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DERIVATIVE INSTRUMENTS (Tables)
 3 Months Ended
Dec. 31, 2016
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, 2016
 
September 30, 2016
(Thousands)
Balance Sheet Location
Asset
Derivatives
Liability
Derivatives
Asset
Derivatives
Liability
Derivatives
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
NJNG:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
$
1,181

 
$
76

 
$
235

 
$
1,154

Financial commodity contracts
Derivatives - current
 
13,931

 
2,919

 
805

 
2,979

 
Derivatives - noncurrent
 
—

 
—

 
75

 
386

Interest rate contracts
Derivatives - noncurrent
 
—

 
2,702

 
—

 
23,073

NJRES:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
5,477

 
5,978

 
5,994

 
11,660

 
Derivatives - noncurrent
 
2,192

 
1,193

 
3,987

 
1,212

Financial commodity contracts
Derivatives - current
 
29,626

 
84,016

 
22,929

 
45,255

 
Derivatives - noncurrent
 
1,468

 
632

 
1,165

 
581

Foreign currency contracts
Derivatives - current
 
—

 
91

 
1

 
32

Fair value of derivatives not designated as hedging instruments
 
$
53,875

 
$
97,607

 
$
35,191

 
$
86,332

Total fair value of derivatives
 
 
$
53,875

 
$
97,607

 
$
35,191

 
$
86,332
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, 2016:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
7,669

 
$
(3,278
)
 
$
(200
)
 
$
4,191

Financial commodity contracts
 
31,094

 
(31,094
)
 
—

 
—

Total NJRES
 
$
38,763

 
$
(34,372
)
 
$
(200
)
 
$
4,191

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
1,181

 
$
(4
)
 
$
—

 
$
1,177

Financial commodity contracts
 
13,931

 
(2,919
)
 
(4,205
)
 
6,807

Total NJNG
 
$
15,112

 
$
(2,923
)
 
$
(4,205
)
 
$
7,984

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
7,171

 
$
(3,278
)
 
$
—

 
$
3,893

Financial commodity contracts
 
84,648

 
(31,093
)
 
(53,555
)
 
—

Foreign currency contracts
 
91

 
—

 
—

 
91

Total NJRES
 
$
91,910

 
$
(34,371
)
 
$
(53,555
)
 
$
3,984

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
76

 
$
(4
)
 
$
—

 
$
72

Financial commodity contracts
 
2,919

 
(2,919
)
 
—

 
—

Interest rate contracts
 
2,702

 
—

 
—

 
2,702

Total NJNG
 
$
5,697

 
$
(2,923
)
 
$
—

 
$
2,774

As of September 30, 2016:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
9,981

 
$
(2,837
)
 
$
(755
)
 
$
6,389

Financial commodity contracts
 
24,094

 
(17,945
)
 
(6,149
)
 
—

Foreign currency contracts
 
1

 
(1
)
 
—

 
—

Total NJRES
 
$
34,076

 
$
(20,783
)
 
$
(6,904
)
 
$
6,389

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
235

 
$
(31
)
 
$
—

 
$
204

Financial commodity contracts
 
880

 
(880
)
 
—

 
—

Total NJNG
 
$
1,115

 
$
(911
)
 
$
—

 
$
204

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
12,872

 
$
(2,837
)
 
$
1,200

 
$
11,235

Financial commodity contracts
 
45,836

 
(17,945
)
 
(27,891
)
 
—

Foreign currency contracts
 
32

 
(1
)
 
—

 
31

Total NJRES
 
$
58,740

 
$
(20,783
)
 
$
(26,691
)
 
$
11,266

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
1,154

 
$
(31
)
 
$
—

 
$
1,123

Financial commodity contracts
 
3,365

 
(880
)
 
(2,485
)
 
—

Interest rate contracts
 
23,073

 
—

 
—

 
23,073

Total NJNG
 
$
27,592

 
$
(911
)
 
$
(2,485
)
 
$
24,196

(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)
Includes 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 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, 2016:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
7,669

 
$
(3,278
)
 
$
(200
)
 
$
4,191

Financial commodity contracts
 
31,094

 
(31,094
)
 
—

 
—

Total NJRES
 
$
38,763

 
$
(34,372
)
 
$
(200
)
 
$
4,191

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
1,181

 
$
(4
)
 
$
—

 
$
1,177

Financial commodity contracts
 
13,931

 
(2,919
)
 
(4,205
)
 
6,807

Total NJNG
 
$
15,112

 
$
(2,923
)
 
$
(4,205
)
 
