XML 33 R18.htm IDEA: XBRL DOCUMENT
v3.10.0.1

INCOME TAXES | 9 Months Ended
--- | ---
Jun. 30, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | 11. INCOME TAXES ASC Topic 740, Income Taxes requires the use of an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods. In calculating its estimated annual effective tax rate, NJR considers forecasted annual pre-tax income and estimated permanent book versus tax differences, as well as tax credits associated with solar and wind projects. For investment tax credits, the estimate is based on solar projects that are probable of being completed and placed in service during the current fiscal year based on the best information available at each reporting period. For production tax credits, the estimate is based on the forecast of electricity produced during the current fiscal year based on the best information available at each reporting period. Adjustments to the effective tax rate and management's estimates will occur as information and assumptions change. Changes in tax laws or tax rates are recognized in the financial reporting period that includes the enactment date, the date in which the act is signed into law. NJR evaluates its tax positions to determine the appropriate accounting and recognition of potential future obligations associated with unrecognized tax benefits. During the nine months ended June 30, 2018 and 2017, the Company determined there was no need to recognize any liabilities associated with uncertain tax positions. The Tax Act On December 22, 2017, the President signed into law the Tax Act. The law made several changes to the Internal Revenue Code of 1986, as amended, the most impactful to the Company of which was a reduction in the federal corporate income tax rate from 35 percent to 21 percent that became effective January 1, 2018. Since the Company's fiscal year end is September 30, it is required by the Internal Revenue Code to calculate a statutory rate based upon the federal tax rates in effect before and after the effective date of the change in the taxable year that includes the effective date. Accordingly, the Company will use a federal statutory tax rate of 24.5 percent during fiscal 2018 and will use the enacted rate of 21 percent beginning in fiscal 2019. The SEC issued guidance in Staff Accounting Bulletin 118 to address the changes in estimates associated with impacts resulting from Tax Act, which allows companies to record provisional amounts during a one-year measurement period. The Company calculated an estimate for the measurement and accounting for certain effects of the Tax Act, including the remeasurement of deferred tax assets and liabilities to reflect the rates that will be in effect when the deferred tax assets and liabilities are expected to be realized or settled. The adjustments to deferred income taxes are based on assumptions the Company made with respect to its book versus tax differences and the timing of when those differences will reverse, including estimations associated with depreciation and the settlement of derivative unrealized amounts. Therefore, the revaluation of net deferred tax liabilities is subject to change as information and assumptions are updated each quarter for actual results. Any additional guidance from the U.S. Department of the Treasury and the Internal Revenue Service or future actions of our regulators could also potentially affect the final determination of the accounting effects of the Tax Act. As a result of the changes associated with the Tax Act, NJNG recorded a decrease in its net deferred tax liability of $228.4 million, which included $164.3 million for the revaluation of its deferred income taxes and $64.1 million for the accounting of the income tax effects on the revaluation. These amounts were recorded as a regulatory liability on the Unaudited Condensed Consolidated Balance Sheets. On May 22, 2018, the BPU approved a refund of $31 million, which included approximately $20.1 million of the initial revaluation of excess deferred income taxes, $9 million for the overcollection of taxes from customers from January 1, 2018 through March 31, 2018, and interest on the overcollected taxes at the Company's short term debt rate. The $20.1 million is comprised of approximately $14.3 million attributable to the remeasurement of deferred income taxes and $5.8 million for the accounting of the income tax effects of revaluation. These credits were returned to customer accounts in June 2018. Since the enactment of the Tax Act and through the nine months ended June 30, 2018, the Company recorded a change in estimate of the excess deferred income taxes of approximately $988,000 as a regulatory liability on the Unaudited Condensed Consolidated Balance Sheets. Changes from the original estimate are based on actual results through the third quarter and forecasted amounts through the fiscal year end. During the nine months ended June 30, 2018, the Company credited approximately $16.1 million to income tax (benefit) provision on the Unaudited Condensed Consolidated Statements of Operations, which includes $14.3 million, as previously discussed, $890,000 for the amortization of excess deferred income taxes primarily related to timing differences associated with utility plant depreciation and $880,000 related to the revaluation of deferred income taxes not included in base rates. As of June 30, 2018, the regulatory liability included excess deferred income taxes of $206.8 million, which requires amortization over the remaining life of the utility plant consistent with IRS normalization principles. The increase (decrease) of the net deferred tax liability due to the impact of the Tax Act that was recognized on the Unaudited Condensed Consolidated Statements of Operations, for the remaining entities was as follows:
| Three Months Ended |  | Nine Months Ended
| June 30, |  | June 30,
(Thousands) | 2018 |  | 2018
Income tax (benefit) provision |  |  |
Clean Energy Ventures | $ | (671 | ) |  | $ | (63,773 | )
Energy Services | 1,598 |  |  | 9,249 |
Midstream | (142 | ) |  | (13,946 | )
Home Services and Other | 59 |  |  | 10,782 |
Total | $ | 844 |  |  | $ | (57,688 | )
The changes from the original estimates are based on actual results through the third quarter and forecasted amounts through the fiscal year end. Effective Tax Rate The forecasted effective tax rates were 14.3 percent and 13.1 percent, for the nine months ended June 30, 2018 and 2017, respectively. The increase in the effective tax rate, when compared with the prior fiscal year, is due primarily to an increase in forecasted pre-tax income combined with a decrease in forecasted tax credits for the fiscal year ending September 30, 2018, which more than offset the lower federal statutory rate that became effective during fiscal 2018 as a result of the Tax Act. Forecasted tax credits, net of deferred income taxes, were $22 million and $36.4 million for fiscal 2018 and 2017, respectively. To the extent there are discrete tax items that are not included in the forecasted effective tax rate, the actual effective tax rate will differ from the estimated annual effective tax rate. As discussed further above, the Company recognized a tax provision (benefit) of $844,000 and $(57.7) million during the three and nine months ended June 30, 2018. In addition, the Company recognized $2.9 million and $4.6 million during the nine months ended June 30, 2018 and 2017, respectively, in excess tax benefits associated with the vesting of share-based awards, as a component of income tax (benefit) provision in its Unaudited Condensed Consolidated Statements of Operations. As a result of these discrete items, NJR’s actual effective tax rate was (23.7) percent and 10.7 percent during the nine months ended June 30, 2018 and 2017, respectively. Other Tax Items As of June 30, 2018, the Company has federal and state income tax net operating losses of approximately $125.3 million and $494.1 million, respectively, which generally have a life of 20 years. As of June 30, 2018, the Company has recorded deferred federal and state tax assets of approximately $28.5 million and $33.8 million, respectively, on the Unaudited Condensed Consolidated Balance Sheets, reflecting the tax benefits associated with these net operating losses. As of September 30, 2017, the Company had federal and state income tax net operating losses of approximately $125.3 million and $471.7 million, respectively, and deferred federal and state tax assets of approximately $28.5 million and $23.6 million, respectively. In March 2018, Clean Energy Ventures committed to a plan to sell its wind assets and expects that the sale will be completed within the next 12 months. As a result of the planned sale, it is more likely than not that certain state net operating loss carryforwards will not be realizable prior to their expiration. As of June 30, 2018, the Company had a valuation allowance of $2.5 million related to state net operating loss carryforwards in Montana, Iowa, Kansas and Wyoming. As of September 30, 2017, the Company had a valuation allowance of $1 million related to state net operating loss carryforwards in Montana. In addition, as of June 30, 2018 and September 30, 2017, the Company had an ITC/PTC carryforward of approximately $130.3 million and $109.3 million, respectively, which each have a life of 20 years. The Company expects to utilize this entire carryforward, which would begin to expire in fiscal 2035. On March 7, 2018, the State of New Jersey notified the Company that it will conduct a general tax examination for fiscal year 2014 through 2017 related to NJRHS. All periods subsequent to those ended September 30, 2013, are statutorily open to examination. In December 2015, the Consolidated Appropriations Act extended the 30 percent ITC for solar property that is under construction on or before December 31, 2019. The credit will decline to 26 percent for property under construction during 2020 and to 22 percent for property under construction during 2021. For any property that is under construction before 2022, but not placed in service before 2024, the ITC will be reduced to 10 percent. In addition, the PTC was extended for five years through December 31, 2019, with a gradual three year phase out for any project for which construction of the facility begins after December 31, 2016.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration