|
Large accelerated filer:
x
|
|
Accelerated filer:
o
|
Non-accelerated filer:
o
|
(Do not check if a smaller reporting company)
|
|
|
|
Smaller reporting company
:
o
|
|
|
Emerging growth company
:
o
|
|
|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
||
|
ITEM 1.
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
ITEM 2.
|
||
|
ITEM 3.
|
||
|
ITEM 4.
|
||
PART II. OTHER INFORMATION
|
|
||
|
ITEM 1.
|
||
|
ITEM 1A.
|
||
|
ITEM 2.
|
||
|
ITEM 6.
|
||
|
|
Adelphia
|
Adelphia Gateway, LLC
|
AFUDC
|
Allowance for Funds Used During Construction
|
AOCI
|
Accumulated Other Comprehensive Income
|
ASC
|
Accounting Standards Codification
|
ASU
|
Accounting Standards Update
|
Bcf
|
Billion Cubic Feet
|
BGSS
|
Basic Gas Supply Service
|
BPU
|
New Jersey Board of Public Utilities
|
CIP
|
Conservation Incentive Program
|
CME
|
Chicago Mercantile Exchange
|
CR&R
|
Commercial Realty & Resources Corp.
|
DM
|
Dominion Midstream Partners, L.P., a master limited partnership
|
DM Common Units
|
Common units representing limited partnership interests in DM
|
DRP
|
NJR Direct Stock Purchase and Dividend Reinvestment Plan
|
Dths
|
Dekatherms
|
EE
|
Energy Efficiency
|
FASB
|
Financial Accounting Standards Board
|
FCM
|
Futures Commission Merchant
|
FERC
|
Federal Energy Regulatory Commission
|
Financial margin
|
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
|
FMB
|
First Mortgage Bond
|
GAAP
|
Generally Accepted Accounting Principles of the United States
|
Home Services and Other
|
Home Services and Other Operations
|
ICE
|
Intercontinental Exchange
|
IEC
|
Interstate Energy Company, LLC
|
ISDA
|
The International Swaps and Derivatives Association
|
ITC
|
Federal Investment Tax Credit
|
MGP
|
Manufactured Gas Plant
|
Moody's
|
Moody's Investors Service, Inc.
|
Mortgage Indenture
|
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
|
MW
|
Megawatts
|
MWh
|
Megawatt Hour
|
NAESB
|
The North American Energy Standards Board
|
NFE
|
Net Financial Earnings
|
NJ RISE
|
New Jersey Reinvestment in System Enhancement
|
NJCEP
|
New Jersey's Clean Energy Program
|
NJDEP
|
New Jersey Department of Environmental Protection
|
NJNG
|
New Jersey Natural Gas Company
|
NJNG Credit Facility
|
NJNG's $250 million unsecured committed credit facility expiring in May 2019
|
NJR Credit Facility
|
NJR's $425 million unsecured committed credit facility expiring in September 2020
|
NJR or The Company
|
New Jersey Resources Corporation
|
NJRHS
|
NJR Home Services Company
|
Non-GAAP
|
Not in accordance with Generally Accepted Accounting Principles of the United States
|
GLOSSARY OF KEY TERMS (cont.)
|
|
|
|
NPNS
|
Normal Purchase/Normal Sale
|
NYMEX
|
New York Mercantile Exchange
|
O&M
|
Operation and Maintenance
|
OCI
|
Other Comprehensive Income
|
OPEB
|
Other Postemployment Benefit Plans
|
PennEast
|
PennEast Pipeline Company, LLC
|
PPA
|
Power Purchase Agreement
|
PTC
|
Federal Production Tax Credit
|
RAC
|
Remediation Adjustment Clause
|
REC
|
Renewable Energy Certificate
|
S&P
|
Standard & Poor's Financial Services, LLC
|
SAFE
|
Safety Acceleration and Facility Enhancement
|
SAVEGREEN
|
The SAVEGREEN Project®
|
SBC
|
Societal Benefits Charge
|
SEC
|
U.S. Securities and Exchange Commission
|
SREC
|
Solar Renewable Energy Certificate
|
SRL
|
Southern Reliability Link
|
Steckman Ridge
|
Collectively, Steckman Ridge GP, LLC and Steckman Ridge, LP
|
Talen
|
Talen Energy Marketing, LLC
|
Tetco
|
Texas Eastern Transmission
|
The Exchange Act
|
The Securities Exchange Act of 1934, as amended
|
The Tax Act
|
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
|
Trustee
|
U.S. Bank National Association
|
U.S.
|
The United States of America
|
USF
|
Universal Service Fund
|
•
|
risks associated with our investments in clean energy projects,
including the availability of regulatory and tax incentives, the availability of viable projects, our eligibility for ITCs and PTCs, the future market for SRECs and electricity prices and operational risks related to projects in service;
|
•
|
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 and NJNG
’
s infrastructure projects in a timely manner;
|
•
|
risks associated with acquisitions and the related integration of acquired assets with our current operations;
|
•
|
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 on our risk management efforts;
|
•
|
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 performance of our subsidiaries;
|
•
|
operating risks incidental to handling, storing, transporting and providing customers with natural gas;
|
•
|
access to adequate supplies of natural gas and dependence on third-party storage and transportation facilities for natural gas supply;
|
•
|
the regulatory and pricing policies of federal and state regulatory agencies;
|
•
|
timing of qualifying for ITCs and PTCs due to delays or failures to complete planned solar and wind energy projects and the resulting effect on our effective tax rate and earnings;
|
•
|
the results of legal or administrative proceedings with respect to claims, rates, environmental issues, gas cost prudence reviews and other matters;
|
•
|
risks related to cyberattacks or failure of information technology systems;
|
•
|
changes in rating agency requirements and/or credit ratings and their effect on availability and cost of capital to our Company;
|
•
|
our ability to comply with current and future regulatory requirements;
|
•
|
the impact of volatility in the equity and credit markets on our access to capital;
|
•
|
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;
|
•
|
any potential need to record a valuation allowance for our deferred tax assets;
|
•
|
changes to tax laws and regulations;
|
•
|
weather and economic conditions;
|
•
|
our ability to comply with debt covenants;
|
•
|
demographic changes in our
service territory and their effect on our customer growth;
|
•
|
the impact of natural disasters, terrorist activities and other extreme events on our operations and customers;
|
•
|
the costs of compliance with present and future environmental laws, including potential climate change-related legislation;
|
•
|
environmental-related and other uncertainties related to litigation or administrative proceedings;
|
•
|
risks related to our employee workforce; and
|
•
|
risks associated with the management of our joint ventures and partnerships, and investment in a master limited partnership.
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(Thousands, except per share data)
|
2017
|
|
2016
|
||||
OPERATING REVENUES
|
|
|
|
||||
Utility
|
$
|
209,787
|
|
|
$
|
185,556
|
|
Nonutility
|
495,518
|
|
|
355,472
|
|
||
Total operating revenues
|
705,305
|
|
|
541,028
|
|
||
OPERATING EXPENSES
|
|
|
|
||||
Gas purchases:
|
|
|
|
||||
Utility
|
77,602
|
|
|
61,320
|
|
||
Nonutility
|
445,084
|
|
|
337,932
|
|
||
Related parties
|
2,149
|
|
|
2,111
|
|
||
Operation and maintenance
|
55,111
|
|
|
52,228
|
|
||
Regulatory rider expenses
|
11,769
|
|
|
12,601
|
|
||
Depreciation and amortization
|
21,854
|
|
|
19,260
|
|
||
Energy and other taxes
|
16,491
|
|
|
14,101
|
|
||
Total operating expenses
|
630,060
|
|
|
499,553
|
|
||
OPERATING INCOME
|
75,245
|
|
|
41,475
|
|
||
Other income, net
|
6,927
|
|
|
3,776
|
|
||
Interest expense, net of capitalized interest
|
11,905
|
|
|
10,615
|
|
||
INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES
|
70,267
|
|
|
34,636
|
|
||
Income tax (benefit) provision
|
(50,168
|
)
|
|
2,018
|
|
||
Equity in earnings of affiliates
|
3,264
|
|
|
2,311
|
|
||
NET INCOME
|
$
|
123,699
|
|
|
$
|
34,929
|
|
|
|
|
|
||||
EARNINGS PER COMMON SHARE
|
|
|
|
||||
Basic
|
$1.42
|
|
$0.41
|
||||
Diluted
|
$1.42
|
|
$0.40
|
||||
DIVIDENDS DECLARED PER COMMON SHARE
|
$0.2725
|
|
$0.255
|
||||
WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
|
||||
Basic
|
86,996
|
|
|
86,084
|
|
||
Diluted
|
87,347
|
|
|
86,855
|
|
|
|
Three Months Ended
|
|||||
|
|
December 31,
|
|||||
(Thousands)
|
|
2017
|
2016
|
||||
Net income
|
|
$
|
123,699
|
|
$
|
34,929
|
|
Other comprehensive (loss) income, net of tax
|
|
|
|
||||
Unrealized (loss) gain on available for sale securities, net of tax of $851 and $(3,786), respectively
|
|
(2,290
|
)
|
5,515
|
|
||
Reclassifications of (gains) to net income on available for sale securities, net of tax of $2,178 and $0, respectively
|
|
(3,154
|
)
|
—
|
|
||
Adjustment to postemployment benefit obligation, net of tax of $(136) and $(217), respectively
|
|
240
|
|
317
|
|
||
Other comprehensive (loss) income
|
|
(5,204
|
)
|
5,832
|
|
||
Comprehensive income
|
|
$
|
118,495
|
|
$
|
40,761
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(Thousands)
|
2017
|
|
2016
|
||||
CASH FLOWS USED IN OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
123,699
|
|
|
$
|
34,929
|
|
Adjustments to reconcile net income to cash flows from operating activities
|
|
|
|
||||
Unrealized loss on derivative instruments
|
34,855
|
|
|
28,302
|
|
||
Gain on sale of available for sale securities, net
|
(5,332
|
)
|
|
(2,581
|
)
|
||
Depreciation and amortization
|
21,854
|
|
|
19,260
|
|
||
Amortization of acquired wholesale energy contracts
|
3,391
|
|
|
—
|
|
||
Allowance for equity used during construction
|
(852
|
)
|
|
(584
|
)
|
||
Allowance for bad debt expense
|
471
|
|
|
230
|
|
||
Deferred income taxes
|
(44,114
|
)
|
|
16,262
|
|
||
Manufactured gas plant remediation costs
|
(5,147
|
)
|
|
(1,619
|
)
|
||
Distributions received from equity investees, net of equity in earnings
|
(257
|
)
|
|
1,101
|
|
||
Cost of removal - asset retirement obligations
|
(332
|
)
|
|
(198
|
)
|
||
Contributions to postemployment benefit plans
|
(1,467
|
)
|
|
(1,712
|
)
|
||
Tax benefit from stock-based compensation
|
2,831
|
|
|
1,188
|
|
||
Changes in:
|
|
|
|
||||
Components of working capital
|
(189,528
|
)
|
|
(150,480
|
)
|
||
Other noncurrent assets
|
31,038
|
|
|
9,823
|
|
||
Other noncurrent liabilities
|
5,388
|
|
|
15
|
|
||
Cash flows used in operating activities
|
(23,502
|
)
|
|
(46,064
|
)
|
||
CASH FLOWS USED IN INVESTING ACTIVITIES
|
|
|
|
||||
Expenditures for:
|
|
|
|
||||
Utility plant
|
(34,638
|
)
|
|
(31,396
|
)
|
||
Solar and wind equipment
|
(18,387
|
)
|
|
(46,785
|
)
|
||
Real estate properties and other
|
(1,313
|
)
|
|
(171
|
)
|
||
Cost of removal
|
(12,752
|
)
|
|
(7,459
|
)
|
||
Investments in equity investees
|
(7,202
|
)
|
|
(4,636
|
)
|
||
Distribution from equity investees in excess of equity in earnings
|
793
|
|
|
688
|
|
||
Cash paid related to acquisition
|
(10,000
|
)
|
|
—
|
|
||
Withdrawal from restricted cash construction fund
