XML 65 R30.htm IDEA: XBRL DOCUMENT v3.3.0.814
DERIVATIVE INSTRUMENTS (Tables)
 12 Months Ended
Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair Value of Derivative Assets and Liabilities
The following table reflects the fair value of NJR's derivative assets and liabilities recognized on the Consolidated Balance Sheets as of September 30:
 
 
 
Fair Value
 
 
 
2015
 
2014
(Thousands)
Balance Sheet Location
Asset
Derivatives
Liability
Derivatives
Asset
Derivatives
Liability
Derivatives
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
NJRES:
 
 
 
 
 
 
 
 
 
Foreign currency contracts
Derivatives - current
 
$
—

 
$
—

 
$
—

 
$
155

 
Derivatives - noncurrent
 
—

 
—

 
—

 
—

Fair value of derivatives designated as hedging instruments
 
$
—

 
$
—

 
$
—

 
$
155

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
NJNG:
 
 
 
 
 
 
 
 
 
Financial commodity contracts
Derivatives - current
 
$
207

 
$
10,163

 
$
2,525

 
$
2,205

 
Derivatives - noncurrent
 
—

 
925

 
82

 
25

Interest rate contracts
Derivatives - noncurrent
 
—

 
4,228

 
—

 
—

NJRES:
 
 
 
 
 
 
 
 
 
Physical forward commodity contracts
Derivatives - current
 
4,854

 
9,281

 
15,391

 
30,778

 
Derivatives - noncurrent
 
1,718

 
—

 
35

 
132

Financial commodity contracts
Derivatives - current
 
35,682

 
13,347

 
46,307

 
46,725

 
Derivatives - noncurrent
 
2,626

 
386

 
5,537

 
6,533

Fair value of derivatives not designated as hedging instruments
 
$
45,087

 
$
38,330

 
$
69,877

 
$
86,398

Total fair value of derivatives
 
 
$
45,087

 
$
38,330

 
$
69,877

 
$
86,553
Offsetting Assets
The following table summarizes the reported gross amounts, the amounts that NJR has the right to offset but elects not to, financial collateral, as well as the net amounts NJR could present on the Consolidated Balance Sheets but elects not to.
(Thousands)
Amounts Presented in Balance Sheets (1)
Offsetting Derivative Instruments (2)
Financial Collateral Received/Pledged (3)
Net Amounts (4)
As of September 30, 2015:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
6,562

 
$
(1,326
)
 
$
—

 
$
5,236

Financial commodity contracts
 
38,308

 
(13,734
)
 
3,841

 
28,415

Total NJRES
 
$
44,870

 
$
(15,060
)
 
$
3,841

 
$
33,651

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
207

 
$
(207
)
 
$
—

 
$
—

Interest rate contracts
 
—

 
—

 
—

 
—

Total NJNG
 
$
207

 
$
(207
)
 
$
—

 
$
—

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
9,271

 
$
(1,326
)
 
$
(1,200
)
 
$
6,745

Financial commodity contracts
 
13,733

 
(13,733
)
 
—

 
—

Total NJRES
 
$
23,004

 
$
(15,059
)
 
$
(1,200
)
 
$
6,745

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
11,088

 
$
(207
)
 
$
(10,881
)
 
$
—

Interest rate contracts
 
$
4,228

 
$
—

 
$
—

 
$
4,228

Total NJNG
 
$
15,316

 
$
(207
)
 
$
(10,881
)
 
$
4,228

As of September 30, 2014:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
15,426

 
$
(11,531
)
 
$
—

 
$
3,895

Financial commodity contracts
 
51,844

 
(51,844
)
 
—

 
—

Total NJRES
 
$
67,270

 
$
(63,375
)
 
$
—

 
$
3,895

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
2,607

 
$
(2,230
)
 
$
(377
)
 
$
—

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
30,910

 
$
(12,058
)
 
$
(1,200
)
 
$
17,652

Financial commodity contracts
 
53,258

 
(51,844
)
 
(1,414
)
 
—

Foreign currency contracts
 
155

 
—

 
—

 
155

Total NJRES
 
$
84,323

 
$
(63,902
)
 
$
(2,614
)
 
$
17,807

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
2,230

 
$
(2,230
)
 
$
—

 
$
—

(1)
Derivative assets and liabilities are presented on a gross basis in the balance sheet as the Company does not elect balance sheet offsetting under ASC 210-20.
(2)
Offsetting derivative instruments include: transactions with NAESB netting election, transactions held by FCMs with net margining and transactions with ISDA netting.
(3)
Financial collateral includes cash balances at FCMs, as well as cash received from or pledged to other counterparties.
(4)
Net amounts represent presentation of derivative assets and liabilities if the Company were to elect balance sheet offsetting under ASC 210-20.
Offsetting Liabilities
The following table summarizes the reported gross amounts, the amounts that NJR has the right to offset but elects not to, financial collateral, as well as the net amounts NJR could present on the Consolidated Balance Sheets but elects not to.
(Thousands)
Amounts Presented in Balance Sheets (1)
Offsetting Derivative Instruments (2)
Financial Collateral Received/Pledged (3)
Net Amounts (4)
As of September 30, 2015:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
6,562

 
$
(1,326
)
 
$
—

 
$
5,236

Financial commodity contracts
 
38,308

 
(13,734
)
 
