What changed in this filing

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Item 1A. Risk Factors

2023-11-21 compared with 2022-11-17 · 170 added, 168 removed, 172 unchanged (66% of the section changed)

RISK FACTORS (Continued)

Risk Related to Our Business Operations

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.

In addition, there are risks associated with our ability to execute on our investment strategy of clean energy projects, which includes our ability to develop and manage such projects profitably, including logistical risks and potential delays related to construction, permitting, regulatory approvals (including any approvals by the BPU required pursuant to solar energy legislation in the State of New Jersey, and similar approvals required by the States of Connecticut, Rhode Island and New York) and electric grid interconnection delays associated with the PJM Interconnection, LLC queue reform process, as well as the operational risk that the projects in service will not perform according to expectations due to equipment failure, suboptimal weather conditions or other economic factors beyond our control.

All of the aforementioned risks could reduce the availability of viable solar energy projects for development.

Furthermore, at the development or acquisition stage, our ability to predict actual performance results may be hindered or inaccurate and the projects may not perform as predicted.

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, 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.

NJNG and Energy Services rely on storage, transportation assets and suppliers, which they do not own or control, to deliver natural gas.

NJNG and Energy Services depend on natural gas pipelines and other transportation and storage facilities owned and operated by third parties to deliver natural gas to wholesale and retail markets and to provide retail energy services to customers.

Actions or limitations to address concerns over long-term climate change, both globally and within our utilities' service areas, may affect our operations and financial performance.

Legislative, regulatory and advocacy efforts at the local, state and national levels concerning climate change and other environmental issues could have significant impacts on our operations.

The natural gas utility industry may be affected by proposals to curb greenhouse gas and other air emissions.

Various regulatory and legislative proposals have been made to limit or further restrict byproducts of combustion, including byproducts resulting from the use of natural gas by our customers.

In addition, regionally, a number of regulatory and legislative initiatives have been passed that are designed to limit greenhouse gas emissions and increase the use of renewable sources of energy, such as the ban of natural gas equipment in new construction in New York.

In addition, regulatory and legislative initiatives may restrict customers’ access to natural gas and/or require or limit natural gas infrastructure in buildings.

Other initiatives may seek to promote social interests expressed as energy equity, environmental justice or similar frameworks.

Any such legislation could direct and/or restrict the operation and raise the costs of our energy delivery infrastructure as well as the distribution of natural gas to our customers.

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

Business development projects involve many risks.

We are currently engaged in business development projects, including projects in various stages of development tied to decarbonization efforts.

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

We could also experience issues such as:

technological challenges;

ineffective scalability;

failure to achieve expected outcomes;

unsuccessful business models;

startup and construction delays;

construction cost overruns;

disputes with contractors;

the inability to negotiate acceptable agreements such as rights-of-way, easements, construction, gas supply or other material contracts;

changes in customer demand, perception or commitment;

public opposition to projects;

marketing risk and changes in market regulation, behavior or prices;

market volatility or unavailability, including markets for RNG and its associated attributes or other environmental attributes;

the inability to receive expected tax or regulatory treatment;

and operating cost increases.

Additionally, we may be unable to finance our business development projects at acceptable costs or within a scheduled time frame necessary for completing the project.

Any of the foregoing risks, if realized, could result in business development efforts failing to produce expected financial results and the project investment becoming impaired, and such failure or impairment could have an adverse effect on our business, results of operations, financial condition and cash flows.

ES’s earnings and cash flows are dependent upon optimization of its physical assets.

ES ’s earnings and cash flows are based, in part, on its ability to optimize its portfolio of contractually based natural gas storage and pipeline assets.

The optimization strategy involves utilizing its physical assets to take advantage of differences in natural gas prices between geographic locations and/or time periods.

Any change among various pricing points could affect these differentials.

In addition, significant increases in the supply of natural gas in ES’s market areas, including as a result of increased production along the Marcellus Shale, can reduce ES’s ability to take advantage of pricing fluctuations in the future.

Changes in pricing dynamics and supply could have an adverse impact on ES’s optimization activities, earnings and cash flows.

ES incurs fixed demand fees to acquire its contractual rights to transportation and storage assets.

Should commodity prices at various locations or time periods change in such a way that ES is not able to recoup these costs from its customers, the cash flows and earnings at ES, and ultimately the Company, could be adversely impacted.

NJNG and ES rely on storage, transportation assets and suppliers, which they do not own or control, to deliver natural gas.

NJNG and ES depend on natural gas pipelines and other transportation and storage facilities owned and operated by third parties to deliver natural gas to wholesale and retail markets and to provide retail energy services to customers.

