What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-11-21 compared with 2022-11-17 · 480 added, 928 removed, 1125 unchanged (56% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The Company has legal, regulatory and environmental proceedings during the normal course of business that can result in loss contingencies.

When evaluating the potential for a loss, the Company will establish a reserve if a loss is probable and can be reasonably estimated, in which case it is the Company’s policy to accrue the full amount of such estimates.

Where the information is sufficient only to establish a range of probable liability, and no point within the range is more likely than any other, it is the Company’s policy to accrue the lower end of the range.

In the normal course of business, estimated amounts are subsequently adjusted to actual results that may differ from estimates.

In March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention and has spread globally, including throughout the U.S.

The Company’s Consolidated Financial Statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities at the balance sheet date and reported amounts of revenue and expenses during the reporting periods presented.

The Company considered the impacts of COVID-19 on the assumptions and estimates used and determined that there have been no material adverse impacts on the Company’s results of operations as of September 30, 2022.

The Company continues to closely monitor developments related to the COVID-19 pandemic and has, when appropriate, taken steps to ensure business continuity in the safe operation of its business.

These steps include working from home for office-based employees utilizing a hybrid schedule, limiting direct contact with customers and suspending late payment fees for utility customers.

While the Company and many businesses generally have returned to normal operating practices, this remains an evolving situation.

The timing for recovery of businesses and local economies, resurgences or mutations of the virus, and any potential future shutdowns remains unknown.

Throughout the COVID-19 pandemic, the Company has continued to provide essential services to our customers.

Both the Company and NJNG continue to have sufficient liquidity to meet their current obligations and business operations remain fundamentally unchanged at this time.

The Company will continue to monitor developments affecting its employees, customers, and operations and take additional steps to address the COVID-19 pandemic and its impacts, as necessary.

The Company follows the guidance in ASC 805, Business Combinations, for determining the appropriate accounting treatment for acquisitions.

2017-01, Clarifying the Definition of a Business , provides an initial fair value screen to determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets.

If the initial screening test is not met, the set is considered a business based on whether there are inputs and substantive processes in place.

Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an asset acquisition, the accounting treatment is derived.

If the acquisition is deemed to be a business, the acquisition method of accounting is applied.

Identifiable assets acquired and liabilities assumed at the acquisition date are recorded at fair value.

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.

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.

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.

Management determines discount rates based on the risk inherent in the acquired assets, specific risks, industry data and capital structure of guideline companies.

The valuation of an acquired business is based on available information at the acquisition date and assumptions that are believed to be reasonable.

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.

Revenues from the sale of natural gas to NJNG customers are recognized in the period that natural gas is delivered and consumed by customers, including an estimate for unbilled revenue.

NJNG records unbilled revenue for natural gas services.

Natural gas sales to individual customers are based on meter readings, which are performed on a systematic basis throughout the month.

At the end of each month, the amount of natural gas delivered to each customer after the last meter reading through the end of the respective accounting period is estimated, and recognizes unbilled revenues related to these amounts.

The unbilled revenue estimates are based on estimated customer usage by customer type, weather effects, unaccounted-for natural gas and the most current tariff rates.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Clean Energy Ventures recognizes revenue when SRECs are transferred to counterparties.

SRECs are physically delivered through the transfer of certificates as per contractual settlement schedules.

The Clean Energy Act of 2018 established guidelines for the closure of the SREC registration program to new applicants in New Jersey.

The SREC program officially closed to new qualified solar projects on April 30, 2020.

In December 2019, the BPU established the TREC as the successor to the SREC program.

TRECs provide a fixed compensation base multiplied by an assigned project factor in order to determine their value.

The project factor is determined by the type and location of the project, as defined.

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

TREC revenue is recognized when TRECs are generated and are transferred monthly based upon metered solar electricity activity.

Revenues for Energy Services are recognized when the natural gas is physically delivered to the customer.

In addition, changes in the fair value of derivatives that economically hedge the forecasted sales of the natural gas are recognized in operating revenues as they occur.

Energy Services also recognizes changes in the fair value of SREC derivative contracts as a component of operating revenues.

During December 2020, Energy Services entered into a series of AMAs with an investment grade public utility to release pipeline capacity associated with certain natural gas transportation contracts, which commenced on November 1, 2021.

The AMAs include a series of temporary and permanent releases, and revenue under these agreements is recognized as the performance obligations are satisfied.

For temporary releases of pipeline capacity, revenue is recognized on a straight-line basis over the agreed-upon term.

For permanent releases of pipeline capacity, which represent a transfer of contractual rights for such capacity, revenue is recognized upon the transfer of the underlying contractual rights.

Energy Services recognized $ 53.0 million of operating revenue on the Consolidated Statements of Operations during fiscal 2022.

Amounts received in excess of revenue recognized totaling $ 33.8 million are included in deferred revenue on the Consolidated Balance Sheets as of September 30, 2022.

Storage and Transportation generates revenues from firm storage contracts and transportation contracts, related usage fees and hub services for the use of storage space, injections and withdrawals from their natural gas storage facility and the delivery of natural gas to customers.

Demand fees are recognized as revenue over the term of the related agreement while usage fees and hub services revenues are recognized as services are performed.

Revenues from all other activities are recorded in the period during which products or services are delivered and accepted by customers, or over the related contractual term.

Revenue for further information.

Natural Gas Purchases

NJNG’s tariff includes a component for BGSS, which is designed to allow it to recover the cost of natural gas through rates charged to its customers and is typically revised on an annual basis.

As part of computing its BGSS rate, NJNG projects its cost of natural gas, net of supplier refunds, the impact of hedging activities and cost savings created by BGSS incentive programs.

NJNG subsequently recovers or credits the difference, if any, of actual costs compared with those included in current rates.

Any underrecoveries or overrecoveries are either credited to customers or deferred and, subject to BPU approval, reflected in the BGSS rates in subsequent years.

Natural gas purchases at Energy Services are composed of natural gas costs to be paid upon completion of a variety of transactions, as well as realized gains and losses from settled derivative instruments and unrealized gains and losses on the change in fair value of derivative instruments that have not yet settled.

Changes in the fair value of derivatives that economically hedge the forecasted purchases of natural gas are recognized in natural gas purchases as they occur.

For the purpose of securing storage and pipeline capacity in support of their respective businesses, Energy Services and Natural Gas Distribution enter into storage and pipeline capacity contracts, which require the payment of associated demand fees and charges that allow them access to a high priority of service in order to maintain the ability to access storage or pipeline capacity during a fixed time period, which generally ranges from one to 10 years.

Many of these demand fees and charges are based on established tariff rates as established and regulated by FERC.

These charges represent commitments to pay storage providers and pipeline companies for the priority right to transport and/or store natural gas utilizing their respective assets.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The following table summarizes the demand charges, which are net of capacity releases, and are included as a component of natural gas purchases on the Consolidated Statements of Operations for the fiscal years ended September 30:

(Millions) 2022 2021 2020

Energy Services $ 95.4 $ 120.5 $ 121.8

Natural Gas Distribution 170.3 123.2 131.9

Total $ 265.7 $ 243.7 $ 253.7

Energy Services expenses demand charges over the term of the service being provided.

Natural Gas Distribution’s costs associated with demand charges are included in its weighted average cost of natural gas.

The demand charges are expensed based on NJNG’s BGSS sales and recovered as part of the natural gas commodity component of its BGSS tariff.

Operations and Maintenance Expenses

Operations and maintenance expenses include operations and maintenance salaries and benefits, materials and supplies, usage of vehicles, tools and equipment, payments to contractors, utility plant maintenance, amortization of software costs for unregulated entities, customer service, professional fees and other outside services, insurance expense, accretion of cost of removal for future retirements of utility assets and other administrative expenses and are expensed as incurred.

Stock-Based Compensation

Stock-based compensation represents costs related to stock-based awards granted to employees and members of NJR’s Board of Directors.

NJR recognizes stock-based compensation based upon the estimated fair value of awards.

The recognition period for these costs begins at either the applicable service inception date or grant date and continues throughout the requisite service period.

The related compensation cost is recognized as O&M expense on the Consolidated Statements of Operations.

Stock-Based Compensation for further information.

The Company computes income taxes using the asset and liability method, whereby deferred income taxes are generally determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

Income Taxes.

In addition, the Company evaluates its tax positions to determine the appropriate accounting and recognition of future obligations associated with unrecognized tax benefits.

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.

ITCs at the unregulated subsidiaries of NJR are recorded on the balance sheet as a reduction to property, plant and equipment when the property is placed in service, and recognized in earnings as a reduction of depreciation expense over the useful lives of the related assets.

Projects placed in service through December 31, 2019, qualified for a 30 percent federal ITC.

The ITC declined to 26 percent for property under construction before December 31, 2020.

The Consolidated Appropriations Act of 2021 extended the 26 percent ITC for property under construction during 2021 and 2022.

On August 16, 2022, the President of the U.S.

signed the Inflation Reduction Act, which raised the ITC from 26 percent to 30 percent for property under construction through the end of 2032, dropping to 26 percent for property under construction before the end of 2033 and to 22 percent for property under construction before the end of 2034.

The ITC expires starting in 2035 unless it is renewed.

Investments in Equity Investees

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 ;

its respective ownership interests are 50 percent or less and/or it has significant influence over operating and management decisions.

The Company’s share of earnings is recognized as equity in earnings of affiliates on the Consolidated Statements of Operations.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

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.

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.

Investments in Equity Investees for more information regarding impairments.

Property Plant and Equipment

Property, plant and equipment is stated at original cost.

Costs include direct labor, materials and third-party construction contractor costs, capitalized interest and certain indirect costs related to equipment and employees engaged in construction.

Utility plant and nonutility plant for Adelphia Gateway also includes AFUDC.

Upon retirement, the cost of depreciable property, plus removal costs less salvage, is charged to accumulated depreciation with no gain or loss recorded.

Depreciation is computed on a straight-line basis over the useful life of the assets for the Company’s nonutility entities, and using rates based on the estimated average lives of the various classes of depreciable property for NJNG.

The composite rate of depreciation used for NJNG was 2.66 percent of average depreciable property in fiscal 2022, 2.42 percent in fiscal 2021 and 2.65 percent in fiscal 2020.

The Company recorded $ 129.2 million, $ 111.4 million and $ 107.4 million in depreciation expense during fiscal 2022, 2021 and 2020, respectively.

Property, plant and equipment was comprised of the following as of September 30:

(Thousands) Estimated

Property Classifications Useful Lives 2022 2021

Distribution facilities 10 to 54 years

$ 2,797,936 $ 2,558,651

Transmission facilities 28 to 42 years

649,241 643,942

Storage facilities 35 to 86 years

85,449 79,892

Solar property 20 to 35 years

710,224 675,376

Storage and transportation property 5 to 50 years

850,186 433,678

All other property 5 to 40 years

60,914 57,968

Construction work in progress 361,766 547,542

Total property, plant and equipment 5,515,716 4,997,049

Accumulated depreciation and amortization ( 865,790 ) ( 783,536 )

Property, plant and equipment, net $ 4,649,926 $ 4,213,513

Within storage and transportation property, base gas is required to maintain the necessary pressure and to allow for efficient operation of the Leaf River storage facility.

The base gas is determined to be recoverable and is considered part of the facility and thus presented as a component in property, plant and equipment.

This natural gas is not depreciated, as it is expected to be recovered and sold.

As of September 30, 2022 and 2021, the base gas had a cost basis of $ 15.1 million and $ 7.9 million, respectively.

Capitalized and Deferred Interest

NJNG’s base rates include the ability to recover AFUDC on its construction work in progress.

For all NJNG construction projects, an incremental cost of equity is recoverable during periods when NJNG’s short-term debt balances are lower than its construction work in progress.

For more information on AFUDC treatment with respect to certain accelerated infrastructure projects, see Note 4.

Regulation - Infrastructure Programs.

Capitalized amounts associated with the debt and equity components of NJNG’s AFUDC are recorded in utility plant on the Consolidated Balance Sheets.

Corresponding amounts for the debt component are recognized in interest expense and in other income for the equity component on the Consolidated Statements of Operations.

Adelphia Gateway’s base rates include the ability to recover AFUDC on its construction work in progress.

Beginning in the fourth quarter of fiscal 2020, capitalized amounts associated with Adelphia Gateway’s AFUDC are recorded in nonutility plant on the Consolidated Balance Sheets.

