What changed in this filing

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Item 1. Business

2022-11-17 compared with 2021-11-18 · 36 added, 99 removed, 185 unchanged (42% of the section changed)

BUSINESS (Continued)

FERC regulates rates charged by interstate pipeline companies for the transportation and storage of natural gas.

This affects NJNG’s agreements with several interstate pipeline companies for the purchase of such services.

Costs associated with these services are currently recoverable through the BGSS.

Although its franchises are nonexclusive, NJNG is not currently subject to competition from other natural gas distribution utilities with regard to the transportation of natural gas in its service territory.

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Clean Energy Ventures

Our Clean Energy Ventures segment invests in, owns and operates clean energy projects, including commercial and residential solar installations located in New Jersey, Connecticut, Rhode Island and New York.

As of September 30, 2021, Clean Energy Ventures has constructed a total of 367.8 MW of solar capacity in New Jersey and Connecticut that has qualified for ITCs, including a combination of residential and commercial net-metered and grid-connected solar systems.

Clean Energy Ventures invests in, owns and operates clean energy projects, including commercial and residential solar installations located in New Jersey, Connecticut, Rhode Island and New York.

As of September 30, 2022, Clean Energy Ventures has approximately 386.6 MW of ITC-eligible solar capacity in service, including a combination of residential and commercial net-metered and grid-connected solar systems.

As part of its solar investment portfolio, Clean Energy Ventures operates a residential and small commercial solar program, The Sunlight Advantage®, that provides qualifying homeowners and small business owners with the opportunity to have a solar system installed at their home or place of business with no installation or maintenance expenses.

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Project construction is competitively sourced through third parties.

New Jersey has the seventh largest solar market in the U.S., according to the Solar Energy Industries Association®, with a large number of firms competing in all facets of the market including development, financing and construction.

New Jersey has the eighth largest solar market in the U.S., according to the Solar Energy Industries Association®, with a large number of firms competing in all facets of the market including development, financing and construction.

Our solar systems are registered and certified with the BPU’s Office of Clean Energy and qualified to produce RECs.

One REC is created for every MWh of electricity produced by a solar generator.

Clean Energy Ventures sold SRECs generated to a variety of counterparties, including electric load-serving entities that serve electric customers in New Jersey and are required to comply with the solar carve-out of the Renewable Portfolio Standard, a regulation that requires the increased production of energy from renewable energy sources.

Clean Energy Ventures sells SRECs generated to a variety of counterparties, including electric load-serving entities that serve electric customers in New Jersey and are required to comply with the solar carve-out of the Renewable Portfolio Standard, a regulation that requires the increased production of energy from renewable energy sources.

Solar projects are also currently eligible for federal ITCs in the year that they are placed into service.

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All TRECs generated are required to be purchased monthly by a TREC program administrator as appointed by the BPU.

On July 28, 2021, the BPU approved the first portion of the solar successor program for net metered projects under 5 MWs.

The new program opened to new applications on August 28, 2021 following the closure of the TREC program.

Incentives are structured as a 15-year fixed incentive ranging from $70-$120/MWh depending on market segment, project siting and size.

The second phase of the successor program rollout is expected to include a competitive bid solicitation for projects greater than 5 MWs, with the solicitation program format and rules operational in 2022.

In July 2021, the BPU approved the first portion of the solar successor program for net-metered projects under 5 MWs.

The new program opened to new applications on August 28, 2021.

Incentives are structured as a 15-year fixed incentive ranging from $70 to $120/MWh depending on market segment, project siting and size.

The second phase of the successor program is expected to include a competitive bid solicitation for projects greater than 5 MWs, with the solicitation program format and rules expected to be finalized in 2023.

Clean Energy Ventures is subject to various risks including those associated with adverse federal and state legislation and regulatory policies, electric grid connection, supply chain and/or construction delays that can impact the timing or eligibility of tax incentives, technological changes and the future market of RECs.

Risk Factors for additional information regarding these risks.

New Jersey Resources Corporation

BUSINESS (Continued)

Clean Energy Ventures is subject to various risks including those associated with adverse federal and state legislation and regulatory policies, supply chain and/or construction delays that can impact the timing or eligibility of tax incentives, technological changes and the future market of SRECs and TRECs.

Risk Factors for additional information regarding these risks.