Their ability to provide natural gas for their present and projected sales will depend upon their suppliers’ ability to obtain and deliver additional supplies of natural gas, as well as NJNG’s ability to acquire supplies directly from new sources.

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Energy deregulation legislation may increase competition among natural gas utilities and impact the quantities of natural gas requirements needed for sales service.

Energy Services also relies on a firm supply source to meet its energy management obligations to its customers.

If supply, transportation or storage is disrupted, including for reasons of force majeure, the ability of NJNG and Energy Services to sell and deliver their products and services may be hindered.

As a result, they may be responsible for damages incurred by their customers, such as the additional cost of acquiring alternative supply at then-current market rates.

Particularly for Energy Services, these conditions could have a material impact on our financial condition, results of operations and cash flows.

ES also relies on a firm supply source to meet its energy management obligations to its customers.

If supply, transportation or storage is disrupted, including for reasons of force majeure, the ability of NJNG and ES to sell and deliver their products and services may be hindered.

As a result, they may be responsible for damages incurred by their customers, such as the additional cost of acquiring alternative supply at then-current

New Jersey Resources Corporation

RISK FACTORS (Continued)

Energy Services’ earnings and cash flows are dependent upon optimization of its physical assets.

Energy Services’ earnings and cash flows are based, in part, on its ability to optimize its portfolio of contractually based natural gas storage and pipeline assets.

The optimization strategy involves utilizing its physical assets to take advantage of differences in natural gas prices between geographic locations and/or time periods.

Any change among various pricing points could affect these differentials.

In addition, significant increases in the supply of natural gas in Energy Services’ market areas, including as a result of increased production along the Marcellus Shale, can reduce Energy Services’ ability to take advantage of pricing fluctuations in the future.

Changes in pricing dynamics and supply could have an adverse impact on Energy Services’ optimization activities, earnings and cash flows.

Energy Services incurs fixed demand fees to acquire its contractual rights to transportation and storage assets.

Should commodity prices at various locations or time periods change in such a way that Energy Services is not able to recoup these costs from its customers, the cash flows and earnings at Energy Services, and ultimately the Company, could be adversely impacted.

market rates.

Particularly for ES, these conditions could have a material impact on our financial condition, results of operations and cash flows.

Failure to attract and retain an appropriately qualified employee workforce could adversely affect operations.

Our ability to implement our business strategy and serve our customers is dependent upon our continuing ability to attract and retain talented professionals and a technically skilled workforce, and being able to transfer the knowledge and expertise of our workforce to new employees as our aging employees retire.

Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to the new employees, or the future availability and cost of contract labor could adversely affect the ability to manage and operate our business.

NJNG and the Union are in active negotiations to extend the collective bargaining agreement, which is scheduled to expire on December 7, 2023.

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

Disputes with the Union over terms and conditions of the agreements could result in instability in our labor relationship and work stoppages that could impair the timely delivery of natural gas and other services from our utility and Home Services business, which could strain relationships with customers and state regulators and cause a loss of revenues that could adversely affect our results of operations.

Our collective bargaining agreements may also increase the cost of employing NJNG and Home Services workforce, affect our ability to continue offering market-based salaries and employee benefits, limit our flexibility in dealing with our workforce and limit our ability to change work rules and practices and implement other efficiency-related improvements to successfully compete in today’s challenging marketplace.

Our success depends upon our ability to attract, effectively transition, motivate and retain key employees and identify and develop talent to succeed senior management.

We depend on senior executive officers and other key personnel to develop, implement and execute on our overall business strategy.

The inability to recruit and retain or effectively transition key personnel or the unexpected loss of key personnel may adversely affect our operations.

Construction, development and operation of energy investments, such as Leaf River and other natural gas storage facilities, NJNG infrastructure improvements, pipeline transportation systems, such as the Adelphia 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 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 reasonable interest rates.

If we do not obtain the necessary regulatory approvals or property rights, or if we are unable to enter into contracts with counterparties at reasonable rates, or obtain financing, our assets or equity method investments could be impaired.

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

Weather and weather patterns, including normal seasonal and quarterly fluctuations of weather, as well as extreme weather events that, individually or in aggregate, may be associated with climate change, could adversely affect our ability to manage our operational requirements to serve our customers, and ultimately adversely affect our results of operations and liquidity.

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The CIP does not mitigate the impact of severe weather conditions on our cash flows.

Future results at Energy Services are subject to volatility in the natural gas market due to weather.

Future results at ES are subject to volatility in the natural gas market due to weather.

Variations in weather may affect earnings and working capital needs throughout the year.

During periods of milder temperatures, demand and volatility in the natural gas market may decrease, which can negatively impact Energy Services’ earnings and cash flows.

