reduce
the availability of supply or capacity or that would reduce our competitiveness could negatively impact our earnings. In
addition, changes in and compliance with laws such as the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011
could increase federal regulatory oversight and administrative costs that may not be recovered in rates from customers, which
could have an adverse effect on our earnings.
We cannot predict the impact of any future revisions or changes in interpretations of existing regulations or the adoption
of new laws and applicable regulations, including the Infrastructure Investment and Jobs Act signed into law on November 15,
2021. We are evaluating the impacts of the Infrastructure Investment and Jobs Act, which seeks to provide significant public
investment in transportation, broadband, and public works projects, may have on our operations, as well as our financial
condition, results from operations and cash flows. Changes in regulations or the imposition of additional regulations could
influence our operating environment and may result in substantial costs to us.
Our costs of compliance with present and future environmental laws are significant and could adversely affect our cash
flows and profitability.
Our operations are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air
quality, water quality, waste management, natural resources and site remediation. Compliance with these laws and regulations
may require us to expend significant financial resources to, among other things, conduct site remediation and perform
environmental monitoring. If we fail to comply with applicable environmental laws and regulations, even if we are unable to do
so due to factors beyond our control, we may be subject to civil liabilities or criminal penalties and may be required to incur
significant expenditures to come into compliance. Additionally, any alleged violations of environmental laws and regulations
may require us to expend significant resources in our defense against alleged violations.
Furthermore, the U.S. Congress has for some time been considering various forms of climate change legislation. In
addition, in July 2019, the State of New Jersey amended the GWRA, which targets 80 percent reduction in greenhouse gas
emissions below 2006 levels economy-wide by 2050. On January 27, 2020, Governor Murphy released the New Jersey Energy
Master Plan (“EMP”) confirming his commitment to achieve 100 percent clean energy by 2050, and the GWRA mandate of
reducing state greenhouse gas emissions. The EMP addressed New Jersey’s energy system, including electric generation,
transportation, and buildings, and their associated greenhouse gas emissions and related air pollutants. The EMP defines 100
percent clean energy by 2050 as 100 percent carbon-neutral electric generation and maximum electrification of the
transportation and building sectors, which are the greatest carbon emission producing sectors in the state, to meet or exceed the
GWRA mandates. To underpin the initiatives in the EMP, Governor Murphy issued Executive Order No. 100, directing the
Department of Environmental Protection to make sweeping regulatory reforms, branded as Protecting Against Climate Threats,
to reduce emissions and adapt to climate change. These regulations have begun to be promulgated, and NJR is taking an active
role in participating in these rulemaking processes.
While the EMP does not place a moratorium or end date on natural gas hook ups, further legislation or rulemaking that
de-emphasizes the role of natural gas in providing clean, low-cost energy in the state of New Jersey which could put upward
pressure on natural gas prices and place customer growth targets at risk. Higher cost levels could impact the competitive
position of natural gas and negatively affect our growth opportunities, cash flows and earnings.
Page 21
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
Risks related to the regulation of NJNG could affect the rates it is able to charge, its costs and its profitability.
NJNG is subject to regulation by federal, state and local authorities. These authorities regulate many aspects of NJNG’s
distribution and transmission operations, including construction and maintenance of facilities, operations, safety, tariff rates that
NJNG can charge customers, rates of return, the authorized cost of capital, recovery of pipeline replacement, environmental
remediation costs and relationships with its affiliates. NJNG’s ability to construct rate-based assets timely and obtain rate
increases, including base rate increases, extend its BGSS incentive and CIP programs and maintain its currently authorized rates
of return may be impacted by events, including regulatory or legislative actions. Additionally, in fiscal 2019, NJR began the
process of transitioning away from its enterprise platform, which will no longer receive extended support after 2025. The first
phase of IT enhancements and upgrades were placed into service in July 2020. The remaining phases of planned upgrades relate
to work order and asset management and customer information systems and experience which are expected to require
significant capital investment through fiscal year 2024. There can be no assurance that NJNG will be able to obtain rate
increases and continue its BGSS incentive, CIP, RAC, SAVEGREEN programs and IT upgrades and enhancements or continue
to earn its currently authorized rates of return.
Our regulated operations are subject to certain operating risks incidental to handling, storing, transporting and
providing customers with natural gas.
Our regulated operations are subject to all operating hazards and risks incidental to handling, storing, transporting and
providing customers with natural gas, including our natural gas vehicle refueling stations and LNG facilities. These risks
include catastrophic failure of the interstate pipeline system, explosions, pollution, release of toxic substances, fires, storms,
safety issues and other adverse weather conditions and hazards, each of which could result in damage to or destruction of
facilities or damage to persons and property. We could suffer substantial losses should any of these events occur. Moreover, as
a result, NJNG has been, and likely will be, a defendant in legal proceedings and litigation arising in the ordinary course of
business. Although NJNG maintains insurance coverage, insurance may not be sufficient to cover all material expenses related
to these risks.
We are involved in legal or administrative proceedings before various courts and governmental bodies that could
adversely affect our results of operations, cash flows and financial condition.
In the ordinary conduct of business, we are involved in legal or administrative proceedings before various courts and
governmental bodies with respect to general claims, rates, permitting, taxes, environmental issues, natural gas cost prudence
reviews and other matters. Adverse decisions regarding these matters, to the extent they require us to make payments in excess
of amounts provided for in our financial statements or are not covered by insurance or indemnity rights, could adversely affect
our results of operations, cash flows and financial condition.
Risk Related to our Markets
We are exposed to market risk and may incur losses in our wholesale business.
Our transportation and storage portfolios consist of contracts to transport and store natural gas. The value of our
transportation and storage portfolio could be negatively impacted if the value of these contracts changes in a direction or
manner that we do not anticipate. In addition, upon expiration of these transportation and storage contracts, to the extent that
they are renewed or replaced at less favorable terms, our results of operations and cash flows could be adversely affected.
Major changes in the supply and price of natural gas may affect financial results.
While NJRES and NJNG expect to meet customers’ demand for natural gas for the foreseeable future, factors affecting
suppliers and other third parties, including the inability to develop additional interstate pipeline infrastructure, lack of supply
sources, increased competition, further deregulation, transportation costs, possible climate change legislation, energy efficiency
mandates or changes in consumer behaviors, transportation availability and drilling for new natural gas resources, may impact
the supply and price of natural gas. In addition, any significant disruption in the availability of supplies of natural gas could
result in increased supply costs, higher prices for customers and potential supply disruptions to customers.
NJRES and NJNG actively hedge against the fluctuation in the price of natural gas by entering into forward and financial
contracts with third parties. Should these third parties fail to perform, and regulators not allow the pass-through of expended
funds to customers, it may result in a loss that could have a material impact on our financial condition, results of operations and
cash flows.
Page 22
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
Changes in customer growth may affect earnings and cash flows.
NJNG’s ability to increase its utility gross margin is dependent upon the new construction housing market, as well as the
conversion of customers to natural gas from other fuel sources. During periods of extended economic downturns, prolonged
weakness in housing markets or slowdowns in the conversion market, there could be an adverse impact on NJNG’s utility gross
margin, earnings and cash flows. Furthermore, while our estimates regarding customer growth are based in part upon
information from third parties, the estimates have not been verified by an independent source and are subject to the
aforementioned risks and uncertainties, which could cause actual results to materially deviate from the estimates.
Adverse economic conditions, including inflation, increased natural gas costs, foreclosures, impacts to our customer base
and customer collections, and business failures, could adversely impact NJNG and increase our level of indebtedness.
Inflation may cause increases in certain operating and capital costs. We continually review the adequacy of NJNG’s base
tariff rates in relation to the increasing cost of providing service and the inherent regulatory lag in adjusting those rates. The
ability to control operating expenses is an important factor that will influence future results.
Rapid increases in the price of purchased natural gas may cause NJNG to experience a significant increase in short-term
debt because it must pay suppliers for natural gas when it is purchased, which can be significantly in advance of when these
costs may be recovered through the collection of monthly bills for natural gas delivered to customers. Increases in purchased
natural gas costs also slow collection efforts as customers are more likely to delay the payment of their natural gas bills, leading
to higher-than-normal accounts receivable.
Our economic hedging activities that are designed to protect against commodity and financial market risks, including the
use of derivative contracts in the normal course of our business, may cause fluctuations in reported financial results and
financial losses that negatively impact results of operations and our stock price.
We use derivatives, including futures, forwards, options, swaps and foreign exchange contracts, to manage commodity,
financial market and foreign currency risks. The timing of the recognition of gains or losses associated with our economic
hedges in accordance with GAAP does not always coincide with the gains or losses on the items being hedged. The difference
in accounting can result in volatility in reported results, even though the expected profit margin is essentially unchanged from
the dates the transactions were consummated.
In addition, we could recognize financial losses on these contracts as a result of volatility in the market values of the
underlying commodities or if a counterparty fails to perform under a contract. In the absence of actively quoted market prices
and pricing information from external sources, the valuation of these financial instruments can involve management’s judgment
or use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could adversely
affect the value of the reported fair value of these contracts.
Risk Related to Credit and Liquidity
NJR is a holding company and depends on its operating subsidiaries to meet its financial obligations.
NJR is a holding company with no significant assets other than possible cash investments and the stock of its operating
subsidiaries. We rely exclusively on dividends from our subsidiaries, on intercompany loans from our unregulated subsidiaries,
and on the repayments of principal and interest from intercompany loans and reimbursement of expenses from our subsidiaries
for our cash flows. Our ability to pay dividends on our common stock and to pay principal and interest on our outstanding debt
depends on the payment of dividends to us by our subsidiaries or the repayment of loans to us by our subsidiaries. The extent to
which our subsidiaries are unable to pay dividends or repay funds to us may adversely affect our ability to pay dividends to
holders of our common stock and principal and interest to holders of our debt.
Credit rating downgrades could increase financing costs, limit access to the financial markets and negatively affect NJR
and its subsidiaries.
Rating agencies Moody’s and Fitch currently rate NJNG’s debt as investment grade. If such ratings are downgraded
below investment grade, borrowing costs could increase, as will the costs of maintaining certain contractual relationships and
obtaining future financing. Even if ratings are downgraded without falling below investment grade, NJR and NJNG could face
increased borrowing costs under their current and future credit facilities. Our ability to borrow and costs of borrowing have a
direct impact on our subsidiaries’ ability to execute their operating strategies, particularly in the case of NJNG, which relies
heavily upon capital expenditures financed by its credit facility.
Page 23
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
If we suffer a reduction in our credit and borrowing capacity or in our ability to issue parental guarantees, the business
prospects of Energy Services, Clean Energy Ventures and Storage and Transportation, which rely on our creditworthiness,
would be adversely affected. Energy Services could possibly be required to comply with various margin or other credit
enhancement obligations under its trading and marketing contracts, and it may be unable to continue to trade or be able to do so
only on less favorable terms with certain counterparties. Clean Energy Ventures could be required to seek alternative financing
for its projects, and may be unable to obtain such financing or able to do so only on less favorable terms. In addition, we may
not be able to finance our capital obligations to PennEast or for the conversion of the southern end of Adelphia Gateway.
Additionally, lower credit ratings could adversely affect relationships with NJNG’s state regulators, who may be
unwilling to allow NJNG to pass along increased costs to its natural gas customers.
If we are unable to access the financial markets or there are adverse conditions in the equity or credit markets, it could
affect management’s ability to execute our business plans.
We rely on access to both short-term and long-term credit markets as significant sources of liquidity for capital
requirements not satisfied by our cash flow from operations. Any deterioration in our financial condition could hamper our
ability to access the equity or credit markets or otherwise obtain debt financing on terms favorable to us or at all. In addition,
because certain state regulatory approvals may be necessary for NJNG to incur debt, NJNG may be unable to access credit
markets on a timely basis. External events could also increase the cost of borrowing or adversely affect our ability to access the
financial markets. Such external events could include the following:
economic weakness and/or political instability in the U.S. or in the regions where we operate;
political conditions, such as a shutdown of the U.S. federal government;
financial difficulties of unrelated energy companies;
capital market conditions generally;
volatility in the equity markets;
•
•
•
•
•
• market prices for natural gas;
•
•
the overall health of the natural gas utility industry; and
fluctuations in interest rates, particularly with respect to NJNG’s variable rate debt instruments.
Our ability to secure short-term financing is subject to conditions in the credit markets. A prolonged constriction of credit
availability could affect management’s ability to execute our business plan. An inability to access capital may limit our ability
to pursue improvements or acquisitions that we may otherwise rely on for both current operations and future growth.
Energy Services and NJNG execute derivative transactions with financial institutions as a part of their economic hedging
strategy and could incur losses associated with the inability of a financial counterparty to meet or perform under its obligations
as a result of adverse conditions in the credit markets or their ability to access capital or post collateral.
Failure by NJR and/or NJNG to comply with debt covenants may impact our financial condition.
Our long-term debt obligations contain financial covenants related to debt-to-capital ratios. These debt obligations also
contain provisions that put limitations on our ability to finance future operations or capital needs or to expand or pursue certain
business activities. For example, certain of these agreements contain provisions that, among other things, put limitations on our
ability to make loans or investments, make material changes to the nature of our businesses, merge, consolidate or engage in
asset sales, grant liens or make negative pledges. Furthermore, the debt obligations and our sale leaseback agreements contain
covenants and other provisions requiring us to provide timely delivery of accurate financial statements prepared in accordance
with GAAP. The failure to comply with any of these covenants could result in an event of default, which, if not cured or
waived, could result in the acceleration of outstanding debt obligations and/or the inability to borrow under existing revolving
credit facilities and term loans. We have relied, and continue to rely, upon short-term bank borrowings or commercial paper
supported by our revolving credit facilities to finance the execution of a portion of our operating strategies. NJNG is dependent
on these capital sources to purchase its natural gas supply and maintain its properties. The acceleration of our outstanding debt
obligations and our inability to borrow under the existing revolving credit facilities would cause a material adverse change in
NJR’s and NJNG’s financial condition.
Page 24
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
Risks Related to Tax and Accounting Matters
The cost of providing pension and postemployment health care benefits to employees and eligible former employees is
subject to changes in pension fund values, interest rates and changing demographics and may have a material adverse effect on
our financial results.
We have two defined benefit pension plans and two OPEB plans for the benefit of eligible full-time employees and
qualified retirees, which were closed to all employees hired on or after January 1, 2012. The cost of providing these benefits to
eligible current and former employees is subject to changes in the market value of the pension and OPEB fund assets, changing
discount rates and changing actuarial assumptions based upon demographics, including longer life expectancy of beneficiaries,
an expected increase in the number of eligible former employees over the next five years, impacts from healthcare legislation
and increases in health care costs.
Significant declines in equity markets and/or reductions in bond yields can have a material adverse effect on the funded
status of our pension and OPEB plans. In these circumstances, we may be required to recognize increased pension and OPEB
expenses and/or be required to make additional cash contributions into the plans.
The funded status of these plans, and the related cost reflected in our financial statements, are affected by various factors
that are subject to an inherent degree of uncertainty. Under the Pension Protection Act of 2006, losses of asset values may
necessitate increased funding of the plans in the future to meet minimum federal government requirements. A significant
decrease in the asset values of these plans can result in funding obligations earlier than we had originally planned, which would
have a negative impact on cash flows from operations, decrease our borrowing capacity and increase our interest expense.
Changes in tax laws or regulations may negatively affect our results of operations, net income, financial condition and
cash flows.
We are subject to taxation by various taxing authorities at the federal, state and local levels. The Biden Administration
has also proposed a significant number of changes to U.S. tax laws, including an increase in the maximum tax rate applicable to
U.S. corporations. In addition, we cannot predict how our federal and state regulators will apply such tax changes in our future
rates. Any future change in tax laws or interpretation of such laws could adversely affect our results of operations, net income,
financial condition and cash flows.
A valuation allowance may be required for our deferred tax assets.
During fiscal 2018, as a result of the Tax Act’s decrease to the federal statutory corporate tax rate, and during fiscal 2020,
as a result of Corporate Business Tax reform in the state of New Jersey, we revalued our deferred tax assets and liabilities at the
enactment date to reflect the rates expected to be in effect when the deferred tax assets and liabilities are realized or settled.
These adjustments are based on assumptions we made with respect to our book versus tax differences and the timing of when
those differences will reverse. Our deferred tax assets are comprised primarily of investment tax credits and state net operating
losses. Any further revaluation of our deferred tax assets that may be required in the future could have a material adverse
impact on our financial condition and results of operations.
Significant regulatory assets recorded by NJNG could be disallowed for recovery from customers in the future.
NJNG records regulatory assets on its financial statements to reflect the ratemaking and regulatory decision-making
authority of the BPU as allowed by GAAP. The creation of a regulatory asset allows for the deferral of costs, which, absent a
mechanism to recover such costs from customers in rates approved by the BPU, would be charged to expense on its income
statement in the period incurred. Primary regulatory assets that are subject to BPU approval include the recovery of BGSS and
USF costs, remediation costs associated with NJNG’s MGP sites, CIP, NJCEP, economic stimulus plans, certain deferred
income taxes and pension and other postemployment benefit plans. If there were to be a change in regulatory positions
surrounding the collection of these deferred costs, there could be a material impact on NJNG’s existing tariff or a future base
rate case, as well as our financial condition, results of operations and cash flows.
Page 25
New Jersey Resources Corporation
Part I
ITEM 1A. RISK FACTORS (Continued)
Risks Related to Takeovers
Our restated certificate of incorporation, as amended, and amended and restated bylaws may delay or prevent a
transaction that shareowners would view as favorable.
Our restated certificate of incorporation, as amended and amended and restated bylaws, as well as New Jersey law,
contain provisions that could delay, defer or prevent an unsolicited change in control of NJR, which may negatively affect the
market price of our common stock or the ability of stockholders to participate in a transaction in which they might otherwise
receive a premium for their shares over the then-current market price. These provisions may also prevent changes in
management. In addition, our Board is authorized to issue preferred stock without stockholder approval on such terms as our
Board may determine. Our common shareowners will be subject to, and may be negatively affected by, the rights of any
preferred stock that may be issued in the future. In addition, we are subject to the New Jersey Shareholders’ Protection Act,
which could delay or prevent a change of control of NJR.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. PROPERTIES
Natural Gas Distribution Segment
As of September 30, 2021, NJNG owns approximately 7,437 miles of distribution main, 7,716 miles of service main, 251
miles of transmission main and 576,807 meters. Mains are primarily located under public roads. Where mains are located under
private property, NJNG has obtained easements from the owners of record.
Additionally, NJNG owns and operates two LNG storage plants in Stafford Township, Ocean County and Howell
Township, Monmouth County. The two LNG plants have an aggregate estimated maximum capacity of approximately 170,000
Dths per day and 1 Bcf of total capacity. These facilities are used for peaking natural gas supply and for emergencies. NJNG’s
Liquefaction facility is also located on the Howell Township property and allows NJNG to convert natural gas into LNG to fill
NJNG’s existing LNG storage tanks. A Power-to-Gas System is also located at the LNG plant in Howell Township and uses
solar power to produce hydrogen and inject it into the natural gas system. It consists primarily of an electrolyzer unit, electrical
and instrumentation building, and small hydrogen storage tank, along with other supporting systems.
NJNG owns five service centers located in Rockaway Township, Morris County; Atlantic Highlands and Wall Township,
Monmouth County; and Lakewood and Stafford Township, Ocean County. These service centers house storerooms, garages,
natural gas distribution and administrative offices. NJNG leases its headquarters and customer service facilities in Wall
Township, Monmouth County; and a customer service office in Asbury Park, Monmouth County. These customer service
offices support customer contact, marketing, economic development and other functions. NJNG also owns a training facility in
Howell Township, Monmouth County, to support the technical training of its employees.
Substantially all of NJNG’s properties, not expressly excepted or duly released, are subject to the lien of the Mortgage
Indenture as security for NJNG’s mortgage bonds, which totaled $1.1 billion as of September 30, 2021. In addition, under the
terms of the Mortgage Indenture, NJNG could have issued up to $1.2 billion of additional first mortgage bonds as of
September 30, 2021.
Clean Energy Ventures Segment
As of September 30, 2021, Clean Energy Ventures has various solar contracts, including lease agreements and easements,
allowing the installation, operation and maintenance of solar equipment and access to the various properties, including
commercial and residential rooftops throughout the State of New Jersey. In addition to the lease agreements and easements,
Clean Energy Ventures owns solar projects with a total of 367.8 MW of capacity in New Jersey and Connecticut, 79.5 acres of
land in Vineland, Cumberland County and 101.75 acres of land in Fairfield Township, Cumberland County.
Clean Energy Ventures leases office space in Wall Township, Monmouth County.
Page 26
New Jersey Resources Corporation
Part I
ITEM 2. PROPERTIES (Continued)
Energy Services Segment
As of September 30, 2021, Energy Services leases office space in Wall Township, New Jersey; Charlotte, North Carolina;
and Allentown, Pennsylvania.
Storage and Transportation Segment
As of September 30, 2021, Adelphia Gateway owns approximately 11.1 acres of land in Delaware County, Pennsylvania,
21.5 acres in Bucks County, Pennsylvania, 121.1 acres in Northampton County, Pennsylvania and 44.9 acres in Montgomery
County, Pennsylvania and leases office space in Wall Township, New Jersey. Leaf River owns 43.94 acres of land and a 5,000
square foot building in Smith County, Mississippi, 65.4 acres in Jasper County, Mississippi and 3.53 acres in Clarke County,
Mississippi and leases office space in Houston, Texas.
All Other Business Operations
As of September 30, 2021, CR&R’s real estate portfolio consisted of 23 acres of undeveloped land in Atlantic County,
New Jersey. NJRHS leases service centers in Dover, New Jersey and Wall Township, New Jersey. NJR Service Corporation
leases office space in Red Bank, New Jersey.
ITEM 3. LEGAL PROCEEDINGS
Manufactured Gas Plant Remediation
NJNG is responsible for the remedial cleanup of certain former MGP sites, dating back to gas operations in the late 1800s
and early 1900s, which contain contaminated residues from former gas manufacturing operations. NJNG is currently involved
in administrative proceedings with the NJDEP and participating in various studies and investigations by outside consultants, to
determine the nature and extent of any such contaminated residues and to develop appropriate programs of remedial action,
where warranted, under NJDEP regulations.
NJNG periodically, and at least annually, performs an environmental review of former MGP sites located in Atlantic
Highlands, Berkeley, Long Branch, Manchester, Toms River, Freehold and Aberdeen, New Jersey, including a review of
potential liability for investigation and remedial action. NJNG estimated at the time of the most recent review that total future
expenditures at the former MGP sites for which it is responsible, including potential liabilities for natural resource damages that
might be brought by the NJDEP for alleged injury to groundwater or other natural resources concerning these sites will range
from approximately $115.4 million to $178.4 million. NJNG’s estimate of these liabilities is based upon known facts, existing
technology and enacted laws and regulations in place when the review was completed. Where it is probable that costs will be
incurred, and the information is sufficient to establish a range of possible liability, NJNG accrues the most likely amount in the
range. If no point within the range is more likely than the other, it is NJNG’s policy to accrue the lower end of the range.
Accordingly, as of September 30, 2021, NJNG recorded a MGP remediation liability and a corresponding regulatory asset of
approximately $135.0 million on the Consolidated Balance Sheets based on the most likely amount.
On September 30, 2021, NJNG filed its annual SBC application requesting to recover remediation expenses, including an
increase in the RAC, of approximately $2.0 million annually, effective April 1, 2022. The actual costs to be incurred by NJNG
are dependent upon several factors, including final determination of remedial action, changing technologies and governmental
regulations, the ultimate ability of other responsible parties to pay and insurance recoveries, if any.
In June 2019, NJNG initiated a preliminary assessment of a site in Aberdeen, New Jersey to determine prior ownership
and if former MGP operations were active at the location. The preliminary assessment and site investigation activities are
ongoing at the Aberdeen, NJ site location. The estimated costs to complete the preliminary assessment and site investigation
phase are included in the MGP remediation liability and corresponding regulatory asset on the Consolidated Balance Sheet at
September 30, 2021. NJNG will continue to gather information to determine whether the obligation exists to undertake
remedial action, if any, and refine its estimate of potential costs for this site as more information becomes available.
NJNG recovers its remediation expenditures, including carrying costs, over rolling seven-year periods pursuant to a RAC
approved by the BPU. On September 9, 2020, the BPU approved NJNG's increase in the RAC, which increased the annual
recovery from $8.5 million to $9.7 million, effective October 1, 2020. On April 7, 2021, the BPU approved an increase in the
RAC, which increased the annual recovery from $9.7 million to $11.1 million and was effective May 1, 2021. As of
Page 27
New Jersey Resources Corporation
Part I
ITEM 3. LEGAL PROCEEDINGS (Continued)
September 30, 2021, $58.5 million of previously incurred remediation costs, net of recoveries from customers and insurance
proceeds, are included in regulatory assets on the Consolidated Balance Sheets. NJNG will continue to seek recovery of MGP-
related costs through the RAC. If any future regulatory position indicates that the recovery of such costs is not probable, the
related non-recoverable costs would be charged to income in the period of such determination.
General
The foregoing statements about NJR’s litigation are based upon the Company’s judgments, assumptions and estimates and
are necessarily subjective and uncertain. The Company is involved, and from time to time in the future may be involved, in a
number of pending and threatened judicial, regulatory and arbitration proceedings at various stages relating to matters that arise
in the ordinary course of business. In view of the inherent difficulty of predicting the outcome of litigation matters, particularly
when such matters are in their early stages or where the claimants seek indeterminate damages, the Company cannot state with
confidence what the eventual outcome of the pending litigation will be, what the timing of the ultimate resolution of these
matters will be, or what the eventual loss, fines or penalties related to each pending matter will be, if any. In accordance with
applicable accounting guidance, NJR establishes accruals for litigation for those matters that present loss contingencies as to
which it is both probable that a loss will be incurred, and the amount of such loss can be reasonably estimated. NJR also
discloses contingent matters for which there is a reasonable possibility of a loss. Based upon currently available information,
NJR believes that the results of litigation that are currently pending, taken together, will not have a materially adverse effect on
the Company’s financial condition, results of operations or cash flows. The actual results of resolving the pending litigation
matters may be substantially higher than the amounts accrued.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
Page 28
New Jersey Resources Corporation
Part II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
NJR’s Common Stock is traded on the New York Stock Exchange under the ticker symbol NJR. As of Nov 12 2021, NJR
had 67,950 holders of record of its common stock. Dividends are subject to declaration by the Board of Directors. In September
2021, the Board of Directors declared dividends payable October 1, 2021 of $.3625 per share of common stock to shareowners
of record on September 20, 2021. We review our dividend policy on a regular basis. Although subject to any contractual or
regulatory restrictions or other limitations on the payment of dividends, future dividends will be at the discretion of the Board
of Directors and will depend upon, among other factors, earnings, financial condition, and other requirements.
Performance Graph
The performance graph and table below illustrates a five-year comparison of cumulative total returns based on an initial
investment of $100 in our common stock, as compared with the S&P 500 Stock Index, the S&P 500 Utilities Industry Index
and the customized peer company group listed below, referred to herein as the Peer Group. The Peer Group companies were
selected based on similarities to the Company’s business model, size and other growth and business factors.
Cumulative Total Return
NJR
S&P 500 Utilities
S&P 500
Peer Group
2016
$100.00
$100.00
$100.00
$100.00
2017
$131.71
$112.03
$118.61
$114.99
2018
$147.88
$115.31
$139.85
$120.30
2019
$148.65
$146.56
$145.80
$139.29
2020
$92.50
$139.28
$167.89
$105.90
2021
$123.43
$154.61
$218.26
$115.85
The 10 companies in the Peer Group are: Atmos Energy Corporation; Avista Corporation; Black Hills Corporation;
National Fuel Gas Company; NiSource Inc.; Northwest Natural Gas Company; ONE Gas, Inc.; South Jersey Industries, Inc.;
Southwest Gas Corporation; and Spire lnc.
This performance graph and accompanying information shall not be deemed “filed” for purposes of Section 18 of the
Exchange Act, or incorporated by reference into any of the Company’s filings under the Securities Act, or the Exchange Act,
except as shall be expressly set forth by specific reference in such filing.
In 1996, the Board of Directors authorized the Company to implement a share repurchase program, which has been
expanded seven times since the inception of the program, authorizing a total of 19.5 million shares of common stock for
repurchase. The share repurchase plan allows us to purchase our outstanding shares on the open market or in negotiated
transactions, based on market and other conditions. We are not required to purchase any specific number of shares and may
discontinue or suspend the program at any time. The share repurchase plan will expire when we have repurchased all shares
authorized for repurchase thereunder, unless it is terminated earlier by action of our Board of Directors or additional shares are
authorized for repurchase. The following table sets forth NJR’s repurchase activity for the quarter ended September 30, 2021:
Period
07/01/21 - 07/31/21
08/01/21 - 08/31/21
09/01/21 - 09/30/21
Total
Total Number
of Shares
(or Units)
Purchased
—
296,000
450,000
746,000
Average
Price Paid
per Share
(or Unit)
$
$
$
$
—
37.41
35.86
36.34
Total Number of Shares (or
Units) Purchased as Part of
Publicly Announced Plans
or Programs
—
296,000
450,000
746,000
Maximum Number (or Approximate
Dollar Value) of Shares (or Units) That
May Yet Be Purchased Under the
Plans or Programs
2,431,053
2,135,053
1,685,053
1,685,053
Page 29
Comparison of 5 year Cumulative ReturnNJRS&P 500 UtilitiesS&P 500Peer Group201620172018201920202021$0.00$100.00$200.00$300.00 New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Critical Accounting Estimates
We prepare our financial statements in accordance with GAAP. Application of these accounting principles requires the
use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related
disclosures of contingencies during the reporting period. We regularly evaluate our estimates, including those related to the
calculation of the fair value of derivative instruments, acquisitions, regulatory assets, income taxes, pension and
postemployment benefits other than pensions and contingencies related to environmental matters and litigation. We base our
estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily
apparent from other sources. In the normal course of business, estimated amounts are subsequently adjusted to actual results
that may differ from estimates.
Regulatory Accounting
NJNG maintains its accounts in accordance with the FERC Uniform System of Accounts as prescribed by the BPU and
recognizes the impact of regulatory decisions on its financial statements. As a result of the ratemaking process, NJNG is
required to apply the accounting principles in ASC 980, Regulated Operations, which differ in certain respects from those
applied by unregulated businesses. Specifically, NJNG records regulatory assets when it is probable that certain operating costs
will be recoverable from customers in future periods and records regulatory liabilities associated with probable future
obligations to customers.
Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing
and amount of assets to be recovered by rates. The BPU’s regulation of rates is premised on the full recovery of prudently
incurred costs and a reasonable rate of return on invested capital. Decisions to be made by the BPU in the future will impact the
accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital
included in rates and any refunds that may be required. If the BPU indicates that recovery of all or a portion of a regulatory
asset is not probable or does not allow for recovery of and a reasonable return on investments in property plant and equipment,
a charge to income would be made in the period of such determination.
Environmental Costs
At the end of each fiscal year, NJNG, with the assistance of an independent consulting firm, updates the environmental
review of its MGP sites, including its potential liability for investigation and remedial action. From this review, NJNG
estimates expenditures necessary to remediate and monitor these MGP sites. NJNG’s estimate of these liabilities is developed
from then-currently available facts, existing technology and current laws and regulations.
In accordance with accounting standards for contingencies, NJNG’s policy is to record a liability when it is probable that
the cost will be incurred and can be reasonably estimated. NJNG will determine a range of liabilities and will record the most
likely amount. If no point within the range is more likely than any other, NJNG will accrue the lower end of the range. Since we
believe that recovery of these expenditures, as well as related litigation costs, is possible through the regulatory process, we
record a regulatory asset corresponding to the related accrued liability. Accordingly, NJNG records an MGP remediation
liability and a corresponding regulatory asset on the Consolidated Balance Sheets, which is based on the most likely amount.
The actual costs to be incurred by NJNG are dependent upon several factors, including final determination of remedial
action, changing technologies and governmental regulations and the ultimate ability of other responsible parties to pay, as well
as the potential impact of any litigation and any insurance recoveries. Previously incurred remediation costs, net of recoveries
from customers and insurance proceeds received are included in regulatory assets on the Consolidated Balance Sheets.
If there are changes in the regulatory position surrounding these costs, or should actual expenditures vary significantly
from estimates in that these costs are disallowed for recovery by the BPU, such costs would be charged to income in the period
of such determination. See the Legal Proceedings section in Note 15. Commitments and Contingent Liabilities for more details.
Page 30
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Postemployment Employee Benefits
Our costs of providing postemployment employee benefits are dependent upon numerous factors, including actual plan
experience and assumptions of future experience. Postemployment employee benefit costs are affected by actual employee
demographics including age, compensation levels and employment periods, the level of contributions made to the plans,
changes in long-term interest rates and the return on plan assets. Changes made to the provisions of the plans or healthcare
legislation may also impact current and future postemployment employee benefit costs. Postemployment employee benefit costs
may also be significantly affected by changes in key actuarial assumptions, including anticipated rates of return on plan assets,
changes in mortality tables, health care cost trends and discount rates used in determining the PBO. In determining the PBO and
cost amounts, assumptions can change from period to period and could result in material changes to net postemployment
employee benefit periodic costs and the related liability recognized by us.
The remeasurement of plan assets and obligations for a significant event should occur as of the date of the significant
event. We may use a practical expedient to remeasure the plan assets and obligations as of the nearest calendar month-end date.
When performing interim remeasurements, we obtain new asset values, roll forward the obligation to reflect population changes
and review the appropriateness of all assumptions, regardless of the reason for performing the interim remeasurement.
Our postemployment employee benefit plan assets consist primarily of U.S. equity securities, international equity
securities, fixed-income investments and other assets, with a targeted allocation of 34 percent, 17 percent, 38 percent and 11
percent, respectively. Fluctuations in actual market returns, as well as changes in interest rates, may result in increased or
decreased postemployment employee benefit costs in future periods. Postemployment employee benefit expenses are included
in O&M and other income, net on the Consolidated Statements of Operations.
The following is a summary of a sensitivity analysis for each actuarial assumption as of and for the fiscal year ended
September 30, 2021:
Pension Plans
Actuarial Assumptions
Discount rate
Discount rate
Rate of return on plan assets
Rate of return on plan assets
Other Postemployment Benefits
Actuarial Assumptions
Discount rate
Discount rate
Rate of return on plan assets
Rate of return on plan assets
Actuarial Assumptions
Health care cost trend rate
Health care cost trend rate
Acquisitions
Increase/
(Decrease)
1.00 %
(1.00) %
1.00 %
(1.00) %
Increase/
(Decrease)
1.00 %
(1.00) %
1.00 %
(1.00) %
Increase/
(Decrease)
1.00 %
(1.00) %
Estimated
Increase/(Decrease) on PBO
(Thousands)
$ (47,822)
$ 59,241
n/a
n/a
Estimated
Increase/(Decrease) to Expense
(Thousands)
(4,708)
5,669
(2,986)
2,986
$
$
$
$
Estimated
Increase/(Decrease) on PBO
(Thousands)
$ (34,782)
$ 44,191
n/a
n/a
Estimated
Increase/(Decrease) to Expense
(Thousands)
(3,622)
4,500
(962)
962
$
$
$
$
Estimated
Increase/(Decrease) on PBO
(Thousands)
$ 43,217
$ (34,669)
Estimated
Increase/(Decrease) to Expense
(Thousands)
7,745
(6,041)
$
$
The Company follows the guidance in ASC 805, Business Combinations, for determining the appropriate accounting
treatment for acquisitions. ASU No. 2017-01, Clarifying the Definition of a Business, provides an initial fair value screen to
determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets. If
the initial screening test is not met, the set is considered a business based on whether there are inputs and substantive processes
in place. Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an
asset acquisition, the accounting treatment is derived.
Page 31
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
If the acquisition is deemed to be a business, the acquisition method of accounting is applied. Identifiable assets acquired
and liabilities assumed at the acquisition date are recorded at fair value. If the transaction is deemed to be an asset purchase, the
cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and
allocated to the individual assets and liabilities based on relative fair values.
The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on
various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables
in these valuations are discount rates and the number of years on which to base the cash flow projections, as well as other
assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates based on
the risk inherent in the acquired assets and related cash flows. The valuation of an acquired business is based on available
information at the acquisition date and assumptions that are believed to be reasonable. However, a change in facts and
circumstances as of the acquisition date can result in subsequent adjustments during the measurement period, but no later than
one year from the acquisition date.
Investments in Equity Investees
The Company accounts for its investments in Steckman Ridge and PennEast, using the equity method of accounting
where it is not the primary beneficiary, as defined under ASC 810, Consolidation, in that its respective ownership interests are
50 percent or less and/or it has significant influence over operating and management decisions. The Company’s share of
earnings is recognized as equity in earnings of affiliates on the Consolidated Statements of Operations.
Equity method investments are reviewed for impairment when changes in facts and circumstances indicate that the
current fair value may be less than the asset’s carrying amount. Factors that the Company analyzes in determining whether an
impairment in its equity investments exists include reviewing the financial condition and near-term prospects of the investees,
including economic conditions and trends in the general market, significant delays in or failure to complete significant projects,
unfavorable regulatory or legal actions expected to substantially impact future earnings potential and lower than expected cash
distributions from investees. If the Company determines the decline in the value of its equity method investment is other than
temporary, an impairment charge is recorded in an amount equal to the excess of the carrying value of the asset over its fair
value.
The fair value of the Company’s investment in Steckman Ridge was determined using a discounted cash flow method and
utilized management’s best estimates and assumptions related to expected future results, including the price and capacity of
firm natural gas storage contracting, operations and maintenance costs, the nature and timing of major maintenance and capital
investment, and discount rates. Fair value determinations require considerable judgment and are sensitive to changes in
underlying assumptions and other factors. As a result, it is reasonably possible that unfavorable developments, such as the
failure to execute storage contracts and other services for available capacity at anticipated price levels could result in an other-
than temporary impairment charge in the Consolidated Financial Statements.
On January 19, 2018, PennEast first received a Certificate of Public Convenience and Necessity for the project from
FERC. There were considerable delays throughout the duration of the project. Despite a favorable outcome from the latest
Supreme Court ruling on June 29, 2021, PennEast continued to experience regulatory and legal challenges preventing the
commencement of construction and commercial operation of the project. As a result, we evaluated our equity investment in
PennEast for impairment as of June 30, 2021, and determined that it was other-than-temporarily impaired. We estimated the fair
value of our investment in PennEast using probability weighted scenarios assigned to discounted future cash flows. The
impairment is the result of management's estimates and assumptions regarding the likelihood of certain outcomes related to
required regulatory approvals and pending legal matters (the timing of which remains uncertain), the timing and magnitude of
construction costs and in-service dates, the evaluation of the current environmental and political climate as it relates to interstate
pipeline development, and transportation capacity revenues and discount rates.
As of September 30, 2021, we recognized an other-than-temporary impairment which is recorded in equity in (losses)
earnings from affiliates in the Consolidated Statements of Operations. On September 27, 2021, it was determined that this
project is no longer supported and all further development has ceased. It is possible that future developments could impact the
fair value and could result in the recognition of additional impairment charges.
For further information on these investments, see Note 7. Investments in Equity Investees.
Page 32
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Impairment of Long-lived Assets
Property, plant and equipment and finite-lived intangible assets are reviewed periodically for impairment when changes
in facts and circumstances indicate that the carrying amount of an asset may not be fully recoverable in accordance with the
appropriate accounting guidance. Factors that the Company analyzes in determining whether an impairment in its long-lived
assets exists include determining if a significant decrease in the market price of a long-lived asset is present; a significant
adverse change in the extent in which a long-lived asset is being used in its physical condition; legal proceedings or factors;
significant business climate changes, accumulations of costs in significant excess of the amounts expected; a current-period
operating or cash flow loss coupled with historical negative cash flows or expected future negative cash flows; and current
expectations that more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its
estimated useful life. When an impairment indicator is present, the Company determines if the carrying value of the asset is
recoverable by comparing it to its expected undiscounted future cash flows. If the carrying value of the asset is greater than the
expected undiscounted future cash flows, an impairment charge is recorded in an amount equal to the excess of the carrying
value of the asset over its fair value.
Derivative Instruments
We record our derivative instruments held as assets and liabilities at fair value on the Consolidated Balance Sheets. In
addition, since we choose not to designate any of our physical and financial natural gas commodity derivatives as accounting
hedges, changes in the fair value of Energy Services’ commodity derivatives are recognized in earnings, as they occur, as a
component of operating revenues or natural gas purchases on the Consolidated Statements of Operations. Changes in the fair
value of foreign exchange contracts are recognized in natural gas purchases on the Consolidated Statements of Operations.
The fair value of derivative instruments is determined by reference to quoted market prices of listed exchange-traded
contracts, published price quotations, pipeline tariff information or a combination of those items. Energy Services’ portfolio is
valued using the most current and reasonable market information. If the price underlying a physical commodity transaction does
not represent a visible and liquid market, Energy Services may utilize additional published pipeline tariff information and/or
other services to determine an equivalent market price. As of September 30, 2021, the fair value of its derivative assets and
liabilities reported on the Consolidated Balance Sheets that is based on such pricing is considered immaterial.
Should there be a significant change in the underlying market prices or pricing assumptions, Energy Services may
experience a significant impact on its financial position, results of operations and cash flows. Refer to Item 7A. Quantitative and
Qualitative Disclosures About Market Risks for a sensitivity analysis related to the impact to derivative fair values resulting
from changes in commodity prices. The valuation methods we use to determine fair values remained consistent for fiscal 2021,
2020 and 2019. We apply a discount to our derivative assets to factor in an adjustment associated with the credit risk of its
physical natural gas counterparties and to our derivative liabilities to factor in an adjustment associated with its own credit risk.
We determine this amount by using historical default probabilities corresponding to the appropriate S&P issuer ratings. Since
the majority of our counterparties are rated investment grade, this results in an immaterial credit risk adjustment.
Gains and losses associated with derivatives utilized by NJNG to manage the price risk inherent in its natural gas
purchasing activities are recoverable through its BGSS, subject to BPU approval. Accordingly, the offset to the change in fair
value of these derivatives is recorded as either a regulatory asset or liability on the Consolidated Balance Sheets.
Clean Energy Ventures hedges certain of its expected production of SRECs through forward and futures contracts. Clean
Energy Ventures intends to physically deliver all SRECs it sells and recognizes SREC revenue as operating revenue on the
Consolidated Statements of Operations upon delivery of the underlying SREC.
We have not designated any derivatives as fair value or cash flow hedges as of September 30, 2021 and 2020.
Income Taxes
The determination of our provision for income taxes requires the use of estimates and the interpretation and application of
tax laws. Judgment is required in assessing the deductibility and recoverability of certain tax benefits. We use the asset and
liability method to determine and record deferred tax assets and liabilities, representing future tax benefits and taxes payable,
which result from the differences in basis recorded in GAAP financial statements and amounts recorded in the income tax
returns. The deferred tax assets and liabilities are recorded utilizing the statutorily enacted tax rates expected to be in effect at
Page 33
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
the time the assets are realized, and/or the liabilities settled. An offsetting valuation allowance is recorded when it is more likely
than not that some or all of the deferred income tax assets won’t be realized. Any significant changes to the estimates and
judgments with respect to the interpretations, timing or deductibility could result in a material change to earnings and cash
flows. For a more detailed description of Income Taxes see Note 13. Income Taxes in the accompanying Consolidated Financial
Statements.
For state income tax and other taxes, estimates and judgments are required with respect to the apportionment among the
various jurisdictions. In addition, we operate within multiple tax jurisdictions and are subject to audits in these jurisdictions.
These audits can involve complex issues, which may require an extended period of time to resolve. We maintain a liability for
the estimate of potential income tax exposure and, in our opinion, adequate provisions for income taxes have been made for all
years reported. Any significant changes to the estimates and judgments with respect to the apportionment factor could result in
a material change to earnings and cash flows.