|
(43
|
)
|
|
—
|
|
||
Proceeds from sale of available for sale securities
|
6,616
|
|
|
3,218
|
|
||
Cash flows used in investing activities
|
(76,926
|
)
|
|
(86,541
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Payments of long-term debt
|
(1,690
|
)
|
|
(2,716
|
)
|
||
Net proceeds from short-term debt
|
107,200
|
|
|
162,900
|
|
||
Proceeds from sale-leaseback transaction
|
7,820
|
|
|
9,587
|
|
||
Payments of common stock dividends
|
(23,607
|
)
|
|
(21,931
|
)
|
||
Proceeds from waiver discount issuance of common stock
|
22,690
|
|
|
—
|
|
||
Proceeds from issuance of common stock
|
3,846
|
|
|
4,616
|
|
||
Purchases of treasury stock
|
—
|
|
|
(6,355
|
)
|
||
Tax withholding payments related to net settled stock compensation
|
(13,319
|
)
|
|
(4,167
|
)
|
||
Cash flows from financing activities
|
102,940
|
|
|
141,934
|
|
||
Change in cash and cash equivalents
|
2,512
|
|
|
9,329
|
|
||
Cash and cash equivalents at beginning of period
|
2,226
|
|
|
37,546
|
|
||
Cash and cash equivalents at end of period
|
$
|
4,738
|
|
|
$
|
46,875
|
|
CHANGES IN COMPONENTS OF WORKING CAPITAL
|
|
|
|
||||
Receivables
|
$
|
(192,253
|
)
|
|
$
|
(152,180
|
)
|
Inventories
|
(2,561
|
)
|
|
(13,954
|
)
|
||
Recovery of gas costs
|
17,102
|
|
|
(2,472
|
)
|
||
Gas purchases payable
|
43,284
|
|
|
47,772
|
|
||
Prepaid and accrued taxes
|
(12,418
|
)
|
|
7,954
|
|
||
Accounts payable and other
|
(25,527
|
)
|
|
(12,405
|
)
|
||
Restricted broker margin accounts
|
(21,694
|
)
|
|
(26,173
|
)
|
||
Customers' credit balances and deposits
|
6,093
|
|
|
616
|
|
||
Other current assets
|
(1,554
|
)
|
|
362
|
|
||
Total
|
$
|
(189,528
|
)
|
|
$
|
(150,480
|
)
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
|
|
|
|
||||
Cash paid (received) for:
|
|
|
|
||||
Interest (net of amounts capitalized)
|
$
|
9,758
|
|
|
$
|
8,153
|
|
Income taxes
|
$
|
(191
|
)
|
|
$
|
(7,020
|
)
|
Accrued capital expenditures
|
$
|
26,034
|
|
|
$
|
28,442
|
|
(Thousands)
|
December 31,
2017 |
September 30,
2017 |
||||
PROPERTY, PLANT AND EQUIPMENT
|
|
|
||||
Utility plant, at cost
|
$
|
2,273,071
|
|
$
|
2,241,324
|
|
Construction work in progress
|
121,679
|
|
119,318
|
|
||
Solar and wind equipment, real estate properties and other, at cost
|
848,900
|
|
843,142
|
|
||
Construction work in progress
|
28,566
|
|
7,286
|
|
||
Total property, plant and equipment
|
3,272,216
|
|
3,211,070
|
|
||
Accumulated depreciation and amortization, utility plant
|
(501,663
|
)
|
(489,122
|
)
|
||
Accumulated depreciation and amortization, solar and wind equipment, real estate properties and other
|
(121,260
|
)
|
(112,207
|
)
|
||
Property, plant and equipment, net
|
2,649,293
|
|
2,609,741
|
|
||
CURRENT ASSETS
|
|
|
||||
Cash and cash equivalents
|
4,738
|
|
2,226
|
|
||
Customer accounts receivable
|
|
|
||||
Billed
|
325,406
|
|
196,467
|
|
||
Unbilled revenues
|
70,138
|
|
7,202
|
|
||
Allowance for doubtful accounts
|
(5,274
|
)
|
(5,181
|
)
|
||
Regulatory assets
|
41,574
|
|
50,791
|
|
||
Gas in storage, at average cost
|
203,447
|
|
202,063
|
|
||
Materials and supplies, at average cost
|
13,121
|
|
11,944
|
|
||
Prepaid and accrued taxes
|
39,581
|
|
24,764
|
|
||
Derivatives, at fair value
|
46,299
|
|
30,081
|
|
||
Restricted broker margin accounts
|
52,850
|
|
25,827
|
|
||
Other
|
34,199
|
|
33,260
|
|
||
Total current assets
|
826,079
|
|
579,444
|
|
||
NONCURRENT ASSETS
|
|
|
||||
Investments in equity method investees
|
179,429
|
|
172,585
|
|
||
Regulatory assets
|
362,150
|
|
375,919
|
|
||
Derivatives, at fair value
|
5,537
|
|
9,164
|
|
||
Available for sale securities
|
55,995
|
|
65,752
|
|
||
Intangible assets
|
37,693
|
|
41,084
|
|
||
Other noncurrent assets
|
70,752
|
|
74,818
|
|
||
Total noncurrent assets
|
711,556
|
|
739,322
|
|
||
Total assets
|
$
|
4,186,928
|
|
$
|
3,928,507
|
|
(Thousands, except share data)
|
December 31,
2017 |
September 30,
2017 |
||||
CAPITALIZATION
|
|
|
||||
Common stock, $2.50 par value; authorized 150,000,000 shares;
outstanding December 31, 2017 — 87,475,456; September 30, 2017 — 86,555,507 |
$
|
225,095
|
|
$
|
222,258
|
|
Premium on common stock
|
255,142
|
|
219,696
|
|
||
Accumulated other comprehensive loss, net of tax
|
(8,460
|
)
|
(3,256
|
)
|
||
Treasury stock at cost and other;
shares December 31, 2017 — 2,507,313; September 30, 2017 — 2,347,380 |
(91,859
|
)
|
(70,039
|
)
|
||
Retained earnings
|
967,852
|
|
867,984
|
|
||
Common stock equity
|
1,347,770
|
|
1,236,643
|
|
||
Long-term debt
|
1,001,183
|
|
997,080
|
|
||
Total capitalization
|
2,348,953
|
|
2,233,723
|
|
||
CURRENT LIABILITIES
|
|
|
||||
Current maturities of long-term debt
|
166,167
|
|
165,375
|
|
||
Short-term debt
|
373,200
|
|
266,000
|
|
||
Gas purchases payable
|
203,401
|
|
160,115
|
|
||
Gas purchases payable to related parties
|
1,150
|
|
1,152
|
|
||
Accounts payable and other
|
75,924
|
|
96,878
|
|
||
Dividends payable
|
23,831
|
|
23,586
|
|
||
Accrued taxes
|
4,430
|
|
2,031
|
|
||
Regulatory liabilities
|
434
|
|
78
|
|
||
New Jersey clean energy program
|
12,626
|
|
14,202
|
|
||
Derivatives, at fair value
|
96,788
|
|
46,544
|
|
||
Customers' credit balances and deposits
|
33,050
|
|
26,957
|
|
||
Total current liabilities
|
991,001
|
|
802,918
|
|
||
NONCURRENT LIABILITIES
|
|
|
||||
Deferred income taxes
|
238,367
|
|
514,708
|
|
||
Deferred investment tax credits
|
4,216
|
|
4,297
|
|
||
Deferred gain
|
27,531
|
|
27,728
|
|
||
Derivatives, at fair value
|
25,759
|
|
11,330
|
|
||
Manufactured gas plant remediation
|
144,046
|
|
149,000
|
|
||
Postemployment employee benefit liability
|
128,574
|
|
128,888
|
|
||
Regulatory liabilities
|
237,838
|
|
14,507
|
|
||
Asset retirement obligation
|
31,792
|
|
31,420
|
|
||
Other
|
8,851
|
|
9,988
|
|
||
Total noncurrent liabilities
|
846,974
|
|
891,866
|
|
||
Commitments and contingent liabilities (Note 12)
|
|
|
|
|||
Total capitalization and liabilities
|
$
|
4,186,928
|
|
$
|
3,928,507
|
|
|
December 31,
2017 |
September 30,
2017 |
||||||||||
($ in thousands)
|
Gas in Storage
|
|
Bcf
|
Gas in Storage
|
|
Bcf
|
||||||
Energy Services
|
|
$
|
144,456
|
|
51.9
|
|
|
$
|
122,884
|
|
53.9
|
|
Natural Gas Distribution
|
|
58,991
|
|
16.5
|
|
|
79,179
|
|
21.8
|
|
||
Total
|
|
$
|
203,447
|
|
68.4
|
|
|
$
|
202,063
|
|
75.7
|
|
(Thousands)
|
December 31,
2017 |
|
September 30,
2017 |
||||||||
Energy Services
|
$
|
246,203
|
|
76
|
%
|
|
$
|
150,322
|
|
77
|
%
|
Natural Gas Distribution
(1)
|
72,067
|
|
22
|
|
|
37,432
|
|
19
|
|
||
Clean Energy Ventures
|
3,072
|
|
1
|
|
|
2,655
|
|
1
|
|
||
NJRHS and other
|
4,064
|
|
1
|
|
|
6,058
|
|
3
|
|
||
Total
|
$
|
325,406
|
|
100
|
%
|
|
$
|
196,467
|
|
100
|
%
|
(1)
|
Does not include unbilled revenues of
$70.1 million
and
$7.2 million
as of
December 31, 2017
and
September 30, 2017
, respectively.
|
(Thousands)
|
December 31,
2017 |
September 30,
2017 |
||||
Regulatory assets-current
|
|
|
||||
New Jersey Clean Energy Program
|
$
|
12,626
|
|
$
|
14,202
|
|
Underrecovered gas costs
|
490
|
|
9,910
|
|
||
Derivatives at fair value, net
|
18,471
|
|
9,010
|
|
||
Conservation Incentive Program
|
9,987
|
|
17,669
|
|
||
Total current regulatory assets
|
$
|
41,574
|
|
$
|
50,791
|
|
Regulatory assets-noncurrent
|
|
|
||||
Environmental remediation costs
|
|
|
||||
Expended, net of recoveries
|
$
|
31,236
|
|
$
|
28,547
|
|
Liability for future expenditures
|
144,046
|
|
149,000
|
|
||
Deferred income taxes
|
16,356
|
|
21,795
|
|
||
SAVEGREEN
|
13,419
|
|
16,302
|
|
||
Postemployment and other benefit costs
|
138,681
|
|
141,433
|
|
||
Deferred Post-Tropical Cyclone Sandy costs
|
12,487
|
|
13,030
|
|
||
Other noncurrent regulatory assets
|
5,925
|
|
5,812
|
|
||
Total noncurrent regulatory assets
|
$
|
362,150
|
|
$
|
375,919
|
|
Regulatory liability-current
|
|
|
||||
Derivatives at fair value, net
|
$
|
434
|
|
$
|
78
|
|
Total current regulatory liabilities
|
$
|
434
|
|
$
|
78
|
|
Regulatory liabilities-noncurrent
|
|
|
||||
Deferred income taxes
(1)
|
$
|
229,315
|
|
$
|
—
|
|
Cost of removal obligation
|
—
|
|
7,902
|
|
||
Derivatives at fair value, net
|
—
|
|
146
|
|
||
New Jersey Clean Energy Program
|
7,527
|
|
5,795
|
|
||
Other noncurrent regulatory liabilities
|
996
|
|
664
|
|
||
Total noncurrent regulatory liabilities
|
$
|
237,838
|
|
$
|
14,507
|
|
(1)
|
Includes an adjustment related to the re-measurement of NJNG's net deferred tax liabilities to reflect the change in federal tax rates enacted in the
Tax Act
. For a more detailed discussion
of the Tax Act,
s
ee
Note 11. Income Taxes
.
|
•
|
On
October 20, 2017
, the BPU approved NJNG's filing to decrease its EE recovery rate, which will result in an annual decrease of
$3.9 million
, effective
November 1, 2017
.
|
•
|
On
November 17, 2017
, NJNG filed its annual SBC application requesting to recover remediation expenses incurred through June 30, 2017, a reduction in the RAC, which will result in an annual decrease of
$2.4 million
and to increase the NJCEP factor, which will result in an annual increase of
$1.8 million
, effective
April 1, 2018
.
|
•
|
On
December 22, 2017
, the Tax Act was signed into law, which resulted in a reduction in the federal corporate tax rate. As a result, NJNG recorded a regulatory liability of
$228 million
, which includes
$164.3 million
for the revaluation of its deferred income taxes and
$63.7 million
for the accounting of the income tax effects on the revaluation. The revaluation is based on certain assumptions and estimations NJNG made with respect to its deferred taxes, as well as the effects from the Tax Act, and as such are subject to change if and when assumptions are updated. See
Note 11. Income Taxes
for a more detailed discussion on the Tax Act. On January 31, 2018, the BPU issued an Order directing the New Jersey utilities to submit filings by March 2, 2018, proposing the prospective change in rates as a result of the Tax Act to be effective April 1, 2018, the method to return to customers the rate difference from January 1, 2018, through March 31, 2018, and an outline of the method by which the excess deferred taxes would be returned to customers. The excess deferred taxes are primarily related to timing differences associated with utility plant depreciation and are subject to IRS normalization rules, which require amortization over the remaining life of the utility plant. The return to customers of the plant-related excess deferred taxes, as well as any non-plant related excess deferred taxes will be addressed in NJNG’s filing to the BPU.