During periods of milder temperatures, demand and volatility in the natural gas market may decrease, which can negatively impact ES’s earnings and cash flows.

New Jersey Resources Corporation

RISK FACTORS (Continued)

Severe weather impacts, including, but not limited to, hurricanes, thunderstorms, high winds, microbursts, fires, tornadoes, blizzards and snow or ice storms, can disrupt energy generation, transmission and distribution.

Extreme weather conditions, especially those of prolonged duration, create high energy demand on our own and/or other systems and increase the risk we may be unable to reliably serve customers.

Extreme weather conditions, especially those of prolonged duration, create high energy demand on our own and/or other systems and increase the risk that we may be unable to reliably serve customers.

Risk of losing gas supply during extreme weather carries significant consequences, as without our services our customers may be subjected to dire circumstances.

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Climate change and the costs that may be associated with its impacts have the potential to affect our business in many ways, including increasing the cost incurred in providing natural gas, impacting the demand for and consumption of natural gas (due to change in both costs and weather patterns) and affecting the economic health of the regions in which we operate.

New Jersey Resources Corporation

RISK FACTORS (Continued)

Failure to attract and retain an appropriately qualified employee workforce could adversely affect operations.

NJNG and the Union recently 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.

Our collective bargaining agreements may also increase the cost of employing Natural Gas Distribution and Home Services workforce, affect our ability to continue offering market-based salaries and employee benefits, limit our flexibility in dealing with our workforce and limit our ability to change work rules and practices and implement other efficiency-related improvements to successfully compete in today’s challenging marketplace.

Our success as a company depends upon our ability to attract, effectively transition, motivate and retain key employees and identify and develop talent to succeed senior management.

We depend on senior executive officers and other key personnel to develop, implement and execute on our overall business strategy.

The inability to recruit and retain or effectively transition key personnel or the unexpected loss of key personnel may adversely affect our operations.

Risk Related to Technologies

Cyberattacks or failure of information technology systems could adversely affect our business operations, financial condition and results of operations.

We may be adversely impacted by natural disasters, pandemic illness, war or terrorist activities and other extreme events to which we may be unable to promptly respond.

Local or national natural disasters, pandemic illness, actual or threatened acts of war or terrorist activities, including the political and economic disruption and uncertainty related to Russia’s military invasion of Ukraine and the Israel-Hamas war, 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, political unrest 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 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.

Such uncertain conditions may also impact the ability of certain customers to pay for services, which could affect the collectability and recognition of our revenues and adversely affect our financial results.

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 (or such insurance may be costly) 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.

Risks Related to Technologies

Cyberattacks, ransomware, terrorism, other malicious acts against, or failure of, information technology systems could adversely affect our business operations, financial condition and results of operations.

We continue to place ever-greater reliance on technological tools that support our business operations and corporate functions, including tools that help us manage our natural gas distribution and energy trading operations and infrastructure.

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Additionally, an attack on, or failure of, information technology systems could result in the unauthorized release of customer, employee or other confidential or sensitive data.

Recent widespread ransomware attacks and cybersecurity breaches in the U.S.

and elsewhere have affected many companies, including the cybersecurity incident involving SolarWinds Orion in December 2020.

While these attacks did not affect our business operations, future events of this kind could adversely affect our business reputation, diminish customer confidence, disrupt operations, subject us to financial liability or increased regulation, increase our costs and expose us to material legal claims and liability.

Cyberattacks, ransomware, terrorism, increased use of artificial intelligence technologies or other malicious acts could damage, destroy or disrupt these systems for an extended period of time.

The energy sector, including natural gas utility companies has become the subject of cyberattacks with increased frequency.

New Jersey Resources Corporation

RISK FACTORS (Continued)

Additionally, the facilities and systems of clients, suppliers and third-party service providers could be vulnerable to the same cyber or terrorism risks as our facilities and systems, and such third-party systems may be interconnected to our systems both physically and technologically.

Therefore, an event caused by cyberattacks, ransomware or other malicious acts at an interconnected third party could impact our business and facilities.

Any failure or unexpected or unauthorized use of technology systems could result in the unavailability of such systems, and could result in a loss of operating revenues, an increase in operating expenses and costs to repair or replace damaged assets.

Any of the above could also result in the loss or release of confidential customer and/or employee information or other proprietary data that could adversely affect our reputation and competitiveness, could result in costly litigation and negatively impact our results of operations.

These cyberattacks have become more common and sophisticated and, as such, we could be required to incur costs to strengthen our systems and respond to emerging concerns.