Occasionally, the federal and state taxing authorities determine that it is necessary to make certain changes to the income
tax laws. These changes may include but are not limited to changes in the tax rates and/or the treatment of certain items of
income or expense. Accounting guidance requires that the Company reflect the effect of tax laws or tax rates at the date of
enactment. Additionally, the Company is required to re-measure its deferred tax assets and liabilities as of the date of
enactment. For non-regulated entities, the effect of changes in tax rates and/or tax laws are required to be included in income
from continuing operations for the period that includes the enactment date. For regulated entities, if as the result of an action by
a regulator it is probable that the future increase or decrease in taxes payable for items such as changes in tax law or rates will
be recovered from or returned to customers through future rates, an asset or liability shall be recognized for that probable
increase or decrease in future revenue. Accounting guidance also requires that regulatory liabilities and/or assets be considered
a temporary difference for which a related deferred tax asset and/or liability shall be recognized.
Accounting guidance requires that we establish reserves for uncertain tax positions when it is more likely than not that the
positions will not be sustained when challenged by taxing authorities. Any changes to the estimates and judgments with respect
to the interpretations, timing or deductibility could result in a change to earnings and cash flows. Interest and penalties related
to unrecognized tax benefits, if any, are recognized within income tax expense and accrued interest, and penalties are
recognized within accrued taxes on the Consolidated Balance Sheets.
To the extent that NJNG invests in property that qualifies for ITCs, the ITC is deferred and amortized to income over the
life of the equipment in accordance with regulatory treatment. In general, for our unregulated subsidiaries, we record ITCs on
the balance sheet as a contra-asset as a reduction to property, plant and equipment when the property is placed in service. The
contra asset is amortized on the Consolidated Statements of Operations as a reduction to depreciation expense, over the useful
lives of the related assets.
Changes to the federal statutes related to ITCs, which have the effect of reducing or eliminating the credits, could have a
negative impact on earnings and cash flows.
Recently Issued Accounting Standards
Refer to Note 2. Summary of Significant Accounting Policies in the accompanying Consolidated Financial Statements for
discussion of recently issued accounting standards.
Page 34
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Management’s Overview
Consolidated
NJR is a diversified energy services holding company providing retail natural gas service in New Jersey and wholesale
natural gas and related energy services to customers in the U.S. and Canada. In addition, we invest in clean energy projects,
storage and transportation assets and provide various repair, sales and installation services. A more detailed description of our
organizational structure can be found in Item 1. Business.
The following sections include a discussion of results for fiscal 2021 compared to fiscal 2020. The comparative results
for fiscal 2020 with fiscal 2019 have been omitted from this Form 10-K, but may be found in Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations in Exhibit Number 99.1 on Form 8-K, filed with the SEC on
September 27, 2021.
Reporting Segments
We have four primary reporting segments as presented in the chart below:
In addition to our four reporting segments above, we have non-utility operations that either provide corporate support
services or do not meet the criteria to be treated as a separate reporting segment. These operations, which comprise Home
Services and Other, include: appliance repair services, sales and installations at NJRHS and commercial real estate holdings at
CR&R.
Impacts of the COVID-19 Pandemic
We closely monitor developments related to the COVID-19 pandemic and have taken steps intended to limit potential
exposure for our employees and those we serve. We have also taken proactive steps to ensure business continuity in the safe
operation of our business. Both NJR and NJNG continue to have sufficient liquidity to meet their current obligations, and
business operations remain fundamentally unchanged at this time. This remains an evolving situation, and we cannot predict the
extent or duration of the outbreak, the effects of the pandemic on the global, national or local economy or its effects on our
Page 35
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
financial condition, results of operations and cash flows. We cannot predict the nature and extent of impacts to future
operations. We will continue to monitor developments affecting our employees, customers and operations and take additional
steps to address the COVID-19 pandemic and its impacts, as necessary.
Operating Results
Net income (loss) and assets by reporting segment and operations for the fiscal years ended September 30, are as follows:
(Thousands)
2021
2020
2019
Natural Gas Distribution
Clean Energy Ventures
Energy Services
Storage and Transportation
Home Services and Other
Intercompany (1)
Total
Net Income
$
Assets
Net Income
Assets
Net Income
Assets
107,375 $ 3,707,461 $
914,788
16,789
365,423
58,957
862,407
(67,787)
162,134
(826)
(289,935)
3,382
117,890 $ 5,722,278 $
126,902 $ 3,531,477 $
814,277
22,111
244,836
(11,008)
844,799
18,311
138,375
5,784
(257,287)
907
163,007 $ 5,316,477 $
78,062 $ 3,064,309
694,439
31,903
290,847
(1,268)
240,955
14,689
104,411
1,637
(237,019)
(1,088)
123,935 $ 4,157,942
$
(1)
Consists of transactions between subsidiaries that are eliminated in consolidation.
The decrease in net income of $45.1 million during fiscal 2021, compared with fiscal 2020, was driven primarily by the
impairment of our equity method investment in PennEast, partially offset by increased earnings at Energy Services due to
strong market demand related to the extreme cold weather during February 2021. The primary drivers of the changes noted
above are described in more detail in the individual segment discussions.
The increase in assets during fiscal 2021, compared with fiscal 2020, was additional investment in utility plant in our
Natural Gas Distribution segment, solar asset investments at Clean Energy Ventures, and increased infrastructure spend in
Storage and Transportation primarily related to the on-going conversion and construction of the southern end of Adelphia
Gateway, along with an increase in accounts receivable at Energy Services, partially offset by the impairment of our equity
method investment in PennEast.
Non-GAAP Financial Measures
Our management uses NFE, a non-GAAP financial measure, when evaluating our operating results. Energy Services
economically hedges its natural gas inventory with financial derivative instruments. NFE is a measure of the earnings based on
eliminating timing differences surrounding the recognition of certain gains or losses, to effectively match the earnings effects of
the economic hedges with the physical sale of natural gas and, therefore, eliminates the impact of volatility to GAAP earnings
associated with the derivative instruments. To the extent we utilize forwards, futures or other derivatives to hedge forecasted
SREC production, unrealized gains and losses are also eliminated from NFE. NFE also excludes impairment charges associated
with equity method investments, which are a non-cash charge considered unusual in nature that occur infrequently and are not
indicative of the Company's performance for our ongoing operations. Included in the tax effects are current and deferred
income tax expense corresponding with the components of NFE.
Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in
addition to, and not as a substitute for or a replacement of, the comparable GAAP measure and should be read in conjunction
with those GAAP results.
Page 36
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Below is a reconciliation of consolidated net income, the most directly comparable GAAP measure, to NFE for the fiscal
years ended September 30:
(Thousands, except per share data)
Net income
Add:
Unrealized loss (gain) on derivative instruments and related transactions
Tax effect
Effects of economic hedging related to natural gas inventory (1)
Tax effect
Impairment of equity method investment
Tax effect
Net financial earnings
Basic earnings per share
Add:
Unrealized loss (gain) on derivative instruments and related transactions
Tax effect
Effects of economic hedging related to natural gas inventory (1)
Tax effect
Impairment of equity method investment
Tax effect
Basic net financial earnings per share
2021
2020
$ 117,890 $ 163,007 $ 123,935
2019
54,203
(12,887)
(42,405)
10,078
92,000
(11,167)
2,881
(711)
4,309
(1,024)
—
—
$ 207,712 $ 165,333 $ 129,390
(9,644)
2,296
12,690
(3,016)
—
—
$
1.23 $
1.72 $
1.39
0.56
(0.13)
(0.44)
0.10
0.96
(0.12)
2.16 $
(0.10)
0.02
0.13
(0.03)
—
—
1.74 $
0.03
(0.01)
0.05
(0.01)
—
—
1.45
$
(1)
Effects of hedging natural gas inventory transactions where the economic impact is realized in a future period.
NFE by reporting segment and other operations for the fiscal years ended September 30, discussed in more detail within
the operating results sections of each segment, is summarized as follows:
(Thousands)
Natural Gas Distribution
Clean Energy Ventures
Energy Services
Storage and Transportation
Home Services and Other
Eliminations (1)
Total
2021
$ 107,375
16,789
71,117
13,046
(826)
211
$ 207,712
2019
2020
77 % $ 78,062
52 % $ 126,902
31,903
13
22,111
8
2,918
(5)
(7,873)
34
14,689
11
18,311
6
1,911
4
5,784
—
(93)
—
98
—
100 % $ 165,333 100 % $ 129,390 100 %
60 %
25
2
11
2
—
(1) Consists of transactions between subsidiaries that are eliminated in consolidation.
The increase in NFE of $42.4 million during fiscal 2021, compared with fiscal 2020, was due primarily to increased
earnings at Energy Services as previously discussed.
Natural Gas Distribution Segment
Overview
Our Natural Gas Distribution segment is comprised of NJNG, a natural gas utility that provides regulated natural gas
service throughout Burlington, Middlesex, Monmouth, Morris, Ocean and Sussex counties in New Jersey to approximately
564,000 residential and commercial customers in its service territory and also participates in the off-system sales and capacity
release markets. The business is subject to various risks, including those risks associated with COVID-19, which may include
but are not limited to impacts to customer growth and customer usage, customer collections, the timing and costs of capital
expenditures and construction of infrastructure projects, operating and financing costs, fluctuations in commodity prices and
customer conservation efforts. In addition, NJNG may be subject to adverse economic conditions, certain regulatory actions,
environmental remediation and severe weather conditions. It is often difficult to predict the impact of events or trends
associated with these risks.
Page 37
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
NJNG’s business is seasonal by nature, as weather conditions directly influence the volume of natural gas delivered to
customers on an annual basis. Specifically, customer demand substantially increases during the winter months when natural gas
is used for heating purposes. As a result, NJNG receives most of its natural gas distribution revenues during the first and second
fiscal quarters and is subject to variations in earnings and working capital during the fiscal year.
As a regulated company, NJNG is required to recognize the impact of regulatory decisions on its financial statements.
See Note 4. Regulation in the accompanying Consolidated Financial Statements for a more detailed discussion on regulatory
actions, including filings related to programs and associated expenditures, as well as rate requests related to recovery of capital
investments and operating costs.
NJNG’s operations are managed with the goal of providing safe and reliable service, growing its customer base,
diversifying its utility gross margin, promoting clean energy programs and mitigating the risks discussed above.
Base Rate Case
On March 30, 2021, NJNG filed a base rate case with the BPU requesting a natural gas revenue increase of $165.7 million
including a rate recovery for SRL and other infrastructure investments. On July 9, 2021, the Company updated its base rate
request to $163.9 million, based on nine months of actual information through June 30, 2021. On September 23, 2021, NJNG
filed its second update to the base rate case. The updated filing seeks a base rate increase of $162.5 million. On November 17,
2021, the BPU issued an order adopting a stipulation of settlement approving a $79.0 million increase to base rates, effective
December 1, 2021. The increase includes an overall rate of return on rate base of 6.84 percent, return on common equity of 9.6
percent, a common equity ratio of 54.0 percent and a composite depreciation rate of 2.78 percent.
Infrastructure Projects
NJNG has significant annual capital expenditures associated with the management of its natural gas distribution and
transmission system, including new utility plant associated with customer growth and its associated PIM and infrastructure
programs. Below is a summary of NJNG’s capital expenditures, including accruals for fiscal 2021 and estimates of expected
investments over the next fiscal year:
Estimated capital expenditures are reviewed on a regular basis and may vary based on the ongoing effects of regulatory
oversight, environmental regulations, unforeseen events and the ability to access capital.
Page 38
$ (Millions)$4.1$37.5$9.4$64.5$100.4$8.7$63.0$4.9$66.1$109.7$—$—$26.4$54.1$145.5$51.7$22.5$13.8$36.4$—2021A2022ENJ RISESAFE IIInfrastructureInvestmentProgramCustomerGrowthSystemMaintenanceTechnologyUpgradesFacilitiesRenewableNaturalGas/Powerto GasCost ofRemovaland OtherSRL$0$20$40$60$80$100$120$140$160 New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Infrastructure Investment Program
On February 28, 2019, NJNG filed a petition with the BPU seeking authority to implement a five-year IIP. The IIP
consisted of two components: transmission and distribution investments and information technology replacement and
enhancements. The total investment for the IIP was approximately $507.0 million. All approved investments will be recovered
through annual filings to adjust base rates. On October 28, 2020, the BPU approved the Company’s transmission and
distribution component of the IIP for $150.0 million over five years, effective November 1, 2020. NJNG voluntarily withdrew
the information technology upgrade component and will seek to recover associated costs in future rate case proceedings.
SAFE II and NJ RISE
NJNG continues to implement BPU-approved infrastructure projects that are designed to enhance the reliability and
integrity of NJNG’s natural gas distribution system.
The BPU approved the 5-year SAFE II program and the associated rate mechanism to replace the remaining unprotected
steel mains and services from NJNG’s natural gas distribution system at an estimated cost of approximately $200.0 million,
excluding AFUDC. With the approval of SAFE II, $157.5 million was approved for accelerated cost recovery methodology.
The remaining $42.5 million in capital expenditures must be requested for recovery in base rate cases, of which $23.4 million
was approved in NJNG’s 2019 base rate case with the remainder included in the 2021 base rate case.
The BPU approved NJNG’s NJ RISE capital infrastructure program, which consists of six capital investment projects
estimated to cost $102.5 million, excluding AFUDC, for natural gas distribution storm hardening and mitigation projects, along
with associated depreciation expense. These system enhancements are intended to minimize service impacts during extreme
weather events to customers in the most storm-prone areas of NJNG’s service territory. Recovery of NJ RISE investments is
included in NJNG’s base rates.
On March 30, 2020, NJNG filed a petition with the BPU requesting a rate increase of approximately $7.4 million for the
recovery associated with NJ RISE and SAFE II capital investment costs of approximately $57.9 million. On July 24, 2020, the
Company updated the filing with actual information through June 30, 2020 and the revised rate increase requested was $7.1
million based on $55.1 million of actual capital investments. On September 9, 2020, the BPU approved the increase to base rate
revenue, effective October 1, 2020.
On March 31, 2021, NJNG filed a petition with the BPU requesting the final base rate increase of approximately
$311,000 for the recovery associated with NJ RISE and SAFE II capital investments cost of approximately $3.4 million made
through June 30, 2021. On June 22, 2021, this filing was consolidated with the 2021 base rate case and on July 30, 2021, was
updated for actual information through June 30, 2021, which revised the increase requested to $269,000. On November 17,
2021, the BPU issued an order for the consolidated matter which included approval for the final increase for the NJ RISE/SAFE
II programs for the requested $269,000.
Southern Reliability Link
The SRL is an approximately 30-mile, 30-inch transmission main designed to support improved system reliability and
integrity in the southern portion of NJNG’s service territory. Construction began on the project in December 2018 and SRL was
placed in service during August 2021.
Customer Growth
In conducting NJNG’s business, management focuses on factors it believes may have significant influence on its future
financial results. NJNG’s policy is to work with all stakeholders, including customers, regulators and policymakers, to achieve
favorable results. These factors include the rate of NJNG’s customer growth in its service territory, which can be influenced by
political and regulatory policies, the delivered cost of natural gas compared with competing fuels, interest rates and general
economic and business conditions.
Page 39
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
NJNG’s total customers as of September 30, include the following:
Firm customers
Residential
Commercial, industrial & other
Residential transport
Commercial transport
Total firm customers
Other
Total customers
2021
2020
2019
502,546
30,615
21,882
8,815
563,858
47
563,905
497,779
28,735
22,420
9,184
558,118
48
558,166
486,474
28,992
22,870
9,237
547,573
53
547,626
During fiscal 2021, NJNG added 7,854 new customers. NJNG expects these new customer additions, and those
customers who added additional natural gas services to their premises to contribute approximately $5.6 million to utility gross
margin during fiscal 2022. NJNG also added 8,349 and 9,711 new customers during the fiscal years ended September 30, 2020
and 2019, respectively.
NJNG continues to expect to add approximately 28,000 to 30,000 new customers during the three-year period of fiscal
2022 to 2024. Based on information from municipalities and developers, as well as external industry analysts and
management’s experience, NJNG estimates that approximately 63 percent of the growth will come from new construction
markets and 37 percent from customer conversions to natural gas from other fuel sources. This new customer and conversion
growth would increase utility gross margin under NJNG's base rates by approximately $6.2 million annually, as calculated
under NJNG's CIP tariff. See the Natural Gas Distribution Segment Operating Results section that follows for a definition and
further discussion of utility gross margin.
Energy Efficiency Programs
SAVEGREEN conducts home energy audits and provides various grants, incentives and financing alternatives designed
to encourage the installation of high-efficiency heating and cooling equipment and other energy efficiency upgrades. Depending
on the specific incentive or approval, NJNG recovers costs associated with the programs over a two- to 10-year period through
a tariff rider mechanism. On March 3, 2021, the BPU approved a three-year SAVEGREEN program consisting of
approximately $126.1 million of direct investment, $109.4 million in financing options, and approximately $23.4 million in
operation and maintenance expenses, which resulted in a $15.6 million annual recovery increase, effective July 1, 2021.
On May 29, 2020, NJNG filed a petition with the BPU for a slight decrease in its EE recovery rate. Throughout the
course of the proceeding, NJNG updated the filing with additional actual information. Based on the updated information, the
BPU approved NJNG to maintain its existing rate, which will result in an annual recovery of approximately $11.4 million,
effective November 1, 2020.
On June 11, 2021, NJNG submitted its annual cost recovery filing for the SAVEGREEN programs established from
2010 through 2018. If approved, the proposed rate increase will increase annual recoveries by $2.2 million, expected to be
effective in early 2022.
The following table summarizes loans, grants, rebates and related investments as of September 30:
(Thousands)
Loans
Grants, rebates and related investments
Total
2021
132,800 $
98,100
230,900 $
2020
119,400
80,500
199,900
$
$
Program recoveries from customers during the fiscal year ended September 30, 2021 and 2020, were $12.4 million and
$10.3 million, respectively. The recovery includes a weighted average cost of capital that ranges from 6.69 percent to 7.76
percent, with a return on equity of 9.6 percent to 10.3 percent.
Page 40
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Conservation Incentive Program/BGSS
The CIP facilitates normalizing NJNG’s utility gross margin for variances not only due to weather but also for other
factors affecting customer usage, such as conservation and energy efficiency. Recovery of utility gross margin for the non-
weather variance through the CIP is limited to the amount of certain natural gas supply cost savings achieved and is subject to a
variable margin revenue test. Additionally, recovery of the CIP utility gross margin is subject to an annual earnings test. An
annual review of the CIP must be filed by June 1, coincident with NJNG’s annual BGSS filing, during which NJNG can request
rate changes to the CIP.
NJNG’s total utility firm gross margin includes the following adjustments related to the CIP mechanism:
(Thousands)
Weather (1)
Usage
Total
2021
2020
2019
$
$
13,273 $
(1,852)
11,421 $
17,882 $
292
18,174 $
2,699
(341)
2,358
(1)
Compared with the CIP 20-year average, weather was 6.5 percent, 7.6 percent and 1 percent warmer-than-normal during fiscal 2021, 2020 and 2019
respectively.
Recovery of Natural Gas Costs
NJNG’s cost of natural gas is passed through to our customers, without markup, by applying NJNG’s authorized BGSS
rate to actual therms delivered. There is no utility gross margin associated with BGSS costs; therefore, changes in such costs do
not impact NJNG’s earnings. NJNG monitors its actual natural gas costs in comparison to its BGSS rates to manage its cash
flows associated with its allowed recovery of natural gas costs, which is facilitated through BPU-approved deferred accounting
and the BGSS pricing mechanism. Accordingly, NJNG occasionally adjusts its periodic BGSS rates or can issue credits or
refunds, as appropriate, for its residential and small commercial customers when the commodity cost varies from the existing
BGSS rate. BGSS rates for its large commercial customers are adjusted monthly based on NYMEX prices.
NJNG’s residential and commercial markets are currently open to competition, and its rates are segregated between
BGSS (i.e., natural gas commodity) and delivery (i.e., transportation) components. NJNG earns utility gross margin through the
delivery of natural gas to its customers and, therefore, is not negatively affected by customers who use its transportation service
and purchase natural gas from another supplier. Under an existing order from the BPU, BGSS can be provided by suppliers
other than the state’s natural gas utilities; however, customers who purchase natural gas from another supplier continue to use
NJNG for transportation service.
On November 20, 2020, NJNG notified the BPU of its intent to provide BGSS bill credits to residential and small
commercial sales customers effective December 1, 2020 to December 31, 2020. On December 22, 2020, NJNG notified the
BPU of the extension of the BGSS bill credits through January 31, 2021. The actual bill credits given to customers totaled $20.6
million, $19.3 million net of tax.
On March 3, 2021, the BPU approved, on a final basis, NJNG’s annual petition to modify its BGSS, balancing charge and
CIP rates for residential and small commercial customers. The rate changes resulted in a $20.4 million decrease to the annual
revenues credited to BGSS, a $3.8 million annual decrease related to its balancing charge, as well as changes to CIP rates,
which resulted in a $16.5 million annual recovery increase, effective October 1, 2020. The balancing charge rate includes the
cost of balancing natural gas deliveries with customer usage for sales and transportation customers and balancing charge
revenues are credited to BGSS.
On May 28, 2021, NJNG submitted its annual petition to modify its BGSS, balancing charge and CIP rates. On
November 17, 2021, the BPU approved a $2.9 million increase to the annual revenues credited to BGSS, a $13.0 million annual
increase related to its balancing charge, as well as changes to CIP rates, which result in a $6.3 million decrease to our annual
recovery decrease, effective December 1, 2021.
Refer to Note 4. Regulation - BGSS and CIP in the accompanying Consolidated Financial Statements for a further
discussion of NJNG’s periodic BGSS and CIP rate adjustments.
Page 41
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
BGSS Incentive Programs
NJNG is eligible to receive financial incentives for reducing BGSS costs through a series of utility gross margin-sharing
programs that include off-system sales, capacity release and storage incentive programs. These programs are designed to
encourage better utilization and hedging of NJNG’s natural gas supply, transportation and storage assets. Depending on the
program, NJNG shares 80 or 85 percent of utility gross margin generated by these programs with firm customers. Utility gross
margin from incentive programs was $13.4 million, $9.5 million and $8.4 million during the fiscal years ended September 30,
2021, 2020 and 2019, respectively.
Hedging
In order to provide relative price stability to its natural gas supply portfolio, NJNG employs a hedging strategy with the
goal of having at least 75 percent of the Company’s projected winter periodic BGSS natural gas sales volumes hedged by each
November 1 and at least 25 percent of the projected periodic BGSS natural gas sales hedged for the following April-through-
March period. This is accomplished with the use of various financial instruments including futures, swaps and options used in
conjunction with commodity and/or weather-related hedging activity.
Commodity Prices
Our Natural Gas Distribution segment is affected by the price of natural gas, which can have a significant impact on our
cash flows, short-term financing costs, the price of natural gas charged to our customers through the BGSS clause, our ability to
collect accounts receivable, which impacts our bad debt expense, and our ability to maintain a competitive advantage over other
energy sources. Natural gas commodity prices are shown in the graph below, which illustrates the daily natural gas prices(1) in
the Northeast market region, also known as TETCO M-3.
(1) Data sourced from S&P Global Platts.
The maximum price per MMBtu was $14.57, $5.59 and $9.17 and the minimum price was $0.28, $0.68 and $1.09 for the
fiscal years ended September 30, 2021, 2020 and 2019, respectively. A more detailed discussion of the impacts of the price of
natural gas on operating revenues, natural gas purchases and cash flows can be found in the Results of Operations and Cash
Flow sections of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Page 42
($ per MMBtu)Tetco M-3 Daily Prices202120202019OctNovDecJanFebMarAprMayJuneJulyAugSept$0$5$10$15 New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Societal Benefits Charge
NJNG’s qualifying customers are eligible for the USF program, which is administered by the New Jersey Department of
Community Affairs, to help make energy bills more affordable. On June 25, 2020, NJNG filed its annual USF compliance filing
proposing a decrease to the statewide USF rate, which will result in annual decreases of approximately $400,000. On
September 23, 2020, the BPU approved the decrease, effective October 1, 2020.
On March 16, 2020, the BPU approved on a final basis NJNG's annual SBC application including recovery of
remediation expenses, an increase in the RAC of approximately $1.2 million annually and an annual decrease to the NJCEP
factor of $600,000, which was effective April 1, 2020.
On April 7, 2021, the BPU approved on a final basis NJNG's annual SBC application to recover remediation expenses,
including an increase in the RAC, of approximately $1.3 million annually and an increase to the NJCEP factor, of
approximately $6.0 million, which was effective May 1, 2021.
On June 25, 2021, NJNG filed its annual USF compliance filing proposing an increase to the statewide USF rate, which
will result in an annual increase of approximately $4.9 million. On September 14, 2021, the BPU approved the increase,
effective October 1, 2021.
On September 30, 2021, NJNG filed its annual SBC application requesting recovery of remediation expenses, an increase
in the RAC of approximately $2.0 million annually and an annual decrease to the NJCEP factor of $500,000 effective April 1,
2022.
Environmental Remediation
NJNG is responsible for the environmental remediation of former MGP sites, which contain contaminated residues from
former gas manufacturing operations that ceased operating at these sites by the mid-1950s and, in some cases, had been
discontinued many years earlier. Actual MGP remediation costs may vary from management’s estimates due to the developing
nature of remediation requirements, regulatory decisions by the NJDEP and related litigation. NJNG reviews these costs at the
end of each fiscal year and adjusts its liability and corresponding regulatory asset as necessary to reflect its expected future
remediation obligation. Accordingly, NJNG recognized a regulatory asset and an obligation of $135.0 million as of September
30, 2021, a decrease of $15.6 million compared with the prior fiscal period.
In June 2019, NJNG initiated a preliminary assessment of a site in Aberdeen, New Jersey to determine prior ownership
and if former MGP operations were active at the location. The preliminary assessment and site investigation activities are
ongoing at the Aberdeen, NJ site location and based on initial findings will be moving to remedial investigation phase. The
costs associated with preliminary assessment, site investigation and remedial investigation activities are considered immaterial
and are included as a component of NJNG’s annual SBC application to recover remediation expenses. We will continue to
gather information to further refine and enhance its estimate of potential costs for this site as it becomes available. See Note 15.
Commitments and Contingent Liabilities for a more detailed description.
Other regulatory filings and a more detailed discussion of the filings in this section can be found in Note 4. Regulation in
the accompanying Consolidated Financial Statements.
Page 43
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Operating Results
NJNG’s operating results for the fiscal years ended September 30, are as follows:
(Thousands)
Operating revenues
Operating expenses
Natural gas purchases (1) (2)
Operation and maintenance
Regulatory rider expense (3)
Depreciation and amortization
Total operating expenses
Operating income
Other income, net
Interest expense, net of capitalized interest
Income tax provision
Net income
2021
2020
$ 731,796 $ 729,923 $ 710,793
2019
260,714
203,740
38,304
80,045
582,803
148,993
13,841
36,405
19,054
287,307
162,792
34,529
71,883
556,511
173,412
11,486
30,975
27,021
$ 107,375 $ 126,902 $
336,489
171,198
33,937
57,980
599,604
111,189
2,441
26,134
9,434
78,062
(1)
(2)
(3)
Includes the purchased cost of the natural gas, fees paid to pipelines and storage facilities, adjustments as a result of BGSS incentive programs and
hedging transactions. These expenses are passed through to customers and are offset by corresponding revenues.
Includes related party transactions of approximately $13.0 million, $11.5 million and $16.2 million during fiscal 2021, 2020 and 2019, respectively, a
portion of which are eliminated in consolidation.
Consists of expenses associated with state-mandated programs, the RAC and energy efficiency programs, and are calculated on a per-therm basis. These
expenses are passed through to customers and are offset by corresponding revenues.
Operating Revenues and Natural Gas Purchases
Operating revenues remained relatively flat during fiscal 2021 compared with fiscal 2020. Natural gas purchases
decreased 9.3 percent during fiscal 2021 compared with fiscal 2020. The factors contributing to the increases and decreases in
operating revenues and natural gas purchases during fiscal 2021, are as follows:
(Thousands)
Firm sales
Bill credits
Average BGSS rates
BGSS incentives
Base rate impact
CIP adjustments
SAFE II/NJ RISE
Other (1)
Total increase (decrease)
2021 v. 2020
Operating
revenues
Natural gas
purchases
$
$
24,853 $
(20,590)
(20,398)
9,460
5,076
(6,753)
6,689
3,536
1,873 $
8,839
(20,590)
(20,398)
5,517
—
—
—
39
(26,593)
(1)
Other includes changes in rider rates, including those related to EE, NJCEP and other programs.
Non-GAAP Financial Measures
Management uses utility gross margin, a non-GAAP financial measure, when evaluating the operating results of NJNG.
NJNG’s utility gross margin is defined as natural gas revenues less natural gas purchases, sales tax and regulatory rider
expenses, and may not be comparable to the definition of gross margin used by others in the natural gas distribution business
and other industries. Management believes that utility gross margin provides a meaningful basis for evaluating utility operations
since natural gas costs, sales tax and regulatory rider expenses are included in operating revenues and passed through to
customers and, therefore, have no effect on utility gross margin. Non-GAAP financial measures are not in accordance with, or
an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measure.
Page 44
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Utility Gross Margin
A reconciliation of operating revenues, the closest GAAP financial measure to NJNG’s utility gross margin, is as follows
for the fiscal years ended September 30:
(Thousands)
Operating revenues
Less:
Natural gas purchases
Regulatory rider expense
Utility gross margin
2021
731,796 $
2020
729,923 $
2019
710,793
260,714
38,304
432,778 $
287,307
34,529
408,087 $
336,489
33,937
340,367
$
$
Utility gross margin consists of three components:
•
utility firm gross margin generated from only the delivery component of either a sales tariff or a transportation tariff
from residential and commercial customers who receive natural gas service from NJNG;
• BGSS incentive programs, where revenues generated or savings achieved from BPU-approved off-system sales,
capacity release or storage incentive programs are shared between customers and NJNG; and
•
utility gross margin generated from off-tariff customers, as well as interruptible customers.
The following provides more information on the components of utility gross margin and associated throughput (Bcf) of
natural gas delivered to customers:
($ in thousands)
Utility gross margin/throughput
Residential
Commercial, industrial and other
Firm transportation
Total utility firm gross margin/throughput
BGSS incentive programs
Interruptible/off-tariff agreements
Total utility gross margin/throughput
Utility Firm Gross Margin
2021
2020
2019
Margin
Bcf
Margin
Bcf
Margin
Bcf
$ 288,723 46.2
8.6
64,950
61,870 13.7
415,543 68.5
13,415 101.3
3,820 22.9
$ 432,778 192.7
$ 275,033
57,929
60,199
393,161
44.6
8.2
13.3
66.1
9,471 118.4
30.9
5,455
$ 408,087 215.4
$ 224,597
50,553
51,069
326,219
46.0
9.7
13.7
69.4
8,398 123.8
39.0
5,750
$ 340,367 232.2
Utility firm gross margin increased $22.4 million during fiscal 2021 compared with fiscal 2020, due primarily to the
increase in firm sales and base rates, along with increased returns on infrastructure programs related to SAFE II and NJ RISE.
BGSS Incentive Programs
The factors contributing to the change in utility gross margin generated by BGSS incentive programs are as follows:
(Thousands)
Storage
Off-system sales
Capacity release
Total increase
2021 v. 2020
2,664
$
1,263
16
3,943
$
The increase in utility gross margin was due primarily to improved opportunities for storage incentive compared with the
prior year along with increased margins from off-system sales.
Page 45
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Operation and Maintenance Expense
O&M expense increased $40.9 million during fiscal 2021 compared with fiscal 2020, due primarily to increased
compensation, information technology expenditures and bad debt expenses.
Depreciation Expense
Depreciation expense increased $8.2 million in fiscal 2021, compared with fiscal 2020, as a result of additional utility
plant being placed into service.
Interest Expense
Interest expense increased $5.4 million in fiscal 2021, compared with fiscal 2020, due primarily to the timing of issuance
of outstanding long-term debt and additional short-term borrowings.
Other Income
Other income increased $2.4 million during fiscal 2021, compared with fiscal 2020, due primarily to increased AFUDC
equity earned on infrastructure projects.
Income Tax Provision
Income tax provision decreased $8.0 million during fiscal 2021, compared with fiscal 2020, due primarily to lower
operating income.
Net Income
Net income decreased $19.5 million to $107.4 million in fiscal 2021, compared with fiscal 2020, due primarily to
increased O&M, depreciation and interest expenses, as previously discussed.
Clean Energy Ventures Segment
Overview
Our Clean Energy Ventures segment actively pursues opportunities in the renewable energy markets. Clean Energy
Ventures enters into various agreements to install solar net-metered systems for residential and commercial customers, as well
as large commercial grid-connected projects. In addition, Clean Energy Ventures enters into various long-term agreements,
including PPAs, to supply energy from commercial solar projects.
Capital expenditures related to clean energy projects are subject to change due to a variety of factors that may affect our
ability to commence operations at these projects on a timely basis or at all, including logistics associated with the start-up of
residential and commercial solar projects, such as timing of construction schedules, the permitting and regulatory process, any
delays related to electric grid interconnection, economic trends, unforeseen events and the ability to access capital or allocation
of capital to other investments or business opportunities. Clean Energy Ventures is also subject to risks associated with
COVID-19, which may include impacts to residential solar customer growth and customer collections, our ability to identify
and develop commercial solar asset investments, impacts to our supply chain and our ability to source materials for
construction.
The primary contributors toward the value of qualifying clean energy projects are tax incentives and RECs. Changes in
the federal statutes related to the ITC and/or relevant state legislation and regulatory policies affecting the market for solar
renewable energy credits, could significantly affect future results.
Page 46
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Solar
Solar projects placed in service and related expenditures for the fiscal years ended September 30, are as follows:
($ in Thousands)
Placed in service
Grid-connected (1) (2)
Net-metered:
Commercial (1) (3)
Residential
Total placed in service
2021
Projects MW Costs
1 2.9 $
3,433
2020
Projects MW Costs
2019
Projects MW Costs
9 60.1 $ 121,516
3 29.0 $ 64,684
1 2.7
5,576
13,885
421 4.8
423 10.4 $ 22,894
— —
43
17,474
481 5.9
490 66.0 $ 139,033
4 22.8 71,730
815 8.3 26,796
822 60.1 $ 163,210
(1)
(2)
(3)
Includes projects subject to sale leaseback arrangements.
Includes an operational 2.9 MW commercial solar project acquired in December 2020.
Includes a 4.4 MW commercial solar project acquired in August 2019.
Since inception, Clean Energy Ventures has constructed a total of 367.8 MW of solar capacity. Projects that were placed
in service through December 31, 2019, qualified for a 30-percent federal ITC. The ITC declined to 26 percent for property
under construction before the end of 2020. The Consolidated Appropriations Act, 2021 extended the 26 percent ITC for
property under construction during 2021 and 2022. The ITC will drop to 22 percent for property under construction before the
end of 2023. After 2023 the ITC will be reduced to 10 percent.
Projects placed in service after December 31, 2019, also qualified for a 30 percent federal ITC if five percent or more of
the total costs of a solar property are incurred before the end of the applicable year and there are continuous efforts to advance
towards completion of the project, based on the IRS guidance around the ITC safe harbor determination. We have taken steps to
preserve the ITC at the higher rate for certain solar projects that are completed after the scheduled reduction in rates, in
accordance with IRS guidance.
Clean Energy Ventures may enter into transactions to sell certain of its commercial solar assets concurrent with
agreements to lease the assets back over a period of five to 15 years. The Company will continue to operate the solar assets and
are responsible for related expenses and entitled to retain the revenue generated from SRECs, TRECs and energy sales. The
ITCs and other tax benefits associated with these solar projects transfer to the buyer, if applicable; however, the lease payments
are structured so that Clean Energy Ventures is compensated for the transfer of the related tax incentives. Accordingly, for solar
projects financed under sale leasebacks for which the assets were sold during the first 5 years of in-service life, Clean Energy
Ventures recognizes the equivalent value of the ITC in other income on the Consolidated Statements of Operations over the
respective five-year ITC recapture periods, starting with the second year of the lease. During fiscal 2021 and 2020, Clean
Energy Ventures received proceeds of $17.7 million and $42.9 million, respectively, in connection with the sale leaseback of
commercial solar assets. There were no sale leasebacks during fiscal 2019.
As part of its solar investment portfolio, Clean Energy Ventures operates a residential and small commercial solar
program, The Sunlight Advantage®, that provides qualifying homeowners and small business owners the opportunity to have a
solar system installed at their home or place of business with no installation or maintenance expenses. Clean Energy Ventures
owns, operates and maintains the system over the life of the contract in exchange for monthly payments.
For solar installations placed in-service in New Jersey prior to April 30, 2020, each MWh of electricity produced creates
an SREC that represents the renewable energy attribute of the solar-electricity generated that can be sold to third parties,
predominantly load-serving entities that are required to comply with the solar requirements under New Jersey’s renewable
portfolio standard.
In December 2019, the BPU established the TREC as pursuant to the successor program to the SREC program. TRECs
provide a fixed compensation base multiplied by an assigned project factor in order to determine their value. The project factor
is determined by the type and location of the project, as defined. All TRECs generated are required to be purchased monthly by
a TREC program administrator as appointed by the BPU.
Page 47
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
SREC and TREC activity for the fiscal years ended September 30, is as follows:
Inventory balance as of October 1,
RECs generated
RECs delivered
Inventory balance as of September 30,
2021
2020
SRECs
TRECs
SRECs
TRECs
2019
SRECs
35,011
406,118
(333,025)
108,104
9,270
31,767
(34,093)
6,944
53,395
389,716
(408,100)
35,011
—
9,270
—
9,270
105,192
311,803
(363,600)
53,395
The average SREC sales price was $196 in fiscal 2021, $199 in fiscal 2020 and $207 in fiscal 2019 and the average TREC
price was $144 in both fiscal 2021 and 2020.
Clean Energy Ventures hedges its expected SREC production through the use of forward sales contracts. The following
table reflects the hedged percentage of our projected inventory related to its in-service commercial and residential assets:
Energy Year (1)
2022
2023
2024
2025
2026
Percent of SRECs Hedged
100%
99%
95%
41%
17%
(1) Energy years are compliance periods for New Jersey’s renewable portfolio standard that run from June 1 to May 31.
There are no direct costs associated with the production of SRECs or TRECs by our solar assets. All related costs are
included as a component of O&M expenses on the Consolidated Statements of Operations, including such expenses as facility
maintenance and broker fees.
Operating Results
Clean Energy Ventures’ financial results for the fiscal years ended September 30, are summarized as follows:
2021
$
95,275 $
2020
102,617 $
2019
98,099
(Thousands)
Operating revenues
Operating expenses
Operation and maintenance
Depreciation and amortization (1)
36,715
20,567
57,282
37,993
6,392
22,548
5,048
16,789 $
30,310
25,329
55,639
46,978
6,420
20,253
11,034
22,111 $
28,614
22,376
50,990
47,109
6,910
14,846
7,270
31,903
Total operating expenses (1)
Operating income (1)
Other income, net
Interest expense, net
Income tax provision (1)
Net income (1)
(1) Amounts in fiscal 2020 and 2019 have been adjusted for the change in accounting method related to ITCs, see Note 2. Summary of Significant Accounting
$
Policies for more detail.
Operating Revenues
Operating revenues decreased $7.3 million in fiscal 2021, compared with fiscal 2020, due primarily to decreased SREC
revenue due to timing of deliveries, partially offset by the recognition of TREC revenue, which was not present during the same
period in the prior year.
Operation and Maintenance Expense
O&M expense increased $6.4 million in fiscal 2021, compared with fiscal 2020, due primarily to increased project
maintenance, lease expenses and information technology expenses.
Page 48
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Depreciation Expense
Depreciation expense decreased $4.8 million in fiscal 2021, compared with fiscal 2020, due primarily to the change in
estimated useful lives of our commercial solar assets, effective July 1, 2020.
Income Tax Provision
Income tax provision decreased $6.0 million during fiscal 2021, compared with fiscal 2020, due primarily to lower
operating income along with a decrease in the state tax rate resulting from tax reform in New Jersey.
Net Income
Net income in fiscal 2021 decreased $5.3 million, compared with fiscal 2020, due primarily to the increased O&M and
interest expense, partially offset by decreased depreciation expense, as previously discussed.
Energy Services Segment
Overview
Energy Services markets and sells natural gas to wholesale and retail customers and manages natural gas transportation
and storage assets throughout major market areas across North America. Energy Services maintains a strategic portfolio of
natural gas transportation and storage contracts that it utilizes in conjunction with its market expertise to provide service and
value to its customers. Availability of these transportation and storage contracts allows Energy Services to generate market
opportunities by capturing price differentials over specific time horizons and between geographic market locations.
Energy Services also provides management of transportation and storage assets for natural gas producers and regulated
utilities. These management transactions typically involve the release of producer/utility-owned storage and/or transportation
capacity in combination with either an obligation to purchase and/or deliver physical natural gas. In addition to the contractual
purchase and/or sale of physical natural gas, Energy Services generates or pays fee-based margin in exchange for its active
management and may provide the producer and/or utility with additional margin based on actual results.
In conjunction with the active management of these contracts, Energy Services generates financial margin by identifying
market opportunities and simultaneously entering into natural gas purchase/sale, storage or transportation contracts and
financial derivative contracts. In cases where storage is utilized to fulfill these contracts, these forecast sales and/or purchases
are economically hedged through the use of financial derivative contracts. The financial derivative contracts consist primarily of
exchange-traded futures, options and swap contracts, and are frequently used to lock in anticipated transactional cash flows and
to help manage volatility in natural gas market prices. Generally, when its transportation and storage contracts are exposed to
periods of increased market volatility, Energy Services is able to implement strategies that allow it to capture margin by
improving the respective time or geographic spreads on a forward basis.
Energy Services accounts for its physical commodity contracts and its financial derivative instruments at fair value on the
Consolidated Balance Sheets. Changes in the fair value of physical commodity contracts and financial derivative instruments
are included in earnings as a component of operating revenues or natural gas purchases on the Consolidated Statements of
Operations. Volatility in reported net income at Energy Services can occur over periods of time due to changes in the fair value
of derivatives, as well as timing differences related to certain transactions. Unrealized gains and losses can fluctuate as a result
of changes in the price of natural gas, SRECs and foreign currency from the original transaction price. Volatility in earnings can
also occur as a result of timing differences between the settlement of financial derivatives and the sale of the underlying
physical commodity. For example, when a financial instrument settles and the physical natural gas is injected into inventory, the
realized gains and losses associated with the financial instrument are recognized in earnings. However, the gains and losses
associated with the physical natural gas are not recognized in earnings until the natural gas inventory is withdrawn from storage
and sold, at which time Energy Services realizes the entire margin on the transaction.
On December 16, 2020, Energy Services entered into a series of asset management agreements with an investment grade
public utility to release pipeline capacity associated with certain natural gas transportation contracts. The utility will provide
certain asset management services and Energy Services may deliver natural gas to the utility in exchange for aggregate net
proceeds of approximately $500 million, payable through November 1, 2030. The asset management agreements include a
series of initial and permanent releases commencing on November 1, 2021. NJR will receive approximately $260 million in
cash from fiscal 2022 through fiscal 2024 and $34 million per year from fiscal 2025 through fiscal 2031 under the agreements.
Page 49
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Operating Results
Energy Services’ financial results for the fiscal years ended September 30, are summarized as follows:
(Thousands)
Operating revenues (1)
Operating expenses
Natural gas purchases (including demand charges (2)(3))
Operation and maintenance
Depreciation and amortization
Total operating expenses
Operating income (loss)
Other income
Interest expense, net
Income tax provision (benefit)
Net income (loss)
2021
2020
$ 1,228,420 $ 1,030,419 $ 1,742,791
2019
1,098,261
50,885
111
1,149,257
79,163
369
2,204
18,371
58,957 $
1,024,579
17,368
123
1,042,070
(11,651)
304
3,276
(3,615)
(11,008) $
1,719,519
20,943
118
1,740,580
2,211
153
5,205
(1,573)
(1,268)
$
(1)
(2)
(3)
Includes related party transactions of approximately $426,000, $1.1 million and $8.2 million during fiscal 2021, 2020 and 2019, respectively, which are
eliminated in consolidation.
Costs associated with pipeline and storage capacity that are expensed over the term of the related contracts, which generally varies from less than one
year to 10 years.
Includes related party transactions of approximately $841,000, $183,000 and $3.4 million during fiscal 2021, 2020 and 2019, respectively, a portion of
which are eliminated in consolidation.
