2 unchanged sentences
NJR’s Common Stock is traded on the New York Stock Exchange under the ticker symbol NJR.
−Removed: As of Nov 12 2021, NJR had 67,950 holders of record of its common stock.
+Added: As of November 7, 2022, NJR had 74,653 holders of record of its common stock.
Dividends are subject to declaration by the Board of Directors.
16 unchanged sentences
NiSource Inc.;
−Removed: Northwest Natural Gas Company;
+Added: Northwest Natural Holding Company;
ONE Gas, Inc.;
1 unchanged sentence
Southwest Gas Corporation;
−Removed: and Spire lnc.
+Added: and Spire Inc.
This performance graph and accompanying information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of the Company’s filings under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
19 unchanged sentences
Regulatory Accounting
−Removed: NJNG maintains its accounts in accordance with the FERC Uniform System of Accounts as prescribed by the BPU and recognizes the impact of regulatory decisions on its financial statements.
−Removed: As a result of the ratemaking process, NJNG is required to apply the accounting principles in ASC 980, Regulated Operations , which differ in certain respects from those applied by unregulated businesses.
−Removed: Specifically, NJNG records regulatory assets when it is probable that certain operating costs will be recoverable from customers in future periods and records regulatory liabilities associated with probable future obligations to customers.
+Added: NJNG and Adelphia Gateway maintain their accounts in accordance with the FERC Uniform System of Accounts and recognize the impact of regulatory decisions on their financial statements.
+Added: As a result of the ratemaking process, NJNG and Adelphia Gateway are required to apply the accounting principles in ASC 980, Regulated Operations , which differ in certain respects from those applied by unregulated businesses.
+Added: Specifically, NJNG and Adelphia Gateway record regulatory assets when it is probable that certain operating costs will be recoverable from customers in future periods and record regulatory liabilities associated with probable future obligations to customers.
Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates.
−Removed: The BPU’s regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital.
+Added: For NJNG, the BPU’s regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital.
Decisions to be made by the BPU in the future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required.
22 unchanged sentences
Postemployment employee benefit costs may also be significantly affected by changes in key actuarial assumptions, including anticipated rates of return on plan assets, changes in mortality tables, health care cost trends and discount rates used in determining the PBO.
−Removed: In determining the PBO and cost amounts, assumptions can change from period to period and could result in material changes to net postemployment employee benefit periodic costs and the related liability recognized by us.
+Added: In determining the PBO and cost amounts, assumptions can change from period to period and could result in material changes to net postemployment employee benefit periodic costs and the related liability recognized.
The remeasurement of plan assets and obligations for a significant event should occur as of the date of the significant event.
38 unchanged sentences
New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: If the acquisition is deemed to be a business, the acquisition method of accounting is applied.
−Removed: Identifiable assets acquired and liabilities assumed at the acquisition date are recorded at fair value.
−Removed: If the transaction is deemed to be an asset purchase, the cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and allocated to the individual assets and liabilities based on relative fair values.
−Removed: The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on various assumptions and valuation methodologies requiring considerable management judgment.
−Removed: The most significant variables in these valuations are discount rates and the number of years on which to base the cash flow projections, as well as other assumptions and estimates used to determine the cash inflows and outflows.
−Removed: Management determines discount rates based on the risk inherent in the acquired assets and related cash flows.
−Removed: The valuation of an acquired business is based on available information at the acquisition date and assumptions that are believed to be reasonable.
−Removed: However, a change in facts and circumstances as of the acquisition date can result in subsequent adjustments during the measurement period, but no later than one year from the acquisition date.
−Removed: Investments in Equity Investees
−Removed: The Company accounts for its investments in Steckman Ridge and PennEast, using the equity method of accounting where it is not the primary beneficiary, as defined under ASC 810, Consolidation, in that its respective ownership interests are 50 percent or less and/or it has significant influence over operating and management decisions.
−Removed: The Company’s share of earnings is recognized as equity in earnings of affiliates on the Consolidated Statements of Operations.
−Removed: Equity method investments are reviewed for impairment when changes in facts and circumstances indicate that the current fair value may be less than the asset’s carrying amount.
−Removed: Factors that the Company analyzes in determining whether an impairment in its equity investments exists include reviewing the financial condition and near-term prospects of the investees, including economic conditions and trends in the general market, significant delays in or failure to complete significant projects, unfavorable regulatory or legal actions expected to substantially impact future earnings potential and lower than expected cash distributions from investees.
−Removed: If the Company determines the decline in the value of its equity method investment is other than temporary, an impairment charge is recorded in an amount equal to the excess of the carrying value of the asset over its fair value.
−Removed: The fair value of the Company’s investment in Steckman Ridge was determined using a discounted cash flow method and utilized management’s best estimates and assumptions related to expected future results, including the price and capacity of firm natural gas storage contracting, operations and maintenance costs, the nature and timing of major maintenance and capital investment, and discount rates.
−Removed: Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and other factors.
−Removed: As a result, it is reasonably possible that unfavorable developments, such as the failure to execute storage contracts and other services for available capacity at anticipated price levels could result in an other-than temporary impairment charge in the Consolidated Financial Statements.
−Removed: On January 19, 2018, PennEast first received a Certificate of Public Convenience and Necessity for the project from FERC.
−Removed: There were considerable delays throughout the duration of the project.
−Removed: Despite a favorable outcome from the latest Supreme Court ruling on June 29, 2021, PennEast continued to experience regulatory and legal challenges preventing the commencement of construction and commercial operation of the project.
−Removed: As a result, we evaluated our equity investment in PennEast for impairment as of June 30, 2021, and determined that it was other-than-temporarily impaired.
−Removed: We estimated the fair value of our investment in PennEast using probability weighted scenarios assigned to discounted future cash flows.
−Removed: The impairment is the result of management's estimates and assumptions regarding the likelihood of certain outcomes related to required regulatory approvals and pending legal matters (the timing of which remains uncertain), the timing and magnitude of construction costs and in-service dates, the evaluation of the current environmental and political climate as it relates to interstate pipeline development, and transportation capacity revenues and discount rates.
−Removed: As of September 30, 2021, we recognized an other-than-temporary impairment which is recorded in equity in (losses) earnings from affiliates in the Consolidated Statements of Operations.
−Removed: On September 27, 2021, it was determined that this project is no longer supported and all further development has ceased.
−Removed: It is possible that future developments could impact the fair value and could result in the recognition of additional impairment charges.
−Removed: For further information on these investments, see Note 7.
−Removed: Investments in Equity Investees.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Impairment of Long-lived Assets
−Removed: Property, plant and equipment and finite-lived intangible assets are reviewed periodically for impairment when changes in facts and circumstances indicate that the carrying amount of an asset may not be fully recoverable in accordance with the appropriate accounting guidance.
−Removed: Factors that the Company analyzes in determining whether an impairment in its long-lived assets exists include determining if a significant decrease in the market price of a long-lived asset is present;
−Removed: a significant adverse change in the extent in which a long-lived asset is being used in its physical condition;
−Removed: legal proceedings or factors;
−Removed: significant business climate changes, accumulations of costs in significant excess of the amounts expected;
−Removed: a current-period operating or cash flow loss coupled with historical negative cash flows or expected future negative cash flows;
−Removed: and current expectations that more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its estimated useful life.
−Removed: When an impairment indicator is present, the Company determines if the carrying value of the asset is recoverable by comparing it to its expected undiscounted future cash flows.
−Removed: If the carrying value of the asset is greater than the expected undiscounted future cash flows, an impairment charge is recorded in an amount equal to the excess of the carrying value of the asset over its fair value.
−Removed: Derivative Instruments
−Removed: We record our derivative instruments held as assets and liabilities at fair value on the Consolidated Balance Sheets.
−Removed: In addition, since we choose not to designate any of our physical and financial natural gas commodity derivatives as accounting hedges, changes in the fair value of Energy Services’ commodity derivatives are recognized in earnings, as they occur, as a component of operating revenues or natural gas purchases on the Consolidated Statements of Operations.
−Removed: Changes in the fair value of foreign exchange contracts are recognized in natural gas purchases on the Consolidated Statements of Operations.
−Removed: The fair value of derivative instruments is determined by reference to quoted market prices of listed exchange-traded contracts, published price quotations, pipeline tariff information or a combination of those items.
−Removed: Energy Services’ portfolio is valued using the most current and reasonable market information.
−Removed: If the price underlying a physical commodity transaction does not represent a visible and liquid market, Energy Services may utilize additional published pipeline tariff information and/or other services to determine an equivalent market price.
−Removed: As of September 30, 2021, the fair value of its derivative assets and liabilities reported on the Consolidated Balance Sheets that is based on such pricing is considered immaterial.
−Removed: Should there be a significant change in the underlying market prices or pricing assumptions, Energy Services may experience a significant impact on its financial position, results of operations and cash flows.
−Removed: Refer to Item 7A.
−Removed: Quantitative and Qualitative Disclosures About Market Risks for a sensitivity analysis related to the impact to derivative fair values resulting from changes in commodity prices.