3,841

 
28,415

Total NJRES
 
$
44,870

 
$
(15,060
)
 
$
3,841

 
$
33,651

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
207

 
$
(207
)
 
$
—

 
$
—

Interest rate contracts
 
—

 
—

 
—

 
—

Total NJNG
 
$
207

 
$
(207
)
 
$
—

 
$
—

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
9,271

 
$
(1,326
)
 
$
(1,200
)
 
$
6,745

Financial commodity contracts
 
13,733

 
(13,733
)
 
—

 
—

Total NJRES
 
$
23,004

 
$
(15,059
)
 
$
(1,200
)
 
$
6,745

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
11,088

 
$
(207
)
 
$
(10,881
)
 
$
—

Interest rate contracts
 
$
4,228

 
$
—

 
$
—

 
$
4,228

Total NJNG
 
$
15,316

 
$
(207
)
 
$
(10,881
)
 
$
4,228

As of September 30, 2014:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
15,426

 
$
(11,531
)
 
$
—

 
$
3,895

Financial commodity contracts
 
51,844

 
(51,844
)
 
—

 
—

Total NJRES
 
$
67,270

 
$
(63,375
)
 
$
—

 
$
3,895

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
2,607

 
$
(2,230
)
 
$
(377
)
 
$
—

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
30,910

 
$
(12,058
)
 
$
(1,200
)
 
$
17,652

Financial commodity contracts
 
53,258

 
(51,844
)
 
(1,414
)
 
—

Foreign currency contracts
 
155

 
—

 
—

 
155

Total NJRES
 
$
84,323

 
$
(63,902
)
 
$
(2,614
)
 
$
17,807

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
2,230

 
$
(2,230
)
 
$
—

 
$
—

(1)
Derivative assets and liabilities are presented on a gross basis in the balance sheet as the Company does not elect balance sheet offsetting under ASC 210-20.
(2)
Offsetting derivative instruments include: transactions with NAESB netting election, transactions held by FCMs with net margining and transactions with ISDA netting.
(3)
Financial collateral includes cash balances at FCMs, as well as cash received from or pledged to other counterparties.
(4)
Net amounts represent presentation of derivative assets and liabilities if the Company were to elect balance sheet offsetting under ASC 210-20.
Effect of Derivative Instruments on the Consolidated Statements of Operations
The following table reflects the effect of derivative instruments on the Consolidated Statements of Operations as of September 30:
(Thousands)
Location of gain (loss) recognized in income on derivatives
Amount of gain (loss) recognized
in income on derivatives
Derivatives not designated as hedging instruments:
2015
 
2014
 
2013
NJRES:
 
 
 
 
 
 
Physical commodity contracts
Operating revenues
$
32,568

 
$
(48,977
)
 
$
1,117

Physical commodity contracts
Gas purchases
(34,438
)
 
(83,847
)
 
(17,194
)
Financial commodity contracts
Gas purchases
109,082

 
(118,872
)
 
41,183

Total unrealized and realized (losses) gains
$
107,212

 
$
(251,696
)
 
$
25,106
Effect of Derivative Instruments Designated as Cash Flow Hedges on OCI
The following table reflects the effect of derivative instruments designated as cash flow hedges on OCI as of September 30:
(Thousands)
Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) (1)
Amount of Gain or (Loss) Reclassified from OCI into Income (Effective Portion)
Amount of Gain or (Loss) Recognized on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Derivatives in cash flow hedging relationships:
2015
2014
2015
2014
2015
2014
Foreign currency contracts
$
(402
)
$
(432
)
$
557

$
266

$
—

$
—
Schedule of Outstanding Long (Short) Derivatives
NJNG and NJRES had the following outstanding long (short) derivatives as of September 30:
 
 
 
Volume (Bcf)
 
 
 
2015
 
2014
NJNG
Futures
 
25.8

(1) 
17.3

NJRES
Futures
 
(91.1
)
 
(62.1
)
 
Financial Options
 
1.2

 
1.2

 
Physical
 
48.2

 
28.6


(1)
Not included is the notional amount of $125 million related to NJNG’s treasury lock agreement.
Schedule of Broker Margin Accounts by Company
The Company maintains separate broker margin accounts for NJNG and NJRES. The balances as of September 30, by company, are as follows:
(Thousands)
Balance Sheet Location
2015
2014
NJNG
Broker margin - Current assets
$
12,990

$
1,057

NJRES
Broker margin - Current (liabilities) assets
$
(4,103
)
$
26,282
Summary of Gross Credit Exposures
The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of September 30, 2015. Internally-rated exposure applies to counterparties that are not rated by S&P or Moody's. In these cases, the Company's or guarantor's financial statements are reviewed, and similar methodologies and ratios used by S&P and/or Moody's are applied to arrive at a substitute rating. Gross credit exposure is defined as the unrealized fair value of physical and financial derivative commodity contracts, plus any outstanding wholesale receivable for the value of natural gas delivered and/or financial derivative commodity contract that has settled for which payment has not yet been received. The amounts presented below have not been reduced by any collateral received or netting and exclude accounts receivable for NJNG retail natural gas sales and services.
(Thousands)
Gross Credit
Exposure
Investment grade
 
$
103,706

 
Noninvestment grade
 
10,655

 
Internally-rated investment grade
 
8,168

 
Internally-rated noninvestment grade
 
8,751

 
Total
 
$
131,280