|
|
|
|
Fair Value
|
||||||||||||||
|
|
December 31, 2017
|
|
September 30, 2017
|
|||||||||||||
(Thousands)
|
Balance Sheet Location
|
Asset
Derivatives
|
Liability
Derivatives
|
Asset
Derivatives
|
Liability
Derivatives
|
||||||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||
Natural Gas Distribution:
|
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
Derivatives - current
|
|
$
|
487
|
|
|
$
|
53
|
|
|
$
|
151
|
|
|
$
|
72
|
|
Financial commodity contracts
|
Derivatives - current
|
|
—
|
|
|
3,478
|
|
|
—
|
|
|
1,149
|
|
||||
Interest rate contracts
|
Derivatives - current
|
|
—
|
|
|
12,534
|
|
|
—
|
|
|
8,467
|
|
||||
Energy Services:
|
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
Derivatives - current
|
|
13,247
|
|
|
24,531
|
|
|
14,588
|
|
|
16,589
|
|
||||
|
Derivatives - noncurrent
|
|
2,801
|
|
|
14,256
|
|
|
7,127
|
|
|
8,710
|
|
||||
Financial commodity contracts
|
Derivatives - current
|
|
32,559
|
|
|
56,188
|
|
|
15,302
|
|
|
20,267
|
|
||||
|
Derivatives - noncurrent
|
|
2,706
|
|
|
11,477
|
|
|
2,033
|
|
|
2,620
|
|
||||
Foreign currency contracts
|
Derivatives - current
|
|
6
|
|
|
4
|
|
|
40
|
|
|
—
|
|
||||
|
Derivatives - noncurrent
|
|
30
|
|
|
26
|
|
|
4
|
|
|
—
|
|
||||
Total fair value of derivatives
|
|
|
$
|
51,836
|
|
|
$
|
122,547
|
|
|
$
|
39,245
|
|
|
$
|
57,874
|
|
(Thousands)
|
Amounts Presented on Balance Sheets
(1)
|
Offsetting Derivative Instruments
(2)
|
Financial Collateral Received/Pledged
(3)
|
Net Amounts
(4)
|
||||||||||||
As of December 31, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
||||||||
Energy Services
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
16,048
|
|
|
$
|
(3,137
|
)
|
|
$
|
(200
|
)
|
|
$
|
12,711
|
|
Financial commodity contracts
|
|
35,265
|
|
|
(29,434
|
)
|
|
(5,327
|
)
|
|
504
|
|
||||
Foreign currency contracts
|
|
36
|
|
|
(30
|
)
|
|
—
|
|
|
6
|
|
||||
Total Energy Services
|
|
$
|
51,349
|
|
|
$
|
(32,601
|
)
|
|
$
|
(5,527
|
)
|
|
$
|
13,221
|
|
Natural Gas Distribution
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
487
|
|
|
$
|
(25
|
)
|
|
$
|
—
|
|
|
$
|
462
|
|
Total Natural Gas Distribution
|
|
$
|
487
|
|
|
$
|
(25
|
)
|
|
$
|
—
|
|
|
$
|
462
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Energy Services
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
38,787
|
|
|
$
|
(3,137
|
)
|
|
$
|
—
|
|
|
$
|
35,650
|
|
Financial commodity contracts
|
|
67,665
|
|
|
(29,434
|
)
|
|
(38,231
|
)
|
|
—
|
|
||||
Foreign currency contracts
|
|
30
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
||||
Total Energy Services
|
|
$
|
106,482
|
|
|
$
|
(32,601
|
)
|
|
$
|
(38,231
|
)
|
|
$
|
35,650
|
|
Natural Gas Distribution
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
53
|
|
|
$
|
(25
|
)
|
|
$
|
—
|
|
|
$
|
28
|
|
Financial commodity contracts
|
|
3,478
|
|
|
—
|
|
|
(3,478
|
)
|
|
—
|
|
||||
Interest rate contracts
|
|
12,534
|
|
|
—
|
|
|
—
|
|
|
12,534
|
|
||||
Total Natural Gas Distribution
|
|
$
|
16,065
|
|
|
$
|
(25
|
)
|
|
$
|
(3,478
|
)
|
|
$
|
12,562
|
|
As of September 30, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
||||||||
Energy Services
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
21,715
|
|
|
$
|
(2,173
|
)
|
|
$
|
(200
|
)
|
|
$
|
19,342
|
|
Financial commodity contracts
|
|
17,335
|
|
|
(14,121
|
)
|
|
—
|
|
|
3,214
|
|
||||
Foreign currency contracts
|
|
44
|
|
|
—
|
|
|
—
|
|
|
44
|
|
||||
Total Energy Services
|
|
$
|
39,094
|
|
|
$
|
(16,294
|
)
|
|
$
|
(200
|
)
|
|
$
|
22,600
|
|
Natural Gas Distribution
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
151
|
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
131
|
|
Total Natural Gas Distribution
|
|
$
|
151
|
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
131
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Energy Services
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
25,299
|
|
|
$
|
(2,173
|
)
|
|
$
|
—
|
|
|
$
|
23,126
|
|
Financial commodity contracts
|
|
22,887
|
|
|
(14,121
|
)
|
|
(8,766
|
)
|
|
—
|
|
||||
Total Energy Services
|
|
$
|
48,186
|
|
|
$
|
(16,294
|
)
|
|
$
|
(8,766
|
)
|
|
$
|
23,126
|
|
Natural Gas Distribution
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
72
|
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
52
|
|
Financial commodity contracts
|
|
1,149
|
|
|
—
|
|
|
(1,149
|
)
|
|
—
|
|
||||
Interest rate contracts
|
|
8,467
|
|
|
—
|
|
|
—
|
|
|
8,467
|
|
||||
Total Natural Gas Distribution
|
|
$
|
9,688
|
|
|
$
|
(20
|
)
|
|
$
|
(1,149
|
)
|
|
$
|
8,519
|
|
(1)
|
Derivative assets and liabilities are presented on a gross basis on the balance sheet as the Company does not elect balance sheet offsetting under ASC 210-20.
|
(2)
|
Includes transactions with NAESB netting election, transactions held by FCMs with net margining and transactions with ISDA netting.
|
(3)
|
Financial collateral includes cash balances at FCMs as well as cash received from or pledged to other counterparties.
|
(4)
|
Net amounts represent presentation of derivative assets and liabilities if the Company were to elect balance sheet offsetting under ASC 210-20.
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(Thousands)
|
2017
|
|
2016
|
||||
Natural Gas Distribution:
|
|
|
|
||||
Physical commodity contracts
|
$
|
(2,976
|
)
|
|
$
|
1,050
|
|
Financial commodity contracts
|
(8,808
|
)
|
|
11,178
|
|
||
Interest rate contracts
|
(4,067
|
)
|
|
20,371
|
|
||
Total unrealized and realized (losses) gains
|
$
|
(15,851
|
)
|
|
$
|
32,599
|
|
|
|
|
Volume (Bcf)
|
||||
|
|
|
December 31,
2017 |
|
September 30,
2017 |
||
Natural Gas Distribution
|
Futures
|
|
20.4
|
|
|
18.2
|
|
|
Physical
|
|
26.8
|
|
|
32.1
|
|
Energy Services
|
Futures
|
|
(33.4
|
)
|
|
(16.4
|
)
|
|
Physical
|
|
(4.6
|
)
|
|
(13.1
|
)
|
(Thousands)
|
Balance Sheet Location
|
December 31,
2017 |
September 30,
2017 |
||||
Natural Gas Distribution
|
Broker margin - Current assets
|
$
|
4,632
|
|
$
|
2,661
|
|
Energy Services
|
Broker margin - Current assets
|
$
|
48,218
|
|
$
|
23,166
|
|
(Thousands)
|
Gross Credit Exposure
|
||||
Investment grade
|
|
$
|
182,514
|
|
|
Noninvestment grade
|
|
25,079
|
|
|
|
Internally rated investment grade
|
|
25,435
|
|
|
|
Internally rated noninvestment grade
|
|
61,714
|
|
|
|
Total
|
|
$
|
294,742
|
|
|
(Thousands)
|
December 31,
2017 |
September 30,
2017 |
||||
Carrying value
(1) (2) (3)
|
$
|
1,097,045
|
|
$
|
1,097,045
|
|
Fair market value
|
$
|
1,111,265
|
|
$
|
1,107,676
|
|
(1)
|
Excludes
capital leases of
$45 million
and
$39.7 million
as of
December 31, 2017
and
September 30, 2017
, respectively.
|
(2)
|
Excludes NJNG's debt issuance costs
of
$6.2 million
and
$6.3 million
as of
December 31, 2017
and
September 30, 2017
, respectively.
|
(3)
|
Excludes NJR's debt issuance costs
of
$804,000
and
$770,000
as of
December 31, 2017
and
September 30, 2017
, respectively.
|
Level 1
|
Unadjusted quoted prices for identical assets or liabilities in active markets. NJR'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 NJR refers internally to as basis swaps, fixed swaps, futures and financial options that are cleared through a FCM.
|
Level 2
|
Other significant observable inputs such as interest rates or
price data, including both commodity and basis pricing that is observed either directly or indirectly from publications or pricing services. NJR'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.
|
Level 3
|
Inputs derived from a significant amount of unobservable market data. These include NJR's best estimate of fair value and are derived primarily through the use of internal valuation methodologies.
|
|
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
|
||||||||||||||
(Thousands)
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||||
As of December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
—
|
|
|
|
$
|
16,535
|
|
|
|
$
|
—
|
|
|
$
|
16,535
|
|
Financial commodity contracts
|
|
35,265
|
|
|
|
—
|
|
|
|
—
|
|
|
35,265
|
|
||||
Financial commodity contracts - foreign exchange
|
|
—
|
|
|
|
36
|
|
|
|
—
|
|
|
36
|
|
||||
Available for sale equity securities - energy industry
|
|
55,995
|
|
|
|
—
|
|
|
|
—
|
|
|
55,995
|
|
||||
Other
(1)
|
|
1,106
|
|
|
|
—
|
|
|
|
—
|
|
|
1,106
|
|
||||
Total assets at fair value
|
|
$
|
92,366
|
|
|
|
$
|
16,571
|
|
|
|
$
|
—
|
|
|
$
|
108,937
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
—
|
|
|
|
$
|
38,840
|
|
|
|
$
|
—
|
|
|
$
|
38,840
|
|
Financial commodity contracts
|
|
71,143
|
|
|
|
—
|
|
|
|
—
|
|
|
71,143
|
|
||||
Financial commodity contracts - foreign exchange
|
|
—
|
|
|
|
30
|
|
|
|
—
|
|
|
30
|
|
||||
Interest rate contracts
|
|
—
|
|
|
|
12,534
|
|
|
|
—
|
|
|
12,534
|
|
||||
Total liabilities at fair value
|
|
$
|
71,143
|
|
|
|
$
|
51,404
|
|
|
|
$
|
—
|
|
|
$
|
122,547
|
|
As of September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
—
|
|
|
|
$
|
21,866
|
|
|
|
$
|
—
|
|
|
$
|
21,866
|
|
Financial commodity contracts
|
|
17,335
|
|
|
|
|
|
|
|
|
|
17,335
|
|
|||||
Financial commodity contracts - foreign exchange
|
|
—
|
|
|
|
44
|
|
|
|
—
|
|
|
44
|
|
||||
Available for sale equity securities - energy industry
|
|
65,752
|
|
|
|
—
|
|
|
|
—
|
|
|
65,752
|
|
||||
Other
(1)
|
|
1,202
|
|
|
|
—
|
|
|
|
—
|
|
|
1,202
|
|
||||
Total assets at fair value
|
|
$
|
84,289
|
|
|
|
$
|
21,910
|
|
|
|
$
|
—
|
|
|
$
|
106,199
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Physical commodity contracts
|
|
$
|
—
|
|
|
|
$
|
25,371
|
|
|
|
$
|
—
|
|
|
$
|
25,371
|
|
Financial commodity contracts
|
|
24,036
|
|
|
|
—
|
|
|
|
—
|
|
|
24,036
|
|
||||
Interest rate contracts
|
|
—
|
|
|
|
8,467
|
|
|
|
—
|
|
|
8,467
|
|
||||
Total liabilities at fair value
|
|
$
|
24,036
|
|
|
|
$
|
33,838
|
|
|
|
$
|
—
|
|
|
$
|
57,874
|
|
(1)
|
Includes money market funds
of
$4,000
and
$112,000
as of
December 31, 2017
and
September 30, 2017
, respectively.
|
(Thousands)
|
December 31,
2017 |
September 30,
2017 |
||||
Steckman Ridge
(1)
|
$
|
119,433
|
|
$
|
120,262
|
|
PennEast
|
59,996
|
|
52,323
|
|
||
Total
|
$
|
179,429
|
|
$
|
172,585
|
|
(1)
|
Includes loans with a total outstanding principal balance of
$70.4 million
for both
December 31, 2017
and
September 30, 2017
. The loans accrue interest at a variable rate that resets quarterly and are due October 1, 2023.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands, except per share amounts)
|
2017
|
2016
|
||||
Net income, as reported
|
$
|
123,699
|
|
$
|
34,929
|
|
Basic earnings per share
|
|
|
||||
Weighted average shares of common stock outstanding-basic
|
86,996
|
|
86,084
|
|
||
Basic earnings per common share
|
$1.42
|
$0.41
|
||||
Diluted earnings per share
|
|
|
||||
Weighted average shares of common stock outstanding-basic
|
86,996
|
|
86,084
|
|
||
Incremental shares
(1)
|
351
|
|
771
|
|
||
Weighted average shares of common stock outstanding-diluted
|
87,347
|
|
86,855
|
|
||
Diluted earnings per common share
(2)
|
$1.42
|
$0.40
|
(1)
|
Incremental shares consist primarily of unvested stock awards and performance shares.
|
(2)
|
There were
no
anti-dilutive shares excluded from the calculation of diluted earnings per share for the
three months ended
December 31, 2017
and
2016
.