−Removed: The valuation methods we use to determine fair values remained consistent for fiscal 2021, 2020 and 2019.
−Removed: We apply a discount to our derivative assets to factor in an adjustment associated with the credit risk of its physical natural gas counterparties and to our derivative liabilities to factor in an adjustment associated with its own credit risk.
−Removed: We determine this amount by using historical default probabilities corresponding to the appropriate S&P issuer ratings.
−Removed: Since the majority of our counterparties are rated investment grade, this results in an immaterial credit risk adjustment.
−Removed: Gains and losses associated with derivatives utilized by NJNG to manage the price risk inherent in its natural gas purchasing activities are recoverable through its BGSS, subject to BPU approval.
−Removed: Accordingly, the offset to the change in fair value of these derivatives is recorded as either a regulatory asset or liability on the Consolidated Balance Sheets.
−Removed: Clean Energy Ventures hedges certain of its expected production of SRECs through forward and futures contracts.
−Removed: Clean Energy Ventures intends to physically deliver all SRECs it sells and recognizes SREC revenue as operating revenue on the Consolidated Statements of Operations upon delivery of the underlying SREC.
−Removed: We have not designated any derivatives as fair value or cash flow hedges as of September 30, 2021 and 2020.
−Removed: The determination of our provision for income taxes requires the use of estimates and the interpretation and application of tax laws.
−Removed: Judgment is required in assessing the deductibility and recoverability of certain tax benefits.
−Removed: We use the asset and liability method to determine and record deferred tax assets and liabilities, representing future tax benefits and taxes payable, which result from the differences in basis recorded in GAAP financial statements and amounts recorded in the income tax returns.
−Removed: The deferred tax assets and liabilities are recorded utilizing the statutorily enacted tax rates expected to be in effect at
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: the time the assets are realized, and/or the liabilities settled.
−Removed: An offsetting valuation allowance is recorded when it is more likely than not that some or all of the deferred income tax assets won’t be realized.
−Removed: Any significant changes to the estimates and judgments with respect to the interpretations, timing or deductibility could result in a material change to earnings and cash flows.
−Removed: For a more detailed description of Income Taxes see Note 13.
−Removed: Income Taxes in the accompanying Consolidated Financial Statements .
−Removed: For state income tax and other taxes, estimates and judgments are required with respect to the apportionment among the various jurisdictions.
−Removed: In addition, we operate within multiple tax jurisdictions and are subject to audits in these jurisdictions.
−Removed: These audits can involve complex issues, which may require an extended period of time to resolve.
−Removed: We maintain a liability for the estimate of potential income tax exposure and, in our opinion, adequate provisions for income taxes have been made for all years reported.
−Removed: Any significant changes to the estimates and judgments with respect to the apportionment factor could result in a material change to earnings and cash flows.
−Removed: Occasionally, the federal and state taxing authorities determine that it is necessary to make certain changes to the income tax laws.
−Removed: These changes may include but are not limited to changes in the tax rates and/or the treatment of certain items of income or expense.
−Removed: Accounting guidance requires that the Company reflect the effect of tax laws or tax rates at the date of enactment.
−Removed: Additionally, the Company is required to re-measure its deferred tax assets and liabilities as of the date of enactment.
−Removed: For non-regulated entities, the effect of changes in tax rates and/or tax laws are required to be included in income from continuing operations for the period that includes the enactment date.
−Removed: For regulated entities, if as the result of an action by a regulator it is probable that the future increase or decrease in taxes payable for items such as changes in tax law or rates will be recovered from or returned to customers through future rates, an asset or liability shall be recognized for that probable increase or decrease in future revenue.
−Removed: Accounting guidance also requires that regulatory liabilities and/or assets be considered a temporary difference for which a related deferred tax asset and/or liability shall be recognized.
−Removed: Accounting guidance requires that we establish reserves for uncertain tax positions when it is more likely than not that the positions will not be sustained when challenged by taxing authorities.
−Removed: Any changes to the estimates and judgments with respect to the interpretations, timing or deductibility could result in a change to earnings and cash flows.
−Removed: Interest and penalties related to unrecognized tax benefits, if any, are recognized within income tax expense and accrued interest, and penalties are recognized within accrued taxes on the Consolidated Balance Sheets.
−Removed: To the extent that NJNG invests in property that qualifies for ITCs, the ITC is deferred and amortized to income over the life of the equipment in accordance with regulatory treatment.
−Removed: In general, for our unregulated subsidiaries, we record ITCs on the balance sheet as a contra-asset as a reduction to property, plant and equipment when the property is placed in service.
−Removed: The contra asset is amortized on the Consolidated Statements of Operations as a reduction to depreciation expense, over the useful lives of the related assets.
−Removed: Changes to the federal statutes related to ITCs, which have the effect of reducing or eliminating the credits, could have a negative impact on earnings and cash flows.
−Removed: Recently Issued Accounting Standards
−Removed: Refer to Note 2.
−Removed: Summary of Significant Accounting Policies in the accompanying Consolidated Financial Statements for discussion of recently issued accounting standards.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Management ’ s Overview
−Removed: NJR is a diversified energy services holding company providing retail natural gas service in New Jersey and wholesale natural gas and related energy services to customers in the U.S.
−Removed: In addition, we invest in clean energy projects, storage and transportation assets and provide various repair, sales and installation services.
−Removed: A more detailed description of our organizational structure can be found in Item 1.
−Removed: The following sections include a discussion of results for fiscal 2021 compared to fiscal 2020.
−Removed: The comparative results for fiscal 2020 with fiscal 2019 have been omitted from this Form 10-K, but may be found in Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations in Exhibit Number 99.1 on Form 8-K, filed with the SEC on September 27, 2021.
−Removed: Reporting Segments
−Removed: We have four primary reporting segments as presented in the chart below:
−Removed: In addition to our four reporting segments above, we have non-utility operations that either provide corporate support services or do not meet the criteria to be treated as a separate reporting segment.
−Removed: These operations, which comprise Home Services and Other, include:
−Removed: appliance repair services, sales and installations at NJRHS and commercial real estate holdings at CR&R.
−Removed: Impacts of the COVID-19 Pandemic
−Removed: We closely monitor developments related to the COVID-19 pandemic and have taken steps intended to limit potential exposure for our employees and those we serve.
−Removed: We have also taken proactive steps to ensure business continuity in the safe operation of our business.
−Removed: Both NJR and NJNG continue to have sufficient liquidity to meet their current obligations, and business operations remain fundamentally unchanged at this time.
−Removed: This remains an evolving situation, and we cannot predict the extent or duration of the outbreak, the effects of the pandemic on the global, national or local economy or its effects on our
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: financial condition, results of operations and cash flows.
−Removed: We cannot predict the nature and extent of impacts to future operations.
−Removed: We will continue to monitor developments affecting our employees, customers and operations and take additional steps to address the COVID-19 pandemic and its impacts, as necessary.
−Removed: Operating Results
−Removed: Net income (loss) and assets by reporting segment and operations for the fiscal years ended September 30, are as follows:
−Removed: (Thousands) 2021 2020 2019
−Removed: Net Income Assets Net Income Assets Net Income Assets
−Removed: Natural Gas Distribution $ 107,375 $ 3,707,461 $ 126,902 $ 3,531,477 $ 78,062 $ 3,064,309
−Removed: Clean Energy Ventures 16,789 914,788 22,111 814,277 31,903 694,439
−Removed: Energy Services 58,957 365,423 (11,008) 244,836 (1,268) 290,847
−Removed: Storage and Transportation (67,787) 862,407 18,311 844,799 14,689 240,955
−Removed: Home Services and Other (826) 162,134 5,784 138,375 1,637 104,411
−Removed: Intercompany (1)
−Removed: 3,382 (289,935) 907 (257,287) (1,088) (237,019)
−Removed: Total $ 117,890 $ 5,722,278 $ 163,007 $ 5,316,477 $ 123,935 $ 4,157,942
−Removed: (1) Consists of transactions between subsidiaries that are eliminated in consolidation.
−Removed: The decrease in net income of $45.1 million during fiscal 2021, compared with fiscal 2020, was driven primarily by the impairment of our equity method investment in PennEast, partially offset by increased earnings at Energy Services due to strong market demand related to the extreme cold weather during February 2021.
−Removed: The primary drivers of the changes noted above are described in more detail in the individual segment discussions.
−Removed: The increase in assets during fiscal 2021, compared with fiscal 2020, was additional investment in utility plant in our Natural Gas Distribution segment, solar asset investments at Clean Energy Ventures, and increased infrastructure spend in Storage and Transportation primarily related to the on-going conversion and construction of the southern end of Adelphia Gateway, along with an increase in accounts receivable at Energy Services, partially offset by the impairment of our equity method investment in PennEast.
−Removed: Non-GAAP Financial Measures
−Removed: Our management uses NFE, a non-GAAP financial measure, when evaluating our operating results.
−Removed: Energy Services economically hedges its natural gas inventory with financial derivative instruments.
−Removed: NFE is a measure of the earnings based on eliminating timing differences surrounding the recognition of certain gains or losses, to effectively match the earnings effects of the economic hedges with the physical sale of natural gas and, therefore, eliminates the impact of volatility to GAAP earnings associated with the derivative instruments.