Corresponding amounts for the debt component are recognized in interest expense and in other income for the equity component on the Consolidated Statements of Operations.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Capitalized and deferred interest include the following for the fiscal years ended September 30:

($ in thousands) 2022 2021 2020

NJNG Adelphia Gateway NJNG Adelphia Gateway NJNG Adelphia Gateway

Debt $ 1,648 $ 4,019 $ 5,648 $ 2,101 $ 5,134 $ 1,394

Equity 4,169 7,074 16,605 3,698 14,599 2,454

Total $ 5,817 $ 11,093 $ 22,253 $ 5,799 $ 19,733 $ 3,848

Weighted average interest rate 4.91 % 8.28 % 5.97 % 8.28 % 6.79 % 8.28 %

Pursuant to a BPU order, NJNG is permitted to recover carrying costs on uncollected balances related to SBC program costs, which include NJCEP, RAC and USF expenditures.

The SBC interest rate changes each September based on the August 31 seven-year constant maturity treasury rate plus 60 basis points.

The rate was 3.85 percent, 1.68 percent and 1.97 percent for the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

Accordingly, other income included $ 857,000 , $ 346,000 and $ 511,000 in the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

Clean Energy Ventures capitalizes interest on the allocation of the costs of debt borrowed for the financing of solar investments.

Capitalized amounts are included in nonutility plant and equipment on the Consolidated Balance Sheets.

Corresponding amounts are recognized in interest expense on the Consolidated Statements of Operations.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit and temporary investments with maturities of three months or less, and excludes restricted cash related to escrow balances for utility plant projects at NJNG, which are recorded in other noncurrent assets on the Consolidated Balance Sheets.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total amounts in the Consolidated Statements of Cash Flows, as of September 30:

(Thousands) 2022 2021 2020

Balance Sheet

Cash and cash equivalents $ 1,107 $ 4,749 $ 117,012

Restricted cash in other noncurrent assets $ 345 $ 1,294 $ 2,411

Statements of Cash Flow

Cash, cash equivalents and restricted cash $ 1,452 $ 6,043 $ 119,423

Allowance for Doubtful Accounts

The Company segregates financial assets, primarily trade receivables and unbilled revenues due in one year or less, into portfolio segments based on shared risk characteristics, such as geographical location and regulatory environment, for evaluation of expected credit losses.

Historical and current information, such as average write-offs, are applied to each portfolio segment to estimate the allowance for losses on uncollectible receivables.

Additionally, the allowance for losses on uncollectible receivables is adjusted for reasonable and supportable forecasts of future economic conditions, which can include changing weather, commodity prices, regulations and macroeconomic factors, such as unemployment rates among others, including the estimated impact of the ongoing pandemic on the outstanding balances.

During fiscal 2022, the Company deferred a portion of costs incurred related to bad debt for NJNG associated with customer accounts receivable as a regulatory asset resulting from the impacts of the ongoing COVID-19 pandemic.

Regulation for additional information.

Loans Receivable

NJNG currently provides loans, with terms ranging from 2 to 10 years, to customers that elect to purchase and install certain energy-efficient equipment in accordance with its BPU-approved SAVEGREEN program.

The loans are recognized at fair value on the Consolidated Balance Sheets.

The Company has $ 14.5 million and $ 14.2 million recorded in other current assets and $ 34.7 million and $ 32.3 million in other noncurrent assets as of September 30, 2022 and 2021, respectively, on the Consolidated Balance Sheets, related to the loans.

The Company regularly evaluates the credit quality and collection profile of its customers.

If NJNG determines a loan is impaired, the basis of the loan would be subject to regulatory review for recovery.

As of September 30, 2022 and 2021, the Company has not recorded any impairments for SAVEGREEN loans.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Regulatory Assets & Liabilities

Under cost-based regulation, regulated utility enterprises generally are permitted to recover their operating expenses and earn a reasonable rate of return on their utility investment.

Natural Gas Distribution maintains its accounts in accordance with the FERC Uniform System of Accounts as prescribed by the BPU and in accordance with ASC 980, Regulated Operations .

As a result of the impact of the ratemaking process and regulatory actions of the BPU, NJNG is required to recognize the economic effects of rate regulation.

Accordingly, NJNG capitalizes or defers certain costs that are expected to be recovered from its customers as regulatory assets and recognizes certain obligations representing probable future expenditures as regulatory liabilities on the Consolidated Balance Sheets.

Regulation for a more detailed description of NJNG’s regulatory assets and liabilities.

Adelphia Gateway capitalizes or defers certain costs that are expected to be recovered from its customers as regulatory assets and recognizes certain obligations representing probable future expenditures as regulatory liabilities on the Consolidated Balance Sheets.

Regulation for a more detailed description of Adelphia Gateway’s regulatory assets and liabilities.

Natural Gas in Storage

Natural gas in storage is reflected at average cost on the Consolidated Balance Sheets and represents natural gas and LNG that will be utilized in the ordinary course of business.

The following table summarizes natural gas in storage, at average cost by company, as of September 30:

($ in thousands) Natural Gas in Storage Bcf Natural Gas in Storage Bcf

Natural Gas Distribution $ 191,175 29.0 $ 115,824 27.6

Energy Services 82,469 10.8 77,782 18.8

Total $ 273,644 39.8 $ 193,606 46.4

Derivative Instruments

The Company accounts for its financial instruments, such as futures, options, foreign exchange contracts and interest rate contracts, as well as its physical commodity contracts related to the purchase and sale of natural gas at Energy Services, as derivatives, and therefore recognizes them at fair value on the Consolidated Balance Sheets.

The Company’s unregulated subsidiaries record changes in the fair value of their financial commodity derivatives in natural gas purchases and changes in the fair value of their physical forward contracts in natural gas purchases or operating revenues, as appropriate, on the Consolidated Statements of Operations.

Ineffective portions of the cash flow hedges are recognized immediately in earnings.

ASC 815, Derivatives and Hedging also provides for a NPNS scope exception for qualifying physical commodity contracts for which physical delivery is probable and the quantities delivered are expected to be used or sold over a reasonable period of time in the normal course of business.

Effective January 1, 2016, the Company prospectively applies this normal scope exception on a case-by-case basis to physical commodity contracts at NJNG and PPAs at Clean Energy Ventures.

When applied, it does not account for these contracts until the contract settles and the related underlying natural gas or power is delivered.

Gains and/or losses on NJNG’s derivatives used to economically hedge its regulated natural gas supply obligations, as well as its exposure to interest rate variability, are recoverable through its BGSS, a component of its tariff.

Accordingly, the offset to the change in fair value of these derivatives is recorded as a regulatory asset or liability on the Consolidated Balance Sheets.

Derivative Instruments for additional details regarding natural gas trading and hedging activities.

Fair values of exchange-traded instruments, including futures and swaps, are based on unadjusted, quoted prices in active markets.

The Company’s non-exchange-traded financial instruments, foreign currency derivatives, over-the-counter physical commodity contracts at Energy Services and interest rate contracts are valued using observable, quoted prices for similar or identical assets when available.

In establishing the fair value of contracts for which a quoted basis price is not available at the measurement date, management utilizes available market data and pricing models to estimate fair values.

Fair values are subject to change in the near term and reflect management’s best estimate based on a variety of factors.

Estimating fair values of instruments that do not have quoted market prices requires management’s judgment in determining amounts that could reasonably be expected to be received from, or paid to, a third party in settlement of the instruments.

These amounts could be materially different from amounts that might be realized in an actual sale transaction.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

During fiscal 2020, the Company entered into treasury lock transactions to fix the benchmark treasury rate associated with debt issuances for NJNG and NJR that occurred during the fiscal year.

Settlement of the NJNG treasury locks resulted in a loss, which was recorded as a component of regulatory assets on the Consolidated Balance Sheets and will be amortized in earnings over the term of the debt as a component of interest expense on the Consolidated Statements of Operations.

NJR designated its treasury lock contracts as cash flow hedges;

therefore, changes in fair value of the effective portion of the hedges were recorded in OCI.

Settlement of the treasury locks resulted in a loss, which was recorded within OCI and is amortized into earnings over the term of the associated debt as a component of interest expense on the Consolidated Statements of Operations.

As of September 30, 2022 and 2021, amounts recognized in interest expense related to the amortization of the loss on treasury lock transactions totaled $ 219,000 and $ 223,000 , respectively, for NJNG, and $ 1.1 million and $ 1.0 million, respectively, for NJR.

Software Costs

The Company capitalizes certain costs, such as software design and configuration, coding, testing and installation, that are incurred to purchase or create and implement computer software for internal use.

Capitalized costs include external costs of materials and services utilized in developing or obtaining internal-use software and payroll and payroll-related costs for employees who are directly associated with and devote time to the internal-use software project.

Maintenance costs are expensed as incurred.

Upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality.

Amortization is recorded on the straight-line basis over the estimated useful lives.

The following table presents the software costs included in the Consolidated Financial Statements, as of September 30:

(Thousands) 2022 2021

Balance Sheets

Utility plant, at cost $ 40,437 $ 16,543

Construction work in progress $ 14,381 $ 7,801

Nonutility plant and equipment, at cost $ 344 $ 338

Construction work in progress $ — $ 8

Accumulated depreciation and amortization, utility plant $ ( 3,361 ) $ ( 1,333 )

Accumulated depreciation and amortization, nonutility plant and equipment $ ( 25 ) $ ( 29 )

Software costs $ 6,120 $ 5,582

Statements of Operations

Operation and maintenance (1)

$ 11,141 $ 9,141

Depreciation and amortization $ 2,024 $ 1,078

(1) During fiscal 2022 and 2021, $ 452,000 and 447,000 , respectively, was amortized from software costs into O&M.

Intangible Assets

Finite-lived intangible assets are stated at cost less accumulated amortization.

The Company amortizes intangible assets based upon the pattern in which the economic benefits are consumed over the life of the asset unless a pattern cannot be reliably determined, in which case the Company uses a straight-line amortization method.

As of September 30, 2022, intangible assets consist primarily of acquired wholesale natural gas energy contracts totaling $ 2.3 million.

The wholesale natural gas contracts are being amortized based upon expected cash flows over the respective terms of the agreements.

The estimated future amortization expense as of September 30, is as follows:

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Long-lived Assets

The Company reviews the recoverability of long-lived assets and finite-lived intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable, such as significant adverse changes in regulation, business climate or market conditions, including prolonged periods of adverse commodity and capacity prices.

If there are changes indicating that the carrying value of such assets may not be recoverable, an undiscounted cash flows test is performed.

If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value of the asset to its fair value.

Factors that the Company analyzes in determining whether an impairment in its long-lived assets exists include:

a significant decrease in the market price of a long-lived asset;

a significant adverse change in the extent in which a long-lived asset is being used in its physical condition;

legal proceedings or other contributing factors;

significant business climate changes;

accumulations of costs in significant excess of the amounts expected;

a current-period operating or cash flow loss combined with a history of such events;

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.

During fiscal 2022 and 2021, there were no events or circumstances that indicated that the carrying value of long-lived assets or finite-lived intangibles was not recoverable.

Debt Issuance Costs

Debt issuance costs are capitalized and amortized as interest expense on a basis which approximates the effective interest method over the term of the related debt.

Debt issuance costs are presented as a direct deduction from the carrying amount of the related debt.

Debt for the total unamortized debt issuance costs that are recorded as a reduction to long-term debt on the Consolidated Balance Sheets.

Sale Leasebacks

2 unchanged sentences

Proceeds from sale leaseback transactions are accounted for as financing arrangements and are included in long-term debt on the Consolidated Balance Sheets.

During fiscal 2022 and 2020, NJNG received $ 17.3 million and $ 4.0 million, respectively, in connection with the sale leaseback of its natural gas meters with terms ranging from seven to 11 years.

There were no natural gas meter sale leasebacks recorded during fiscal 2021.

In addition, for certain of its commercial solar energy projects, the Company enters into lease agreements that provide for the sale of commercial solar energy assets to third parties and the concurrent leaseback of the assets.

1 unchanged sentence

Under the financing method, the Company recognizes the proceeds received from the buyer-lessor that constitute a payment to acquire the solar energy asset as a financing arrangement, which is recorded as a component of debt on the Consolidated Balance Sheets.

During fiscal 2022, 2021, and 2020, Clean Energy Ventures received proceeds of $ 24.1 million, $ 17.7 million and $ 42.9 million, respectively, in connection with sale leasebacks of commercial solar assets.

The proceeds received were recognized as a financing obligation on the Consolidated Balance Sheets.

Clean Energy Ventures simultaneously entered into agreements to lease the assets back over a term of five to 15 years.

The Company continues to operate the solar assets and is responsible for related expenses and entitled to retain the revenue generated from RECs and energy sales.

The Company continues to operate the solar assets and is responsible for related expenses and entitled to retain the revenue generated from SRECs, TRECs, SREC IIs and energy sales.