As of September 30, Energy Services’ portfolio of financial derivative instruments are composed of:
(in Bcf)
Net short futures contracts
Net long options
Operating Revenues and Natural Gas Purchases
2021
2020
2019
13.7
—
29.3
—
34.6
1.0
During fiscal 2021, operating revenues increased $198.0 million and natural gas purchases increased $73.7 million, due
primarily to increased natural gas price and volumes compared to the prior period, along with volatility related to the extreme
weather in the mid-continent and southern regions of the U.S. during February 2021.
Future results at Energy Services are contingent upon natural gas market price volatility driven by variations in both the
supply and demand balances caused by weather and other factors. As a result, variations in weather patterns in the key market
areas served may affect earnings during the fiscal year. Changes in market fundamentals, such as an increase in supply and
decrease in demand due to warmer temperatures, and reduced volatility, can negatively impact Energy Services’ earnings. See
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Natural Gas Distribution
Segment for TETCO M-3 Daily Prices, which illustrates the daily natural gas prices in the Northeast market region.
Operation and Maintenance Expense
O&M expense increased $33.5 million during fiscal 2021, compared with fiscal 2020, due primarily to increased
compensation costs, charitable contributions and bad debt expense.
Income Tax Provision (Benefit)
Income taxes increased $22.0 million during fiscal 2021, compared with fiscal 2020, due primarily to increased operating
income related to increased natural gas price volatility during February 2021, as discussed above.
Net Income (Loss)
Net income increased $70.0 million during fiscal 2021, compared with fiscal 2020, due primarily to increased operating
revenue, partially offset by higher natural gas purchases and O&M expenses, as previously discussed.
Page 50
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Non-GAAP Financial Measures
Management uses financial margin and NFE, non-GAAP financial measures, when evaluating the operating results of
Energy Services. Financial margin and NFE are based on removing timing differences associated with certain derivative
instruments, as discussed above. There is a related tax effect on current and deferred income tax expense corresponding with
NFE.
Management views these measures as representative of the overall expected economic result and uses these measures to
compare Energy Services’ results against established benchmarks and earnings targets as these measures eliminate the impact
of volatility on GAAP earnings as a result of timing differences associated with the settlement of derivative instruments. To the
extent that there are unanticipated impacts from changes in the market value related to the effectiveness of economic hedges,
Energy Services’ actual non-GAAP results can differ from the results anticipated at the outset of the transaction. Non-GAAP
financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a
substitute for, the comparable GAAP measure.
When Energy Services reconciles the most directly comparable GAAP measure to both financial margin and NFE, the
current period unrealized gains and losses on derivatives are excluded as a reconciling item. Financial margin and NFE also
exclude the effects of economic hedging of the value of our natural gas in storage and, therefore, only include realized gains and
losses related to natural gas withdrawn from storage, effectively matching the full earnings effects of the derivatives with
realized margins on the related physical natural gas flows.
Financial Margin
The following table is a computation of Energy Services’ financial margin for the fiscal years ended September 30.
(Thousands)
Operating revenues
Less: Natural gas purchases
Add:
Unrealized (gain) loss on derivative instruments and related transactions (1)
Effects of economic hedging related to natural gas inventory (2)
Financial margin
2021
2020
2019
$ 1,228,420 $ 1,030,419 $ 1,742,791
1,098,261 1,024,579 1,719,519
58,362
(8,583)
(42,405)
12,690
1,195
4,309
$ 146,116 $
9,947 $
28,776
(1)
(2)
Includes unrealized (gains) losses related to an intercompany transaction between NJNG and Energy Services that have been eliminated in consolidation
of approximately $(3.2) million, $(809,000) and $995,000, net of taxes for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.
Effects of hedging natural gas inventory transactions where the economic impact is realized in a future period.
A reconciliation of operating income, the closest GAAP financial measure to Energy Services’ financial margin, is as
follows for the fiscal years ended September 30:
(Thousands)
Operating income (loss)
Add:
Operation and maintenance
Depreciation and amortization
Subtotal
Add:
Unrealized loss (gain) on derivative instruments and related transactions
Effects of economic hedging related to natural gas inventory
Financial margin
2021
2020
2019
$ 79,163 $ (11,651) $
2,211
50,885
111
130,159
17,368
123
5,840
20,943
118
23,272
58,362
(42,405)
$ 146,116 $
1,195
(8,583)
12,690
4,309
9,947 $ 28,776
Financial margin increased $136.2 million during fiscal 2021, compared with fiscal 2020, due primarily to volatility
related to the extreme weather in the mid-continent and southern regions of the U.S. during February 2021, as previously
discussed.
Page 51
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Net Financial Earnings
A reconciliation of Energy Services’ net income (loss), the most directly comparable GAAP financial measure to NFE, is
as follows for the fiscal years ended September 30:
(Thousands)
Net income (loss)
Add:
2021
2020
$ 58,957 $ (11,008) $ (1,268)
2019
Unrealized loss (gain) on derivative instruments and related transactions
Tax effect (1)
Effects of economic hedging related to natural gas inventory
Tax effect
Net financial earnings
1,195
58,362
(8,583)
(294)
2,044
(13,875)
4,309
(42,405) 12,690
10,078
(1,024)
(3,016)
$ 71,117 $ (7,873) $ 2,918
(1)
Includes taxes related to an intercompany transaction between NJNG and Energy Services that have been eliminated in consolidation of approximately
$988,000, $252,000 and $(310,000) for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.
NFE increased $79.0 million during fiscal 2021, compared with fiscal 2020, due primarily to volatility related to the
extreme weather in the mid-continent and southern regions of the U.S. during February 2021, as previously discussed.
Future results are subject to Energy Services’ ability to expand its wholesale sales and service activities and are
contingent upon many other factors, including an adequate number of appropriate and credit-qualified counterparties in an
active and liquid natural marketplace; volatility in the natural gas market due to weather or other fundamental market factors
impacting supply and/or demand; transportation, storage and/or other market arbitrage opportunities; sufficient liquidity in the
overall energy trading market; and continued access to liquidity in the capital markets.
Storage and Transportation Segment
Overview
Our Storage and Transportation segment invests in natural gas assets, such as natural gas transportation and storage
facilities. We believe that acquiring, owning and developing these storage and transportation assets, which operate under a tariff
structure that has either cost- or market-based rates, can provide us a growth opportunity. Our Storage and Transportation
segment is subject to various risks, including the construction, development and operation of our transportation and storage
assets, obtaining necessary governmental, environmental and regulatory approvals, our ability to obtain necessary property
rights and our ability to obtain financing at reasonable costs for the construction, operation and maintenance of our assets. In
addition, our storage and transportation assets may be subject to risk associated with the COVID-19 pandemic, such as
disruption to the supply chain and availability of critical equipment and supplies, disruptions to the availability of our
specialized workforce and contractors and changes to demand for natural gas, transportation and other downstream activities.
Our Storage and Transportation segment is comprised of Leaf River, a 32.2 million Dth salt dome natural gas storage
facility that operates under market-based rates and Adelphia Gateway, an existing 84-mile pipeline in southeastern
Pennsylvania. Adelphia Gateway operates under cost of service rates but can enter into negotiated rates with counterparties. The
northern portion of the pipeline was operational upon acquisition and it currently serves two natural gas generation facilities.
On October 5, 2020, we began the conversion of the southern zone of the pipeline to natural gas.
Our Storage and Transportation segment also has a 50 percent ownership interest in Steckman Ridge, a storage facility
that operates under market-based rates and a 20 percent interest in PennEast, a partnership whose purpose was to construct and
operate a 120-mile natural gas pipeline that would have extended from northeast Pennsylvania to western New Jersey.
PennEast received a Certificate of Public Convenience and Necessity for the project from FERC on January 19, 2018.
However, because of numerous regulatory and legal challenge, we evaluated our equity investment in PennEast for impairment
as of June 30, 2021, and determined that it was other-than-temporarily impaired. We estimated the fair value of our investment
in PennEast using probability weighted scenarios assigned to discounted future cash flows. The impairment is the result of
management's estimates and assumptions regarding the likelihood of certain outcomes related to required regulatory approvals
and pending legal matters, the timing of which remains uncertain, the timing and magnitude of construction costs and in-service
dates, the evaluation of the current environmental and political climate as it relates to interstate pipeline development, and
transportation capacity revenues and discount rates.
Page 52
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
As of September 30, 2021, we recognized an other-than-temporary impairment charge of $92.0 million, or approximately
$74.5 million, net of income taxes. The other-than-temporary impairment is recorded in equity in (losses) earnings from
affiliates in the Consolidated Statements of Operations. On September 27, 2021, the PennEast partnership determined that this
project is no longer supported and all further development has ceased. It is possible that future developments could impact the
fair value and could result in the recognition of additional impairment charges.
As of September 30, 2021, our investments in Steckman Ridge and PennEast were $109.0 million and $5.5 million,
respectively.
Operating Results
The financial results of our Storage and Transportation segment for the fiscal years ended September 30, are summarized
as follows:
(Thousands)
Operating revenues (1)
Operating expenses
Natural gas purchases
Operation and maintenance
Depreciation and amortization
Total operating expenses
Operating income
Other income, net
Interest expense, net
Income tax (benefit) provision
Equity in earnings of affiliates
Net (loss) income
2021
2020
2019
$
51,020 $
44,728 $
—
1,266
29,135
9,960
40,361
10,659
5,931
13,348
(10,043)
(81,072)
(67,787) $
1,122
21,862
9,293
32,277
12,451
7,328
13,124
4,247
15,903
18,311 $
—
4,043
6
4,049
(4,049)
7,345
2,185
2,254
15,832
14,689
$
(1)
Includes related party transactions of approximately $1.8 million and $2.7 million during fiscal 2021 and fiscal 2020, respectively, which are eliminated
in consolidation.
Operation Revenues
Operating revenue in fiscal 2021 increased $6.3 million, compared with fiscal 2020, due to increased operating revenues
at Leaf River and Adelphia Gateway.
Equity in earnings of affiliates decreased $97.0 million during fiscal 2021, compared with fiscal 2020, due primarily to
the impairment of our equity method investment in PennEast.
Operation and Maintenance Expense
O&M increased $7.3 million during fiscal 2021, compared with fiscal 2020, due primarily to operations of Adelphia
Gateway and increases at Leaf River.
Depreciation Expense
Depreciation expense increased $667,000 during fiscal 2021, compared with fiscal 2020, due primarily to operations of
Adelphia Gateway during fiscal 2021, that were not present in the first quarter of fiscal 2020.
Interest Expense
Interest expense, net increased $224,000 during fiscal 2021, compared with fiscal 2020, due primarily to higher interest
expense related to the acquisition of Leaf River and Adelphia Gateway during fiscal 2020.
Page 53
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Net Income
Net income in fiscal 2021 decreased $86.1 million, compared with fiscal 2020, due primarily to the impairment of our
equity method investment in PennEast, as previously discussed.
Non-GAAP Financial Measures
Management uses NFE, a non-GAAP financial measure, when evaluating the operating results of our Storage and
Transportation segment. We feel that the impairment of our equity method investment in PennEast is a special item that is not
indicative of our ongoing performance and its impact has been excluded for NFE purposes. The details of such adjustments can
be found in the table below. Non-GAAP financial measures are not in accordance with, or an alternative to GAAP, and should
be considered in addition to, and not as a substitute for the comparable GAAP measure. A reconciliation of Storage and
Transportations' net income, the most directly comparable GAAP financial measure to NFE is as follows:
(Thousands)
Net (loss) income
Add:
Impairment of equity method investment
Tax effect
Net financial earnings
2021
2020
2019
$
(67,787) $
18,311 $
14,689
92,000
(11,167)
13,046 $
—
—
18,311 $
—
—
14,689
$
NFE decreased $5.3 million during fiscal 2021, compared with fiscal 2020, due primarily to increased O&M and
depreciation expense, partially offset by increased operating revenue at Leaf River and Adelphia Gateway, as previously
discussed.
Home Services and Other Operations
Overview
The financial results of Home Services and Other consist primarily of the operating results of NJRHS. NJRHS provides
service, sales and installation of appliances to approximately 106,000 service contract customers and has been focused on
growing its installation business and expanding its service contract customer base. Home Services and Other also includes
organizational expenses incurred at NJR and rental income at CR&R.
Operating Results
The condensed consolidated financial results of Home Services and Other for the fiscal years ended September 30, are
summarized as follows:
(Thousands)
Operating revenues
Operation and maintenance
Income tax (provision) benefit
Net (loss) income
Operating Revenues
2021
2020
2019
$
$
$
$
52,229 $
47,214 $
(196) $
(826) $
51,017 $
41,529 $
(2,478) $
5,784 $
50,902
44,846
1,428
1,637
Operating revenues increased $1.2 million during fiscal 2021, compared with fiscal 2020, due primarily to increased
service contract and installation revenue at Home Services.
Operation and Maintenance Expense
O&M expense increased $5.7 million during fiscal 2021, compared with fiscal 2020, due primarily to increased consulting
expenses related to technology improvement projects and higher compensation costs.
Page 54
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Income Tax (Benefit) Provision
Income tax benefit decreased $2.3 million during fiscal 2021, compared with fiscal 2020, due primarily to tax credits and
impacts of New Jersey corporate business tax reform recognized in the prior year that did not recur.
Net Income
Net income decreased $6.6 million during fiscal 2021, compared with fiscal 2020, due primarily to increased shared
corporate costs, information technology costs and compensation expense along with decreased income tax benefit as described
above.
Non-GAAP Financial Measures
NFE is based on removing timing differences associated with NJR's variable-for-fixed interest rate swap. Non-GAAP
financial measures are not in accordance with, or an alternative to, GAAP, and should be considered in addition to, and not as a
substitute, for the comparable GAAP measure. A reconciliation of Home Services and Other's net income for the fiscal years
ended September 30, to the GAAP financial measure most directly comparable to NFE, is as follows:
(Thousands)
Net (loss) income
Add:
Unrealized loss on derivative instruments and related transactions
Tax effect
Net financial (loss) earnings
Liquidity and Capital Resources
2021
2020
2019
$
(826) $
5,784 $
1,637
—
—
(826) $
—
—
5,784 $
381
(107)
1,911
$
Our objective is to maintain an efficient consolidated capital structure that reflects the different characteristics of each
reporting segment and business operations and provides adequate financial flexibility for accessing capital markets as required.
Our consolidated capital structure as of September 30, was as follows:
Common stock equity
Long-term debt
Short-term debt
Total
Common Stock Equity
2021
2020
38 %
51
11
100 %
40 %
56
4
100 %
We satisfy our external common equity requirements, if any, through issuances of our common stock, including the
proceeds from stock issuances under our DRP. The DRP allows us, at our option, to use treasury shares or newly issued shares
to raise capital. On September 28, 2021, we registered 2.5 million shares of additional common stock for issuance under the
DRP. NJR raised approximately $15.1 million of equity through the DRP by issuing approximately 290,000 shares of common
stock and approximately 141,000 shares of treasury stock during fiscal 2021, and raised $18.1 million during fiscal 2020, by
issuing approximately 520,000 shares of treasury stock. There were no shares of common stock issued through the waiver
discount feature of the DRP during fiscal 2021 and 2020.
Page 55
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
In December 2019, we completed an equity offering of 6,545,454 common shares, consisting of 5,333,334 common
shares issued directly by NJR and 1,212,120 common shares issuable pursuant to forward sales agreements with investment
banks. The issuance of 5,333,334 common shares resulted in proceeds of approximately $212.9 million, net of issuance costs,
and was reflected in shareholders' equity and as a financing activity on the statement of cash flows.
Under the forward sale agreements, a total of 1,212,120 common shares were borrowed from third parties and sold to the
underwriters. Each forward sale agreement allows us, at our election and prior to September 30, 2020, to physically settle the
forward sale agreements by issuing common shares in exchange for net proceeds at the then-applicable forward sale price
specified by the agreement, which was initially $40.0125 per share, or, alternatively, to settle the forward sale agreements in
whole or in part through the delivery or receipt of shares or cash. The forward sale price was subjected to adjustment daily
based on a floating interest rate factor and would decrease with respect to certain fixed amounts specified in the agreements,
such as dividends.
On September 18, 2020, we amended our forward sale agreements to extend the maturity date of such forward sales
agreements from September 30, 2020 to September 10, 2021. On March 3, 2021, we cash settled a portion of the forward sale
agreement for a payout of approximately $388,000 in lieu of the issuance of 727,272 common shares. On May 26, 2021, we
cash settled the rest of the forward sale agreements for a payout of approximately $2.4 million in lieu of the issuance of 484,848
common shares.
In 1996, the Board of Directors authorized us to implement a share repurchase program, which was expanded seven times
since the inception of the program, authorizing a total of 19.5 million shares of common stock for repurchase. As of September
30, 2021, we had repurchased a total of approximately 17.8 million of those shares and may repurchase an additional 1.7
million shares under the approved program. There were 746,000 shares repurchased during fiscal 2021 and no shares
repurchased during fiscal 2020.
Debt
NJR and its unregulated subsidiaries generally rely on cash flows generated from operating activities and the utilization
of committed credit facilities to provide liquidity to meet working capital and short-term debt financing requirements. NJNG
also relies on the issuance of commercial paper for short-term funding. NJR and NJNG periodically access the capital markets
to fund long-life assets through the issuance of long-term debt securities.
We believe that our existing borrowing availability, equity proceeds and cash flows from operations will be sufficient to
satisfy our working capital, capital expenditures and dividend requirements for at least the next 12 months. NJR, NJNG, Clean
Energy Ventures, Storage and Transportation and Energy Services currently anticipate that each of their financing requirements
for the next 12 months will be met primarily through the issuance of short and long-term debt, and meter or solar asset sale
leasebacks.
We believe that as of September 30, 2021, NJR and NJNG were, and currently are, in compliance with all existing debt
covenants, both financial and non-financial.
As a result of the COVID-19 pandemic there have been disruptions, uncertainty and volatility in the credit and capital
markets. The Company has been able to obtain sufficient financing to meet its funding requirements for operations and capital
expenditures, however, our ability to access funds from financial institutions at a reasonable cost may impact the nature and
timing of future capital market transactions.
Short-Term Debt
We use our short-term borrowings primarily to finance Energy Services’ short-term liquidity needs, Storage and
Transportation investments, share repurchases and, on an initial basis, Clean Energy Ventures’ investments. Energy Services’
use of high-volume storage facilities and anticipated pipeline park-and-loan arrangements, combined with related economic
hedging activities in the volatile wholesale natural gas market, create significant short-term cash requirements.
As of September 30, 2021, NJR had a revolving credit facility totaling $500 million, with $270.3 million available under
the facility.
NJNG satisfies its debt needs by issuing short-term and long-term debt based on its financial profile. The seasonal nature
of NJNG’s operations creates large short-term cash requirements, primarily to finance natural gas purchases and customer
accounts receivable. NJNG obtains working capital for these requirements, and for the temporary financing of construction and
MGP remediation expenditures and energy tax payments, based on its financial profile, through the issuance of commercial
paper supported by the NJNG Credit Facility or through short-term bank loans under the NJNG Credit Facility.
Page 56
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
NJNG’s commercial paper is sold through several commercial banks under an issuing and paying agency agreement and
is supported by the $250 million NJNG Credit Facility. As of September 30, 2021, the unused amount available under the
NJNG Credit Facility, including amounts allocated to the backstop under the commercial paper program and the issuance of
letters of credit, was $91.1 million.
Short-term borrowings were as follows:
(Thousands)
NJR
Notes Payable to banks:
Balance at end of period
Weighted average interest rate at end of period
Average balance for the period
Weighted average interest rate for average balance
Month end maximum for the period
NJNG
Commercial Paper and Notes Payable to banks:
Balance at end of period
Weighted average interest rate at end of period
Average balance for the period
Weighted average interest rate for average balance
Month end maximum for the period
Three Months
Ended
Twelve Months
Ended
September 30, 2021
$
$
$
$
$
$
219,100
1.05 %
163,018
1.08 %
219,100
158,200
0.17 %
5,814
0.16 %
158,200
$
$
$
$
$
$
219,100
1.05 %
119,982
1.05 %
219,100
158,200
0.17 %
2,699
0.09 %
158,200
Due to the seasonal nature of natural gas prices and demand, and because inventory levels are built up during its natural
gas injection season (April through October), NJR and NJNG’s short-term borrowings tend to peak in the November through
January time frame.
NJR
Based on its average borrowings during fiscal 2021, NJR’s average interest rate was 1.05 percent, resulting in interest
expense of approximately $1.2 million.
On September 2, 2021, NJR entered into a Second Amended and Restated Credit Agreement governing a $500 million
NJR Credit Facility. The agreement refinances a $425 million revolving credit facility that was scheduled to expire on
December 5, 2023, but has now been terminated. The NJR Credit Facility expires on September 2, 2026, subject to two mutual
options for a one-year extension beyond that date. The NJR Credit Facility permits the borrowing of revolving loans and
swingline loans, as well as a $75 million sublimit for the issuance of letters of credit. The NJR Credit Facility also includes an
accordion feature, which would allow NJR, in the absence of a default or event of default, to increase from time to time, with
the existing or new lenders, the revolving credit commitments under the NJR Credit Facility in minimum increments of $50
million increments up to a maximum of $250 million. Certain of NJR’s unregulated subsidiaries have guaranteed all of NJR’s
obligations under the NJR Credit Facility. The credit facility is used primarily to finance its share repurchases, to satisfy Energy
Services’ short-term liquidity needs and to finance, on an initial basis, unregulated investments.
As of September 30, 2021, NJR had eight letters of credit outstanding totaling $10.6 million, which reduced the amount
available under the NJR Credit Facility by the same amount. NJR does not anticipate that these letters of credit will be drawn
upon by the counterparties.
Neither NJNG nor its assets are obligated or pledged to support the NJR Credit Facility.
NJNG
As noted above, based on its average borrowings during fiscal 2021, NJNG’s average interest rate was 0.09 percent,
resulting in interest expense of approximately $54,000.
On September 2, 2021, NJNG entered into a Second Amended and Restated Credit Agreement governing a $250 million,
NJNG Credit Facility. The agreement refinances a $250 million revolving credit facility that was scheduled to expire on
December 5, 2023, but has now been terminated. The NJNG Credit Facility expires on September 2, 2026, subject to two
Page 57
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
mutual options for a one-year extension beyond that date. The NJNG Credit Facility permits the borrowing of revolving loans
and swingline loans, as well as a $30 million sublimit for the issuance of letters of credit. The NJNG Credit Facility also
includes an accordion feature, which would allow NJNG, in the absence of a default or event of default, to increase from time to
time, with the existing or new lenders, the revolving credit commitments under the NJNG Credit Facility in minimum
increments of $50 million up to a maximum of $100 million.
As of September 30, 2021, NJNG had two letters of credit outstanding for $731,000, which reduced the amount available
under NJNG’s committed credit facility by the same amount. NJNG does not anticipate that these letters of credit will be drawn
upon by the counterparties.
Short-Term Debt Covenants
Borrowings under the NJR Credit Facility and the NJNG Credit Facility are conditioned upon compliance with a
maximum leverage ratio (consolidated total indebtedness to consolidated total capitalization as defined in the applicable
agreements), of not more than .70 to 1.00 for NJR and .65 to 1.00 for NJNG. These revolving credit facilities contain customary
representations and warranties for transactions of this type. They also contain customary events of default and certain covenants
that will limit NJR’s or NJNG’s ability, beyond agreed upon thresholds, to, among other things:
incur additional debt;
incur liens and encumbrances;
•
•
• make dispositions of assets;
•
• merge, consolidate, transfer, sell or lease all or substantially all of the borrowers’ or guarantors’ assets.
enter into transactions with affiliates; and
These covenants are subject to a number of exceptions and qualifications set forth in the applicable agreements.
Default Provisions
The agreements governing our long-term and short-term debt obligations include provisions that, if not complied with,
could require early payment or similar actions. Default events include, but are not limited to, the following:
•
•
•
•
•
•
defaults for non-payment;
defaults for breach of representations and warranties;
defaults for insolvency;
defaults for non-performance of covenants;
cross-defaults to other debt obligations of the borrower; and
guarantor defaults.
The occurrence of an event of default under these agreements could result in all loans and other obligations of the
borrower becoming immediately due and payable and the termination of the credit facilities or term loan.
Long-Term Debt
NJR
As of September 30, 2021, NJR had the following outstanding:
•
•
•
•
•
•
•
•
•
•
$50 million of 3.25 percent senior notes due September 17, 2022;
$50 million of 3.20 percent senior notes due August 18, 2023;
$100 million of 3.48 percent senior notes due November 7, 2024;
$100 million of 3.54 percent senior notes due August 18, 2026;
$100 million of 3.96 percent senior notes due June 8, 2028;
$150 million of 3.29 percent senior notes due July 17, 2029;
$130 million of 3.50 percent senior notes due July 23, 2030;
$120 million of 3.13 percent senior notes due September 1, 2031;
$130 million of 3.60 percent senior notes due July 23, 2032; and
$80 million of 3.25 percent senior notes due September 1, 2033.
Neither NJNG nor its assets are obligated or pledged to support NJR’s long-term debt.
Page 58
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
On May 14, 2020, NJR entered into a Note Purchase Agreement for $260 million of its senior notes, of which $130
million are at a fixed interest rate of 3.5 percent, maturing in 2030, and $130 million are at a fixed interest rate of 3.6 percent,
maturing in 2032. On July 23, 2020, NJR issued all $260 million of the senior notes. The senior notes are unsecured and
guaranteed by certain unregulated subsidiaries of NJR.
On September 1, 2020, NJR entered into and issued a Note Purchase Agreement for $200 million of its senior notes, of
which $120 million are at a fixed interest rate of 3.13 percent, maturing in 2031, and $80 million are at a fixed interest rate of
3.25 percent, maturing in 2033. The senior notes are unsecured and guaranteed by certain unregulated subsidiaries of NJR.
NJNG
As of September 30, 2021, NJNG’s long-term debt consisted of $1.1 billion in fixed-rate debt issuances secured by the
Mortgage Indenture, with maturities ranging from 2024 to 2060, and $14.7 million in finance leases with various maturities
ranging from 2021 to 2037.
On May 14, 2020, NJNG entered into a Note Purchase Agreement for $125 million of its senior notes, of which $100
million were at an interest rate of 3.13 percent, maturing in 2050, and $25 million were at an interest rate of 3.33 percent,
maturing in 2060. On June 30, 2020, NJNG issued $50 million of 3.13 percent senior notes due June 30, 2050. On July 23,
2020, NJNG issued the remaining $50 million of 3.13 percent senior notes due July 23, 2050 and $25 million of 3.33 percent
senior notes due July 23, 2060. The senior notes are secured by an equal principal amount of NJNG’s FMBs issued under
NJNG’s Mortgage Indenture.
On September 1, 2020, NJNG entered into and issued a Note Purchase Agreement for $75 million of its senior notes, of
which $25 million were at an interest rate of 2.87 percent, maturing in 2050, and $50 million were at an interest rate of 2.97
percent, maturing in 2060. The senior notes are secured by an equal principal amount of NJNG’s FMBs issued under NJNG’s
Mortgage Indenture.
On October 28, 2021, NJNG entered into a Note Purchase Agreement for, and issued, $100 million of its senior notes, of
which $50 million were issued at an interest rate of 2.97 percent, maturing in 2051, and $50 million were issued at an interest
rate of 3.07 percent, maturing in 2061. The senior notes are secured by an equal principal amount of NJNG’s FMBs issued
under NJNG’s Mortgage Indenture.
NJR is not obligated directly or contingently with respect to the NJNG’s fixed-rate debt issuances.
Long-Term Debt Covenants and Default Provisions
The NJR and NJNG long-term debt instruments contain customary representations and warranties for transactions of their
type. They also contain customary events of default and certain covenants that will limit NJR or NJNG’s ability beyond agreed
upon thresholds to, among other things:
incur liens and encumbrances;
•
incur additional debt (including a covenant that limits the amount of consolidated total debt of the borrower at the end
of a fiscal quarter to 70 percent for NJR and 65 percent for NJNG of the consolidated total capitalization of the borrower,
as those terms are defined in the applicable agreements, and a covenant limiting priority debt to 20 percent of the
borrower’s consolidated total capitalization, as those terms are defined in the applicable agreements);
•
• make loans and investments;
• make dispositions of assets;
• make dividends or restricted payments;
•
• merge, consolidate, transfer, sell or lease substantially all of the borrower’s assets.
enter into transactions with affiliates; and
The aforementioned covenants are subject to a number of exceptions and qualifications set forth in the applicable note
purchase agreements.
In addition, the FMBs issued by NJNG under the Mortgage Indenture are subject to certain default provisions. Events of
Default, as defined in the Mortgage Indenture, consist mainly of:
•
•
•
•
failure for 30 days to pay interest when due;
failure to pay principal or premium when due and payable;
failure to make sinking fund payments when due;
failure to comply with any other covenants of the Mortgage Indenture after 30 days’ written notice from the Trustee;
Page 59
•
thereof; or
•
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
failure to pay or provide for judgments in excess of $30 million in aggregate amount within 60 days of the entry
certain events that are or could be the basis of a bankruptcy, reorganization, insolvency or receivership proceeding.
Upon the occurrence and continuance of such an Event of Default, the Mortgage Indenture, subject to any provisions of
law applicable thereto, provides that the Trustee may take possession and conduct the business of NJNG, may sell the trust
estate or proceed to foreclose the lien of the Mortgage Indenture. The interest rate on defaulted principal and interest, to the
extent permitted by law, on the FMBs issued under the Mortgage Indenture is the rate stated in the applicable supplement or, if
no such rate is stated, six percent per annum.
Sale Leaseback
NJNG
NJNG received $4.0 million and $9.9 million in fiscal 2020 and 2019, respectively, in connection with the sale leaseback
of its natural gas meters. During fiscal 2021, 2020 and 2019, NJNG exercised early purchase options with respect to meter
leases by making final principal payments of $1.2 million, $1.2 million and $1.1 million, respectively. NJNG continues to
evaluate this sale leaseback program based on current market conditions. As noted, natural gas meters are excepted from the
lien on NJNG property under the Mortgage Indenture. There were no natural gas meter sale leasebacks recorded during fiscal
2021.
Clean Energy Ventures
Clean Energy Ventures enters into transactions to sell the commercial solar assets concurrent with agreements to lease the
assets back over a period of five to 15 years. These transactions are considered failed sale leasebacks for accounting purposes
and are therefore treated as financing obligations, which are typically secured by the renewable energy facility asset and its
future cash flows from SREC and energy sales. ITCs and other tax benefits associated with these solar projects are transferred
to the buyer, if applicable; however, the lease payments are structured so that Clean Energy Ventures is compensated for the
transfer of the related tax incentives. Clean Energy Ventures continues to operate the solar assets, including related expenses,
and retain the revenue generated from SRECs and energy sales, and has the option to renew the lease or repurchase the assets
sold at the end of the lease term. During fiscal 2021 and 2020, Clean Energy Ventures received proceeds of $17.7 million and
$42.9 million, respectively, in connection with the sale leaseback of commercial solar projects. There were no solar sale
leasebacks recorded during fiscal 2019.
Contractual Obligations
As of September 30, 2021, the Company’s contractual cash obligations and financial commitments totaled $6.4 billion
consisting primarily of debt totaling $3.8 billion, as discussed in the prior section, along with various leasing obligations,
regulatory and remediation expenditures, and natural gas supply purchases and related demand fees. For a more detailed
explanation of these fees and their applicable payment due dates, see Note 4. Regulation, Note 14. Leases and Note 15.
Commitments and Contingent Liabilities in the accompanying Consolidated Financial Statements.
As of September 30, 2021, there were NJR guarantees covering approximately $192.4 million of natural gas purchases
and Energy Services demand fee commitments and ten outstanding letters of credit totaling $11.3 million, as previously
mentioned, not yet reflected in accounts payable on the Consolidated Balance Sheets.
NJR does not expect to be required to make additional contributions to fund the pension plans over the next three fiscal
years 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. In addition, as in the past, we may elect to make discretionary contributions to the plans in excess of the minimum
required amount. We made no discretionary contributions to the pension plans in fiscal 2021 and 2020. There are no federal
requirements to pre-fund OPEB benefits. However, we are required to fund certain amounts due to regulatory agreements with
the BPU. We anticipate that the annual funding level of the OPEB plans will range from $5 million to $10 million annually
over each of the next five years. Additional contributions may vary based on market conditions and various assumptions.
During fiscal 2021, committed and spent capital expenditures totaled $468.3 million. During fiscal 2022 and 2023,
NJNG’s total capital expenditures are projected to be $350.4 million and $324.3 million, respectively. NJNG expects to fund its
obligations with a combination of cash flow from operations, cash on hand, issuance of commercial paper, available capacity
under its revolving credit facility and the issuance of long-term debt. As of September 30, 2021, NJNG’s future MGP
Page 60
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
expenditures are estimated to be $135.0 million. For a more detailed description of MGP see Note 15. Commitments and
Contingent Liabilities in the accompanying Consolidated Financial Statements.
Estimated capital expenditures are reviewed on a regular basis and may vary based on the ongoing effects of regulatory
constraints, environmental regulations, unforeseen events and the ability to access capital.
During fiscal 2021, our Storage and Transportation segment had capital expenditures spent or accrued for the Adelphia
Gateway project totaling $113.0 million and capital expenditures spent or accrued for Leaf River totaling $10.8 million. During
fiscal 2022, we expect expenditures related to the Adelphia Gateway project to be between $90 million and $110 million and
expenditures related to Leaf River to be between $6 million and $10 million.
During fiscal 2021, Clean Energy Ventures had capital expenditures spent or accrued totaling $89.4 million. Clean
Energy Ventures’ expenditures include clean energy projects that support our goal to promote renewable energy. Accordingly,
Clean Energy Ventures enters into agreements to install solar equipment involving both residential and commercial projects.
We estimate the value of solar-related projects placed in service during fiscal 2022 to be between $235 million and $301
million.
Capital expenditures related to clean energy projects are subject to change due to a variety of factors that may affect our
ability to commence operations at these projects on a timely basis or at all, including sourcing projects that meet our investment
criteria, logistics associated with the start-up of residential and commercial solar projects, such as timing of construction
schedules, the permitting and regulatory process, any delays related to electric grid interconnection, economic trends or
unforeseen events and the ability to access capital or allocation of capital to other investments or business opportunities.
Energy Services does not currently anticipate any significant capital expenditures in fiscal 2022 and 2023.
On December 16, 2020, Energy Services entered into a series of asset management agreements with an investment grade
public utility to release pipeline capacity associated with certain natural gas transportation contracts. The utility will provide
certain asset management services and Energy Services may deliver natural gas to the utility in exchange for aggregate net
proceeds of approximately $500 million, payable through November 1, 2030. The asset management agreements include a
series of initial and permanent releases commencing on November 1, 2021. NJR will receive approximately $260 million in
cash from fiscal 2022 through fiscal 2024 and $34 million per year from fiscal 2025 through fiscal 2031 under the agreements.
Cash Flows
Operating Activities
Cash flows from operating activities during fiscal 2021 totaled $391.0 million compared with $213.5 million during fiscal
2020. Operating cash flows are primarily affected by variations in working capital, which can be impacted by several factors,
including:
•
seasonality of our business;
fluctuations in wholesale natural gas prices and other energy prices, including changes in derivative asset and liability
•
values;
•
•
•
•
•
•
•
•
timing of storage injections and withdrawals;
the deferral and recovery of natural gas costs;
changes in contractual assets utilized to optimize margins related to natural gas transactions;
broker margin requirements;
impact of unusual weather patterns on our wholesale business;
timing of the collections of receivables and payments of current liabilities;
volumes of natural gas purchased and sold; and
timing of SREC deliveries.
The increase of $177.5 million in cash flows from operating activities during fiscal 2021, compared with fiscal 2020, was
due primarily to increased earnings at Energy Services.
Page 61
New Jersey Resources Corporation
Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Investing Activities
Cash flows used in investing activities totaled $622.1 million during fiscal 2021, compared with $994.0 million during
fiscal 2020. The decrease of $371.9 million was due primarily to the acquisition of Leaf River and Adelphia Gateway in the
prior period that did not recur along with a decrease of $46.0 million in solar capital expenditures, partially offset by an increase
in capital expenditures of $86.3 million for utility plant investments and $85.9 million for Storage and Transportation.
Financing Activities
Financing cash flows generally are seasonal in nature and are impacted by the volatility in pricing in the natural gas and
other energy markets. NJNG’s inventory levels are built up during its natural gas injection season (April through October) and
reduced during withdrawal season (November through March) in response to the supply requirements of its customers. Changes
in financing cash flows can also be impacted by natural gas management and marketing activities at Energy Services and clean
energy investments at Clean Energy Ventures.
Cash flows used in financing activities totaled $117.8 million during fiscal 2021, compared with $895.9 million during
fiscal 2020. The decrease of $778.1 million is due primarily to increased long-term debt activity at NJR related to the
acquisitions of Leaf River and Adelphia along with the issuance of long-term debt at NJNG and higher proceeds from solar sale
leasebacks at Clean Energy Ventures in the prior period, partially offset by increased short-term debt in the current period.
Credit Ratings
The table below summarizes NJNG’s current credit ratings issued by two rating entities, Moody’s and Fitch, as of
September 30, 2021:
Corporate Rating
Commercial Paper
Senior Secured
Ratings Outlook
Moody’s
N/A
P-2
A1
Stable
Fitch
A-
F-2
A+
Stable
The Fitch ratings and outlook were reaffirmed on March 15, 2021. The Moody's ratings and outlook were reaffirmed on
May 11, 2021. NJNG's Moody's and Fitch ratings are investment-grade ratings. NJR is not a rated entity.
Although NJNG is not party to any lending agreements that would accelerate the maturity date of any obligation caused
by a failure to maintain any specific credit rating, if such ratings are downgraded below investment grade, borrowing costs
could increase, as would the costs of maintaining certain contractual relationships, and future financing and our access to capital
markets would be reduced. Even if ratings are downgraded without falling below investment grade, NJR and NJNG could face
increased borrowing costs under their credit facilities. A rating set forth above is not a recommendation to buy, sell or hold
NJR’s or NJNG’s securities and may be subject to revision or withdrawal at any time. Each rating set forth above should be
evaluated independently of any other rating.
The timing and mix of any external financings will target a common equity ratio that is consistent with maintaining
NJNG's current short-term and long-term credit ratings.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial Risk Management
Commodity Market Risks
Natural gas is a nationally traded commodity. Its prices are determined effectively by the NYMEX, CME, ICE and over-
the-counter markets. The prices on the NYMEX, CME, ICE and over-the-counter markets generally reflect the national balance
of natural gas supply and demand, but are also significantly influenced from time to time by other events.
Page 62
New Jersey Resources Corporation
Part II
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)
Our regulated and unregulated businesses are subject to market risk due to fluctuations in the price of natural gas. To
economically hedge against such fluctuations, we have entered into forwards, futures, options and swap agreements. To manage
these derivative instruments, we have well-defined risk management policies and procedures that include daily monitoring of
volumetric limits and monetary guidelines. Our natural gas businesses are conducted through two of our operating subsidiaries.
NJNG is a regulated utility that uses futures, options and swaps to provide relative price stability, and its recovery of natural gas
costs is governed by the BPU. Energy Services uses futures, options, swaps and physical contracts to economically hedge
purchases and sales of natural gas.
The following table reflects the changes in the fair market value of financial derivatives related to natural gas purchases
and sales:
(Thousands)
Natural Gas Distribution
Energy Services
Total
Balance
September 30,
2020
Increase
(Decrease) in Fair
Market Value
Less
Amounts
Settled
Balance
September 30,
2021
$
(211)
$
10,899
$
8,655
4,397
(15,908)
17,976
$ 4,186
$
(5,009)
$ 26,631
$ 2,033
(29,487)
$ (27,454)
There were no changes in methods of valuations during the fiscal year ended September 30, 2021.
The following is a summary of fair market value of financial derivatives as of September 30, 2021, excluding foreign
exchange contracts discussed below, by method of valuation and by maturity for each fiscal year period:
(Thousands)
Price based on NYMEX/CME
Price based on ICE
Total
2022
2023
2024 - 2026 After 2026
Total
Fair Value
$
(559) $
(46)
$ —
(29,702)
1,587
1,266
$ (30,261) $ 1,541
$ 1,266
$ —
—
$ —
$
(605)
(26,849)
$ (27,454)
The following is a summary of financial derivatives by type as of September 30, 2021:
Natural Gas Distribution
Energy Services
Total
(1) Million British thermal unit
Volume
Bcf
Futures
22.2
Price per
MMBtu (1)
$2.24 - $5.47
Futures
(13.4)
$2.41 - $8.42
Swaps
(0.3)
$2.72 - $3.08
Amounts included
in Derivatives
(Thousands)
$ 2,033
(28,881)
(606)
$ (27,454)
The following table reflects the changes in the fair market value of physical commodity contracts:
(Thousands)
Natural Gas Distribution - Prices based on other external data
Balance
September 30,
2020
$
2
Energy Services - Prices based on other external data
Total
(24,723)
$ (24,721)
Increase
(Decrease) in Fair
Market Value
Less
Amounts
Settled
791
(19,810)
(19,019)
773
(9,855)
(9,082)
Balance
September 30,
2021
$
20
(34,678)
$ (34,658)
Page 63
New Jersey Resources Corporation
Part II
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)
Foreign Currency Market Risks
The following table reflects the changes in the fair market value of financial derivatives related to foreign currency
hedges:
(Thousands)
Energy Services
Balance
September 30,
2020
Increase
(Decrease) in Fair
Market Value
Less
Amounts
Settled
Balance
September 30,
2021
$
(23)
239
92
$
124
There were no changes in methods of valuations during the fiscal year ended September 30, 2021.
The following is a summary of fair market value of financial derivatives related to foreign currency hedges as of
September 30, 2021, by method of valuation and by maturity for each fiscal year period:
(Thousands)
2022 2023 2024 - 2026 After 2026
Total
Fair Value
Prices based on other external data
$ 122
2
—
—
$
124
Our market price risk is predominately linked with changes in the price of natural gas at the Henry Hub, the delivery
point for the NYMEX natural gas futures contracts. Based on price sensitivity analysis, an illustrative 10 percent movement in
the natural gas futures contract price, for example, increases (decreases) the reported derivative fair value of all open,
unadjusted Henry Hub natural gas futures and fixed price swap positions by approximately $10.6 million. This analysis does
not include potential changes to reported credit adjustments embedded in the $(45.2) million reported fair value.
Derivative Fair Value Sensitivity Analysis
(Thousands)
Henry Hub Futures and Fixed Price Swaps
Percent increase in NYMEX natural gas futures prices
0%
5%
10%
15%
20%
Estimated change in derivative fair value
$
— $
(5,309) $ (10,617) $ (15,926) $ (21,234)
Ending derivative fair value
$ (45,181) $ (50,490) $ (55,798) $ (61,107) $ (66,415)
Percent decrease in NYMEX natural gas futures prices
0%
(5)%
(10)%
(15)%
(20)%
Estimated change in derivative fair value
$
— $
5,309 $ 10,617 $ 15,926 $ 21,234
Ending derivative fair value
$ (45,181) $ (39,872) $ (34,564) $ (29,255) $ (23,947)
Wholesale Credit Risk
Natural Gas Distribution and Energy Services engage in wholesale marketing activities and Clean Energy Ventures
engages in SREC sales. We monitor and manage the credit risk of our operations through credit policies and procedures that
management believes reduce overall credit risk. These policies include a review and evaluation of prospective counterparties’
financial statements and/or credit ratings, daily monitoring of counterparties’ credit limits, daily communication with traders
regarding credit status and the use of credit mitigation measures, such as minimum margin requirements, collateral
requirements and netting agreements. Examples of collateral include letters of credit and cash received for either prepayment or
margin deposit.
Our Risk Management Committee continuously monitors our credit risk management policies and procedures and is
composed of individuals from NJR-affiliated companies. The Risk Management Committee meets at least once a month and,
among other things, evaluates the effectiveness of existing credit policies and procedures, reviews material transactions and
discusses emerging issues.
The following is a summary of gross and net credit exposures, grouped by investment and non-investment grade
counterparties, as of September 30, 2021. Gross credit exposure for Energy Services is defined as the unrealized fair value of
derivative and energy trading contracts, plus any outstanding wholesale receivable for the value of natural gas or power
delivered and/or financial derivative commodity contract that has settled for which payment has not yet been received. Gross
credit exposure for Storage and Transportation is defined as demand and estimated usage fees for contracted services and/or
Page 64
New Jersey Resources Corporation
Part II
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)
market value of loan balances for which payment has not yet been received. Net credit exposure is defined as gross credit
exposure reduced by collateral received from counterparties and/or payables, where netting agreements exist. The amounts
presented below exclude accounts receivable for NJNG retail natural gas sales and services.