|
(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, 2017
|
86,556
|
|
$
|
222,258
|
|
$
|
219,696
|
|
|
$
|
(3,256
|
)
|
|
$
|
(70,039
|
)
|
$
|
867,984
|
|
$
|
1,236,643
|
|
Net income
|
|
|
|
|
|
|
|
123,699
|
|
123,699
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
(5,204
|
)
|
|
|
|
(5,204
|
)
|
|||||||||||
Common stock issued:
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Incentive plan
|
525
|
|
1,453
|
|
13,951
|
|
|
|
|
|
|
|
15,404
|
|
||||||||
Dividend reinvestment plan
(1)
|
90
|
|
|
245
|
|
|
|
|
3,554
|
|
|
3,799
|
|
|||||||||
Waiver discount
|
554
|
|
1,384
|
|
21,306
|
|
|
|
|
|
|
22,690
|
|
|||||||||
Cash dividend declared ($.2725 per share)
|
|
|
|
|
|
|
|
(23,831
|
)
|
(23,831
|
)
|
|||||||||||
Treasury stock and other
|
(250
|
)
|
|
(56
|
)
|
|
|
|
(25,374
|
)
|
|
(25,430
|
)
|
|||||||||
Balance at December 31, 2017
|
87,475
|
|
$
|
225,095
|
|
$
|
255,142
|
|
|
$
|
(8,460
|
)
|
|
$
|
(91,859
|
)
|
$
|
967,852
|
|
$
|
1,347,770
|
|
(1)
|
Shares sold through the DRP are issued from treasury stock at average cost, which may differ from the actual market price paid.
|
(Thousands)
|
Available for Sale Securities
|
Postemployment Benefit Obligation
|
Total
|
||||||||
Balance at September 30, 2017
|
$
|
11,044
|
|
|
$
|
(14,300
|
)
|
|
$
|
(3,256
|
)
|
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
||||||
Other comprehensive (loss), before reclassifications, net of tax of $851, $0, $851
|
(2,290
|
)
|
|
—
|
|
|
(2,290
|
)
|
|||
Amounts reclassified from accumulated other comprehensive (loss) income, net of tax of $2,178, $(136), $2,042
|
(3,154
|
)
|
|
240
|
|
(1)
|
(2,914
|
)
|
|||
Net current-period other comprehensive (loss) income, net of tax of $3,029, $(136), $2,893
|
(5,444
|
)
|
|
240
|
|
|
(5,204
|
)
|
|||
Balance at December 31, 2017
|
$
|
5,600
|
|
|
$
|
(14,060
|
)
|
|
$
|
(8,460
|
)
|
|
|
|
|
|
|
||||||
Balance as of September 30, 2016
|
$
|
4,198
|
|
|
$
|
(19,353
|
)
|
|
$
|
(15,155
|
)
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
||||||
Other comprehensive income, before reclassifications, net of tax of $(4,840), $0, $(4,840)
|
7,042
|
|
|
—
|
|
|
7,042
|
|
|||
Amounts reclassified from accumulated other comprehensive (loss) income, net of tax of $1,054, $(217), $837
|
(1,527
|
)
|
|
317
|
|
(1)
|
(1,210
|
)
|
|||
Net current-period other comprehensive income, net of tax of $(3,786), $(217), $(4,003)
|
5,515
|
|
|
317
|
|
|
5,832
|
|
|||
Balance as of December 31, 2016
|
$
|
9,713
|
|
|
$
|
(19,036
|
)
|
|
$
|
(9,323
|
)
|
(1)
|
Included in the computation of net periodic pension cost, a component of operations and maintenance expense on the Unaudited Condensed Consolidated Statements of Operations.
|
(Thousands)
|
December 31,
2017 |
|
September 30,
2017 |
|
Expiration Dates
|
||||
NJR
|
|
|
|
|
|
||||
Bank revolving credit facilities
(1)
|
$
|
425,000
|
|
|
$
|
425,000
|
|
|
September 2020
|
Notes outstanding at end of period
|
$
|
327,200
|
|
|
$
|
255,000
|
|
|
|
Weighted average interest rate at end of period
|
2.26
|
%
|
|
2.14
|
%
|
|
|
||
Amount available at end of period
(2)
|
$
|
86,834
|
|
|
$
|
156,601
|
|
|
|
Bank revolving credit facilities
(1)
|
$
|
75,000
|
|
|
$
|
—
|
|
|
April 2018
|
Amount available at end of period
|
$
|
75,000
|
|
|
$
|
—
|
|
|
|
NJNG
|
|
|
|
|
|
||||
Bank revolving credit facilities
(1)
|
$
|
250,000
|
|
|
$
|
250,000
|
|
|
May 2019
|
Commercial paper outstanding at end of period
|
$
|
46,000
|
|
|
$
|
11,000
|
|
|
|
Weighted average interest rate at end of period
|
1.33
|
%
|
|
1.13
|
%
|
|
|
||
Amount available at end of period
(3)
|
$
|
203,269
|
|
|
$
|
238,269
|
|
|
|
(1)
|
Committed credit facilities, which require commitment fees on the unused amounts.
|
(2)
|
Letters of credit outstanding total
$11 million
and
$13.4 million
for
December 31, 2017
and
September 30, 2017
, respectively, which reduces amount available by the same amount.
|
(3)
|
Letters of credit outstanding total
$731,000
for both
December 31, 2017
and
September 30, 2017
, which reduces the amount available by the same amount.
|
|
Pension
|
OPEB
|
||||||||||
|
Three Months Ended
|
Three Months Ended
|
||||||||||
|
December 31,
|
December 31,
|
||||||||||
(Thousands)
|
2017
|
2016
|
2017
|
2016
|
||||||||
Service cost
|
$
|
2,035
|
|
$
|
2,087
|
|
$
|
1,152
|
|
$
|
1,095
|
|
Interest cost
|
2,623
|
|
2,443
|
|
1,591
|
|
1,386
|
|
||||
Expected return on plan assets
|
(4,910
|
)
|
(4,828
|
)
|
(1,338
|
)
|
(1,192
|
)
|
||||
Recognized actuarial loss
|
1,884
|
|
2,207
|
|
1,165
|
|
1,093
|
|
||||
Prior service cost amortization
|
27
|
|
27
|
|
(91
|
)
|
(91
|
)
|
||||
Net periodic benefit cost
|
$
|
1,659
|
|
$
|
1,936
|
|
$
|
2,479
|
|
$
|
2,291
|
|
(Thousands)
|
2018
|
2019
|
2020
|
2021
|
2022
|
Thereafter
|
||||||||||||
Energy Services:
|
|
|
|
|
|
|
||||||||||||
Natural gas purchases
|
$
|
287,394
|
|
$
|
117,129
|
|
$
|
21,504
|
|
$
|
11,443
|
|
$
|
—
|
|
$
|
—
|
|
Storage demand fees
|
24,479
|
|
22,933
|
|
13,573
|
|
9,263
|
|
6,055
|
|
3,523
|
|
||||||
Pipeline demand fees
|
59,067
|
|
50,562
|
|
39,292
|
|
23,348
|
|
19,087
|
|
18,977
|
|
||||||
Sub-total Energy Services
|
$
|
370,940
|
|
$
|
190,624
|
|
$
|
74,369
|
|
$
|
44,054
|
|
$
|
25,142
|
|
$
|
22,500
|
|
NJNG:
|
|
|
|
|
|
|
||||||||||||
Natural gas purchases
|
$
|
39,542
|
|
$
|
41,287
|
|
$
|
40,046
|
|
$
|
38,234
|
|
$
|
38,794
|
|
$
|
79,894
|
|
Storage demand fees
|
22,531
|
|
27,193
|
|
16,482
|
|
9,380
|
|
8,952
|
|
11,373
|
|
||||||
Pipeline demand fees
|
53,406
|
|
75,718
|
|
101,087
|
|
91,202
|
|
89,828
|
|
669,099
|
|
||||||
Sub-total NJNG
|
$
|
115,479
|
|
$
|
144,198
|
|
$
|
157,615
|
|
$
|
138,816
|
|
$
|
137,574
|
|
$
|
760,366
|
|
Total
|
$
|
486,419
|
|
$
|
334,822
|
|
$
|
231,984
|
|
$
|
182,870
|
|
$
|
162,716
|
|
$
|
782,866
|
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Operating revenues
|
|
|
||||
Natural Gas Distribution
|
|
|
||||
External customers
|
$
|
209,787
|
|
$
|
185,556
|
|
Clean Energy Ventures
|
|
|
||||
External customers
|
13,996
|
|
7,567
|
|
||
Energy Services
|
|
|
||||
External customers
(1)
|
472,171
|
|
338,930
|
|
||
Intercompany
|
5,810
|
|
(1,749
|
)
|
||
Subtotal
|
701,764
|
|
530,304
|
|
||
Home Services and Other
|
|
|
||||
External customers
|
9,351
|
|
8,975
|
|
||
Intercompany
|
606
|
|
1,031
|
|
||
Eliminations
|
(6,416
|
)
|
718
|
|
||
Total
|
$
|
705,305
|
|
$
|
541,028
|
|
Depreciation and amortization
|
|
|
||||
Natural Gas Distribution
|
$
|
12,783
|
|
$
|
12,030
|
|
Clean Energy Ventures
|
8,935
|
|
7,041
|
|
||
Energy Services
|
14
|
|
16
|
|
||
Midstream
|
1
|
|
1
|
|
||
Subtotal
|
21,733
|
|
19,088
|
|
||
Home Services and Other
|
188
|
|
221
|
|
||
Eliminations
|
(67
|
)
|
(49
|
)
|
||
Total
|
$
|
21,854
|
|
$
|
19,260
|
|
Interest income
(2)
|
|
|
||||
Natural Gas Distribution
|
$
|
119
|
|
$
|
75
|
|
Midstream
|
664
|
|
462
|
|
||
Subtotal
|
783
|
|
537
|
|
||
Home Services and Other
|
204
|
|
121
|
|
||
Eliminations
|
(931
|
)
|
(583
|
)
|
||
Total
|
$
|
56
|
|
$
|
75
|
|
(1)
|
Includes sales to Canada, which accounted for
.02
and
1.9 percent
of total operating revenues during the
three months ended
December 31, 2017
and
2016
, respectively.
|
(2)
|
Included in other income, net on the Unaudited Condensed Consolidated Statements of Operations.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Interest expense, net of capitalized interest
|
|
|
||||
Natural Gas Distribution
|
$
|
6,536
|
|
$
|
6,824
|
|
Clean Energy Ventures
|
4,208
|
|
3,324
|
|
||
Energy Services
|
1,257
|
|
571
|
|
||
Midstream
|
309
|
|
56
|
|
||
Subtotal
|
12,310
|
|
10,775
|
|
||
Home Services and Other
|
90
|
|
74
|
|
||
Eliminations
|
(495
|
)
|
(234
|
)
|
||
Total
|
$
|
11,905
|
|
$
|
10,615
|
|
Income tax provision (benefit)
|
|
|
||||
Natural Gas Distribution
|
$
|
11,704
|
|
$
|
14,887
|
|
Clean Energy Ventures
|
(73,988
|
)
|
(11,887
|
)
|
||
Energy Services
|
13,743
|
|
(3,176
|
)
|
||
Midstream
|
(12,843
|
)
|
1,649
|
|
||
Subtotal
|
(61,384
|
)
|
1,473
|
|
||
Home Services and Other
|
11,698
|
|
(245
|
)
|
||
Eliminations
|
(482
|
)
|
790
|
|
||
Total
|
$
|
(50,168
|
)
|
$
|
2,018
|
|
Equity in earnings of affiliates
|
|
|
||||
Midstream
|
$
|
4,129
|
|
$
|
3,331
|
|
Eliminations
|
(865
|
)
|
(1,020
|
)
|
||
Total
|
$
|
3,264
|
|
$
|
2,311
|
|
Net financial earnings
|
|
|
||||
Natural Gas Distribution
|
$
|
34,109
|
|
$
|
30,348
|
|
Clean Energy Ventures
|
71,250
|
|
2,842
|
|
||
Energy Services
|
20,274
|
|
3,487
|
|
||
Midstream
|
17,511
|
|
2,387
|
|
||
Subtotal
|
143,144
|
|
39,064
|
|
||
Home Services and Other
|
(7,716
|
)
|
1,542
|
|
||
Eliminations
|
(95
|
)
|
(223
|
)
|
||
Total
|
$
|
135,333
|
|
$
|
40,383
|
|
Capital expenditures
|
|
|
||||
Natural Gas Distribution
|
$
|
47,390
|
|
$
|
38,855
|
|
Clean Energy Ventures
|
18,387
|
|
46,785
|
|
||
Subtotal
|
65,777
|
|
85,640
|
|
||
Home Services and Other
|
1,313
|
|
171
|
|
||
Total
|
$
|
67,090
|
|
$
|
85,811
|
|
Investments in equity investees
|
|
|
||||
Midstream
|
$
|
7,202
|
|
$
|
4,636
|
|
Total
|
$
|
7,202
|
|
$
|
4,636
|
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Net financial earnings
|
$
|
135,333
|
|
$
|
40,383
|
|
Less:
|
|
|
||||
Unrealized loss on derivative instruments and related transactions
|
34,855
|
|
28,302
|
|
||
Tax effect
|
(8,059
|
)
|
(9,757
|
)
|
||
Effects of economic hedging related to natural gas inventory
|
(25,387
|
)
|
(17,939
|
)
|
||
Tax effect
|
8,244
|
|
6,204
|
|
||
Net income to NFE tax adjustment
|
1,981
|
|
(1,356
|
)
|
||
Net income
|
$
|
123,699
|
|
$
|
34,929
|
|
•
|
unrealized gains and losses on derivatives are recognized in reported earnings in periods prior to physical 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 gas inventory movements occur.