The ITCs and other tax benefits associated with these solar projects transfer to the buyer;

however, the payments are structured so that Clean Energy Ventures is compensated for the transfer of the related tax attributes.

Accordingly, Clean Energy Ventures recognizes the equivalent value of the tax attributes 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.

however, the payments are structured so that CEV is compensated for the transfer of the related tax attributes.

Accordingly, CEV recognizes the equivalent value of the tax attributes 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.

Debt for more details regarding sale leaseback transactions recorded as financing arrangements.

Environmental Contingencies

2 unchanged sentences

Accruals for loss contingencies are recorded based on an analysis of potential results.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

With respect to environmental liabilities and related costs, NJNG periodically, and at least annually, performs an environmental review of MGP sites, including a review of potential liability for investigation and remedial action.

15 unchanged sentences

Funding of these benefits is made primarily into Voluntary Employee Beneficiary Association trust funds.

The Company contributed $ 6.1 million and $ 7.2 million in aggregate to these plans during fiscal 2022 and 2021, respectively, which is recorded in postemployment employee benefit liability on the Consolidated Balance Sheets.

The Company contributed $ 4.2 M and $ 6.1 M in aggregate to these plans during fiscal 2023 and 2022, respectively, which is recorded in postemployment employee benefit liability on the Consolidated Balance Sheets.

Employee Benefit Plans for a more detailed description of the Company’s pension and postemployment plans.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Asset Retirement Obligations

The Company recognizes ARO related to the costs associated with cutting and capping NJNG’s main and service natural gas distribution mains, which is required by New Jersey law when taking such natural gas distribution mains out of service.

The Company also recognizes ARO associated with Clean Energy Ventures’ solar assets when there are decommissioning provisions in lease agreements that require removal of the asset at the end of the lease term.

The Company also recognizes ARO associated with CEV’s solar assets when there are decommissioning provisions in lease agreements that require removal of the asset at the end of the lease term.

ARO are initially recognized when the legal obligation to retire an asset has been incurred and a reasonable estimate of fair value can be made.

1 unchanged sentence

The obligation is subsequently accreted to the future value of the expected retirement cost, and the corresponding asset retirement cost is depreciated over the life of the related asset.

Accretion expense associated with Clean Energy Ventures’ ARO is recognized as a component of operations and maintenance expense on the Consolidated Statements of Operations.

Accretion expense associated with CEV’s ARO is recognized as a component of operations and maintenance expense on the Consolidated Statements of Operations.

Accretion amounts associated with NJNG’s ARO are recognized as part of its depreciation expense, and the corresponding regulatory asset and liability will be shown gross on the Consolidated Balance Sheets.

4 unchanged sentences

Accordingly, ARO are subject to change.

The following is an analysis of the change in the Company’s ARO for the fiscal years ended September 30:

(Thousands) Balance at October 1 Accretion Additions Change in assumptions Retirements Balance at period end

NJNG $ 49,874 2,693 155 4,089 ( 1,526 ) $ 55,285

NJRCEV $ 5,161 213 1,334 — — $ 6,708

NJNG $ 41,611 2,052 161 7,339 ( 1,289 ) $ 49,874

NJRCEV $ 4,694 186 281 — — $ 5,161

Accretion for the next five years, for the fiscal years ended September 30, is estimated to be as follows:

(Thousands) 2024 2025 2026 2027 2028 Total

Estimated Accretion $ 3,114 3,268 3,429 3,597 3,781 $ 17,189

New Jersey Resources Corporation

1 unchanged sentence

Accumulated Other Comprehensive Income

The following table presents the changes in the components of accumulated other comprehensive income, net of related tax effects, as of September 30:

The following table presents the changes in the components of accumulated other comprehensive income, net of related tax effects:

(Thousands) Cash Flow Hedges Postemployment Benefit Obligation Total

Balance at September 30, 2020 $ ( 10,397 ) $ ( 33,918 ) $ ( 44,315 )

Balance as of September 30, 2021 $ ( 9,376 ) $ ( 25,152 ) $ ( 34,528 )

Other comprehensive income, net of tax

5 unchanged sentences

1,054 28,648 29,702

Balance at September 30, 2021 $ ( 9,376 ) $ ( 25,152 ) $ ( 34,528 )

Balance as of September 30, 2022 $ ( 8,322 ) $ 3,496 $ ( 4,826 )

Other comprehensive income, net of tax

5 unchanged sentences

1,053 ( 6,186 ) ( 5,133 )

Balance at September 30, 2022 $ ( 8,322 ) $ 3,496 $ ( 4,826 )

Balance as of September 30, 2023 $ ( 7,269 ) $ ( 2,690 ) $ ( 9,959 )

(1) Included in the computation of net periodic pension cost, a component of operations and maintenance expense on the Consolidated Statements of Operations.

2 unchanged sentences

Foreign Currency Transactions

The market area of Energy Services includes Canadian delivery points and, as a result, Energy Services incurs certain natural gas commodity costs and demand fees denominated in Canadian dollars.

The market area of ES includes Canadian delivery points and, as a result, ES incurs certain natural gas commodity costs and demand fees denominated in Canadian dollars.

Gains or losses that occur as a result of these foreign currency transactions are reported as a component of natural gas purchases on the Consolidated Statements of Operations.

Gains and losses recognized for the fiscal years ended September 30, 2023, 2022 and 2021, are considered immaterial.

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation.

Deferred income taxes and postemployment employee benefit assets previously classified within other noncurrent assets on the Consolidated Balance Sheets have been reclassified to their own category.

Recently Adopted Updates to the Accounting Standards Codification

In December 2019, the FASB issued ASU No.

2019-12, an amendment to ASC 740, Income Taxes , which simplifies the accounting for income taxes and changes the accounting for certain income tax transactions, among other minor improvements.

The Company adopted this guidance on October 1, 2021, and applied it on a prospective basis.

The amendments in this update were either not applicable, currently applied, or did not have a material impact on the Company’s financial position, results of operations, cash flows or disclosures upon adoption.

Investments - Equity Securities, Investments - Equity Method and Joint Ventures and Derivatives and Hedging

In January 2020, the FASB issued ASU No.

2020-01, an amendment to ASC 321, Investments - Equity Securities, ASC 323 , Investments - Equity Method and Joint Ventures, and ASC 815 , Derivatives and Hedging, which clarifies the interactions between the three ASU topics.

The update requires an entity to evaluate observable transactions that necessitate applying or discontinuing the equity method of accounting when applying the measurement alternative in Topic 321.

This evaluation occurs prior to applying or upon ceasing the equity method.

The update also states that when applying paragraph 815-10-15-141(a) for forward contracts and purchased options, an entity is not required to assess whether the underlying securities will be accounted for under the equity method in accordance with Topic 323 or fair value method under Topic 825 upon settlement or exercise.

The Company adopted this guidance on October 1, 2021, and applied it on a prospective basis.

There was no material impact on the Company’s financial position, results of operations, cash flows or disclosures upon adoption.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

In October 2020, the FASB issued ASU No.

2020-10, Codification Improvements , which clarifies application of various provisions in the ASC by amending and adding new headings, cross-referencing to other guidance, and refining or correcting terminology.

It also improves the consistency by amending the ASC to include all disclosure guidance in the appropriate section.

The Company adopted this guidance on October 1, 2021, and applied it on a prospective basis.

There was no material impact on the Company’s financial position, results of operations, cash flows or disclosures upon adoption.

Other Recent Updates to the Accounting Standards Codification

Debt and Other

1 unchanged sentence

2020-06, an amendment to ASC 470, Debt , and ASC 815, Derivatives and Hedging , which changes the accounting for convertible instruments by reducing the number of acceptable accounting models to three models, including the embedded derivative, substantial premium and traditional no proceeds allocated models.

The guidance is effective for the Company beginning October 1, 2022, and the Company can elect to apply it on either a modified or a full retrospective basis.

The Company does not currently have convertible debt instruments and thus does not expect the amendments to have an impact on its financial position, results of operations, cash flows and disclosures upon adoption.

The Company adopted this guidance on October 1, 2022.

The Company does not currently have convertible debt instruments, and as a result there was no impact on its financial position, results of operations, cash flows and disclosures upon adoption.

In May 2021, the FASB issued ASU No.

1 unchanged sentence

The update impacts equity-classified written call options that remain equity-classified after a modification or exchange.

The guidance is effective for the Company beginning October 1, 2022, and will be applied on a prospective basis.

The Company does not currently have equity-classified written call options and thus does not expect the amendments to have an impact on its financial position, results of operations, cash flows and disclosures upon adoption.

The Company adopted this guidance on October 1, 2022, on a prospective basis.

As the Company does not currently have equity-classified written call options, there was no impact on its financial position, results of operations, cash flows and disclosures upon adoption.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

In July 2021, the FASB issued ASU No.

2021-05, an amendment to ASC 842, Leases , which requires a lessor to classify a lease with entirely or partially variable payments that do not depend on an index or rate as an operating lease if another classification, including sales-type or direct financing, would trigger a loss at the lease commencement date.

The guidance is effective for the Company beginning October 1, 2022, and the Company has elected to apply it on a prospective basis.

The Company expects the amendments to have an immaterial impact on its financial position, results of operations, cash flows and disclosures upon adoption.

The Company adopted this guidance on October 1, 2022, on a prospective basis.

The Company currently does not have any leases that meet this criteria, and as such there was no impact on its financial position, results of operations, cash flows and disclosures upon adoption.

Other Recent Updates to the Accounting Standards Codification

Business Combinations

1 unchanged sentence

2021-08, an amendment to ASC 805, Business Combinations , which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers .

The guidance is effective for the Company beginning October 1, 2023, and will be applied on a prospective basis to new acquisitions following the date of adoption.

The Company is currently evaluating the amendments to understand the impact on its financial position, results of operations, cash flows and disclosures upon adoption.

The guidance is effective for the Company beginning October 1, 2023, and the Company will apply the updated guidance on a prospective basis to new acquisitions following the date of adoption.

In August 2023, the FASB issued ASU No.

2023-05, an amendment to ASC 805, Business Combinations , which addresses how a joint venture should recognize contributions received upon its formation.

Joint ventures must account for initial assets and liabilities received at fair value on the date the joint venture is formed.

The guidance is effective for the Company for joint ventures formed beginning January 1, 2025, and the Company can elect to apply it either prospectively or retrospectively back to a joint venture’s formation date provided adequate information is available.

Early adoption is permitted.

This amendment would only impact the Company upon adoption if, in the future, it entered into an applicable transaction.

Derivatives and Hedging

3 unchanged sentences

The guidance is effective for the Company beginning October 1, 2023, and the transition method can be on a prospective basis for a multiple-layer hedging strategy or a modified retrospective basis for a portfolio layer method.

The Company does not currently apply hedge accounting to any of its risk management activities and thus does not expect the amendment to have an impact on its financial position, results of operations, cash flows and disclosures upon adoption.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

As the Company does not currently apply hedge accounting to any of its risk management activities, the amendment will have no impact on its financial position, results of operations, cash flows and disclosures upon adoption.

Financial Instruments

3 unchanged sentences

The amendment also adds new disclosures for creditors with loan refinancing and restructuring for borrowers experiencing financial difficulty.

The guidance is effective for the Company beginning October 1, 2023, and the Company can elect to apply it either on a modified retrospective or prospective basis.

At this time, the Company has not experienced a troubled debt restructuring and thus does not expect the amendments to have an impact on its financial position, results of operations and cash flows upon adoption.

The Company is currently evaluating the amendments to understand the impact on its disclosures upon adoption.

The guidance is effective for the Company beginning October 1, 2023, and the Company can elect to apply it on either a modified retrospective or prospective basis.

At this time, the Company has not experienced a troubled debt restructuring, and therefore the amendments will have no impact on its financial position, results of operations, cash flows and disclosures upon adoption.

Fair Value Measurement

2 unchanged sentences

The amendment clarifies the fair value principles when measuring the fair value of an equity security subject to a contractual sale restriction.

The guidance is effective for the Company on October 1, 2024, its first fiscal year beginning after December 15, 2023, and will be applied on a prospective basis, if applicable.

At this time, the Company does not have equity securities subject to contractual sale restrictions, and therefore these amendments would only impact the Company if, in the future, it entered into such transactions.

The guidance is effective for the Company on October 1, 2024, and will be applied on a prospective basis.

At this time, the Company does not have equity securities subject to contractual sale restrictions, and therefore this amendment would only impact the Company upon adoption if, in the future, it entered into such transactions.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

In March 2023, the FASB issued ASU No.

2023-01, an amendment to ASC 842, Leases, which applies to arrangements between related parties under common control.