Energy Services

Our Energy Services segment consists of unregulated wholesale and retail natural gas operations and provides producer and asset management services to a diverse customer base across North America.

Energy Services consists of unregulated wholesale and retail natural gas operations and provides producer and asset management services to a diverse customer base across North America.

Energy Services has acquired contractual rights to natural gas transportation and storage assets it utilizes to implement its strategic and opportunistic market strategies.

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• Providing natural gas portfolio management services to nonaffiliated and our affiliated natural gas utility, electric generation facilities and natural gas producers;

• Managing strategies for new and existing natural gas transportation and storage assets to capture value from changes in price due to location or timing differences as a means to generate financial margin (as defined below);

• Managing transactional logistics to minimize the cost of natural gas delivery to customers while maintaining security of supply.

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• Managing economic hedging programs that are designed to mitigate the impact of changes in market prices on Financial Margin generated on its natural gas transportation and storage commitments.

In an effort to deliver more predictable earnings contributions, reduce earnings volatility, and monetize the value of its natural gas transportation portfolio, Energy Services entered into a series of asset management agreements with an investment grade public utility to release pipeline capacity associated with certain natural gas transportation contracts.

The asset management agreements include a series of initial and permanent releases commencing on November 1, 2021.

NJR will receive approximately $260 million in cash from fiscal 2022 through fiscal 2024 and $34 million per year from fiscal 2025 through fiscal 2031 under the agreements.

In an effort to deliver more predictable earnings contributions, reduce earnings volatility and monetize the value of its natural gas transportation portfolio, Energy Services entered into a series of AMAs in December 2020 with an investment grade public utility to release pipeline capacity associated with certain natural gas transportation contracts.

The AMAs include a series of initial and permanent releases, which commenced on November 1, 2021.

NJR will receive a total of approximately $260 million in cash from fiscal 2022 through fiscal 2024 and $34 million per year from fiscal 2025 through fiscal 2031 under the agreements.

During fiscal 2022, Energy Services did not purchase over 10 percent of its natural gas from any one supplier.

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In these cases, Energy Services evaluates the economics of the transaction to determine if it can capture pricing differentials in the marketplace and generate Financial Margin.

Energy Services evaluates deal attributes such as fixed fees, calendar spread value from deal inception until volumes are scheduled to be

Energy Services evaluates deal attributes such as fixed fees, calendar-spread value from deal inception until volumes are scheduled to be returned and/or repaid, as well as the time value of money.

If this evaluation demonstrates that Financial Margin exists, Energy Services may enter into the transaction and hedge with natural gas futures contracts, thereby locking in Financial Margin.

New Jersey Resources Corporation

BUSINESS (Continued)

returned and/or repaid, as well as the time value of money.

If this evaluation demonstrates that financial margin exists, Energy Services may enter into the transaction and hedge with natural gas futures contracts, thereby locking in financial margin.

Energy Services maintains inventory balances to satisfy existing or anticipated sales of natural gas to its counterparties and/or to create additional value, as described above.

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These derivative instruments are accounted for at fair value with changes in fair value recognized in earnings as they occur.

Energy Services views “financial margin” as a key internal financial metric.

Energy Services’ financial margin, which is a non-GAAP financial measure, represents revenues earned from the sale of natural gas less costs of natural gas sold including any transportation and storage costs, and excluding any accounting impact from changes in the fair value of certain derivative instruments.

Energy Services views Financial Margin, a non-GAAP financial measure, as a key internal financial metric.

For additional information regarding Financial Margin, see Item 7.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations-Energy Services Segment .

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations-Energy Services .

Risk Management

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Storage and Transportation

Our Storage and Transportation segment, includes investments in FERC-regulated interstate natural gas storage and transportation assets and is comprised of the following subsidiaries:

Storage and Transportation includes investments in FERC-regulated interstate natural gas storage and transportation assets and is comprised of the following subsidiaries:

• NJR Midstream Company owns and operates Leaf River, a 32.2 million Dth salt dome natural gas facility, located in southeastern Mississippi, and the FERC-regulated Adelphia Gateway, which owns and operates an 84-mile pipeline in southeastern Pennsylvania.

NJR Midstream Company also holds our 20 percent equity method investment in PennEast;

NJR Midstream Company also holds a 20 percent equity method investment in PennEast, whose project was cancelled in September 2021 and subsequently is dissolving the partnership;

• NJR Steckman Ridge Storage Company holds our 50 percent equity method investment in Steckman Ridge.

