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DERIVATIVE INSTRUMENTS (Tables) | 6 Months Ended
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Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Fair Value of Derivative Assets and Liabilities | The following table presents the fair value of the Company's derivative assets and liabilities recognized on the Unaudited Condensed Consolidated Balance Sheets as of:
|  |  | Derivatives at Fair Value
|  | March 31, 2024 |  | September 30, 2023
(Thousands) | Balance Sheet Location | Assets | Liabilities | Assets | Liabilities
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |
NJNG: |  |  |  |  |  |  |  |  |
Physical commodity contracts | Derivatives - current |  | $ | 49 |  |  | $ | 6 |  |  | $ | 43 |  |  | $ | 488 |
Financial commodity contracts | Derivatives - current |  | 1,229 |  |  | 35 |  |  | 6,110 |  |  | 20 |
ES: |  |  |  |  |  |  |  |  |
Physical commodity contracts | Derivatives - current |  | 1,384 |  |  | 6,656 |  |  | 6,209 |  |  | 12,757 |
| Derivatives - noncurrent |  | 678 |  |  | 13,014 |  |  | 802 |  |  | 7,870 |
Financial commodity contracts | Derivatives - current |  | 11,394 |  |  | 4,028 |  |  | 18,393 |  |  | 2,880 |
| Derivatives - noncurrent |  | 232 |  |  | 777 |  |  | 762 |  |  | 97 |
Total fair value of derivatives |  |  | $ | 14,966 |  |  | $ | 24,516 |  |  | $ | 32,319 |  |  | $ | 24,112 |
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 Unaudited Condensed Consolidated Balance Sheets but elects not to.
| Asset Derivatives |  | Liability Derivatives
(Thousands) | Fair Value (1) | Amounts Offset (2) | Collateral Received/Pledged (3) | Net Value (4) |  | Fair Value (1) | Amounts Offset (2) | Collateral Received/Pledged (3) | Net Value (4)
As of March 31, 2024 |  |  |  |  |  |  |  |  |
ES Contracts |  |  |  |  |  |  |  |  |
Physical commodity | $ | 2,062 |  | (539) |  | — |  | $ | 1,523 |  |  | $ | 19,670 |  | (539) |  | (9,865) |  | $ | 9,266 |
Financial commodity | 11,626 |  | (4,805) |  | (6,206) |  | 615 |  |  | 4,805 |  | (4,805) |  | — |  | — |
Total ES | $ | 13,688 |  | (5,344) |  | (6,206) |  | $ | 2,138 |  |  | $ | 24,475 |  | (5,344) |  | (9,865) |  | $ | 9,266 |
NJNG Contracts |  |  |  |  |  |  |  |
Physical commodity | $ | 49 |  | (4) |  | — |  | $ | 45 |  |  | $ | 6 |  | (4) |  | — |  | $ | 2 |
Financial commodity | 1,229 |  | (35) |  | — |  | 1,194 |  |  | 35 |  | (35) |  | — |  | — |
Total NJNG | $ | 1,278 |  | (39) |  | — |  | $ | 1,239 |  |  | $ | 41 |  | (39) |  | — |  | $ | 2 |
As of September 30, 2023 |  |  |  |  |  |  |  |  |
ES Contracts |  |  |  |  |  |  |  |  |
Physical commodity | $ | 7,011 |  | (1,236) |  | — |  | $ | 5,775 |  |  | $ | 20,627 |  | (1,236) |  | (9,728) |  | $ | 9,663 |
Financial commodity | 19,155 |  | (2,977) |  | (16,178) |  | — |  |  | 2,977 |  | (2,977) |  | — |  | — |
Total ES | $ | 26,166 |  | (4,213) |  | (16,178) |  | $ | 5,775 |  |  | $ | 23,604 |  | (4,213) |  | (9,728) |  | $ | 9,663 |
NJNG Contracts |  |  |  |  |  |  |  |
Physical commodity | $ | 43 |  | (3) |  | — |  | $ | 40 |  |  | $ | 488 |  | (3) |  | — |  | $ | 485 |
Financial commodity | 6,110 |  | (20) |  | — |  | 6,090 |  |  | 20 |  | (20) |  | — |  | — |
Total NJNG | $ | 6,153 |  | (23) |  | — |  | $ | 6,130 |  |  | $ | 508 |  | (23) |  | — |  | $ | 485 |
(1)Derivative assets and liabilities are presented on a gross basis on the condensed consolidated balance sheets 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 the Company has the right to offset but elects not to, financial collateral and the net amounts the Company could present on the Unaudited Condensed Consolidated Balance Sheets but elects not to.