This update requires that all entities with common control arrangements classify and account for these leases on the same basis as an arrangement with an unrelated party.

If the lessee in these types of arrangements continues to control the use of the underlying asset through a lease, the leasehold improvements are to be amortized over the improvements’ useful life to the common control group, regardless of the lease term.

The guidance is effective for the Company on October 1, 2024, and the Company can elect to apply it either on a prospective basis or retrospectively beginning October 1, 2019, representing the date which the Company adopted ASC 842.

The Company is currently evaluating the amendment to understand the impact on its financial position, results of operations, cash flows and disclosures upon adoption.

Revenue is recognized when a performance obligation is satisfied by transferring control of a product or service to a customer.

6 unchanged sentences

Segment/ Operations Performance Obligation Description

Natural Gas Distribution Natural gas utility sales NJNG’s performance obligation is to provide natural gas to residential, commercial and industrial customers as demanded, based on regulated tariff rates, which are established by the BPU.

NJNG Natural gas utility sales NJNG’s performance obligation is to provide natural gas to residential, commercial and industrial customers as demanded, based on regulated tariff rates, which are established by the BPU.

Revenues from the sale of natural gas are recognized in the period that natural gas is delivered and consumed by customers, including an estimate for quantities consumed but not billed during the period.

5 unchanged sentences

As NJNG is acting as an agent on behalf of the third-party supplier, revenue is recorded for the delivery of natural gas to the customer.

Clean Energy Ventures Commercial solar electricity Clean Energy Ventures operates wholly-owned solar projects that recognize revenue as electricity is generated and transferred to the customer.

CEV Commercial solar electricity CEV operates wholly-owned solar projects that recognize revenue as electricity is generated and transferred to the customer.

The performance obligation is to provide electricity to the customer in accordance with contract terms or the interconnection agreement and is satisfied upon transfer of electricity generated.

Revenue is recognized as invoiced and the payment is due each month for the previous month's services.

CEV Residential solar electricity CEV provides access to residential rooftop and ground-mount solar equipment to customers who then pay the Company a monthly fee.

The performance obligation is to provide electricity to the customer based on generation from the underlying residential solar asset and is satisfied upon transfer of electricity generated.

Revenue is derived from the contract terms and is recognized as invoiced, with the payment due each month for the previous month’s services.

New Jersey Resources Corporation

1 unchanged sentence

Revenue Recognized Over Time (continued):

Segment/ Operations Performance Obligation Description

Clean Energy Ventures Residential solar electricity Clean Energy Ventures provides access to residential rooftop and ground-mount solar equipment to customers who then pay the Company a monthly fee.

The performance obligation is to provide electricity to the customer based on generation from the underlying residential solar asset and is satisfied upon transfer of electricity generated.

Revenue is derived from the contract terms and is recognized as invoiced, with the payment due each month for the previous month's services.

Clean Energy Ventures Transition renewable energy certificates

Clean Energy Ventures generates TRECs, which are created for every MWh of electricity produced by a solar generator.

The performance obligation of Clean Energy Ventures is to generate electricity and TRECs, which are purchased monthly by a REC Administrator.

Operations Performance Obligation Description

CEV Renewable energy certificates Certain CEV projects generate TRECs and SREC IIs under the established Administratively Determined Incentive Program.

A TREC or SREC II is created for every MWh of electricity produced by a solar generator.

The performance obligation of CEV is to generate electricity.

TRECs and SREC IIs under the Administratively Determined Incentive Program are purchased monthly by a REC Administrator.

Revenue is recognized upon generation.

Energy Services Natural gas services The performance obligation of Energy Services is to provide the customer transportation, storage and asset management services on an as-needed basis.

Energy Services generates revenue through management fees, demand charges, reservation fees and transportation charges centered around the buying and selling of the natural gas commodity, representing one series of distinct performance obligations.

ES Natural gas services The performance obligation of ES is to provide the customer transportation, storage and asset management services on an as-needed basis.

ES generates revenue through management fees, demand charges, reservation fees and transportation charges centered around the buying and selling of the natural gas commodity, representing one series of distinct performance obligations.

Revenue is recognized based upon the underlying natural gas quantities physically delivered and the customer obtaining control.

Energy Services invoices customers in line with the terms of the contract and based on the services provided.

ES invoices customers in line with the terms of the contract and based on the services provided.

Payment is due upon receipt of the invoice.

For temporary releases of pipeline capacity, revenue is recognized on a straight-line basis over the agreed upon term.

Storage and Transportation Natural gas services The performance obligation of Storage and Transportation is to provide the customer with storage and transportation services.

Storage and Transportation generates revenues from firm storage contracts and transportation contracts, injection and withdrawal at the storage facility and the delivery of natural gas to customers.

Natural gas services The performance obligation of S&T is to provide the customer with storage and transportation services.

S&T generates revenues from firm storage contracts and transportation contracts, injection and withdrawal at the storage facility and the delivery of natural gas to customers.

Revenue is recognized over time as customers receive the benefits of its service as it is performed on their behalf using an output method based on actual deliveries.

Demand fees are recognized as revenue over the term of the related agreement.

Home Services and Other Service contracts Home Services enters into service contracts with homeowners to provide maintenance and replacement services of applicable heating, cooling or ventilation equipment.

HSO Service contracts Home Services enters into service contracts with homeowners to provide maintenance and replacement of applicable heating, cooling or ventilation equipment.

NJR Retail enters into warranty contracts with homeowners for various appliances.

2 unchanged sentences

Revenue Recognized at a Point in Time:

Energy Services Natural gas services For a permanent release of pipeline capacity, the performance obligation of Energy Services is the release of the pipeline capacity associated with certain natural gas transportation contracts and the transfer of the underlying contractual rights to the counterparty.

ES Natural gas services For a permanent release of pipeline capacity, the performance obligation of ES is the release of the pipeline capacity associated with certain natural gas transportation contracts and the transfer of the underlying contractual rights to the counterparty.

Revenue is recognized upon the transfer of the underlying contractual rights.

Storage and Transportation Natural gas services The performance obligation of Storage and Transportation is to provide the customer with storage and transportation services.

Storage and Transportation generates revenues from usage fees and hub services for the use of storage space, injection and withdrawal from the storage facility.

Natural gas services The performance obligation of S&T is to provide the customer with storage and transportation services.

S&T generates revenues from usage fees and hub services for the use of storage space, injection and withdrawal from the storage facility.

Hub services include park and loan transactions and wheeling.

Usage fees and hub services revenues are recognized as services are performed.

Home Services and Other Installations Home Services installs appliances, including but not limited to furnaces, air conditioning units, boilers and generators, for customers.

HSO Installations Home Services installs appliances, including but not limited to, furnaces, air conditioning units, boilers and generators for customers.

The distinct performance obligation is the installation of the contracted appliance, which is satisfied at the point in time the item is installed.

4 unchanged sentences

Disaggregated revenues from contracts with customers by product line and by reporting segment and other business operations during fiscal 2023, 2022 and 2021 are as follows:

(Thousands) Natural Gas Distribution Clean Energy Ventures Energy Services Storage and Transportation Home Services

and Other Total

(Thousands) NJNG CEV ES S&T HSO Total

Natural gas utility sales (1)

55 unchanged sentences

Disaggregated revenues from contracts with customers by customer type and by reporting segment and other business operations during the fiscal years ended September 30, are as follows:

(Thousands) Natural Gas Distribution Clean Energy Ventures Energy Services Storage and Transportation Home Services

and Other Total

(Thousands) NJNG CEV ES S&T HSO Total

Residential $ 621,663 13,668 — — 57,091 $ 692,422

1 unchanged sentence

Firm transportation 77,722 — — — — 77,722

Interruptible and off-tariff 5,097 — — — — 5,097

Interruptible, off-tariff and other 8,647 — — — — 8,647

Revenues out of scope 167,241 79,762 604,471 — — 851,474

3 unchanged sentences

Firm transportation 92,531 — — — — 92,531

Interruptible and off-tariff 3,842 — — — — 3,842

Interruptible, off-tariff and other 5,097 — — — — 5,097

Revenues out of scope 177,141 84,476 1,445,377 — — 1,706,994

3 unchanged sentences

Firm transportation 79,256 — — — — 79,256

Interruptible and off-tariff 6,322 — — — — 6,322

Interruptible, off-tariff and other 3,842 — — — — 3,842

Revenues out of scope 37,161 65,434 1,201,913 — — 1,304,508

7 unchanged sentences

Balance as of September 30, 2022 222,297 13,769 33,246

Increase 9,459 3,418 660

(Decrease) increase ( 124,757 ) 5,331 11,664

Balance as of September 30, 2023 $ 97,540 $ 19,100 $ 44,910

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The following table provides information about receivables, which are included within accounts receivable, billed and unbilled, and customers’ credit balances and deposits, respectively, on the Consolidated Balance Sheets as of September 30:

(Thousands) Natural Gas Distribution Clean Energy Ventures Energy Services Storage and Transportation Home Services

and Other Total

(Thousands) NJNG CEV ES S&T HSO Total

Customer accounts receivable

8 unchanged sentences

Total $ 56,076 8,521 129,199 7,012 2,012 $ 202,820

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The EDECA is the legal framework for New Jersey’s public utility and wholesale energy landscape.

8 unchanged sentences

The primary purpose of the audit is to ensure that utilities and their affiliates offering unregulated retail services do not have an unfair competitive advantage over nonaffiliated providers of similar retail services.

A combined competitive services and management audit of NJNG commenced in August 1, 2013.

A combined competitive services and management audit of NJNG commenced on August 1, 2013.

A draft management audit report was accepted by the BPU on July 23, 2014, for public comment.

6 unchanged sentences

Annual rate changes are typically requested to be effective at the beginning of the following fiscal year.

The current base rates include a weighted average cost of capital of 6.84 percent and a return on common equity of 9.6 percent.

The current base rates include a weighted average cost of capital of 6.84 % and a return on common equity of 9.6 %.

All rate and program changes are subject to proper notification and BPU review and approval.

7 unchanged sentences

Conservation Incentive Program 50,356 23,099

Derivatives at fair value, net 6,017 —

Other current regulatory assets 1,410 1,290

22 unchanged sentences

(1) Reflects the re-measurement and subsequent amortization of NJNG’s net deferred tax liabilities as a result of the change in federal tax rates enacted in the Tax Act.

Regulatory assets and liabilities included on the Consolidated Balance Sheets for Adelphia Gateway are comprised of the following, as of September 30:

The Tax Act is an Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, previously known as The Tax Cuts and Jobs Act of 2017.

Other noncurrent regulatory assets include deferred pandemic costs of approximately $ 3.9 M and $ 6.9 M as of September 30, 2023 and 2022, respectively, primarily related to a portion of bad debt associated with customer accounts receivable resulting from the impacts of the COVID-19 pandemic.

These costs are eligible for future regulatory recovery.

On January 5, 2023, NJNG advised the BPU that it will cease deferring COVID-19 costs as of December 31, 2022, and will seek recovery of its regulatory asset balance in its next base rate proceeding.

Regulatory assets and liabilities included on the Consolidated Balance Sheets for Adelphia are comprised of the following, as of September 30:

(Thousands) 2023 2022

Total current regulatory assets $ — $ 417

Total noncurrent regulatory assets $ 5,231 $ 5,366

Total current regulatory liabilities $ 1,650 $ 5,311

Total noncurrent regulatory liabilities $ — $ 1,163

The assets are comprised primarily of the tax benefit associated with the equity component of AFUDC and the liability consists primarily of scheduling penalties.

5 unchanged sentences

NJNG recovers the costs associated with its portion of the NJCEP obligation through its NJCEP rider, with interest.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Conservation Incentive Program

2 unchanged sentences

This program has no expiration date.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Derivatives are utilized by NJNG to manage the price risk associated with its natural gas purchasing activities and to participate in certain BGSS incentive programs.

The gains and losses associated with NJNG’s derivatives are recoverable through its BGSS, as noted above, without interest.

Derivative Instruments .

Environmental Remediation Costs

3 unchanged sentences

Commitments and Contingent Liabilities .

Derivatives are utilized by NJNG to manage the price risk associated with its natural gas purchasing activities and to participate in certain BGSS incentive programs.

The gains and losses associated with NJNG’s derivatives are recoverable through its BGSS, as noted above, without interest.

Derivative Instruments .

Deferred Income Taxes

19 unchanged sentences

NJNG’s related costs to maintain the operational integrity of its distribution and transmission main are recoverable, without interest, subject to BPU review and approval.

As of September 30, 2022, NJNG recorded $ 635,000 of PIM in other regulatory assets, which is being recovered through base rates over a seven-year amortization period effective October 2016.

