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DEBT | 12 Months Ended
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Sep. 30, 2018
Debt Disclosure [Abstract] |
DEBT | 8. DEBT NJNG and NJR finance working capital requirements and capital expenditures through the issuance of various long-term debt and other financing arrangements, including unsecured credit and private placement debt shelf facilities. Amounts available under credit facilities are reduced by bank or commercial paper borrowings, as applicable, and any outstanding letters of credit. Long-term Debt The following table presents the long-term debt of the Company as of September 30:
(Thousands) | 2018 | 2017
NJNG |  |  |
First mortgage bonds: | Maturity date: |  |
5.60% | Series LL | May 15, 2018 | $ | — |  | $ | 125,000 |
Variable | Series MM | September 1, 2027 | 9,545 |  | 9,545 |
Variable | Series NN | August 1, 2035 | 41,000 |  | 41,000 |
Variable | Series OO | August 1, 2041 | 46,500 |  | 46,500 |
3.15% | Series PP | April 15, 2028 | 50,000 |  | 50,000 |
3.58% | Series QQ | March 13, 2024 | 70,000 |  | 70,000 |
4.61% | Series RR | March 13, 2044 | 55,000 |  | 55,000 |
2.82% | Series SS | April 15, 2025 | 50,000 |  | 50,000 |
3.66% | Series TT | April 15, 2045 | 100,000 |  | 100,000 |
3.63% | Series UU | June 21, 2046 | 125,000 |  | 125,000 |
4.01% | Series VV | May 11, 2048 | 125,000 |  | — |
Capital lease obligation-buildings | June 1, 2021 | 8,749 |  | 11,617 |
Capital lease obligation-meters | Various dates | 27,188 |  | 28,042 |
Less: Debt issuance costs |  | (6,515 | ) | (6,262 | )
Less: Current maturities of long-term debt |  | (9,502 | ) | (135,800 | )
Total NJNG long-term debt | 691,965 |  | 569,642 |
NJR |  |  |
2.51% | Unsecured senior notes | September 15, 2018 | — |  | 25,000 |
3.25% | Unsecured senior notes | September 17, 2022 | 50,000 |  | 50,000 |
3.48% | Unsecured senior notes | November 7, 2024 | 100,000 |  | 100,000 |
3.20% | Unsecured senior notes | August 18, 2023 | 50,000 |  | 50,000 |
3.54% | Unsecured senior notes | August 18, 2026 | 100,000 |  | 100,000 |
3.96% | Unsecured senior notes | June 8, 2028 | 100,000 |  | — |
Variable | Term loan | August 16, 2019 | 100,000 |  | 100,000 |
Less: Debt issuance costs |  | (1,136 | ) | (770 | )
Less: Current maturities of long-term debt |  | (100,000 | ) | (25,000 | )
Total NJR long-term debt | 398,864 |  | 399,230 |
Clean Energy Ventures |  |
Solar asset financing obligation | Various dates | 103,923 |  | 32,790 |
Less: Current maturities of long-term debt | (14,133 | ) | (4,582 | )
Total Clean Energy Ventures long-term debt | 89,790 |  | 28,208 |
Total long-term debt | $ | 1,180,619 |  | $ | 997,080 |
Annual long-term debt redemption requirements, excluding capital leases, debt issuance costs and solar asset financing obligations, as of September 30, are as follows:
(Thousands) | NJNG | NJR
2019 | $ | — |  | $ | 100,000 |
2020 | $ | — |  | $ | — |
2021 | $ | — |  | $ | — |
2022 | $ | — |  | $ | 50,000 |
2023 | $ | — |  | $ | 50,000 |
Thereafter | $ | 672,045 |  | $ | 300,000 |
NJNG First Mortgage Bonds NJNG and Trustee entered into the Mortgage Indenture, dated September 1, 2014, which secures all of the outstanding First Mortgage Bonds issued by NJNG. The Mortgage Indenture provides a direct first mortgage lien upon substantially all of the operating properties and franchises of NJNG (other than excepted property, such as cash on hand, choses-in-action, securities, rent, natural gas meters and certain materials, supplies, appliances and vehicles), subject only to certain permitted encumbrances. The Mortgage Indenture contains provisions subjecting after-acquired property (other than excepted property and subject to pre-existing liens, if any, at the time of acquisition) to the lien thereof. NJNG’s Mortgage Indenture no longer contains a restriction on NJNG’s ability to pay dividends. New Jersey Administrative Code 14:4-4.7 states that a public utility cannot issue dividends, without regulatory approval, if its equity to total capitalization ratio falls below 30 percent. As of September 30, 2018, NJNG’s equity to total capitalization ratio is 56.7 percent and has the ability to issue up to $1 billion of FMB under the terms of the Mortgage Indenture. NJNG has variable rate EDA Bonds with a total principal amount of $97 million and maturity dates ranging from September 2027 to August 2041. The EDA Bonds are not subject to optional tender while they bear interest at a LIBOR index rate. As of September 30, 2018, the interest rate on the EDA Bonds was 2.03 percent. In June 2016, NJNG entered into a Note Purchase Agreement, under which NJNG issued $125 million of its 3.63 percent senior notes due June 2046. The notes are secured by an equal principal amount of NJNG’s FMB (series UU) issued under NJNG’s Mortgage Indenture. The proceeds of the notes will be used for general corporate purposes, including, but not limited to, refinancing or retiring short-term debt and funding capital expenditures. On January 17, 2017, the Company completed the purchase of three FMBs in lieu of redemption with an aggregate principal amount totaling $35.8 million. The FMBs bore interest at rates ranging from 4.5 percent to 4.9 percent. The bonds purchased in lieu of redemption are being held by the Company to provide an opportunity to evaluate remarketing alternatives. On May 11, 2018, NJNG entered into a Note Purchase Agreement, under which NJNG issued $125 million, 4.01 percent senior notes due May 11, 2048. The interest rate includes the quoted March 9, 2018, 30-year treasury rate, plus a market based credit spread. The notes are secured by an equal principal amount of NJNG's FMB (series VV) issued under NJNG's Mortgage Indenture. In June 2015, NJNG entered into a treasury lock transaction to fix a benchmark treasury rate of 3.26 percent associated with a $125 million debt issuance that was finalized in May 2018. This debt issuance coincided with the maturity of the $125 million, 5.6 percent notes that came due May 15, 2018. This treasury lock was settled on March 13, 2018, which coincided with the pricing of the new debt being issued. Settlement of the treasury lock resulted in a $2.6 million loss, which is recorded as a component of regulatory assets on the Consolidated Balance Sheets and will be amortized in earnings over the term of the May 11, 2018 debt issuance, discussed above. Sale-Leasebacks NJNG has entered into a sale-leaseback for its headquarters building, which has a 25.5-year term that expires in June 2021, subject to an option by NJNG to renew the lease for additional five-year terms a maximum of four times. The present value of the agreement’s minimum lease payments is reflected as both a capital lease asset and a capital lease obligation, which are included in utility plant and long-term debt, respectively, on the Consolidated Balance Sheets. NJNG received $7.8 million, $9.6 million and $7.1 million for fiscal 2018, 2017 and 2016, respectively, in connection with the sale-leaseback of its natural gas meters. NJNG records a capital lease obligation that is paid over the term of the lease and has the option to purchase the meters back at fair value upon expiration of the lease. During fiscal 2018, 2017 and 2016, NJNG exercised early purchase options with respect to meter leases by making final principal payments of $2.2 million, $2.4 million and $1.9 million, respectively. NJNG continues to evaluate this sale-leaseback program based on current market conditions. Contractual commitments for capital lease payments, as of the fiscal years ended September 30, are as follows:
(Thousands) | Lease Payments |
2019 |  | $ | 10,932 |
2020 |  | 7,989 |
2021 |  | 9,236 |
2022 |  | 3,775 |
2023 |  | 2,393 |
Thereafter |  | 5,245 |
Subtotal |  | 39,570 |
Less: Interest component |  | (3,633 | )
Total |  | $ | 35,937 |
NJR In March 2016, NJR entered into a Note Purchase Agreement, under which the Company issued, in August 2016, $50 million of the Company’s 3.2 percent senior notes due August 2023, and $100 million of the Company’s 3.54 percent senior notes due August 2026. The notes are not secured by assets, but are instead guaranteed by certain unregulated subsidiaries of the Company. The proceeds of the notes will be used for general corporate purposes, including working capital and capital expenditures. On January 26, 2018, NJR entered into a variable-for-fixed interest rate swap on its existing $100 million variable rate term loan due August 16, 2019, which fixed the variable rate at 2.84 percent. On July 17, 2018, the $100 million variable rate term loan was amended to permit the disposition of assets relating to sale leaseback or other similar tax equity financing arrangements of meter assets or of solar or wind facilities. These transactions are permissible so long as NJR is in compliance with certain covenants both before and after such incurrence, and if no event of default may be caused by such sale leaseback or similar arrangement. As of September 30, 2018, NJR’s variable rate term loan was classified within current maturities of long-term debt. On June 8, 2018, NJR entered into a Note Purchase Agreement, under which the Company issued $100 million, 3.96 percent senior notes due June 8, 2028. The notes are not secured by assets, but are instead guaranteed by certain unregulated subsidiaries of NJR. Clean Energy Ventures Clean Energy Ventures received proceeds of $71.5 million and $32.9 million in connection with the sale-leasebacks of commercial solar projects for fiscal 2018 and 2017, respectively. Clean Energy Ventures enters into transactions to sell the commercial solar assets concurrent with agreements to lease the assets back over a period of six to 15 years. These sale-leasebacks are treated as financing obligations, which are typically secured by the renewable energy facility asset and its future cash flows from SREC and energy sales. ITCs and other tax benefits associated with these solar projects are transferred to the buyer. Clean Energy Ventures continues to operate the solar assets, including related expenses, and retain the revenue generated from SRECs and energy sales, and has the option to renew the lease or repurchase the assets sold at the end of the lease term. Contractual commitments for solar sale-leaseback lease payments, as of the fiscal years ended September 30, are as follows:
(Thousands) | Lease Payments |
2019 |  | $ | 9,794 |
2020 |  | 7,830 |
2021 |  | 7,803 |
2022 |  | 7,802 |
2023 |  | 7,878 |
Thereafter |  | 38,303 |
Subtotal |  | 79,410 |
Less: Interest component |  | (26,728 | )
Total |  | $ | 52,682 |
Short-term Debt A summary of NJR’s and NJNG’s short-term bank facilities as of September 30, are as follows:
(Thousands) | 2018 |  | 2017
NJR |  |  |
Bank revolving credit facilities: (1) | $ | 425,000 |  |  | $ | 425,000 |
Notes outstanding at end of period | $ | 87,950 |  |  | $ | 255,000 |
Weighted average interest rate at end of period | 3.07 | % |  | 2.14 | %
Amount available at end of period (2) | $ | 322,144 |  |  | $ | 156,601 |
NJNG |  |  |
Bank revolving credit facilities: (3) | $ | 250,000 |  |  | $ | 250,000 |
Commercial paper outstanding at end of period | $ | 64,000 |  |  | $ | 11,000 |
Weighted average interest rate at end of period | 2.18 | % |  | 1.13 | %
Amount available at end of period (4) | $ | 185,269 |  |  | $ | 238,269 |
(1) | Committed credit facilities, which require commitment fees of .075 percent on the unused amounts.
(2) | Letters of credit outstanding total $14.9 million and $13.4 million as of September 30, 2018 and 2017, respectively, which reduces amount available by the same amount.
(3) | Committed credit facilities, which require commitment fees of .075 percent on the unused amounts.
(4) | Letters of credit outstanding total $731,000 as of September 30, 2018 and 2017, which reduces amount available by the same amount.
NJR NJR entered into a $425 million unsecured, committed credit facility scheduled to expire on September 28, 2020, subject to two mutual options for a one-year extension beyond that date. The NJR Credit Facility includes an accordion feature, which would allow NJR, in the absence of a default or event of default, to increase from time to time, with the existing or new lenders, the revolving credit commitments under the NJR Credit Facility in minimum $5 million increments up to a maximum of $100 million. The credit facility is used primarily to finance its share repurchases, to satisfy Energy Services’ short-term liquidity needs and to finance, on an initial basis, unregulated investments. On June 25, 2018, the $425 million NJR Credit Facility was amended to permit liens and the disposition of assets relating to sale-leaseback or other similar tax equity financing arrangements of meter assets or of solar or wind facilities. These transactions are permissible so long as NJR is in compliance with certain covenants both before and after such incurrence, and if no event of default may be caused by such sale-leaseback or similar arrangement. On December 14, 2017, NJR entered into a four-month, $75 million revolving line of credit facility. On January 19, 2018, NJR amended the agreement to increase the available amount to $100 million. This facility expired on April 14, 2018. No amounts were outstanding on the facility at the time of expiration. As of September 30, 2018, NJR had six letters of credit outstanding totaling $14.9 million. Three letters of credit totaling $11.9 million are issued on behalf of Energy Services and three letters of credit, which total $3 million, are issued on behalf of Clean Energy Ventures. These letters of credit reduce the amount available under NJR’s committed credit facility by the same amount. NJR does not anticipate that these letters of credit will be drawn upon by the counterparties, and they will be renewed as necessary. Energy Services’ letters of credit are used for margin requirements for natural gas transactions, collateral and security deposit for retail gas sales and expire on dates ranging from December 2018 to September 2019. Clean Energy Ventures’ letters of credit are used to secure construction of ground-mounted solar projects and to secure obligations pursuant to an Interconnection Services Agreement. They expire on dates ranging from May 2019 to August 2019. Neither NJNG nor the results of its operations are obligated or pledged to support the NJR credit or debt shelf facilities. NJNG NJNG has a $250 million, five-year, revolving, unsecured credit facility, which expires in May 2019. The NJNG Credit Facility permits the borrowing of revolving loans and swing loans, as well as the issuance of letters of credit. It also permits an increase to the facility, from time to time, with the existing or new lenders, in a minimum of $15 million increments up to a maximum of $50 million at the lending banks’ discretion. As of September 30, 2018, NJNG has two letters of credit outstanding for $731,000. NJNG’s letters of credit are used as collateral for remediation projects and expire in August 2019. These letters of credit reduce the amount available under NJNG’s committed credit facility by the same amount. NJNG does not anticipate that these letters of credit will be drawn upon by the counterparty and will be renewed as necessary.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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