Energy Services’, Clean Energy Ventures’ and Storage and Transportation’s counterparty credit exposure as of
September 30, 2021, is as follows:
(Thousands)
Investment grade
Noninvestment grade
Internally-rated investment grade
Internally-rated noninvestment grade
Total
NJNG’s counterparty credit exposure as of September 30, 2021, is as follows:
(Thousands)
Investment grade
Noninvestment grade
Internally-rated investment grade
Internally-rated noninvestment grade
Total
Gross Credit
Exposure
Net Credit
Exposure
$ 155,810
9,964
25,456
34,464
$ 225,694
$ 121,553
1,706
22,252
15,510
$ 161,021
Gross Credit
Exposure
Net Credit
Exposure
$
$
5,870
927
371
2,125
9,293
$
$
5,351
—
108
97
5,556
Due to the inherent volatility in the market price for natural gas, electricity and SRECs, the market value of contractual
positions with individual counterparties could exceed established credit limits or collateral provided by those counterparties. If a
counterparty failed to perform the obligations under its contract (for example, failed to make payment for natural gas received),
we could sustain a loss. This loss would comprise the loss on natural gas delivered but not paid for and/or the cost of replacing
natural gas not delivered or received at a price that exceeds the original contract price. Any such loss could have a material
impact on our financial condition, results of operations or cash flows.
Effects of Interest Rate and Foreign Currency Rate Fluctuations
We are also exposed to changes in interest rates on our debt hedges, variable rate debt and changes in foreign currency
rates for our business conducted in Canada using Canadian dollars. We do not believe an immediate 10 percent increase or
decrease in interest rates or foreign currency rates would have a material effect on our operating results or cash flows.
For more information regarding the interest rate risk related to our short-term debt, please see the Liquidity and Capital
Resources - Debt section of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Effects of Inflation
Although inflation rates have been relatively low to moderate in recent years, including the three most recent fiscal years,
any change in price levels has an effect on operating results due to the capital-intensive and regulated nature of our utility
subsidiary. We attempt to minimize the effects of inflation through cost control, productivity improvements and regulatory
actions, when appropriate.
Page 65
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of New Jersey Resources Corporation is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal
control over financial reporting is a process designed to provide reasonable assurance to the Company’s Management and
Board of Directors regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP and includes policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial statements.
Under the supervision and with the participation of the Company’s management, including its principal executive officer
and principal financial officer, management conducted an evaluation of the effectiveness of the Company’s internal control over
financial reporting as of September 30, 2021. In making this assessment, management used the criteria for effective internal
control over financial reporting described in the Internal Control-Integrated Framework (2013) set forth by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on the assessment, management concluded that, as of
September 30, 2021, the Company’s internal control over financial reporting was effective to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP.
The conclusion of the Company’s principal executive officer and principal financial officer is based on the recognition
that there are inherent limitations in all systems of internal control over financial reporting. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements, errors or fraud. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has issued its report on the
effectiveness of the Company’s internal control over financial reporting as of September 30, 2021, which appears herein.
November 18, 2021
Page 66
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareowners and the Board of Directors of New Jersey Resources Corporation:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of New Jersey Resources Corporation and subsidiaries
(the “Company”) as of September 30, 2021 and 2020, and the related consolidated statements of operations, comprehensive
income, common stock equity, and cash flows, for each of the three years in the period ended September 30, 2021, and the
related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in
the period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2021, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated November 18, 2021, expressed an unqualified opinion on the Company's internal
control over financial reporting.
Change in Investment Tax Credit (“ITC”) Accounting Policy
As discussed in Note 2 to the financial statements, the Company has elected to change its method of accounting for ITCs
at Clean Energy Ventures from the flow through method to the deferral method during the year ended September 30, 2021. The
change in accounting principle has been retrospectively applied to the consolidated financial statements for the years ended
September 30, 2020 and 2019.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Page 67
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Regulation — Impact of Rate-Regulation on Various Account Balances and Disclosures — Refer to Notes 2 and 4 to the
financial statements
Critical Audit Matter Description
New Jersey Natural Gas Company (“NJNG”), a subsidiary of the Company, is a regulated gas distribution company that
serves customers in central and northern New Jersey. NJNG is subject to regulation by the New Jersey Board of Public Utilities
(the “BPU”), which has jurisdiction with respect to the rates of gas distribution companies in New Jersey. Management has
determined NJNG meets the requirements under accounting principles generally accepted in the United States of America to
prepare its financial statements in accordance with the ASC 980, Regulated Operations.
NJNG is subject to cost-based regulation; therefore, it is permitted to recover authorized operating expenses and earn a
reasonable return on its utility capital investments based on the BPU’s approval. The impact of the ratemaking process and
decisions authorized by the BPU allows NJNG to capitalize or defer certain costs that are expected to be recovered from its
customers as regulatory assets, and to recognize certain obligations representing amounts that are probable future expenditures
as regulatory liabilities in accordance with accounting guidance applicable to regulated operations. Regulatory decisions can
have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be
recovered by rates. Decisions to be made by the BPU in the future will impact the accounting for regulated operations,
including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that
may be required.
Accounting for the economics of rate-regulation impacts multiple financial statement line items and disclosures, such as
regulated property, plant, and equipment, regulatory assets and liabilities, operating revenues and depreciation expense. While
NJNG expects to recover costs from customers through regulated rates, there is a risk that the BPU will not approve full
recovery of such costs or full recovery of all amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate-regulation as a critical audit matter due to the significant judgments made by management to
support its assertions about the impact of regulatory orders on the financial statements, including assessing the probability of
both recovery in rates of incurred costs and refunds to customers. Given that management’s accounting judgments are based on
assumptions about the outcome of future decisions by the BPU, auditing these judgments requires specialized knowledge of
accounting for rate regulation and the rate setting process due to its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty around the impact of regulatory orders on the financial statements,
including the probability of recovery in rates of incurred costs and a refund to customers included the following, among others:
•
•
•
•
We tested the effectiveness of controls over the relevant regulatory account balances and disclosures, including
management’s controls over the monitoring and evaluation of regulatory developments that may affect the
probability of recovering costs in future rates or of a future reduction in rates.
We read relevant regulatory orders issued by the BPU for NJNG and other public utilities in New Jersey, regulatory
statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available
information to assess the probability of recovery in future rates or of a future reduction in rates based on
precedence of the BPU’s treatment of similar costs under similar circumstances. We evaluated the external
information and compared that to management’s assertions regarding the probability of recovery or refund of
regulatory asset and liability balances for completeness.
We obtained an analysis from management regarding the probability of recovery for regulatory assets or refund or
future reduction in rates for regulatory liabilities in order to assess management’s assertion that amounts are
probable of recovery or refund or a future reduction in rates.
We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded
and regulatory developments.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
November 18, 2021
We have served as the Company's auditor since 1951.
Page 68
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareowners and the Board of Directors of New Jersey Resources Corporation:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of New Jersey Resources Corporation and subsidiaries (the
“Company”) as of September 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of September 30, 2021, based on
criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended September 30, 2021, of the Company and
our report dated November 18, 2021, expressed an unqualified opinion on those financial statements and included an
explanatory paragraph regarding the Company’s change in accounting policy.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
November 18, 2021
Page 69
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands, except per share data)
Fiscal years ended September 30,
OPERATING REVENUES
Utility
Nonutility
Total operating revenues
OPERATING EXPENSES
Natural gas purchases:
Utility
Nonutility
Related parties
Operation and maintenance
Regulatory rider expenses
Depreciation and amortization
Total operating expenses
OPERATING INCOME
Other income, net
Interest expense, net of capitalized interest
INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF
AFFILIATES
Income tax provision
Equity in (loss) earnings of affiliates
NET INCOME
EARNINGS PER COMMON SHARE
Basic
Diluted
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic
Diluted
2021
2020
2019
$ 731,459 $ 729,923 $ 710,793
1,425,154 1,223,745 1,881,252
2,156,613 1,953,668 2,592,045
247,734
275,831
7,013
366,905
38,304
111,387
6,083
278,143
34,529
107,368
320,256
1,096,920 1,022,805 1,716,098
7,948
268,141
33,937
81,109
1,868,263 1,724,759 2,427,489
164,556
11,273
47,082
128,747
228,909
23,878
67,597
185,190
288,350
24,597
78,559
234,388
33,286
(83,212)
18,440
13,628
$ 117,890 $ 163,007 $ 123,935
36,494
14,311
$1.23
$1.22
$1.72
$1.71
$1.39
$1.38
96,227
96,560
94,798
95,103
89,242
89,596
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Thousands)
Fiscal years ended September 30,
Net income
Other comprehensive income (loss), net of tax:
Reclassifications of losses to net income on derivatives designated as hedging
instruments, net of tax of $(350), $(32) and $0, respectively
Loss on derivatives designated as hedging instruments, net of tax of $0, $3,203 and
$0, respectively
Adjustment to postemployment benefit obligation, net of tax of $(2,575), $567, and
$6,106, respectively
Other comprehensive income (loss)
Comprehensive income
See Notes to Consolidated Financial Statements
Page 70
2021
2020
$ 117,890 $ 163,007 $ 123,935
2019
1,021
108
—
(10,505)
—
—
8,766
9,787
(15,731)
(15,731)
$ 127,677 $ 150,479 $ 108,204
(2,131)
(12,528)
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
Fiscal years ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES
2020
2021
2019
Net income
Adjustments to reconcile net income to cash flows from operating activities
Unrealized loss (gain) on derivative instruments
Gain on sale of available for sale securities
Gain on sale of businesses
Impairment loss on investment in equity method investees
Depreciation and amortization
Amortization of acquired wholesale energy contracts
Allowance for equity used during construction
Allowance for doubtful accounts
Noncash lease expense
Deferred income taxes
Equivalent value of ITCs recognized on equipment financing
Manufactured gas plant remediation costs
Equity in earnings, net of distributions received from equity investees
Cost of removal - asset retirement obligations
Contributions to postemployment benefit plans
Taxes related to stock-based compensation
Changes in:
Components of working capital
Other noncurrent assets
Other noncurrent liabilities
Cash flows from operating activities
CASH FLOWS USED IN INVESTING ACTIVITIES
Expenditures for:
Utility plant
Solar and wind equipment
Storage and transportation assets and other
Cost of removal
Acquisition of assets, net of cash acquired of $5.1 million
Distributions from equity investees in excess of equity in earnings
Investments in equity investees
Proceeds from sale of available for sale securities, net
Proceeds from sale of businesses, net of closing costs
Cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt
Payments of long-term debt
Proceeds from term loan
Payments of term loan
Proceeds from (payments of) short-term debt, net
Proceeds from sale leaseback transaction - solar
Proceeds from sale leaseback transaction - natural gas meters
Payments of common stock dividends
Proceeds from equity offering
Cash settlement of equity forward agreement
Proceeds from waiver discount issuance of common stock
Proceeds from issuance of common stock
Purchases of treasury stock
Tax withholding payments related to net settled stock compensation
Cash flows from financing activities
Change in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
CHANGES IN COMPONENTS OF WORKING CAPITAL
Receivables
Inventories
Recovery of natural gas costs
Natural gas purchases payable
Natural gas purchases payable - related parties
Accounts payable and other
Prepaid expenses
Prepaid and accrued taxes
Restricted broker margin accounts
Customers’ credit balances and deposits
Other current assets, net
Total
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest (net of amounts capitalized)
Income taxes
Accrued capital expenditures
See Notes to Consolidated Financial Statements
Page 71
$
117,890
$
163,007
$
123,935
54,203
—
—
92,000
111,387
4,604
(20,303)
18,986
3,920
23,796
(6,482)
(17,532)
(3,046)
(1,129)
(7,669)
(159)
10,254
13,715
(3,481)
390,954
(376,312)
(87,852)
(110,130)
(50,316)
—
3,183
(690)
—
—
(622,117)
—
(18,007)
—
—
251,950
17,673
—
(116,960)
—
(2,823)
—
15,105
(27,217)
(1,938)
117,783
(113,380)
119,423
6,043
(81,366)
(25,257)
(13,124)
72,752
70
30,063
(1,527)
(3,449)
28,013
6,652
(2,573)
10,254
78,650
6,381
64,626
$
$
$
$
$
$
(9,644)
—
—
—
107,368
4,924
(17,053)
2,238
3,851
34,346
(6,482)
(7,651)
(5,848)
(245)
(9,032)
647
(8,096)
(44,129)
5,280
213,481
(290,040)
(133,841)
(24,228)
(22,059)
(523,647)
1,907
(2,117)
—
—
(994,025)
660,000
(20,286)
350,000
(350,000)
99,900
42,927
4,000
(117,804)
212,900
—
—
18,080
—
(3,813)
895,904
115,360
4,063
119,423
5,065
(3,254)
17,479
(41,326)
1
20,390
2,548
(2,376)
(6,097)
(1,182)
656
(8,096)
66,146
7,594
19,434
2,881
(1,567)
(645)
—
81,109
8,424
(6,492)
2,387
—
(2,822)
(6,482)
(13,878)
(4,156)
(258)
(8,157)
1,290
(27,759)
8,193
38,125
194,128
(304,809)
(157,828)
(23,100)
(40,195)
—
2,428
(4,102)
34,484
205,745
(287,377)
467,900
(218,638)
—
—
(126,500)
—
9,895
(104,059)
—
—
57,391
16,717
—
(7,104)
95,602
2,353
1,710
4,063
63,795
14,265
(15,733)
(74,031)
(360)
2,256
(1,193)
2,271
(22,004)
(209)
3,184
(27,759)
50,371
12,647
30,725
$
$
$
$
$
$
$
$
$
$
$
$
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands)
September 30,
PROPERTY, PLANT AND EQUIPMENT
Utility plant, at cost
Construction work in progress
Nonutility plant and equipment, at cost
Construction work in progress
Total property, plant and equipment
Accumulated depreciation and amortization, utility plant
Accumulated depreciation and amortization, nonutility plant and equipment
Property, plant and equipment, net
CURRENT ASSETS
Cash and cash equivalents
Customer accounts receivable:
Billed
Unbilled revenues
Allowance for doubtful accounts
Regulatory assets
Natural gas in storage, at average cost
Materials and supplies, at average cost
Prepaid expenses
Prepaid and accrued taxes
Derivatives, at fair value
Restricted broker margin accounts
Other current assets
Total current assets
NONCURRENT ASSETS
Investments in equity investees
Regulatory assets
Operating lease assets
Derivatives, at fair value
Intangible assets
Software costs
Other noncurrent assets
Total noncurrent assets
Total assets
See Notes to Consolidated Financial Statements
Page 72
2021
2020
$ 3,324,611 $ 2,800,052
182,196
379,846
1,124,896
1,108,512
365,346
176,556
4,997,049
4,464,966
(611,827)
(601,635)
(171,709)
(140,562)
4,213,513
3,722,769
4,749
117,012
212,838
134,173
10,351
(24,652)
30,118
9,226
(7,242)
36,530
193,606
167,504
19,561
8,166
51,211
35,251
72,840
20,406
6,639
24,301
23,310
69,444
20,235
634,274
21,029
622,332
114,529
522,099
173,928
3,403
5,029
5,582
49,921
208,375
527,459
131,769
3,349
10,060
4,707
85,657
874,491
971,376
$ 5,722,278 $ 5,316,477
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
CAPITALIZATION AND LIABILITIES
(Thousands, except share data)
September 30,
CAPITALIZATION
Common stock, $2.50 par value; authorized 150,000,000 shares;
outstanding shares September 30, 2021 — 95,709,662; September 30, 2020 — 95,949,183
Premium on common stock
Accumulated other comprehensive loss, net of tax
Treasury stock at cost and other;
shares September 30, 2021 — 762,313; September 30, 2020 — 148,310
Retained earnings
Common stock equity
Long-term debt
Total capitalization
CURRENT LIABILITIES
Current maturities of long-term debt
Short-term debt
Natural gas purchases payable
Natural gas purchases payable to related parties
Accounts payable and other
Dividends payable
Accrued taxes
Regulatory liabilities
New Jersey Clean Energy Program
Derivatives, at fair value
Operating lease liabilities
Customers’ credit balances and deposits
Total current liabilities
NONCURRENT LIABILITIES
Deferred income taxes
Deferred investment tax credits
Deferred gain
Derivatives, at fair value
Manufactured gas plant remediation
Postemployment employee benefit liability
Regulatory liabilities
Operating lease liabilities
Asset retirement obligation
Other noncurrent liabilities
Total noncurrent liabilities
Commitments and contingent liabilities (Note 15)
Total capitalization and liabilities
See Notes to Consolidated Financial Statements
Page 73
2021
2020
$
240,644 $
240,243
502,584
491,982
(34,528)
(44,315)
(12,448)
8,485
934,610
947,501
1,630,862
1,643,896
2,162,164
2,259,466
3,793,026
3,903,362
72,840
27,236
377,300
125,350
168,697
95,945
861
791
225,242
141,500
34,768
3,356
28,007
16,308
87,145
4,300
32,586
31,902
2,717
26,188
15,570
33,865
6,724
25,934
1,051,410
533,722
163,530
3,010
847
13,497
135,012
169,267
193,051
141,363
46,306
11,959
138,081
3,332
1,035
13,352
150,590
237,221
196,450
95,030
33,723
10,579
877,842
879,393
$ 5,722,278 $ 5,316,477
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
CONSOLIDATED STATEMENTS OF COMMON STOCK EQUITY
(Thousands)
Number
of Shares
Common
Stock
Premium
on
Common
Stock
Accumulated
Other
Comprehensive
(Loss) Income
Treasury
Stock And
Other
Retained
Earnings
Total
Balance at September 30, 2018
88,293 $ 226,196 $ 274,748
$ (12,610)
$ (76,473) $ 882,803 $ 1,294,664
Net income
Other comprehensive loss
Common stock issued:
Incentive compensation plan
Dividend reinvestment plan (1)
Waiver discount
Cash dividend declared ($1.19 per share)
Treasury stock and other
Adoption of ASU 2016-01
Adoption of ASU 2017-05
Adoption of ASU 2014-09/ASC 606
—
—
182
351
1,181
—
(8)
—
—
—
—
—
453
—
—
—
—
—
—
—
—
—
—
(15,731)
— 123,935
123,935
—
—
(15,731)
3,334
2,718
10,531
—
—
—
—
—
—
—
—
—
—
(3,446)
—
—
—
13,945
46,860
—
—
—
3,787
16,663
57,391
— (106,342)
(106,342)
5,232
—
—
—
—
3,446
4,970
(2,736)
5,232
—
4,970
(2,736)
Balance at September 30, 2019
89,999 226,649 291,331
(31,787)
(10,436) 906,076 1,381,833
Net income
Other comprehensive loss
Common stock issued:
Common stock offering
Incentive compensation plan
Dividend reinvestment plan (1)
Cash dividend declared ($1.27 per share)
Treasury stock and other
—
—
—
—
—
—
—
(12,528)
— 163,007
163,007
—
—
(12,528)
5,333
13,333 199,567
105
520
—
(8)
261
—
—
—
3,511
2,833
—
(5,260)
—
—
—
—
—
—
—
15,324
—
212,900
—
—
3,772
18,157
— (121,582)
(121,582)
3,597
—
(1,663)
Balance at September 30, 2020
95,949 240,243 491,982
(44,315)
8,485 947,501 1,643,896
Net income
Other comprehensive income
Common stock issued:
Common stock offering
Incentive compensation plan
Dividend reinvestment plan (1)
Cash dividend declared ($1.36 per share)
Treasury stock and other
—
—
—
—
—
—
—
9,787
— 117,890
117,890
—
—
9,787
—
84
431
—
(754)
—
(2,823)
210
191
—
—
4,053
9,372
—
—
—
—
—
—
—
—
—
5,593
—
—
—
(2,823)
4,263
15,156
— (130,781)
(130,781)
(26,526)
—
(26,526)
Balance at September 30, 2021
95,710 $ 240,644 $ 502,584
$ (34,528)
$ (12,448) $ 934,610 $ 1,630,862
(1) Shares sold through the DRP are issued from treasury stock at average cost, which may differ from the actual market price paid.
See Notes to Consolidated Financial Statements
Page 74
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
1. NATURE OF THE BUSINESS
NJR provides regulated natural gas distribution services, transmission and storage services and operates certain
unregulated businesses primarily through the following:
NJNG provides natural gas utility service to approximately 564,000 customers throughout Burlington, Middlesex,
Monmouth, Morris, Ocean and Sussex counties in New Jersey and is subject to rate regulation by the BPU. NJNG comprises
the Natural Gas Distribution segment.
NJRCEV, the Company's clean energy subsidiary, comprises the Clean Energy Ventures segment and consists of the
Company's capital investments in commercial and residential solar projects located in New Jersey and Connecticut.
NJRES comprises the Energy Services segment. Energy Services maintains and transacts around a portfolio of natural gas
transportation and storage capacity contracts and provides physical wholesale energy, retail energy and energy management
services in the U.S. and Canada.
NJR Midstream Holdings Corporation, which comprises the Storage and Transportation segment, invests in energy-
related ventures through its subsidiaries. The Company operates natural gas storage and transmission assets through the wholly-
owned subsidiaries of Leaf River, which was acquired on October 11, 2019 and Adelphia Gateway, which was acquired on
January 13, 2020, and is subject to rate regulation by FERC. The Company holds a 50 percent combined ownership interest in
Steckman Ridge, located in Pennsylvania and 20 percent ownership interest in PennEast, which are accounted for under the
equity method of accounting.
NJR Retail Holdings Corporation has two principal subsidiaries: NJRHS, which provides heating, central air conditioning,
standby generators, solar and other indoor and outdoor comfort products to residential homes throughout New Jersey; and
CR&R, which owns commercial real estate. NJRHS and CR&R are included in Home Services and Other operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany
accounts and transactions have been eliminated.
Other financial investments or contractual interests that lack the characteristics of a voting interest entity, which are
commonly referred to as variable interest entities, are evaluated by the Company to determine if the entity has the power to
direct business activities and, therefore, would be considered a controlling interest that the Company would have to consolidate.
Based on those evaluations, NJR has determined that it does not have any investments in variable interest entities as of
September 30, 2021, 2020 and 2019.
Investments in entities over which the Company does not have a controlling financial interest are either accounted for
under the equity method or cost method of accounting.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company to make estimates that affect the
reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingencies during the reporting period.
On a quarterly basis or more frequently whenever events or changes in circumstances indicate a need, the Company evaluates
its estimates, including those related to the calculation of the fair value of derivative instruments, debt, equity method
investments, unbilled revenues, allowance for doubtful accounts, provisions for depreciation and amortization, long-lived
assets, regulatory assets and liabilities, income taxes, pensions and other postemployment benefits, contingencies related to
environmental matters and litigation. ARO are evaluated as often as needed. The Company’s estimates are based on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other
sources.
The Company has legal, regulatory and environmental proceedings during the normal course of business that can result in
loss contingencies. When evaluating the potential for a loss, the Company will establish a reserve if a loss is probable and can
be reasonably estimated, in which case it is the Company’s policy to accrue the full amount of such estimates. Where the
information is sufficient only to establish a range of probable liability, and no point within the range is more likely than any
other, it is the Company’s policy to accrue the lower end of the range. In the normal course of business, estimated amounts are
subsequently adjusted to actual results that may differ from estimates.
Page 75
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
In March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease
Control and Prevention and has spread globally, including throughout the U.S. The Company’s Consolidated Financial
Statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities at
the balance sheet date and reported amounts of revenue and expenses during the reporting periods presented. The Company
considered the impacts of COVID-19 on the assumptions and estimates used and determined that there have been no material
adverse impacts on the Company’s results of operations as of September 30, 2021.
Acquisitions
The Company follows the guidance in ASC 805, Business Combinations, for determining the appropriate accounting
treatment for acquisitions. ASU No. 2017-01, Clarifying the Definition of a Business, provides an initial fair value screen to
determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets. If
the initial screening test is not met, the set is considered a business based on whether there are inputs and substantive processes
in place. Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an
asset acquisition, the accounting treatment is derived.
If the acquisition is deemed to be a business, the acquisition method of accounting is applied. Identifiable assets acquired
and liabilities assumed at the acquisition date are recorded at fair value. If the transaction is deemed to be an asset purchase, the
cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and
allocated to the individual assets and liabilities based on relative fair values.
The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on
various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables
in these valuations are discount rates and the number of years on which to base the cash flow projections, as well as other
assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates based on
the risk inherent in the acquired assets, specific risks, industry data and capital structure of guideline companies. The valuation
of an acquired business is based on available information at the acquisition date and assumptions that are believed to be
reasonable. However, a change in facts and circumstances as of the acquisition date can result in subsequent adjustments during
the measurement period, but no later than one year from the acquisition date.
Revenues
Revenues from the sale of natural gas to NJNG customers are recognized in the period that natural gas is delivered and
consumed by customers, including an estimate for unbilled revenue. NJNG records unbilled revenue for natural gas services.
Natural gas sales to individual customers are based on meter readings, which are performed on a systematic basis throughout
the month. At the end of each month, the amount of natural gas delivered to each customer after the last meter reading through
the end of the respective accounting period is estimated, and recognizes unbilled revenues related to these amounts. The
unbilled revenue estimates are based on estimated customer usage by customer type, weather effects, unaccounted-for natural
gas and the most current tariff rates.
Clean Energy Ventures recognizes revenue when SRECs are transferred to counterparties. SRECs are physically
delivered through the transfer of certificates as per contractual settlement schedules. The Clean Energy Act of 2018 established
guidelines for the closure of the SREC registration program to new applicants in New Jersey. The SREC program officially
closed to new qualified solar projects on April 30, 2020.
In December 2019, the BPU established the TREC as the successor to the SREC program. TRECs provide a fixed
compensation base multiplied by an assigned project factor in order to determine their value. The project factor is determined
by the type and location of the project, as defined. All TRECs generated are required to be purchased monthly by a TREC
program administrator as appointed by the BPU.
In June 2020, Clean Energy Ventures began generating TRECs for qualified new residential and commercial solar
projects placed into service following the close of the SREC program. TREC revenue is recognized when TRECs are generated
and are transferred monthly based upon metered solar electricity activity.
Revenues for Energy Services are recognized when the natural gas is physically delivered to the customer. In addition,
changes in the fair value of derivatives that economically hedge the forecasted sales of the natural gas are recognized in
operating revenues as they occur, as noted above. Energy Services also recognizes changes in the fair value of SREC derivative
contracts as a component of operating revenues.
Page 76
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The Storage and Transportation segment generates revenues from firm storage contracts and transportation contracts,
related usage fees and hub services for the use of storage space, injections and withdrawals from their natural gas storage
facility and the delivery of natural gas to customers. Demand fees are recognized as revenue over the term of the related
agreement while usage fees and hub services revenues are recognized as services are performed.
Revenues from all other activities are recorded in the period during which products or services are delivered and accepted
by customers, or over the related contractual term. See Note 3. Revenue for further information.
As a result of the adoption of ASC 606, Revenue from Contracts with Customers, as of October 1, 2018, the Company
excludes from the transaction price all sales taxes that are assessed by a governmental authority and therefore presents sales tax
on a net basis in operating revenues on the Consolidated Statements of Operations.
Natural Gas Purchases
NJNG’s tariff includes a component for BGSS, which is designed to allow it to recover the cost of natural gas through
rates charged to its customers and is typically revised on an annual basis. As part of computing its BGSS rate, NJNG projects its
cost of natural gas, net of supplier refunds, the impact of hedging activities and cost savings created by BGSS incentive
programs. NJNG subsequently recovers or credits the difference, if any, of actual costs compared with those included in current
rates. Any underrecoveries or overrecoveries are either credited to customers or deferred and, subject to BPU approval,
reflected in the BGSS rates in subsequent years.
Natural gas purchases at Energy Services are composed of natural gas costs to be paid upon completion of a variety of
transactions, as well as realized gains and losses from settled derivative instruments and unrealized gains and losses on the
change in fair value of derivative instruments that have not yet settled. Changes in the fair value of derivatives that
economically hedge the forecasted purchases of natural gas are recognized in natural gas purchases as they occur.
Demand Fees
For the purpose of securing storage and pipeline capacity in support of their respective businesses, the Energy Services
and Natural Gas Distribution segments enter into storage and pipeline capacity contracts, which require the payment of
associated demand fees and charges that allow them access to a high priority of service in order to maintain the ability to access
storage or pipeline capacity during a fixed time period, which generally ranges from one to 10 years. Many of these demand
fees and charges are based on established tariff rates as established and regulated by FERC. These charges represent
commitments to pay storage providers and pipeline companies for the priority right to transport and/or store natural gas utilizing
their respective assets.
The following table summarizes the demand charges, which are net of capacity releases, and are included as a component
of natural gas purchases on the Consolidated Statements of Operations for the fiscal years ended September 30:
(Millions)
Energy Services
Natural Gas Distribution
Total
2021
2019
2020
$ 120.5 $ 121.8 $ 120.4
119.1
$ 243.7 $ 253.7 $ 239.5
131.9
123.2
Energy Services expenses demand charges over the term of the service being provided.
The Natural Gas Distribution segment’s costs associated with demand charges are included in its weighted average cost
of natural gas. The demand charges are expensed based on NJNG’s BGSS sales and recovered as part of its natural gas
commodity component of its BGSS tariff.
Operations and Maintenance Expenses
Operations and maintenance expenses include operations and maintenance salaries and benefits, materials and supplies,
usage of vehicles, tools and equipment, payments to contractors, utility plant maintenance, amortization of software costs for
unregulated entities, customer service, professional fees and other outside services, insurance expense, accretion of cost of
removal for future retirements of utility assets and other administrative expenses and are expensed as incurred.
Page 77
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Stock-Based Compensation
Stock-based compensation represents costs related to stock-based awards granted to employees and members of NJR’s
Board of Directors. NJR recognizes stock-based compensation based upon the estimated fair value of awards. The recognition
period for these costs begins at either the applicable service inception date or grant date and continues throughout the requisite
service period. The related compensation cost is recognized as O&M expense on the Consolidated Statements of Operations.
See Note 10. Stock-Based Compensation for further information.
Income Taxes
The Company computes income taxes using the asset and liability method, whereby deferred income taxes are generally
determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates
in effect in the years in which the differences are expected to reverse. See Note 13. Income Taxes. In addition, the Company
evaluates its tax positions to determine the appropriate accounting and recognition of future obligations associated with
unrecognized tax benefits.
To the extent that NJNG invests in property that qualifies for ITCs, the ITC is deferred and amortized to income over the
life of the equipment in accordance with regulatory treatment. ITCs at the unregulated subsidiaries of NJR are recorded on the
balance sheet as a reduction to property, plant and equipment when the property is placed in service, and recognized in earnings
as depreciation expense, over the useful lives of the related assets.
Projects placed in service through December 31, 2019, qualified for a 30-percent federal ITC. The TC declined to 26
percent for property under construction before the end of 2020. The Consolidated Appropriations Act, 2021 extended the 26
percent ITC for property under construction during 2021 and 2022. The ITC will drop to 22 percent for property under
construction before the end of 2023. After 2023 the ITC will be reduced to 10 percent.
Investments in Equity Investees
The Company accounts for its investments in Steckman Ridge and PennEast using the equity method of accounting
where it is not the primary beneficiary, as defined under ASC 810, Consolidation, its respective ownership interests are 50
percent or less and/or it has significant influence over operating and management decisions. The Company’s share of earnings
is recognized as equity in earnings of affiliates on the Consolidated Statements of Operations.
Equity method investments are reviewed for impairment when changes in facts and circumstances indicate that the
current fair value may be less than the asset’s carrying amount. If the Company determines the decline in the value of its equity
method investment is other than temporary, an impairment charge is recorded in an amount equal to the excess of the carrying
value of the asset over its fair value. See Note 7. Investments in Equity Investees for more information regarding impairments.
Property Plant and Equipment
Property, plant and equipment is stated at original cost. Costs include direct labor, materials and third-party construction
contractor costs, capitalized interest and certain indirect costs related to equipment and employees engaged in construction.
Utility plant and nonutility plant for Adelphia Gateway also includes AFUDC. Upon retirement, the cost of depreciable
property, plus removal costs less salvage, is charged to accumulated depreciation with no gain or loss recorded.
Depreciation is computed on a straight-line basis over the useful life of the assets for the Company’s nonutility entities,
and using rates based on the estimated average lives of the various classes of depreciable property for NJNG. The composite
rate of depreciation used for NJNG was 2.42 percent of average depreciable property in fiscal 2021, 2.65 percent in fiscal 2020
and 2.25 percent in fiscal 2019. The Company recorded $111.4 million, $107.4 million and $81.1 million in depreciation
expense during fiscal 2021, 2020 and 2019, respectively.
During fiscal 2019, the estimated useful lives of commercial solar assets ranged from 15 to 25 years. During the fourth
quarter of fiscal 2020, the Company reassessed the estimated useful lives of its commercial solar asset fleet. Based upon this
review, the Company concluded that the actual lives of certain commercial solar assets were longer than the estimated useful
lives used for depreciation purposes. As a result, effective July 1, 2020, the Company changed its estimates of the useful lives
of its solar assets to a range of 15 to 35 years. The effects of this change were considered immaterial to the Consolidated
Financial Statements.
Page 78
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Property, plant and equipment was comprised of the following as of September 30:
(Thousands)
Property Classifications
Distribution facilities
Transmission facilities
Storage facilities
Solar property
Storage and transportation property
All other property
Construction work in progress
Total property, plant and equipment
Accumulated depreciation and amortization
Property, plant and equipment, net
Estimated
Useful Lives
38 to 74 years
35 to 56 years
34 to 47 years
15 to 35 years
5 to 50 years
5 to 35 years
2021
2,558,651 $
643,942
79,892
675,376
433,678
57,968
547,542
4,997,049
(783,536)
4,213,513 $
2020
2,309,039
332,947
79,922
665,233
428,491
92,932
556,402 (1)
4,464,966
(742,197)
3,722,769
$
$
(1) During fiscal 2020, construction work in progress was included within the various property classifications.
Within storage and transportation property, base gas is required to maintain the necessary pressure and to allow for
efficient operation of the Leaf River storage facility. The base gas is determined to be recoverable and is considered part of the
facility and thus presented as a component in property, plant and equipment. This natural gas is not depreciated, as it is
expected to be recovered and sold. As of September 30, 2021 and 2020, the base gas had a cost basis of $7.9 million and
$5.7 million, respectively.
Capitalized and Deferred Interest
NJNG’s base rates include the ability to recover AFUDC on its construction work in progress. For all NJNG construction
projects, an incremental cost of equity is recoverable during periods when NJNG’s short-term debt balances are lower than its
construction work in progress. For more information on AFUDC treatment with respect to certain accelerated infrastructure
projects, see Note 4. Regulation - Infrastructure Programs.
Capitalized amounts associated with the debt and equity components of NJNG’s AFUDC are recorded in utility plant on
the Consolidated Balance Sheets. Corresponding amounts for the debt component are recognized in interest expense and in
other income for the equity component on the Consolidated Statements of Operations.
Adelphia Gateway’s base rates include the ability to recover AFUDC on its construction work in progress. Beginning in
the fourth quarter of fiscal 2020, capitalized amounts associated with Adelphia Gateway’s AFUDC are recorded in nonutility
plant on the Consolidated Balance Sheets. Corresponding amounts are recorded in other income on the Consolidated Statements
of Operations.
Capitalized and deferred interest include the following for the fiscal years ended September 30:
($ in thousands)
AFUDC:
Debt
Equity
Total
Weighted average interest rate
2021
2020
2019
NJNG
$
5,648
16,605
$ 22,253
Adelphia
Gateway
2,101
3,698
5,799
$
$
NJNG
$
5,134
14,599
$ 19,733
5.97 %
8.28 %
6.79 %
Adelphia
Gateway
1,394
2,454
3,848
8.28 %
$
$
NJNG
$
3,710
6,492
$ 10,202
6.35 %
Pursuant to a BPU order, NJNG is permitted to recover carrying costs on uncollected balances related to SBC program
costs, which include NJCEP, RAC and USF expenditures. The SBC interest rate changes each September based on the August
31 seven-year constant maturity treasury rate plus 60 basis points. The rate was 1.68 percent, 1.97 percent and 3.30 percent for
the fiscal years ended September 30, 2021, 2020 and 2019, respectively. Accordingly, other income included $346,000,
$511,000 and $760,000 in the fiscal years ended September 30, 2021, 2020 and 2019, respectively.
Clean Energy Ventures capitalizes interest on the allocation of the costs of debt borrowed for the financing of solar
investments. Capitalized amounts are included in nonutility plant and equipment on the Consolidated Balance Sheets.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on deposit and temporary investments with maturities of three months or less,
and excludes restricted cash related to escrow balances for utility plant projects at NJNG and irrevocable letters of credit at Leaf
River, which is recorded in other current and noncurrent assets on the Consolidated Balance Sheets.
Page 79
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the
Consolidated Balance Sheets to the total amounts in the Statements of Cash Flows, as of September 30:
(Thousands)
Balance Sheet
Cash and cash equivalents
Restricted cash in other noncurrent assets
Statements of Cash Flow
Cash, cash equivalents and restricted cash
Allowance for Doubtful Accounts
2021
2020
2019
$
$
$
4,749 $
1,294 $
117,012 $
2,411 $
2,676
1,387
6,043 $
119,423 $
4,063
As of October 1, 2020, the Company adopted ASU No. 2016-13, an amendment to ASC 326, Financial Instruments -
Credit Losses, which changes the impairment model for certain financial assets that have a contractual right to receive cash,
including trade and loan receivables. The Company segregates financial assets that fall within the scope of ASC 326, primarily
trade receivables and unbilled revenues due in one year or less, into portfolio segments based on shared risk characteristics,
such as geographical location and regulatory environment, for evaluation of expected credit losses. Historical and current
information, such as average write-offs, are applied to each portfolio segment to estimate the allowance for losses on
uncollectible receivables. Additionally, the allowance for losses on uncollectible receivables is adjusted for reasonable and
supportable forecasts of future economic conditions, which can include changing weather, commodity prices, regulations, and
macroeconomic factors, such as unemployment rates among others.
Allowance for doubtful accounts was comprised of the following as of September 30:
(Thousands)
Natural Gas Distribution
Energy Services
Clean Energy Ventures
NJR Home Services & Other
Total
2021
(17,040) $
(5,825) $
(1,787) $
— $
(24,652) $
$
$
$
$
$
2020
(5,628)
(104)
(1,504)
(6)
(7,242)
In February 2021, severe winter weather affected the U.S. mid-continent and southern regions and resulted in increased
demand for natural gas supply and increases in wholesale energy prices. As a result, Energy Services evaluated its
counterparties for credit deterioration, as well as the related receivables for the purchase and receipt of natural gas for amounts
past due. The Company examined the credit characteristics of its counterparties, including the history of past due amounts for
contractual settlements, counterparty credit ratings, and the likelihood of recovering amounts owed. The Company recorded a
reserve for expected credit losses for Energy Services totaling $5.2 million within operations and maintenance expense on the
Consolidated Statement of Operations, representing management’s best estimate of expected credit losses during the second
quarter of fiscal 2020. It is possible that future developments could occur that could result in impairment of a portion or all of
the remaining amounts owed to Energy Services, which would result in an additional charge to earnings.
Loans Receivable
NJNG currently provides loans, with terms ranging from 2 to 10 years, to customers that elect to purchase and install
certain energy-efficient equipment in accordance with its BPU-approved SAVEGREEN program. The loans are recognized at
fair value on the Consolidated Balance Sheets. The Company has $14.2 million and $13.7 million recorded in other current
assets and $32.3 million and $35.3 million in other noncurrent assets as of September 30, 2021 and 2020, respectively, on the
Consolidated Balance Sheets, related to the loans. The Company regularly evaluates the credit quality and collection profile of
its customers. If NJNG determines a loan is impaired, the basis of the loan would be subject to regulatory review for recovery.
As of September 30, 2021 and 2020, the Company has not recorded any impairments for SAVEGREEN loans.
Page 80
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Regulatory Assets & Liabilities
Under cost-based regulation, regulated utility enterprises generally are permitted to recover their operating expenses and
earn a reasonable rate of return on their utility investment.
The Natural Gas Distribution segment maintains its accounts in accordance with the FERC Uniform System of Accounts
as prescribed by the BPU and in accordance with the ASC 980, Regulated Operations. As a result of the impact of the
ratemaking process and regulatory actions of the BPU, NJNG is required to recognize the economic effects of rate regulation.
Accordingly, NJNG capitalizes or defers certain costs that are expected to be recovered from its customers as regulatory assets
and recognizes certain obligations representing probable future expenditures as regulatory liabilities on the Consolidated
Balance Sheets. See Note 4. Regulation for a more detailed description of NJNG’s regulatory assets and liabilities.
In January 2020, NJR acquired Adelphia Gateway an existing 84-mile pipeline in southeastern Pennsylvania, which
maintains its accounts in accordance with the FERC Uniform System of Accounts and in accordance with the ASC 980,
Regulated Operations. Accordingly, Adelphia Gateway capitalizes or defers certain costs that are expected to be recovered
from its customers as regulatory assets and recognizes certain obligations representing probable future expenditures as
regulatory liabilities on the Consolidated Balance Sheets. See Note 4. Regulation for a more detailed description of Adelphia
Gateway’s regulatory assets and liabilities.
Natural Gas in Storage
Natural gas in storage is reflected at average cost on the Consolidated Balance Sheets and represents natural gas and LNG
that will be utilized in the ordinary course of business. The following table summarizes natural gas in storage, at average cost by
company, as of September 30:
($ in thousands)
Natural Gas Distribution
Energy Services
Storage and Transportation
Total
Derivative Instruments
2021
2020
Natural Gas in Storage Bcf Natural Gas in Storage Bcf
$
$
115,824 27.6
77,782 18.8
— —
193,606 46.40
$ 110,037 27.2
57,352 34.3
115 0.02
$ 167,504 61.52
The Company accounts for its financial instruments, such as futures, options, foreign exchange contracts and interest rate
contracts, as well as its physical commodity contracts related to the purchase and sale of natural gas at Energy Services, as
derivatives, and therefore recognizes them at fair value on the Consolidated Balance Sheets. The Company’s unregulated
subsidiaries record changes in the fair value of their financial commodity derivatives in natural gas purchases and changes in
the fair value of their physical forward contracts in natural gas purchases or operating revenues, as appropriate, on the
Consolidated Statements of Operations. Ineffective portions of the cash flow hedges are recognized immediately in earnings.
The ASC 815, Derivatives and Hedging also provides for a NPNS scope exception for qualifying physical commodity
contracts for which physical delivery is probable and the quantities delivered are expected to be used or sold over a reasonable
period of time in the normal course of business. Effective January 1, 2016, the Company prospectively applies this normal
scope exception on a case-by-case basis to physical commodity contracts at NJNG and PPAs at Clean Energy Ventures. When
applied, it does not account for these contracts until the contract settles and the related underlying natural gas or power is
delivered. Gains and/or losses on NJNG’s derivatives used to economically hedge its regulated natural gas supply obligations,
as well as its exposure to interest rate variability, are recoverable through its BGSS, a component of its tariff. Accordingly, the
offset to the change in fair value of these derivatives is recorded as a regulatory asset or liability on the Consolidated Balance
Sheets. See Note 5. Derivative Instruments for additional details regarding natural gas trading and hedging activities.
Fair values of exchange-traded instruments, including futures and swaps, are based on unadjusted, quoted prices in active
markets. The Company’s non-exchange-traded financial instruments, foreign currency derivatives, over-the-counter physical
commodity contracts at Energy Services and interest rate contracts are valued using observable, quoted prices for similar or
identical assets when available. In establishing the fair value of contracts for which a quoted basis price is not available at the
measurement date, management utilizes available market data and pricing models to estimate fair values. Fair values are subject
to change in the near term and reflect management’s best estimate based on a variety of factors. Estimating fair values of
instruments that do not have quoted market prices requires management’s judgment in determining amounts that could
reasonably be expected to be received from, or paid to, a third party in settlement of the instruments. These amounts could be
materially different from amounts that might be realized in an actual sale transaction.
Page 81
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
During fiscal 2020, the Company entered into treasury lock transactions to fix the benchmark treasury rate associated
with debt issuances for NJNG and NJR that occurred during the fiscal year. Settlement of the NJNG treasury locks resulted in a
loss, which was recorded as a component of regulatory assets on the Consolidated Balance Sheets and will be amortized in
earnings over the term of the debt as a component of interest expense on the Consolidated Statements of Operations. NJR
designated its treasury lock contracts as cash flow hedges, therefore, changes in fair value of the effective portion of the hedges
were recorded in OCI. Settlement of the treasury locks resulted in a loss, which was recorded within OCI and is amortized into
earnings over the term of the associated debt as a component of interest expense on the Consolidated Statements of Operations.
As of September 30, 2021 and 2020, amounts recognized in interest expense related to the amortization of the loss on treasury
lock transactions totaled $223,000 and $50,000, respectively, for NJNG, and $1.0 million and $108,000, respectively, for NJR.
Software Costs
The Company capitalizes certain costs, such as software design and configuration, coding, testing and installation, that
are incurred to purchase or create and implement computer software for internal use. Capitalized costs include external costs of
materials and services utilized in developing or obtaining internal-use software and payroll and payroll-related costs for
employees who are directly associated with and devote time to the internal-use software project. Maintenance costs are
expensed as incurred. Upgrades and enhancements are capitalized if it is probable that such expenditures will result in
additional functionality. Amortization is recorded on the straight-line basis over the estimated useful lives.
The following table presents the software costs included in the Consolidated Financial Statements, as of September 30:
(Thousands)
Balance Sheets
Utility plant, at cost
Construction work in progress
Nonutility plant and equipment, at cost
Construction work in progress
Accumulated depreciation and amortization, utility plant
Accumulated depreciation and amortization, nonutility plant and equipment
Software costs
Statements of Operations
Operation and maintenance (1)
Depreciation and amortization
(1) During fiscal 2021 and 2020, $447,000 and 63,000, respectively, was amortized into O&M.
Intangible Assets
2021
2020
$
$
$
$
$
$
$
$
$
16,543 $
7,801 $
338 $
8 $
(1,333) $
(29) $
5,582 $
13,452
—
316
—
(279)
(5)
4,707
9,141 $
1,078 $
6,720
284
Finite-lived intangible assets are stated at cost less accumulated amortization. The Company amortizes intangible assets
based upon the pattern in which the economic benefits are consumed over the life of the asset unless a pattern cannot be reliably
determined, in which case the Company uses a straight-line amortization method. As of September 30, 2021, intangible assets
consist primarily of acquired wholesale natural gas energy contracts totaling $5.0 million. The wholesale natural gas contracts
are being amortized based upon expected cash flows over the respective terms of the agreements.
The estimated future amortization expense as of September 30, is as follows:
(Thousands)
2022
2023
2024
2025
2026
Long-lived Assets
$
$
$
$
$
2,681
2,271
77
—
—
The Company reviews the recoverability of long-lived assets and finite-lived intangible assets whenever events or
changes in circumstances indicate that the carrying value may not be recoverable, such as significant adverse changes in
regulation, business climate or market conditions, including prolonged periods of adverse commodity and capacity prices. If
there are changes indicating that the carrying value of such assets may not be recoverable, an undiscounted cash flows test is
performed. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an
impairment loss is recognized by reducing the recorded value of the asset to its fair value. Factors that the Company analyzes in
Page 82
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
determining whether an impairment in its long-lived assets exists include: a significant decrease in the market price of a long-
lived asset; a significant adverse change in the extent in which a long-lived asset is being used in its physical condition; legal
proceedings or other contributing factors; significant business climate changes; accumulations of costs in significant excess of
the amounts expected; a current-period operating or cash flow loss combined with a history of such events; and current
expectations that more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its
estimated useful life. During fiscal 2021 and 2020, there were no events or circumstances that indicated that the carrying value
of long-lived assets or finite-lived intangibles were not recoverable.
Debt Issuance Costs
Debt issuance costs are capitalized and amortized as interest expense on a basis which approximates the effective interest
method over the term of the related debt. Debt issuance costs are presented as a direct deduction from the carrying amount of
the related debt. See Note 9. Debt for the total unamortized debt issuance costs that are recorded as a reduction to long-term
debt on the Consolidated Balance Sheets.
Sale Leasebacks
NJNG utilizes sale leaseback arrangements as a financing mechanism to fund certain of its capital expenditures related to
natural gas meters, whereby the physical asset is sold concurrent with an agreement to lease the asset back. These agreements
include options to renew the lease or repurchase the asset at the end of the term. Proceeds from sale leaseback transactions are
accounted for as financing arrangements and are included in long-term debt on the Consolidated Balance Sheets. During fiscal
2020, NJNG received $4.0 million in connection with the sale leaseback of its natural gas meters with terms ranging from seven
to 11 years. There were no natural gas meter sale leasebacks recorded during fiscal 2021.
In addition, for certain of its commercial solar energy projects, the Company enters into lease agreements that provide for
the sale of commercial solar energy assets to third parties and the concurrent leaseback of the assets. For sale leaseback
transactions where the Company has concluded that the arrangement does not qualify as a sale as the Company retains control
of the underlying assets and, as such, the Company uses the financing method to account for the transaction. Under the
financing method, the Company recognizes the proceeds received from the buyer-lessor that constitute a payment to acquire the
solar energy asset as a financing arrangement, which is recorded as a component of debt on the Consolidated Balance Sheets.
During fiscal 2021 and 2020, Clean Energy Ventures received proceeds of $17.7 million and $42.9 million, respectively,
in connection with sale leasebacks of commercial solar assets. The proceeds received were recognized as a financing obligation
on the Consolidated Balance Sheets. Clean Energy Ventures simultaneously entered into agreements to lease the assets back
over a term of five- to 15-years. The Company continues to operate the solar assets and is responsible for related expenses and
entitled to retain the revenue generated from RECs and energy sales. The ITCs and other tax benefits associated with these solar
projects transfer to the buyer; however, the payments are structured so that Clean Energy Ventures is compensated for the
transfer of the related tax attributes. Accordingly, Clean Energy Ventures recognizes the equivalent value of the tax attributes in
other income on the Consolidated Statements of Operations over the respective five-year ITC recapture periods, starting with
the second year of the lease. There were no sale leasebacks during fiscal 2019.
Environmental Contingencies
Loss contingencies are recorded as liabilities when it is probable a liability has been incurred and the amount of the loss is
reasonably estimable in accordance with accounting standards for contingencies. Estimating probable losses requires an
analysis of uncertainties that often depend upon judgments about potential actions by third parties. Accruals for loss
contingencies are recorded based on an analysis of potential results.
With respect to environmental liabilities and related costs, NJNG periodically, and at least annually, performs an
environmental review of MGP sites, including a review of potential liability for investigation and remedial action. NJNG’s
estimate of these liabilities is based upon known facts, existing technology and enacted laws and regulations in place when the
review was completed. Where it is probable that costs will be incurred, and the information is sufficient to establish a range of
possible liability, NJNG accrues the most likely amount in the range. If no point within the range is more likely than the other,
it is NJNG’s policy to accrue the lower end of the range. The actual costs to be incurred by NJNG are dependent upon several
factors, including final determination of remedial action, changing technologies and governmental regulations, the ultimate
ability of other responsible parties to pay and any insurance recoveries. NJNG will continue to seek recovery of MGP-related
costs through the RAC. If any future regulatory position indicates that the recovery of such costs is not probable, the related
non-recoverable costs would be charged to income in the period of such determination. See Note 15. Commitments and
Contingent Liabilities for more details.
Page 83
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Pension and Postemployment Plans
The Company has two noncontributory defined pension plans covering eligible employees, including officers. Benefits
are based on each employee’s years of service and compensation. The Company’s funding policy is to contribute annually to
these plans at least the minimum amount required under the Employee Retirement Income Security Act, as amended, and not
more than can be deducted for federal income tax purposes. Plan assets consist of equity securities, fixed-income securities and
short-term investments. The Company did not make any discretionary contributions to the pension plans during fiscal 2021 and
2020.
The Company also provides two primarily noncontributory medical and life insurance plans for eligible retirees and
dependents. Medical benefits, which make up the largest component of the plans, are based upon an age and years-of-service
vesting schedule and other plan provisions. Funding of these benefits is made primarily into Voluntary Employee Beneficiary
Association trust funds. The Company contributed $7.2 million and $8.4 million in aggregate to these plans during fiscal 2021
and 2020, respectively, which is recorded in postemployment employee benefit liability on the Consolidated Balance Sheets.
See Note 11. Employee Benefit Plans, for a more detailed description of the Company’s pension and postemployment plans.
Asset Retirement Obligations
The Company recognizes ARO related to the costs associated with cutting and capping NJNG’s main and service natural
gas distribution mains, which is required by New Jersey law when taking such natural gas distribution mains out of service. The
Company also recognizes ARO associated with Clean Energy Ventures’ solar assets when there are decommissioning
provisions in lease agreements that require removal of the asset at the end of the lease term.
ARO are initially recognized when the legal obligation to retire an asset has been incurred and a reasonable estimate of
fair value can be made. The discounted fair value is recognized as an ARO liability with a corresponding amount capitalized as
part of the carrying cost of the underlying asset. The obligation is subsequently accreted to the future value of the expected
retirement cost and the corresponding asset retirement cost is depreciated over the life of the related asset. Accretion expense
associated with Clean Energy Ventures’ ARO is recognized as a component of operations and maintenance expense on the
Consolidated Statements of Operations. Accretion amounts associated with NJNG’s ARO are recognized as part of its
depreciation expense and the corresponding regulatory asset and liability will be shown gross on the Consolidated Balance
Sheets.
Estimating future removal costs requires management to make significant judgments because most of the removal
obligations span long time frames and removal may be conditioned upon future events. Asset removal technologies are also
constantly changing, which makes it difficult to estimate removal costs. Accordingly, inherent in the estimate of ARO are
various assumptions including the ultimate settlement date, expected cash outflows, inflation rates, credit-adjusted risk-free
rates and consideration of potential outcomes where settlement of the ARO can be conditioned upon events. In the latter case,
the Company develops possible retirement scenarios and assigns probabilities based on management’s reasonable judgment and
knowledge of industry practice. Accordingly, ARO are subject to change.
Page 84
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Accumulated Other Comprehensive Income
The following table presents the changes in the components of accumulated other comprehensive income, net of related
tax effects, as of September 30:
(Thousands)
Balance at September 30, 2019
Other comprehensive (loss) income, net of tax
Cash Flow
Hedges
—
$
Postemployment
Benefit
Obligation
(31,787)
$
Total
$ (31,787)
Other comprehensive (loss), before reclassifications, net of tax of $3,203,
$1,235 and $4,438, respectively
Amounts reclassified from accumulated other comprehensive (loss), net of tax
of $(32), $(668) and $(700), respectively
Net current-period other comprehensive income, net of tax of $3,171, $567
and $3,738, respectively
Balance at September 30, 2020
Other comprehensive income, net of tax
(10,505)
(4,882)
(15,387)
108
2,751 (1)
2,859
(10,397)
$ (10,397)
$
(2,131)
(33,918)
(12,528)
$ (44,315)
Other comprehensive income, before reclassifications, net of tax of $—,
$(1,618), $(1,618), respectively
Amounts reclassified from accumulated other comprehensive loss, net of tax
of $(350), $(957), $(1,307), respectively
Net current-period other comprehensive income, net of tax of $(350),
$(2,575), $(2,925), respectively
Balance at September 30, 2021
—
1,021
5,494
5,494
3,272 (1)
4,293
1,021
(9,376)
$
$
8,766
(25,152)
9,787
$ (34,528)
(1)
Included in the computation of net periodic pension cost, a component of O&M expense on the Consolidated Statements of Operations. For more details,
see Note 11. Employee Benefit Plans.
Foreign Currency Transactions
The market area of Energy Services includes Canadian delivery points and as a result, Energy Services incurs certain
natural gas commodity costs and demand fees denominated in Canadian dollars. Gains or losses that occur as a result of these
foreign currency transactions are reported as a component of natural gas purchases on the Consolidated Statements of
Operations. Gains and losses recognized for the fiscal years ended September 30, 2021, 2020 and 2019, are considered
immaterial.
Reclassification
Certain prior period amounts have been reclassified to conform to the current period presentation. Construction work in
progress previously classified within various property classifications in the Property Plant and Equipment section of this note
has been reclassified to its own category.
Change in Accounting Policy
Effective October 1, 2020, the Company changed its method of accounting for ITCs at Clean Energy Ventures from the
flow through method to the deferral method. Prior to the change, the Company recognized ITCs as a reduction of income tax
expense in the period that the qualified solar energy property, to which it relates, was placed in service. Effective with the
accounting change, the Company records ITCs as a reduction to the carrying value of the related asset when placed in service
and recognizes ITCs in earnings as a reduction to depreciation expense over the productive life of the related property. The
deferral method is considered the preferred method per the authoritative guidance as described in ASC 740 - Income Taxes. The
change to the deferral method is also consistent with the application of authoritative accounting guidance throughout other
reporting segments and promotes proper matching of the benefits of the recognition of the ITC with the expected use of the
asset.
The Company applied the change in accounting method retrospectively to all prior periods presented.
Page 85
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The impact of the change in accounting policy on the Consolidated Statements of Operations during the fiscal years
ended September 30, 2020 and 2019 are as follows:
(Thousands)
September 30, 2020
Depreciation and amortization
Total operating expenses
Operating income
Income before income taxes and equity in earnings of affiliates
Income tax (benefit) expense
Net income
Weighted average shares outstanding
Diluted
Earnings per common share
Basic
Diluted
September 30, 2019
Depreciation and amortization
Total operating expenses
Operating income
Income before income taxes and equity in earnings of affiliates
Income tax (benefit) expense
Net income
Weighted average shares outstanding
Diluted
Earnings per common share
Basic
Diluted
As Previously
Reported
Effect of
Change
As
Adjusted
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
119,894
1,737,285
216,383
172,664
(6,944)
193,919
107,368
(12,526) $
(12,526) $ 1,724,759
228,909
12,526 $
185,190
12,526 $
36,494
43,438 $
163,007
(30,912) $
95,107
(4) $
95,103
2.05
2.04
(0.33) $
(0.33) $
1.72
1.71
91,730
2,438,110
153,935
118,126
(37,751)
169,505
81,109
(10,621) $
(10,621) $ 2,427,489
164,556
10,621 $
128,747
10,621 $
18,440
56,191 $
123,935
(45,570) $
89,616
(20) $
89,596
1.90
1.89
(0.51) $
(0.51) $
1.39
1.38
The cumulative effect of the change in accounting policy on the Consolidated Balance Sheets as of September 30, 2020 is
as follows:
(Thousands)
Assets
Nonutility plant and equipment, at cost
Accumulated depreciation and amortization, nonutility plant and equipment
Property, plant and equipment, net
Other noncurrent assets
Total noncurrent assets
Total assets
Capitalization
Retained earnings
Common stock equity
Total capitalization
Liabilities
Deferred income taxes
Total noncurrent liabilities
Total capitalization and liabilities
Page 86
As Previously
Reported
Effect of
Change
As
Adjusted
$
$
$
$
$
$
$
$
$
$
$
$
1,430,723
(202,507)
3,983,035
78,716
964,435
5,569,802
61,945 $
(322,211) $ 1,108,512
(140,562)
(260,266) $ 3,722,769
85,657
971,376
(253,325) $ 5,316,477
6,941 $
6,941 $
1,148,297
1,844,692
4,104,158
(200,796) $
947,501
(200,796) $ 1,643,896
(200,796) $ 3,903,362
190,610
931,922
5,569,802
138,081
(52,529) $
(52,529) $
879,393
(253,325) $ 5,316,477
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The impact of the change in accounting policy on the Consolidated Statements of Cash Flows as of September 30, 2020
and 2019 are as follows:
(Thousands)
September 30, 2020
Depreciation and amortization
Deferred income taxes
September 30, 2019
Depreciation and amortization
Deferred income taxes
As Previously
Reported
Effect of
Change
As
Adjusted
$
$
$
$
119,894
(9,092)
(12,526) $
43,438 $
107,368
34,346
91,730
(59,013)
(10,621) $
56,191 $
81,109
(2,822)
The impact of the change in accounting policy on the Consolidated Statements of Common Stock Equity as of September
30, 2020 and 2019 are as follows:
(Thousands)
Retained Earnings
Balance at September 30, 2018
Net Income
Balance at September 30, 2019
Net Income
Balance at September 30, 2020
Total Common stock equity
Balance at September 30, 2018
Net Income
Balance at September 30, 2019
Net Income
Balance at September 30, 2020
As Previously
Reported
Effect of
Change
As
Adjusted
$
$
$
$
$
$
$
$
$
$
1,007,117
169,505
1,075,960
193,919
1,148,297
1,418,978
169,505
1,551,717
193,919
1,844,692
(124,314) $
(45,570) $
(169,884) $
(30,912) $
(200,796) $
882,803
123,935
906,076
163,007
947,501
(124,314) $ 1,294,664
123,935
(45,570) $
(169,884) $ 1,381,833
(30,912) $
163,007
(200,796) $ 1,643,896
Recently Adopted Updates to the Accounting Standards Codification
Financial Instruments
In June 2016, the FASB issued ASU No. 2016-13, an amendment to ASC 326, Financial Instruments - Credit Losses,
which changes the impairment model for certain financial assets that have a contractual right to receive cash, including trade
and loan receivables. The new model requires recognition based upon an estimation of expected credit losses rather than
recognition of losses when it is probable that they have been incurred. An entity will apply the amendment through a
cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is
effective. The Company assessed the impact of the guidance on NJR's reserve methodologies and credit policies and procedures
for any assets that could be impacted, noting the majority of NJR's financial assets are short-term in nature, such as trade
receivables and unbilled revenues.
The Company completed its evaluation of this amendment and all subsequent amendments related to this topic and
adopted this guidance on October 1, 2020 using the modified retrospective method. The adoption did not result in a cumulative
effect adjustment to retained earnings as the current expected lifetime loss estimates were not materially different from the
reserves already in place.
The Company segregates financial assets that fall within the scope of ASC 326, primarily trade receivables and unbilled
revenues due in one year or less, into portfolio segments based on shared risk characteristics, such as geographical location and
regulatory environment, for evaluation of expected credit losses. Historical and current information, such as average write-offs,
are applied to each portfolio segment to estimate the allowance for losses on uncollectible receivables. Additionally, the
allowance for losses on uncollectible receivables is adjusted for reasonable and supportable forecasts of future economic
conditions, which can include changing weather, commodity prices, regulations, and macroeconomic factors, such as
unemployment rates among others.
Page 87
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Fair Value
In August 2018, the FASB issued ASU No. 2018-13, an amendment to ASC 820, Fair Value Measurement which
removes, modifies and adds to certain disclosure requirements of fair value measurements. Disclosure requirements removed
include the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of
transfers between levels and the valuation processes for Level 3 fair value measurements. Modifications include considerations
around the requirement to disclose the timing of liquidation of an investee’s assets and the date when restrictions from
redemption might lapse. The additions include the requirement to disclose changes in unrealized gains and losses for the period
in other comprehensive income for recurring Level 3 fair value measurements held and the range and weighted average of
significant unobservable inputs used to develop Level 3 fair value measurements. The Company adopted this guidance on
October 1, 2020 on a prospective basis. The Company does not have either Level 3 fair value measurements or transfers
between Level 1 or Level 2 in its current portfolios, and therefore, this ASU did not have an impact on the Company's financial
position, results of operations or cash flows.
Compensation - Retirement Benefits
In August 2018, the FASB issued ASU No. 2018-14, an amendment to ASC 715, Compensation - Retirement Benefits,
which removes disclosures that no longer are considered cost-beneficial, clarifies the specific requirements of certain
disclosures and adds new disclosure requirements identified as relevant. The Company adopted this guidance on October 1,
2020. There was no impact to the Company's financial position, results of operations or cash flows.
Reference Rate Reform
In January 2021, the FASB issued ASU No. 2021-01, which refines the scope of ASC 848, Reference Rate Reform, and
clarifies some of its guidance of global reference rate reform activities. The amendments in this update permit entities to elect
certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected
by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating
price alignment interest in connection with reference rate reform activities under way in global financial markets (the
“discounting transition”). The amendments in this update are effective upon the ASU issuance and allow for retrospective
application or prospective application through December 31, 2022. NJR adopted this standard prospectively in January 2021.
Other Recent Updates to the Accounting Standards Codification
Income Taxes
In December 2019, the FASB issued ASU No. 2019-12, an amendment to ASC 740, Income Taxes, which simplifies the
accounting for income taxes and changes the accounting for certain income tax transactions, among other minor improvements.
The guidance is effective for the Company beginning October 1, 2021 and will be applied on a prospective basis. The Company
has evaluated the amendments and concluded that they are either not applicable, currently applied, or will have no material
impact on its financial position, results of operations, cash flows and disclosures upon adoption.
Investments - Equity Method and Derivatives and Hedging
In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity
Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic
321, Topic 323, and Topic 815. The update requires an entity to evaluate observable transactions that necessitate applying or
discontinuing the equity method of accounting when applying the measurement alternative in Topic 321. This evaluation occurs
prior to applying or upon ceasing the equity method. The update also states that when applying paragraph 815-10-15-141(a) for
forward contracts and purchased options, an entity is not required to assess whether the underlying securities will be accounted
for under the equity method in accordance with Topic 323 or fair value method under Topic 825 upon settlement or exercise.
The guidance is effective for the Company beginning October 1, 2021 and will be applied on a prospective basis. The Company
has evaluated the amendments and does not expect a material impact on its financial position, results of operations, cash flows
and disclosures upon adoption.
Page 88
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Other
In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements, which clarifies application of various
provisions in the ASC by amending and adding new headings, cross referencing to other guidance, and refining or correcting
terminology. It also improves the consistency by amending the ASC to include all disclosure guidance in the appropriate
section. The guidance is effective for the Company on October 1, 2021. The Company has evaluated the amendments and does
not expect a material impact on its financial position, results of operations, cash flows and disclosures upon adoption.
3. REVENUE
Revenue is recognized when a performance obligation is satisfied by transferring control of a product or service to a
customer. Revenue is measured based on consideration specified in a contract with a customer using the output method of
progress. The Company elected to apply the invoice practical expedient for recognizing revenue, whereby the amounts invoiced
to customers represent the value to the customer and the Company’s performance completion as of the invoice date. Therefore
the Company does not disclose related unsatisfied performance obligations. The Company also elected the practical expedient
to exclude from the transaction price all sales taxes that are assessed by a governmental authority and therefore presents sales
tax net in operating revenues on the Consolidated Statements of Operations.
Page 89
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Below is a listing of performance obligations that arise from contracts with customers, along with details on the
satisfaction of each performance obligation, the significant payment terms and the nature of the goods and services being
transferred, by reporting segment and other business operations:
Revenue Recognized Over Time:
Performance
Obligation
Natural gas utility
sales
Segment
Natural Gas
Distribution
Description
NJNG's performance obligation is to provide natural gas to residential, commercial and industrial
customers as demanded, based on regulated tariff rates, which are established by the BPU.
Revenues from the sale of natural gas are recognized in the period that natural gas is delivered and
consumed by customers, including an estimate for quantities consumed but not billed during the
period. Payment is due each month for the previous month's deliveries. Natural gas sales to
individual customers are based on meter readings, which are performed on a systematic basis
throughout the billing period. The unbilled revenue estimates are based on estimated customer usage
by customer type, weather effects and the most current tariff rates. NJNG is entitled to be
compensated for performance completed until service is terminated.
Clean Energy
Ventures
Commercial solar
and wind electricity
Clean Energy
Ventures
Residential solar
electricity
Clean Energy
Ventures
Transition
renewable energy
certificates
Customers may elect to purchase the natural gas commodity from NJNG or may contract separately
to purchase natural gas directly from third-party suppliers. As NJNG is acting as an agent on behalf
of the third-party supplier, revenue is recorded for the delivery of natural gas to the customer.
Clean Energy Ventures operates wholly-owned solar projects that recognize revenue as electricity is
generated and transferred to the customer. The performance obligation is to provide electricity to the
customer in accordance with contract terms or the interconnection agreement and is satisfied upon
transfer of electricity generated. All wind assets were sold as of February 7, 2019.
Revenue is recognized as invoiced and the payment is due each month for the previous month's
services.
Clean Energy Ventures provides access to residential rooftop and ground-mount solar equipment to
customers who then pay the Company a monthly fee. The performance obligation is to provide
electricity to the customer based on generation from the underlying residential solar asset and is
satisfied upon transfer of electricity generated.
Revenue is derived from the contract terms and is recognized as invoiced, with the payment due
each month for the previous month's services.
Clean Energy Ventures generates TRECs, which are created for every MWh of electricity produced
by a solar generator. The performance obligation of Clean Energy Ventures is to generate electricity
and TRECs, which are purchased monthly by a REC Administrator.
Revenue is recognized upon generation.
Energy Services Natural gas services The performance obligation of Energy Services is to provide the customer transportation, storage
and asset management services on an as-needed basis. Energy Services generates revenue through
management fees, demand charges, reservation fees and transportation charges centered around the
buying and selling of the natural gas commodity, representing one series of distinct performance
obligations.
Revenue is recognized based upon the underlying natural gas quantities physically delivered and the
customer obtaining control. Energy Services invoices customers on a monthly basis in line with the
terms of the contract and based on the services provided. Payment is due each month for the
previous month's invoiced services.
Storage and
Transportation
Natural gas services The performance obligation of the Storage and Transportation segment is to provide the customer
with storage and transportation services. Storage and Transportation generates revenues from firm
storage contracts and transportation contracts, related usage fees for the use of storage space,
injection and withdrawal at the storage facility and the delivery of natural gas to customers.
Revenue is recognized over time as customers receive the benefits of its service as it is performed
on their behalf using an output method based on actual deliveries.
Home Services
and Other
Service contracts Home Services enters into service contracts with homeowners to provide maintenance and
Demand fees are recognized as revenue over the term of the related agreement.
replacement services of applicable heating, cooling or ventilation equipment. All services provided
relate to a distinct performance obligation which is to provide services for the specific equipment
over the term of the contract.
Revenue is recognized on a straight-line basis over the term of the contract and payment is due upon
receipt of the invoice.
Revenue Recognized at a Point in Time:
Storage and
Transportation
Natural gas services The performance obligation of the Storage and Transportation segment is to provide the customer
with storage and transportation services. The Storage and Transportation segment generates
revenues from hub services for the use of storage space, injection and withdrawal from the storage
facility. Hub services include park and loan transactions and wheeling.
Hub services revenues are recognized as services are performed.
Page 90
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Home Services
and Other
Installations
Home Services installs appliances, including but not limited to, furnaces, air conditioning units,
boilers and generators to customers. The distinct performance obligation is the installation of the
contracted appliance, which is satisfied at the point in time the item is installed.
The transaction price for each installation differs accordingly. Revenue is recognized at a point in
time upon completion of the installation, which is when the customer is billed.
Disaggregated revenues from contracts with customers by product line and by reporting segment and other business
operations during fiscal 2021, 2020 and 2019 are as follows:
Natural Gas
Distribution
Clean
Energy
Ventures
Energy
Services
Storage and
Transportation
Home
Services
and Other
Total
(Thousands)
2021
Natural gas utility sales
Natural gas services
Service contracts
Installations and maintenance
Renewable energy certificates
Electricity sales
Eliminations (1)
Revenues from contracts with customers
Alternative revenue programs (2)
Derivative instruments
Eliminations (1)
Revenues out of scope
Total operating revenues
2020
Natural gas utility sales
Natural gas services
Service contracts
Installations and maintenance
Renewable energy certificates
Electricity sales
Eliminations (1)
Revenues from contracts with customers
Alternative revenue programs (2)
Derivative instruments
Eliminations (1)
Revenues out of scope
Total operating revenues
2019
Natural gas utility sales
Natural gas services
Service contracts
Installations and maintenance
Electricity sales
Eliminations (1)
$
$
$
$
$
Revenues from contracts with customers
Alternative revenue programs (2)
Derivative instruments
Eliminations (1)
Revenues out of scope
Total operating revenues
$
694,635
—
—
—
—
—
—
694,635
(7,282)
44,443
—
37,161
731,796
695,858
—
—
—
—
—
—
695,858
15,750
18,315
—
34,065
729,923
680,151
—
—
—
—
—
680,151
10,364
20,278
—
30,642
710,793
—
—
—
—
4,571
25,270
—
29,841
—
65,434
—
65,434
95,275
—
—
—
—
1,384
20,099
—
21,483
—
81,134
—
81,134
102,617
—
—
—
—
22,121
—
22,121
—
75,978
—
75,978
98,099
—
26,933
—
—
—
—
—
26,933
—
1,201,487
426
1,201,913
1,228,846
—
24,511
—
—
—
—
—
24,511
—
1,005,908
(1,116)
1,004,792
1,029,303
—
31,459
—
—
—
—
31,459
—
1,711,332
(8,238)
1,703,094
1,734,553
(3)
(3)
(3)
—
51,020
—
—
—
—
(1,768)
49,252
—
—
—
—
49,252
—
44,728
—
—
—
—
(2,713)
42,015
—
—
—
—
42,015
—
—
—
—
—
—
—
—
—
—
—
—
— $ 694,635
77,953
—
33,250
33,250
18,979
18,979
4,571
—
25,270
—
(2,553)
(785)
852,105
51,444
—
(7,282)
— 1,311,364
—
426
— 1,304,508
51,444 $ 2,156,613
— $ 695,858
69,239
—
32,455
32,455
18,562
18,562
1,384
—
20,099
—
(3,920)
(1,207)
49,810
833,677
15,750
—
— 1,105,357
—
(1,116)
— 1,119,991
49,810 $ 1,953,668
680,151
—
31,459
—
31,499
31,499
19,403
19,403
22,121
—
(2,302)
(2,302)
782,331
48,600
—
10,364
— 1,807,588
—
(8,238)
— 1,809,714
48,600 2,592,045
(1)
(2)
(3)
Consists of transactions between subsidiaries that are eliminated in consolidation.
Includes CIP revenue.
Includes SREC revenue.
Page 91
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Disaggregated revenues from contracts with customers by customer type and by reporting segment and other business
operations during the fiscal years ended September 30, are as follows:
(Thousands)
2021
Residential
Commercial and industrial
Firm transportation
Interruptible and off-tariff
Revenues out of scope
Total operating revenues
2020
Residential
Commercial and industrial
Firm transportation
Interruptible and off-tariff
Revenues out of scope
Total operating revenues
2019
Residential
Commercial and industrial
Firm transportation
Interruptible and off-tariff
Revenues out of scope
Total operating revenues
Natural Gas
Distribution
Clean
Energy
Ventures
Energy
Services
Storage and
Transportation
Home
Services
and Other
Total
$
$
$
$
$
$
487,018
124,519
79,256
3,842
37,161
731,796
490,233
129,946
69,357
6,322
34,065
729,923
440,787
171,357
61,370
6,637
30,642
710,793
11,319
18,522
—
—
65,434
95,275
10,233
11,250
—
—
81,134
102,617
9,003
13,118
—
—
75,978
98,099
—
26,933
—
—
1,201,913
1,228,846
—
24,511
—
—
1,004,792
1,029,303
—
31,459
—
—
1,703,094
1,734,553
—
49,252
—
—
—
49,252
—
42,015
—
—
—
42,015
—
—
—
—
—
—
50,689 $
755
—
—
—
549,026
219,981
79,256
3,842
1,304,508
51,444 $ 2,156,613
48,867 $
943
—
—
—
549,333
208,665
69,357
6,322
1,119,991
49,810 $ 1,953,668
47,655 $
945
—
—
—
497,445
216,879
61,370
6,637
1,809,714
48,600 $ 2,592,045
Customer Accounts Receivable/Credit Balances and Deposits
The timing of revenue recognition, customer billings and cash collections resulting in accounts receivables, billed and
unbilled, and customers’ credit balances and deposits on the Consolidated Balance Sheets are as follows:
(Thousands)
Balance as of September 30, 2019
(Decrease)/Increase
Balance as of September 30, 2020
Increase
Balance as of September 30, 2021
Customer Accounts Receivable Customers' Credit
Billed
Unbilled
Balances and
Deposits
$
$
139,263 $
(5,090)
134,173
78,665
212,838 $
6,510 $
2,716
9,226
1,125
10,351 $
27,116
(1,182)
25,934
6,652
32,586
Page 92
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The following table provides information about receivables, which are included within accounts receivable, billed and
unbilled, and customers’ credit balances and deposits, respectively, on the Consolidated Balance Sheets as of September 30:
(Thousands)
2021
Customer accounts receivable
Billed
Unbilled
Customers' credit balances and deposits
Total
2020
Customer accounts receivable
Billed
Unbilled
Customers' credit balances and deposits
Total
4. REGULATION
Natural Gas
Distribution
Clean Energy
Ventures
Energy
Services
Storage and
Transportation
Home Services
and Other
Total
$
$
$
$
54,514
8,427
(32,586)
30,355
52,134
7,842
(25,934)
34,042
5,534 147,087
—
1,924
—
—
7,458 147,087
5,282
1,384
—
6,666
70,457
—
—
70,457
3,956
—
—
3,956
3,905
—
—
3,905
1,747 $ 212,838
10,351
(32,586)
1,747 $ 190,603
—
—
2,395 $ 134,173
9,226
(25,934)
2,395 $ 117,465
—
—
The EDECA is the legal framework for New Jersey’s public utility and wholesale energy landscape. NJNG is required,
pursuant to a written order by the BPU under EDECA, to open its residential markets to competition from third-party natural
gas suppliers. Customers can choose the supplier of their natural gas commodity in NJNG’s service territory.
As required by EDECA, NJNG’s rates are segregated into two primary components: the commodity portion, which
represents the wholesale cost of natural gas, including the cost for interstate pipeline capacity to transport the natural gas to
NJNG’s service territory; and the delivery portion, which represents the transportation of the commodity portion through
NJNG’s natural gas distribution system to the end-use customer. NJNG does not earn utility gross margin on the commodity
portion of its natural gas sales. NJNG earns utility gross margin through the delivery of natural gas to its customers, regardless
of whether it or a third-party supplier provides the wholesale natural gas commodity.
Under EDECA, the BPU is required to audit the state’s energy utilities every two years. The primary purpose of the audit
is to ensure that utilities and their affiliates offering unregulated retail services do not have an unfair competitive advantage over
nonaffiliated providers of similar retail services. A combined competitive services and management audit of NJNG commenced
in August 1, 2013. A draft management audit report was accepted by the BPU on July 23, 2014, for public comment. To date,
NJNG has implemented all audit recommendations with the approval of BPU staff and is waiting for final BPU approval.
NJNG is subject to cost-based regulation, therefore, it is permitted to recover authorized operating expenses and earn a
reasonable return on its utility capital investments based on the BPU’s approval. The impact of the ratemaking process and
decisions authorized by the BPU allows NJNG to capitalize or defer certain costs that are expected to be recovered from its
customers as regulatory assets, and to recognize certain obligations representing amounts that are probable future expenditures
as regulatory liabilities in accordance with accounting guidance applicable to regulated operations.
NJNG’s recovery of costs is facilitated through its base rates, BGSS and other regulatory tariff riders. NJNG is required to
make filings to the BPU for review of its BGSS, CIP and other programs and related rates. Annual rate changes are requested to
be effective at the beginning of the following fiscal year. The current base rates include a weighted average cost of capital of
6.95 percent and a return on common equity of 9.6 percent. All rate and program changes are subject to proper notification and
BPU review and approval. In addition, NJNG is permitted to implement certain BGSS rate changes on a provisional basis with
proper notification to the BPU.
Page 93
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Regulatory assets and liabilities included on the Consolidated Balance Sheets for NJNG are comprised of the following,
as of September 30:
(Thousands)
Regulatory assets-current
New Jersey Clean Energy Program
Conservation Incentive Program
Other current regulatory assets
Total current regulatory assets
Regulatory assets-noncurrent
Environmental remediation costs:
Expended, net of recoveries
Liability for future expenditures
Deferred income taxes
Derivatives at fair value, net
SAVEGREEN
Postemployment and other benefit costs
Deferred storm damage costs
Cost of removal
Other noncurrent regulatory assets
Total noncurrent regulatory assets
Regulatory liability-current
Overrecovered natural gas costs
Derivatives at fair value, net
Total current regulatory liabilities
Regulatory liabilities-noncurrent
Tax Act impact (1)
Derivatives at fair value, net
Other noncurrent regulatory liabilities
Total noncurrent regulatory liabilities
2021
2020
16,308 $
11,839
1,554
29,701 $
15,570
19,120
1,682
36,372
58,483 $
135,012
39,694
—
32,941
117,194
4,343
99,238
32,695
519,600 $
36,516
150,590
28,241
1
21,281
188,170
6,515
75,080
20,068
526,462
5,510 $
22,497
28,007 $
25,914
274
26,188
190,386 $
1,166
336
191,888 $
195,425
352
509
196,286
$
$
$
$
$
$
$
$
(1)
Reflects the re-measurement and subsequent amortization of NJNG's net deferred tax liabilities as a result of the change in federal tax rates enacted in
the Tax Act.
Regulatory assets and liabilities included on the Consolidated Balance Sheets for Adelphia Gateway are comprised of the
following, as of September 30:
(Thousands)
Total current regulatory assets
Total noncurrent regulatory assets
Total-noncurrent regulatory liabilities
2021
2020
$
$
$
417 $
2,499 $
1,163 $
158
997
—
The assets are comprised primarily of the tax benefit associated with the equity component of AFUDC and the liability
consists primarily of scheduling penalties. Recovery of regulatory assets is subject to FERC approval.
New Jersey Clean Energy Program
The NJCEP is a statewide program that encourages energy efficiency and renewable energy. Funding amounts are
determined by the BPU’s Office of Clean Energy and all New Jersey utilities are required to share in the annual funding
obligation. The current NJCEP program is for the State of New Jersey’s fiscal year ending June 2022. NJNG recovers the costs
associated with its portion of the NJCEP obligation through its NJCEP rider, with interest.
Over and Underrecovered Natural Gas Costs
NJNG recovers its cost of natural gas through the BGSS rate component of its customers’ bills. NJNG’s cost of natural gas
includes the purchased cost of the natural gas commodity, fees paid to pipelines and storage facilities, adjustments as a result of
BGSS incentive programs and hedging transactions. Overrecovered natural gas costs represent a regulatory liability that
generally occurs when NJNG’s BGSS rates are higher than actual costs and requests approval to be returned to customers
including interest, when applicable, in accordance with NJNG’s approved BGSS tariff. Conversely, underrecovered natural gas
costs generally occur during periods when NJNG’s BGSS rates are lower than actual costs, in which case NJNG records a
regulatory asset and requests amounts to be recovered from customers in the future.
Page 94
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Derivatives
Derivatives are utilized by NJNG to manage the price risk associated with its natural gas purchasing activities and to
participate in certain BGSS incentive programs. The gains and losses associated with NJNG’s derivatives are recoverable
through its BGSS, as noted above, without interest. See Note 5. Derivative Instruments.
Conservation Incentive Program
The CIP permits NJNG to recover utility gross margin variations related to customer usage resulting from customer
conservation efforts and mitigates the impact of weather on its margin. Such utility gross margin variations are recovered in the
year following the end of the CIP usage year, without interest, and are subject to additional conditions, including an earnings
test, a revenue test and an evaluation of BGSS-related savings. This program has no expiration date.
Environmental Remediation Costs
NJNG is responsible for the cleanup of certain former gas manufacturing facilities. Actual expenditures are recovered from
customers, with interest, over seven-year rolling periods, through a RAC rate rider. Recovery for NJNG’s estimated future
liability will be requested and/or recovered when actual expenditures are incurred. See Note 15. Commitments and Contingent
Liabilities.
Deferred Income Taxes
Upon adoption of a 1993 provision of ASC 740, Income Taxes, NJNG recognized a transition adjustment and
corresponding regulatory asset representing the difference between NJNG’s existing deferred tax amounts compared with the
deferred tax amounts calculated in accordance with the change in method prescribed by ASC 740. NJNG recovers the
regulatory asset associated with these tax impacts through future base rates, without interest.
SAVEGREEN
NJNG administers certain programs that supplement the state’s NJCEP and that allow NJNG to promote clean energy to
its residential and commercial customers, as described further below. NJNG will recover related expenditures and a weighted
average cost of capital on the unamortized balance through a tariff rider, with interest, as approved by the BPU, over a two- to
10-year period depending upon the specific program incentive.
Postemployment and Other Benefit Costs
Postemployment and Other Benefit Costs represents NJNG’s underfunded postemployment benefit obligations, as well as
a fiscal 2010 tax charge resulting from a change in the deductibility of federal subsidies associated with Medicare Part D, both
of which are deferred as regulatory assets and are recoverable, without interest, in base rates. The BPU approved the recovery
of the tax charge through NJNG’s base rates effective October 2016 over a seven-year amortization period. See Note 11.
Employee Benefit Plans.
Deferred Storm Damage Costs
Portions of NJNG’s distribution system incurred significant damage as a result of Post-Tropical Cyclone Sandy in
October 2012. NJNG deferred the uninsured incremental O&M costs associated with its restoration efforts, which were
approved for recovery by the BPU through NJNG’s base rates, without interest, effective October 2016 over a seven-year
amortization period.
Cost of Removal
NJNG accrues and collects for cost of removal in base rates on its utility property, without interest. These costs are
recorded in accumulated depreciation for regulatory reporting purposes, and actual costs of removal, without interest, will be
recovered in subsequent rates, pursuant to the BPU order. Consistent with GAAP, amounts recorded within accumulated
depreciation for regulatory accounting purposes are reclassified out of accumulated depreciation to either a regulatory asset or a
regulatory liability depending on whether actual cost of removal is still subject to collection or amounts overcollected will be
refunded back to customers. NJNG’s prior regulatory liability represented customer collections in excess of actual expenditures,
which the Company returned to customers as a reduction to depreciation expense.
Page 95
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Other Regulatory Assets
Other regulatory assets consist primarily of deferred costs associated with certain components of NJNG’s SBC, as
discussed further in the regulatory proceedings section, and NJNG’s compliance with federal and state-mandated PIM
provisions. NJNG’s related costs to maintain the operational integrity of its distribution and transmission main are recoverable,
without interest, subject to BPU review and approval. As of September 30, 2021, NJNG recorded $1.1 million of PIM in other
regulatory assets, which is being recovered through base rates over a seven-year amortization period effective October 2016.
The following is a description of certain regulatory proceedings during fiscal 2020 and 2021:
On March 30, 2021, NJNG filed a base rate case with the BPU requesting a natural gas revenue increase of $165.7 million
including a rate recovery for SRL and other infrastructure investments. On July 9, 2021, the Company updated its base rate
request to $163.9 million, based on nine months of actual information through June 30, 2021. On September 23, 2021, NJNG
filed its second update to the base rate case. The updated filing seeks a base rate increase of $162.5 million.
On November 17, 2021, the BPU issued an order adopting a stipulation of settlement approving a $79.0 million increase to
base rates, effective December 1, 2021. The increase includes an overall rate of return on rate base of 6.84 percent, return on
common equity of 9.6 percent, a common equity ratio of 54.0 percent and a depreciation rate of 2.78 percent.
BGSS and CIP
BGSS rates are normally revised on an annual basis. In addition, to manage the fluctuations in wholesale natural gas costs,
NJNG has the ability to make two interim filings during each fiscal year to increase residential and small commercial customer
BGSS rates on a self-implementing and provisional basis. NJNG is also permitted to refund or credit back a portion of the
commodity costs to customers at any time given five days’ notice when the natural gas commodity costs decrease in
comparison to amounts projected or to amounts previously collected from customers. Concurrent with the annual BGSS filing,
NJNG files for an annual review of its CIP. NJNG’s annual BGSS and CIP filings are summarized as follows:
•
•
2020 BGSS/CIP filing — On March 3, 2021, the BPU approved, on a final basis, NJNG’s annual petition to modify
its BGSS, balancing charge and CIP rates for residential and small commercial customers. The rate changes will result
in a $20.4 million decrease to the annual revenues credited to BGSS, a $3.8 million annual decrease related to its
balancing charge, as well as changes to CIP rates, which resulted in a $16.5 million annual recovery increase,
effective October 1, 2020. On November 20, 2020, NJNG notified the BPU of its intent to provide BGSS bill credits
to residential and small commercial sales customers effective December 1, 2020 to December 31, 2020. On December
22, 2020, NJNG notified the BPU of the extension of the BGSS bill credits through January 31, 2021. The actual bill
credits given to customers totaled $20.6 million, $19.3 million net of tax.