−Removed: To the extent we utilize forwards, futures or other derivatives to hedge forecasted SREC production, unrealized gains and losses are also eliminated from NFE.
−Removed: NFE also excludes impairment charges associated with equity method investments, which are a non-cash charge considered unusual in nature that occur infrequently and are not indicative of the Company's performance for our ongoing operations.
−Removed: Included in the tax effects are current and deferred income tax expense corresponding with the components of NFE.
−Removed: Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for or a replacement of, the comparable GAAP measure and should be read in conjunction with those GAAP results.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Below is a reconciliation of consolidated net income, the most directly comparable GAAP measure, to NFE for the fiscal years ended September 30:
−Removed: (Thousands, except per share data) 2021 2020 2019
−Removed: Net income $ 117,890 $ 163,007 $ 123,935
−Removed: Unrealized loss (gain) on derivative instruments and related transactions 54,203 (9,644) 2,881
−Removed: Tax effect (12,887) 2,296 (711)
−Removed: Effects of economic hedging related to natural gas inventory (1)
−Removed: (42,405) 12,690 4,309
−Removed: Tax effect 10,078 (3,016) (1,024)
−Removed: Impairment of equity method investment
−Removed: Tax effect (11,167) — —
−Removed: Net financial earnings $ 207,712 $ 165,333 $ 129,390
−Removed: Basic earnings per share $ 1.23 $ 1.72 $ 1.39
−Removed: Unrealized loss (gain) on derivative instruments and related transactions 0.56 (0.10) 0.03
−Removed: Tax effect (0.13) 0.02 (0.01)
−Removed: Effects of economic hedging related to natural gas inventory (1)
−Removed: (0.44) 0.13 0.05
−Removed: Tax effect 0.10 (0.03) (0.01)
−Removed: Impairment of equity method investment
−Removed: Tax effect (0.12) — —
−Removed: Basic net financial earnings per share $ 2.16 $ 1.74 $ 1.45
−Removed: (1) Effects of hedging natural gas inventory transactions where the economic impact is realized in a future period.
−Removed: NFE by reporting segment and other operations for the fiscal years ended September 30, discussed in more detail within the operating results sections of each segment, is summarized as follows:
−Removed: (Thousands) 2021 2020 2019
−Removed: Natural Gas Distribution $ 107,375 52 % $ 126,902 77 % $ 78,062 60 %
−Removed: Clean Energy Ventures 16,789 8 22,111 13 31,903 25
−Removed: Energy Services 71,117 34 (7,873) (5) 2,918 2
−Removed: Storage and Transportation 13,046 6 18,311 11 14,689 11
−Removed: Home Services and Other (826) — 5,784 4 1,911 2
−Removed: Eliminations (1)
−Removed: 211 — 98 — (93) —
−Removed: Total $ 207,712 100 % $ 165,333 100 % $ 129,390 100 %
−Removed: (1) Consists of transactions between subsidiaries that are eliminated in consolidation.
−Removed: The increase in NFE of $42.4 million during fiscal 2021, compared with fiscal 2020, was due primarily to increased earnings at Energy Services as previously discussed.
−Removed: Natural Gas Distribution Segment
−Removed: Our Natural Gas Distribution segment is comprised of NJNG, a natural gas utility that provides regulated natural gas service throughout Burlington, Middlesex, Monmouth, Morris, Ocean and Sussex counties in New Jersey to approximately 564,000 residential and commercial customers in its service territory and also participates in the off-system sales and capacity release markets.
−Removed: The business is subject to various risks, including those risks associated with COVID-19, which may include but are not limited to impacts to customer growth and customer usage, customer collections, the timing and costs of capital expenditures and construction of infrastructure projects, operating and financing costs, fluctuations in commodity prices and customer conservation efforts.
−Removed: In addition, NJNG may be subject to adverse economic conditions, certain regulatory actions, environmental remediation and severe weather conditions.
−Removed: It is often difficult to predict the impact of events or trends associated with these risks.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: NJNG’s business is seasonal by nature, as weather conditions directly influence the volume of natural gas delivered to customers on an annual basis.
−Removed: Specifically, customer demand substantially increases during the winter months when natural gas is used for heating purposes.
−Removed: As a result, NJNG receives most of its natural gas distribution revenues during the first and second fiscal quarters and is subject to variations in earnings and working capital during the fiscal year.
−Removed: As a regulated company, NJNG is required to recognize the impact of regulatory decisions on its financial statements.
−Removed: Regulation in the accompanying Consolidated Financial Statements for a more detailed discussion on regulatory actions, including filings related to programs and associated expenditures, as well as rate requests related to recovery of capital investments and operating costs.
−Removed: NJNG’s operations are managed with the goal of providing safe and reliable service, growing its customer base, diversifying its utility gross margin, promoting clean energy programs and mitigating the risks discussed above.
−Removed: Base Rate Case
−Removed: On March 30, 2021, NJNG filed a base rate case with the BPU requesting a natural gas revenue increase of $165.7 million including a rate recovery for SRL and other infrastructure investments.
−Removed: On July 9, 2021, the Company updated its base rate request to $163.9 million, based on nine months of actual information through June 30, 2021.
−Removed: On September 23, 2021, NJNG filed its second update to the base rate case.
−Removed: The updated filing seeks a base rate increase of $162.5 million.
−Removed: On November 17, 2021, the BPU issued an order adopting a stipulation of settlement approving a $79.0 million increase to base rates, effective December 1, 2021.
−Removed: The increase includes an overall rate of return on rate base of 6.84 percent, return on common equity of 9.6 percent, a common equity ratio of 54.0 percent and a composite depreciation rate of 2.78 percent.
−Removed: Infrastructure Projects
−Removed: NJNG has significant annual capital expenditures associated with the management of its natural gas distribution and transmission system, including new utility plant associated with customer growth and its associated PIM and infrastructure programs.
−Removed: Below is a summary of NJNG’s capital expenditures, including accruals for fiscal 2021 and estimates of expected investments over the next fiscal year:
−Removed: Estimated capital expenditures are reviewed on a regular basis and may vary based on the ongoing effects of regulatory oversight, environmental regulations, unforeseen events and the ability to access capital.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Infrastructure Investment Program
−Removed: On February 28, 2019, NJNG filed a petition with the BPU seeking authority to implement a five-year IIP.
−Removed: The IIP consisted of two components:
−Removed: transmission and distribution investments and information technology replacement and enhancements.
−Removed: The total investment for the IIP was approximately $507.0 million.
−Removed: All approved investments will be recovered through annual filings to adjust base rates.
−Removed: On October 28, 2020, the BPU approved the Company’s transmission and distribution component of the IIP for $150.0 million over five years, effective November 1, 2020.
−Removed: NJNG voluntarily withdrew the information technology upgrade component and will seek to recover associated costs in future rate case proceedings.
−Removed: SAFE II and NJ RISE
−Removed: NJNG continues to implement BPU-approved infrastructure projects that are designed to enhance the reliability and integrity of NJNG’s natural gas distribution system.
−Removed: The BPU approved the 5-year SAFE II program and the associated rate mechanism to replace the remaining unprotected steel mains and services from NJNG’s natural gas distribution system at an estimated cost of approximately $200.0 million, excluding AFUDC.
−Removed: With the approval of SAFE II, $157.5 million was approved for accelerated cost recovery methodology.
−Removed: The remaining $42.5 million in capital expenditures must be requested for recovery in base rate cases, of which $23.4 million was approved in NJNG’s 2019 base rate case with the remainder included in the 2021 base rate case.
−Removed: The BPU approved NJNG’s NJ RISE capital infrastructure program, which consists of six capital investment projects estimated to cost $102.5 million, excluding AFUDC, for natural gas distribution storm hardening and mitigation projects, along with associated depreciation expense.
−Removed: These system enhancements are intended to minimize service impacts during extreme weather events to customers in the most storm-prone areas of NJNG’s service territory.
−Removed: Recovery of NJ RISE investments is included in NJNG’s base rates.
−Removed: On March 30, 2020, NJNG filed a petition with the BPU requesting a rate increase of approximately $7.4 million for the recovery associated with NJ RISE and SAFE II capital investment costs of approximately $57.9 million.
−Removed: On July 24, 2020, the Company updated the filing with actual information through June 30, 2020 and the revised rate increase requested was $7.1 million based on $55.1 million of actual capital investments.
−Removed: On September 9, 2020, the BPU approved the increase to base rate revenue, effective October 1, 2020.
−Removed: On March 31, 2021, NJNG filed a petition with the BPU requesting the final base rate increase of approximately $311,000 for the recovery associated with NJ RISE and SAFE II capital investments cost of approximately $3.4 million made through June 30, 2021.
−Removed: On June 22, 2021, this filing was consolidated with the 2021 base rate case and on July 30, 2021, was updated for actual information through June 30, 2021, which revised the increase requested to $269,000.
−Removed: On November 17, 2021, the BPU issued an order for the consolidated matter which included approval for the final increase for the NJ RISE/SAFE II programs for the requested $269,000.
