INVESTMENTS IN EQUITY INVESTEES

Investments in equity investees includes NJR's equity method and cost method investments.

Equity Method Investments

During the fourth quarter of fiscal 2014, NJR, through a subsidiary, NJR Pipeline Company, formed PennEast with four other investors, with another investor joining in October 2014, plans to construct and operate an 118-mile pipeline that will extend from northeast Pennsylvania to western New Jersey.

On September 29, 2015, NJNR Pipeline exchanged its 5.53 percent ownership interest in Iroquois to DM for approximately 1.84 million DM Common Units. The units are accounted for as available for sale securities on the Consolidated Balance Sheets. The exchange resulted in a pre-tax gain of approximately $24.6 million that was deferred and will be recognized into income if and when the units are sold in the future.

As of September 30, NJR's equity method investments include the following:



(Thousands)	2015		2014
Steckman Ridge ⁽¹⁾	$	125,649	$	128,413
Iroquois	—		24,042
PennEast	6,353		555
Total	$	132,002	$	153,010

(1)Includes loans with a total outstanding principal balance of $70.4 million for both fiscal 2015 and 2014, which accrue interest at a variable rate that resets quarterly and are due October 1, 2023.

NJRES and NJNG have transportation, storage and park and loan agreements with Steckman Ridge and Iroquois. In addition, NJNG has entered into a precedent capacity agreement with PennEast with an estimated service date of November 1, 2017. See Note 15. Related Party Transactions for more information on these intercompany transactions.

Cost Method Investments

During fiscal 2014 and most of fiscal 2015, NJRCEV held a minority equity interest in OwnEnergy, an onshore wind developer, which provided NJRCEV with the option to acquire wind farms that fit its investment profile. During the fourth quarter of fiscal 2015, OwnEnergy was acquired by a power producer and NJRCEV realized a $3 million pre-tax gain in exchange for its ownership interest, which is included in other income, net on the Consolidated Statements of Operations.