Overrecovered Natural Gas Costs

1 unchanged sentence

NJNG’s cost of natural gas includes the purchased cost of the natural gas commodity, fees paid to pipelines and storage facilities, adjustments as a result of BGSS incentive programs and hedging transactions.

Overrecovered natural gas costs represent a regulatory liability that generally occurs when NJNG’s BGSS rates are higher than actual costs and requests approval to be returned to customers including interest, when applicable, in accordance with NJNG’s approved BGSS tariff.

Overrecovered natural gas costs represent a regulatory liability that generally occurs when NJNG’s BGSS rates are higher than actual costs and returns to customers, including interest when applicable, in accordance with NJNG’s approved BGSS tariff.

Conversely, underrecovered natural gas costs generally occur during periods when NJNG’s BGSS rates are lower than actual costs, in which case NJNG records a regulatory asset and requests amounts to be recovered from customers in the future.

The following is a description of certain regulatory proceedings during fiscal 2022 and 2023:

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.

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 depreciation rate of 2.78 percent.

On November 2021, the BPU issued an order adopting a stipulation of settlement approving a $ 79.0 M increase to base rates, effective December 1, 2021.

The increase includes an overall rate of return on rate base of 6.84 %, return on common equity of 9.6 %, a common equity ratio of 54.0 % and a depreciation rate of 2.78 %.

BGSS rates are normally revised on an annual basis.

5 unchanged sentences

In December 2020, NJNG notified the BPU of the extension of the BGSS bill credits through January 2021.

The actual bill credits given to customers totaled $ 20.6 million, $ 19.3 million net of tax.

The actual bill credits given to customers totaled $ 20.6 M, $ 19.3 M net of tax.

• 2021 BGSS/CIP filing — In May 2021, NJNG submitted to the BPU the annual petition to modify its BGSS, balancing charge and CIP rates.

On November 17, 2021, the BPU approved a $ 2.9 million increase to the annual revenues credited to BGSS and a $ 13.0 million annual increase related to its balancing charge, as well as changes to CIP rates, which will result in a $ 6.3 million decrease to the annual recovery, effective December 1, 2021.

• On November 17, 2021, the BPU approved, on a preliminary basis, NJNG’s annual petition to modify its BGSS, balancing charge and CIP rates for residential and small commercial customers.

The rate changes resulted in a $ 2.9 million increase to the annual revenues credited to BGSS and a $ 13.0 million annual increase related to its balancing charge, as well as changes to CIP rates, which resulted in a $ 6.3 million annual recovery decrease, effective December 1, 2021, and was approved on a final basis on May 4, 2022.

• On November 19, 2021, NJNG submitted notification of its intent to self-implement an increase to its BGSS rate which results in an approximate $ 24.2 million increase to annual revenues credited to BGSS, effective December 1, 2021.

• 2022 BGSS/CIP filing — On June 1, 2022, NJNG submitted its annual petition to modify its BGSS, balancing charge and CIP rates for residential and small commercial customers.

On September 7, 2022, the BPU approved, on a preliminary basis, an $ 81.9 million increase to the annual revenues credited to BGSS and a $ 9.0 million annual increase related to its balancing charge, as well as a $ 10.2 million increase to CIP rates, effective October 1, 2022.

In November 2021, the BPU approved a $ 2.9 M increase to the annual revenues credited to BGSS and a $ 13.0 M annual increase related to its balancing charge, as well as changes to CIP rates, which will result in a $ 6.3 M decrease to the annual recovery, effective December 1, 2021.

• In November 2021, the BPU approved, on a preliminary basis, NJNG’s annual petition to modify its BGSS, balancing charge and CIP rates for residential and small commercial customers.

The rate changes resulted in a $ 2.9 M increase to the annual revenues credited to BGSS and a $ 13.0 M annual increase related to its balancing charge, as well as changes to CIP rates, which resulted in a $ 6.3 M annual recovery decrease, effective December 1, 2021, and was approved on a final basis in May 2022.

• In November 2021, NJNG submitted notification of its intent to self-implement an increase to its BGSS rate which results in an approximate $ 24.2 M increase to annual revenues credited to BGSS, effective December 1, 2021.

• 2022 BGSS/CIP filing — In June 2022, NJNG submitted its annual petition to modify its BGSS, balancing charge and CIP rates for residential and small commercial customers.

In September 2022, the BPU approved, on a preliminary basis, an $ 81.9 M increase to the annual revenues credited to BGSS and a $ 9.0 M annual increase related to its balancing charge, as well as a $ 10.2 M increase to CIP rates, effective October 1, 2022, which was approved on a final basis on April 12, 2023.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

• On February 22, 2023, NJNG advised the BPU of a bill credit and a reduction to the BGSS rate for residential and small commercial customers, which reduced recoveries by approximately $ 29.9 M, effective March 1, 2023, and was approved on a final basis by the BPU on April 12, 2023.

Bill credits provided to customers from March 2023 through May 2023, totaled approximately $ 32.4 M.

• 2023 BGSS/CIP filing — On June 1, 2023, NJNG filed its annual petition to modify its BGSS, balancing charge and CIP rates for residential and small business customers.

This includes a $ 38.6 M decrease to the annual revenues credited to BGSS, a $ 7.4 M annual decrease related to its balancing charge and a $ 27.5 M increase to CIP rates, effective October 1, 2023.

On September 18, 2023, the BPU approved, on a provisional basis, the filed BGSS and balancing charge changes and a $ 27.0 M increase to CIP rates, based on updated information since the initial filing.

BGSS Incentive Programs

4 unchanged sentences

Depending on the specific initiative or approval, NJNG recovers costs associated with the programs over a three - to 10-year period through a tariff rider mechanism.

In March 2021, the BPU approved a three-year SAVEGREEN program that included $ 126.1 million of direct investment, $ 109.4 million in financing options and $ 23.4 million in operation and maintenance expenses, which resulted in a $ 15.6 million annual recovery increase, effective July 1, 2021.

In March 2021, the BPU approved a three-year SAVEGREEN program that included $ 126.1 M of direct investment, $ 109.4 M in financing options and $ 23.4 M in operation and maintenance expenses.

SAVEGREEN investments and costs are filed with the BPU on an annual basis.

2 unchanged sentences

Throughout the course of the proceeding, the Company updated the filing for additional actual information.

Based on the updated information, the BPU approved the request to maintain its existing rate, which results in an annual recovery of approximately $ 11.4 million, effective November 1, 2020.

Based on the updated information, the BPU approved the request to maintain its existing rate, which results in an annual recovery of approximately $ 11.4 M, effective November 1, 2020.

• 2021 EE filing — In June 2021, NJNG submitted its annual cost recovery filing for the SAVEGREEN programs established from 2010 through 2018.

On January 26, 2022, the BPU approved the stipulation to resolve the current EE annual cost recovery filing, which increases annual recoveries by $ 2.2 million, effective February 1, 2022.

• 2022 EE filing — On June 1, 2022, NJNG submitted its annual cost recovery filing for the SAVEGREEN programs established from 2010 through the present.

On September 28, 2022, the BPU approved the filing, which decreases annual recoveries by $ 3.5 million, effective October 1, 2022.

In January 2022, the BPU approved the stipulation to resolve the current EE annual cost recovery filing, which increases annual recoveries by $ 2.2 M, effective February 1, 2022.

• 2022 EE filing — In June 2022, NJNG submitted its annual cost recovery filing for the SAVEGREEN programs established from 2010 through the present.

In September 2022, the BPU approved the filing, which decreases annual recoveries by $ 3.5 M, effective October 1, 2022.

• 2023 EE filing — On June 1, 2023, NJNG submitted its annual EE filing with the BPU for the recovery of SAVEGREEN costs, proposing an increase in annual recoveries of approximately $ 10.7 M.

On September 27, 2023, the BPU approved an increase to the EE rate increasing annual recoveries by $ 9.0 M based on updated information since the initial filing, effective October 1, 2023

Societal Benefits Charge

1 unchanged sentence

NJNG has submitted the following filings to the BPU, which include a report of program expenditures incurred each program year:

• 2020 SBC filing — In April 2021, the BPU approved a stipulation resolving NJNG’s annual SBC application requesting to recover remediation expenses, including an increase in the RAC of approximately $ 1.3 million annually and an increase to the NJCEP factor, which resulted in an annual increase of approximately $ 6.0 million, effective May 1, 2021.

• 2021 USF filing — In June 2021, NJNG filed its annual USF compliance filing proposing an annual increase to the statewide USF rate of approximately $ 4.9 million.

In September 2021, the BPU approved the increase, effective October 1, 2021.

• 2021 SBC filing — On March 23, 2022, the BPU approved NJNG's annual filing to increase the RAC by $ 600,000 and decrease the NJCEP by $ 2.9 million, effective April 1, 2022.

• 2022 USF filing — On June 27, 2022, NJNG filed its annual USF compliance filing proposing a decrease to the statewide USF rate.

On August 25, 2022, an additional update was submitted on behalf of all NJ utilities with actual information through July 31, 2022.

On September 28, 2022, the BPU approved a decrease based on the August update, which resulted in an annual decrease of approximately $ 1.6 million, effective October 1, 2022.

• 2020 SBC filing — In April 2021, the BPU approved a stipulation resolving NJNG’s annual SBC application requesting to recover remediation expenses, including an increase in the RAC of approximately $ 1.3 M annually and an increase to the NJCEP factor, which resulted in an annual increase of approximately $ 6.0 M, effective May 1, 2021.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

• 2022 SBC filing — On September 13, 2022, NJNG submitted its annual SBC filing to the BPU requesting approval of RAC expenditures through June 30, 2022, as well as an increase to the RAC annual recoveries of $ 3.8 million and an increase to the NJCEP annual recoveries of $ 2.2 million, with a proposed effective date of April 1, 2023.

• 2021 USF filing — In June 2021, NJNG filed its annual USF compliance filing proposing an annual increase to the statewide USF rate of approximately $ 4.9 M.

In September 2021, the BPU approved the increase, effective October 1, 2021.

• 2021 SBC filing — In March 2022, the BPU approved NJNG’s annual filing to increase the RAC by $ 0.6 M and decrease the NJCEP by $ 2.9 M, effective April 1, 2022.

• 2022 USF filing — In June 2022, NJNG filed its annual USF compliance filing proposing a decrease to the statewide USF rate.

In August 2022, an additional update was submitted on behalf of all NJ utilities with actual information through July 31, 2022.

In September 2022, the BPU approved a decrease based on the August update, which resulted in an annual decrease of approximately $ 1.6 M, effective October 1, 2022.

• 2022 SBC filing — In September 2022, NJNG submitted its annual SBC filing to the BPU requesting approval of RAC expenditures through June 30, 2022, as well as an increase to the RAC annual recoveries of $ 3.8 M and an increase to the NJCEP annual recoveries of $ 2.2 M, with a proposed effective date of April 1, 2023.

On April 12, 2023, the BPU approved on a final basis an increase to the RAC annual recoveries of $ 3.7 M and a decrease to the NJCEP annual recoveries of $ 0.9 M, effective May 1, 2023.

• 2023 USF filing — On June 28, 2023, NJNG submitted its annual USF filing to the BPU requesting an increase to the statewide USF rate, which will result in a $ 0.7 M increase to annual recoveries.

The BPU approved this matter on September 27, 2023, effective October 1, 2023.

• 2023 SBC filing — On September 11, 2023 , NJNG submitted its annual SBC filing to the BPU requesting approval of RAC expenditures through June 2023, as well as an increase to the RAC annual recoveries of $ 2.4 M and an increase to the NJCEP annual recoveries of $ 5.0 M, which would be effective April 1, 2024.

Infrastructure Programs

2 unchanged sentences

The SAFE program replaced portions of NJNG’s natural gas distribution unprotected steel, cast iron infrastructure and associated services to improve the safety and reliability of the natural gas distribution system.

SAFE I was approved to invest up to $ 130.0 million, exclusive of AFUDC, over a four-year period.

SAFE II was approved to invest up to $ 200.0 million, excluding AFUDC, over a five-year period.

NJNG recovered approximately $ 157.5 million through annual rate filings, with the remainder recovered through subsequent rate cases.

SAFE I was approved to invest up to $ 130.0 M, exclusive of AFUDC, over a four-year period.

SAFE II was approved to invest up to $ 200.0 M, excluding AFUDC, over a five-year period.

NJNG recovered approximately $ 157.5 M through annual rate filings, with the remainder recovered through subsequent rate cases.

As a condition of approval of the program, NJNG was required to file a base rate case no later than November 2019 and satisfied this requirement with its March 29, 2019 base rate case filing.