−Removed: Southern Reliability Link
−Removed: The SRL is an approximately 30-mile, 30-inch transmission main designed to support improved system reliability and integrity in the southern portion of NJNG’s service territory.
−Removed: Construction began on the project in December 2018 and SRL was placed in service during August 2021.
−Removed: Customer Growth
−Removed: In conducting NJNG’s business, management focuses on factors it believes may have significant influence on its future financial results.
−Removed: NJNG’s policy is to work with all stakeholders, including customers, regulators and policymakers, to achieve favorable results.
−Removed: These factors include the rate of NJNG’s customer growth in its service territory, which can be influenced by political and regulatory policies, the delivered cost of natural gas compared with competing fuels, interest rates and general economic and business conditions.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: NJNG’s total customers as of September 30, include the following:
−Removed: 2021 2020 2019
−Removed: Firm customers
−Removed: Residential 502,546 497,779 486,474
−Removed: Commercial, industrial & other 30,615 28,735 28,992
−Removed: Residential transport 21,882 22,420 22,870
−Removed: Commercial transport 8,815 9,184 9,237
−Removed: Total firm customers 563,858 558,118 547,573
−Removed: Other 47 48 53
−Removed: Total customers 563,905 558,166 547,626
−Removed: During fiscal 2021, NJNG added 7,854 new customers.
−Removed: NJNG expects these new customer additions, and those customers who added additional natural gas services to their premises to contribute approximately $5.6 million to utility gross margin during fiscal 2022.
−Removed: NJNG also added 8,349 and 9,711 new customers during the fiscal years ended September 30, 2020 and 2019, respectively.
−Removed: NJNG continues to expect to add approximately 28,000 to 30,000 new customers during the three-year period of fiscal 2022 to 2024.
−Removed: Based on information from municipalities and developers, as well as external industry analysts and management’s experience, NJNG estimates that approximately 63 percent of the growth will come from new construction markets and 37 percent from customer conversions to natural gas from other fuel sources.
−Removed: This new customer and conversion growth would increase utility gross margin under NJNG's base rates by approximately $6.2 million annually, as calculated under NJNG's CIP tariff.
−Removed: See the Natural Gas Distribution Segment Operating Results section that follows for a definition and further discussion of utility gross margin.
−Removed: Energy Efficiency Programs
−Removed: SAVEGREEN conducts home energy audits and provides various grants, incentives and financing alternatives designed to encourage the installation of high-efficiency heating and cooling equipment and other energy efficiency upgrades.
−Removed: Depending on the specific incentive or approval, NJNG recovers costs associated with the programs over a two- to 10-year period through a tariff rider mechanism.
−Removed: On March 3, 2021, the BPU approved a three-year SAVEGREEN program consisting of approximately $126.1 million of direct investment, $109.4 million in financing options, and approximately $23.4 million in operation and maintenance expenses, which resulted in a $15.6 million annual recovery increase, effective July 1, 2021.
−Removed: On May 29, 2020, NJNG filed a petition with the BPU for a slight decrease in its EE recovery rate.
−Removed: Throughout the course of the proceeding, NJNG updated the filing with additional actual information.
−Removed: Based on the updated information, the BPU approved NJNG to maintain its existing rate, which will result in an annual recovery of approximately $11.4 million, effective November 1, 2020.
−Removed: On June 11, 2021, NJNG submitted its annual cost recovery filing for the SAVEGREEN programs established from 2010 through 2018.
−Removed: If approved, the proposed rate increase will increase annual recoveries by $2.2 million, expected to be effective in early 2022.
−Removed: The following table summarizes loans, grants, rebates and related investments as of September 30:
−Removed: (Thousands) 2021 2020
−Removed: Loans $ 132,800 $ 119,400
−Removed: Grants, rebates and related investments 98,100 80,500
−Removed: Total $ 230,900 $ 199,900
−Removed: Program recoveries from customers during the fiscal year ended September 30, 2021 and 2020, were $12.4 million and $10.3 million, respectively.
−Removed: The recovery includes a weighted average cost of capital that ranges from 6.69 percent to 7.76 percent, with a return on equity of 9.6 percent to 10.3 percent.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Conservation Incentive Program/BGSS
−Removed: The CIP facilitates normalizing NJNG’s utility gross margin for variances not only due to weather but also for other factors affecting customer usage, such as conservation and energy efficiency.
−Removed: Recovery of utility gross margin for the non-weather variance through the CIP is limited to the amount of certain natural gas supply cost savings achieved and is subject to a variable margin revenue test.
−Removed: Additionally, recovery of the CIP utility gross margin is subject to an annual earnings test.
−Removed: An annual review of the CIP must be filed by June 1, coincident with NJNG’s annual BGSS filing, during which NJNG can request rate changes to the CIP.
−Removed: NJNG’s total utility firm gross margin includes the following adjustments related to the CIP mechanism:
−Removed: (Thousands) 2021 2020 2019
−Removed: $ 13,273 $ 17,882 $ 2,699
−Removed: Usage (1,852) 292 (341)
−Removed: Total $ 11,421 $ 18,174 $ 2,358
−Removed: (1) Compared with the CIP 20-year average, weather was 6.5 percent, 7.6 percent and 1 percent warmer-than-normal during fiscal 2021, 2020 and 2019 respectively.
−Removed: Recovery of Natural Gas Costs
−Removed: NJNG’s cost of natural gas is passed through to our customers, without markup, by applying NJNG’s authorized BGSS rate to actual therms delivered.
−Removed: There is no utility gross margin associated with BGSS costs;
−Removed: therefore, changes in such costs do not impact NJNG’s earnings.
−Removed: NJNG monitors its actual natural gas costs in comparison to its BGSS rates to manage its cash flows associated with its allowed recovery of natural gas costs, which is facilitated through BPU-approved deferred accounting and the BGSS pricing mechanism.
−Removed: Accordingly, NJNG occasionally adjusts its periodic BGSS rates or can issue credits or refunds, as appropriate, for its residential and small commercial customers when the commodity cost varies from the existing BGSS rate.
−Removed: BGSS rates for its large commercial customers are adjusted monthly based on NYMEX prices.
−Removed: NJNG’s residential and commercial markets are currently open to competition, and its rates are segregated between BGSS (i.e., natural gas commodity) and delivery (i.e., transportation) components.
−Removed: NJNG earns utility gross margin through the delivery of natural gas to its customers and, therefore, is not negatively affected by customers who use its transportation service and purchase natural gas from another supplier.
−Removed: Under an existing order from the BPU, BGSS can be provided by suppliers other than the state’s natural gas utilities;
−Removed: however, customers who purchase natural gas from another supplier continue to use NJNG for transportation service.
−Removed: On November 20, 2020, NJNG notified the BPU of its intent to provide BGSS bill credits to residential and small commercial sales customers effective December 1, 2020 to December 31, 2020.
−Removed: On December 22, 2020, NJNG notified the BPU of the extension of the BGSS bill credits through January 31, 2021.
−Removed: The actual bill credits given to customers totaled $20.6 million, $19.3 million net of tax.
−Removed: On March 3, 2021, the BPU approved, on a final basis, NJNG’s annual petition to modify its BGSS, balancing charge and CIP rates for residential and small commercial customers.
−Removed: The rate changes resulted in a $20.4 million decrease to the annual revenues credited to BGSS, a $3.8 million annual decrease related to its balancing charge, as well as changes to CIP rates, which resulted in a $16.5 million annual recovery increase, effective October 1, 2020.
−Removed: The balancing charge rate includes the cost of balancing natural gas deliveries with customer usage for sales and transportation customers and balancing charge revenues are credited to BGSS.
−Removed: On May 28, 2021, NJNG submitted its annual petition to modify its BGSS, balancing charge and CIP rates.
−Removed: On November 17, 2021, the BPU approved a $2.9 million increase to the annual revenues credited to BGSS, a $13.0 million annual increase related to its balancing charge, as well as changes to CIP rates, which result in a $6.3 million decrease to our annual recovery decrease, effective December 1, 2021.
−Removed: Refer to Note 4.
−Removed: Regulation - BGSS and CIP in the accompanying Consolidated Financial Statements for a further discussion of NJNG’s periodic BGSS and CIP rate adjustments.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: BGSS Incentive Programs
−Removed: NJNG is eligible to receive financial incentives for reducing BGSS costs through a series of utility gross margin-sharing programs that include off-system sales, capacity release and storage incentive programs.
−Removed: These programs are designed to encourage better utilization and hedging of NJNG’s natural gas supply, transportation and storage assets.
−Removed: Depending on the program, NJNG shares 80 or 85 percent of utility gross margin generated by these programs with firm customers.
−Removed: Utility gross margin from incentive programs was $13.4 million, $9.5 million and $8.4 million during the fiscal years ended September 30, 2021, 2020 and 2019, respectively.
−Removed: In order to provide relative price stability to its natural gas supply portfolio, NJNG employs a hedging strategy with the goal of having at least 75 percent of the Company’s projected winter periodic BGSS natural gas sales volumes hedged by each November 1 and at least 25 percent of the projected periodic BGSS natural gas sales hedged for the following April-through-March period.