|
(Thousands)
|
December 31,
2017 |
September 30,
2017 |
||||
Assets at end of period:
|
|
|
||||
Natural Gas Distribution
|
$
|
2,590,623
|
|
$
|
2,519,578
|
|
Clean Energy Ventures
|
797,951
|
|
771,340
|
|
||
Energy Services
|
547,388
|
|
398,277
|
|
||
Midstream
|
248,498
|
|
232,806
|
|
||
Subtotal
|
4,184,460
|
|
3,922,001
|
|
||
Home Services and Other
|
125,149
|
|
114,801
|
|
||
Intercompany assets
(1)
|
(122,681
|
)
|
(108,295
|
)
|
||
Total
|
$
|
4,186,928
|
|
$
|
3,928,507
|
|
(1)
|
Consists of transactions between subsidiaries that are eliminated and reclassified in consolidation.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Natural Gas Distribution
|
$
|
1,448
|
|
$
|
1,410
|
|
Energy Services
|
701
|
|
701
|
|
||
Total
|
$
|
2,149
|
|
$
|
2,111
|
|
(Thousands)
|
December 31,
2017 |
September 30,
2017 |
||||
Natural Gas Distribution
|
$
|
775
|
|
$
|
775
|
|
Energy Services
|
375
|
|
377
|
|
||
Total
|
$
|
1,150
|
|
$
|
1,152
|
|
|
Three Months Ended
|
||
|
December 31,
|
||
(Thousands)
|
2017
|
||
Income tax (benefit) provision
|
|
||
Clean Energy Ventures
|
$
|
(62,657
|
)
|
Energy Services
|
9,107
|
|
|
Midstream
|
(13,989
|
)
|
|
Home Services and Other
|
9,974
|
|
|
Total
|
$
|
(57,565
|
)
|
|
Three Months Ended
|
||||||||||
|
December 31,
|
||||||||||
(Thousands)
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
|
|
|
|
|
||||||
Natural Gas Distribution
|
$
|
34,109
|
|
28
|
%
|
|
$
|
30,348
|
|
87
|
%
|
Clean Energy Ventures
|
69,269
|
|
56
|
|
|
4,198
|
|
12
|
|
||
Energy Services
|
11,120
|
|
9
|
|
|
(4,790
|
)
|
(14
|
)
|
||
Midstream
|
17,511
|
|
13
|
|
|
2,387
|
|
7
|
|
||
Home Services and Other
|
(7,716
|
)
|
(6
|
)
|
|
1,542
|
|
4
|
|
||
Eliminations
(1)
|
(594
|
)
|
—
|
|
|
1,244
|
|
4
|
|
||
Total
|
$
|
123,699
|
|
100
|
%
|
|
$
|
34,929
|
|
100
|
%
|
(1)
|
Consists
of transactions between subsidiaries that are eliminated in consolidation
.
|
(Thousands)
|
December 31,
2017 |
|
September 30,
2017 |
||||||||
Assets
|
|
|
|
|
|
||||||
Natural Gas Distribution
|
$
|
2,590,623
|
|
62
|
%
|
|
$
|
2,519,578
|
|
64
|
%
|
Clean Energy Ventures
|
797,951
|
|
19
|
|
|
771,340
|
|
20
|
|
||
Energy Services
|
547,388
|
|
13
|
|
|
398,277
|
|
10
|
|
||
Midstream
|
248,498
|
|
6
|
|
|
232,806
|
|
6
|
|
||
Home Services and Other
|
125,149
|
|
3
|
|
|
114,801
|
|
3
|
|
||
Intercompany assets
(1)
|
(122,681
|
)
|
(3
|
)
|
|
(108,295
|
)
|
(3
|
)
|
||
Total
|
$
|
4,186,928
|
|
100
|
%
|
|
$
|
3,928,507
|
|
100
|
%
|
(1)
|
Consists of transactions between subsidiaries that are eliminated in consolidation.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands, except per share data)
|
2017
|
2016
|
||||
Net income
|
$
|
123,699
|
|
$
|
34,929
|
|
Add:
|
|
|
||||
Unrealized loss on derivative instruments and related transactions
|
34,855
|
|
28,302
|
|
||
Tax effect
|
(8,059
|
)
|
(9,757
|
)
|
||
Effects of economic hedging related to natural gas inventory
(1)
|
(25,387
|
)
|
(17,939
|
)
|
||
Tax effect
|
8,244
|
|
6,204
|
|
||
NFE tax adjustment
|
1,981
|
|
(1,356
|
)
|
||
Net financial earnings
|
$
|
135,333
|
|
$
|
40,383
|
|
Basic earnings per share
|
$
|
1.42
|
|
$
|
0.41
|
|
Add:
|
|
|
||||
Unrealized loss on derivative instruments and related transactions
|
0.40
|
|
0.33
|
|
||
Tax effect
|
(0.09
|
)
|
(0.11
|
)
|
||
Effects of economic hedging related to natural gas inventory
(1)
|
(0.29
|
)
|
(0.21
|
)
|
||
Tax effect
|
0.10
|
|
0.07
|
|
||
NFE tax adjustment
|
0.02
|
|
(0.02
|
)
|
||
Basic NFE per share
|
$
|
1.56
|
|
$
|
0.47
|
|
(1)
|
Effects of hedging natural gas inventory transactions where the economic impact is realized in a future period.
|
|
Three Months Ended
|
||||||||||
|
December 31,
|
||||||||||
($ in Thousands)
|
2017
|
|
2016
|
||||||||
Net financial earnings (loss)
|
|
|
|
|
|
||||||
Natural Gas Distribution
|
$
|
34,109
|
|
25
|
%
|
|
$
|
30,348
|
|
75
|
%
|
Clean Energy Ventures
|
71,250
|
|
53
|
|
|
2,842
|
|
7
|
|
||
Energy Services
|
20,274
|
|
15
|
|
|
3,487
|
|
9
|
|
||
Midstream
|
17,511
|
|
13
|
|
|
2,387
|
|
6
|
|
||
Home Services and Other
|
(7,716
|
)
|
(6
|
)
|
|
1,542
|
|
4
|
|
||
Eliminations
(1)
|
(95
|
)
|
—
|
|
|
(223
|
)
|
(1
|
)
|
||
Total
|
$
|
135,333
|
|
100
|
%
|
|
$
|
40,383
|
|
100
|
%
|
(1)
|
Consists
of transactions between subsidiaries that are eliminated in consolidation
.
|
•
|
earning a reasonable rate of return on the investments in its natural gas distribution
and transmission businesses
, as well as timely recovery of all prudently incurred costs to provide safe and reliable service throughout NJNG's territory;
|
•
|
continuing to invest in the safety and integrity of its infrastructure;
|
•
|
managing its customer growth rate, which NJNG expects will be approximately
1.7 percent
annually through fiscal
2020
;
|
•
|
maintaining a collaborative relationship with the BPU on regulatory initiatives, including:
|
•
|
managing the volatility of wholesale natural gas prices through a hedging program designed to keep customers' BGSS rates as stable as possible; and
|
•
|
working with the NJDEP and BPU to manage its financial obligations related to remediation activities associated with its former MGP sites.
|
|
December 31,
2017 |
December 31,
2016 |
||
Firm customers
|
|
|
||
Residential
|
463,679
|
|
451,587
|
|
Commercial, industrial & other
|
28,656
|
|
27,995
|
|
Residential transport
|
31,969
|
|
35,698
|
|
Commercial transport
|
10,089
|
|
10,149
|
|
Total firm customers
|
534,393
|
|
525,429
|
|
Other
|
49
|
|
64
|
|
Total customers
|
534,442
|
|
525,493
|
|
(1)
|
Compared with the CIP 20-year average, weather was
0.1 percent
colder
-than-normal and
6 percent
warmer
-than-normal during the
three months ended
December 31, 2017
and
2016
, respectively.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Operating revenues
|
$
|
209,787
|
|
$
|
185,556
|
|
Operating expenses
|
|
|
||||
Gas purchases
(1)
|
84,755
|
|
64,186
|
|
||
Operation and maintenance
|
35,391
|
|
33,218
|
|
||
Regulatory rider expense
|
11,769
|
|
12,601
|
|
||
Depreciation and amortization
|
12,783
|
|
12,030
|
|
||
Energy and other taxes
|
13,750
|
|
12,149
|
|
||
Total operating expenses
|
158,448
|
|
134,184
|
|
||
Operating income
|
51,339
|
|
51,372
|
|
||
Other income, net
|
1,010
|
|
687
|
|
||
Interest expense, net of capitalized interest
|
6,536
|
|
6,824
|
|
||
Income tax provision
|
11,704
|
|
14,887
|
|
||
Net income
|
$
|
34,109
|
|
$
|
30,348
|
|
(1)
|
Includes related party transactions of approximately
$7.2 million
and
$2.9 million
for the
three months ended
December 31, 2017
and
2016
, respectively, a portion of which is eliminated in consolidation.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
|
2017 v. 2016
|
|||||
(Thousands)
|
Operating
revenues
|
Gas
purchases
|
||||
Bill credits
(1)
|
$
|
19,260
|
|
$
|
18,000
|
|
Firm sales
|
11,093
|
|
4,806
|
|
||
NJ RISE/SAFE II
|
1,448
|
|
—
|
|
||
Average BGSS rates
(2)
|
1,156
|
|
1,070
|
|
||
CIP adjustments
|
(3,586
|
)
|
—
|
|
||
Off-system sales
|
(2,700
|
)
|
(3,054
|
)
|
||
Other
(3)
|
(2,440
|
)
|
(253
|
)
|
||
Total increase
|
$
|
24,231
|
|
$
|
20,569
|
|
(1)
|
Operating revenues includes changes in sales tax of
$1.3 million
.
|
(2)
|
Operating revenues includes changes in sales tax of
$86,000
.
|
(3)
|
Other includes changes in rider rates, including those related to NJCEP and other programs.
|
•
|
bill credits issued to residential and small commercial customers during fiscal 2017 that did not occur in fiscal 2018;
|
•
|
increased firm sales due primarily to customer growth and higher usage related to weather being
5.6 percent
colder
;
partially offset by
|
•
|
a
decrease
in CIP due primarily to weather being colder during December 2017; and
|
•
|
lower
off-system sales due primarily to
reduction
in volumes of
24.9 percent
, partially offset by an
increase
of
18.5 percent
in the average price of gas sold.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Operating revenues
|
$
|
209,787
|
|
$
|
185,556
|
|
Less:
|
|
|
||||
Gas purchases
|
84,755
|
|
64,186
|
|
||
Energy taxes
(1)
|
12,404
|
|
10,882
|
|
||
Regulatory rider expense
|
11,769
|
|
12,601
|
|
||
Utility gross margin
|
$
|
100,859
|
|
$
|
97,887
|
|
(1)
|
Energy taxes includes only sales tax on operating revenues, excluding tax-exempt sales.
|
•
|
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.
|
|
Three Months Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2017
|
|
2016
|
||||||||
($ in thousands)
|
Margin
|
Bcf
|
|
Margin
|
Bcf
|
||||||
Utility gross margin/throughput
|
|
|
|
|
|
||||||
Residential
|
$
|
64,735
|
|
13.6
|
|
|
$
|
62,498
|
|
12.6
|
|
Commercial, industrial and other
|
13,918
|
|
2.6
|
|
|
13,696
|
|
2.4
|
|
||
Firm transportation
|
16,260
|
|
4.6
|
|
|
16,285
|
|
4.5
|
|
||
Total utility firm gross margin/throughput
|
94,913
|
|
20.8
|
|
|
92,479
|
|
19.5
|
|
||
BGSS incentive programs
|
4,435
|
|
38.7
|
|
|
3,784
|
|
43.6
|
|
||
Interruptible/off-tariff agreements
|
1,511
|
|
9.9
|
|
|
1,624
|
|
13.3
|
|
||
Total utility gross margin/throughput
|
$
|
100,859
|
|
69.4
|
|
|
$
|
97,887
|
|
76.4
|
|
|
Three Months Ended
|
||||
|
December 31,
|
||||
(Thousands)
|
2017 v. 2016
|
||||
Off-system sales
|
|
$
|
354
|
|
|
Storage
|
|
301
|
|
|
|
Capacity release
|
|
(3
|
)
|
|
|
Total increase
|
|
$
|
652
|
|
|
|
Three Months Ended
|
||||
|
December 31,
|
||||
(Thousands)
|
2017 v. 2016
|
||||
Compensation and benefits
|
|
$
|
622
|
|
|
Donations
|
|
725
|
|
|
|
Consulting
|
|
532
|
|
|
|
Other
|
|
294
|
|
|
|
Total increase
|
|
$
|
2,173
|
|
|
|
Three Months Ended
|
|||
|
December 31,
|
|||
|
2017
|
2016
|
||
Inventory balance as of October 1,
|
48,357
|
|
24,135
|
|
SRECs generated
|
53,568
|
|
41,443
|
|
SRECs delivered
|
(29,680
|
)
|
(10,319
|
)
|
Inventory balance as of December 31,
|
72,245
|
|
55,259
|
|
(1)
|
Energy years are compliance periods for New Jersey's renewable portfolio standard that run from June 1 to May 31.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Operating revenues
|
$
|
13,996
|
|
$
|
7,567
|
|
Operating expenses
|
|
|
||||
Operation and maintenance
|
5,192
|
|
4,404
|
|
||
Depreciation and amortization
|
8,935
|
|
7,041
|
|
||
Other taxes
|
404
|
|
415
|
|
||
Total operating expenses
|
14,531
|
|
11,860
|
|
||
Operating loss
|
(535
|
)
|
(4,293
|
)
|
||
Other income, net
|
24
|
|
(72
|
)
|
||
Interest expense, net
|
4,208
|
|
3,324
|
|
||
Income tax benefit
|
(73,988
|
)
|
(11,887
|
)
|
||
Net income
|
$
|
69,269
|
|
$
|
4,198
|
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Net income
|
$
|
69,269
|
|
$
|
4,198
|
|
Add:
|
|
|
||||
Net income to NFE tax adjustment
|
1,981
|
|
(1,356
|
)
|
||
Net financial earnings
|
$
|
71,250
|
|
$
|
2,842
|
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Operating revenues
(1)
|
$
|
477,981
|
|
$
|
337,181
|
|
Operating expenses
|
|
|
||||
Gas purchases (including demand charges
(2)(3)
)
|
446,210
|
|
339,087
|
|
||
Operation and maintenance
|
4,420
|
|
5,018
|
|
||
Depreciation and amortization
|
14
|
|
16
|
|
||
Other taxes
|
1,217
|
|
455
|
|
||
Total operating expenses
|
451,861
|
|
344,576
|
|
||
Operating income (loss)
|
26,120
|
|
(7,395
|
)
|
||
Interest expense, net
|
1,257
|
|
571
|
|
||
Income tax provision (benefit)
|
13,743
|
|
(3,176
|
)
|
||
Net income (loss)
|
$
|
11,120
|
|
$
|
(4,790
|
)
|
(1)
|
Includes related party transactions of approximately
$5.8 million
and
$1.7 million
for the
three months ended
December 31, 2017
and
2016
, respectively, which is eliminated in consolidation.