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• NJR Plumbing Services, Inc., which provides plumbing repair and installation services;

• NJR Retail Company, which provides home warranty contracts:

• New Jersey Resources Corporation, a diversified energy services holding company;

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NJNG and NJRHS have collective bargaining agreements with the Union, which is affiliated with the American Federation of Labor and Congress of Industrial Organizations.

NJNG and the Union recently negotiated an extension of their current collective bargaining agreement extending the term through December 7, 2022.

NJNG and the Union negotiated an extension of their current collective bargaining agreement extending the term through December 7, 2023.

The collective bargaining agreement between NJRHS and the Union is scheduled to expire April 2, 2024.

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As a result, NJR supports and utilizes various training and educational programs and has developed additional company-wide and project-specific employee training and educational programs.

NJR continues key programs focused on employee safety, leadership development, work-life balance, talent management, health and wellness, DEI as well as employee engagement.

NJR continues key programs focused on employee safety, leadership development, work-life balance, talent management, health and wellness, DEI and employee engagement.

Moreover, DEI and employee engagement are integral to NJR’s vision, strategy and business success.

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Complementing our efforts are a DEI Council and our six employee-led Business Resource Groups, cross functional teams of employees whose core mission is to advance their own professional development and cultivate deeper connections with co-workers and communities.

NJR regularly evaluates employees and their productivity against future demand expectations and historical trends.

NJR periodically evaluates employees and their productivity against future demand expectations and historical trends.

NJR employees continue to maintain high levels of engagement, satisfaction and retention according to NJR’s most recent employee survey.

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Management regularly reports to the LDCC of the Board of Directors on human capital management topics, including corporate culture, DEI, employee development, compensation and benefits.

The LDCC maintains oversight of matters related to human capital management, including talent retention, development and succession planning, and the Board of Director’s provides input on important decisions in each of these areas.

The LDCC maintains oversight of matters related to human capital management, including talent retention, development and succession planning, and the Board of Directors provides input on important decisions in each of these areas.

NJR regularly conducts an employee feedback survey, which is reviewed by the LDCC, designed to help the Company measure overall employee engagement.

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These benefits are designed to attract and retain our employees and include medical, vision and dental insurance, short- and long-term disability insurance, accidental death and disability insurance, travel and accident insurance and our 401(k) Plan.

As part of the 401(k) Plan, NJR generally matches 85 percent of the first 6 percent of compensation contributed by the employee into the 401(k) Plan, subject to the Internal Revenue Code and NJR’s 401(k) Plan limits.

As part of the 401(k) Plan, NJR matches 85 percent of the first 6 percent of compensation contributed by the employee into the 401(k) Plan, subject to the Internal Revenue Code and NJR’s 401(k) Plan limits.

Additionally, for employees who are not eligible to participate in the defined benefit plans, NJR contributes between 3.5 percent and 4.5 percent of base compensation, depending upon years of service, into the 401(k) Plan on their behalf.

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October 2017)

Migliaccio 47 2013 Senior Vice President and Chief Financial Officer (January 2016 - present)

Mullan 55 2015 Senior Vice President and Chief Human Resources Officer (January 2017 - present)

Vice President and Chief Human Resources Officer (April 2015 - December 2016)

Amy Cradic 50 2018 Senior Vice President and Chief Operating Officer of Non-Utility Businesses, Strategy and External Affairs (March 2020 - present)

Roberto Bel 49 2019 Senior Vice President and Chief Financial Officer (January 2022 - present)

Vice President, Treasury and Investor Relations (April 2019 - December 2021)

Assistant Treasurer at Refinitiv (October 2018 - March 2019)

Assistant Treasurer at Thomson Reuters (May 2016 - September 2018)

Migliaccio 48 2013 Senior Vice President and Chief Operating Officer (January 2022 - present)

Senior Vice President and Chief Financial Officer (January 2016 - December 2021)

Amy Cradic 51 2018 Senior Vice President and Chief Operating Officer of Nonutility Businesses, Strategy and External Affairs (March 2020 - present)

Vice President, Corporate Strategy and External Affairs (January 2020 – February 2020)

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Corporate Secretary and Assistant General Counsel (January 2016 - September 2021)

Lori DelGiudice 47 2023 Senior Vice President, Human Resources (November 22 - present)

Vice President of Human Resources for Honeywell Advanced Materials (September 2017 – October 2022)

Jacqueline K.

