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DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended
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Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Fair Value of Derivative Assets and Liabilities | The following table reflects the fair value of the Company’s derivative assets and liabilities recognized on the Consolidated Balance Sheets as of September 30:
|  |  | Fair Value
|  |  | 2018 |  | 2017
(Thousands) | Balance Sheet Location | Asset Derivatives | Liability Derivatives | Asset Derivatives | Liability Derivatives
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |
Natural Gas Distribution: |  |  |  |  |  |  |  |  |
Physical commodity contracts | Derivatives - current |  | $ | 85 |  |  | $ | 192 |  |  | $ | 151 |  |  | $ | 72 |
Financial commodity contracts | Derivatives - current |  | 94 |  |  | — |  |  | — |  |  | 1,149 |
Interest rate contracts (1) | Derivatives - current |  | — |  |  | — |  |  | — |  |  | 8,467 |
Energy Services: |  |  |  |  |  |  |  |  |
Physical commodity contracts | Derivatives - current |  | 7,667 |  |  | 18,158 |  |  | 14,588 |  |  | 16,589 |
| Derivatives - noncurrent |  | 3,930 |  |  | 11,316 |  |  | 7,127 |  |  | 8,710 |
Financial commodity contracts | Derivatives - current |  | 19,169 |  |  | 28,176 |  |  | 15,302 |  |  | 20,267 |
| Derivatives - noncurrent |  | 6,630 |  |  | 11,548 |  |  | 2,033 |  |  | 2,620 |
Foreign currency contracts | Derivatives - current |  | — |  |  | 126 |  |  | 40 |  |  | — |
| Derivatives - noncurrent |  | — |  |  | 118 |  |  | 4 |  |  | — |
Home Services and Other: |  |  |  |  |  |  |  |  |
Interest rate contracts | Derivatives - current |  | 381 |  |  | — |  |  | — |  |  | — |
Total fair value of derivatives |  |  | $ | 37,956 |  |  | $ | 69,634 |  |  | $ | 39,245 |  |  | $ | 57,874 |
(1) | Includes treasury lock which was settled in March 2018. See Note 8. Debt for more information.
Offsetting Assets | The following table summarizes the reported gross amounts, the amounts that the Company has the right to offset but elects not to, financial collateral and the net amounts the Company could present on the 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 September 30, 2018: |  |  |  |  |  |  |  |
Derivative assets: |  |  |  |  |  |  |  |
Energy Services |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 11,597 |  |  | $ | (3,944 | ) |  | $ | (200 | ) |  | $ | 7,453 |
Financial commodity contracts |  | 25,799 |  |  | (18,775 | ) |  | — |  |  | 7,024 |
Total Energy Services |  | $ | 37,396 |  |  | $ | (22,719 | ) |  | $ | (200 | ) |  | $ | 14,477 |
Natural Gas Distribution |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 85 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | 82 |
Financial commodity contracts |  | 94 |  |  | — |  |  | (94 | ) |  | — |
Total Natural Gas Distribution |  | $ | 179 |  |  | $ | (3 | ) |  | $ | (94 | ) |  | $ | 82 |
Home Services and Other |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | 381 |  |  | $ | — |  |  | $ | — |  |  | $ | 381 |
Total Home Services and Other |  | $ | 381 |  |  | $ | — |  |  | $ | — |  |  | $ | 381 |
Derivative liabilities: |  |  |  |  |  |  |  |
Energy Services |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 29,474 |  |  | $ | (3,944 | ) |  | $ | — |  |  | $ | 25,530 |
Financial commodity contracts |  | 39,724 |  |  | (18,775 | ) |  | (20,949 | ) |  | — |
Foreign currency contracts |  | 244 |  |  | — |  |  | — |  |  | 244 |
Total Energy Services |  | $ | 69,442 |  |  | $ | (22,719 | ) |  | $ | (20,949 | ) |  | $ | 25,774 |
Natural Gas Distribution |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 192 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | 189 |
Total Natural Gas Distribution |  | $ | 192 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | 189 |