−Removed: This is accomplished with the use of various financial instruments including futures, swaps and options used in conjunction with commodity and/or weather-related hedging activity.
−Removed: Commodity Prices
−Removed: Our Natural Gas Distribution segment is affected by the price of natural gas, which can have a significant impact on our cash flows, short-term financing costs, the price of natural gas charged to our customers through the BGSS clause, our ability to collect accounts receivable, which impacts our bad debt expense, and our ability to maintain a competitive advantage over other energy sources.
−Removed: Natural gas commodity prices are shown in the graph below, which illustrates the daily natural gas prices (1) in the Northeast market region, also known as TETCO M-3.
−Removed: (1) Data sourced from S&P Global Platts.
−Removed: The maximum price per MMBtu was $14.57, $5.59 and $9.17 and the minimum price was $0.28, $0.68 and $1.09 for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.
−Removed: A more detailed discussion of the impacts of the price of natural gas on operating revenues, natural gas purchases and cash flows can be found in the Results of Operations and Cash Flow sections of Item 7.
−Removed: Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Societal Benefits Charge
−Removed: NJNG’s qualifying customers are eligible for the USF program, which is administered by the New Jersey Department of Community Affairs, to help make energy bills more affordable.
−Removed: On June 25, 2020, NJNG filed its annual USF compliance filing proposing a decrease to the statewide USF rate, which will result in annual decreases of approximately $400,000.
−Removed: On September 23, 2020, the BPU approved the decrease, effective October 1, 2020.
−Removed: On March 16, 2020, the BPU approved on a final basis NJNG's annual SBC application including recovery of remediation expenses, an increase in the RAC of approximately $1.2 million annually and an annual decrease to the NJCEP factor of $600,000, which was effective April 1, 2020.
−Removed: On April 7, 2021, the BPU approved on a final basis NJNG's annual SBC application to recover remediation expenses, including an increase in the RAC, of approximately $1.3 million annually and an increase to the NJCEP factor, of approximately $6.0 million, which was effective May 1, 2021.
−Removed: On June 25, 2021, NJNG filed its annual USF compliance filing proposing an increase to the statewide USF rate, which will result in an annual increase of approximately $4.9 million.
−Removed: On September 14, 2021, the BPU approved the increase, effective October 1, 2021.
−Removed: On September 30, 2021, NJNG filed its annual SBC application requesting recovery of remediation expenses, an increase in the RAC of approximately $2.0 million annually and an annual decrease to the NJCEP factor of $500,000 effective April 1, 2022.
−Removed: Environmental Remediation
−Removed: NJNG is responsible for the environmental remediation of former MGP sites, which contain contaminated residues from former gas manufacturing operations that ceased operating at these sites by the mid-1950s and, in some cases, had been discontinued many years earlier.
−Removed: Actual MGP remediation costs may vary from management’s estimates due to the developing nature of remediation requirements, regulatory decisions by the NJDEP and related litigation.
−Removed: NJNG reviews these costs at the end of each fiscal year and adjusts its liability and corresponding regulatory asset as necessary to reflect its expected future remediation obligation.
−Removed: Accordingly, NJNG recognized a regulatory asset and an obligation of $135.0 million as of September 30, 2021, a decrease of $15.6 million compared with the prior fiscal period.
−Removed: In June 2019, NJNG initiated a preliminary assessment of a site in Aberdeen, New Jersey to determine prior ownership and if former MGP operations were active at the location.
−Removed: The preliminary assessment and site investigation activities are ongoing at the Aberdeen, NJ site location and based on initial findings will be moving to remedial investigation phase.
−Removed: The costs associated with preliminary assessment, site investigation and remedial investigation activities are considered immaterial and are included as a component of NJNG’s annual SBC application to recover remediation expenses.
−Removed: We will continue to gather information to further refine and enhance its estimate of potential costs for this site as it becomes available.
−Removed: Commitments and Contingent Liabilities for a more detailed description.
−Removed: Other regulatory filings and a more detailed discussion of the filings in this section can be found in Note 4.
−Removed: Regulation in the accompanying Consolidated Financial Statements.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Operating Results
−Removed: NJNG’s operating results for the fiscal years ended September 30, are as follows:
−Removed: (Thousands) 2021 2020 2019
−Removed: Operating revenues $ 731,796 $ 729,923 $ 710,793
−Removed: Operating expenses
−Removed: Natural gas purchases (1) (2)
−Removed: 260,714 287,307 336,489
−Removed: Operation and maintenance 203,740 162,792 171,198
−Removed: Regulatory rider expense (3)
−Removed: 38,304 34,529 33,937
−Removed: Depreciation and amortization 80,045 71,883 57,980
−Removed: Total operating expenses 582,803 556,511 599,604
−Removed: Operating income 148,993 173,412 111,189
−Removed: Other income, net 13,841 11,486 2,441
−Removed: Interest expense, net of capitalized interest 36,405 30,975 26,134
−Removed: Income tax provision 19,054 27,021 9,434
−Removed: Net income $ 107,375 $ 126,902 $ 78,062
−Removed: (1) Includes the purchased cost of the natural gas, fees paid to pipelines and storage facilities, adjustments as a result of BGSS incentive programs and hedging transactions.
−Removed: These expenses are passed through to customers and are offset by corresponding revenues.
−Removed: (2) Includes related party transactions of approximately $13.0 million, $11.5 million and $16.2 million during fiscal 2021, 2020 and 2019, respectively, a portion of which are eliminated in consolidation.
−Removed: (3) Consists of expenses associated with state-mandated programs, the RAC and energy efficiency programs, and are calculated on a per-therm basis.
−Removed: These expenses are passed through to customers and are offset by corresponding revenues.
−Removed: Operating Revenues and Natural Gas Purchases
−Removed: Operating revenues remained relatively flat during fiscal 2021 compared with fiscal 2020.
−Removed: Natural gas purchases decreased 9.3 percent during fiscal 2021 compared with fiscal 2020.
−Removed: The factors contributing to the increases and decreases in operating revenues and natural gas purchases during fiscal 2021, are as follows:
−Removed: (Thousands) Operating
−Removed: revenues Natural gas
−Removed: Firm sales $ 24,853 $ 8,839
−Removed: Bill credits (20,590) (20,590)
−Removed: Average BGSS rates (20,398) (20,398)
−Removed: BGSS incentives 9,460 5,517
−Removed: Base rate impact 5,076 —
−Removed: CIP adjustments (6,753) —
−Removed: SAFE II/NJ RISE 6,689 —
−Removed: Total increase (decrease) $ 1,873 $ (26,593)
−Removed: (1) Other includes changes in rider rates, including those related to EE, NJCEP and other programs.
−Removed: Non-GAAP Financial Measures
−Removed: Management uses utility gross margin, a non-GAAP financial measure, when evaluating the operating results of NJNG.
−Removed: NJNG’s utility gross margin is defined as natural gas revenues less natural gas purchases, sales tax and regulatory rider expenses, and may not be comparable to the definition of gross margin used by others in the natural gas distribution business and other industries.
−Removed: Management believes that utility gross margin provides a meaningful basis for evaluating utility operations since natural gas costs, sales tax and regulatory rider expenses are included in operating revenues and passed through to customers and, therefore, have no effect on utility gross margin.
−Removed: Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measure.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Utility Gross Margin
−Removed: A reconciliation of operating revenues, the closest GAAP financial measure to NJNG’s utility gross margin, is as follows for the fiscal years ended September 30:
−Removed: (Thousands) 2021 2020 2019
−Removed: Operating revenues $ 731,796 $ 729,923 $ 710,793
−Removed: Natural gas purchases 260,714 287,307 336,489
−Removed: Regulatory rider expense 38,304 34,529 33,937
−Removed: Utility gross margin $ 432,778 $ 408,087 $ 340,367
−Removed: Utility gross margin consists of three components:
−Removed: • utility firm gross margin generated from only the delivery component of either a sales tariff or a transportation tariff from residential and commercial customers who receive natural gas service from NJNG;
−Removed: • BGSS incentive programs, where revenues generated or savings achieved from BPU-approved off-system sales, capacity release or storage incentive programs are shared between customers and NJNG;
−Removed: • utility gross margin generated from off-tariff customers, as well as interruptible customers.
−Removed: The following provides more information on the components of utility gross margin and associated throughput (Bcf) of natural gas delivered to customers:
−Removed: 2021 2020 2019
−Removed: ($ in thousands) Margin Bcf Margin Bcf Margin Bcf
−Removed: Utility gross margin/throughput
−Removed: Residential $ 288,723 46.2 $ 275,033 44.6 $ 224,597 46.0
−Removed: Commercial, industrial and other 64,950 8.6 57,929 8.2 50,553 9.7
−Removed: Firm transportation 61,870 13.7 60,199 13.3 51,069 13.7
−Removed: Total utility firm gross margin/throughput 415,543 68.5 393,161 66.1 326,219 69.4
−Removed: BGSS incentive programs 13,415 101.3 9,471 118.4 8,398 123.8
−Removed: Interruptible/off-tariff agreements 3,820 22.9 5,455 30.9 5,750 39.0
−Removed: Total utility gross margin/throughput $ 432,778 192.7 $ 408,087 215.4 $ 340,367 232.2
−Removed: Utility Firm Gross Margin
−Removed: Utility firm gross margin increased $22.4 million during fiscal 2021 compared with fiscal 2020, due primarily to the increase in firm sales and base rates, along with increased returns on infrastructure programs related to SAFE II and NJ RISE.