Shea 58 2016 Vice President and Chief Information Officer (June 2016 - present)

Shea 55 2017 Vice President, Energy Trading (January 2017 - present)

Managing Director, Energy Trading (January 2014 - December 2016)

Valori 58 2017 Vice President, Clean Energy Ventures (November 2017 - present)

Managing Director, Projects and Asset Management (January 2016 - October 2017)

When considering any investment in our securities, investors should consider the following risk factors, as well as the information contained under the caption “Information Concerning Forward-Looking Statements,” in analyzing our present and future business performance.

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New Jersey Resources Corporation

RISK FACTORS (Continued)

Risks Related to the Ongoing COVID-19 Pandemic and Other Extreme Events

The Company and our subsidiaries and affiliates are subject to risk associated with the ongoing novel coronavirus, COVID-19 pandemic, which could materially and adversely impact our business, including our financial condition, results from operations, liquidity, cash flows and the market value of our common stock.

COVID-19 has been declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention and has spread globally, including throughout the U.S.

In response, the U.S.

federal government and many jurisdictions, including without limitation, New Jersey, Pennsylvania, Mississippi and Texas have instituted emergency orders, restrictions on travel, limitations on public gatherings and non-essential business, shelter-in-place requirements and government shutdowns.

While some jurisdictions have relaxed some of these restrictions, many of these restrictions remain and there is no guarantee restrictions will not be reimposed in the future.

These emergency orders and restrictions have significantly disrupted economic activity in the jurisdictions in which we operate and have caused volatility in the capital markets.

The effects of the ongoing COVID-19 pandemic and related government responses could include, and have at times included, extended disruptions to supply chains and capital markets, reduced labor availability and productivity and a prolonged reduction in economic activity.

We are currently evaluating the potential prolonged impacts that the ongoing COVID-19 pandemic may have on our future operating results and liquidity, which include:

• impacts related to the health, safety, productivity and availability of our employees and contractors;

• reduced demand for energy and forecasted customer growth;

• our ability to develop, construct and operate facilities;

• suspension of collection activities and the inability to shutoff natural gas services for nonpayment;

• reduced demand for commercial, industrial and residential natural gas services;

• deterioration of the credit quality of our counterparties;

• increases in costs and supply chain delays and disruptions;

• delays and disruptions to capital construction and infrastructure operations and maintenance programs, including delays in the permitting process and base rate cases;

• delays and disruptions to financing plans and increasing costs related thereto;

• impacts on pension valuations and increased pension and post-retirement plan costs and funding requirements;

• deterioration in our financial metrics or the business environment that impacts our credit ratings;

• impacts to our liquidity position and cost of and ability to access funds from financial institutions and capital markets;

• impacts on our legal and regulatory matters, including the potential for delayed state regulatory filings and recovery of invested capital, as well as delays in newly enacted and proposed state regulatory actions and federal laws;

• exacerbation of other risks that may impact us;

• other unpredictable events.

These uncertain economic conditions have also impacted the ability of certain customers to pay for utility and certain non-utility services, which could affect the collectability and recognition of our revenues and adversely affect our financial results.

While we have implemented our business continuity plan (including without limitation employee travel restrictions, employee remote work locations and cancellation of physical participation in meetings, events, and conferences) to conform to government restrictions and best practices encouraged by federal, state, and local government and regulatory authorities, if a large proportion of our employees in essential capacities were to contract COVID-19, there is no certainty that such measures will be sufficient to mitigate an adverse impact to our operations.

The situation surrounding the ongoing COVID-19 pandemic remains fluid and the likelihood of material impacts may increase the longer the pandemic impacts activity levels in the U.S.

As of September 30, 2021, the ongoing COVID-19 pandemic has not had a material impact on the Company and our subsidiaries and affiliates;

however, the ultimate severity and duration of the COVID-19 pandemic and the responses thereto are uncertain and we cannot predict whether they will have a material impact on our liquidity, financial condition, results of operations or cash flows and when and to what extent normal economic and operating conditions can resume.

New Jersey Resources Corporation

RISK FACTORS (Continued)

We may be adversely impacted by natural disasters, pandemic illness (including COVID-19), terrorist activities and other extreme events to which we may be unable to promptly respond.