There is no guarantee that redundancies built into our networks and technology, or the procedures we have implemented to protect against cyberattacks and other unauthorized access to secured data, will guarantee protection against all failures of technology or security breaches.

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In addition, customers are increasingly expecting enhanced communications regarding their electric and natural gas services, which, in some cases, may involve additional investments in technology.

New technologies may require us to make significant expenditures to remain competitive and may result in the obsolescence of certain of our operating assets.

New Jersey Resources Corporation

RISK FACTORS (Continued)

New technologies, including, but not limited to, cloud computing and generative artificial intelligence, may require us to make significant expenditures to remain competitive and may result in the obsolescence of certain of our operating assets.

Our future success will depend, in part, on our ability to anticipate and successfully adapt to technological changes and to offer services that meet customer demand.

Failure to adapt to advances in technology and manage the related costs could make us less competitive and negatively impact our financial condition, results of operations and cash flows.

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 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.

The effects of the ongoing COVID-19 pandemic, including the rise of COVID-19 mutations 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.

The potential prolonged impacts that the ongoing COVID-19 pandemic may have on our future operating results and liquidity include the following:

• 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;

• impacts of a resurgence of infections, including the risk that a large proportion of our employees in essential capacities contract COVID-19

• 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 the 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 nonutility services, which could affect the collectability and recognition of our revenues and adversely affect our financial results.

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.

The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that we are not able to predict.

As of September 30, 2022, 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.

We may be adversely impacted by natural disasters, pandemic illness (including COVID-19), war or 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), actual or threatened acts of war or terrorist activities, including the political and economic disruption and uncertainty related to Russia's military invasion of Ukraine, catastrophic failure of the interstate pipeline system and other extreme events are a threat to our assets and operations.

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, political unrest or actual or

New Jersey Resources Corporation

RISK FACTORS (Continued)

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.

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 Regulations and Litigation

Risks Related to Regulations and Litigation

We are subject to governmental regulation.

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These agencies regulate various aspects of our business, including customer rates, services, construction and natural gas pipeline operations.

FERC has regulatory authority over some of our operations, including sales of natural gas in the wholesale and retail markets and the purchase and sale of interstate pipeline and storage capacity, including Steckman Ridge, Leaf River and Adelphia Gateway.

Any Congressional legislation or agency regulation that would alter these or other similar statutory and regulatory structures in a way to significantly raise costs that could not be recovered in rates from customers, that would reduce the availability of supply or capacity or that would reduce our competitiveness could negatively impact our earnings.

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Changes in regulations or the imposition of additional regulations could influence our operating environment and may result in substantial costs to us.

New Jersey Resources Corporation

RISK FACTORS (Continued)

Our regulated operations are subject to certain operating risks incidental to handling, storing, transporting and providing customers with natural gas.

Our regulated operations are subject to all operating hazards and risks incidental to handling, storing, transporting and providing customers with natural gas, including our natural gas vehicle refueling stations and LNG facilities.

These risks include catastrophic failure of the interstate pipeline system, explosions, pollution, release of toxic substances, fires, storms, safety issues and other adverse weather conditions and hazards, each of which could result in damage to or destruction of facilities or damage to persons and property.

We could suffer substantial losses should any of these events occur.

Although we maintain insurance coverage, insurance may not be sufficient to cover all material expenses related to these risks, and such insurance may be costly.

We are involved in legal or administrative proceedings before various courts and governmental bodies that could adversely affect our results of operations, cash flows and financial condition.

In the ordinary conduct of business, we are involved in legal or administrative proceedings before various courts and governmental bodies with respect to general claims, rates, permitting, taxes, environmental issues, natural gas cost prudence reviews and other matters.

Adverse decisions regarding these matters, to the extent they require us to make payments in excess of amounts provided for in our financial statements or are not covered by insurance or indemnity rights, could adversely affect our results of operations, cash flows and financial condition.

Our costs of compliance with present and future environmental laws are significant and could adversely affect our cash flows and profitability.

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Congress has for some time been considering various forms of climate change legislation.

In addition, in July 2019, the State of New Jersey amended the GWRA, which targets 80 percent reduction in greenhouse gas emissions below 2006 levels economy-wide by 2050.

In January 2020, Governor Murphy released the EMP confirming his commitment to achieve 100 percent clean energy by 2050, and the GWRA mandate of reducing state greenhouse gas emissions.

In addition, in July 2019, the State of New Jersey amended the GWRA, which targets 80% reduction in greenhouse gas emissions below 2006 levels economy-wide by 2050.

In January 2020, Governor Murphy released the EMP confirming his commitment to achieve 100% clean energy by 2050, and the GWRA mandate of reducing state greenhouse gas emissions.