NJ RISE consisted of six capital investment projects estimated to cost $ 102.5 million over a five-year period, excluding AFUDC, for natural gas distribution storm-hardening and mitigation projects, along with incremental depreciation expense.

NJ RISE includes a weighted average cost of capital that ranges from 6.74 percent to 6.9 percent and a return on equity of 9.75 percent.

NJ RISE consisted of six capital investment projects estimated to cost $ 102.5 M over a five-year period, excluding AFUDC, for natural gas distribution storm-hardening and mitigation projects, along with incremental depreciation expense.

NJ RISE includes a weighted average cost of capital that ranges from 6.74 % to 6.9 % and a return on equity of 9.75 %.

Requests for recovery of future NJ RISE capital costs occurred in conjunction with SAFE II.

In March 2021, NJNG filed a petition with the BPU requesting the final base rate increase for the recovery associated with NJ RISE and SAFE II capital investments cost of approximately $ 3.4 million made through June 30, 2021.

In June 2021, this filing was consolidated with the 2021 base rate case.

In November 2021, the BPU issued an order for the consolidated matter which included approval for the final increase for the NJ RISE and SAFE II programs of $ 269,000 .

In November 2021, the BPU issued an order for the consolidated matter which included approval for the final increase for the NJ RISE and SAFE II programs of $ 0.3 M.

With this approval, the BPU filings with respect to NJ RISE and SAFE II are complete.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Infrastructure Investment Program

1 unchanged sentence

The IIP consists of two components, transmission and distribution investments and information technology replacement and enhancements.

The total investment for the IIP is approximately $ 507.0 million.

The total investment for the IIP is approximately $ 507.0 M.

Upon approval from the BPU, investments will be recovered through annual filings to adjust base rates.

In October 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.

In October 2020, the BPU approved the Company’s transmission and distribution component of the IIP for $ 150.0 M over five years , effective November 1, 2020.

The recovery of information technology replacement and enhancements that was included in the original IIP filing will be included as part of base rate filings as projects are placed in service.

On March 31, 2022, NJNG filed its first rate recovery request for its BPU-approved IIP with capital expenditures estimated through June 30, 2022, including AFUDC.

On July 13, 2022, NJNG filed its update with actual capital expenditures of $ 28.9 million through June 30, 2022.

On September 7, 2022, the BPU approved the rate increase resulting in a $ 3.2 million revenue increase, effective October 1, 2022.

Other Filings

In July 2020, the BPU issued an order which authorized New Jersey utilities to create a regulatory asset by deferring incremental COVID-19 related costs and required a related quarterly report be filed for the COVID-19-related costs and savings incurred.

Utilities were to file a petition by the later of December 31, 2021, or within 60 days of the close of the regulatory asset period, and rate recovery can be addressed in the filing or the utility may request consideration be deferred to a future rate case.

Any potential rate recovery, and the appropriate period of recovery, would be addressed through that filing, or may have requested a deferral of rate recovery for a future base rate case.

In September 2021, the BPU extended the filing date to December 31, 2022, or within 60 days of the close of the regulatory asset period.

On August 17, 2022, the BPU approved NJNG’s petition seeking authority to issue up to $ 500 million in Medium Term Notes over a 3-year period.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

In March 2022, NJNG filed its first rate recovery request for its BPU-approved IIP with capital expenditures estimated through June 30, 2022, including AFUDC.

In July 2022, NJNG filed its update with actual capital expenditures of $ 28.9 M through June 30, 2022.

In September 2022, the BPU approved the rate increase resulting in a $ 3.2 M revenue increase, effective October 1, 2022.

On March 30, 2023, NJNG submitted its annual IIP filing to the BPU requesting a rate increase for estimated capital expenditures of $ 31.4 M through June 30, 2023.

This filing was updated on July 28, 2023, with actual expenses of approximately $ 28.2 M through June 30, 2023.

The BPU approved this filing on September 27, 2023, which resulted in a $ 3.2 M revenue increase, effective October 1, 2023.

DERIVATIVE INSTRUMENTS

6 unchanged sentences

Energy Services

Energy Services chooses not to designate its financial commodity and physical forward commodity derivatives as accounting hedges or to elect NPNS.

The changes in the fair value of these derivatives are recorded as a component of natural gas purchases or operating revenues, as appropriate for Energy Services, on the Consolidated Statements of Operations as unrealized gains or losses.

For Energy Services at settlement, realized gains and losses on all financial derivative instruments are recognized as a component of natural gas purchases, and realized gains and losses on all physical derivatives follow the presentation of the related unrealized gains and losses as a component of either natural gas purchases or operating revenues.

Energy Services also enters into natural gas transactions in Canada and, consequently, is exposed to fluctuations in the value of Canadian currency relative to the U.S.

Energy Services may utilize foreign currency derivatives to lock in the exchange rates associated with natural gas transactions denominated in Canadian currency.

ES chooses not to designate its financial commodity and physical forward commodity derivatives as accounting hedges or to elect NPNS.

The changes in the fair value of these derivatives are recorded as a component of natural gas purchases or operating revenues, as appropriate for ES, on the Consolidated Statements of Operations as unrealized gains or losses.

For ES at settlement, realized gains and losses on all financial derivative instruments are recognized as a component of natural gas purchases, and realized gains and losses on all physical derivatives follow the presentation of the related unrealized gains and losses as a component of either natural gas purchases or operating revenues.

ES also enters into natural gas transactions in Canada and, consequently, is exposed to fluctuations in the value of Canadian currency relative to the U.S.

ES may utilize foreign currency derivatives to lock in the exchange rates associated with natural gas transactions denominated in Canadian currency.

The derivatives may include currency forwards, futures or swaps and are accounted for as derivatives.

These derivatives are typically used to hedge demand fee payments on pipeline capacity, storage and natural gas purchase agreements.

As a result of Energy Services entering into transactions to borrow natural gas, commonly referred to as “park and loans,” an embedded derivative is recognized relating to differences between the fair value of the amount borrowed and the fair value of the amount that will ultimately be repaid, based on changes in the forward price for natural gas prices at the borrowed location over the contract term.

As a result of ES entering into transactions to borrow natural gas, commonly referred to as “park and loans,” an embedded derivative is recognized relating to differences between the fair value of the amount borrowed and the fair value of the amount that will ultimately be repaid, based on changes in the forward price for natural gas prices at the borrowed location over the contract term.

This embedded derivative is accounted for as a forward sale in the month in which the repayment of the borrowed natural gas is expected to occur and is considered a derivative transaction that is recorded at fair value on the Consolidated Balance Sheets, with changes in value recognized in current-period earnings.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Expected production of SRECs is hedged through the use of forward and futures contracts.

All contracts require the Company to physically deliver SRECs through the transfer of certificates as per contractual settlement schedules.

Energy Services recognizes changes in the fair value of these derivatives as a component of operating revenues.

ES recognizes changes in the fair value of these derivatives as a component of operating revenues.

Upon settlement of the contract, the related revenue is recognized when the SREC is transferred to the counterparty.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Natural Gas Distribution

7 unchanged sentences

Clean Energy Ventures

The Company elects NPNS accounting treatment on PPA contracts executed by Clean Energy Ventures that meet the definition of a derivative and accounts for the contract on an accrual basis.

The Company elects NPNS accounting treatment on PPA contracts executed by CEV that meet the definition of a derivative and accounts for the contract on an accrual basis.

Accordingly, electricity sales are recognized in revenues throughout the term of the PPA as electricity is delivered.

5 unchanged sentences

Derivatives not designated as hedging instruments:

Natural Gas Distribution:

Physical commodity contracts Derivatives - current $ 43 $ 488 $ 252 $ 11

Financial commodity contracts Derivatives - current 6,110 20 85 6,281

Energy Services:

Physical commodity contracts Derivatives - current 6,209 12,757 9,857 17,051

3 unchanged sentences

Foreign currency contracts Derivatives - current — — 18 17

Derivatives - noncurrent — — 2 —

Total fair value of derivatives $ 32,319 $ 24,112 $ 31,020 $ 64,039

5 unchanged sentences

The following table summarizes the reported gross amounts, the amounts that the Company has the right to offset but elects not to, financial collateral and the net amounts the Company could present on the Consolidated Balance Sheets but elects not to.

(Thousands) Amounts Presented on Balance Sheets (1)

Offsetting Derivative Instruments (2)

Financial Collateral Received/Pledged (3)

Net Amounts (4)

Asset Derivatives Liability Derivatives

(Thousands) Fair Value (1)

Amounts Offset (2)

Collateral Received/Pledged (3)

Net Value (4)

Fair Value (1)

Amounts Offset (2)

Collateral Received/Pledged (3)

Net Value (4)

As of September 30, 2023

Derivative assets:

Energy Services

Physical commodity contracts $ 10,233 $ ( 404 ) $ ( 200 ) $ 9,629

Financial commodity contracts 20,432 ( 12,198 ) — 8,234

Foreign currency contracts 18 ( 17 ) — 1

Total Energy Services $ 30,683 $ ( 12,619 ) $ ( 200 ) $ 17,864

Natural Gas Distribution

Physical commodity contracts $ 252 $ — $ — $ 252

Financial commodity contracts 85 ( 85 ) — —

Total Natural Gas Distribution $ 337 $ ( 85 ) $ — $ 252

Derivative liabilities:

Energy Services

Physical commodity contracts $ 30,612 $ ( 404 ) $ — $ 30,208

Financial commodity contracts 27,118 ( 12,198 ) — 14,920

Foreign currency contracts 17 ( 17 ) —

Total Energy Services $ 57,747 $ ( 12,619 ) $ — $ 45,128

Natural Gas Distribution

Physical commodity contracts $ 11 $ — $ — $ 11

Financial commodity contracts 6,281 ( 85 ) — 6,196

Total Natural Gas Distribution $ 6,292 $ ( 85 ) $ — $ 6,207

Physical commodity $ 7,011 ( 1,236 ) — $ 5,775 $ 20,627 ( 1,236 ) ( 9,728 ) $ 9,663

Financial commodity 19,155 ( 2,977 ) ( 16,178 ) — 2,977 ( 2,977 ) — —

Total ES $ 26,166 ( 4,213 ) ( 16,178 ) $ 5,775 $ 23,604 ( 4,213 ) ( 9,728 ) $ 9,663

NJNG Contracts

Physical commodity $ 43 ( 3 ) — $ 40 $ 488 ( 3 ) — $ 485

Financial commodity 6,110 ( 20 ) — 6,090 20 ( 20 ) — —

Total NJNG $ 6,153 ( 23 ) — $ 6,130 $ 508 ( 23 ) — $ 485

As of September 30, 2022

Derivative assets:

Energy Services

Physical commodity contracts $ 3,151 $ ( 894 ) $ ( 700 ) $ 1,557

Financial commodity contracts 33,294 ( 33,294 ) 20,532 20,532

Foreign currency contracts 127 ( 3 ) — 124

Total Energy Services $ 36,572 $ ( 34,191 ) $ 19,832 $ 22,213

Natural Gas Distribution

Physical commodity contracts $ 36 $ ( 8 ) $ — $ 28

Financial commodity contracts 2,046 ( 13 ) — 2,033

Total Natural Gas Distribution $ 2,082 $ ( 21 ) $ — $ 2,061

Derivative liabilities:

Energy Services

Physical commodity contracts $ 37,829 $ ( 894 ) $ — $ 36,935

Financial commodity contracts 62,781 ( 33,294 ) — 29,487

Foreign currency contracts 3 ( 3 ) — —

Total Energy Services $ 100,613 $ ( 34,191 ) $ — $ 66,422

Natural Gas Distribution

Physical commodity contracts $ 16 $ ( 8 ) $ — $ 8

Financial commodity contracts 13 ( 13 ) — —

Total Natural Gas Distribution $ 29 $ ( 21 ) $ — $ 8

(1) Derivative assets and liabilities are presented on a gross basis on the balance sheets as the Company does not elect balance sheet offsetting under ASC 210-20.

Physical commodity $ 10,233 ( 404 ) ( 200 ) $ 9,629 $ 30,612 ( 404 ) — $ 30,208

Financial commodity 20,432 ( 12,198 ) — 8,234 27,118 ( 12,198 ) — 14,920

Foreign currency 18 ( 17 ) — 1 17 ( 17 ) — —

Total ES $ 30,683 ( 12,619 ) ( 200 ) $ 17,864 $ 57,747 ( 12,619 ) — $ 45,128

NJNG Contracts

Physical commodity $ 252 — — $ 252 $ 11 — — $ 11

Financial commodity 85 ( 85 ) — — 6,281 ( 85 ) — 6,196

Total NJNG $ 337 ( 85 ) — $ 252 $ 6,292 ( 85 ) — $ 6,207

(1) Derivative assets and liabilities are presented on a gross basis on the Consolidated Balance Sheets, as the Company does not elect balance sheet offsetting under ASC 210-20.