As of September 30, 2017: |  |  |  |  |  |  |  |
Derivative assets: |  |  |  |  |  |  |  |
Energy Services |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 21,715 |  |  | $ | (2,173 | ) |  | $ | (200 | ) |  | $ | 19,342 |
Financial commodity contracts |  | 17,335 |  |  | (14,121 | ) |  | — |  |  | 3,214 |
Foreign currency contracts |  | 44 |  |  | — |  |  | — |  |  | 44 |
Total Energy Services |  | $ | 39,094 |  |  | $ | (16,294 | ) |  | $ | (200 | ) |  | $ | 22,600 |
Natural Gas Distribution |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 151 |  |  | $ | (20 | ) |  | $ | — |  |  | $ | 131 |
Total Natural Gas Distribution |  | $ | 151 |  |  | $ | (20 | ) |  | $ | — |  |  | $ | 131 |
Derivative liabilities: |  |  |  |  |  |  |  |
Energy Services |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 25,299 |  |  | $ | (2,173 | ) |  | $ | — |  |  | $ | 23,126 |
Financial commodity contracts |  | 22,887 |  |  | (14,121 | ) |  | (8,766 | ) |  | — |
Total Energy Services |  | $ | 48,186 |  |  | $ | (16,294 | ) |  | $ | (8,766 | ) |  | $ | 23,126 |
Natural Gas Distribution |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 72 |  |  | $ | (20 | ) |  | $ | — |  |  | $ | 52 |
Financial commodity contracts |  | 1,149 |  |  | — |  |  | (1,149 | ) |  | — |
Interest rate contracts |  | 8,467 |  |  | — |  |  | — |  |  | 8,467 |
Total Natural Gas Distribution |  | $ | 9,688 |  |  | $ | (20 | ) |  | $ | (1,149 | ) |  | $ | 8,519 |
(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 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 the Company has the right to offset but elects not to, financial collateral and the net amounts the Company could present on the 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 September 30, 2018: |  |  |  |  |  |  |  |
Derivative assets: |  |  |  |  |  |  |  |
Energy Services |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 11,597 |  |  | $ | (3,944 | ) |  | $ | (200 | ) |  | $ | 7,453 |
Financial commodity contracts |  | 25,799 |  |  | (18,775 | ) |  | — |  |  | 7,024 |
Total Energy Services |  | $ | 37,396 |  |  | $ | (22,719 | ) |  | $ | (200 | ) |  | $ | 14,477 |
Natural Gas Distribution |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 85 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | 82 |
Financial commodity contracts |  | 94 |  |  | — |  |  | (94 | ) |  | — |
Total Natural Gas Distribution |  | $ | 179 |  |  | $ | (3 | ) |  | $ | (94 | ) |  | $ | 82 |
Home Services and Other |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | 381 |  |  | $ | — |  |  | $ | — |  |  | $ | 381 |
Total Home Services and Other |  | $ | 381 |  |  | $ | — |  |  | $ | — |  |  | $ | 381 |
Derivative liabilities: |  |  |  |  |  |  |  |
Energy Services |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 29,474 |  |  | $ | (3,944 | ) |  | $ | — |  |  | $ | 25,530 |
Financial commodity contracts |  | 39,724 |  |  | (18,775 | ) |  | (20,949 | ) |  | — |
Foreign currency contracts |  | 244 |  |  | — |  |  | — |  |  | 244 |
Total Energy Services |  | $ | 69,442 |  |  | $ | (22,719 | ) |  | $ | (20,949 | ) |  | $ | 25,774 |
Natural Gas Distribution |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 192 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | 189 |
Total Natural Gas Distribution |  | $ | 192 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | 189 |
As of September 30, 2017: |  |  |  |  |  |  |  |
Derivative assets: |  |  |  |  |  |  |  |
Energy Services |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 21,715 |  |  | $ | (2,173 | ) |  | $ | (200 | ) |  | $ | 19,342 |
Financial commodity contracts |  | 17,335 |  |  | (14,121 | ) |  | — |  |  | 3,214 |
Foreign currency contracts |  | 44 |  |  | — |  |  | — |  |  | 44 |
Total Energy Services |  | $ | 39,094 |  |  | $ | (16,294 | ) |  | $ | (200 | ) |  | $ | 22,600 |