The EMP addressed New Jersey’s energy system, including electric generation, transportation and buildings, and their associated greenhouse gas emissions and related air pollutants.

The EMP defines 100 percent clean energy by 2050 to mean 100 percent carbon-neutral electric generation and maximum electrification of the transportation and building sectors, which are the greatest carbon emission producing sectors in the state, to meet or exceed the GWRA emissions reductions by 2050.

Our goals, to reduce our New Jersey operational emissions by 50 percent from 2006 levels by 2030 and to achieve net-zero carbon emissions from our New Jersey operations by 2050, may require additional technological, legislative and regulatory developments, the impacts and costs of which may not be fully known at this time.

New Jersey Resources Corporation

RISK FACTORS (Continued)

To underpin the initiatives in the EMP, Governor Murphy issued Executive Order No.

100, directing the Department of Environmental Protection to make sweeping regulatory reforms, branded as Protecting Against Climate Threats, to reduce emissions and adapt to climate change.

These regulations have begun to be promulgated, and NJR is taking an active role in participating in these rulemaking processes.

While the EMP does not place a moratorium or end date on natural gas hook ups, further legislation or rulemaking that de-emphasizes the role of natural gas in providing clean, low-cost energy in the state of New Jersey which could put upward pressure on natural gas prices and place customer growth targets at risk.

The EMP defines 100% clean energy by 2050 to mean 100% carbon-neutral electric generation and maximum electrification of the transportation and building sectors, which are the greatest carbon emission-producing sectors in the state, to meet or exceed the GWRA emissions reductions by 2050.

Our goals, to reduce our New Jersey operational emissions by 60% from 2006 levels by 2030 and to achieve net-zero carbon emissions from our New Jersey operations by 2050, may require additional technological, legislative and regulatory developments, the impacts and costs of which may not be fully known at this time.

While the EMP does not place a moratorium or end date on natural gas hook ups, further legislation or rulemaking that de-emphasizes the role of natural gas in providing clean, low-cost energy in the state of New Jersey could put upward pressure on natural gas prices and place customer growth targets at risk.

Higher cost levels could impact the competitive position of natural gas and negatively affect our growth opportunities, cash flows and earnings.

In February 2023, Governor Murphy issued two executive orders that established, or accelerated, previously established 2050 targets for clean-sourced electricity and electric heat pump adoption, with target dates of 2030 or 2035, as applicable.

An additional executive order opened a proceeding to plan for the future of natural gas utilities in New Jersey.

We are unable to predict the outcomes of these proceedings, but they could have a material impacts on our business, results of operations and cash flows.

Risks related to regulation could affect the rates we are able to charge, various costs and our profitability.

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These authorities regulate many aspects of NJNG’s distribution and transmission operations, including construction and maintenance of facilities, operations, safety, tariff rates that NJNG can charge customers, rates of return, the authorized cost of capital, recovery of pipeline replacement, environmental remediation costs and relationships with its affiliates.

NJNG’s ability to timely construct rate-based assets and obtain rate increases, including base rate increases, extend its BGSS incentive and CIP programs and maintain its currently authorized rates of return may be impacted by events, including regulatory or legislative actions.

NJNG’s ability to timely construct rate-based assets and obtain rate increases, including base rate increases, continue its BGSS incentive and CIP programs and maintain its currently authorized rates of return may be impacted by events, including regulatory or legislative actions.

Additionally, in fiscal 2019, NJR began the process of transitioning away from its enterprise platform, which will no longer receive extended support after 2025.

The first phase of IT enhancements and upgrades were placed into service in July 2020.

New Jersey Resources Corporation

RISK FACTORS (Continued)

phase of IT enhancements and upgrades were placed into service in July 2020.

The remaining phases of planned upgrades relate to work order and asset management and customer information systems and experience, which are expected to require significant capital investment through fiscal year 2024.

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There can be no assurance that Adelphia will be able to obtain rate increases or continue to earn its currently authorized rate of return.

Our regulated operations are subject to certain operating risks incidental to handling, storing, transporting and providing customers with natural gas.

We could suffer substantial losses should any of these events occur.

Moreover, as a result, we have been, and likely will be, a defendant in legal proceedings and litigation arising in the ordinary course of business.

Although we maintain insurance coverage, insurance may not be sufficient to cover all material expenses related to these risks.

We are involved in legal or administrative proceedings before various courts and governmental bodies that could adversely affect our results of operations, cash flows and financial condition.

New Jersey Resources Corporation

RISK FACTORS (Continued)

Risk Related to Acquisition and Investment Strategies

Any acquisitions that we may undertake involve risks and uncertainties.