−Removed: BGSS Incentive Programs
−Removed: The factors contributing to the change in utility gross margin generated by BGSS incentive programs are as follows:
−Removed: (Thousands) 2021 v.
−Removed: Storage $ 2,664
−Removed: Off-system sales 1,263
−Removed: Capacity release 16
−Removed: Total increase $ 3,943
−Removed: The increase in utility gross margin was due primarily to improved opportunities for storage incentive compared with the prior year along with increased margins from off-system sales.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Operation and Maintenance Expense
−Removed: O&M expense increased $40.9 million during fiscal 2021 compared with fiscal 2020, due primarily to increased compensation, information technology expenditures and bad debt expenses.
−Removed: Depreciation Expense
−Removed: Depreciation expense increased $8.2 million in fiscal 2021, compared with fiscal 2020, as a result of additional utility plant being placed into service.
−Removed: Interest Expense
−Removed: Interest expense increased $5.4 million in fiscal 2021, compared with fiscal 2020, due primarily to the timing of issuance of outstanding long-term debt and additional short-term borrowings.
−Removed: Other income increased $2.4 million during fiscal 2021, compared with fiscal 2020, due primarily to increased AFUDC equity earned on infrastructure projects.
−Removed: Income Tax Provision
−Removed: Income tax provision decreased $8.0 million during fiscal 2021, compared with fiscal 2020, due primarily to lower operating income.
−Removed: Net income decreased $19.5 million to $107.4 million in fiscal 2021, compared with fiscal 2020, due primarily to increased O&M, depreciation and interest expenses, as previously discussed.
−Removed: Clean Energy Ventures Segment
−Removed: Our Clean Energy Ventures segment actively pursues opportunities in the renewable energy markets.
−Removed: Clean Energy Ventures enters into various agreements to install solar net-metered systems for residential and commercial customers, as well as large commercial grid-connected projects.
−Removed: In addition, Clean Energy Ventures enters into various long-term agreements, including PPAs, to supply energy from commercial solar projects.
−Removed: Capital expenditures related to clean energy projects are subject to change due to a variety of factors that may affect our ability to commence operations at these projects on a timely basis or at all, including logistics associated with the start-up of residential and commercial solar projects, such as timing of construction schedules, the permitting and regulatory process, any delays related to electric grid interconnection, economic trends, unforeseen events and the ability to access capital or allocation of capital to other investments or business opportunities.
−Removed: Clean Energy Ventures is also subject to risks associated with COVID-19, which may include impacts to residential solar customer growth and customer collections, our ability to identify and develop commercial solar asset investments, impacts to our supply chain and our ability to source materials for construction.
−Removed: The primary contributors toward the value of qualifying clean energy projects are tax incentives and RECs.
−Removed: Changes in the federal statutes related to the ITC and/or relevant state legislation and regulatory policies affecting the market for solar renewable energy credits, could significantly affect future results.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Solar projects placed in service and related expenditures for the fiscal years ended September 30, are as follows:
−Removed: ($ in Thousands) 2021 2020 2019
−Removed: Placed in service Projects MW Costs Projects MW Costs Projects MW Costs
−Removed: Grid-connected (1) (2)
−Removed: 1 2.9 $ 3,433 9 60.1 $ 121,516 3 29.0 $ 64,684
−Removed: Commercial (1) (3)
−Removed: 1 2.7 5,576 — — 43 4 22.8 71,730
−Removed: Residential 421 4.8 13,885 481 5.9 17,474 815 8.3 26,796
−Removed: Total placed in service 423 10.4 $ 22,894 490 66.0 $ 139,033 822 60.1 $ 163,210
−Removed: (1) Includes projects subject to sale leaseback arrangements.
−Removed: (2) Includes an operational 2.9 MW commercial solar project acquired in December 2020.
−Removed: (3) Includes a 4.4 MW commercial solar project acquired in August 2019.
−Removed: Since inception, Clean Energy Ventures has constructed a total of 367.8 MW of solar capacity.
−Removed: Projects that were placed in service through December 31, 2019, qualified for a 30-percent federal ITC.
−Removed: The ITC declined to 26 percent for property under construction before the end of 2020.
−Removed: The Consolidated Appropriations Act, 2021 extended the 26 percent ITC for property under construction during 2021 and 2022.
−Removed: The ITC will drop to 22 percent for property under construction before the end of 2023.
−Removed: After 2023 the ITC will be reduced to 10 percent.
−Removed: Projects placed in service after December 31, 2019, also qualified for a 30 percent federal ITC if five percent or more of the total costs of a solar property are incurred before the end of the applicable year and there are continuous efforts to advance towards completion of the project, based on the IRS guidance around the ITC safe harbor determination.
−Removed: We have taken steps to preserve the ITC at the higher rate for certain solar projects that are completed after the scheduled reduction in rates, in accordance with IRS guidance.
−Removed: Clean Energy Ventures may enter into transactions to sell certain of its commercial solar assets concurrent with agreements to lease the assets back over a period of five to 15 years.
−Removed: The Company will continue to operate the solar assets and are responsible for related expenses and entitled to retain the revenue generated from SRECs, TRECs and energy sales.
−Removed: The ITCs and other tax benefits associated with these solar projects transfer to the buyer, if applicable;
−Removed: however, the lease payments are structured so that Clean Energy Ventures is compensated for the transfer of the related tax incentives.
−Removed: Accordingly, for solar projects financed under sale leasebacks for which the assets were sold during the first 5 years of in-service life, Clean Energy Ventures recognizes the equivalent value of the ITC in other income on the Consolidated Statements of Operations over the respective five-year ITC recapture periods, starting with the second year of the lease.
−Removed: During fiscal 2021 and 2020, Clean Energy Ventures received proceeds of $17.7 million and $42.9 million, respectively, in connection with the sale leaseback of commercial solar assets.
−Removed: There were no sale leasebacks during fiscal 2019.
−Removed: 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 the opportunity to have a solar system installed at their home or place of business with no installation or maintenance expenses.
−Removed: Clean Energy Ventures owns, operates and maintains the system over the life of the contract in exchange for monthly payments.
−Removed: For solar installations placed in-service in New Jersey prior to April 30, 2020, each MWh of electricity produced creates an SREC that represents the renewable energy attribute of the solar-electricity generated that can be sold to third parties, predominantly load-serving entities that are required to comply with the solar requirements under New Jersey’s renewable portfolio standard.
−Removed: In December 2019, the BPU established the TREC as pursuant to the successor program to the SREC program.
−Removed: TRECs provide a fixed compensation base multiplied by an assigned project factor in order to determine their value.
−Removed: The project factor is determined by the type and location of the project, as defined.
−Removed: All TRECs generated are required to be purchased monthly by a TREC program administrator as appointed by the BPU.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: SREC and TREC activity for the fiscal years ended September 30, is as follows:
−Removed: 2021 2020 2019
−Removed: SRECs TRECs SRECs TRECs SRECs
−Removed: Inventory balance as of October 1, 35,011 9,270 53,395 — 105,192
−Removed: RECs generated 406,118 31,767 389,716 9,270 311,803
−Removed: RECs delivered (333,025) (34,093) (408,100) — (363,600)
−Removed: Inventory balance as of September 30, 108,104 6,944 35,011 9,270 53,395
−Removed: The average SREC sales price was $196 in fiscal 2021, $199 in fiscal 2020 and $207 in fiscal 2019 and the average TREC price was $144 in both fiscal 2021 and 2020.
−Removed: Clean Energy Ventures hedges its expected SREC production through the use of forward sales contracts.
−Removed: The following table reflects the hedged percentage of our projected inventory related to its in-service commercial and residential assets:
−Removed: Energy Year (1)
−Removed: Percent of SRECs Hedged
−Removed: (1) Energy years are compliance periods for New Jersey’s renewable portfolio standard that run from June 1 to May 31.
−Removed: There are no direct costs associated with the production of SRECs or TRECs by our solar assets.
−Removed: All related costs are included as a component of O&M expenses on the Consolidated Statements of Operations, including such expenses as facility maintenance and broker fees.
−Removed: Operating Results
−Removed: Clean Energy Ventures’ financial results for the fiscal years ended September 30, are summarized as follows:
−Removed: (Thousands) 2021 2020 2019
−Removed: Operating revenues $ 95,275 $ 102,617 $ 98,099
−Removed: Operating expenses
−Removed: Operation and maintenance 36,715 30,310 28,614
−Removed: Depreciation and amortization (1)
−Removed: 20,567 25,329 22,376
−Removed: Total operating expenses (1)
−Removed: 57,282 55,639 50,990
−Removed: Operating income (1)
−Removed: 37,993 46,978 47,109
−Removed: Other income, net 6,392 6,420 6,910
−Removed: Interest expense, net 22,548 20,253 14,846
−Removed: Income tax provision (1)
−Removed: 5,048 11,034 7,270
−Removed: Net income (1)
−Removed: $ 16,789 $ 22,111 $ 31,903
−Removed: (1) Amounts in fiscal 2020 and 2019 have been adjusted for the change in accounting method related to ITCs, see Note 2.