|
(2)
|
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 ten years.
|
(3)
|
Includes related party transactions of approximately
$1.1 million
and
$1.2 million
for the
three months ended
December 31, 2017
and
2016
, respectively, a portion of which is eliminated in consolidation.
|
|
Three Months Ended
|
|||
|
December 31,
|
|||
(in Bcf)
|
2017
|
2016
|
||
Net short futures contracts
|
33.4
|
|
76.4
|
|
Net long options
|
—
|
|
0.5
|
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Operating revenues
(1)
|
$
|
477,981
|
|
$
|
337,181
|
|
Less: Gas purchases
|
446,210
|
|
339,087
|
|
||
Add:
|
|
|
||||
Unrealized loss on derivative instruments and related transactions
|
33,873
|
|
30,592
|
|
||
Effects of economic hedging related to natural gas inventory
(2)
|
(25,387
|
)
|
(17,939
|
)
|
||
Financial margin
|
$
|
40,257
|
|
$
|
10,747
|
|
(1)
|
Includes unrealized (gains) related to an intercompany transaction between NJNG and
Energy Services
that have been eliminated in consolidation of approximately
$982,000
and
$(2.3) million
for the
three months ended
December 31, 2017
and
2016
, respectively.
|
(2)
|
Effects of hedging natural gas inventory transactions where the economic impact is realized in a future period.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Operating income (loss)
|
$
|
26,120
|
|
$
|
(7,395
|
)
|
Add:
|
|
|
||||
Operation and maintenance
|
4,420
|
|
5,018
|
|
||
Depreciation and amortization
|
14
|
|
16
|
|
||
Other taxes
|
1,217
|
|
455
|
|
||
Subtotal
|
31,771
|
|
(1,906
|
)
|
||
Add:
|
|
|
||||
Unrealized loss on derivative instruments and related transactions
|
33,873
|
|
30,592
|
|
||
Effects of economic hedging related to natural gas inventory
|
(25,387
|
)
|
(17,939
|
)
|
||
Financial margin
|
$
|
40,257
|
|
$
|
10,747
|
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Net income (loss)
|
$
|
11,120
|
|
$
|
(4,790
|
)
|
Add:
|
|
|
||||
Unrealized loss on derivative instruments and related transactions
|
33,873
|
|
30,592
|
|
||
Tax effect
(1)
|
(7,576
|
)
|
(10,580
|
)
|
||
Effects of economic hedging related to natural gas inventory
|
(25,387
|
)
|
(17,939
|
)
|
||
Tax effect
|
8,244
|
|
6,204
|
|
||
Net financial earnings
|
$
|
20,274
|
|
$
|
3,487
|
|
(1)
|
Includes taxes related to an intercompany transaction between NJNG and
Energy Services
that have been eliminated in consolidation of approximately
$(483,000)
and
$823,000
for the
three months ended
December 31, 2017
and
2016
, respectively.
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Equity in earnings of affiliates
|
$
|
4,129
|
|
$
|
3,331
|
|
Operation and maintenance
|
$
|
372
|
|
$
|
149
|
|
Other income, net
|
$
|
1,221
|
|
$
|
917
|
|
Interest expense, net
|
$
|
309
|
|
$
|
56
|
|
Income tax provision
|
$
|
(12,843
|
)
|
$
|
1,649
|
|
Net income
|
$
|
17,511
|
|
$
|
2,387
|
|
|
Three Months Ended
|
|||||
|
December 31,
|
|||||
(Thousands)
|
2017
|
2016
|
||||
Operating revenues
|
$
|
9,957
|
|
$
|
10,006
|
|
Operation and maintenance
|
$
|
10,179
|
|
$
|
10,164
|
|
Energy and other taxes
|
$
|
1,120
|
|
$
|
1,076
|
|
Other income, net
|
$
|
5,603
|
|
$
|
2,827
|
|
Income tax provision (benefit)
|
$
|
11,698
|
|
$
|
(245
|
)
|
Net (loss) income
|
$
|
(7,716
|
)
|
$
|
1,542
|
|
|
December 31,
2017 |
September 30,
2017 |
||
Common stock equity
|
47
|
%
|
46
|
%
|
Long-term debt
|
35
|
|
38
|
|
Short-term debt
|
18
|
|
16
|
|
Total
|
100
|
%
|
100
|
%
|
|
Three Months Ended
|
||
(Thousands)
|
December 31, 2017
|
||
NJR
|
|
||
Notes Payable to banks:
|
|
||
Balance at end of period
|
$
|
327,200
|
|
Weighted average interest rate at end of period
|
2.26
|
%
|
|
Average balance for the period
|
$
|
299,868
|
|
Weighted average interest rate for average balance
|
2.19
|
%
|
|
Month end maximum for the period
|
$
|
330,900
|
|
NJNG
|
|
||
Commercial Paper and Notes Payable to banks:
|
|
||
Balance at end of period
|
$
|
46,000
|
|
Weighted average interest rate at end of period
|
1.33
|
%
|
|
Average balance for the period
|
$
|
40,114
|
|
Weighted average interest rate for average balance
|
1.21
|
%
|
|
Month end maximum for the period
|
$
|
51,000
|
|
|
Standard and Poor's
|
Moody's
|
Corporate Rating
|
A
|
N/A
|
Commercial Paper
|
A-1
|
P-1
|
Senior Secured
|
A+
|
Aa2
|
Ratings Outlook
|
Stable
|
Stable
|
|
Balance
|
Increase
|
Less
|
Balance
|
||||||||||
(Thousands)
|
September 30, 2017
|
(Decrease) in Fair
Market Value
|
Amounts
Settled
|
December 31,
2017 |
||||||||||
Natural Gas Distribution
|
|
$
|
(1,149
|
)
|
|
(3,774
|
)
|
|
(1,445
|
)
|
|
$
|
(3,478
|
)
|
Energy Services
|
|
(5,552
|
)
|
|
(23,727
|
)
|
|
3,121
|
|
|
(32,400
|
)
|
||
Total
|
|
$
|
(6,701
|
)
|
|
(27,501
|
)
|
|
1,676
|
|
|
$
|
(35,878
|
)
|
(Thousands)
|
2018
|
2019
|
2020 - 2022
|
After 2022
|
Total
Fair Value
|
||||||||||
Price based on ICE
|
$
|
(27,037
|
)
|
(6,145
|
)
|
|
(2,700
|
)
|
|
4
|
|
|
$
|
(35,878
|
)
|
Total
|
$
|
(27,037
|
)
|
(6,145
|
)
|
|
(2,700
|
)
|
|
4
|
|
|
$
|
(35,878
|
)
|
|
|
Volume Bcf
|
Price per MMBtu
(1)
|
Amounts included in Derivatives (Thousands)
|
||||
Natural Gas Distribution
|
Futures
|
20.4
|
|
$2.73 - $5.21
|
|
$
|
(3,478
|
)
|
Energy Services
|
Futures
|
(33.4
|
)
|
$1.53 - $6.04
|
|
(32,400
|
)
|
|
Total
|
|
|
|
|
$
|
(35,878
|
)
|
(1)
|
Million British thermal unit
|
|
Balance
|
Increase
|
Less
|
Balance
|
||||||||||
(Thousands)
|
September 30, 2017
|
(Decrease) in Fair
Market Value |
Amounts
Settled |
December 31,
2017 |
||||||||||
Natural Gas Distribution - Prices based on other external data
|
|
$
|
79
|
|
|
(404
|
)
|
|
(759
|
)
|
|
$
|
434
|
|
Energy Services - Prices based on other external data
|
|
(3,584
|
)
|
|
(26,285
|
)
|
|
(7,130
|
)
|
|
(22,739
|
)
|
||
Total
|
|
$
|
(3,505
|
)
|
|
(26,689
|
)
|
|
(7,889
|
)
|
|
$
|
(22,305
|
)
|
|
Balance
|
Increase
|
Less
|
Balance
|
||||||||||
(Thousands)
|
September 30, 2017
|
(Decrease) in Fair
Market Value |
Amounts
Settled |
December 31,
2017 |
||||||||||
Natural Gas Distribution - Prices based on other external data
|
|
$
|
(8,467
|
)
|
|
(4,067
|
)
|
|
—
|
|
|
$
|
(12,534
|
)
|
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
|
$
|
—
|
|
$
|
(5,799
|
)
|
$
|
(11,598
|
)
|
$
|
(17,397
|
)
|
$
|
(23,196
|
)
|
Ending derivative fair value
|
$
|
16,270
|
|
$
|
10,471
|
|
$
|
4,672
|
|
$
|
(1,127
|
)
|
$
|
(6,926
|
)
|
|
|
|
|
|
|
||||||||||
Percent decrease in NYMEX natural gas futures prices
|
0%
|
(5)%
|
(10)%
|
(15)%
|
(20)%
|
||||||||||
Estimated change in derivative fair value
|
$
|
—
|
|
$
|
5,799
|
|
$
|
11,598
|
|
$
|
17,397
|
|
$
|
23,196
|
|
Ending derivative fair value
|
$
|
16,270
|
|
$
|
22,069
|
|
$
|
27,868
|
|
$
|
33,667
|
|
$
|
39,466
|
|
(Thousands)
|
Gross Credit Exposure
|
Net Credit Exposure
|
||||||
Investment grade
|
|
$
|
179,097
|
|
|
$
|
145,295
|
|
Noninvestment grade
|
|
24,933
|
|
|
9,333
|
|
||
Internally rated investment grade
|
|
25,235
|
|
|
17,813
|
|
||
Internally rated noninvestment grade
|
|
48,222
|
|
|
14,517
|
|
||
Total
|
|
$
|
277,487
|
|
|
$
|
186,958
|
|
(Thousands)
|
Gross Credit Exposure
|
Net Credit Exposure
|
||||||
Investment grade
|
|
$
|
3,417
|
|
|
$
|
2,268
|
|
Noninvestment grade
|
|
146
|
|
|
—
|
|
||
Internally rated investment grade
|
|
200
|
|
|
138
|
|
||
Internally rated noninvestment grade
|
|
13,492
|
|
|
3,321
|
|
||
Total
|
|
$
|
17,255
|
|
|
$
|
5,727
|
|
Period
|
Total Number of Shares
(or Units) Purchased
|
Average Price Paid per Share (or Unit)
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs
|
||||
10/01/17 - 10/31/17
|
—
|
$
|
—
|
|
—
|
|
|
2,431,053
|
11/01/17 - 11/30/17
|
—
|
—
|
|
—
|
|
|
2,431,053
|
|
12/01/17 - 12/31/17
|
—
|
—
|
|
—
|
|
|
2,431,053
|
|
Total
|
—
|
$
|
—
|
|
—
|
|
|
2,431,053
|
Exhibit
Number
|
Exhibit Description
|
2.1
|
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
)
|
|
|
10.1
|
Summary of Company’s Non-Employee Director Compensation (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K as filed on November 17, 2017
)
|
|
|
10.2
|
$75,000,000 4 Month Revolver Agreement, dated as of December 14, 2017, between New Jersey Resources Corporation and PNC Bank, National Association (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K as filed on December 19, 2017
)
|
|
|
10.3
|
$75,000,000 Committed Line of Credit Note, dated as of December 14, 2017, between New Jersey Resources Corporation and PNC Bank, National Association (incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K as filed on December 19, 2017
)
|
|
|
10.4
|
Amendment to the Committed Line of Credit Note, dated as of January 19, 2018, between New Jersey Resources Corporation and PNC Bank, National Association (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K as filed on January 22, 2018
)
|
|
|
10.5
|
Amended and Restated Committed Line of Credit Note, dated as of January 19, 2018, between New Jersey Resources Corporation and PNC Bank, National Association (incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K as filed on January 22, 2018
)
|
|
|
10.6+
|
|
|
|
10.7+
|
|
|
|
10.8+
|
|
|
|
10.9+
|
|
|
|
10.10+
|
|
|
|
31.1+
|
|
|
|
31.2+
|
|
|
|
32.1+ †
|
|
|
|
32.2+ †
|
|
|
|
101+
|
Interactive Data File (Form 10-Q, for the fiscal period ended June 30, 2017, furnished in XBRL (eXtensible Business Reporting Language)).