We may not realize the anticipated synergies, cost savings and growth opportunities as a result of these transactions.

The integration of acquisitions require significant time and resources.

Investments of resources are required to support any acquisition, which could result in significant ongoing operating expenses, and we may experience challenges when combining separate business cultures, information technology systems and employees, and those challenges may divert senior management’s time and attention.

If we fail to successfully integrate assets and liabilities through the entities which we acquire, we may not fully realize all of the growth opportunities, benefits expected from the transaction, cost savings and other synergies and, as a result, the fair value of assets acquired could be impaired.

We assess long-lived assets, including intangible assets associated with acquisitions, for impairment whenever events or circumstances indicate that an asset’s carrying amount may not be recoverable.

To the extent the value of long-lived assets become impaired, the impairment charges could have a material impact on our financial condition and results of operations.

The benefits that we expect to achieve from acquisitions will depend, in part, on our ability to realize anticipated growth opportunities and other synergies with our existing businesses.

The success of these transactions will depend on our ability to integrate these transactions within our existing businesses in a timely and seamless manner.

We may experience challenges when combining separate business cultures, information technology systems and employees.

Even if we are able to complete an integration successfully, we may not fully realize all the growth opportunities, cost savings and other synergies that we expect.

Investing through partnerships or joint ventures decreases our ability to manage risk.

We have utilized joint ventures through partnerships for certain Storage and Transportation investments.

Although we currently have no specific plans to do so, we may acquire interests in other joint ventures or partnerships in the future.

In these joint ventures or partnerships, we may not have the right or power to direct the management and policies of the joint ventures or partnerships, and other participants or investors may take action contrary to our instructions or requests and against our policies and objectives.

In addition, the other participants may become bankrupt or have economic or other business interests or goals that are inconsistent with those of NJR and our subsidiaries and affiliates.

Our financial condition, results of operations or cash flows could be harmed if a joint venture participant acts contrary to our interests.

Risk Related to our Markets

We are exposed to market risk and may incur losses in our wholesale business.

Our transportation and storage portfolios consist of contracts to transport and store natural gas.

The value of our transportation and storage portfolio could be negatively impacted if the value of these contracts changes in a direction or manner that we do not anticipate.

In addition, upon expiration of these transportation and storage contracts, to the extent that they are renewed or replaced at less favorable terms, our results of operations and cash flows could be adversely affected.

Risks Related to Our Markets

Major changes in the supply and price of natural gas may affect financial results.

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Should these third parties fail to perform, and regulators not allow the pass-through of expended funds to customers, it may result in a loss that could have a material impact on our financial condition, results of operations and cash flows.

New Jersey Resources Corporation

RISK FACTORS (Continued)

Inflation and increased natural gas costs could adversely impact our customer base and customer collections and increase The Company ’s level of indebtedness.

Inflation has caused, and may continue to cause, increases in certain operating and capital costs.

Our regulated businesses have a process in place to review the adequacy of their rates in relation to the increasing cost of providing service and the inherent regulatory lag in adjusting those rates.

The ability to control expenses is an important factor that will influence future results.

Rapid increases in the price of purchased gas may cause the Company to experience a significant increase in short-term debt because it must pay suppliers for gas when it is purchased, which can be significantly in advance of when these costs may be recovered through the collection from customers and counterparties for gas delivered.

Increases in purchased gas costs could also slow collection efforts as NJNG customers may be more likely to delay the payment of their gas bills, leading to higher-than-normal accounts receivable.

This situation could also result in higher short-term debt levels and increased bad debt expense.

Supply chain disruptions may adversely affect Company operations.

The Company relies on third-party vendors and manufacturers to supply many of the materials necessary for its operations.

Global logistics disruptions have impacted the flow of materials and restricted global trade flows.

Manufacturers are competing for a limited supply of key commodities and logistical capacity, which has impacted lead times, pricing, supply and demand.

Disruptions or delays in receiving materials;

price increases from suppliers or manufacturers;

or the inability to source needed materials, which has occurred and could reoccur, could adversely affect the Company’s results of operations, financial condition and cash flows.

Changes in customer growth may affect earnings and cash flows.

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As a result, changes in the underlying assumptions or use of alternative valuation methods could adversely affect the value of the reported fair value of these contracts.

Risk Related to Credit and Liquidity

New Jersey Resources Corporation

RISK FACTORS (Continued)

We are exposed to market risk and may incur losses in our wholesale business.

Our transportation and storage portfolios consist of contracts to transport and store natural gas.

The value of our transportation and storage portfolio could be negatively impacted if the value of these contracts changes in a direction or manner that we do not anticipate.