$
7,984

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
7,171

 
$
(3,278
)
 
$
—

 
$
3,893

Financial commodity contracts
 
84,648

 
(31,093
)
 
(53,555
)
 
—

Foreign currency contracts
 
91

 
—

 
—

 
91

Total NJRES
 
$
91,910

 
$
(34,371
)
 
$
(53,555
)
 
$
3,984

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
76

 
$
(4
)
 
$
—

 
$
72

Financial commodity contracts
 
2,919

 
(2,919
)
 
—

 
—

Interest rate contracts
 
2,702

 
—

 
—

 
2,702

Total NJNG
 
$
5,697

 
$
(2,923
)
 
$
—

 
$
2,774

As of September 30, 2016:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
9,981

 
$
(2,837
)
 
$
(755
)
 
$
6,389

Financial commodity contracts
 
24,094

 
(17,945
)
 
(6,149
)
 
—

Foreign currency contracts
 
1

 
(1
)
 
—

 
—

Total NJRES
 
$
34,076

 
$
(20,783
)
 
$
(6,904
)
 
$
6,389

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
235

 
$
(31
)
 
$
—

 
$
204

Financial commodity contracts
 
880

 
(880
)
 
—

 
—

Total NJNG
 
$
1,115

 
$
(911
)
 
$
—

 
$
204

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
12,872

 
$
(2,837
)
 
$
1,200

 
$
11,235

Financial commodity contracts
 
45,836

 
(17,945
)
 
(27,891
)
 
—

Foreign currency contracts
 
32

 
(1
)
 
—

 
31

Total NJRES
 
$
58,740

 
$
(20,783
)
 
$
(26,691
)
 
$
11,266

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
1,154

 
$
(31
)
 
$
—

 
$
1,123

Financial commodity contracts
 
3,365

 
(880
)
 
(2,485
)
 
—

Interest rate contracts
 
23,073

 
—

 
—

 
23,073

Total NJNG
 
$
27,592

 
$
(911
)
 
$
(2,485
)
 
$
24,196

(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)
Includes 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 Consolidated Statements of Operations
The following table reflects the gains (losses) associated with NJNG's derivative instruments as of:
 
Three Months Ended
 
December 31,
(Thousands)
2016
 
2015
NJNG:
 
 
 
Physical commodity contracts
$
1,050

 
$
—

Financial commodity contracts
11,178

 
(5,635
)
Interest rate contracts
20,371

 
2,366

Total unrealized and realized gains (losses)
$
32,599

 
$
(3,269
)
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:
2016
 
2015
NJRES:
 
 
 
 
Physical commodity contracts
Operating revenues
$
1,743

 
$
11,874

Physical commodity contracts
Gas purchases
(8,799
)
 
(21,237
)
Financial commodity contracts
Gas purchases
(30,611
)
 
41,276

Foreign currency contracts
Gas purchases
(86
)
 
—

Total unrealized and realized (losses) gains
$
(37,753
)
 
$
31,913
Effect of Derivative Instruments Designated as Cash Flow Hedges on OCI
The following table reflects the effect of derivative instruments that were designated as cash flow hedges on OCI during the three months ended December 31, 2015:
(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)
Foreign currency contracts
$
(64
)
$
12
Schedule of Outstanding Long (Short) Derivatives
NJNG and NJRES had the following outstanding long (short) derivatives as of:
 
 
 
Volume (Bcf)
 
 
 
December 31,
2016
 
September 30,
2016
NJNG
Futures
 
24.3

 
23.6

 
Physical
 
4.4

 
9.2

NJRES
Futures
 
(76.4
)
 
(79.1
)
 
Options
 
0.5

 
1.2

 
Physical
 
70.4

 
94.6



Not included in the previous table are NJRES' gross notional amount of foreign currency transactions of approximately $3.7 million, NJNG’s treasury lock agreement as previously discussed and 179,000 SRECs at NJRES that are open as of December 31, 2016.
Schedule of Broker Margin Accounts by Company
The balances by company, are as follows:
(Thousands)
Balance Sheet Location
December 31,
2016
September 30,
2016
NJNG
Broker margin - Current assets
$
—

$
4,822

 
Broker margin - Current (liabilities)
$
(5,294
)
$
—

NJRES
Broker margin - Current assets
$
79,118

$
42,822
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, 2016. 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
 
$
200,025

 
Noninvestment grade
 
40,457

 
Internally rated investment grade
 
14,769

 
Internally rated noninvestment grade
 
23,082

 
Total
 
$
278,333