|
+
|
Filed herewith.
|
|
|
NEW JERSEY RESOURCES CORPORATION
|
|
|
(Registrant)
|
Date:
|
February 8, 2018
|
|
|
|
By:/s/ Patrick Migliaccio
|
|
|
Patrick Migliaccio
|
|
|
Senior Vice President and
|
|
|
Chief Financial Officer
|
Cumulative NFEPS
|
Performance Share Units Earned as a Percentage of Target
Performance Share Units
|
|
|
Less than $4.61
|
0%
|
$4.61
|
50%
|
$5.76
|
100%
|
$6.91
_
or Greater
|
150%
|
a.
|
“Business of the Company” means the following areas of its business which are selected below, which Employee acknowledges are areas of the Company’s business in which Employee has responsibilities:
|
___
|
Natural Gas Distribution
: Consists of New Jersey Natural Gas Company, a natural gas utility company that provides regulated retail natural gas service to residential and commercial customers in central and northern New Jersey and participates in the off-system sales and capacity release markets.
|
___
|
Energy Services
: Maintains and transacts around a portfolio of physical assets consisting of natural gas storage and transportation contracts and also provides wholesale energy management services to other energy companies and natural gas producers in market areas including states from the Gulf Coast and Mid-continent regions to the Appalachian and Northeast regions, the West Coast and Canada.
|
___
|
Clean Energy Ventures
: Investor, owner, and operator in the renewable energy sector, including investments in wind and residential and commercial rooftop and ground mount solar systems.
|
___
|
Midstream Assets
: Includes investments in natural gas transportation and storage assets and is comprised of the following: an equity investment in Dominion Midstream Partners, LP, which holds ownership interests in the Iroquois Gas Transmission System, Cove Point and Dominion Carolina Gas Transmission; Steckman Ridge, which is a partnership that owns and operates a 17.7 Bcf natural gas storage facility, with up to 12 Bcf working capacity, in western Pennsylvania that is 50 percent owned by a Company Subsidiary; and a 20 percent ownership interest in the proposed PennEast Pipeline, a 118-mile pipeline designed to bring natural gas produced in the Marcellus Shale region to homes and businesses in Pennsylvania and New Jersey.
|
___
|
Home Services
: Consists of NJR Home Services Company, which provides Heating, Ventilating, and Air Conditioning (HVAC) service, sales and installation of appliances, as well as installation of solar equipment.
|
___
|
Retail Services
: Consists of NJR Retail Services Company, which sells natural gas to large commercial and industrial customers in Delaware, Maryland, New Jersey, and Pennsylvania.
|
b.
|
“Confidential Information” means all valuable and/or proprietary information (in oral, written, electronic or other forms) belonging to or pertaining to the Company, its customers and vendors, that is not generally known or publicly available, and which would be useful to competitors of the Company or otherwise damaging to the Company if disclosed. Confidential Information may include, but is not necessarily limited to: (i) the identity of the Company’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which the Company offers or may offer its products and services to such customers, (ii) the identity of the Company’s vendors or potential vendors, and the terms or proposed terms upon which the Company may purchase products and services from such vendors, (iii) technology used by the Company to provide its services, (iv) the terms and conditions upon which the Company employs its employees and independent contractors, (v) marketing and/or business plans and strategies, (vi) financial reports and analyses regarding the revenues, expenses, profitability and operations of the Company, and (vii) information provided to the Company by customers and other third parties under a duty to maintain the confidentiality of such information. Notwithstanding the foregoing, Confidential Information does not include information that: (i) has been voluntarily disclosed to the public by Company or any Employer, except where such public disclosure has been made by Employee without authorization from Company or Employer; (ii) has been independently developed and disclosed by others, or (iii) which has otherwise entered the public domain through lawful means.
|
c.
|
“Material Contact” means contact in person, by telephone, or by paper or electronic correspondence, or the supervision of those who have such conduct, and which is done in furtherance of the business interests of the company and within the last 36 months.
|
d.
|
“Restricted Territory” consists of the following areas, to the extent such areas have been identified as applicable to the definition of the “Business of the company” above:
|
(a)
|
Competitive Employment
. In the event that Employee, during the Restricted Period and within the Restricted Territory, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, performs services of the type which are the same as or similar to those conducted, authorized, offered or provided by Employee to NJR within the 24 months prior to Employee’s termination or resignation, and which support business activities which compete with the Business of NJR.
|
(b)
|
Recruitment of NJR Employees and Contractors
. In the event that Employee, during the Restricted Period, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicits or induces any employee or independent contractor of NJR with whom Employee had Material Contact to terminate or lessen such employment or contract with NJR.
|
(c)
|
Solicitation of NJR Customers
. In the event that Employee, during the Restricted Period, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicits any actual or prospective customers of NJR with whom Employee had Material Contact for the purpose of selling any products or services which compete with the Business of NJR.
|
(d)
|
Solicitation of NJR Vendors.
In the event that Employee, during the Restricted Period, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicits any actual or prospective vendor of NJR with whom Employee had Material Contact for the purpose of purchasing products or services to support business activities which compete with the Business of NJR.
|
(e)
|
Breach of Confidentiality
. In the event that Employee, at any time, directly or indirectly, divulges or makes use of any Confidential Information of NJR other than in the performance of Employee’s duties for NJR. This provision does not limit the remedies available to NJR under common or statutory law as to trade secrets or other forms of confidential information, which may impose longer duties of non-disclosure and provide for injunctive relief and damages.
|
(f)
|
Return of Property and Information
. In the event that Employee fails to return all of NJR’s property and information (whether confidential or not) within Employee’s possession or control within seven (7) calendar days following the termination or resignation of Employee from employment with NJR. Such property and information includes, but is not limited to, the original and any copy (regardless of the manner in which it is recorded) of all information provided by NJR to Employee or which Employee has developed or collected in the scope of Employee’s employment with NJR, as well as all NJR-issued equipment, supplies, accessories, vehicles, keys, instruments, tools, devices, computers, cell phones, pagers, materials, documents, plans, records, notebooks, drawings, or papers. Upon request by NJR, Employee shall certify in writing that Employee has complied with this provision, and has permanently deleted all NJR information from any computers or other electronic storage devices or media owned by Employee. Employee may only retain information relating to the Employee’s benefit plans and compensation to the extent needed to prepare Employee’s tax returns.
|
(g)
|
Disparagement
. In the event that Employee makes any statements, either verbally or in writing, that are disparaging with regard to NJR or any of its subsidiaries or their respective executives and Board members.
|
(h)
|
Termination for Cause
. In the event that Employee’s employment with NJR and its subsidiaries is terminated for Cause.
|
a.
|
“Business of NJR” means the following areas of its business which are selected below, which Employee acknowledges are areas of NJR’s business in which Employee has responsibilities:
|
___
|
Natural Gas Distribution
: Consists of New Jersey Natural Gas Company, a natural gas utility company that provides regulated retail natural gas service to residential and commercial customers in central and northern New Jersey and participates in the off-system sales and capacity release markets.
|
___
|
Energy Services
: Maintains and transacts around a portfolio of physical assets consisting of natural gas storage and transportation contracts and also provides wholesale energy management services to other energy companies and natural gas producers in market areas including states from the Gulf Coast and Mid-continent regions to the Appalachian and Northeast regions, the West Coast and Canada.
|
___
|
Clean Energy Ventures
: Investor, owner, and operator in the renewable energy sector, including investments in wind and residential and commercial rooftop and ground mount solar systems.
|
___
|
Midstream Assets
: Includes investments in natural gas transportation and storage assets and is comprised of the following: an equity investment in Dominion Midstream Partners, LP, which holds ownership interests in the Iroquois Gas Transmission System, Cove Point and Dominion Carolina Gas Transmission; Steckman Ridge, which is a partnership that owns and operates a 17.7 Bcf natural gas storage facility, with up to 12 Bcf working capacity, in western Pennsylvania that is 50 percent owned by an NJR Subsidiary; and a 20 percent ownership interest in the proposed PennEast Pipeline, a 118-mile pipeline designed to bring natural gas produced in the Marcellus Shale region to homes and businesses in Pennsylvania and New Jersey.
|
___
|
Home Services
: Consists of NJR Home Services Company, which provides Heating, Ventilating, and Air Conditioning (HVAC) service, sales and installation of appliances, as well as installation of solar equipment.
|
___
|
Retail Services
: Consists of NJR Retail Services Company, which sells natural gas to large commercial and industrial customers in Delaware, Maryland, New Jersey, and Pennsylvania.
|
b.
|
"Cause" has the same meaning as in any employment or similar agreement between NJR and the Employee or, if no such agreement or definition exists, then “Cause” means: (A) conviction of a felony or the entering by Employee of a plea of nolo contendere to a felony charge, (B) Employee’s gross neglect, willful malfeasance or willful gross misconduct in connection with Employee’s employment hereunder which has had a significant adverse effect on the business of NJR or any of its subsidiaries, unless Employee reasonably believed in good faith that such act or non-act was in or not opposed to the best interests of NJR or any of its subsidiaries, or (C) repeated material violations by Employee of his or her obligations under any applicable employment agreement or policy of NJR or any of its subsidiaries, which have continued after written notice thereof from NJR or any of its subsidiaries, which violations are demonstrably willful and deliberate on Employee’s part and which result in material damage to NJR or any of its subsidiaries’ business or reputation.
|
c.
|
“Confidential Information” means all valuable and/or proprietary information (in oral, written, electronic or other forms) belonging to or pertaining to NJR, its customers and vendors, that is not generally known or publicly available, and which would be useful to competitors of NJR or otherwise damaging to NJR if disclosed. Confidential Information may include, but is not necessarily limited to: (i) the identity of NJR’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which NJR offers or may offer its products and services to such customers, (ii) the identity of NJR’s vendors or potential vendors, and the terms or proposed terms upon which NJR may purchase products and services from such vendors, (iii) technology used by NJR to provide its services, (iv) the terms and conditions upon which NJR employs its employees and independent contractors, (v) marketing and/or business plans and strategies, (vi) financial reports and analyses regarding the revenues, expenses, profitability and operations of NJR, and (vii) information provided to NJR by customers and other third parties under a duty to maintain the confidentiality of such information. Notwithstanding the foregoing, Confidential Information does not include information that: (i) has been voluntarily disclosed to the public by Company or Employer, except where such public disclosure has been made by Employee without authorization from Company or Employer; (ii) has been independently developed and disclosed by others, or (iii) which has otherwise entered the public domain through lawful means.
|
d.
|
“Material Contact” means contact in person, by telephone, or by paper or electronic correspondence, or the supervision of those who have such conduct, and which is done in furtherance of the business interests of NJR and within the last 36 months of Employee’s employment with NJR.
|
e.
|
“Restricted Period” means the period while Employee is employed by NJR and for 36 months following the termination or resignation of Employee from employment with NJR.
|
f.
|
“Restricted Territory” consists of the following areas, to the extent such areas have been identified as applicable to the definition of the “Business of NJR” above:
|
Relative Total Shareholder Return
|
Company Relative Total Shareholder Return Performance —
Percentile Achieved
|
Performance Share Units Earned as
Percentage of
Target Performance Share Units
|
|
Less than 25
th
|
0
|
%
|
25
th
(threshold)
|
40
|
%
|
55
th
(target)
|
100
|
%
|
80
th
and above (maximum)
|
150
|
%
|
1.
|
ceases to be a domestically domiciled publicly traded company on a national stock exchange or market system, unless such cessation of such listing is due to a low stock price or low trading volume; or
|
3.
|
has reincorporated in a foreign (e.g., non-U.S.) jurisdiction, regardless of whether it is a reporting company in that or another jurisdiction; or
|
4.
|
has been acquired by another company (whether by a peer company or otherwise, but not including internal reorganizations), or has sold all or substantially all of its assets.
|
a.
|
“Business of the Company” means the following areas of its business which are selected below, which Employee acknowledges are areas of the Company’s business in which Employee has responsibilities:
|
___
|
Natural Gas Distribution
: Consists of New Jersey Natural Gas Company, a natural gas utility company that provides regulated retail natural gas service to residential and commercial customers in central and northern New Jersey and participates in the off-system sales and capacity release markets.
|
___
|
Energy Services
: Maintains and transacts around a portfolio of physical assets consisting of natural gas storage and transportation contracts and also provides wholesale energy management services to other energy companies and natural gas producers in market areas including states from the Gulf Coast and Mid-continent regions to the Appalachian and Northeast regions, the West Coast and Canada.
|
___
|
Clean Energy Ventures
: Investor, owner, and operator in the renewable energy sector, including investments in wind and residential and commercial rooftop and ground mount solar systems.
|
___
|
Midstream Assets
: Includes investments in natural gas transportation and storage assets and is comprised of the following: an equity investment in Dominion Midstream Partners, LP, which holds ownership interests in the Iroquois Gas Transmission System, Cove Point and Dominion Carolina Gas Transmission; Steckman Ridge, which is a partnership that owns and operates a 17.7 Bcf natural gas storage facility, with up to 12 Bcf working capacity, in western Pennsylvania that is 50 percent owned by a Company Subsidiary; and a 20 percent ownership interest in the proposed PennEast Pipeline, a 118-mile pipeline designed to bring natural gas produced in the Marcellus Shale region to homes and businesses in Pennsylvania and New Jersey.
