XML 41 R26.htm IDEA: XBRL DOCUMENT v3.7.0.1
DERIVATIVE INSTRUMENTS (Tables)
 9 Months Ended
Jun. 30, 2017
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
 
 
June 30, 2017
 
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
 
$
92

 
$
15

 
$
235

 
$
1,154

Financial commodity contracts
Derivatives - current
 
21

 
925

 
805

 
2,979

 
Derivatives - noncurrent
 
—

 
—

 
75

 
386

Interest rate contracts
Derivatives - current
 
—

 
8,594

 
—

 
—

Interest rate contracts
Derivatives - noncurrent
 
—

 
—

 
—

 
23,073

NJRES:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
5,205

 
3,851

 
5,994

 
11,660

 
Derivatives - noncurrent
 
4,917

 
1,443

 
3,987

 
1,212

Financial commodity contracts
Derivatives - current
 
19,384

 
14,217

 
22,929

 
45,255

 
Derivatives - noncurrent
 
998

 
1,150

 
1,165

 
581

Foreign currency contracts
Derivatives - current
 
16

 
—

 
1

 
32

Fair value of derivatives not designated as hedging instruments
 
$
30,633

 
$
30,195

 
$
35,191

 
$
86,332

Total fair value of derivatives
 
 
$
30,633

 
$
30,195

 
$
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 June 30, 2017:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
10,122

 
$
(1,496
)
 
$
(200
)
 
$
8,426

Financial commodity contracts
 
20,382

 
(15,367
)
 
(4,843
)
 
172

Foreign currency contracts
 
16

 
—

 
—

 
16

Total NJRES
 
$
30,520

 
$
(16,863
)
 
$
(5,043
)
 
$
8,614

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
92

 
$
(3
)
 
$
—

 
$
89

Financial commodity contracts
 
21

 
(21
)
 
—

 
—

Total NJNG
 
$
113

 
$
(24
)
 
$
—

 
$
89

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
5,294

 
$
(1,496
)
 
$
—

 
$
3,798

Financial commodity contracts
 
15,367

 
(15,367
)
 
—

 
—

Total NJRES
 
$
20,661

 
$
(16,863
)
 
$
—

 
$
3,798

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
15

 
$
(3
)
 
$
—

 
$
12

Financial commodity contracts
 
925

 
(21
)
 
(904
)
 
—

Interest rate contracts
 
8,594

 
—

 
—

 
8,594

Total NJNG
 
$
9,534

 
$
(24
)
 
$
(904
)
 
$
8,606

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 June 30, 2017:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
10,122

 
$
(1,496
)
 
$
(200
)
 
$
8,426

Financial commodity contracts
 
20,382

 
(15,367
)
 
(4,843
)
 
172

Foreign currency contracts
 
16

 
—

 
—

 
16

Total NJRES
 
$
30,520

 
$
(16,863
)
 
$
(5,043
)
 
$
8,614

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
92

 
$
(3
)
 
$
—

 
$
89

Financial commodity contracts
 
21

 
(21
)
 
—

 
—

Total NJNG
 
$
113

 
$
(24
)
 
$
—

 
$
89

Derivative liabilities:
 
 
 
 
 
 
 
 
NJRES
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
5,294

 
$
(1,496
)
 
$
—

 
$
3,798

Financial commodity contracts
 
15,367

 
(15,367
)
 
—

 
—

Total NJRES
 
$
20,661

 
$
(16,863
)
 
$
—

 
$
3,798

NJNG
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
15

 
$
(3
)
 
$
—

 
$
12

Financial commodity contracts
 
925

 
(21
)
 
(904
)
 
—

Interest rate contracts
 
8,594

 
—

 
—

 
8,594

Total NJNG
 
$
9,534

 
$
(24
)
 
$
(904
)
 
$
8,606

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 (losses) gains associated with NJNG's derivative instruments as of:
 
Three Months Ended
Nine Months Ended
 
June 30,
June 30,
(Thousands)
2017
 
2016
2017
 
2016
NJNG:
 
 
 
 
 
 
Physical commodity contracts
$
(301
)
 
$
(236
)
$
(3,031
)
 
$
(14,764
)
Financial commodity contracts
(4,232
)
 
4,937

6,528

 
(5,849
)
Interest rate contracts
(4,203
)
 
(9,700
)
14,478

 
(18,405
)
Total unrealized and realized (losses) gains
$
(8,736
)
 
$
(4,999
)
$
17,975

 
$
(39,018
)
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
Nine Months Ended
 
 
June 30,
June 30,
Derivatives not designated as hedging instruments:
2017
 
2016
2017
 
2016
NJRES:
 
 
 
 
 
 
 
Physical commodity contracts
Operating revenues
$
1,364

 
$
3,997

$
8,089

 
$
24,999

Physical commodity contracts
Gas purchases
(1,131
)
 
(2,463
)
(13,912
)
 
(29,283
)
Financial commodity contracts
Gas purchases
22,004

 
(39,653
)
29,514

 
23,443

Foreign currency contracts
Gas purchases
9

 
—

(24
)
 
—

Total unrealized and realized gains (losses)
$
22,246

 
$
(38,119
)
$
23,667

 
$
19,159
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 in OCI during the three and nine months ended June 30, 2016:
(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)
June 30, 2016
Three Months Ended
Nine Months Ended
Three Months Ended
Nine Months Ended
Foreign currency contracts
$
8

$
(27
)
$
(15
)
$
27
Schedule of Outstanding Long (Short) Derivatives
NJNG and NJRES had the following outstanding long (short) derivatives as of:
 
 
 
Volume (Bcf)
 
 
 
June 30,
2017
 
September 30,
2016
NJNG
Futures
 
21.9

 
23.6

 
Physical
 
4.9

 
9.2

NJRES
Futures
 
(89.3
)
 
(79.1
)
 
Options
 
—

 
1.2

 
Physical
 
56.8

 
94.6
Schedule of Broker Margin Accounts by Company
The balances by company are as follows:
(Thousands)
Balance Sheet Location
June 30,
2017
September 30,
2016
NJNG
Broker margin - Current assets
$
4,178

$
4,822

NJRES
Broker margin - Current assets
$
15,965

$
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 June 30, 2017. 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
 
$
135,334

 
Noninvestment grade
 
20,009

 
Internally rated investment grade
 
13,892

 
Internally rated noninvestment grade
 
31,970

 
Total
 
$
201,205