2021 BGSS/CIP filing — On May 28, 2021, NJNG submitted to the BPU the annual petition to modify its BGSS,
balancing charge and CIP rates. On November 17, 2021, the BPU approved a $2.9 million increase to the annual
revenues credited to BGSS, a $13.0 million annual increase related to its balancing charge, as well as changes to CIP
rates, which will result in a $6.3 million decrease to the annual recovery, effective December 1, 2021.
BGSS Incentive Programs
NJNG is eligible to receive financial incentives for reducing BGSS costs through a series of utility gross margin-sharing
programs that include off-system sales, capacity release and storage incentive programs. The Company is permitted to annually
propose a process to evaluate and discuss alternative incentive programs, should performance of the existing incentives or
market conditions warrant re-evaluation.
Energy Efficiency Programs
SAVEGREEN conducts home energy audits and provides various grants, incentives and financing alternatives, which
are designed to encourage the installation of high efficiency heating and cooling equipment and other upgrades to promote
energy efficiency to its residential and commercial customers while stimulating state and local economies through the creation
of jobs. Depending on the specific initiative or approval, NJNG recovers costs associated with the programs over a three- to 10-
year period through a tariff rider mechanism. As of September 30, 2021, the BPU approved total SAVEGREEN investments of
approximately $354.3 million, including $135.0 million that was approved in September 2018, for a continuation of existing EE
programs and the implementation of new programs through December 2021.
Page 96
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
On March 3, 2021 the BPU approved the three-year SAVEGREEN program consisting of approximately $126.1 million
of direct investment, $109.4 million in financing options, and $23.4 million in operation and maintenance expenses, which
resulted in a $15.6 million annual recovery increase, effective July 1, 2021. SAVEGREEN investments and costs are filed with
the BPU on an annual basis. NJNG’s annual EE filings are summarized as follows:
•
•
2020 EE filing — On May 29, 2020, NJNG filed a petition with the BPU to minimally decrease its EE recovery rate.
Throughout the course of the proceeding, the Company updated the filing for additional actual information. Based on
the updated information, the BPU approved the request to maintain its existing rate, which results in an annual
recovery of approximately $11.4 million, effective November 1, 2020.
2021 EE filing — On June 11, 2021, NJNG submitted its annual cost recovery filing for the SAVEGREEN programs
established from 2010 through 2018. If approved, the proposed rate increase will increase annual recoveries by $2.2
million. It is anticipated that this increase will be effective in early 2022.
Societal Benefits Charge
The SBC is comprised of three primary riders that allow NJNG to recover costs associated with USF, which is a
permanent statewide program for all natural gas and electric utilities for the benefit of income-eligible customers, MGP
remediation and the NJCEP. NJNG has submitted the following filings to the BPU, which include a report of program
expenditures incurred each program year:
•
•
•
•
•
2019 SBC filing — On September 9, 2020, the BPU approved NJNG's annual SBC application which included an
increase in the RAC rate of $1.2 million annually and a decrease to the NJCEP factor of $600,000, which was
effective October 1, 2020.
2020 USF filing — On October 1, 2020, the BPU approved NJNG’s annual USF compliance filing to decrease the
statewide USF rate by approximately $400,000 annually, which was effective October 1, 2020.
2020 SBC filing — On April 7, 2021, the BPU approved a stipulation resolving NJNG’s annual SBC application
requesting to recover remediation expenses, including an increase in the RAC of approximately $1.3 million annually
and an increase to the NJCEP factor, which resulted in an annual increase of approximately $6.0 million, effective
May 1, 2021.
2021 USF filing — On June 25, 2021, NJNG filed its annual USF compliance filing proposing an increase to the
statewide USF rate, which results in an annual increase of approximately $4.9 million. On September 14, 2021, the
BPU approved the increase, effective October 1, 2021.
2021 SBC filing - On September 30, 2021, NJNG filed its annual SBC application requesting to recover remediation
expenses including an increase in the RAC of approximately $2.0 million annually and a decrease to the NJCEP factor,
which will result in an annual decrease of approximately $500,000, effective April 1, 2022.
Infrastructure Programs
NJNG has significant annual capital expenditures associated with the management of its natural gas distribution and
transmission system, including new utility plant for customer growth and its associated PIM and infrastructure programs. NJNG
continues to implement BPU-approved infrastructure projects that are designed to enhance the reliability of NJNG’s natural gas
distribution system, including SAFE and NJ RISE.
SAFE/NJ RISE
The SAFE program replaces portions of NJNG’s natural gas distribution unprotected steel, cast iron infrastructure and
associated services to improve the safety and reliability of the natural gas distribution system. SAFE I was approved to invest
up to $130.0 million, exclusive of AFUDC, over a four-year period. SAFE II was approved to invest up to $200.0 million,
excluding AFUDC, over a five-year period. NJNG will recover approximately $157.5 million through annual rate filings, with
the remainder recovered through subsequent rate cases. As a condition of approval of the program, NJNG was required to file a
base rate case no later than November 2019 and satisfied this requirement with its March 29, 2019 base rate case filing.
Page 97
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
NJ RISE consists of six capital investment projects estimated to cost $102.5 million over a five-year period, excluding
AFUDC, for natural gas distribution storm-hardening and mitigation projects, along with incremental depreciation expense. NJ
RISE includes a weighted average cost of capital that ranges from 6.74 percent to 6.9 percent and a return on equity of 9.75
percent. Requests for recovery of future NJ RISE capital costs will occur in conjunction with SAFE II.
On September 27, 2019, the BPU approved NJNG’s annual SAFE II/NJ RISE petition requesting a base rate increase of
$7.8 million, effective October 1, 2019. On September 9, 2020, the BPU approved NJNG’s annual SAFE II/NJ RISE petition
requesting a base rate increase of $7.1 million, effective October 1, 2020.
On March 31, 2021, NJNG filed a petition with the BPU requesting the final base rate increase of approximately
$311,000 for the recovery associated with NJ RISE and SAFE II capital investments cost of approximately $3.4 million made
through June 30, 2021. On June 22, 2021, this filing was consolidated with the 2021 base rate case and on July 30, 2021, was
updated for actual information through June 30, 2021. Changes to base rates are anticipated to be effective concurrent with the
base rate case request.
On July 30, 2021, NJNG updated its annual SAFE II/NJ RISE cost recovery filing through June 30, 2021, this filing
seeks a base rate increase of approximately $269,000 annually. This is expected to be the last annual SAFE II/NJ RISE cost
recovery filings. This increase will be effective December 1, 2021, concurrent with the rate case.
Southern Reliability Link
The SRL is an approximately 30-mile, 30-inch transmission main designed to support improved system reliability and
integrity in the southern portion of NJNG’s service territory. SRL was placed in service during August 2021 with total costs of
$304.4 million.
Infrastructure Investment Program
On February 28, 2019, NJNG filed a petition with the BPU seeking authority to implement a five-year IIP. The IIP
consists of two components, transmission and distribution investments and information technology replacement and
enhancements. The total investment for the IIP is approximately $507.0 million. Upon approval from the BPU, investments will
be recovered through annual filings to adjust base rates. On October 28, 2020, the BPU approved the Company’s transmission
and distribution component of the IIP for $150.0 million over five years, effective November 1, 2020. The recovery of
information technology replacement and enhancements, that was included in the original IIP filing, will be included as part of
base rate filings as projects are placed in service.
Other Filings
COVID-19 Pandemic
On July 2, 2020, the BPU issued an order which authorized New Jersey utilities to create a regulatory asset by deferring
incremental COVID-19 related costs and required a related quarterly report be filed for the COVID-19-related costs and savings
incurred. Utilities must file petition by later of December 31, 2021, or within 60 days of the close of the regulatory asset period
and rate recovery can be addressed in the filing or the utility may request consideration be deferred to future rate case. Any
potential rate recovery and the appropriate period of recovery, will be addressed through that filing, or may request a deferral of
rate recovery for a future base rate case. On September 14, 2021, the BPU extended the filing date to December 31, 2022, or
within 60 days of the close of the regulatory asset period.
Page 98
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
5. DERIVATIVE INSTRUMENTS
The Company is subject primarily to commodity price risk due to fluctuations in the market price of natural gas, SRECs
and electricity. To manage this risk, the Company enters into a variety of derivative instruments including, but not limited to,
futures contracts, physical forward contracts, financial options and swaps to economically hedge the commodity price risk
associated with its existing and anticipated commitments to purchase and sell natural gas, SRECs and electricity. In addition,
the Company is exposed to foreign currency and interest rate risk and may utilize foreign currency derivatives to hedge
Canadian dollar denominated natural gas purchases and/or sales and interest rate derivatives to reduce exposure to fluctuations
in interest rates. All of these types of contracts are accounted for as derivatives, unless the Company elects NPNS, which is
done on a contract-by-contract election. Accordingly, all of the financial and certain of the Company's physical derivative
instruments are recorded at fair value on the Consolidated Balance Sheets. For a more detailed discussion of the Company’s fair
value measurement policies and level disclosures associated with the Company’s derivative instruments, see Note 6. Fair Value.
Energy Services
Energy Services chooses not to designate its financial commodity and physical forward commodity derivatives as
accounting hedges or to elect NPNS. The changes in the fair value of these derivatives are recorded as a component of natural
gas purchases or operating revenues, as appropriate for Energy Services, on the Consolidated Statements of Operations as
unrealized gains or losses. For Energy Services at settlement, realized gains and losses on all financial derivative instruments
are recognized as a component of natural gas purchases and realized gains and losses on all physical derivatives follow the
presentation of the related unrealized gains and losses as a component of either natural gas purchases or operating revenues.
Energy Services also enters into natural gas transactions in Canada and, consequently, is exposed to fluctuations in the
value of Canadian currency relative to the U.S. dollar. Energy Services may utilize foreign currency derivatives to lock in the
exchange rates associated with natural gas transactions denominated in Canadian currency. The derivatives may include
currency forwards, futures or swaps and are accounted for as derivatives. These derivatives are typically used to hedge demand
fee payments on pipeline capacity, storage and natural gas purchase agreements.
As a result of Energy Services entering into transactions to borrow natural gas, commonly referred to as “park and loans,”
an embedded derivative is recognized relating to differences between the fair value of the amount borrowed and the fair value
of the amount that will ultimately be repaid, based on changes in the forward price for natural gas prices at the borrowed
location over the contract term. This embedded derivative is accounted for as a forward sale in the month in which the
repayment of the borrowed natural gas is expected to occur, and is considered a derivative transaction that is recorded at fair
value on the Consolidated Balance Sheets, with changes in value recognized in current-period earnings.
Expected production of SRECs is hedged through the use of forward and futures contracts. All contracts require the
Company to physically deliver SRECs through the transfer of certificates as per contractual settlement schedules. Energy
Services recognizes changes in the fair value of these derivatives as a component of operating revenues. Upon settlement of the
contract, the related revenue is recognized when the SREC is transferred to the counterparty.
Natural Gas Distribution
Changes in fair value of NJNG's financial commodity derivatives are recorded as a component of regulatory assets or
liabilities on the Consolidated Balance Sheets. The Company elects NPNS accounting treatment on all physical commodity
contracts that NJNG entered into on or before December 31, 2015, and accounts for these contracts on an accrual basis.
Accordingly, physical natural gas purchases are recognized in regulatory assets or liabilities on the Consolidated Balance Sheets
when the contract settles and the natural gas is delivered. The average cost of natural gas is charged to expense in the current
period earnings based on the BGSS factor times the therm sales. Effective for contracts executed on or after January 1, 2016,
NJNG no longer elects NPNS accounting treatment on a portfolio basis. However, since NPNS is a contract-by-contract
election, where it makes sense to do so, NJNG can and may elect to treat certain contracts as normal. Because NJNG recovers
these amounts through future BGSS rates as increases or decreases to the cost of natural gas in NJNG’s tariff for natural gas
service, the changes in fair value of these contracts are deferred as a component of regulatory assets or liabilities on the
Consolidated Balance Sheets.
In February 2020 and March 2020, NJNG entered into treasury lock transactions to fix the benchmark treasury rate
associated with a $75 million debt tranche that was issued in September 2020. Settlement of the treasury locks resulted in a $6.6
million loss, which was recorded as a component of regulatory assets on the Consolidated Balance Sheets. The loss is being
amortized into earnings over the term of the debt as a component of interest expense on the Consolidated Statements of
Operations, which totaled $223,000 and $50,000, as of September 30, 2021 and 2020, respectively.
Page 99
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Clean Energy Ventures
The Company elects NPNS accounting treatment on PPA contracts executed by Clean Energy Ventures that meet the
definition of a derivative and accounts for the contract on an accrual basis. Accordingly, electricity sales are recognized in
revenues throughout the term of the PPA as electricity is delivered. NPNS is a contract-by-contract election and where it makes
sense to do so, the Company can and may elect to treat certain contracts as normal.
Home Services and Other
On January 26, 2018, NJR entered into a variable-for-fixed interest rate swap on its $100 million variable rate term loan,
which fixed the variable rate at 2.84 percent. The swap terminated on August 16, 2019, which coincided with the maturity of
the debt. The change in the fair value and the settlement of the interest rate swap was recorded as a component of interest
expense on the Consolidated Statements of Operations.
During fiscal 2020, NJR entered into treasury lock transactions to fix the benchmark treasury rate associated with a $260
million debt issuance that was finalized in July 2020 and a $200 million debt issuance that was finalized in September 2020.
NJR designated its treasury lock contracts as cash flow hedges, therefore, changes in fair value of the effective portion of the
hedges were recorded in OCI. Settlement of the treasury locks in fiscal 2020 resulted in a loss of $13.7 million, which was
recorded within OCI. The loss is being amortized into earnings over the term of the debt as a component of interest expense on
the Consolidated Statements of Operations, which totaled $1.0 million and $108,000, net of tax, as of September 30, 2021 and
2020, respectively.
Fair Value of Derivatives
The following table presents the fair value of the Company’s derivative assets and liabilities recognized on the
Consolidated Balance Sheets as of September 30:
Balance Sheet Location
(Thousands)
Derivatives not designated as hedging instruments:
Natural Gas Distribution:
Physical commodity contracts
Financial commodity contracts
Energy Services:
Physical commodity contracts
Derivatives - current
Derivatives - current
Derivatives - current
Derivatives - noncurrent
Derivatives - current
Derivatives - noncurrent
Derivatives - current
Derivatives - noncurrent
Financial commodity contracts
Foreign currency contracts
Total fair value of derivatives
Offsetting of Derivatives
Derivatives at Fair Value
2021
2020
Assets
Liabilities
Assets
Liabilities
$
36
2,046
$
$
16
13
78
71
$
76
282
2,818
333
30,226
3,068
125
2
$ 38,654
24,592
13,237
62,521
260
3
—
$ 100,642
6,454
1,264
16,671
2,037
36
48
$ 26,659
20,438
12,003
12,965
1,346
104
3
$ 47,217
The Company transacts under master netting arrangements or equivalent agreements that allow it to offset derivative
assets and liabilities with the same counterparty. However, the Company’s policy is to present its derivative assets and
liabilities on a gross basis at the contract level unit of account on the Consolidated Balance Sheets. 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 Consolidated Balance Sheets but elects not to.
Page 100
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
(Thousands)
As of September 30, 2021:
Derivative assets:
Energy Services
Physical commodity contracts
Financial commodity contracts
Foreign currency contracts
Total Energy Services
Natural Gas Distribution
Physical commodity contracts
Financial commodity contracts
Total Natural Gas Distribution
Derivative liabilities:
Energy Services
Physical commodity contracts
Financial commodity contracts
Foreign currency contracts
Total Energy Services
Natural Gas Distribution
Physical commodity contracts
Financial commodity contracts
Total Natural Gas Distribution
As of September 30, 2020:
Derivative assets:
Energy Services
Physical commodity contracts
Financial commodity contracts
Foreign currency contracts
Total Energy Services
Natural Gas Distribution
Physical commodity contracts
Financial commodity contracts
Total Natural Gas Distribution
Derivative liabilities:
Energy Services
Physical commodity contracts
Financial commodity contracts
Foreign currency contracts
Total Energy Services
Natural Gas Distribution
Physical commodity contracts
Financial commodity contracts
Total Natural Gas Distribution
Amounts
Presented on
Balance Sheets (1)
Offsetting
Derivative
Instruments (2)
Financial Collateral
Received/Pledged (3) Net Amounts (4)
$
$
$
$
3,151
33,294
127
36,572
36
2,046
2,082
$
37,829
62,781
3
$ 100,613
$
$
$
$
$
$
$
$
$
$
16
13
29
7,718
18,708
84
26,510
78
71
149
32,441
14,311
107
46,859
76
282
358
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(894)
(33,294)
(3)
(34,191)
(8)
(13)
(21)
(894)
(33,294)
(3)
(34,191)
(8)
(13)
(21)
(3,587)
(14,311)
(84)
(17,982)
(65)
(71)
(136)
(3,587)
(14,311)
(84)
(17,982)
(65)
(71)
(136)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(700)
20,532
19,832
—
—
—
—
—
—
—
—
—
—
(200)
—
—
(200)
—
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,557
20,532
124
22,213
28
2,033
2,061
36,935
29,487
—
66,422
8
—
8
3,931
4,397
—
8,328
13
—
13
28,854
—
23
28,877
11
211
222
(1)
(2)
(3)
(4)
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.
Includes transactions with NAESB netting election, transactions held by FCMs with net margining and transactions with ISDA netting.
Financial collateral includes cash balances at FCMs, as well as cash received from or pledged to other counterparties.
Net amounts represent presentation of derivative assets and liabilities if the Company were to elect balance sheet offsetting under ASC 210-20.
Page 101
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Energy Services utilizes financial derivatives to economically hedge the gross margin associated with the purchase of
physical natural gas to be used for storage injection and its subsequent sale at a later date. The gains or (losses) on the financial
transactions that are economic hedges of the cost of the purchased natural gas are recognized prior to the gains or (losses) on the
physical transaction, which are recognized in earnings when the natural gas is delivered. Therefore, mismatches between the
timing of the recognition of realized gains or (losses) on the financial derivative instruments and gains or (losses) associated
with the actual sale of the natural gas that is being economically hedged, along with fair value changes in derivative
instruments, creates volatility in the results of Energy Services, although the Company’s intended economic results relating to
the entire transaction are unaffected.
The following table presents the effect of derivative instruments recognized on the Consolidated Statements of Operations
as of September 30:
(Thousands)
Derivatives not designated as hedging instruments:
Energy Services:
Location of gain (loss) recognized in
income on derivatives
Amount of gain (loss) recognized
in income on derivatives
2020
2021
2019
Physical commodity contracts
Physical commodity contracts
Financial commodity contracts
Foreign currency contracts
Home Services and Other:
Interest rate contracts
Operating revenues
Natural gas purchases
Natural gas purchases
Natural gas purchases
Interest expense
Total unrealized and realized (losses) gains
$
30,011
1,052
(43,997)
238
$
1,163
(3,366)
58,949
(41)
$
(5,732)
(521)
(643)
(283)
—
(12,696)
$
—
$ 56,705
(233)
(7,412)
$
NJNG’s derivative contracts are part of the Company’s risk management activities that relate to its natural gas purchases
and BGSS incentive programs. At settlement, the resulting gains and/or losses are payable to or recoverable from utility
customers and are deferred in regulatory assets or liabilities resulting in no impact to earnings.
The following table reflects the gains and/or (losses) associated with NJNG’s derivative instruments as of September 30:
(Thousands)
Natural Gas Distribution:
Physical commodity contracts
Financial commodity contracts
Total unrealized and realized (losses) gains
2021
2020
2019
$ 2,174
32,725
$ 34,899
$ 2,077
(3,903)
$ (1,826)
$ 5,926
(7,700)
$ (1,774)
NJR designates its treasury lock contracts as cash flow hedges, therefore, changes in fair value of the effective portion of
the hedges are recorded in OCI and upon settlement of the contracts, realized gains and (losses) are reclassified from OCI to
interest expense on the Consolidated Statements of Operations.
The following table reflects the effect of derivative instruments designated as cash flow hedges in OCI as of September 30:
(Thousands)
Derivatives in cash flow hedging relationships:
Interest rate contracts
Amount of pre-tax
gain (loss) recognized
in OCI on derivatives
Location of gain (loss)
reclassified from OCI
into income
Amount of pre-tax
gain (loss) reclassified
from OCI into income
2021
2020
$
— $ (13,568)
Interest expense
2021
(1,371) $
$
2020
140
Page 102
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
NJNG and Energy Services had the following outstanding long (short) derivatives as of September 30:
Natural Gas Distribution
Energy Services
Transaction Type
Futures
Physical Commodity
Futures
Swaps
Physical Commodity
Volume (Bcf)
2021
2020
22.2
7.6
(13.4)
(0.3)
0.6
23.7
6.0
(27.5)
(1.8)
5.0
Not included in the above table are Energy Services' net notional amount of foreign currency transactions of
approximately $(123,000) and $5.1 million and 1,358,000 and 960,000 SRECs that were open, as of September 30, 2021 and
2020, respectively.
Broker Margin
Futures exchanges have contract-specific margin requirements that require the posting of cash or cash equivalents relating
to traded contracts. Margin requirements consist of initial margin that is posted upon the initiation of a position, maintenance
margin that is usually expressed as a percent of initial margin, and variation margin that fluctuates based on the daily marked-
to-market relative to maintenance margin requirements. The Company maintains separate broker margin accounts for the
Natural Gas Distribution and Energy Services segments. The balances as of September 30, by segment, are as follows:
(Thousands)
Natural Gas Distribution
Energy Services
Wholesale Credit Risk
Balance Sheet Location
Restricted broker margin accounts
Restricted broker margin accounts
2021
2020
$
$
2,790 $
70,050 $
13,525
55,919
NJNG, Energy Services, Clean Energy Ventures and the Storage and Transportation segment are exposed to credit risk as
a result of their sales/wholesale marketing activities. As a result of the inherent volatility in the prices of natural gas
commodities, derivatives, SRECs, the market value of contractual positions with individual counterparties could exceed
established credit limits or collateral provided by those counterparties. If a counterparty fails to perform the obligations under
its contract, then the Company could sustain a loss.
The Company monitors and manages the credit risk of its wholesale operations through credit policies and procedures that
management believes reduce overall credit risk. These policies include a review and evaluation of current and prospective
counterparties’ financial statements and/or credit ratings, daily monitoring of counterparties’ credit limits and exposure, daily
communication with traders regarding credit status and the use of credit mitigation measures, such as collateral requirements
and netting agreements. Examples of collateral include letters of credit and cash received for either prepayment or margin
deposit. Collateral may be requested due to the Company’s election not to extend credit or because exposure exceeds defined
thresholds. Most of the Company’s wholesale marketing contracts contain standard netting provisions. These contracts include
those governed by ISDA and the NAESB. The netting provisions refer to payment netting, whereby receivables and payables
with the same counterparty are offset and the resulting net amount is paid to the party to which it is due.
Internally-rated exposure applies to counterparties that are not rated by Fitch or Moody’s. In these cases, the
counterparty’s or guarantor’s financial statements are reviewed, and similar methodologies and ratios used by Fitch and/or
Moody’s are applied to arrive at a substitute rating. Gross credit exposure is defined as the unrealized fair value of physical and
financial derivative commodity contracts, plus any outstanding wholesale receivable for the value of natural gas delivered and/
or financial derivative commodity contract that has settled for which payment has not yet been received.
Page 103
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as
of September 30, 2021. 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)
Investment grade
Noninvestment grade
Internally-rated investment grade
Internally-rated noninvestment grade
Total
Gross Credit
Exposure
$ 161,680
10,891
25,827
36,589
$ 234,987
Conversely, certain of NJNG’s and Energy Services’ derivative instruments are linked to agreements containing
provisions that would require cash collateral payments from the Company if certain events occur. These provisions vary based
upon the terms in individual counterparty agreements and can result in cash payments if NJNG’s credit rating were to fall below
its current level. Specifically, most, but not all, of these additional payments will be triggered if NJNG’s debt is downgraded by
the major credit agencies, regardless of investment grade status. In addition, some of these agreements include threshold
amounts that would result in additional collateral payments if the values of derivative liabilities were to exceed the maximum
values provided for in relevant counterparty agreements. Other provisions include payment features that are not specifically
linked to ratings, but are based on certain financial metrics.
Collateral amounts associated with any of these conditions are determined based on a sliding scale and are contingent
upon the degree to which the Company’s credit rating and/or financial metrics deteriorate, and the extent to which liability
amounts exceed applicable threshold limits. There were no derivative instruments with credit-risk-related contingent features
that were in a liability position for which collateral is required as of September 30, 2021 and 2020. These amounts differ from
the respective net derivative liabilities reflected on the Consolidated Balance Sheets because the agreements also include
clauses, commonly known as “Rights of Offset,” that would permit the Company to offset its derivative assets against its
derivative liabilities for determining additional collateral to be posted, as previously discussed.
6. FAIR VALUE
Fair Value of Assets and Liabilities
The fair value of cash and cash equivalents, accounts receivable, current loan receivables, accounts payable, commercial
paper and borrowings under revolving credit facilities are estimated to equal their carrying amounts due to the short maturity of
those instruments. Non-current loan receivables are recorded based on what the Company expects to receive, which
approximates fair value, in other noncurrent assets on the Consolidated Balance Sheets. The Company regularly evaluates the
credit quality and collection profile of its customers to approximate fair value.
As of September 30, the estimated fair value of long-term debt, including current maturities, excluding finance leases,
debt issuance costs and solar asset financing obligations, is as follows (1):
(Thousands)
NJNG (2) (3)
Carrying value
Fair market value
NJR (4)
Carrying value
Fair market value
2021
2020
$ 1,092,845 $
1,092,845
$ 1,188,261 $
1,271,715
$ 1,010,000 $
1,010,000
$ 1,100,283 $
1,146,033
(1)
(2)
(3)
(4)
See Note 9. Debt for a reconciliation to long-term and short-term debt.
Excludes finance leases of $20.1 million and $74.2 million as of September 30, 2021 and September 30, 2020, respectively.
Excludes NJNG's debt issuance costs of $9.1 million and $9.2 million as of September 30, 2021 and September 30, 2020, respectively.
Excludes NJR's debt issuance costs of $3.3 million and $3.4 million as of September 30, 2021 and September 30, 2020, respectively.
Page 104
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Clean Energy Ventures enters into transactions to sell certain commercial solar assets and lease the assets back for a term
specified in the lease. These transactions are considered financing obligations for accounting purposes and are recorded within
long-term debt on the Consolidated Balance Sheets. The estimated fair value of solar asset financing obligations as of
September 30, 2021 and 2020 was $132.5 million and $149.2 million, respectively.
The Company utilizes a discounted cash flow method to determine the fair value of its debt. Inputs include observable
municipal and corporate yields, as appropriate for the maturity of the specific issue and the Company's credit rating. As of
September 30, 2021, NJR discloses its debt within Level 2 of the fair value hierarchy.
Fair Value Hierarchy
The Company applies fair value measurement guidance to its financial assets and liabilities, as appropriate, which include
financial derivatives and physical commodity contracts qualifying as derivatives, investments in equity securities and other
financial assets and liabilities. In addition, authoritative accounting literature prescribes the use of a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value based on the source of the data used to develop the price
inputs.
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 include the following:
Level 1
Level 2
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 a FCM.
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). NJNG’s
treasury lock is also considered Level 2 as valuation is based on quoted market interest and swap rates as inputs to
the valuation model. 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.
Financial derivative portfolios of NJNG and Energy Services consist mainly of futures, options and swaps. The Company
primarily uses the market approach and its policy is to use actively quoted market prices when available. The principal market
for its derivative transactions is the natural gas wholesale market; therefore, the primary sources for its price inputs are CME,
NYMEX and ICE. Energy Services uses Platts and Natural Gas Exchange for Canadian delivery points. However, Energy
Services also engages in transactions that result in transporting natural gas to delivery points for which there is no actively
quoted market price. In most instances, the transportation cost to the final delivery location is not significant to the overall
valuation. If required, Energy Services’ policy is to use the best information available to determine fair value based on internal
pricing models, which would include estimates extrapolated from broker quotes or other pricing services.
Page 105
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The Company also has other financial assets that include listed equities, mutual funds and money market funds for which
there are active exchange quotes available.
When the Company determines fair values, measurements are adjusted, as needed, for credit risk associated with its
counterparties, as well as its own credit risk. The Company determines these adjustments by using historical default
probabilities that correspond to the applicable S&P issuer ratings, while also taking into consideration collateral and netting
arrangements that serve to mitigate risk.
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
(Level 1)
(Level 2)
(Level 3)
Total
(Thousands)
As of September 30, 2021:
Assets
Physical commodity contracts
Financial commodity contracts
Financial commodity contracts - foreign exchange
Money market funds
Other
Total assets at fair value
Liabilities
Physical commodity contracts
Financial commodity contracts
Financial commodity contracts - foreign exchange
Total liabilities at fair value
As of September 30, 2020:
Assets
Physical commodity contracts
Financial commodity contracts
Financial commodity contracts - foreign exchange
Money market funds
Other
Total assets at fair value
Liabilities
Physical commodity contracts
Financial commodity contracts
Financial commodity contracts - foreign exchange
$
—
35,340
—
41
1,815
$ 3,187
—
127
—
—
$ 37,196
$ 3,314
$
—
$ 37,845
62,188
—
606
3
$ 62,188
$ 38,454
$
—
18,279
—
112,291
1,840
$ 132,410
$ 7,796
500
84
—
—
$ 8,380
$
—
$ 32,517
14,593
—
—
107
$ —
—
—
—
—
$ —
$ —
—
—
$ —
$ —
—
—
—
—
$ —
$ —
—
—
$ —
$
3,187
35,340
127
41
1,815
$ 40,510
$ 37,845
62,794
3
$ 100,642
$
7,796
18,779
84
112,291
1,840
$ 140,790
$ 32,517
14,593
107
$ 47,217
Total liabilities at fair value
$ 14,593
$ 32,624
During the third quarter of fiscal 2021, the Company evaluated its equity method investment in PennEast and determined
that it was other-than-temporarily impaired. As of September 30, 2021, the Company recognized an impairment charge of $92.0
million, which was determined primarily using significant unobservable inputs (Level 3) in the estimation of fair value,
including the probabilities assigned to development options and potential outcomes, forecasts for construction costs and
operating revenues, and timing of capital expenditures and in service dates. See the Company’s discussion of investments in
equity method investees in Note 7. Investments in Equity Investees below for more information regarding the impairment.
Page 106
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
7. INVESTMENTS IN EQUITY INVESTEES
As of September 30, the Company’s investments in equity method investees includes the following:
(Thousands)
Steckman Ridge (1)
PennEast (2)
Total
2021
109,050 $
5,479
114,529 $
$
$
2020
112,378
95,997
208,375
(1)
(2)
Includes loans with a total outstanding principal balance of $70.4 million for both fiscal 2021 and 2020, which accrue interest at a variable rate that
resets quarterly and are due October 1, 2023.
Includes a deferred tax component related to AFUDC equity of $4.6 million for September 30, 2020. As a result of the impairment of the equity method
investment in PennEast, the deferred tax component was reversed and charged to earnings as of September 30, 2021.
Steckman Ridge
The Company holds a 50 percent equity method investment in Steckman Ridge, a jointly owned and controlled natural
gas storage facility located in Bedford County, Pennsylvania. NJNG and Energy Services have entered into storage and park
and loan agreements with Steckman Ridge. See Note 18. Related Party Transactions for more information on these
intercompany transactions.
PennEast
The Company, through its subsidiary NJR Midstream Company, is a 20 percent investor in PennEast, a partnership
whose purpose was to construct and operate a 120-mile natural gas pipeline that would have extended from northeast
Pennsylvania to western New Jersey.
PennEast received a Certificate of Public Convenience and Necessity for the project from FERC on January 19, 2018. On
June 29, 2021, the Supreme Court ruled in favor of PennEast reversing the earlier decision by the Third Circuit on the use of
eminent domain to acquire state owned lands for pipeline construction and remanding the case back to the Third Circuit for
further proceedings.
Despite the favorable outcome from the Supreme Court, PennEast continues to experience regulatory and legal
challenges. As a result, the Company evaluated its equity investment in PennEast for impairment as of June 30, 2021, and
determined that it was other-than-temporarily impaired. The Company estimated the fair value of its investment in PennEast
using probability weighted scenarios assigned to discounted future cash flows. The impairment is the result of management's
estimates and assumptions regarding the likelihood of certain outcomes related to required regulatory approvals and pending
legal matters, the timing of which remains uncertain, the timing and magnitude of construction costs and in-service dates, the
evaluation of the current environmental and political climate as it relates to interstate pipeline development, and transportation
capacity revenues and discount rates.
As of September 30, 2021, the Company recognized an other-than-temporary impairment charge of $92.0 million, or
approximately $74.5 million, net of income taxes. The other-than-temporary impairment is recorded in equity in (losses)
earnings from affiliates in the Consolidated Statements of Operations. On September 27, 2021, the PennEast partnership
determined that this project is no longer supported, and all further development has ceased. Given that construction of the
pipeline will not continue, the Company re-evaluated its investment for an additional other-than temporary impairment as of
September 30, 2021. It was determined that no additional impairment was needed as the current value of the investment noted
above represents the best estimate of the salvage value of the remaining assets of the project.
It is possible that future developments could impact the fair value and could result in the recognition of additional
impairment charges.
Page 107
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The following is the summarized financial information for Steckman Ridge and PennEast for fiscal years ended
September 30:
(Thousands)
Steckman Ridge
Operating revenues
Gross profit
Income from continuing operations
Net income
Net income attributable to NJR
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
PennEast
Operating revenues
Gross profit
Income from continuing operations
Net (loss) income
Net (loss) income attributable to NJR
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
8. EARNINGS PER SHARE
2021
2020
2019
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
21,847 $
13,350 $
11,483 $
11,483 $
5,742 $
14,786 $
202,670 $
9,738 $
140,810 $
— $
— $
(406,305) $
(406,305) $
(81,261) $
822 $
44,998 $
248 $
500 $
28,814 $
20,537 $
16,926 $
16,926 $
8,463 $
7,979
207,051
945
140,810
— $
— $
34,376 $
34,376 $
6,875 $
2,829
446,212
1,761
500
32,087
24,051
18,944
18,944
9,472
—
—
31,689
31,689
6,338
The following table presents the calculation of the Company’s basic and diluted earnings per share for the fiscal years
ended September 30:
(Thousands, except per share amounts)
Net income, as reported
Basic earnings per share
Weighted average shares of common stock outstanding-basic
Basic earnings per common share
Diluted earnings per share
Weighted average shares of common stock outstanding-basic
Incremental shares (1)
Weighted average shares of common stock outstanding-diluted
Diluted earnings per common share (2)
(1)
(2)
2021
2020
2019
$ 117,890 $ 163,007 $ 123,935
96,227
94,798
89,242
$1.23
$1.72
$1.39
96,227
94,798
89,242
333
305
354
96,560
95,103
89,596
$1.22
$1.71
$1.38
Incremental shares consist primarily of unvested stock awards and performance units.
There were anti-dilutive shares of 74,000 excluded from the calculation of diluted earnings per share related to the equity forward sale agreement for
fiscal 2020. There were no anti-dilutive shares excluded from the calculation of diluted earnings per share for fiscal 2021 and 2019.
9. DEBT
NJNG and NJR finance working capital requirements and capital expenditures through various short-term debt and long-
term financing arrangements, including a commercial paper program and committed unsecured credit facilities.
Page 108
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Long-term Debt
The following table presents the long-term debt of the Company as of September 30:
(Thousands)
NJNG
Series OO
Series PP
Series QQ
Series RR
Series SS
Series TT
Series UU
Series VV
Series WW
Series XX
Series YY
Series ZZ
Series AAA
Series BBB
Series CCC
Series DDD
Series EEE
Series FFF
Series GGG
Series HHH
First mortgage bonds:
3.00%
3.15%
3.58%
4.61%
2.82%
3.66%
3.63%
4.01%
3.50%
3.38%
2.45%
3.76%
3.86%
2.75%
3.00%
3.13%
3.13%
3.33%
2.87%
2.97%
Finance lease obligation-buildings
Finance lease obligation-meters
Less: Debt issuance costs
Less: Current maturities of long-term debt
Total NJNG long-term debt
NJR
3.25%
3.20%
3.48%
3.54%
3.96%
3.29%
3.60%
3.50%
3.25%
3.13%
Less: Debt issuance costs
Less: Current maturities of long-term debt
Unsecured senior notes
Unsecured senior notes
Unsecured senior notes
Unsecured senior notes
Unsecured senior notes
Unsecured senior notes
Unsecured senior notes
Unsecured senior notes
Unsecured senior notes
Unsecured senior notes
Total NJR long-term debt
Clean Energy Ventures
Maturity date:
August 1, 2041
April 15, 2028
March 13, 2024
March 13, 2044
April 15, 2025
April 15, 2045
June 21, 2046
May 11, 2048
April 1, 2042
April 1, 2038
April 1, 2059
July 17, 2049
July 17, 2059
August 1, 2039
August 1, 2043
June 30, 2050
July 23, 2050
July 23, 2060
September 1, 2050
September 1, 2060
June 30, 2037
Various dates
September 17, 2022
August 18, 2023
November 7, 2024
August 18, 2026
June 8, 2028
July 17, 2029
July 23, 2032
July 23, 2030
September 1, 2033
September 1, 2031
Solar asset financing obligation
Less: Current maturities of long-term debt
Total Clean Energy Ventures long-term debt
Various dates
Total long-term debt
Page 109
2021
2020
46,500
50,000
70,000
55,000
50,000
100,000
125,000
125,000
10,300
10,500
15,000
100,000
85,000
9,545
41,000
50,000
50,000
25,000
25,000
50,000
—
20,135
(9,093)
(5,393)
46,500
50,000
70,000
55,000
50,000
100,000
125,000
125,000
10,300
10,500
15,000
100,000
85,000
9,545
41,000
50,000
50,000
25,000
25,000
50,000
47,597
26,562
(9,195)
(10,416)
1,098,494 1,147,393
50,000
50,000
50,000
50,000
100,000
100,000
100,000
100,000
100,000
100,000
150,000
150,000
130,000
130,000
130,000
130,000
80,000
80,000
120,000
120,000
(3,424)
(3,269)
(50,000)
—
956,731 1,006,576
124,387
(17,448)
106,939
122,317
(16,820)
105,497
$ 2,162,164 $ 2,259,466
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Annual long-term debt redemption requirements, excluding finance leases, debt issuance costs and solar asset financing
obligations, as of September 30, are as follows:
(Thousands)
2022
2023
2024
2025
2026
Thereafter
NJNG
First Mortgage Bonds
NJR
NJNG
—
50,000 $
$
—
$
50,000 $
70,000
$ 100,000 $
50,000
$
— $
—
$ 100,000 $
$ 710,000 $ 972,845
NJNG and Trustee entered into the Mortgage Indenture, dated September 1, 2014, which secures all of the outstanding
First Mortgage Bonds issued by NJNG. The Mortgage Indenture provides a direct first mortgage lien upon substantially all of
the operating properties and franchises of NJNG (other than excepted property, such as cash on hand, choses-in-action,
securities, rent, natural gas meters and certain materials, supplies, appliances and vehicles), subject only to certain permitted
encumbrances. The Mortgage Indenture contains provisions subjecting after-acquired property (other than excepted property
and subject to pre-existing liens, if any, at the time of acquisition) to the lien thereof.
NJNG’s Mortgage Indenture does not restrict NJNG’s ability to pay dividends. New Jersey Administrative Code 14:4-4.7
states that a public utility cannot issue dividends, without regulatory approval, if its equity to total capitalization ratio falls
below 30 percent. As of September 30, 2021, NJNG’s equity to total capitalization ratio is 52.9 percent and has the ability to
issue up to $1.2 billion of FMB under the terms of the Mortgage Indenture.
On October 28, 2021, NJNG entered into a Note Purchase Agreement for $100 million of its senior notes, of which
$50 million were issued at an interest rate of 2.97 percent, maturing in 2051, and $50 million were issued at an interest rate of
3.07 percent, maturing in 2061. The senior notes are secured by an equal principal amount of NJNG’s FMBs issued under
NJNG’s Mortgage Indenture.
Sale Leasebacks
NJNG received $4.0 million during fiscal 2020, in connection with the sale leaseback of its natural gas meters with terms
ranging from seven to 11 years. NJNG records a finance lease liability that is paid over the term of the lease and has the option
to purchase the meters back at fair value upon expiration of the lease. NJNG exercised early purchase options with respect to
certain outstanding meter leases by making final principal payments of $1.2 million for both fiscal 2021 and 2020. There were
no natural gas meter sale leasebacks recorded during fiscal 2021.
Contractual commitments for finance lease payments, as of the fiscal years ended September 30, are as follows:
(Thousands)
2022
2023
2024
2025
2026
Subtotal
Less: Interest component
Total
Clean Energy Ventures
Lease Payments
6,004
$
4,622
5,279
3,396
2,324
21,625
(1,490)
20,135
$
Clean Energy Ventures enters into transactions to sell the commercial solar assets concurrent with agreements to lease the
assets back over a period of five to 15 years. These transactions are treated as financing obligations for accounting purposes,
and are typically secured by the renewable energy facility asset and its future cash flows from SREC, TRECs and energy sales.
Page 110
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
ITCs and other tax benefits associated with these solar projects are transferred to the buyer, if applicable; however, the lease
payments are structured so that Clean Energy Ventures is compensated for the transfer of the related tax incentives. Clean
Energy Ventures continues to operate the solar assets, including related expenses, and retain the revenue generated from
SRECs, TRECs, and energy sales, and has the option to renew the lease or repurchase the assets sold at the end of the lease
term. Clean Energy Ventures received proceeds of $17.7 million and $42.9 million during fiscal 2021 and 2020, respectively, in
connection with the sale leaseback of commercial solar assets. The proceeds received were recognized as a financing obligation
on the Consolidated Balance Sheets.
Contractual commitments for the solar financing obligation payments, as of the fiscal years ended September 30, are as
follows:
(Thousands)
2022
2023
2024
2025
2026
Thereafter
Subtotal
Less: Interest component
Total
Short-term Debt
Lease Payments
13,749
$
13,886
41,132
33,873
974
9,036
112,650
(10,985)
101,665
$
A summary of NJR’s credit facility and NJNG’s commercial paper program and credit facility as of September 30, are as
follows:
(Thousands)
NJR
Bank revolving credit facilities (1)
Notes outstanding at end of period
Weighted average interest rate at end of period
Amount available at end of period (2)
Bank revolving credit facilities (3)
Notes outstanding at end of period
Weighted average interest rate at end of period
Amount available at end of period (4)
Bank revolving credit facilities (3)
Notes outstanding at end of period
Weighted average interest rate at end of period
Amount available at end of period
NJNG
Bank revolving credit facilities (3)
Commercial paper outstanding at end of period
Weighted average interest rate at end of period
Amount available at end of period (5)
Bank revolving credit facilities (3)
Commercial paper outstanding at end of period
Weighted average interest rate at end of period
Amount available at end of period (5)
2021
2020
Expiration Dates
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
500,000
219,100
1.05 %
270,312
—
—
— %
—
—
—
— %
—
250,000
158,200
0.17 %
91,069
—
—
— %
—
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
—
—
— %
—
425,000
125,350
1.49 %
289,356
250,000
—
— %
250,000
—
—
— %
—
250,000
—
— %
249,269
September 2026
December 2023
April 2021
September 2026
December 2023
(1)
(2)
(3)
(4)
(5)
Committed credit facilities, which require commitment fees ranging from 0.10 percent on the unused amounts.
Letters of credit outstanding total $10.6 million as of September 30, 2021, which reduces amount available by the same amount.
Committed credit facilities, which require commitment fees ranging from 0.075 percent on the unused amounts
Letters of credit outstanding total $10.3 million as of September 30, 2020, which reduces amount available by the same amount.
Letters of credit outstanding total $731,000 as of both September 30, 2021 and 2020, which reduces amount available by the same amount.
Amounts available under credit facilities are reduced by bank or commercial paper borrowings, as applicable, and any
outstanding letters of credit. Neither NJNG nor the results of its operations are obligated or pledged to support the NJR credit or
debt shelf facilities.