|
___
|
Home Services
: Consists of NJR Home Services Company, which provides Heating, Ventilating, and Air Conditioning (HVAC) service, sales and installation of appliances, as well as installation of solar equipment.
|
___
|
Retail Services
: Consists of NJR Retail Services Company, which sells natural gas to large commercial and industrial customers in Delaware, Maryland, New Jersey, and Pennsylvania.
|
b.
|
“Confidential Information” means all valuable and/or proprietary information (in oral, written, electronic or other forms) belonging to or pertaining to the Company, its customers and vendors, that is not generally known or publicly available, and which would be useful to competitors of the Company or otherwise damaging to the Company if disclosed. Confidential Information may include, but is not necessarily limited to: (i) the identity of the Company’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which the Company offers or may offer its products and services to such customers, (ii) the identity of the Company’s vendors or potential vendors, and the terms or proposed terms upon which the Company may purchase products and services from such vendors, (iii) technology used by the Company to provide its services, (iv) the terms and conditions upon which the Company employs its employees and independent contractors, (v) marketing and/or business plans and strategies, (vi) financial reports and analyses regarding the revenues, expenses, profitability and operations of the Company, and (vii) information provided to the Company by customers and other third parties under a duty to maintain the confidentiality of such information. Notwithstanding the foregoing, Confidential Information does not include information that: (i) has been voluntarily disclosed to the public by Company or any Employer, except where such public disclosure has been made by Employee without authorization from Company or Employer; (ii) has been independently developed and disclosed by others, or (iii) which has otherwise entered the public domain through lawful means.
|
c.
|
“Material Contact” means contact in person, by telephone, or by paper or electronic correspondence, or the supervision of those who have such conduct, and which is done in furtherance of the business interests of the company and within the last 36 months.
|
d.
|
“Restricted Territory” consists of the following areas, to the extent such areas have been identified as applicable to the definition of the “Business of the company” above:
|
How Restricted Stock Units Vest
:
|
The Restricted Stock Units, if not previously forfeited, will vest on the dates and as to the number of Restricted Stock Units in the following table provided Employee remains employed by the Company or a Subsidiary from the Grant Date through the Stated Vesting Date:
|
Settlement:
|
The Restricted Stock Units, to the extent vested, including Restricted Stock Units credited as the result of Dividend Equivalents, to the extent vested, will be settled by delivery of one share of Stock for each Restricted Stock Unit to be settled, as soon as administratively practicable (and no later than sixty (60) days) after the earlier of (i) the Stated Vesting Date that corresponds to the applicable tranche of vested Restricted Stock Units or (ii) a Change in Control if no provision is made for the continuance, assumption or substitution of the Restricted Stock Units by the Company or its successor in connection with the Change in Control. Notwithstanding the foregoing, the Committee may determine to permit Employee to elect to defer settlement (or redefer) if such election would be permissible under Section 11(k) of the Plan and Code Section 409A. In addition to any applicable requirements under Code Section 409A, any such deferral election shall be made only while Employee remains employed and at a time permitted under Code Section 409A. The form under which an election is made shall set forth the time and form of payment of such amount deferred. Any amount deferred shall be
|
Further Conditions to Settlement:
|
Notwithstanding any other provision of this Agreement, except as otherwise set forth below, the Company’s obligation to settle the Restricted Stock Units and Employee’s right to distribution of the Restricted Stock Units will be forfeited immediately upon the occurrence of any one or more of the following events (defined terms are attached hereto as Exhibit B):
|
(a)
|
Competitive Employment
. In the event that Employee, prior to full settlement of the Restricted Stock Units and within the Restricted Territory, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, performs services of the type which are the same as or similar to those conducted, authorized, offered or provided by Employee to the Company within the last 24 months, and which support business activities which compete with the Business of the Company.
|
(b)
|
Recruitment of Company Employees and Contractors
. In the event that Employee, prior to full settlement of the Restricted Stock Units, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicits or induces any employee or independent contractor of the Company with whom Employee had Material Contact to terminate or lessen such employment or contract with the Company.
|
(c)
|
Solicitation of Company Customers
. In the event that Employee, prior to full settlement of the Restricted Stock Units, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicits any actual or prospective customers of the Company with whom Employee had Material Contact for the purpose of selling any products or services which compete with the Business of the Company.
|
(d)
|
Solicitation of Company Vendors
. In the event that Employee, prior to full settlement of the Restricted Stock Units, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicits any actual or prospective vendor of the Company with whom Employee had Material Contact for the purpose of purchasing products or services to support business activities which compete with the Business of the Company.
|
(e)
|
Breach of Confidentiality
. In the event that Employee, at any time prior to full settlement of the Restricted Stock Units, directly or indirectly, divulges or makes use of any Confidential Information of the Company other than in the performance of Employee’s duties for the Company. This provision does not limit the remedies available to the Company under common or statutory law as to trade secrets or other forms of confidential information, which may impose longer duties of non-disclosure and provide for injunctive relief and damages.
|
(f)
|
Return of Property and Information
. In the event that prior to full settlement of the Restricted Stock Units Employee fails to return all of the Company’s property and information (whether confidential or not) within Employee’s possession or control within seven (7) calendar days following the termination or resignation of Employee from employment with the Company. Such property and information includes, but is not limited to, the original and any copy (regardless of the manner in which it is recorded) of all information provided by the Company to Employee or which Employee has developed or collected in the scope of Employee’s employment with the Company, as well as all Company-issued equipment, supplies, accessories, vehicles, keys, instruments, tools, devices, computers, cell
|
(g)
|
Disparagement
. In the event that prior to full settlement of the Restricted Stock Units Employee makes any statements, either verbally or in writing, that are disparaging with regard to the Company or any of its subsidiaries or their respective executives and Board members.
|
(h)
|
Failure to Provide Information
. In the event that prior to full settlement of the Restricted Stock Units Employee fails to promptly and fully respond to requests for information from the Company regarding Employee’s compliance with any of the foregoing conditions.
|
a.
|
“Business of the Company” means the following areas of its business which are selected below, which Employee acknowledges are areas of the Company’s business in which Employee has responsibilities:
|
___
|
Natural Gas Distribution
: Consists of New Jersey Natural Gas Company, a natural gas utility company that provides regulated retail natural gas service to residential and commercial customers in central and northern New Jersey and participates in the off-system sales and capacity release markets.
|
___
|
Energy Services
: Maintains and transacts around a portfolio of physical assets consisting of natural gas storage and transportation contracts and also provides wholesale energy management services to other energy companies and natural gas producers in market areas including states from the Gulf Coast and Mid-continent regions to the Appalachian and Northeast regions, the West Coast and Canada.
|
___
|
Clean Energy Ventures
: Investor, owner, and operator in the renewable energy sector, including investments in wind and residential and commercial rooftop and ground mount solar systems.
|
___
|
Midstream Assets
: Includes investments in natural gas transportation and storage assets and is comprised of the following: an equity investment in Dominion Midstream Partners, LP, which holds ownership interests in the Iroquois Gas Transmission System, Cove Point and Dominion Carolina Gas Transmission; Steckman Ridge, which is a partnership that owns and operates a 17.7 Bcf natural gas storage facility, with up to 12 Bcf working capacity, in western Pennsylvania that is 50 percent owned by a Company Subsidiary; and a 20 percent ownership interest in the proposed PennEast Pipeline, a 118-mile pipeline designed to bring natural gas produced in the Marcellus Shale region to homes and businesses in Pennsylvania and New Jersey.
|
___
|
Home Services
: Consists of NJR Home Services Company, which provides Heating, Ventilating, and Air Conditioning (HVAC) service, sales and installation of appliances, as well as installation of solar equipment.
|
___
|
Retail Services
: Consists of NJR Retail Services Company, which sells natural gas to large commercial and industrial customers in Delaware, Maryland, New Jersey, and Pennsylvania.
|
b.
|
“Confidential Information” means all valuable and/or proprietary information (in oral, written, electronic or other forms) belonging to or pertaining to the Company, its customers and vendors, that is not generally known or publicly available, and which would be useful to competitors of the Company or otherwise damaging to the Company if disclosed. Confidential Information may include, but is not necessarily limited to: (i) the identity of the Company’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which the Company offers or may offer its products and services to such customers, (ii) the identity of the Company’s vendors or potential vendors, and the terms or proposed terms upon which the Company may purchase products and services from such vendors, (iii) technology used by the Company to provide its services, (iv) the terms and conditions upon which the Company employs its employees and independent contractors, (v) marketing and/or business plans and strategies, (vi) financial reports and analyses regarding the revenues, expenses, profitability and operations of the Company, and (vii) information provided to the Company by customers and other third parties under a duty to maintain the confidentiality of such information. Notwithstanding the foregoing, Confidential Information does not include information that: (i) has been voluntarily disclosed to the public by Company or any Employer, except where such public disclosure has been made by Employee without authorization from Company or Employer; (ii) has been independently developed and disclosed by others, or (iii) which has otherwise entered the public domain through lawful means.
|
c.
|
“Material Contact” means contact in person, by telephone, or by paper or electronic correspondence, or the supervision of those who have such conduct, and which is done in furtherance of the business interests of the company and within the last 36 months.
|
d.
|
“Restricted Territory” consists of the following areas, to the extent such areas have been identified as applicable to the definition of the “Business of the company” above:
|
Number of Performance-Based Restricted Stock Units Granted:
|
|
a.
|
“Business of the Company” means the following areas of its business which are selected below, which Employee acknowledges are areas of the Company’s business in which Employee has responsibilities:
|
___
|
Natural Gas Distribution
: Consists of New Jersey Natural Gas Company, a natural gas utility company that provides regulated retail natural gas service to residential and commercial customers in central and northern New Jersey and participates in the off-system sales and capacity release markets.
|
___
|
Energy Services
: Maintains and transacts around a portfolio of physical assets consisting of natural gas storage and transportation contracts and also provides wholesale energy management services to other energy companies and natural gas producers in market areas including states from the Gulf Coast and Mid-continent regions to the Appalachian and Northeast regions, the West Coast and Canada.
|
___
|
Clean Energy Ventures
: Investor, owner, and operator in the renewable energy sector, including investments in wind and residential and commercial rooftop and ground mount solar systems.
|
___
|
Midstream Assets
: Includes investments in natural gas transportation and storage assets and is comprised of the following: an equity investment in Dominion Midstream Partners, LP, which holds ownership interests in the Iroquois Gas Transmission System, Cove Point and Dominion Carolina Gas Transmission; Steckman Ridge, which is a partnership that owns and operates a 17.7 Bcf natural gas storage facility, with up to 12 Bcf working capacity, in western Pennsylvania that is 50 percent owned by a Company Subsidiary; and a 20 percent ownership interest in the proposed PennEast Pipeline, a 118-mile pipeline designed to bring natural gas produced in the Marcellus Shale region to homes and businesses in Pennsylvania and New Jersey.
|
___
|
Home Services
: Consists of NJR Home Services Company, which provides Heating, Ventilating, and Air Conditioning (HVAC) service, sales and installation of appliances, as well as installation of solar equipment.
|
___
|
Retail Services
: Consists of NJR Retail Services Company, which sells natural gas to large commercial and industrial customers in Delaware, Maryland, New Jersey, and Pennsylvania.
|
b.
|
“Confidential Information” means all valuable and/or proprietary information (in oral, written, electronic or other forms) belonging to or pertaining to the Company, its customers and vendors, that is not generally known or publicly available, and which would be useful to competitors of the Company or otherwise damaging to the Company if disclosed. Confidential Information may include, but is not necessarily limited to: (i) the identity of the Company’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which the Company offers or may offer its products and services to such customers, (ii) the identity of the Company’s vendors or potential vendors, and the
|
c.
|
“Material Contact” means contact in person, by telephone, or by paper or electronic correspondence, or the supervision of those who have such conduct, and which is done in furtherance of the business interests of the company and within the last 36 months.
|
d.
|
“Restricted Territory” consists of the following areas, to the extent such areas have been identified as applicable to the definition of the “Business of the company” above:
|
1)
|
I have reviewed this report on Form
10-Q
of New Jersey Resources Corporation;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 8, 2018
|
By:
|
/s/ Laurence M. Downes
|
|
|
|
Laurence M. Downes
|
|
|
|
Chairman, President & Chief Executive Officer
|
1)
|
I have reviewed this report on Form
10-Q
of New Jersey Resources Corporation;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 8, 2018
|
By:
|
/s/ Patrick Migliaccio
|
|
|
|
Patrick Migliaccio
|
|
|
|
Senior Vice President and Chief Financial Officer
|
(a)
|
I am the Chief Executive Officer of New Jersey Resources Corporation (the "Company");
|
(b)
|
To the best of my knowledge, this annual report on Form
10-Q
for the fiscal year ended
December 31, 2017
, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(c)
|
To the best of my knowledge, based upon a review of this report, the information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 8, 2018
|
By:
|
/s/ Laurence M. Downes
|
|
|
|
Laurence M. Downes
|
|
|
|
Chairman, President and Chief Executive Officer
|
(a)
|
I am the Chief
Financial
Officer of New Jersey Resources Corporation (the "Company");
|
(b)
|
To the best of my knowledge, this annual report on Form
10-Q
for the fiscal year ended
December 31, 2017
, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(c)
|
To the best of my knowledge, based upon a review of this report, the information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 8, 2018
|
By:
|
/s/ Patrick Migliaccio
|
|
|
|
Patrick Migliaccio
|
|
|
|
Senior Vice President and Chief Financial Officer
|