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ASSET RETIREMENT OBLIGATIONS

12 Months Ended

Sep. 30, 2016

Asset Retirement Obligation Disclosure [Abstract]

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS

The Company recognizes AROs when the legal obligation to retire an asset has been incurred and a reasonable estimate of fair value can be made. Accordingly, NJR recognizes AROs related to the costs associated with cutting and capping its main and service gas distribution pipelines of NJNG, which is required by New Jersey law when taking such gas distribution pipeline out of service. NJR also recognizes AROs related to NJRCEV’s solar and wind assets when there are decommissioning provisions in NJRCEV’s lease agreements that require removal of the asset.

Accretion amounts associated with NJNG’s ARO are not reflected as an expense, but rather are deferred as a regulatory asset and netted against NJNG’s regulatory liabilities, for presentation purposes, on the Consolidated Balance Sheets. Accretion amounts associated with NJRCEV’s ARO are recognized as a component of operations and maintenance expense on NJR’s Consolidated Statements of Operations.

The following is an analysis of the change in the Company’s AROs for the fiscal year ended September 30:

(Thousands)	2016				2015
Balance at October 1	$	19,145			$	30,495
Accretion	1,206				2,262
Additions	3,111				2,185
Revisions in estimated cash flows	5,320				(14,763		)
Retirements	(403		)		(1,034		)
Balance at period end	$	28,379			$	19,145

During fiscal 2016, NJNG revised its retirement assumptions to reflect increase in inflation rates and construction costs. These increases, were discounted using the current credit adjusted risk free rate, resulting in an increase of approximately $5.3 million to the ARO liability. The $14.8 million decrease during fiscal 2015, was due primarily to changes in retirement assumptions, which reflected a more accurate projection of settlement of NJNG’s AROs associated with its main and service assets, and was more in line with the calculated survival curves used in a then recent depreciation study.

Accretion for the next five years is estimated to be as follows:

(Thousands)
Fiscal Year Ended September 30,	Estimated Accretion
2017		$	1,552
2018		1,639
2019		1,712
2020		1,789
2021		1,870
Total		$	8,562

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- References

No definition available.

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- Definition

The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 410
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6392692&loc=d3e7535-110849

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 410
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6392692&loc=d3e7569-110849

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