−Removed: Summary of Significant Accounting Policies for more detail.
−Removed: Operating Revenues
−Removed: Operating revenues decreased $7.3 million in fiscal 2021, compared with fiscal 2020, due primarily to decreased SREC revenue due to timing of deliveries, partially offset by the recognition of TREC revenue, which was not present during the same period in the prior year.
−Removed: Operation and Maintenance Expense
−Removed: O&M expense increased $6.4 million in fiscal 2021, compared with fiscal 2020, due primarily to increased project maintenance, lease expenses and information technology expenses.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Depreciation Expense
−Removed: Depreciation expense decreased $4.8 million in fiscal 2021, compared with fiscal 2020, due primarily to the change in estimated useful lives of our commercial solar assets, effective July 1, 2020.
−Removed: Income Tax Provision
−Removed: Income tax provision decreased $6.0 million during fiscal 2021, compared with fiscal 2020, due primarily to lower operating income along with a decrease in the state tax rate resulting from tax reform in New Jersey.
−Removed: Net income in fiscal 2021 decreased $5.3 million, compared with fiscal 2020, due primarily to the increased O&M and interest expense, partially offset by decreased depreciation expense, as previously discussed.
−Removed: Energy Services Segment
−Removed: Energy Services markets and sells natural gas to wholesale and retail customers and manages natural gas transportation and storage assets throughout major market areas across North America.
−Removed: Energy Services maintains a strategic portfolio of natural gas transportation and storage contracts that it utilizes in conjunction with its market expertise to provide service and value to its customers.
−Removed: Availability of these transportation and storage contracts allows Energy Services to generate market opportunities by capturing price differentials over specific time horizons and between geographic market locations.
−Removed: Energy Services also provides management of transportation and storage assets for natural gas producers and regulated utilities.
−Removed: These management transactions typically involve the release of producer/utility-owned storage and/or transportation capacity in combination with either an obligation to purchase and/or deliver physical natural gas.
−Removed: In addition to the contractual purchase and/or sale of physical natural gas, Energy Services generates or pays fee-based margin in exchange for its active management and may provide the producer and/or utility with additional margin based on actual results.
−Removed: In conjunction with the active management of these contracts, Energy Services generates financial margin by identifying market opportunities and simultaneously entering into natural gas purchase/sale, storage or transportation contracts and financial derivative contracts.
−Removed: In cases where storage is utilized to fulfill these contracts, these forecast sales and/or purchases are economically hedged through the use of financial derivative contracts.
−Removed: The financial derivative contracts consist primarily of exchange-traded futures, options and swap contracts, and are frequently used to lock in anticipated transactional cash flows and to help manage volatility in natural gas market prices.
−Removed: Generally, when its transportation and storage contracts are exposed to periods of increased market volatility, Energy Services is able to implement strategies that allow it to capture margin by improving the respective time or geographic spreads on a forward basis.
−Removed: Energy Services accounts for its physical commodity contracts and its financial derivative instruments at fair value on the Consolidated Balance Sheets.
−Removed: Changes in the fair value of physical commodity contracts and financial derivative instruments are included in earnings as a component of operating revenues or natural gas purchases on the Consolidated Statements of Operations.
−Removed: Volatility in reported net income at Energy Services can occur over periods of time due to changes in the fair value of derivatives, as well as timing differences related to certain transactions.
−Removed: Unrealized gains and losses can fluctuate as a result of changes in the price of natural gas, SRECs and foreign currency from the original transaction price.
−Removed: Volatility in earnings can also occur as a result of timing differences between the settlement of financial derivatives and the sale of the underlying physical commodity.
−Removed: For example, when a financial instrument settles and the physical natural gas is injected into inventory, the realized gains and losses associated with the financial instrument are recognized in earnings.
−Removed: However, the gains and losses associated with the physical natural gas are not recognized in earnings until the natural gas inventory is withdrawn from storage and sold, at which time Energy Services realizes the entire margin on the transaction.
−Removed: On December 16, 2020, 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.
−Removed: The utility will provide certain asset management services and Energy Services may deliver natural gas to the utility in exchange for aggregate net proceeds of approximately $500 million, payable through November 1, 2030.
−Removed: The asset management agreements include a series of initial and permanent releases commencing on November 1, 2021.
−Removed: 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.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Operating Results
−Removed: Energy Services’ financial results for the fiscal years ended September 30, are summarized as follows:
−Removed: (Thousands) 2021 2020 2019
−Removed: Operating revenues (1)
−Removed: $ 1,228,420 $ 1,030,419 $ 1,742,791
−Removed: Operating expenses
−Removed: Natural gas purchases (including demand charges (2)(3) )
−Removed: 1,098,261 1,024,579 1,719,519
−Removed: Operation and maintenance 50,885 17,368 20,943
−Removed: Depreciation and amortization 111 123 118
−Removed: Total operating expenses 1,149,257 1,042,070 1,740,580
−Removed: Operating income (loss) 79,163 (11,651) 2,211
−Removed: Other income 369 304 153
−Removed: Interest expense, net 2,204 3,276 5,205
−Removed: Income tax provision (benefit) 18,371 (3,615) (1,573)
−Removed: Net income (loss) $ 58,957 $ (11,008) $ (1,268)
−Removed: (1) Includes related party transactions of approximately $426,000, $1.1 million and $8.2 million during fiscal 2021, 2020 and 2019, respectively, which are eliminated in consolidation.
−Removed: (2) Costs associated with pipeline and storage capacity that are expensed over the term of the related contracts, which generally varies from less than one year to 10 years.
−Removed: (3) Includes related party transactions of approximately $841,000, $183,000 and $3.4 million during fiscal 2021, 2020 and 2019, respectively, a portion of which are eliminated in consolidation.
−Removed: As of September 30, Energy Services’ portfolio of financial derivative instruments are composed of:
−Removed: (in Bcf) 2021 2020 2019
−Removed: Net short futures contracts 13.7 29.3 34.6
−Removed: Net long options — — 1.0
−Removed: Operating Revenues and Natural Gas Purchases
−Removed: During fiscal 2021, operating revenues increased $198.0 million and natural gas purchases increased $73.7 million, due primarily to increased natural gas price and volumes compared to the prior period, along with volatility related to the extreme weather in the mid-continent and southern regions of the U.S.
−Removed: during February 2021.
−Removed: Future results at Energy Services are contingent upon natural gas market price volatility driven by variations in both the supply and demand balances caused by weather and other factors.
−Removed: As a result, variations in weather patterns in the key market areas served may affect earnings during the fiscal year.
−Removed: Changes in market fundamentals, such as an increase in supply and decrease in demand due to warmer temperatures, and reduced volatility, can negatively impact Energy Services’ earnings.
−Removed: Management ’ s Discussion and Analysis of Financial Condition and Results of Operations- Natural Gas Distribution Segment for TETCO M-3 Daily Prices, which illustrates the daily natural gas prices in the Northeast market region.
−Removed: Operation and Maintenance Expense
−Removed: O&M expense increased $33.5 million during fiscal 2021, compared with fiscal 2020, due primarily to increased compensation costs, charitable contributions and bad debt expense.
−Removed: Income Tax Provision (Benefit)
−Removed: Income taxes increased $22.0 million during fiscal 2021, compared with fiscal 2020, due primarily to increased operating income related to increased natural gas price volatility during February 2021, as discussed above.
−Removed: Net Income (Loss)
−Removed: Net income increased $70.0 million during fiscal 2021, compared with fiscal 2020, due primarily to increased operating revenue, partially offset by higher natural gas purchases and O&M expenses, as previously discussed.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Non-GAAP Financial Measures
−Removed: Management uses financial margin and NFE, non-GAAP financial measures, when evaluating the operating results of Energy Services.
−Removed: Financial margin and NFE are based on removing timing differences associated with certain derivative instruments, as discussed above.
−Removed: There is a related tax effect on current and deferred income tax expense corresponding with NFE.
−Removed: Management views these measures as representative of the overall expected economic result and uses these measures to compare Energy Services’ results against established benchmarks and earnings targets as these measures eliminate the impact of volatility on GAAP earnings as a result of timing differences associated with the settlement of derivative instruments.
−Removed: To the extent that there are unanticipated impacts from changes in the market value related to the effectiveness of economic hedges, Energy Services’ actual non-GAAP results can differ from the results anticipated at the outset of the transaction.
−Removed: Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measure.
−Removed: When Energy Services reconciles the most directly comparable GAAP measure to both financial margin and NFE, the current period unrealized gains and losses on derivatives are excluded as a reconciling item.