(2) Includes transactions with NAESB netting election, transactions held by FCMs with net margining and transactions with ISDA netting.

1 unchanged sentence

(4) Net amounts represent presentation of derivative assets and liabilities if the Company were to elect balance sheet offsetting under ASC 210-20.

ES utilizes financial derivatives to economically hedge the gross margin associated with the purchase of physical natural gas to be used for storage injection and its subsequent sale at a later date.

The gains or (losses) on the financial transactions that are economic hedges of the cost of the purchased natural gas are recognized prior to the gains or (losses) on the physical transaction, which are recognized in earnings when the natural gas is delivered.

Therefore, mismatches between the timing of the recognition of realized gains or (losses) on the financial derivative instruments and gains or (losses) associated with the actual sale of the natural gas that is being economically hedged, along with fair value changes in derivative instruments, creates volatility in the results of ES, although the Company’s intended economic results relating to the entire transaction are unaffected.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Energy Services utilizes financial derivatives to economically hedge the gross margin associated with the purchase of physical natural gas to be used for storage injection and its subsequent sale at a later date.

Therefore, mismatches between the timing of the recognition of realized gains or (losses) on the financial derivative instruments and gains or (losses) associated with the actual sale of the natural gas that is being economically hedged, along with fair value changes in derivative instruments, creates volatility in the results of Energy Services, although the Company’s intended economic results relating to the entire transaction are unaffected.

The following table presents the effect of derivative instruments recognized on the Consolidated Statements of Operations as of September 30:

3 unchanged sentences

2023 2022 2021

Energy Services:

Physical commodity contracts Operating revenues $ 33,610 $ ( 8,569 ) $ 30,011

2 unchanged sentences

Foreign currency contracts Natural gas purchases — ( 14 ) 238

Total unrealized and realized gains (losses) $ 9,400 $ ( 12,696 ) $ 56,705

Total unrealized and realized gain (loss) $ 107,170 $ 9,400 $ ( 12,696 )

NJNG’s derivative contracts are part of the Company’s risk management activities that relate to its natural gas purchases and BGSS incentive programs.

2 unchanged sentences

(Thousands) 2023 2022 2021

Natural Gas Distribution:

Physical commodity contracts $ ( 34,241 ) $ 7,116 $ 2,174

Financial commodity contracts ( 50,130 ) 32,868 32,725

Total unrealized and realized gains (losses) $ 39,984 $ 34,899 $ ( 1,826 )

Total unrealized and realized (loss) gain $ ( 84,371 ) $ 39,984 $ 34,899

During fiscal 2020, NJR entered into treasury lock transactions to fix the benchmark treasury rate associated with debt issuances that were finalized in 2020.

1 unchanged sentence

therefore, changes in fair value of the effective portion of the hedges are recorded in OCI and upon settlement of the contracts, realized gains and (losses) are reclassified from OCI to interest expense on the Consolidated Statements of Operations ratable over the term of the associated debt.

Pre-tax losses of $ 1.4 million were reclassified during both fiscal 2022 and 2021.

The following table reflects the effect of derivative instruments designated as cash flow hedges in OCI as of September 30:

(Thousands) Amount of pre-tax gain (loss) recognized in OCI on derivatives Location of gain (loss) reclassified from OCI into income Amount of pre-tax gain (loss) reclassified from OCI into income

Derivatives in cash flow hedging relationships:

Pre-tax losses of $ 1.4 M were reclassified during both fiscal 2023 and 2022.

NJNG and ES had the following outstanding long (short) derivatives as of September 30:

Natural Gas Distribution Energy Services

Volumes (Bcf) Futures Physical Commodity Futures Physical Commodity

2023 32.1 12.1 ( 6.9 ) 0.2

Interest rate contracts $ — $ — Interest expense $ ( 1,371 ) $ ( 1,371 )

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

NJNG and Energy Services had the following outstanding long (short) derivatives as of September 30:

Transaction Type 2022 2021

Natural Gas Distribution Futures 30.5 22.2

Physical Commodity 6.8 7.6

Energy Services Futures ( 0.7 ) ( 13.4 )

Swaps — ( 0.3 )

Physical Commodity 2.7 0.6

Not included in the above table are Energy Services’ net notional amount of foreign currency transactions of approximately $( 1,000 ) and $( 123,000 ) and 1.2 million and 1.4 million SRECs that were open as of September 30, 2022 and 2021, respectively.

2022 30.5 6.8 ( 0.7 ) 2.7

Not included in the above table are 1.3 M and 1.2 M SRECs that were open as of September 30, 2023 and 2022, respectively, and the notional amount of foreign currency transactions for the periods were immaterial .

Broker Margin

1 unchanged sentence

Margin requirements consist of initial margin that is posted upon the initiation of a position, maintenance margin that is usually expressed as a percent of initial margin and variation margin that fluctuates based on the daily marked-to-market relative to maintenance margin requirements.

The Company maintains separate broker margin accounts for Natural Gas Distribution and Energy Services.

The Company maintains separate broker margin accounts for NJNG and ES.

The balances as of September 30, by reporting segment, are as follows:

(Thousands) Balance Sheet Location 2023 2022

Natural Gas Distribution Restricted broker margin accounts - current assets $ 26,138 $ 2,790

Energy Services Restricted broker margin accounts - current assets $ 68,123 $ 70,050

NJNG Restricted broker margin accounts - current assets $ 5,915 $ 26,138

ES Restricted broker margin accounts - current assets $ 14,881 $ 68,123

Restricted broker margin accounts - current liabilities $ 8,029 $ —

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Wholesale Credit Risk

NJNG, Energy Services, Clean Energy Ventures and Storage and Transportation are exposed to credit risk as a result of their sales/wholesale marketing activities.

NJNG, ES, CEV and S&T are exposed to credit risk as a result of their sales/wholesale marketing activities.

As a result of the inherent volatility in the prices of natural gas commodities, derivatives and SRECs, the market value of contractual positions with individual counterparties could exceed established credit limits or collateral provided by those counterparties.

10 unchanged sentences

Gross credit exposure is defined as the unrealized fair value of physical and financial derivative commodity contracts, plus any outstanding wholesale receivable for the value of natural gas delivered and/or financial derivative commodity contract that has settled for which payment has not yet been received.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of September 30, 2023.

The amounts presented below have not been reduced by any collateral received or netting and exclude accounts receivable for NJNG retail natural gas sales and services and Clean Energy Ventures residential solar installations.

The amounts presented below have not been reduced by any collateral received or netting and exclude accounts receivable for NJNG retail natural gas sales and services and CEV residential solar installations.

(Thousands) Gross Credit

4 unchanged sentences

Total $ 164,500

Conversely, certain of NJNG’s and Energy Services’ derivative instruments are linked to agreements containing provisions that would require cash collateral payments from the Company if certain events occur.

Conversely, certain of NJNG’s and ES’s derivative instruments are linked to agreements containing provisions that would require cash collateral payments from the Company if certain events occur.

These provisions vary based upon the terms in individual counterparty agreements and can result in cash payments if NJNG’s credit rating were to fall below its current level.

3 unchanged sentences

Collateral amounts associated with any of these conditions are determined based on a sliding scale and are contingent upon the degree to which the Company’s credit rating and/or financial metrics deteriorate, and the extent to which liability amounts exceed applicable threshold limits.

There was approximately $ 161,000 of derivative instruments with credit-risk-related contingent features that were in a liability position for which collateral is required as of September 30, 2022.

There was approximately $ 0.1 M and $ 0.2 M of derivative instruments with credit-risk-related contingent features that were in a liability position for which collateral is required as of September 30, 2023 and 2022, respectively.

These amounts differ from the respective net derivative liabilities reflected on the Consolidated Balance Sheets because the agreements also include clauses, commonly known as “Rights of Offset,” that would permit the Company to offset its derivative assets against its derivative liabilities for determining additional collateral to be posted, as previously discussed.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Fair Value of Assets and Liabilities

The fair value of cash and cash equivalents, accounts receivable, current loan receivables, accounts payable, commercial paper and borrowings under revolving credit facilities are estimated to equal their carrying amounts due to the short maturity of those instruments.

The fair value of cash and cash equivalents, accounts receivable, current loans receivable, accounts payable, commercial paper and borrowings under revolving credit facilities are estimated to equal their carrying amounts due to the short maturity of those instruments.

Non-current loans receivable are recorded based on what the Company expects to receive, which approximates fair value, in other noncurrent assets on the Consolidated Balance Sheets.

The Company regularly evaluates the credit quality and collection profile of its customers to approximate fair value.

As of September 30, the estimated fair value of long-term debt, including current maturities, excluding finance leases, debt issuance costs and solar asset financing obligations, is as follows (1) :

As of September 30, the estimated fair value of long-term debt, including current maturities, excluding natural gas meter sale leasebacks, debt issuance costs and solar asset sale leasebacks, is as follows (1) :

(Thousands) 2023 2022

5 unchanged sentences

Debt f or a reconciliation to long-term and short-term debt .

(2) Excludes finance leases of $ 30.3 million and $ 20.1 million as of September 30, 2022 and September 30, 2021, respectively.

(3) Excludes NJNG’'s debt issuance costs of $ 9.5 million and $ 9.1 million as of September 30, 2022 and September 30, 2021, respectively.

(4) Excludes NJR’s debt issuance costs of $ 3.8 million and $ 3.3 million as of September 30, 2022 and September 30, 2021, respectively.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Clean Energy Ventures enters into transactions to sell certain commercial solar assets and lease the assets back for a term specified in the lease.

(2) Excludes the sale leasebacks of natural gas meters of $ 31.4 M and $ 30.3 M as of September 30, 2023 and 2022, respectively.

The fair value of certain sale leasebacks of natural gas meters amounted to $ 20.9 M and $ 15.7 M as of September 30, 2023 and 2022, respectively.

(3) Excludes NJNG’s debt issuance costs of $ 9.8 M and $ 9.5 M as of September 30, 2023 and September 30, 2022, respectively.

(4) Excludes NJR’s debt issuance costs of $ 3.7 M and $ 3.8 M as of September 30, 2023 and September 30, 2022, respectively.

CEV enters into transactions to sell certain commercial solar assets and lease the assets back for a term specified in the lease.

These transactions are considered financing obligations for accounting purposes and are recorded within long-term debt on the Consolidated Balance Sheets.

The estimated fair value of solar asset financing obligations as of September 30, 2022 and 2021 was $ 124.1 million and $ 132.5 million, respectively.

The estimated fair value of solar asset financing obligations as of September 30, 2023 and 2022 was $ 268.1 M and $ 124.1 M, respectively.

The Company utilizes a discounted cash flow method to determine the fair value of its debt.

4 unchanged sentences

In addition, authoritative accounting literature prescribes the use of a fair value hierarchy that prioritizes the inputs-to-valuation techniques used to measure fair value based on the source of the data used to develop the price inputs.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to inputs that are based on unobservable market data and includes the following:

Fair Value Hierarchy Description of Fair Value Level Fair Value Technique

Level 1 Unadjusted quoted prices for identical assets or liabilities in active markets

1 unchanged sentence

Exchange-traded futures and options contracts include all energy contracts traded on the NYMEX, CME and ICE that the Company refers to internally as basis swaps, fixed swaps, futures and financial options that are cleared through an FCM.

The Company’s Level 2 assets and liabilities include over-the-counter physical forward commodity contracts and swap contracts, SREC forward sales or derivatives that are initially valued using observable quotes and are subsequently adjusted to include time value, credit risk or estimated transport pricing components for which no basis price is available.

Level 2 Other significant observable inputs, such as interest rates or price data, including both commodity and basis pricing that is observed either directly or indirectly from publications or pricing services The Company’s Level 2 assets and liabilities include over-the-counter physical forward commodity contracts and swap contracts, SREC forward sales or derivatives that are initially valued using observable quotes and are subsequently adjusted to include time value, credit risk or estimated transport pricing components for which no basis price is available.

Level 2 financial derivatives consist of transactions with non-FCM counterparties (basis swaps, fixed swaps and/or options).

7 unchanged sentences

These additional adjustments are generally not considered to be significant to the ultimate recognized values.

Level 3 Inputs derived from a significant amount of unobservable market data.

These include the Company’s best estimate of fair value and are derived primarily through the use of internal valuation methodologies.

Financial derivative portfolios of NJNG and Energy Services consist mainly of futures, options and swaps.