Inflation and increased natural gas costs could adversely impact our customer base and customer collections and increase the Company ’s level of indebtedness.

Inflation has caused, and may continue to cause, increases in certain operating and capital costs.

The ability to control expenses is an important factor that will influence future results.

Increases in purchased gas costs could also slow collection efforts as NJNG customers may be more likely to delay the payment of their gas bills, leading to higher-than-normal accounts receivable.

This situation could also result in higher short-term debt levels and increased bad debt expense.

Risks Related to Acquisition and Investment Strategies

Any acquisitions that we may undertake involve risks and uncertainties.

We may not realize the anticipated synergies, cost savings and growth opportunities as a result of these transactions.

The integration of acquisitions requires significant time and resources.

To the extent the value of long-lived assets becomes impaired, the impairment charges could have a material impact on our financial condition and results of operations.

The benefits that we expect to achieve from acquisitions will depend, in part, on our ability to realize anticipated growth opportunities and other synergies with our existing businesses.

The success of these transactions will depend on our ability to integrate these transactions within our existing businesses in a timely and seamless manner.

We may experience challenges when combining separate business cultures, information technology systems and employees.

Even if we are able to complete an integration successfully, we may not fully realize all the growth opportunities, cost savings and other synergies that we expect.

Investing through partnerships or joint ventures decreases our ability to manage risk.

We have utilized joint ventures through partnerships for certain S&T investments.

Although we currently have no specific plans to do so, we may acquire interests in other joint ventures or partnerships in the future.

In addition, the other participants may become bankrupt or have economic or other business interests or goals that are inconsistent with those of NJR and our subsidiaries and affiliates.

Our financial condition, results of operations or cash flows could be harmed if a joint venture participant acts contrary to our interests.

Risks Related to Credit and Liquidity

NJR is a holding company and depends on its operating subsidiaries to meet its financial obligations.

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Our ability to borrow and costs of borrowing have a direct impact on our subsidiaries’ ability to execute their operating strategies, particularly in the case of NJNG, which relies heavily upon capital expenditures financed by its credit facility.

If we suffer a reduction in our credit and borrowing capacity or in our ability to issue parental guarantees, the business prospects of Energy Services, Clean Energy Ventures and Storage and Transportation, which rely on our creditworthiness, would be adversely affected.

Energy Services could possibly be required to comply with various margin or other credit enhancement obligations under its trading and marketing contracts, and it may be unable to continue to trade or be able to do so only on less favorable terms with certain counterparties.

Clean Energy Ventures could be required to seek alternative financing for its projects, and may be unable to obtain such financing or able to do so only on less favorable terms.

If we suffer a reduction in our credit and borrowing capacity or in our ability to issue parental guarantees, the business prospects of ES, CEV and S&T, which rely on our creditworthiness, would be adversely affected.

ES could possibly be required to comply with various margin or other credit enhancement obligations under its trading and marketing contracts, and it may be unable to continue to trade or be able to do so only on less favorable terms with certain counterparties.

CEV could be required to seek alternative financing for its projects and may be unable to obtain such financing or able to do so only on less favorable terms.

Additionally, lower credit ratings could adversely affect relationships with NJNG’s state regulators, who may be unwilling to allow NJNG to pass along increased costs to its natural gas customers.

If we are unable to access the financial markets or there are adverse conditions in the equity or credit markets, it could affect management’s ability to execute our business plans.

If we are unable to access the financial markets or there are adverse conditions in the equity or credit markets, including, but not limited to, inflationary pressures, recessionary pressures, or rising interest rates, it could affect management’s ability to execute our business plans.

We rely on access to both short-term and long-term credit markets as significant sources of liquidity for capital requirements not satisfied by our cash flow from operations.

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In addition, because certain state regulatory approvals may be necessary for NJNG to incur debt, NJNG may be unable to access credit markets on a timely basis.

General economic factors beyond our control might create uncertainty that could increase our cost of capital or impair or eliminate our ability to access the debt, equity, or credit markets, including our ability to draw on bank credit facilities.

External events could also increase the cost of borrowing or adversely affect our ability to access the financial markets.

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• fluctuations in interest rates and increased borrowing costs.

Our ability to secure short-term financing is subject to conditions in the credit markets.

A prolonged constriction of credit availability could affect management’s ability to execute our business plan.

An inability to access capital may limit our ability to pursue improvements or acquisitions that we may otherwise rely on for both current operations and future growth.

Energy Services and NJNG execute derivative transactions with financial institutions as a part of their economic hedging strategy and could incur losses associated with the inability of a financial counterparty to meet or perform under its obligations as a result of adverse conditions in the credit markets or their ability to access capital or post collateral.