Natural Gas Distribution |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 151 |  |  | $ | (20 | ) |  | $ | — |  |  | $ | 131 |
Total Natural Gas Distribution |  | $ | 151 |  |  | $ | (20 | ) |  | $ | — |  |  | $ | 131 |
Derivative liabilities: |  |  |  |  |  |  |  |
Energy Services |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 25,299 |  |  | $ | (2,173 | ) |  | $ | — |  |  | $ | 23,126 |
Financial commodity contracts |  | 22,887 |  |  | (14,121 | ) |  | (8,766 | ) |  | — |
Total Energy Services |  | $ | 48,186 |  |  | $ | (16,294 | ) |  | $ | (8,766 | ) |  | $ | 23,126 |
Natural Gas Distribution |  |  |  |  |  |  |  |
Physical commodity contracts |  | $ | 72 |  |  | $ | (20 | ) |  | $ | — |  |  | $ | 52 |
Financial commodity contracts |  | 1,149 |  |  | — |  |  | (1,149 | ) |  | — |
Interest rate contracts |  | 8,467 |  |  | — |  |  | — |  |  | 8,467 |
Total Natural Gas Distribution |  | $ | 9,688 |  |  | $ | (20 | ) |  | $ | (1,149 | ) |  | $ | 8,519 |
(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 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 the Consolidated Statements of Operations | The following table reflects the effect of derivative instruments on the Consolidated Statements of Operations as of September 30:
(Thousands) | Location of gain (loss) recognized in income on derivatives | Amount of gain (loss) recognized in income on derivatives
Derivatives not designated as hedging instruments: | 2018 |  | 2017 |  | 2016
Energy Services: |  |  |  |  |  |
Physical commodity contracts | Operating revenues | $ | (9,311 | ) |  | $ | 8,912 |  |  | $ | 33,034 |
Physical commodity contracts | Gas purchases | (197 | ) |  | (27,461 | ) |  | (45,637 | )
Financial commodity contracts | Gas purchases | (24,622 | ) |  | 26,563 |  |  | 45,579 |
Foreign currency contracts | Gas purchases | (379 | ) |  | 41 |  |  | (34 | )
Home Services and Other: |  |  |  |  |  |
Interest rate contracts | Interest expense | 334 |  |  | — |  |  | — |
Total unrealized and realized gains (losses) | $ | (34,175 | ) |  | $ | 8,055 |  |  | $ | 32,942 |
The following table reflects the (losses) gains associated with NJNG’s derivative instruments as of September 30:
(Thousands) | 2018 |  | 2017 |  | 2016
Natural Gas Distribution: |  |  |  |  |
Physical commodity contracts | $ | 1,232 |  |  | $ | (12,303 | ) |  | $ | (15,756 | )
Financial commodity contracts | 1,844 |  |  | 5,595 |  |  | (7,984 | )
Interest rate contracts | 8,467 |  |  | 14,606 |  |  | (18,845 | )
Total unrealized and realized (losses) gains | $ | 11,543 |  |  | $ | 7,898 |  |  | $ | (42,585 | )
Schedule of Outstanding Long (Short) Derivatives | NJNG and Energy Services had the following outstanding long (short) derivatives as of September 30:
|  |  | Volume (Bcf)
|  |  | 2018 |  | 2017
Natural Gas Distribution | Futures |  | 27.9 |  |  | 18.2 |
| Physical |  | 23.1 |  |  | 32.1 |
Energy Services | Futures |  | (7.0 | ) |  | (16.4 | )
| Physical |  | 51.2 |  |  | (13.1 | )
Schedule of Due to (from) Broker-Dealers and Clearing Organizations | The balances as of September 30, by segment, are as follows:
(Thousands) | Balance Sheet Location | 2018 | 2017
Natural Gas Distribution | Broker margin - Current assets | $ | 2,038 |  | $ | 2,661 |
Energy Services | Broker margin - Current assets | $ | 51,681 |  | $ | 23,166 |
Schedules of Concentration of Risk, by Risk Factor | The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of September 30, 2018.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 Clean Energy Ventures residential solar installations.
(Thousands) | Gross Credit Exposure
Investment grade |  | $ | 179,982 |  |
Noninvestment grade |  | 43,486 |  |
Internally-rated investment grade |  | 30,786 |  |
Internally-rated noninvestment grade |  | 25,750 |  |
Total |  | $ | 280,004 |  |

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