Page 111
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
NJR
On September 2, 2021, NJR entered into a Second Amended and Restated Credit Agreement governing a $500 million
NJR Credit Facility. The agreement replaces a $425 million revolving credit facility that was scheduled to expire on
December 5, 2023, and the new NJR Credit Facility expires on September 2, 2026, subject to two mutual options for a one-year
extension beyond that date. The NJR Credit Facility permits the borrowing of revolving loans and swingline loans, as well as a
$75 million sublimit for the issuance of letters of credit. The NJR Credit Facility also includes an accordion feature, which
would allow NJR, in the absence of a default or event of default, to increase from time to time, with the existing or new lenders,
the revolving credit commitments under the NJR Credit Facility in minimum increments of $50 million increments up to a
maximum of $250 million. Certain of NJR’s unregulated subsidiaries have guaranteed all of NJR’s obligations under the NJR
Credit Facility. The credit facility is used primarily to finance its share repurchases, to satisfy Energy Services’ short-term
liquidity needs and to finance, on an initial basis, unregulated investments.
As of September 30, 2021, NJR had eight letters of credit outstanding totaling $10.6 million on behalf of Energy Services
and Clean Energy Ventures. These letters of credit reduce the amount available under NJR’s committed credit facility by the
same amount. NJR does not anticipate that these letters of credit will be drawn upon by the counterparties, and they will be
renewed as necessary.
Energy Services’ letters of credit are used for margin requirements for natural gas transactions, collateral and security
deposit for retail natural gas sales and expire on dates ranging from December 2021 to September 2022.
Neither NJNG nor the results of its operations are obligated or pledged to support the NJR credit or debt shelf facilities.
NJNG
On September 2, 2021, NJNG entered into a Second Amended and Restated Credit Agreement governing a $250 million,
NJNG Credit Facility. The agreement refinances a $250 million revolving credit facility that was scheduled to expire on
December 5, 2023, but has now been terminated. The NJNG Credit Facility expires on September 2, 2026, subject to two
mutual options for a one-year extension beyond that date. The NJNG Credit Facility permits the borrowing of revolving loans
and swingline loans, as well as a $30 million sublimit for the issuance of letters of credit. The NJNG Credit Facility also
includes an accordion feature, which would allow NJNG, in the absence of a default or event of default, to increase from time to
time, with the existing or new lenders, the revolving credit commitments under the NJNG Credit Facility in minimum
increments of $50 million up to a maximum of $100 million.
As of September 30, 2021, NJNG has two letters of credit outstanding for $731,000. NJNG’s letters of credit are used as
collateral for remediation projects and expire in August 11, 2022. These letters of credit reduce the amount available under
NJNG’s committed credit facility by the same amount. NJNG does not anticipate that these letters of credit will be drawn upon
by the counterparty and they will be renewed as necessary.
10. STOCK-BASED COMPENSATION
In January 2017, the NJR 2017 Stock Award and Incentive Plan replaced the NJR 2007 Stock Award and Incentive Plan.
Shares have been issued in the form of performance share units, restricted stock units, deferred retention stock units and
unrestricted common stock to non-employee directors. As of September 30, 2021, 3,102,764 shares remain available for future
issuance.
The following table summarizes all stock-based compensation expense recognized during the following fiscal years:
(Thousands)
Stock-based compensation expense:
Performance share awards
Restricted and non-restricted stock
Deferred retention stock
Compensation expense included in operation and maintenance expense
Income tax benefit (1)
Total, net of tax
2021
2020
2019
$ 3,856 $ 1,943 $ 5,804
2,492
1,500
9,796
(2,848)
$ 5,536 $ 4,636 $ 6,948
2,868
1,725
6,536
(1,900)
3,193
100
7,149
(1,613)
(1)
Excludes additional tax (expense) benefit related to delivered shares of $(159,000), $647,000 and $1.3 million as of September 30, 2021, 2020 and
2019, respectively.
Page 112
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Performance Share Units
In fiscal 2021, the Company granted to certain officers 46,813 performance shares, which are market condition awards
that vest on September 30, 2023, subject to the Company meeting certain conditions. In fiscal 2021, the Company also granted
to certain officers 70,138 performance shares, of which 44,156 vest on September 30, 2023 and 25,982 vest annually over a
three-year period beginning in September 2021, both of which are subject to the Company meeting certain performance
conditions.
In fiscal 2020, the Company granted to certain officers 33,123 performance shares, which are market condition awards
that vest on September 30, 2022, subject to the Company meeting certain conditions. In fiscal 2020, the Company also granted
to certain officers 48,941 performance shares, of which 30,473 vest on September 30, 2022 and 18,468 vest annually over a
three-year period beginning in September 2020, both of which are subject to the Company meeting certain performance
conditions.
In fiscal 2019, the Company granted to certain officers 36,392 performance shares, which are market condition awards
that vested on September 30, 2021, subject to the Company meeting certain conditions. In fiscal 2019, the Company also
granted to certain officers 63,870 performance shares, of which 33,844 vested in September 30, 2021 and 30,026 vest annually
over a three-year period beginning in September 2019, both of which were subject to the Company meeting certain
performance conditions. The vesting of these awards are shown in the table below.
There is approximately $3.9 million of deferred compensation related to unvested performance shares that is expected to
be recognized over the weighted average period of 1.8 years.
The following table summarizes the performance share activity under the stock award and incentive plans for the past
three fiscal years:
Non-vested and outstanding at September 30, 2018
Granted
Vested (2)
Cancelled/forfeited
Non-vested and outstanding at September 30, 2019
Granted
Vested (3)
Cancelled/forfeited
Non-vested and outstanding at September 30, 2020
Granted
Vested (4)
Cancelled/forfeited
Non-vested and outstanding at September 30, 2021
Weighted Average
Grant Date
Fair Value
$39.67
$47.98
$38.52
$44.34
$46.53
$40.61
$44.27
$44.38
$44.22
$33.34
$44.64
$45.32
$36.08
Shares (1)
145,176
100,262
(103,009)
(11,920)
130,509
82,064
(55,025)
(1,817)
155,731
116,951
(54,918)
(51,673)
166,091
Total Fair Value
of Vested Shares
(in Thousands)
—
—
$ 4,622
—
—
—
$ 2,083
—
—
—
$ 1,673
—
—
(1)
(2)
(3)
(4)
The number of common shares issued related to certain performance shares may range from zero to 150 percent of the number of shares shown in the
table above based on the Company’s achievement of performance goals.
As certified by the Company’s Leadership and Compensation Committee on November 12, 2019, the number of common shares related to performance
shares earned was 119 percent, or 43,641 shares, the number of common shares earned related to NFE performance was 117 percent or 26,413 shares,
and the number of common shares earned related to Performance Based Restricted Stock was 100 percent or 24,468 shares. Each award earned
excludes accumulated dividends. The number represented on this line is the target number of 100 percent.
As certified by the Company’s Leadership and Compensation Committee on November 9, 2020, there were no common shares earned related to TSR
performance, the number of common shares earned related to NFE performance was 114 percent or 28,513 shares, and the number of common shares
earned related to Performance Based Restricted Stock was 100 percent or 11,139 shares. Each award earned excludes accumulated dividends. The
number represented on this line is the target number of 100 percent.
As certified by the Company’s Leadership and Compensation Committee on November 10, 2021, there were no common shares earned related to TSR
performance, the number of common shares earned related to NFE performance was 93 percent or 31,116 shares and the number of common shares
earned related to Performance Based Restricted Stock was 100 percent or 25,982 shares. Each award earned excludes accumulated dividends. The
number represented on this line is the target number of 100 percent.
The Company measures compensation expense related to performance shares based on the fair value of these awards at
their date of grant. In accordance with ASC 718, Compensation - Stock Compensation, compensation expense for market
condition grants are recognized for awards granted, and are not adjusted based on actual achievement of the performance goals.
The Company estimated the fair value of these grants on the date of grant using a lattice model. Performance condition grants
Page 113
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
are initially fair valued at the Company’s stock price on grant date, and are subsequently adjusted for actual achievement of the
performance goals.
Restricted Stock Units
In fiscal 2021, the Company granted 67,726 shares of restricted stock that vest annually over a three-year period
beginning in October 2021. In fiscal 2020, the Company granted 42,478 shares of restricted stock that vest annually over a
three-year period beginning in October 2020. In fiscal 2019, the Company granted 29,222 shares of restricted stock that vest
annually over a three-year period beginning in October 2019. In fiscal 2019, the Company also granted 6,062 shares of
restricted stock that vest annually over a three-year period beginning in April 2020. There is approximately $1.1 million of
deferred compensation related to unvested restricted stock shares that is expected to be recognized over the weighted average
period of 1.8 years.
The following table summarizes the restricted stock activity under the stock award and incentive plans for the past three
fiscal years:
Non-vested and outstanding at September 30, 2018
Granted
Vested
Cancelled/forfeited
Non-vested and outstanding at September 30, 2019
Granted
Vested
Cancelled/forfeited
Non-vested and outstanding at September 30, 2020
Granted
Vested
Cancelled/forfeited
Non-vested and outstanding at September 30, 2021
Deferred Retention Stock Units
Weighted Average
Grant Date
Fair Value
$41.24
$48.24
$39.26
$42.96
$46.18
$40.61
$44.71
$43.62
$43.52
$33.34
$44.30
$36.34
$36.87
Shares
44,168
35,284
(20,748)
(548)
58,156
42,478
(25,973)
(1,175)
73,486
67,726
(34,000)
(5,591)
101,621
Total Fair Value
of Vested Shares
(in Thousands)
—
—
$ 935
—
—
—
$ 1,073
—
—
—
$ 996
—
—
Deferred retention stock awards are granted upon approval by the Board of Directors, which generally occurs subsequent
to the fiscal year end. Deferred retention stock awards vest immediately when granted, with shares delivered at a future date in
accordance with the terms of the underlying agreements. The expense for these awards is recognized in the fiscal year in which
services are rendered. The following table summarizes the deferred retention stock award under the stock award and incentive
plans for the past three fiscal years:
Outstanding at September 30, 2018
Granted/Vested
Delivered
Forfeited
Outstanding at September 30, 2019
Granted/Vested
Delivered
Outstanding at September 30, 2020
Granted/Vested
Delivered
Outstanding at September 30, 2021
Weighted Average
Grant Date
Fair Value
$32.99
$47.95
$30.32
$44.41
$44.67
$40.72
$35.25
$46.32
$33.34
$45.00
$46.28
Shares
242,082
167,407
(158,733)
(7,195)
243,561
42,358
(57,673)
228,246
2,999
(22,389)
208,856
Total Fair Value
of Vested Shares
(in Thousands)
—
—
$ 7,145
—
—
—
$ 2,423
—
—
641
—
$
Page 114
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Non-Employee Director Stock
Effective January 2020, non-employee director compensation includes an annual equity retainer that is awarded at the
time of the Company’s annual meeting of shareowners. The shares vest upon the earlier of the first anniversary of the grant date
or the date of the Company’s next annual meeting of shareowners following the grant date and are subsequently amortized to
expense over a 12-month period. During fiscal years 2019 and 2018, the equity portion of non-employee director compensation
was awarded in shares of NJR common stock. The shares vested immediately and were subsequently amortized to expense over
a 12-month period.
The following summarizes non-employee director share awards for the past three fiscal years:
Shares granted
Weighted average grant date fair value
2021
34,994 (1)
$35.72
2020
2019
27,696
$42.88
26,165
$44.80
(1)
Approximately $313,000 of expense remains as of September 30, 2021, to be recognized through December 31, 2021.
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 were 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 2021 and 2020, the Company had no minimum
funding requirements. The Company made no discretionary contributions to the pension plans in fiscal 2021 or 2020. The
Company does not expect to be required to make additional contributions to fund the pension plans over the following two
fiscal years 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 $7.2 million and $8.4 million, in fiscal 2021 and 2020,
respectively, and estimates that it will contribute between $5 million and $10 million over each of the next five years.
Additional contributions may be required based on market conditions and changes to assumptions.
The Affordable Care Act was enacted in March 2010 and created an excise tax applicable to high-cost health plans,
commonly known as the Cadillac Tax. Employers who sponsor health plans that have an annual cost that exceeded an amount
defined by the law would pay a 40 percent tax on the excess plan costs beginning in 2022. The 2020 federal spending package
permanently eliminated the Affordable Care Act-mandated Cadillac tax on high-cost employer-sponsored health coverage. Due
to the repeal, the Company's OPEB liability was revalued for these changes. The Company applied a practical expedient to
remeasure the plan assets and obligations as of December 31, 2019, which was the nearest calendar month-end date. The impact
of the revaluation of the OPEB liability was recorded as of January 1, 2020 and is incorporated within actuarial assumptions at
September 30, 2020.
Page 115
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
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:
(Thousands)
Change in Benefit Obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions (2)
Actuarial (gain) loss
Benefits paid, net of retiree subsidies received
Benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid, net of plan participants’ contributions (2)
Fair value of plan assets at end of year
Funded status
Amounts recognized on Consolidated Balance Sheets
Postemployment employee (liability)
Current
Noncurrent
Total
Pension (1)
OPEB
2021
2020
2021
2020
$ 397,164 $ 360,477 $ 245,862 $ 260,003
4,854
7,026
194
(23,226)
(2,989)
$ 395,547 $ 397,164 $ 244,674 $ 245,862
8,223
10,587
25
29,738
(11,886)
8,730
9,112
27
(7,319)
(12,167)
4,844
6,071
451
(4,715)
(7,839)
58,874
548
(12,106)
$ 307,968 $ 288,634 $
30,632
596
(11,894)
96,406 $
18,144
7,198
(7,565)
$ 355,284 $ 307,968 $ 114,183 $
$
83,925
6,872
8,436
(2,827)
96,406
(89,196) $ (130,491) $ (149,456)
(40,263) $
$
$
(587) $
(39,676)
(40,263) $
(900)
(900) $
(531) $
(88,665)
(148,556)
(129,591)
(89,196) $ (130,491) $ (149,456)
(1)
(2)
Includes the Company’s PEP.
Prior to July 1, 1998, employees were eligible to elect an additional participant contribution to enhance their benefits and contributions made during the
periods were insignificant.
The actuarial gains on the Company’s pension and OPEB are due primarily to an increase in the discount rate used to
measure the benefit obligation. 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 other comprehensive income for the portion of the liability related to its unregulated operations.
The following table summarizes the amounts recognized in regulatory assets and accumulated other comprehensive
income as of September 30:
Balance at September 30, 2019
Amounts arising during the period:
Net actuarial loss (gain)
Amounts amortized to net periodic costs:
Net actuarial (loss)
Prior service (cost) credit
Balance at September 30, 2020
Amounts arising during the period:
Net actuarial (gain)
Amounts amortized to net periodic costs:
Net actuarial (loss)
Prior service (cost) credit
Balance at September 30, 2021
Regulatory Assets
OPEB
Pension
Accumulated Other
Comprehensive
Income (Loss)
Pension
OPEB
$ 99,606 $ 111,629
$ 27,801 $ 16,328
11,953
(21,974)
7,731
(1,614)
(7,893)
(102)
(6,536)
182
$ 103,564 $ 83,301
(907)
(2,528)
—
16
$ 33,004 $ 13,823
(39,006)
(16,286)
(7,036)
(76)
(8,269)
(102)
(6,846)
166
$ 56,187 $ 60,335
(1,064)
(3,178)
—
13
$ 22,790 $ 12,696
Page 116
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The amounts in regulatory assets and accumulated other comprehensive income 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
2021
2020
2021
2020
2021
2020
2021
2020
$ 55,922 $ 103,197 $ 60,468 $ 83,600 $ 22,790 $ 33,004 $ 12,707 $ 13,847
(24)
$ 56,187 $ 103,564 $ 60,335 $ 83,301 $ 22,790 $ 33,004 $ 12,696 $ 13,823
(133)
(299)
265
367
(11)
—
—
(Thousands)
Net actuarial loss
Prior service cost (credit)
Total
To the extent the unrecognized amounts in accumulated other comprehensive income or regulatory assets exceed 10
percent 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
other comprehensive income expected to be recognized as components of net periodic benefit cost in fiscal 2022 are as follows:
(Thousands)
Net actuarial loss
Prior service cost (credit)
Total
Regulatory Assets
OPEB
Pension
Accumulated Other
Comprehensive
Income (Loss)
Pension
OPEB
$
$
5,843 $
102
5,945 $
4,577
(133)
4,444
$
$
2,902 $
—
2,902 $
1,107
(11)
1,096
The accumulated benefit obligation for the pension plans, including the PEP, exceeded the fair value of plan assets
during fiscal 2020. The projected benefit and accumulated benefit obligations and the fair value of plan assets as of September
30, are as follows:
(Thousands)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Pension
2021
2020
$ 395,547 $ 397,164
$ 353,852 $ 352,320
$ 355,284 $ 307,968
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:
(Thousands)
Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
2021
Pension
2020
2019
2021
OPEB
2020
$
8,730 $
8,223 $
7,381 $
4,844 $
4,854 $
9,112
10,587
12,173
6,071
7,026
2019
4,404
8,324
(20,150)
(20,579)
(19,054)
(6,497)
(6,510)
(5,515)
Prior service cost (credit) amortization
102
102
102
11,446
10,424
5,765
7,909
(179)
7,442
(197)
6,466
(365)
Net periodic benefit cost recognized as expense $
9,240 $
8,757 $
6,367 $
12,148 $
12,615 $
13,314
Page 117
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
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:
2021
Pension
2020
2019
2021
OPEB
2020
2019
Benefit costs:
Discount rate
Expected asset return
Compensation increase
Obligations:
2.95/2.92% (1)
6.75 %
3.37/3.35% (1)
7.25 %
3.00/3.50% (1) 3.00/3.50% (1)
4.36/4.35% (1)
7.00 %
3.25/3.50% (1)
3.08/3.03% (1)
6.75 %
3.48/3.44% (1)
7.25 %
3.00/3.50% (1) 3.00/3.50% (1) 3.25/3.50% (1)
4.38/4.37% (1)
7.00 %
Discount rate
Compensation increase
3.10/3.07% (1) 2.95/2.92% (1) 3.37/3.35%
3.00/3.50% (1) 3.00/3.50% (1) 3.00/3.50% (1)
3.24/3.17% (1) 3.08/3.03% (1) 3.48/3.44% (1)
3.00/3.50% (1) 3.00/3.50% (1) 3.00/3.50% (1)
(1)
Percentages for represented and nonrepresented plans, respectively.
When measuring its projected benefit obligations, 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 percent change in the rate, are as follows:
($ in thousands)
HCCTR
Ultimate HCCTR
Year ultimate HCCTR reached
Effect of a 1 percentage point increase in the HCCTR on:
Year-end benefit obligation
Total service and interest cost
Effect of a 1 percentage point decrease in the HCCTR on:
Year-end benefit obligation
Total service and interest costs
2021
6.9%
4.5%
2027
2020
7.6%
4.5%
2026
2019
7.6%
4.5%
2026
$ 43,217
$ 2,959
$ 49,106
$ 2,799
$ 49,061
$ 2,923
$ (34,669)
$ (2,253)
$ (38,844)
$ (2,151)
$ (38,747)
$ (2,250)
The Company’s investment objective is a long-term real rate of return on assets before permissible expenses that is
approximately 5 percent 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:
Asset Allocation
U.S. equity securities
International equity securities
Fixed income
Other assets
Total
2022
Target
Allocation
34 %
17
38
11
100 %
Assets at
September 30,
2020
2021
36 %
17
40
7
100 %
38 %
18
39
5
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-2019 and the Pri-2012 mortality study, did not materially impact the projected benefit obligation for the
plans.
Page 118
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid during the
following fiscal years:
(Thousands)
2022
2023
2024
2025
2026
2027 - 2031
Pension
OPEB
6,936
$ 13,434 $
7,495
$ 14,353 $
8,069
$ 15,294 $
8,735
$ 16,277 $
$ 17,269 $
9,392
$ 101,147 $ 55,685
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.
The following estimated subsidy payments are expected to be paid during the following fiscal years:
(Thousands)
2022
2023
2024
2025
2026
2027 - 2031
Estimated Subsidy
Payments
$
$
$
$
$
$
314
350
388
425
466
3,099
Pension and OPEB assets held in the master trust, measured at fair value, as of September 30, are summarized as follows:
(Thousands)
As of September 30, 2021
Assets
Money market funds
Registered Investment Companies:
Equity Funds:
Large Cap Index
Extended Market Index
International Stock
Fixed Income Funds:
Emerging Markets
Core Fixed Income
Opportunistic Income
Ultra Short Duration
High Yield Bond Fund
Long Duration Fund
Total assets at in the fair value hierarchy
Investments measured at net asset value
$
Common collective trusts
Total assets at fair value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Pension
Total
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
OPEB
Total
$
—
$
—
$
32
$
32
103,961
21,948
61,286
18,291
—
—
—
30,300
93,849
329,635
103,961
21,948
61,286
18,291
—
—
—
30,300
93,849
329,635
$
33,644
7,096
20,063
6,001
13,345
8,568
8,536
9,912
—
107,197
33,644
7,096
20,063
6,001
13,345
8,568
8,536
9,912
—
107,197
25,649
355,284
$
6,986
114,183
$
Page 119
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
(Thousands)
As of September 30, 2020:
Assets
Money market funds
Registered Investment Companies:
Equity Funds:
Large Cap Index
Extended Market Index
International Stock
Fixed Income Funds:
Emerging Markets
Core Fixed Income
Opportunistic Income
Ultra Short Duration
High Yield Bond Fund
Long Duration Fund
Total assets at in the fair value hierarchy
Investments measured at net asset value
$
Common collective trusts
Total assets at fair value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Pension
Total
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
OPEB
Total
$
—
$
—
$
15
$
15
95,542
21,085
56,912
16,008
—
—
—
26,303
77,036
292,886
95,542
21,085
56,912
16,008
—
—
—
26,303
77,036
292,886
$
29,908
6,470
17,390
4,958
11,146
7,128
7,057
8,223
—
92,295
15,082
307,968
$
$
29,908
6,470
17,390
4,958
11,146
7,128
7,057
8,223
—
92,295
4,111
96,406
The Plan had no Level 2 or Level 3 fair value measurements during fiscal 2021 and 2020, and there have been no changes
in valuation methodologies as of September 30, 2021. 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:
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.
Common collective trusts — The NAV for common collective 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 percent of participants’
contributions up to 6 percent 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 percent and 4.5 percent 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 $5.1 million in fiscal
2021, $4.5 million in fiscal 2020 and $3.9 million in fiscal 2019. The amount contributed for the employer special contribution
of the Savings Plan was $2.1 million in fiscal 2021, $1.6 million in fiscal 2020 and $1.3 million in fiscal 2019.
Page 120
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
12. ASSET RETIREMENT OBLIGATIONS
The Company recognizes ARO when the legal obligation to retire an asset has been incurred and a reasonable estimate of
fair value can be made. Accordingly, the Company recognizes ARO related to the costs associated with cutting and capping its
main and service natural gas distribution pipelines of NJNG, which is required by New Jersey law when taking such natural gas
distribution pipeline out of service. The Company also recognizes ARO related to Clean Energy Ventures’ solar assets when
there are decommissioning provisions in Clean Energy Ventures’ lease agreements that require removal of the asset.
Accretion amounts associated with NJNG’s ARO are recognized as part of its depreciation expense and the corresponding
regulatory asset and liability will be shown gross on the Consolidated Balance Sheets. Accretion amounts associated with Clean
Energy Ventures’ ARO are recognized as a component of operations and maintenance expense on the Consolidated Statements
of Operations.
The following is an analysis of the change in the Company’s ARO for the fiscal years ended September 30:
(Thousands)
Balance at October 1
Accretion
Additions
Change in estimated useful life
Change in assumptions
Retirements
Balance at period end
2021
2020
NJNG
NJRCEV
NJNG
NJRCEV
$
$
29,280 $
1,612
5,697
—
6,151
(1,129)
41,611 $
4,444
182
68
—
—
—
4,694
$
$
26,944 $
1,476
—
—
1,104
(244)
29,280 $
4,102
196
1,306
(1,160)
—
—
4,444
Accretion for the next five years, for the fiscal years ended September 30, is estimated to be as follows:
(Thousands)
2022
2023
2024
2025
2026
Total
13. INCOME TAXES
Estimated
Accretion
2,012
$
2,092
2,174
2,255
2,339
10,872
$
The income tax provision (benefit) from operations for the fiscal years ended September 30, consists of the following:
(Thousands)
Current:
Federal
State
Deferred:
Federal
State
Investment/production tax credits
Income tax provision
2021
2020
2019
$
$
651 $
1,703
(2,164) $
6,763
10,933
3,530
25,030
6,224
(322)
33,286 $
28,817
3,400
(322)
36,494 $
4,103
4,003
(4,129)
18,440
Page 121
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
As of September 30, the temporary differences, which give rise to deferred tax assets (liabilities), consist of the
following:
(Thousands)
Deferred tax assets
Investment tax credits (1)
Federal net operating losses (2)
State net operating losses
Fair value of derivatives
Impairment of equity method investment
Postemployment benefits
Incentive compensation
Amortization of intangibles
Overrecovered natural gas costs
Allowance for doubtful accounts
Other
Total deferred tax assets
Less: Valuation allowance
Total deferred tax assets net of valuation allowance
Deferred tax liabilities
Property related items
Remediation costs
Investments in equity investees
Conservation incentive plan
Other
Total deferred tax liabilities
Total net deferred tax liabilities
2021
2020
$
$
$
$
$
$
225,036
—
38,108
16,333
15,395
9,665
6,894
6,540
1,540
6,561
6,140
332,212
(23,613)
308,599
(419,753)
(16,347)
(21,739)
(3,309)
(6,203)
(467,351)
(158,752)
$
$
$
$
$
$
194,840
24,091
33,233
13,979
—
8,544
7,071
5,892
7,244
1,922
448
297,264
(17,639)
279,625
(359,604)
(10,207)
(23,395)
(5,345)
(6,639)
(405,190)
(125,565)
(1)
(2)
Includes approximately $814,000 and $898,000 for NJNG for fiscal 2021 and 2020, respectively, which is being amortized over the life of the related
assets.
See discussion of federal net operating loss utilization in the Other Tax Items section of this note.
A reconciliation of the U.S. federal statutory rate to the effective rate from operations for the fiscal years ended
September 30, is as follows:
(Thousands)
Statutory income tax expense
Change resulting from:
Investment/production tax credits
Cost of removal of assets placed in service prior to 1981
AFUDC equity
State income taxes, net of federal benefit
NJ Unitary method change
Valuation allowance
Tax Act - utility excess deferred income taxes amortized
Other
Income tax provision
Effective income tax rate
2021
$ 31,747
2020
$ 41,896
2019
$ 29,898
(322)
(5,366)
(786)
6,124
—
5,974
(3,573)
(512)
$ 33,286
(322)
(5,362)
(4,933)
11,965
(15,345)
13,604
(3,573)
(1,436)
$ 36,494
(4,129)
(6,349)
(2,313)
6,262
—
—
(3,573)
(1,356)
$ 18,440
22.0 %
18.3 %
14.0 %
The Company and one or more of its subsidiaries files or expects to file income and/or franchise tax returns in the U.S.
Federal jurisdiction and in the states of Colorado, Connecticut, Delaware, Louisiana, Maryland, New Jersey, New York, North
Carolina, Pennsylvania, Rhode Island, Texas, Mississippi and Virginia. The Company neither files in, nor believes it has a
filing requirement in, any foreign jurisdictions other than Canada. Due to certain available tax treaty benefits, the Company
incurs no tax liability in Canada.
The Company’s federal income tax returns through fiscal 2017 have either been reviewed by the IRS, or the related statute
of limitations has expired and all matters have been settled. Federal income tax returns for periods subsequent to fiscal 2017 are
open to examination by the IRS. For all periods subsequent to those ended September 30, 2017, the Company’s state income
Page 122
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
tax returns are statutorily open to examination in all applicable states with the exception of Colorado, New Jersey and Texas. In
Colorado, New Jersey and Texas, all periods subsequent to September 30, 2016, are statutorily open to examination.
NJR evaluates its tax positions to determine the appropriate accounting and recognition of potential future obligations
associated with unrecognized tax benefits. A tax benefit claimed, or expected to be claimed, on a tax return may be recognized
if it is more likely than not that the position will be upheld upon examination by the applicable taxing authority. Interest and
penalties related to unrecognized tax benefits, if any, are recognized within income tax expense and accrued interest, and
penalties are recognized within other noncurrent liabilities on the Consolidated Balance Sheets.
The Company evaluates certain tax benefits that have been recorded in the financial statements for uncertainties. During
fiscal 2019, the Company concluded that a portion of tax benefits were uncertain and recorded a reserve against deferred taxes
on the Consolidated Balance Sheets. During fiscal 2021, a federal tax audit was completed and, as a result, the positions that the
prior tax reserves related to are considered effectively settled and the related tax reserve was released. As a result of the change
in the Company's method of accounting for ITCs from the flow through method to the deferral method, which was effective
October 1, 2020, the settlement of the reserve was recorded as an adjustment to nonutility plant and equipment, at cost on the
Consolidated Balance Sheets. The tax benefits related to fiscal tax years open to examination by the IRS may be subject to
subsequent adjustments.
The reserve for uncertain tax benefits for the fiscal year ended September 30, is as follows:
(Thousands)
Balance at October 1,
Reversal of settled tax positions during the current fiscal period
Balance at period end
CARES Act
2021
2020
$
$
4,930 $
(4,930)
— $
4,930
—
4,930
On March 27, 2020, the President of the U.S. signed the CARES Act, which is aimed at providing emergency assistance
and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S.
economy. The CARES Act, among other things, includes several business tax provisions which include, but are not limited to
modifications of federal net operating loss carrybacks and deductibility, changes to prior year refundable alternative minimum
tax liabilities, increase of limitations on business interest deductions from 30 percent to 50 percent of earnings before interest,
taxes, depreciation, and amortization, technical corrections of the classification of qualified improvement property making them
eligible for bonus depreciation, increase of the limits on charitable contribution deductions from 10 percent to 25 percent of
adjusted taxable income, modifications of the treatment of federal loans, loan guarantees, and other investments, suspension of
industry specific excise taxes, deferral of the company portion of OASDI, and implementation of a refundable employee
retention tax credit.
The CARES Act provides for the delay in the required deposit of the employer portion of the OASDI payroll tax from the
date of enactment through the end of 2020. Of the taxes that the Company can defer, 50 percent of the deferred taxes are
required to be deposited by the end of 2021 and the remaining 50 percent are required to be deposited by the end of 2022.
Additionally, The CARES Act provides a refundable tax credit, the employee retention tax credit, to certain employers who are
ordered by a competent governmental authority to suspend or reduce business operations due to concern about the spread of
COVID-19 or suffered a significant decline in the business during a calendar quarter during 2020 compared to the same
calendar quarter during the previous year. As of September 30, 2021 and 2020, the Company deferred approximately $5.1
million and $3.1 million, respectively, related to the employer portion of the OASDI tax.
On March 11, 2021, the President of the U.S. signed the American Rescue Plan Act of 2021, which is primarily an
economic stimulus package. It also expanded the scope of Section 162(m) of the Internal Revenue Code, which imposes a
$1.0 million deduction limit on compensation paid to covered employees from the top five officers to also include the next five
highest paid employees for tax years beginning after December 31, 2026.
Page 123
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Other Tax Items
As of September 30, 2020, the Company had federal income tax net operating losses of approximately $134.0 million.
Federal net operating losses can generally be carried back two years and forward 20 years and will begin to expire in fiscal
2036, with the remainder expiring by 2038. During fiscal 2021, the Company exercised its ability to carryback these federal net
operating losses to offset taxable income in prior periods.
For the net operating losses carried back, the Company estimated the portion of taxes considered refundable totaling
approximately $22.8 million as of September 30, 2020, which was recorded as a component of prepaid and accrued taxes on the
Consolidated Balance Sheets. The remaining $24.1 million that the Company has determined not to be refundable in cash, was
recaptured as ITCs that were previously utilized to offset expense.
As of September 30, 2021 and 2020, the Company has tax credit carryforwards of approximately $224.2 million and
$195.2 million, respectively, which each have a life of 20 years. The Company expects to utilize this entire carryforward prior
to expiration, which would begin in fiscal 2035.
As of September 30, 2021 and 2020, the Company has state income tax net operating losses of approximately $554.6
million and $487.7 million, respectively. These state net operating losses have varying carry-forward periods dictated by the
state in which they were incurred; these state carry-forward periods range from seven to 20 years and began to expire in fiscal
2021, with the majority expiring after 2035. The Company expects to utilize this entire carryforward, other than as described
below.
The impairment of the equity method investment in PennEast created potential net capital loss attributes totaling
approximately $61.8 million, which can only be utilized to offset capital gains income and can be carried back three years and
forward five years prior to expiration.
As of September 30, 2021, the Company has a valuation allowance totaling $23.6 million comprised of approximately
$17.3 million, related to the recognition of state net operating loss carryforwards, which primarily relate to New Jersey and
approximately $6.4 million related to potential capital loss carryforwards resulting from the impairment of the equity method
investment in PennEast, which the Company believes may not be fully utilized prior to expiration. As of September 30, 2020,
the Company had a valuation allowance totaling $17.6 million related to the state net operating loss carryforwards, as
previously discussed.
The Consolidated Appropriations Act extended the 30 percent ITC for solar property that is under construction on or
before December 31, 2019. Projects placed in service after December 31, 2019, may also qualify for a 30 percent federal ITC if
five percent or more of the total costs of a solar property are incurred before the end of the applicable year and there are
continuous efforts to advance towards completion of the project, based on the IRS guidance around ITC safe harbor
determination. The credit declined to 26 percent for property under construction before the end of 2020. The Consolidated
Appropriations Act, 2021 extended the 26 percent tax credit for property under construction during 2021 and 2022. The credit
will drop to 22 percent for property under construction before the end of 2023. After 2023 the ITC will be reduced to 10
percent.
14. LEASES
Lessee Accounting
The Company determines if an arrangement is a lease at inception based on whether the Company has the right to control
the use of an identified asset, the right to obtain substantially all of the economic benefits from the use of the asset and the right
to direct the use of the asset and accounts for leases in accordance with ASC 842, Leases. Right-of-use assets represent the
Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company's obligation to make
lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based
on the present value of lease payments over the lease term, including payments at commencement that depend on an index or
rate. Most leases in which the Company is the lessee do not have a readily determinable implicit rate, so an incremental
borrowing rate, based on the information available at the lease commencement date, is utilized to determine the present value of
lease payments. When a secured borrowing rate is not readily available, unsecured borrowing rates are adjusted for the effects
of collateral to determine the incremental borrowing rate. The Company uses the implicit rate for agreements in which it is a
lessor. The Company has not entered into any material agreements in which it is a lessor. Lease expense and lease income are
recognized on a straight-line basis over the lease term for operating leases.
Page 124
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The Company’s lease agreements primarily consist of commercial solar land leases, storage and capacity leases,
equipment and real property, including land and office facilities, office equipment and the sale leaseback of its natural gas
meters.
Certain leases contain escalation provisions for inflation metrics. The storage leases contain a variable payment
component that relates to the change in the inflation metrics that are not known past the current payment period. The variable
components of these lease payments are excluded from the lease payments that are used to determine the related right-of-use
lease asset and liability. The variable portion of these leases are recognized as leasing expenses when they are incurred. The
capacity lease payments are fully variable and based on the amount of natural gas stored in the storage caverns.
Generally, the Company’s solar land lease terms are between 15 and 35 years and may include multiple options to extend
the terms for an additional five to ten years. The Company’s office leases vary in duration, ranging from one to 17 years and
may or may not include extension or early purchase options. The Company’s meter lease terms are between seven and ten years
with purchase options available prior to the end of the term. Equipment leases include general office equipment that also vary in
duration, most of which are for a term of five years. The Company's storage and capacity leases have assumed terms of 50 years
to coincide with the expected useful lives of the cavern assets with which the leases are associated. The Company's lease terms
may include options to extend, purchase the leased asset or terminate a lease and they are included in the lease liability
calculation when it is reasonably certain that those options will be exercised. The Company has elected an accounting policy
that exempts leases with an original term of one year or less from the recognition requirements of ASC 842, Leases.
The Company has lease agreements with lease and non-lease components and has elected the practical expedient to
combine lease and non-lease components for certain classes of leases, such as office buildings, solar land leases and office
equipment. Variable payments are not considered material to the Company. The Company’s lease agreements do not contain
any material residual value guarantees, material restrictions or material covenants. There are no material lease transactions with
related parties.
The following table presents the Company's lease costs included in the Consolidated Statements of Operations for the
fiscal year ended September 30:
(Thousands)
Operating lease cost (1)
Finance lease cost
Income Statement Location
Operation and maintenance
Amortization of right-of-use assets
Interest on lease liabilities
Depreciation and amortization
Interest expense, net of capitalized interest
Total finance lease cost
Short-term lease cost
Variable lease cost
Total lease cost
(1) Net of capitalized costs.
Operation and maintenance
Operation and maintenance
2021
2020
8,182 $
6,404
3,442
710
4,152 $
543
1,381
14,258 $
5,007
1,511
6,518
1,041
1,025
14,988
$
$
$
The following table presents supplemental cash flow information related to leases for the fiscal year ended September 30:
(Thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases
Operating cash flows for finance leases
Financing cash flows for finance leases
2021
2020
$
$
$
6,675 $
1,167 $
8,180 $
8,804
1,189
6,985
Assets obtained or modified for operating lease liabilities totaled approximately $46.1 million and $76.6 million during
fiscal 2021 and 2020, respectively. There were no assets obtained or modified through finance lease liabilities during fiscal
2021. Assets obtained or modified through finance lease liabilities totaled approximately $49.7 million during fiscal 2020.
Page 125
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The following table presents the balance and classifications of the Company’s right of use assets and lease liabilities
included in the Consolidated Balance Sheets for the fiscal year ended September 30:
(Thousands)
Assets
Noncurrent
Balance Sheet Location
2021
2020
Operating lease assets
Finance lease assets
Operating lease assets
Utility plant
Total lease assets
Liabilities
Current
Operating lease liabilities
Finance lease liabilities
Operating lease liabilities
Current maturities of long-term debt
Noncurrent
Operating lease liabilities
Finance lease liabilities
Total lease liabilities
Operating lease liabilities
Long-term debt
$
$
$
$
173,928 $
13,489
187,417 $
131,769
71,085
202,854
4,300 $
5,393
6,724
10,416
141,363
14,742
165,798 $
95,030
63,743
175,913
NJNG was a lessee as part of a lease agreement for its headquarters building with a 16-year term that would have expired
in June 2037. On May 26, 2021, NJNG exercised a purchase option of the lease to acquire the building for $41.1 million, which
is included in utility plant on the Consolidated Balance Sheets. Following the purchase of the building, NJNG removed the
present value of the future lease payments of $46.9 million, which was reflected within utility plant and $45.6 million as
presented within finance lease liabilities on the Consolidated Balance Sheets.
For operating lease assets and liabilities, the weighted average remaining lease term was 29.6 years and 25.5 years and
the weighted average discount rate used in the valuation over the remaining lease term was 3.2 percent for both September 30,
2021 and 2020. For finance lease assets and liabilities as of September 30, 2021 and 2020, the weighted average remaining
lease term was 3.4 years and 11.5 years, respectively, and the weighted average discount rate used in the valuation over the
remaining lease term is 3.5 percent and 2.5 percent as of September 30, 2021 and 2020, respectively.
The following table presents the Company's maturities of lease liabilities as of September 30, 2021:
(Thousands)
2022
2023
2024
2025
2026
Thereafter
Total future lease payments
Less: Liability accretion
Total lease liability
Operating Leases Finance Leases
$
7,564 $
8,022
7,667
7,127
7,034
196,471
233,885
(88,222)
145,663 $
6,004
4,622
5,279
3,396
2,324
—
21,625
(1,490)
20,135
$
On August 14, 2020, the Company entered into a partial termination agreement of its lease contracts associated with its
natural gas cavern storage. As a result of the partial termination, the Company paid $28.5 million to the lease owners receiving
in return a 50 year non-compete agreement. The Company treated these Leaf River lease arrangements as one combined
contract and its termination was recognized as remeasurement of the remaining lease assets that will be amortized over the
remaining part of the lease lives.
15. COMMITMENTS AND CONTINGENT LIABILITIES
Cash Commitments
NJNG has entered into long-term contracts, expiring at various dates through November 2038, for the supply,
transportation and storage of natural gas. These contracts include annual fixed charges of approximately $168.5 million at
current contract rates and volumes, which are recoverable through BGSS.
Page 126
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
For the purpose of securing storage and pipeline capacity, the Energy Services segment enters into storage and pipeline
capacity contracts, which require the payment of certain demand charges by Energy Services to maintain the ability to access
such natural gas storage or pipeline capacity, during a fixed time period, which generally ranges from one to 10 years. Demand
charges are established by interstate storage and pipeline operators and are regulated by FERC. These demand charges represent
commitments to pay storage providers or pipeline companies for the right to store and/or transport natural gas utilizing their
respective assets.
Commitments as of September 30, 2021, for natural gas purchases and future demand fees for the next five fiscal year
periods, are as follows:
(Thousands)
Energy Services:
Natural gas purchases
Storage demand fees
Pipeline demand fees
Sub-total Energy Services
NJNG:
Natural gas purchases
Storage demand fees
Pipeline demand fees
Sub-total NJNG
Total
2022
2023
2024
2025
2026
Thereafter
$ 220,186 $
20,685
58,143
— $
2,355
15,095
$ 299,014 $ 52,673 $ 26,538 $ 21,255 $ 17,450 $
— $
6,205
20,333
— $
4,525
16,730
1,258 $
11,584
39,831
—
813
18,633
19,446
— $
27,981
$ 35,389 $
37,293
—
1,870
131,207 126,177 126,343 127,990 121,258 1,066,014
$ 203,889 $ 154,158 $ 140,643 $ 134,846 $ 122,984 $ 1,067,884
$ 502,903 $ 206,831 $ 167,181 $ 156,101 $ 140,434 $ 1,087,330
— $
14,300
— $
6,856
— $
1,726
Certain pipeline demand fees totaling approximately $4.0 million per year, for which Energy Services is the responsible
party, will be paid for by the counterparty to a capacity release transaction beginning November 1, 2021 for a period of 10
years.
As of September 30, 2021, the Company’s future minimum lease payments under various operating leases will not be
more than $8.0 million annually for the next five years and $196.5 million in the aggregate for all years thereafter.
Guarantees
As of September 30, 2021, there were NJR guarantees covering approximately $192.4 million of Energy Services’ natural
gas purchases and demand fee commitments not yet reflected in accounts payable on the Consolidated Balance Sheets.
Legal Proceedings
Manufactured Gas Plant Remediation
NJNG is responsible for the remedial cleanup of certain former MGP sites, dating back to gas operations in the late 1800s
and early 1900s, which contain contaminated residues from former gas manufacturing operations. NJNG is currently involved
in administrative proceedings with the NJDEP, and participating in various studies and investigations by outside consultants, to
determine the nature and extent of any such contaminated residues and to develop appropriate programs of remedial action,
where warranted, under NJDEP regulations.
NJNG periodically, and at least annually, performs an environmental review of former MGP sites located in Atlantic
Highlands, Berkeley, Long Branch, Manchester, Toms River, Freehold and Aberdeen, New Jersey, including a review of
potential liability for investigation and remedial action. NJNG estimated at the time of the most recent review that total future
expenditures at the former MGP sites for which it is responsible, including potential liabilities for natural resource damages that
might be brought by the NJDEP for alleged injury to groundwater or other natural resources concerning these sites will range
from approximately $115.4 million to $178.4 million. NJNG’s estimate of these liabilities is based upon known facts, existing
technology and enacted laws and regulations in place when the review was completed. Where it is probable that costs will be
incurred, and the information is sufficient to establish a range of possible liability, NJNG accrues the most likely amount in the
range. If no point within the range is more likely than the other, it is NJNG’s policy to accrue the lower end of the range.
Accordingly, as of September 30, 2021, NJNG recorded a MGP remediation liability and a corresponding regulatory asset of
approximately $135.0 million on the Consolidated Balance Sheets based on the most likely amount.
Page 127
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
On September 30, 2021, NJNG filed its annual SBC application requesting to recover remediation expenses including an
increase in the RAC, of approximately $2.0 million annually, effective April 1, 2022. The actual costs to be incurred by NJNG
are dependent upon several factors, including final determination of remedial action, changing technologies and governmental
regulations, the ultimate ability of other responsible parties to pay and insurance recoveries, if any.