| Asset Derivatives |  | Liability Derivatives
(Thousands) | Fair Value (1) | Amounts Offset (2) | Collateral Received/Pledged (3) | Net Value (4) |  | Fair Value (1) | Amounts Offset (2) | Collateral Received/Pledged (3) | Net Value (4)
As of March 31, 2024 |  |  |  |  |  |  |  |  |
ES Contracts |  |  |  |  |  |  |  |  |
Physical commodity | $ | 2,062 |  | (539) |  | — |  | $ | 1,523 |  |  | $ | 19,670 |  | (539) |  | (9,865) |  | $ | 9,266 |
Financial commodity | 11,626 |  | (4,805) |  | (6,206) |  | 615 |  |  | 4,805 |  | (4,805) |  | — |  | — |
Total ES | $ | 13,688 |  | (5,344) |  | (6,206) |  | $ | 2,138 |  |  | $ | 24,475 |  | (5,344) |  | (9,865) |  | $ | 9,266 |
NJNG Contracts |  |  |  |  |  |  |  |
Physical commodity | $ | 49 |  | (4) |  | — |  | $ | 45 |  |  | $ | 6 |  | (4) |  | — |  | $ | 2 |
Financial commodity | 1,229 |  | (35) |  | — |  | 1,194 |  |  | 35 |  | (35) |  | — |  | — |
Total NJNG | $ | 1,278 |  | (39) |  | — |  | $ | 1,239 |  |  | $ | 41 |  | (39) |  | — |  | $ | 2 |
As of September 30, 2023 |  |  |  |  |  |  |  |  |
ES Contracts |  |  |  |  |  |  |  |  |
Physical commodity | $ | 7,011 |  | (1,236) |  | — |  | $ | 5,775 |  |  | $ | 20,627 |  | (1,236) |  | (9,728) |  | $ | 9,663 |
Financial commodity | 19,155 |  | (2,977) |  | (16,178) |  | — |  |  | 2,977 |  | (2,977) |  | — |  | — |
Total ES | $ | 26,166 |  | (4,213) |  | (16,178) |  | $ | 5,775 |  |  | $ | 23,604 |  | (4,213) |  | (9,728) |  | $ | 9,663 |
NJNG Contracts |  |  |  |  |  |  |  |
Physical commodity | $ | 43 |  | (3) |  | — |  | $ | 40 |  |  | $ | 488 |  | (3) |  | — |  | $ | 485 |
Financial commodity | 6,110 |  | (20) |  | — |  | 6,090 |  |  | 20 |  | (20) |  | — |  | — |
Total NJNG | $ | 6,153 |  | (23) |  | — |  | $ | 6,130 |  |  | $ | 508 |  | (23) |  | — |  | $ | 485 |
(1)Derivative assets and liabilities are presented on a gross basis on the condensed consolidated balance sheets 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 presents the effect of derivative instruments recognized on the Unaudited Condensed Consolidated Statements of Operations for the periods set forth below:
(Thousands) | Location of gain (loss) recognized in income on derivatives | Amount of gain (loss) recognized in income on derivatives
|  | Three Months Ended | Six Months Ended
|  | March 31, | March 31,
Derivatives not designated as hedging instruments: | 2024 |  | 2023 | 2024 |  | 2023
ES: |  |  |  |  |  |  |
Physical commodity contracts | Operating revenues | $ | (3,651) |  |  | $ | 7,208 |  | $ | 10,379 |  |  | $ | 17,246 |
Physical commodity contracts | Natural gas purchases | (1,424) |  |  | (124) |  | (2,010) |  |  | (794) |
Financial commodity contracts | Natural gas purchases | (2,459) |  |  | 29,863 |  | 15,623 |  |  | 71,474 |
Total unrealized and realized (loss) gain | $ | (7,534) |  |  | $ | 36,947 |  | $ | 23,992 |  |  | $ | 87,926 |
Effect of Derivative Instruments Designated as Cash Flow Hedges on OCI | The following table reflects the gains (losses) associated with NJNG's derivative instruments for the periods set forth below:
| Three Months Ended | Six Months Ended
| March 31, | March 31,
(Thousands) | 2024 |  | 2023 | 2024 |  | 2023
NJNG: |  |  |  |  |  |
Physical commodity contracts | $ | (3,920) |  |  | $ | (203) |  | $ | (4,990) |  |  | $ | (28,234) |
Financial commodity contracts | (3,142) |  |  | (38,294) |  | 1,190 |  |  | (69,957) |
Total unrealized and realized loss | $ | (7,062) |  |  | $ | (38,497) |  | $ | (3,800) |  |  | $ | (98,191) |
Schedule of Outstanding Long (Short) Derivatives | NJNG and ES had the following outstanding long (short) derivatives as of:
| Natural Gas Distribution | Energy Services
Volumes (Bcf) | Futures | Physical Commodity | Futures | Physical Commodity
March 31, 2024 | 23.8 | 5.0 | (3.8) | (3.2)
September 30, 2023 | 32.1 | 12.1 | (6.9) | 0.2
Schedule of Broker Margin Accounts by Company | The balances by reporting segment are as follows:
(Thousands) | Balance Sheet Location | March 31, 2024 | September 30, 2023
NJNG | Restricted broker margin accounts-current assets | $ | 4,969 |  | $ | 5,915 |
ES | Restricted broker margin accounts-current assets | $ | 14,341 |  | $ | 14,881 |
| Restricted broker margin accounts-current liabilities | $ | 4,689 |  | $ | 8,029 |
Summary of Gross Credit Exposures | The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of March 31, 2024. 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 CEV residential solar installations.
(Thousands) | Gross Credit Exposure
Investment grade |  | $ | 113,150 |  |
Noninvestment grade |  | 9,134 |  |
Internally rated investment grade |  | 19,988 |  |
Internally rated noninvestment grade |  | 22,477 |  |
Total |  | $ | 164,749 |  |

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