XML 40 R25.htm IDEA: XBRL DOCUMENT v3.3.1.900
DERIVATIVE INSTRUMENTS (Tables)
 3 Months Ended
Dec. 31, 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 Unaudited Condensed Consolidated Balance Sheets as of:
 
 
 
Fair Value
 
 
 
December 31, 2015
 
September 30, 2015
(Thousands)
Balance Sheet Location
Asset
Derivatives
Liability
Derivatives
Asset
Derivatives
Liability
Derivatives
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
NJRES:
 
 
 
 
 
 
 
 
 
Foreign currency contracts
Derivatives - current
 
$
—

 
$
52

 
$
—

 
$
—

Fair value of derivatives designated as hedging instruments
 
$
—

 
$
52

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
NJNG:
 
 
 
 
 
 
 
 
 
Financial commodity contracts
Derivatives - current
 
$
820

 
$
13,819

 
$
207

 
$
10,163

 
Derivatives - noncurrent
 
—

 
—

 
—

 
925

Interest rate contracts
Derivatives - noncurrent
 
$
—

 
$
1,861

 
$
—

 
$
4,228

NJRES:
 
 
 
 
 
 
 
 
 
Physical forward commodity contracts
Derivatives - current
 
$
9,844

 
$
22,333

 
$
4,854

 
$
9,281

 
Derivatives - noncurrent
 
3,045

 
650

 
1,718

 
—

Financial commodity contracts
Derivatives - current
 
48,314

 
15,675

 
35,682

 
13,347

 
Derivatives - noncurrent
 
696

 
95

 
2,626

 
386

Fair value of derivatives not designated as hedging instruments
 
$
62,719

 
$
54,433

 
$
45,087

 
$
38,330

Total fair value of derivatives
 
 
$
62,719

 
$
54,485

 
$
45,087

 
$
38,330
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 Unaudited Condensed 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 December 31, 2015:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
12,889

 
$
(809
)
 
$
(1,000
)
 
$
11,080

Financial commodity contracts
 
49,010

 
(13,004
)
 
(25,136
)
 
10,870

Total NJRES
 
$
61,899

 
$
(13,813
)
 
$
(26,136
)
 
$
21,950

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
820

 
$
(820
)
 
$
—

 
$
—

Total NJNG
 
820

 
(820
)
 
—

 
—

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
22,983

 
$
(809
)
 
$
(1,200
)
 
$
20,974

Financial commodity contracts
 
15,770

 
(13,004
)
 
(2,766
)
 
—

Foreign currency contracts
 
52

 
—

 
—

 
52

Total NJRES
 
$
38,805

 
$
(13,813
)
 
$
(3,966
)
 
$
21,026

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
13,819

 
$
(820
)
 
$
(12,999
)
 
$
—

Interest rate contracts
 
$
1,861

 
$
—

 
$
—

 
$
1,861

Total NJNG
 
$
15,680

 
$
(820
)
 
$
(12,999
)
 
$
1,861

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
)
 
$
—

 
$
—

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

(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 FCM's 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 Unaudited Condensed 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 December 31, 2015:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
12,889

 
$
(809
)
 
$
(1,000
)
 
$
11,080

Financial commodity contracts
 
49,010

 
(13,004
)
 
(25,136
)
 
10,870

Total NJRES
 
$
61,899

 
$
(13,813
)
 
$
(26,136
)
 
$
21,950

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
820

 
$
(820
)
 
$
—

 
$
—

Total NJNG
 
820

 
(820
)
 
—

 
—

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical forward commodity contracts
 
$
22,983

 
$
(809
)
 
$
(1,200
)
 
$
20,974

Financial commodity contracts
 
15,770

 
(13,004
)
 
(2,766
)
 
—

Foreign currency contracts
 
52

 
—

 
—

 
52

Total NJRES
 
$
38,805

 
$
(13,813
)
 
$
(3,966
)
 
$
21,026

NJNG
 
 
 
 
 
 
 
 
Financial commodity contracts
 
$
13,819

 
$
(820
)
 
$
(12,999
)
 
$
—

Interest rate contracts
 
$
1,861

 
$
—

 
$
—

 
$
1,861

Total NJNG
 
$
15,680

 
$
(820
)
 
$
(12,999
)
 
$
1,861

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
)
 
$
—

 
$
—

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

(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 FCM's 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 Consolidated Statements of Operations
The following table reflects the effect of derivative instruments on the Unaudited Condensed Consolidated Statements of Operations as of:
(Thousands)
Location of gain (loss) recognized in income on derivatives
Amount of gain (loss) recognized
in income on derivatives
 
 
Three Months Ended
 
 
December 31,
Derivatives not designated as hedging instruments:
2015
 
2014
NJRES:
 
 
 
 
Physical commodity contracts
Operating revenues
$
11,874

 
$
16,091

Physical commodity contracts
Gas purchases
(21,237
)
 
(19,856
)
Financial commodity contracts
Gas purchases
41,276

 
117,721

Total unrealized and realized gains
$
31,913

 
$
113,956
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 December 31:
(Thousands)
Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)
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)
 
Three Months Ended
Three Months Ended
Three Months Ended
 
December 31,
December 31,
December 31,
Derivatives in cash flow hedging relationships:
2015
2014
2015
2014
2015
2014
Foreign currency contracts
$
(64
)
$
(24
)
$
12

$
(25
)
$
—

$
—
Schedule of Outstanding Long (Short) Derivatives
NJNG and NJRES had the following outstanding long (short) derivatives as of:
 
 
 
Volume (Bcf)
 
 
 
December 31,
2015
 
September 30,
2015
NJNG
Futures(1)
 
19.5

 
25.8

NJRES
Futures
 
(120.8
)
 
(91.1
)
 
Options
 
5.8

 
1.2

 
Physical
 
111.7

 
48.2


(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 balances by company, are as follows:
(Thousands)
Balance Sheet Location
December 31,
2015
September 30,
2015
NJNG
Broker margin - Current assets
$
17,487

$
12,990

NJRES
Broker margin - Current assets
$
3,847

$
—

 
Broker margin - Current (liabilities)
$
(19,307
)
$
(4,103
)
Summary of Gross Credit Exposures
The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of December 31, 2015. 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 and NJRCEV residential solar installations.
(Thousands)
Gross Credit Exposure
Investment grade
 
$
99,405

 
Noninvestment grade
 
9,693

 
Internally rated investment grade
 
22,507

 
Internally rated noninvestment grade
 
7,815

 
Total
 
$
139,420