−Removed: Financial margin and NFE also exclude the effects of economic hedging of the value of our natural gas in storage and, therefore, only include realized gains and losses related to natural gas withdrawn from storage, effectively matching the full earnings effects of the derivatives with realized margins on the related physical natural gas flows.
−Removed: Financial Margin
−Removed: The following table is a computation of Energy Services’ financial margin for the fiscal years ended September 30.
−Removed: (Thousands) 2021 2020 2019
−Removed: Operating revenues $ 1,228,420 $ 1,030,419 $ 1,742,791
−Removed: Natural gas purchases 1,098,261 1,024,579 1,719,519
−Removed: Unrealized (gain) loss on derivative instruments and related transactions (1)
−Removed: 58,362 (8,583) 1,195
−Removed: Effects of economic hedging related to natural gas inventory (2)
−Removed: (42,405) 12,690 4,309
−Removed: Financial margin $ 146,116 $ 9,947 $ 28,776
−Removed: (1) Includes unrealized (gains) losses related to an intercompany transaction between NJNG and Energy Services that have been eliminated in consolidation of approximately $(3.2) million, $(809,000) and $995,000, net of taxes for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.
−Removed: (2) Effects of hedging natural gas inventory transactions where the economic impact is realized in a future period.
−Removed: A reconciliation of operating income, the closest GAAP financial measure to Energy Services’ financial margin, is as follows for the fiscal years ended September 30:
−Removed: (Thousands) 2021 2020 2019
−Removed: Operating income (loss) $ 79,163 $ (11,651) $ 2,211
−Removed: Operation and maintenance 50,885 17,368 20,943
−Removed: Depreciation and amortization 111 123 118
−Removed: Subtotal 130,159 5,840 23,272
−Removed: Unrealized loss (gain) on derivative instruments and related transactions 58,362 (8,583) 1,195
−Removed: Effects of economic hedging related to natural gas inventory (42,405) 12,690 4,309
−Removed: Financial margin $ 146,116 $ 9,947 $ 28,776
−Removed: Financial margin increased $136.2 million during fiscal 2021, compared with fiscal 2020, due primarily to volatility related to the extreme weather in the mid-continent and southern regions of the U.S.
−Removed: during February 2021, as previously discussed.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: Net Financial Earnings
−Removed: A reconciliation of Energy Services’ net income (loss), the most directly comparable GAAP financial measure to NFE, is as follows for the fiscal years ended September 30:
−Removed: (Thousands) 2021 2020 2019
−Removed: Net income (loss) $ 58,957 $ (11,008) $ (1,268)
−Removed: Unrealized loss (gain) on derivative instruments and related transactions 58,362 (8,583) 1,195
−Removed: Tax effect (1)
−Removed: (13,875) 2,044 (294)
−Removed: Effects of economic hedging related to natural gas inventory (42,405) 12,690 4,309
−Removed: Tax effect 10,078 (3,016) (1,024)
−Removed: Net financial earnings $ 71,117 $ (7,873) $ 2,918
−Removed: (1) Includes taxes related to an intercompany transaction between NJNG and Energy Services that have been eliminated in consolidation of approximately $988,000, $252,000 and $(310,000) for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.
−Removed: NFE increased $79.0 million during fiscal 2021, compared with fiscal 2020, due primarily to volatility related to the extreme weather in the mid-continent and southern regions of the U.S.
−Removed: during February 2021, as previously discussed.
−Removed: Future results are subject to Energy Services’ ability to expand its wholesale sales and service activities and are contingent upon many other factors, including an adequate number of appropriate and credit-qualified counterparties in an active and liquid natural marketplace;
−Removed: volatility in the natural gas market due to weather or other fundamental market factors impacting supply and/or demand;
−Removed: transportation, storage and/or other market arbitrage opportunities;
−Removed: sufficient liquidity in the overall energy trading market;
−Removed: and continued access to liquidity in the capital markets.
−Removed: Storage and Transportation Segment
−Removed: Our Storage and Transportation segment invests in natural gas assets, such as natural gas transportation and storage facilities.
−Removed: We believe that acquiring, owning and developing these storage and transportation assets, which operate under a tariff structure that has either cost- or market-based rates, can provide us a growth opportunity.
−Removed: Our Storage and Transportation segment is subject to various risks, including the construction, development and operation of our transportation and storage assets, obtaining necessary governmental, environmental and regulatory approvals, our ability to obtain necessary property rights and our ability to obtain financing at reasonable costs for the construction, operation and maintenance of our assets.
−Removed: In addition, our storage and transportation assets may be subject to risk associated with the COVID-19 pandemic, such as disruption to the supply chain and availability of critical equipment and supplies, disruptions to the availability of our specialized workforce and contractors and changes to demand for natural gas, transportation and other downstream activities.
−Removed: Our Storage and Transportation segment is comprised of Leaf River, a 32.2 million Dth salt dome natural gas storage facility that operates under market-based rates and Adelphia Gateway, an existing 84-mile pipeline in southeastern Pennsylvania.
−Removed: Adelphia Gateway operates under cost of service rates but can enter into negotiated rates with counterparties.
−Removed: The northern portion of the pipeline was operational upon acquisition and it currently serves two natural gas generation facilities.
−Removed: On October 5, 2020, we began the conversion of the southern zone of the pipeline to natural gas.
−Removed: Our Storage and Transportation segment also has a 50 percent ownership interest in Steckman Ridge, a storage facility that operates under market-based rates and a 20 percent interest in PennEast, a partnership whose purpose was to construct and operate a 120-mile natural gas pipeline that would have extended from northeast Pennsylvania to western New Jersey.
−Removed: PennEast received a Certificate of Public Convenience and Necessity for the project from FERC on January 19, 2018.
−Removed: However, because of numerous regulatory and legal challenge, we evaluated our equity investment in PennEast for impairment as of June 30, 2021, and determined that it was other-than-temporarily impaired.
−Removed: We estimated the fair value of our investment in PennEast using probability weighted scenarios assigned to discounted future cash flows.
−Removed: The impairment is the result of management's estimates and assumptions regarding the likelihood of certain outcomes related to required regulatory approvals and pending legal matters, the timing of which remains uncertain, the timing and magnitude of construction costs and in-service dates, the evaluation of the current environmental and political climate as it relates to interstate pipeline development, and transportation capacity revenues and discount rates.
−Removed: New Jersey Resources Corporation
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
−Removed: OPERATIONS (Continued)
−Removed: As of September 30, 2021, we recognized an other-than-temporary impairment charge of $92.0 million, or approximately $74.5 million, net of income taxes.
−Removed: The other-than-temporary impairment is recorded in equity in (losses) earnings from affiliates in the Consolidated Statements of Operations.
−Removed: On September 27, 2021, the PennEast partnership determined that this project is no longer supported and all further development has ceased.
−Removed: It is possible that future developments could impact the fair value and could result in the recognition of additional impairment charges.
−Removed: As of September 30, 2021, our investments in Steckman Ridge and PennEast were $109.0 million and $5.5 million, respectively.
−Removed: Operating Results
−Removed: The financial results of our Storage and Transportation segment for the fiscal years ended September 30, are summarized as follows:
−Removed: (Thousands) 2021 2020 2019
−Removed: Operating revenues (1)
−Removed: $ 51,020 $ 44,728 $ —
−Removed: Operating expenses
−Removed: Natural gas purchases 1,266 1,122 —
−Removed: Operation and maintenance 29,135 21,862 4,043
−Removed: Depreciation and amortization 9,960 9,293 6
−Removed: Total operating expenses 40,361 32,277 4,049
−Removed: Operating income 10,659 12,451 (4,049)
−Removed: Other income, net 5,931 7,328 7,345
−Removed: Interest expense, net 13,348 13,124 2,185
−Removed: Income tax (benefit) provision (10,043) 4,247 2,254
−Removed: Equity in earnings of affiliates (81,072) 15,903 15,832
−Removed: Net (loss) income $ (67,787) $ 18,311 $ 14,689
−Removed: (1) Includes related party transactions of approximately $1.8 million and $2.7 million during fiscal 2021 and fiscal 2020, respectively, which are eliminated in consolidation.
−Removed: Operation Revenues
−Removed: Operating revenue in fiscal 2021 increased $6.3 million, compared with fiscal 2020, due to increased operating revenues at Leaf River and Adelphia Gateway.
−Removed: Equity in earnings of affiliates decreased $97.0 million during fiscal 2021, compared with fiscal 2020, due primarily to the impairment of our equity method investment in PennEast.
−Removed: Operation and Maintenance Expense
−Removed: O&M increased $7.3 million during fiscal 2021, compared with fiscal 2020, due primarily to operations of Adelphia Gateway and increases at Leaf River.
−Removed: Depreciation Expense
−Removed: Depreciation expense increased $667,000 during fiscal 2021, compared with fiscal 2020, due primarily to operations of Adelphia Gateway during fiscal 2021, that were not present in the first quarter of fiscal 2020.
−Removed: Interest Expense
−Removed: Interest expense, net increased $224,000 during fiscal 2021, compared with fiscal 2020, due primarily to higher interest expense related to the acquisition of Leaf River and Adelphia Gateway during fiscal 2020.
−Removed: 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.