Failure by NJR and/or NJNG to comply with debt covenants may impact our financial condition.

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Furthermore, the debt obligations and our sale leaseback agreements contain covenants and other provisions requiring us to provide timely delivery of accurate financial statements prepared in accordance with GAAP.

The failure to comply with any of these covenants could result in an event of default, which, if not cured or waived, could result in the acceleration of outstanding debt obligations and/or the inability to borrow under existing revolving

New Jersey Resources Corporation

RISK FACTORS (Continued)

credit facilities and term loans.

We have relied, and continue to rely, upon short-term bank borrowings or commercial paper supported by our revolving credit facilities to finance the execution of a portion of our operating strategies.

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The acceleration of our outstanding debt obligations and our inability to borrow under the existing revolving credit facilities would cause a material adverse change in NJR’s and NJNG’s financial condition.

New Jersey Resources Corporation

RISK FACTORS (Continued)

Our ability to secure short-term financing is subject to conditions in the credit markets.

A prolonged constriction of credit availability could affect management’s ability to execute our business plan.

An inability to access capital may limit our ability to pursue improvements or acquisitions that we may otherwise rely on for both current operations and future growth.

ES and NJNG execute derivative transactions with financial institutions as a part of their economic hedging strategy and could incur losses associated with the inability of a financial counterparty to meet or perform under its obligations as a result of adverse conditions in the credit markets or their ability to access capital or post collateral.

Risks Related to Tax and Accounting Matters

A valuation allowance may be required for our deferred tax assets.

Our deferred tax assets are comprised primarily of investment tax credits and state net operating losses.

Any revaluation of our deferred tax assets that may be required in the future could have a material adverse impact on our financial condition and results of operations.

The cost of providing pension and postemployment health care benefits to employees and eligible former employees is subject to changes in pension fund values, interest rates and changing demographics and may have a material adverse effect on our financial results.

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New tax legislative initiatives may be proposed from time to time, such as proposals for comprehensive tax reform in the United States, which may impact our effective tax rate and which could adversely affect our tax positions or tax liabilities.

On August 16, 2022, the Inflation Reduction Act was signed into law and imposed a 15 percent minimum tax rate on book earnings for corporations with higher than $1 billion of annual income, along with a 1 percent excise tax on corporate stock repurchases while providing tax incentives to promote various clean energy initiatives.

On August 16, 2022, the Inflation Reduction Act was signed into law and imposed a 15% minimum tax rate on book earnings for corporations with higher than $1B of annual income, along with a 1% excise tax on corporate stock repurchases while providing tax incentives to promote various clean energy initiatives.

We are currently assessing the potential impact of these legislative changes.

Any future change in tax laws or interpretation of such laws could adversely affect our results of operations, net income, financial condition and cash flows.

A valuation allowance may be required for our deferred tax assets.

During fiscal 2018, as a result of the Tax Act’s decrease to the federal statutory corporate tax rate, and during fiscal 2020, as a result of Corporate Business Tax reform in the state of New Jersey, we revalued our deferred tax assets and liabilities at the enactment date to reflect the rates expected to be in effect when the deferred tax assets and liabilities are realized or settled.

These adjustments are based on assumptions we made with respect to our book versus tax differences and the timing of when those differences will reverse.

Our deferred tax assets are comprised primarily of investment tax credits and state net operating losses.

Any further revaluation of our deferred tax assets that may be required in the future could have a material adverse impact on our financial condition and results of operations.

New Jersey Resources Corporation

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If there were to be a change in regulatory positions surrounding the collection of these deferred costs, there could be a material impact on NJNG’s existing tariff or a future base rate case, as well as our financial condition, results of operations and cash flows.

Adelphia Gateway records regulatory assets on its financial statements to reflect the ratemaking and regulatory decision-making authority of FERC as allowed by GAAP.

Adelphia records regulatory assets on its financial statements to reflect the ratemaking and regulatory decision-making authority of FERC as allowed by GAAP.

The creation of a regulatory asset allows for the deferral of costs, which, absent a mechanism to recover such costs from customers in rates approved by FERC, would be recorded as a charge to earnings on its Statement of Operations in the period incurred.

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A Power-to-Gas System is also located at the LNG plant in Howell Township that uses solar power to produce hydrogen and then injects it into the natural gas system.

It consists primarily of an electrolyzer unit, electrical and instrumentation building and small hydrogen storage tank, along with other supporting systems.

It consists primarily of an electrolyzer unit, an electrical and instrumentation building and small hydrogen storage tank, along with other supporting systems.

New Jersey Resources Corporation

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What changed 10-K

Item 1A. Risk Factors