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COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended
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Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENT LIABILITIES | COMMITMENTS AND CONTINGENT LIABILITIES Cash Commitments NJNG has entered into long-term contracts, expiring at various dates through October 2033, for the supply, storage and transportation of natural gas. These contracts include annual fixed charges of approximately $85.6 million at current contract rates and volumes, which are recoverable through BGSS. For the purpose of securing storage and pipeline capacity, NJRES enters into storage and pipeline capacity contracts, which require the payment of certain demand charges by NJRES to maintain the ability to access such natural gas storage or pipeline capacity, during a fixed time period, which generally ranges from one to 10 years. Demand charges are established by interstate storage and pipeline operators and are regulated by FERC. These demand charges represent commitments to pay storage providers or pipeline companies for the right to store and/or transport natural gas utilizing their respective assets. Commitments as of September 30, 2016, for natural gas purchases and future demand fees for the next five fiscal year periods, are as follows:
(Thousands) | 2017 | 2018 | 2019 | 2020 | 2021 | Thereafter
NJRES: |  |  |  |  |  |
Natural gas purchases | $ | 224,853 |  | $ | 91,807 |  | $ | 51,561 |  | $ | — |  | $ | — |  | $ | — |
Storage demand fees | 34,674 |  | 16,833 |  | 9,924 |  | 7,638 |  | 4,834 |  | 3,194 |
Pipeline demand fees | 69,168 |  | 24,213 |  | 5,698 |  | 2,923 |  | 2,404 |  | 1,411 |
Sub-total NJRES | $ | 328,695 |  | $ | 132,853 |  | $ | 67,183 |  | $ | 10,561 |  | $ | 7,238 |  | $ | 4,605 |
NJNG: |  |  |  |  |  |
Natural gas purchases | $ | 85,196 |  | $ | 3,814 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |
Storage demand fees | 29,140 |  | 22,265 |  | 12,841 |  | 5,779 |  | — |  | — |
Pipeline demand fees | 56,452 |  | 90,672 |  | 90,821 |  | 89,928 |  | 87,225 |  | 731,182 |
Sub-total NJNG | $ | 170,788 |  | $ | 116,751 |  | $ | 103,662 |  | $ | 95,707 |  | $ | 87,225 |  | $ | 731,182 |
Total (1) | $ | 499,483 |  | $ | 249,604 |  | $ | 170,845 |  | $ | 106,268 |  | $ | 94,463 |  | $ | 735,787 |
(1) | Does not include amounts related to intercompany asset management agreements between NJRES and NJNG.
As of September 30, 2016, the Company’s future minimum lease payments under various operating leases will not be more than $2.3 million annually for the next five years and $33.2 million in the aggregate for all years thereafter. Guarantees As of September 30, 2016, there were NJR guarantees covering approximately $294.2 million of NJRES’ natural gas purchases and demand fee commitments not yet reflected in accounts payable on the Consolidated Balance Sheets. Legal Proceedings Manufactured Gas Plant Remediation NJNG is responsible for the remedial cleanup of five MGP sites, dating back to gas operations in the late 1800s and early 1900s, which contain contaminated residues from former gas manufacturing operations. NJNG is currently involved in administrative proceedings with the NJDEP, and participating in various studies and investigations by outside consultants, to determine the nature and extent of any such contaminated residues and to develop appropriate programs of remedial action, where warranted, under Administrative Consent Orders or Memoranda of Agreement with the NJDEP. NJNG may recover its remediation expenditures, including carrying costs, over rolling seven-year periods pursuant to a RA approved by the BPU. In May 2015, the BPU approved NJNG’s September 2014 filing, which requested approval of its MGP expenditures incurred through June 2014, with recovery of $8.5 million annually related to the SBC RA factor with rates effective June 1, 2015. On June 29, 2016, the BPU approved NJNG’s December 2015 filing, which requested approval of its MGP expenditures incurred through June 30, 2015, with recovery of $9.4 million annually related to the SBC RA factor with rates effective July 9, 2016. As of September 30, 2016, $19.6 million of previously incurred remediation costs, net of recoveries from customers and insurance proceeds, are included in regulatory assets on the Consolidated Balance Sheets. NJNG periodically, and at least annually, performs an environmental review of the MGP sites, including a review of potential liability for investigation and remedial action. NJNG estimated at the time of the most recent review that total future expenditures to remediate and monitor the five MGP sites for which it is responsible, including potential liabilities for Natural Resource Damages that might be brought by the NJDEP for alleged injury to groundwater or other natural resources concerning these sites, will range from approximately $143.9 million to $231.6 million. NJNG’s estimate of these liabilities is based upon known facts, existing technology and enacted laws and regulations in place when the review was completed. Where it is probable that costs will be incurred, and the information is sufficient to establish a range of possible liability, NJNG accrues the most likely amount in the range. If no point within the range is more likely than the other, it is NJNG’s policy to accrue the lower end of the range. Accordingly, as of September 30, 2016, NJNG recorded an MGP remediation liability and a corresponding regulatory asset of $172 million on the Consolidated Balance Sheets, based on the most likely amount. The actual costs to be incurred by NJNG are dependent upon several factors, including final determination of remedial action, changing technologies and governmental regulations, the ultimate ability of other responsible parties to pay and any insurance recoveries. NJNG will continue to seek recovery of MGP-related costs through the RA. If any future regulatory position indicates that the recovery of such costs is not probable, the related non-recoverable costs would be charged to income in the period of such determination. General On February 24, 2015, a natural gas fire and explosion occurred in Stafford Township, New Jersey as a result of a natural gas leak emanating from an underground pipe. There were no fatalities, although several employees of NJNG were injured and several homes were damaged. NJNG notified its insurance carrier and believes that any costs associated with the incident, including attorneys’ fees, property damage and other losses, will be substantially covered by insurance. The Company believes the resolution of any potential claims associated with the incident will not have a material effect on its financial condition, results of operations or cash flows. As of September 30, 2016, NJNG estimates that liabilities associated with claims will range between $600,000 and $3.2 million and has accrued the lower end of the range. The Company is party to various other claims, legal actions and complaints arising in the ordinary course of business. In the Company’s opinion, the ultimate disposition of these matters will not have a material effect on its financial condition, results of operations or cash flows.

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