Local or national natural disasters, pandemic illness (including COVID-19), terrorist activities, catastrophic failure of the interstate pipeline system and other extreme events are a threat to our assets and operations.

Companies in our industry that are located in our service territory may face a heightened risk due to exposure to acts of terrorism that could target or impact our natural gas distribution, transmission and storage facilities and disrupt our operations and ability to meet customer requirements.

In addition, the threat of terrorist activities could lead to increased economic instability and volatility in the price of natural gas that could affect our operations.

Natural disasters or actual or threatened terrorist activities may also disrupt capital markets and our ability to raise capital or may impact our suppliers or our customers directly.

A local disaster or pandemic illness (including COVID-19) could result in part of our workforce being unable to operate or maintain our infrastructure or perform other tasks necessary to conduct our business.

In addition, these risks could result in loss of human life, significant damage to property, environmental damage, impairment of our operations and substantial loss to the Company.

Our regulators may not allow us to recover from our customers part or all of the increased cost related to the foregoing events, which could negatively affect our financial condition, results of operations and cash flows.

A slow or inadequate response to events that could cause business interruption may have an adverse impact on operations and earnings.

We may be unable to obtain sufficient insurance to cover all risks associated with local and national disasters, pandemic illness, terrorist activities, catastrophic failure of the interstate pipeline system and other events, which could increase the risk that an event adversely affects our financial condition, results of operations and cash flows.

Risk Related to Our Business Operations

Uncertainties associated with our Adelphia Gateway pipeline project could adversely affect our business, results of operations, financial condition and cash flows.

In January 2020, our subsidiary Adelphia Gateway, LLC acquired Interstate Energy Company LLC, owner of a transmission pipeline extending approximately 90 miles through eastern Pennsylvania that it operated in either oil-only service or in dual-phase oil and natural gas service.

As part of the Adelphia Gateway pipeline project, Adelphia is continuing to operate a portion of the pipeline in natural gas-only service, is converting the remaining sections of the southern mainline of the pipeline to transport natural gas and is constructing certain new facilities, including two compressor stations in Bucks County and Delaware County, PA and two new pipeline laterals in Delaware County, PA and New Castle County, DE.

Timely completion of the project is subject to certain risks, including those related to regulatory proceedings regarding permitting and adverse outcomes from legal challenges related to the project's authorizations from federal and state regulatory agencies.

Any delays in the expected timeframe for completing the conversion of the southern mainline of the pipeline to transport natural gas and constructing the new facilities could cause disruption and create uncertainties, which could have an adverse effect on our business, results of operations, financial condition and cash flows.

We may be unable to obtain governmental approvals, property rights and/or financing for the construction, development and operation of our proposed energy investments and projects in a timely manner or at all.

Construction, development and operation of energy investments, such as Leaf River and other natural gas storage facilities, NJNG infrastructure improvements, such as SRL and NJ RISE, pipeline transportation systems, such as the Adelphia Gateway pipeline project, and solar energy projects are subject to federal and state regulatory oversight and require certain property rights, such as easements and rights-of-way from public and private property owners, as well as regulatory approvals, including environmental and other permits and licenses for such facilities and systems.

We or our joint venture partnerships may be unable to obtain, in a cost-efficient or timely manner, all such needed property rights, permits and licenses to successfully construct and develop our energy facilities and systems.

Successful financing of our energy investments requires participation by willing financial institutions and lenders, as well as acquisition of capital at favorable interest rates.

If we do not obtain the necessary regulatory approvals, property rights and financing, our equity method investments could be impaired.

Such impairment could have a materially adverse effect on our financial condition, results of operations and cash flows.

Our investments in solar energy projects are subject to substantial risks and uncertainties.

Our investments in commercial and residential solar energy projects are dependent, in part, upon current state regulatory incentives and federal tax credits in order for the projects to be economically viable.

Our return on investment for these solar projects is based substantially on our eligibility for ITCs and the future market value of SRECs that are traded in a competitive marketplace in the State of New Jersey.

These projects face the risk that the current state regulatory programs and tax laws may expire or be adversely modified.

A sustained decrease in the value of SRECs could negatively impact the return on our investments and could impair our portfolio of solar assets.

New Jersey Resources Corporation

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business