In June 2019, NJNG initiated a preliminary assessment of a site in Aberdeen, New Jersey to determine prior ownership
and if former MGP operations were active at the location. The preliminary assessment and site investigation activities are
ongoing at the Aberdeen, NJ site location. The estimated costs to complete the preliminary assessment and site investigation
phase are included in the MGP remediation liability and corresponding regulatory asset on the Consolidated Balance Sheet at
September 30, 2021. NJNG will continue to gather information to determine whether the obligation exists to undertake
remedial action, if any, and refine its estimate of potential costs for this site as more information becomes available.
NJNG recovers its remediation expenditures, including carrying costs, over rolling seven-year periods pursuant to a RAC
approved by the BPU. On September 9, 2020, the BPU approved NJNG's increase in the RAC, which increased the annual
recovery from $8.5 million to $9.7 million, effective October 1, 2020. On April 7, 2021, the BPU approved an increase in the
RAC, which increased the annual recovery from $9.7 million to $11.1 million and was effective May 1, 2021. As of
September 30, 2021, $58.5 million of previously incurred remediation costs, net of recoveries from customers and insurance
proceeds, are included in regulatory assets on the Consolidated Balance Sheets. NJNG will continue to seek recovery of MGP-
related costs through the RAC. If any future regulatory position indicates that the recovery of such costs is not probable, the
related non-recoverable costs would be charged to income in the period of such determination.
General
The Company is involved, and from time to time in the future may be involved, in a number of pending and threatened
judicial, regulatory and arbitration proceedings relating to matters that arise in the ordinary course of business. In view of the
inherent difficulty of predicting the outcome of litigation matters, particularly when such matters are in their early stages or
where the claimants seek indeterminate damages, the Company cannot state with confidence what the eventual outcome of the
pending litigation will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or
penalties related to each pending matter will be, if any. In accordance with applicable accounting guidance, NJR establishes
accruals for litigation for those matters that present loss contingencies as to which it is both probable that a loss will be incurred
and the amount of such loss can be reasonably estimated. NJR also discloses contingent matters for which there is a reasonable
possibility of a loss. Based upon currently available information, NJR believes that the results of litigation that are currently
pending, taken together, will not have a materially adverse effect on the Company’s financial condition, results of operations or
cash flows. The actual results of resolving the pending litigation matters may be substantially higher than the amounts accrued.
The foregoing statements about NJR’s litigation are based upon the Company’s judgments, assumptions and estimates and
are necessarily subjective and uncertain. The Company has a number of threatened and pending litigation matters at various
stages.
16. COMMON STOCK EQUITY
In December 2019, the Company completed an equity offering of 6,545,454 common shares, consisting of 5,333,334
common shares issued directly by the Company and 1,212,120 common shares issuable pursuant to forward sales agreements
with investment banks. The issuance of 5,333,334 resulted in proceeds of approximately $212.9 million, net of issuance costs,
and was reflected in shareholders' equity and as a financing activity on the statement of cash flows.
Under the forward sale agreements, a total of 1,212,120 common shares were borrowed from third parties and sold to the
underwriters. Each forward sale agreement allowed the Company, at its election and prior to September 30, 2020, to physically
settle the forward sale agreement by issuing common shares in exchange for net proceeds at the then-applicable forward sale
price specified by the agreement, which was initially $40.0125 per share, or, alternatively, to settle the forward sale agreement
in whole or in part through the delivery or receipt of shares or cash. The forward sale price was subjected to adjustment daily
based on a floating interest rate factor and would decrease in respect of certain fixed amounts specified in the agreement, such
as anticipated dividends.
Page 128
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Issuances of shares under the forward sale agreements are classified as equity transactions. Accordingly, no amounts
relating to the forward sale agreements have or will be recorded in the financial statements until settlements take place. Prior to
any settlements, the only impact to the financial statements is the inclusion of incremental shares within the calculation of
diluted EPS using the treasury stock method until settlement of the forward sale agreements. Under this method, the number of
the Company common shares used in calculating diluted EPS is deemed to be increased by the excess, if any, of the number of
shares that would be issued upon physical settlement of the forward sale agreements less the number of shares that would be
purchased by the Company in the market (based on the average market price during the same reporting period) using the
proceeds receivable upon settlement (based on the adjusted forward sale price at the end of that reporting period). Share dilution
occurs when the average market price of the Company's common shares is higher than the adjusted forward sale price.
On September 18, 2020, the Company amended its forward sale agreements to extend the maturity date of such forward
sales agreements from September 30, 2020 to September 10, 2021. On March 3, 2021, the Company cash settled a portion of
the forward sale agreement for a payout of approximately $388,000 in lieu of the issuance of 727,272 common shares. On
May 26, 2021, the Company cash settled the rest of the forward sale agreements for a payout of approximately $2.4 million in
lieu of the issuance of 484,848 common shares.
17. REPORTING SEGMENT AND OTHER OPERATIONS DATA
The Company organizes its businesses based on a combination of factors, including its products and its regulatory
environment. As a result, the Company manages its businesses through the following reporting segments and other operations:
the Natural Gas Distribution segment consists of regulated energy and off-system, capacity and storage management operations;
the Clean Energy Ventures segment consists of capital investments in clean energy projects; the Energy Services segment
consists of unregulated wholesale and retail energy operations; the Storage and Transportation segment consists of the
Company’s investments in natural gas storage and transportation facilities; the Home Services and Other operations consist of
heating, cooling and water appliance sales, installations and services, other investments and general corporate activities.
Page 129
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
Information related to the Company’s various reporting segments and other operations is detailed below:
(Thousands)
Fiscal Years Ended September 30,
Operating revenues
Natural Gas Distribution
External customers
Clean Energy Ventures
External customers
Energy Services
External customers (1)
Intercompany
Storage and Transportation
External customers
Intercompany
Subtotal
Home Services and Other
External customers
Intercompany
Eliminations
Total
Depreciation and amortization
Natural Gas Distribution
Clean Energy Ventures
Energy Services (2)
Storage and Transportation
Subtotal
Home Services and Other
Eliminations
Total
Interest income (3)
Natural Gas Distribution
Clean Energy Ventures
Energy Services
Storage and Transportation
Subtotal
Home Services and Other
Eliminations
Total
2021
2020
2019
$ 731,796 $ 729,923 $ 710,793
95,275
102,617
98,099
1,228,846 1,029,303 1,734,553
8,238
1,116
(426)
49,252
1,768
—
—
2,106,511 1,907,687 2,551,683
42,015
2,713
51,444
785
(2,127)
48,600
2,302
(10,540)
$ 2,156,613 $ 1,953,668 $ 2,592,045
49,810
1,207
(5,036)
$
80,045 $
20,567
111
9,960
110,683
980
(276)
71,883 $
25,329
123
9,293
106,628
1,032
(292)
$ 111,387 $ 107,368 $
$
$
85 $
241
11
2,243
2,580
522
(935)
2,167 $
538 $
240
99
3,510
4,387
8,633
(10,061)
2,959 $
57,980
22,376
118
6
80,480
914
(285)
81,109
994
—
78
4,000
5,072
1,942
(5,391)
1,623
Includes sales to Canada for the Energy Services segment, which are immaterial.
(1)
(2) The amortization of acquired wholesale energy contracts is excluded above and is included in natural gas purchases - nonutility on the Consolidated
Statements of Operations.
Included in other income, net on the Consolidated Statements of Operations.
(3)
Page 130
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
(Thousands)
Fiscal Years Ended September 30,
Interest expense, net of capitalized interest
Natural Gas Distribution
Clean Energy Ventures
Energy Services
Storage and Transportation
Subtotal
Home Services and Other
Eliminations
Total
Income tax provision (benefit)
Natural Gas Distribution
Clean Energy Ventures
Energy Services
Storage and Transportation
Subtotal
Home Services and Other
Eliminations
Total
Equity in earnings of affiliates
Storage and Transportation
Eliminations
Total
Net financial earnings (loss)
Natural Gas Distribution
Clean Energy Ventures
Energy Services
Storage and Transportation
Subtotal
Home Services and Other
Eliminations
Total
Capital expenditures
Natural Gas Distribution
Clean Energy Ventures
Storage and Transportation
Subtotal
Home Services and Other
Total
Investments in equity investees
Storage and Transportation
Total
Page 131
2021
2020
2019
$
36,405 $
30,975 $
26,134
22,548
20,253
14,846
2,204
3,276
13,348
13,124
5,205
2,185
74,505
67,628
48,370
4,054
10,327
1,535
—
(10,358)
(2,823)
$
78,559 $
67,597 $
47,082
$
19,054 $
27,021 $
5,048
11,034
9,434
7,270
18,371
(3,615)
(1,573)
(10,043)
4,247
2,254
32,430
38,687
17,385
(196)
(2,478)
1,052
285
1,428
(373)
$
33,286 $
36,494 $
18,440
$
(81,072) $
15,903 $
15,832
(2,140)
(1,592)
(2,204)
$
(83,212) $
14,311 $
13,628
$ 107,375 $ 126,902 $
78,062
16,789
22,111
31,903
71,117
(7,873)
2,918
13,046
208,327
18,311
159,451
14,689
127,572
(826)
211
5,784
98
1,911
(93)
$ 207,712 $ 165,333 $ 129,390
$ 426,628 $ 290,040 $ 345,004
87,852
133,841
157,828
107,500
20,998
20,616
621,980
444,879
523,448
2,630
3,230
2,484
$ 624,610 $ 448,109 $ 525,932
$
$
690 $
690 $
2,117 $
2,117 $
4,102
4,102
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
The Company’s assets for the various reporting segments and business operations are detailed below:
(Thousands)
Assets at end of period:
Natural Gas Distribution
Clean Energy Ventures
Energy Services
Storage and Transportation
Subtotal
Home Services and Other
Intercompany assets (1)
Total
2021
2020
2019
$ 3,707,461 $ 3,531,477 $ 3,064,309
914,788
814,277
694,439
365,423
244,836
290,847
862,407
844,799
240,955
5,850,079 5,435,389 4,290,550
162,134
138,375
104,411
(289,935)
(257,287)
(237,019)
$ 5,722,278 $ 5,316,477 $ 4,157,942
(1)
Consists of transactions between subsidiaries that are eliminated and reclassified in consolidation.
The Chief Executive Officer, who uses NFE as a measure of profit or loss in measuring the results of the Company’s
reporting segments and operations, is the chief operating decision maker of the Company. A reconciliation of consolidated NFE
to consolidated net income is as follows:
(Thousands)
Net financial earnings
Less:
Unrealized loss (gain) on derivative instruments and related transactions
Tax effect
Effects of economic hedging related to natural gas inventory
Tax effect
Impairment of equity method investment
Tax effect
Net income
2021
2020
$ 207,712 $ 165,333 $ 129,390
2019
54,203
(12,887)
(42,405)
10,078
92,000
(11,167)
2,881
(711)
4,309
(1,024)
—
—
$ 117,890 $ 163,007 $ 123,935
(9,644)
2,296
12,690
(3,016)
—
—
The Company uses derivative instruments as economic hedges of purchases and sales of physical natural gas inventory.
For GAAP purposes, these derivatives are recorded at fair value and related changes in fair value are included in reported
earnings. Revenues and cost of natural gas related to physical natural gas flow are recognized when the natural gas is delivered
to customers. Consequently, there is a mismatch in the timing of earnings recognition between the economic hedges and
physical natural gas flows. Timing differences occur in two ways:
•
•
unrealized gains and losses on derivatives are recognized in reported earnings in periods prior to physical natural gas
inventory flows; and
unrealized gains and losses of prior periods are reclassified as realized gains and losses when derivatives are settled in
the same period as physical natural gas inventory movements occur.
NFE is a measure of the earnings based on eliminating these timing differences, to effectively match the earnings effects
of the economic hedges with the physical sale of natural gas, SRECs and foreign currency contracts. Consequently, to reconcile
between net income and NFE, current-period unrealized gains and losses on the derivatives are excluded from NFE as a
reconciling item. Realized derivative gains and losses are also included in current-period net income. However, NFE includes
only realized gains and losses related to natural gas sold out of inventory, effectively matching the full earnings effects of the
derivatives with realized margins on physical natural gas flows. NFE also excludes impairment charges associated with equity
method investments, which are non-cash charges considered unusual in nature that occur infrequently and are not indicative of
the Company's performance for its ongoing operations. Included in the tax effects are current and deferred income tax expense
corresponding with the components of NFE.
Page 132
New Jersey Resources Corporation
Part II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
18. RELATED PARTY TRANSACTIONS
Effective April 1, 2020, NJNG entered into a 5-year agreement for 3 Bcf of firm storage capacity with Steckman Ridge,
which expires on March 31, 2025. Under the terms of the agreement, NJNG incurs demand fees, at market rates, of
approximately $9.3 million annually, a portion of which is eliminated in consolidation. These fees are recoverable through
NJNG’s BGSS mechanism and are included as a component of regulatory assets.
Energy Services may periodically enter into storage or park and loan agreements with its affiliated FERC-jurisdictional
natural gas storage facility, Steckman Ridge. As of September 30, 2021, Energy Services has entered into transactions with
Steckman Ridge for varying terms, all of which expire by October 31, 2022.
Demand fees, net of eliminations, associated with Steckman Ridge during the fiscal years ended September 30, are as
follows:
(Thousands)
Natural Gas Distribution
Energy Services
Total
2021
2020
2019
$
$
6,449 $
564
7,013 $
5,900 $
183
6,083 $
5,814
2,134
7,948
The following table summarizes demand fees payable to Steckman Ridge as of September 30:
(Thousands)
Natural Gas Distribution
Energy Services
Total
2021
2020
778 $
83
861 $
775
16
791
$
$
NJNG and Energy Services have entered into various asset management agreements, the effects of which are eliminated in
consolidation. Under the terms of these agreements, NJNG releases certain transportation and storage contracts to Energy
Services. As of September 30, 2021, NJNG and Energy Services had two asset management agreements with expiration dates
of October 31, 2021 through March 31, 2022.
NJNG has entered into a 5-year transportation precedent agreement with Adelphia Gateway for committed capacity of
130,000 Dths per day, which is expected to begin during the 2nd quarter of fiscal 2022, dependent upon the completion of a
compressor.
Energy Services has a 5-year agreement for 3 Bcf of firm storage capacity with Leaf River, which is eliminated in
consolidation and expires in March 2024. On February 19, 2021, Energy Services entered into a park and loan agreement with
Leaf River for 330,000 Dths, which expired on April 30, 2021, the activity of which is eliminated in consolidation.
In March 2021, NJNG and Clean Energy Ventures entered into a 15-year sublease and PPA agreement related to an onsite
solar array and the related energy output at the Company’s headquarters in Wall, New Jersey, the effects of which are
immaterial to the consolidated financial statements.
In July 2021, NJNG entered into 16-year lease agreements with various NJR subsidiaries for office space at the
Company’s headquarters in Wall, New Jersey, the effects of which are eliminated in consolidation.
Page 133
New Jersey Resources Corporation
Part II
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the principal executive officer
and principal financial officer, the Company conducted an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the
period covered by this report. Based on this evaluation, the Company’s principal executive officer and principal financial
officer concluded that, as of end of the period covered by this report, the Company’s disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to the Company’s management, including its principal executive
officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
The report of management required under this Item 9A is contained in Item 8 of this Form 10-K under the caption
Management’s Report on Internal Control over Financial Reporting.
Attestation Report of Registered Public Accounting Firm
The attestation report required under this Item 9A is contained in Item 8 of this 10-K under the caption Report of
Independent Registered Public Accounting Firm.
Changes in Internal Control over Financial Reporting
We periodically review our internal controls over financial reporting as part of our efforts to ensure compliance with the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002. In addition, we routinely review our system of internal
controls over financial reporting to identify potential changes to our processes and systems that may improve controls and
increase efficiency, while ensuring that we maintain an effective internal controls environment. There were no changes in our
internal controls over financial reporting that occurred during the quarter ended September 30, 2021, that have materially
affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
ITEM 9B. OTHER INFORMATION
None
Page 134
New Jersey Resources Corporation
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this item, including information concerning the Board of Directors of the Company, the members
of the Company’s Audit Committee, the Company’s Audit Committee Financial Expert, compliance with Section 16(a) of the
Exchange Act and shareowner proposals, is incorporated by reference to the Company’s Proxy Statement for the 2022 Annual
Meeting of Shareowners, which will be filed with the SEC pursuant to Regulation 14A within 120 days after September 30,
2021. The information regarding executive officers is included in this report as Item 1 under the caption Information About our
Executive Officers and incorporated herein by reference.
The Board of Directors has adopted the Code of Conduct, a code for all directors, officers and employees, as required by
the New York Stock Exchange rules, and governing the chief executive officer and senior financial officers, in compliance with
Sarbanes-Oxley and SEC regulations. Copies of the Code of Conduct are available free of charge on the Company’s website at
http://investor.njresources.com under the caption Corporate Governance. A printed copy of the Code of Conduct is available
free of charge to any shareowner who requests it by contacting the Corporate Secretary at 1415 Wyckoff Road, Wall, New
Jersey 07719. The Company will disclose any amendments to, or waivers from, a provision of the Code of Conduct that applies
to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing
similar functions that relate to any element of the Code of Conduct as defined in Item 406 of Regulation S-K by posting such
information on the Company’s website.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is incorporated by reference from the Registrant’s Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information required by this Item is incorporated by reference from the Registrant’s Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Information required by this Item is incorporated by reference from the Registrant’s Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is incorporated by reference from the Registrant’s Proxy Statement.
Page 135
New Jersey Resources Corporation
Part IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. Financial Statements.
All Financial Statements of the Registrant are filed as part of this report and included in Item 8 of Part II of this Form 10-K.
(a) 2. Financial Statement Schedules-See Index to Financial Statement Schedules in Item 8.
(a) 3. Exhibits-See Exhibit Index on page 139.
Page 136
New Jersey Resources Corporation
Part IV
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule II - Valuation and qualifying accounts and reserves for each of the three years in the period ended
September 30, 2021
Page
138
Schedules other than those listed above are omitted because they are either not required or are not applicable, or the
required information is shown in the financial statements or notes thereto.
Page 137
New Jersey Resources Corporation
Part IV
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 2021, 2020 and 2019
(Thousands)
CLASSIFICATION
2021
BEGINNING
BALANCE
ADDITIONS
CHARGED TO
EXPENSE
OTHER
ENDING
BALANCE
Valuation allowance for deferred tax assets
Allowance for doubtful accounts
2020
Valuation allowance for deferred tax assets
Allowance for doubtful accounts
2019
Allowance for doubtful accounts
$
$
$
$
$
17,639
7,242
4,035
6,148
6,355
18,986
(381)
(1,576) (1)
15,869
2,238
(2,265)
(1,144) (1)
5,704
2,387
(1,943) (1)
$
$
$
$
$
23,613
24,652
17,639
7,242
6,148
(1)
Uncollectible accounts written off, less recoveries and adjustments.
Page 138
New Jersey Resources Corporation
Part IV
EXHIBIT INDEX
Exhibit
Number
Exhibit Description
2.1
2.2
2.3
3.1
3.2
4.1
4.2
4.3
4.3(a)
4.3(b)
4.3(c)
4.3(d)
4.3(e)
4.3(f)
4.3(g)
4.3(h)
4.3(i)
4.3(j)
Purchase and Sale Agreement, dated as of October 27, 2017, by and between Talen Generation, LLC, and
Adelphia Gateway, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, as filed on
November 2, 2017)
Membership Interest Purchase Agreement, between NJR Clean Energy Ventures II Corporation and SRIV
Partnership, LLC, dated as of November 21, 2018 (incorporated by reference to Exhibit 2.1 to the Current Report
on Form 8-K, as filed on November 21, 2018)
Membership Interest Purchase Agreement, dated September 3, 2019, by and between Leaf River Energy
Holdings, LLC and NJR Pipeline Company (incorporated by reference to Exhibit 2.1 to the Current Report on
Form 8-K, as filed on September 5, 2019)
Restated Certificate of Incorporation of New Jersey Resources Corporation, as amended through March 3, 2015
(incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, as filed on January 23, 2014, and
Exhibit 3.1 to the Current Report on Form 8-K, as filed on March 3, 2015)
Bylaws of New Jersey Resources Corporation, as amended and restated on July 14, 2020 (incorporated by
reference to Exhibit 3.1 to the Current Report on Form 8-K, as filed on July 20, 2020)
Description of Common Stock (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K for
the fiscal year ended September 30, 2019, as filed on November 22, 2019)
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-
K for the fiscal year ended September 30, 2013, as filed on November 25, 2013)
Amended and Restated Indenture of Mortgage, Deed of Trust and Security Agreement, dated as of September 1,
2014, between NJNG and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 99.3
to the Current Report on Form 8-K, as filed on September 30, 2014)
36th Supplemental Indenture dated as of September 1, 2014, between NJNG and U.S. Bank National Association,
as Trustee (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K, as filed on September
30, 2014)
First Supplemental Indenture dated as of April 1, 2015 between NJNG and U.S. Bank National Association, as
Trustee (incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q, as filed on May 7, 2015)
Second Supplemental Indenture dated as of June 1, 2016, between New Jersey Natural Gas Company and U.S.
Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to Form 8-K as filed on June 22,
2016)
Third Supplemental Indenture, dated as of May 1, 2018, by and between New Jersey Natural Gas Company and
U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, as
filed on May 11, 2018)
Fourth Supplemental Indenture, dated as of April 1, 2019, between NJNG and U.S. Bank National Association, as
Trustee (incorporated by reference to Exhibit 4.4 to the Quarterly Report on Form 10-Q, as filed on May 3, 2019)
Fifth Supplemental Indenture, dated as of July 1, 2019, by and between New Jersey Natural Gas Company and
the Purchasers party thereto (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K, as filed
on July 17, 2019)
Sixth Supplemental Indenture, dated as of August 1, 2019, between NJNG and U.S. Bank National Association,
as Trustee (incorporated by reference to Exhibit 4.3(g) to the Annual Report on Form 10-K for the fiscal year
ended September 30, 2019, as filed on November 22, 2019)
Seventh Supplemental Indenture, dated as of June 1, 2020, between NJNG and U.S. Bank National Association,
as Trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, as filed on July 2, 2020)
Eighth Supplemental Indenture, dated as of July 23, 2020, between NJNG and U.S. Bank National Association,
as Trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, as filed on July 23, 2020)
Ninth Supplemental Indenture, dated as of September 2, 2020, between NJNG and U.S. Bank National
Association, as Trustee (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K, as filed on
September 2, 2020)
Page 139
New Jersey Resources Corporation
Part IV
Exhibit
Number
4.4(k)
4.4
4.4(a)
4.4(b)
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
Exhibit Description
Tenth Supplemental Indenture, dated as of October 1, 2021, by and between New Jersey Natural Gas Company
and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Current Report on
Form 8-K, as filed on November 3, 2021)
$75,000,000 Shelf Note Purchase Agreement, dated as of June 30, 2011, between New Jersey Resources
Corporation and Prudential Investment Management, Inc. (“Prudential Facility”) (incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K as filed on July 6, 2011)
First Amendment to the Prudential Facility, dated as of July 25, 2014, between the Company and Prudential
Investment Management, Inc. (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K as
filed on November 12, 2014)
Second Amendment to the Prudential Facility, dated as of September 28, 2015, between the Company and
Prudential Investment Management, Inc. (incorporated by reference to Exhibit 10.2 to the Current Report on
Form 8-K as filed on October 2, 2015)
$125,000,000 Note Purchase Agreement, dated as of February 7, 2014, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.5 to the Quarterly Report on
Form 10-Q, as filed on May 7, 2014)
Loan Agreement between New Jersey Economic Development Authority and New Jersey Natural Gas Company,
dated as of August 1, 2011 (incorporated by reference to Exhibit 4.10 to the Annual Report on Form 10-K for the
fiscal year ended September 30, 2011, as filed on November 23, 2011)
First Amendment to the Loan Agreement, dated as of August 1, 2019, NJNG and New Jersey Economic
Development Authority (incorporated by reference to Exhibit 4.7 to the Annual Report on Form 10-K for the
fiscal year ended September 30, 2019, as filed on November 22, 2019)
First Supplemental Indenture, dated as of August 1, 2019, between NJNG and U.S. Bank National Association, as
Trustee (incorporated by reference to Exhibit 4.8 to the Annual Report on Form 10-K for the fiscal year ended
September 30, 2019, as filed on November 22, 2019)
$50,000,000 Note Purchase Agreement, dated as of February 8, 2013, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.12 to the Quarterly Report on
Form 10-Q, as filed on May 3, 2013)
$150,000,000 Note Purchase Agreement, dated as of February 12, 2015, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on February 17, 2015)
Note Purchase Agreement, dated as of March 22, 2016, among New Jersey Resources Corporation and each of
the Purchasers listed in Schedule A thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on March 25, 2016)
$125,000,000 Note Purchase Agreement, dated as of June 21, 2016, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on June 22, 2016)
$125,000,000 Note Purchase Agreement, dated as of May 11, 2018, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on May 11, 2018)
$100,000,000 Note Purchase Agreement, dated as of June 8, 2018, by and among New Jersey Resources
Corporation and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on June 8, 2018)
Amended and Restated Indenture, dated as of April 1, 2019, between NJNG and New Jersey Economic
Development Authority and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1
to the Quarterly Report on Form 10-Q, as filed on May 3, 2019)
Second Amendment to the Loan Agreement, dated as of April 1, 2019, NJNG and New Jersey Economic
Development Authority (incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q, as filed
on May 3, 2019)
Amended and Restated Continuing Disclosure Undertaking, dated as of April 18, 2019 (incorporated by reference
to Exhibit 4.3 to the Quarterly Report on Form 10-Q, as filed on May 3, 2019)
Page 140
Exhibit
Number
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
New Jersey Resources Corporation
Part IV
Exhibit Description
$150,000,000 Note Purchase Agreement, dated as of July 17, 2019, by and among New Jersey Resources
Corporation and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on July 17, 2019)
$185,000,000 Note Purchase Agreement, dated as of July 17, 2019, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.2 to the Current Report on
Form 8-K, as filed on July 17, 2019)
Amended and Restated Continuing Disclosure Undertaking, dated as of August 22, 2019 (incorporated by
reference to Exhibit 4.20 to the Annual Report on Form 10-K for the fiscal year ended September 30, 2019, as
filed on November 22, 2019)
$260,000,000 Note Purchase Agreement, dated as of May 14, 2020, by and among New Jersey Resources
Corporation and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on May 18, 2020)
$125,000,000 Note Purchase Agreement, dated as of May 14, 2020, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.2 to the Current Report on
Form 8-K, as filed on May 18, 2020)
$200,000,000 Note Purchase Agreement, dated as of September 1, 2020, by and among New Jersey Resources
Corporation and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on September 2, 2020)
$75,000,000 Note Purchase Agreement, dated as of September 1, 2020, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.2 to the Current Report on
Form 8-K, as filed on September 2, 2020)
$100,000,000 Note Purchase Agreement, dated as of October 28, 2021, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on November 3, 2021)
Third Amendment to the Shelf Note Purchase Agreement dated as of June 30, 2011, dated as of November 1,
2021 among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party
thereto (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K, as filed on November 3,
2021)
First Amendment to the Note Purchase Agreement dated as of March 22, 2016, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K, as filed on November 3, 2021)
First Amendment to the Note Purchase Agreement dated as of June 8, 2018, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.5 to the Current Report on Form 8-K, as filed on November 3, 2021)
First Amendment to the Note Purchase Agreement dated as of July 17, 2019, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K, as filed on November 3, 2021)
First Amendment to the Note Purchase Agreement dated as of May 14, 2020, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K, as filed on November 3, 2021)
First Amendment to the Note Purchase Agreement dated as of September 1, 2020, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.8 to the Current Report on Form 8-K, as filed on November 3, 2021)
$100,000,000 Note Purchase Agreement, dated as of October 28, 2021, by and among New Jersey Natural Gas
Company and the Purchasers party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K, as filed on November 3, 2021)
Third Amendment to the Shelf Note Purchase Agreement dated as of June 30, 2011, dated as of November 1,
2021 among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party
thereto (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K, as filed on November 3,
2021)
Page 141
New Jersey Resources Corporation
Part IV
Exhibit
Number
4.34
4.35
4.36
4.37
4.38
Exhibit Description
First Amendment to the Note Purchase Agreement dated as of March 22, 2016, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K, as filed on November 3, 2021)
First Amendment to the Note Purchase Agreement dated as of June 8, 2018, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.5 to the Current Report on Form 8-K, as filed on November 3, 2021)
First Amendment to the Note Purchase Agreement dated as of July 17, 2019, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K, as filed on November 3, 2021)
First Amendment to the Note Purchase Agreement dated as of May 14, 2020, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K, as filed on November 3, 2021)
First Amendment to the Note Purchase Agreement dated as of September 1, 2020, dated as of November 1, 2021
among New Jersey Resources Corporation, each Guarantor signatory thereto, and each Noteholder party thereto
(incorporated by reference to Exhibit 4.8 to the Current Report on Form 8-K, as filed on November 3, 2021)
10.1*
Form of Amended and Restated Supplemental Executive Retirement Plan Agreement between the Company and
Named Executive Officer (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K for the
fiscal year ended September 30, 2020, as filed on November 30, 2020)
10.1(a)*
Schedule of Supplemental Executive Retirement Plan Agreements for named executive officers (incorporated by
reference to Exhibit 10.1(a) to the Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as
filed on November 30, 2020)
10.2
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
Service Agreement for Rate Schedule SS-1 by and between NJNG and Texas Eastern Transmission Company,
dated as of June 21, 1995 (incorporated by reference to Exhibit 10-5B to the Annual Report on Form 10-K for the
fiscal year ended September 30, 1996, as filed on December 30, 1996)
Summary of 2022 Non-Employee Director Compensation Plan (incorporated by reference to Exhibit 10.3 to the
Current Report on Form 8-K, as filed on September 9, 2021)
Summary of 2021 Non-Employee Director Compensation Plan (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K as filed on September 11, 2020)
Summary of 2020 Company’s Non-Employee Director Compensation (incorporated by reference to Exhibit 10.1
to the Current Report on Form 8-K as filed on January 23, 2020)
New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
Total Shareholder Return Fiscal Year 2018 (incorporated by reference to Exhibit 10.8 to the Quarterly Report on
Form 10-Q, as filed on February 8, 2018)
New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
NFE Fiscal Year 2018 (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q, as filed
on February 8, 2018)
New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Based Restricted Stock
Units Agreement Fiscal Year 2018 (incorporated by reference to Exhibit 10.10 to the Quarterly Report on Form
10-Q, as filed on February 8, 2018)
10.9*
New Jersey Resources Corporation Deferred Stock Retention Award Agreement Fiscal Year 2018 (incorporated
by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q, as filed on February 8, 2018)
10.10* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Restricted Stock Units Agreement
Fiscal Year 2018 (incorporated by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q, as filed on
February 8, 2018)
10.11*
The Company’s 2017 Stock Award and Incentive Plan (incorporated by reference to Appendix A to the Proxy
Statement for the 2017 Annual Meeting as filed on December 15, 2016)
10.12* New Jersey Resources Savings Equalization Plan (as amended and restated as of November 16, 2020)
(incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K for the fiscal year ended
September 30, 2020, as filed on November 30, 2020)
Page 142
New Jersey Resources Corporation
Part IV
Exhibit
Number
Exhibit Description
10.13* New Jersey Resources Pension Equalization Plan (as amended and restated as of November 16, 2020)
(incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K for the fiscal year ended
September 30, 2020, as filed on November 30, 2020)
10.14* New Jersey Resources Corporation Directors’ Deferred Compensation Plan (incorporated by reference to Exhibit
10.25 to the Quarterly Report on Form 10-Q, as filed on February 6, 2009)
10.15* New Jersey Resources Corporation Officers’ Deferred Compensation Plan (as amended and restated on
November 16, 2020) (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K for the fiscal
year ended September 30, 2020, as filed on November 30, 2020)
10.16* Amended and Restated New Jersey Resources Corporation Directors’ Deferred Compensation Plan (amended
and restated as of November 16, 2020) (incorporated by reference to Exhibit 10.1 to the Annual Report on Form
10-K for the fiscal year ended September 30, 2020, as filed on November 30, 2020)
10.17*
Form of Amended and Restated Employment Continuation Agreement between the Company and named
executive officer (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, as filed on
November 18, 2019)
10.17(a)* Schedule of Employee Continuation Agreements (incorporated by reference to Exhibit 10.1 to the Annual Report
on Form 10-K for the fiscal year ended September 30, 2020, as filed on November 30, 2020)
10.17(b)* Form of Amended and Restated Employment Continuation Agreement for officers of NJR Energy Services
Company dated as of November 12, 2019 (incorporated by reference to Exhibit 10.2 to the Current Report on
Form 8-K, as filed on November 18, 2019)
10.18
10.19
Limited Liability Company Agreement of Steckman Ridge GP, LLC, dated as of March 2, 2007 (incorporated by
reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, as filed on May 3, 2007)
Limited Partnership Agreement of Steckman Ridge, LP dated as of March 2, 2007 (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q, as filed on May 3, 2007)
10.20* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
NFE Fiscal Year 2019 (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q, as filed
on February 6, 2019)
10.21* New Jersey Resources Corporation Deferred Stock Retention Award Agreement Fiscal Year 2019 (incorporated
by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q, as filed on February 6, 2019)
10.22* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
Total Shareholder Return Fiscal Year 2019 (incorporated by reference to Exhibit 10.8 to the Quarterly Report on
Form 10-Q, as filed on February 6, 2019)
10.23* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Restricted Stock Units Agreement
Fiscal Year 2019 (incorporated by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q, as filed on
February 6, 2019)
10.24* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Based Restricted Stock
Units Agreement Fiscal Year 2019 (incorporated by reference to Exhibit 10.10 to the Quarterly Report on Form
10-Q, as filed on February 6, 2019)
10.25* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Restricted Stock Units Agreement
Fiscal Year 2020 (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K for the fiscal
year ended September 30, 2020, as filed on November 30, 2020)
10.26* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
Total Shareholder Return Fiscal Year 2020 (incorporated by reference to Exhibit 10.1 to the Annual Report on
Form 10-K for the fiscal year ended September 30, 2020, as filed on November 30, 2020)
10.27* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
NFE Fiscal Year 2020 (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K for the
fiscal year ended September 30, 2020, as filed on November 30, 2020)
10.28* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance-Based Restricted Stock
Unit Agreement Fiscal Year 2020 (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K
for the fiscal year ended September 30, 2020, as filed on November 30, 2020)
Page 143
New Jersey Resources Corporation
Part IV
Exhibit
Number
Exhibit Description
10.29* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Deferred Retention Stock Award
Agreement Fiscal Year 2020 (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K for
the fiscal year ended September 30, 2020, as filed on November 30, 2020)
10.30*
2017 Stock Award and Incentive Plan Form of Director Restricted Stock Units Agreement (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K, as filed on January 23, 2020)
10.31* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Restricted Stock Units Agreement
Fiscal Year 2021 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, as filed on
November 13, 2020)
10.32* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
Total Shareholder Return Fiscal Year 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K, as filed on November 13, 2020)
10.33* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
NFE Fiscal Year 2021 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, as filed on
November 13, 2020)
10.34* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance-Based Restricted Stock
Unit Agreement Fiscal Year 2021 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K,
as filed on November 13, 2020)
10.35* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Restricted Stock Units Agreement
Fiscal Year 2022 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, as filed on
November 15, 2021)
10.36* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
Total Shareholder Return Fiscal Year 2022 (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K, as filed on November 15, 2021)
10.37* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance Share Units Agreement -
NFE Fiscal Year 2022 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, as filed on
November 15, 2021)
10.38* New Jersey Resources Corporation 2017 Stock Award and Incentive Plan Performance-Based Restricted Stock
Unit Agreement Fiscal Year 2022 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K,
as filed on November 15, 2021)
10.39*
10.40
10.41
10.42
Separation Agreement, dated as of May 7, 2021, between the Company and Nancy A. Washington (incorporated
by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, as filed on August 5, 2021)
364-Day $250,000,000 Revolving Credit Facility, dated as of April 24, 2020 by and among New Jersey
Resources Corporation and each of the Guarantors party thereto and the lenders party thereto, and PNC Bank,
National Association and PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc. and TD Bank, N.A., as
Joint Lead Arrangers, and Truist Bank and TB Bank, N.A., as Co- Syndication Agents (incorporated by reference
to Exhibit 10.1 to the Current Report on Form 8-K, as filed on April 27, 2020)
$500,000,000 Second Amended and Restated Credit Agreement, dated as of September 2, 2021, by and among
New Jersey Resources Corporation, the guarantors thereto, the lenders party thereto, PNC Bank, National
Association, as Administrative Agent, JPMorgan Chase Bank, N.A., Wells Fargo Bank, National Association and
Mizuho Bank, Ltd., as Syndication Agents, and U.S. Bank National Association, Bank of America, N.A., TD
Bank, N.A. and The Bank of Nova Scotia, as Documentation Agents (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K, as filed on September 9, 2021)
$250,000,000 Second Amended and Restated Credit Agreement dated as of September 2, 2021, by and among
New Jersey Natural Gas Company, the lenders party thereto, PNC Bank, National Association, as Administrative
Agent, JPMorgan Chase Bank, N.A., Wells Fargo Bank, National Association and Mizuho Bank, Ltd., as
Syndication Agents, and U.S. Bank National Association, Bank of America, N.A., TD Bank, N.A., and The Bank
of Nova Scotia, as Documentation Agents (incorporated by reference to Exhibit 10.2 to the Current Report on
Form 8-K, as filed on September 9, 2021)
Page 144
New Jersey Resources Corporation
Part IV
Exhibit
Number
Exhibit Description
21.1+
23.1+
31.1+
31.2+
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Certification of the Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act
Certification of the Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act
32.1+ † Certification of the Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act
32.2+ † Certification of the Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act
101+
104+
Interactive Data File {Annual Report on Form 10-K, for the fiscal year ended September 30, 2021, furnished in
iXBRL (Inline eXtensible Business Reporting Language)}
Cover Page Interactive Data File included in Exhibit 101
________________________________
+ Filed herewith.
* Denotes compensatory plans or arrangements or management contracts.
† This certificate accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be
deemed filed by NJR for purposes of Section 18 or any other provision of the Exchange Act.
Page 145
SIGNATURES
New Jersey Resources Corporation
Part IV
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 18, 2021
NEW JERSEY RESOURCES CORPORATION
(Registrant)
By:/s/ Patrick J. Migliaccio
Patrick J. Migliaccio
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates indicated:
November 18, 2021
/s/ Stephen D. Westhoven
Stephen D. Westhoven
President and Chief Executive
Officer
Director
(Principal Executive Officer)
November 18, 2021
/s/ Patrick J. Migliaccio
Patrick J. Migliaccio
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
November 18, 2021
November 18, 2021
/s/ Donald L. Correll
Donald L. Correll
Chairman
/s/ Gregory E. Aliff
Gregory E. Aliff
Director
November 18, 2021
/s/ Jane M. Kenny
Jane M. Kenny
Director
November 18, 2021
/s/ Thomas C. O’Connor
Thomas C. O’Connor
Director
November 18, 2021
/s/ James H. DeGraffenreidt, Jr.
James H. DeGraffenreidt, Jr.
Director
November 18, 2021
November 18, 2021
November 18, 2021
/s/ Robert B. Evans
Robert B. Evans
Director
/s/ M. Susan Hardwick
M. Susan Hardwick
Director
November 18, 2021
/s/ M. William Howard, Jr.
M. William Howard, Jr.
Director
November 18, 2021
/s/ Sharon C. Taylor
Sharon C. Taylor
Director
/s/ David A. Trice
David A. Trice
Director
November 18, 2021
/s/ George R. Zoffinger
George R. Zoffinger
Director
Page 146
(This page intentionally left blank)
(This page intentionally left blank)
(This page intentionally left blank)
(This page intentionally left blank)
SHAREOWNER INFORMATION
Annual Meeting
The Annual Shareowners Meeting will be held at 9:30 a.m. on
January 26, 2022. This year’s annual meeting will be held virtually
via webcast with no physical in-person meeting. Please refer to
your proxy statement for the link and details on how to participate.
Stock Listing
The company’s common stock is traded on the New York Stock
Exchange under the ticker symbol NJR. The stock may also appear
as NewJerRes or NJRsc in stock tables in many daily newspapers,
business publications, financial websites and search engines.
• Benefit from maintenance of shares of common stock in book-
entry form and detailed record keeping and reporting, provided
at no charge.
• Deposit common stock certificates registered in your name with
the plan administrator into your plan account for safekeeping,
at no cost.
• Receive statements of your account following each reinvestment
of dividends and each investment of an optional cash payment
or payroll deduction amount, if any.
Investor and Media Information
• Execute plan transactions online.
Members of the financial community are invited to contact
Dennis Puma, Director — Investor Relations, at 732-938-1229.
Members of the media are invited to contact Michael Kinney,
Director —Corporate Communications, at 732-938-1031.
Correspondence can be sent to New Jersey Resources, 1415
Wyckoff Road, P.O. Box 1468, Wall, NJ 07719.
Stock Transfer Agent and Registrar
The Transfer Agent and Registrar for the company’s common
stock is Broadridge Corporate Issuer Solutions, Inc. (Broadridge).
Shareowners with questions about account activity should
contact Broadridge investor relations representatives between
9 a.m. and 6 p.m. ET, Monday through Friday, by calling
toll-free 800-817-3955.
General written inquiries and address changes may be sent to:
Broadridge Corporate Issuer Solutions
P.O. Box 1342, Brentwood, NY 11717
or
For certified and overnight delivery:
Broadridge Corporate Issuer Solutions, ATTN: IWS
1155 Long Island Avenue, Edgewood, NY 11717
Shareowners can view their account information online at
shareholder.broadridge.com/NJR.
New Jersey Resources Direct Stock Purchase and
Dividend Reinvestment Plan
The New Jersey Resources Direct Stock Purchase and Dividend
Reinvestment Plan, NJR Direct, provides a convenient and
economical method for new eligible investors to make an
initial investment in shares of common stock and for existing
shareowners to invest in additional shares of common stock
or reinvest all or some of their common stock cash dividends.
This is neither an offer to sell nor a solicitation of an offer to buy
securities. NJR Direct is administered by Broadridge.
As a participant in NJR Direct, you can:
• Conveniently purchase our common stock without incurring
brokerage commissions or transaction/processing fees.
• Build your investment over time, starting with as little as $100,
up to a maximum of $100,000 per calendar year.
• Increase your holdings in NJR by reinvesting all or some of your
cash dividends in our common stock.
• Invest automatically with optional withdrawals from your
For additional information, please visit njresources.com, then
“Shareholder Services” under “Investor Relations.” Full details are
contained in the NJR Direct prospectus, which may be obtained
from Broadridge or the company.
Dividends
Dividends on NJR common stock are currently declared
quarterly by the board of directors. Future dividends are
dependent on a number of factors, including our earnings,
financial condition, shareowner equity levels, our cash flow and
business requirements, as determined by the board of directors.
Shareowners of record receive their dividend checks from
Broadridge, unless they have elected to reinvest their dividends
with NJR Direct. The company offers direct deposit of dividends
into shareowners’ bank accounts so the funds are available the
same day they are paid. Please contact Broadridge for details.
Request for Form 10-K and other Documents
The following documents may be obtained when available,
without charge, upon written request to: Investor Relations, New
Jersey Resources, 1415 Wyckoff Road, P.O. Box 1468, Wall, NJ 07719:
• Bylaws, as amended and restated
• Annual Report and Form 10-K
• Form 10-Q
• Form 8-K
• Quarterly Earnings News Release
• Corporate Governance Guidelines
• Audit Committee Charter
• Leadership Development and Compensation
Committee Charter
• Nominating/Corporate Governance Committee Charter
• NJR Code of Conduct
• Audit Complaint Procedure
• Communicating with Non-Management Directors
• Statement of Policy with Respect to Related Person Transactions
These documents, as well as other filings made with the SEC,
are also available through njresources.com.
Information in this Annual Report should not be considered a
solicitation of the sale or purchase of securities.
bank account.
Design: Decker Design, Inc., New York
Printed on recycled paper.
1415 Wyckoff Road
Post Office Box 1468
Wall, NJ 07719
732-938-1480
www.njresources.com