Level 3 Inputs derived from a significant amount of unobservable market data These include the Company’s best estimate of fair value and are derived primarily through the use of internal valuation methodologies.

Financial derivative portfolios of NJNG and ES consist mainly of futures, options and swaps.

The Company primarily uses the market approach, and its policy is to use actively quoted market prices when available.

1 unchanged sentence

therefore, the primary sources for its price inputs are CME, NYMEX and ICE.

Energy Services uses Platts and Natural Gas Exchange for Canadian delivery points.

However, Energy Services also engages in transactions that result in transporting natural gas to delivery points for which there is no actively quoted market price.

ES uses Platts and Natural Gas Exchange for Canadian delivery points.

However, ES also engages in transactions that result in transporting natural gas to delivery points for which there is no actively quoted market price.

In most instances, the transportation cost to the final delivery location is not significant to the overall valuation.

If required, Energy Services’ policy is to use the best information available to determine fair value based on internal pricing models, which would include estimates extrapolated from broker quotes or other pricing services.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

If required, ES’s policy is to use the best information available to determine fair value based on internal pricing models, which would include estimates extrapolated from broker quotes or other pricing services.

The Company also has other financial assets that include listed equities, mutual funds and money market funds for which there are active exchange quotes available.

1 unchanged sentence

The Company determines these adjustments by using historical default probabilities that correspond to the applicable S&P issuer ratings, while also taking into consideration collateral and netting arrangements that serve to mitigate risk.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Assets and liabilities measured at fair value on a recurring basis are summarized as follows:

4 unchanged sentences

Financial commodity contracts 25,265 — — 25,265

Financial commodity contracts - foreign exchange — 18 — 18

Money market funds 145 — — 145

3 unchanged sentences

Financial commodity contracts 2,997 — — 2,997

Financial commodity contracts - foreign exchange — 17 — 17

Total liabilities at fair value $ 2,997 $ 21,115 $ — $ 24,112

11 unchanged sentences

INVESTMENTS IN EQUITY INVESTEES

As of September 30, the Company’s investments in equity method investees includes the following:

(Thousands) 2022 2021

Steckman Ridge

$ 106,571 $ 109,050

PennEast — 5,479

Total $ 106,571 $ 114,529

(1) Includes loans with a total outstanding principal balance of $ 70.4 million for both fiscal 2022 and 2021, which accrue interest at a variable rate that resets quarterly and are due October 1, 2023.

The Company holds a 50 % equity method investment in Steckman Ridge, a jointly owned and controlled natural gas storage facility located in Bedford County, Pennsylvania.

The Company’s investment in Steckman Ridge was $ 104.1 M and $ 106.6 M as of September 30, 2023 and 2022, respectively, which includes loans with a total outstanding principal balance of $ 70.4 M for both September 30, 2023 and 2022.

On October 1, 2023, we entered into an Amended and Restated Loan Agreement with Steckman Ridge to extend the existing loan agreement for an additional five years and moved from London Interbank Offered Rate to SOFR.

These loans accrue interest at a variable rate that resets quarterly and are now due October 1, 2027.

NJNG and ES have entered into storage and park and loan agreements with Steckman Ridge.

Related Party Transactions for more information on these intercompany transactions.

The Company, through its subsidiary NJR Midstream Company, is a 20 % investor 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.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Steckman Ridge

The Company holds a 50 percent equity method investment in Steckman Ridge, a jointly owned and controlled natural gas storage facility located in Bedford County, Pennsylvania.

NJNG and Energy Services have entered into storage and park and loan agreements with Steckman Ridge.

Related Party Transactions for more information on these intercompany transactions.

The Company, through its subsidiary NJR Midstream Company, is a 20 percent investor 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.

During the third quarter of fiscal 2021, the Company recognized an other-than-temporary impairment charge of $ 92.0 million, or approximately $ 74.5 million, net of income taxes, which represents the best estimate of the salvage value of the remaining assets of the project.

Other-than-temporary impairments are recorded in equity in earnings (losses) of affiliates in the Consolidated Statements of Operations.

In September 2021, the PennEast partnership determined that this project is no longer supported, and all further development has ceased.

On December 16, 2021, the FERC dismissed PennEast’s pending applications.

The order vacates the certificate authorization for the PennEast pipeline project in light of PennEast’s response to FERC staff’s November 23, 2021 request for a status update, in which PennEast informed the FERC it is no longer developing the project.

During fiscal 2022, the PennEast board of managers approved cash distributions to members of the partnership following the sale of certain project-related assets and refunds of interconnection fees received from interstate pipelines.

The return of capital received by the Company, which totaled $ 11.0 million, reduced the remaining carrying value of its equity method investment in PennEast to zero in the Consolidated Balance Sheet, with the excess recorded in equity in earnings (loss) of affiliates in the Consolidated Statements of Operations.

During the third quarter of fiscal 2021, the Company recognized an other-than-temporary impairment charge of $ 92.0 M, or approximately $ 74.5 M, net of income taxes, which represented the best estimate of the salvage value of the remaining assets of the project and was recorded in equity in earnings of affiliates in the Consolidated Statements of Operations.

In September 2021, the PennEast partnership determined that this project was no longer supported, and all further development ceased.

In March 2022, the PennEast board of managers approved cash distributions to members of the partnership following the sale of certain project-related assets and refunds of interconnection fees received from interstate pipelines.

The return of capital received by the Company from March 2022 through September 2022 totaled $ 11.0 M and reduced the remaining carrying value of its equity method investment in PennEast to zero in the Consolidated Balance Sheets, with the excess recorded in equity in earnings of affiliates in the Consolidated Statements of Operations.

The Company received additional return of capital of $ 0.3 M during fiscal 2023, which is recognized in equity in earnings of affiliates in the Consolidated Statements of Operations.

The following is the summarized financial information for Steckman Ridge and PennEast for fiscal years ended September 30:

12 unchanged sentences

Gross profit $ — $ — $ —

Income from continuing operations $ ( 3,778 ) $ ( 406,305 ) $ 34,376

Net (loss) income $ ( 3,778 ) $ ( 406,305 ) $ 34,376

Net (loss) income attributable to NJR $ ( 756 ) $ ( 81,261 ) $ 6,875

Loss from continuing operations $ ( 9,543 ) $ ( 3,778 ) $ ( 406,305 )

Net loss $ ( 9,543 ) $ ( 3,778 ) $ ( 406,305 )

Net loss attributable to NJR $ ( 1,909 ) $ ( 756 ) $ ( 81,261 )

Current assets $ 1,481 $ 1,801

2 unchanged sentences

Noncurrent liabilities $ — $ 500

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

EARNINGS PER SHARE

10 unchanged sentences

Diluted earnings per common share $ 2.71 $ 2.85 $ 1.22

$ 2.85 $ 1.22 $ 1.71

(1) Incremental shares consist primarily of unvested stock awards and performance units.

(2) There were anti-dilutive shares of 74,000 excluded from the calculation of diluted earnings per share related to the equity forward sale agreement for fiscal 2020.

There were no anti-dilutive shares excluded from the calculation of diluted earnings per share for fiscal 2022 and 2021 .

NJNG and NJR finance working capital requirements and capital expenditures through various short-term debt and long-term financing arrangements, including a commercial paper program and committed unsecured credit facilities.

(1) Incremental shares consist primarily of unvested stock awards and performance units, which are calculated using the treasury stock method.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Long-term Debt

27 unchanged sentences

Series MMM 4.71 % May 27, 2052 50,000 50,000

Finance lease obligation-meters Various dates 30,290 20,135

Series NNN 5.47 % October 24, 2052 125,000 —

Series OOO 5.56 % September 28, 2033 50,000 —

Meter financing obligation Various dates 31,352 30,290

Debt issuance costs ( 9,770 ) ( 9,528 )

1 unchanged sentence

Total NJNG long-term debt 1,410,950 1,307,069

3.25 % Unsecured senior notes September 17, 2022 — 50,000

Unsecured senior notes 3.20 % August 18, 2023 — 50,000

9 unchanged sentences

Unsecured senior notes 3.64 % September 19, 2034 50,000 50,000

Unsecured senior notes 6.14 % December 15, 2032 50,000 —

Debt issuance costs ( 3,656 ) ( 3,753 )

1 unchanged sentence

Total NJR long-term debt 1,116,344 1,066,247

Clean Energy Ventures

Solar asset financing obligation Various dates 278,401 130,618

Current maturities of long-term debt ( 37,678 ) ( 18,532 )

Total Clean Energy Ventures long-term debt 112,086 106,939

Total CEV long-term debt 240,723 112,086

Total long-term debt $ 2,768,017 $ 2,485,402

1 unchanged sentence

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Annual long-term debt redemption requirements, excluding finance leases, debt issuance costs and solar asset financing obligations, as of September 30, are as follows:

(Thousands) NJR NJNG

2023 $ 50,000 $ —

2024 $ — $ 70,000

2025 $ 100,000 $ 50,000

2026 $ 100,000 $ —

2027 $ 110,000 $ —

Thereafter $ 760,000 $ 1,172,845

On June 23, 2022, NJR entered into a Note Purchase Agreement under which NJR issued $ 110 million, Series 2022A senior notes at a fixed rate of 4.38 percent, maturing in 2027.

On September 16, 2022, NJR entered into another Note Purchase Agreement under which NJR issued $ 50 million, Series C senior notes at a fixed rate of 3.64 percent, maturing in 2034.

Annual long-term debt redemption requirements, excluding meter financing obligations, debt issuance costs and solar asset financing obligations, as of September 30, are as follows:

(Thousands) 2024 2025 2026 2027 2028 Thereafter

NJR $ — $ 100,000 $ 100,000 $ 110,000 $ 100,000 $ 710,000

NJNG $ 70,000 $ 50,000 $ — $ — $ 50,000 $ 1,297,845

On October 24, 2022, NJR entered into a Note Purchase Agreement, which closed on December 15, 2022, under which NJR issued $ 50 M, senior notes at a fixed rate of 6.14 %, maturing in 2032.

The senior notes are unsecured and guaranteed by certain unregulated subsidiaries of NJR.

First Mortgage Bonds

NJNG and Trustee entered into the Mortgage Indenture, dated September 1, 2014, which secures all of the outstanding FMBs issued by NJNG.

The Mortgage Indenture provides a direct first mortgage lien upon substantially all of the operating properties and franchises of NJNG (other than excepted property, such as cash on hand, choses-in-action, securities, rent, natural gas meters and certain materials, supplies, appliances and vehicles), subject only to certain permitted encumbrances.

NJNG and Trustee entered into the Mortgage Indenture, dated September 1, 2014, which secures all the outstanding FMBs issued by NJNG.

The Mortgage Indenture provides a direct first mortgage lien upon substantially all the operating properties and franchises of NJNG (other than excepted property, such as cash on hand, choses-in-action, securities, rent, natural gas meters and certain materials, supplies, appliances and vehicles), subject only to certain permitted encumbrances.

The Mortgage Indenture contains provisions subjecting after-acquired property (other than excepted property and subject to pre-existing liens, if any, at the time of acquisition) to the lien thereof.

NJNG’s Mortgage Indenture does not restrict NJNG’s ability to pay dividends.

New Jersey Administrative Code 14:4-4.7 states that a public utility cannot issue dividends, without regulatory approval, if its equity-to-total-capitalization ratio falls below 30 percent.

As of September 30, 2022, NJNG’s equity-to-total-capitalization ratio is 53.7 percent and NJNG has the capacity to issue up to $ 1.3 billion of FMB under the terms of the Mortgage Indenture.

On October 28, 2021, NJNG entered into a Note Purchase Agreement for $ 100 million of its senior notes, of which $ 50 million were issued at an interest rate of 2.97 percent, maturing in 2051, and $ 50 million were issued at an interest rate of 3.07 percent, maturing in 2061.

On May 27, 2022, NJNG entered into a Note Purchase Agreement for $ 100 million of its senior notes, of which $ 50 million were issued at an interest rate of 4.37 percent, maturing in 2037, and $ 50 million were issued at an interest rate of 4.71 percent, maturing in 2052.

On October 24, 2022, NJNG entered into a Note Purchase Agreement for $ 125 million of its senior notes at an interest rate of 5.47 percent, maturing in 2052.

New Jersey Administrative Code 14:4-4.7 states that a public utility cannot issue dividends, without regulatory approval, if its equity-to-total-capitalization ratio falls below 30 %.

As of September 30, 2023, NJNG’s equity-to-total-capitalization ratio is 54.4 % and NJNG has the capacity to issue up to $ 1.4 B of FMB under the terms of the Mortgage Indenture.

On October 24, 2022, NJNG entered into a Note Purchase Agreement under which it sold $ 125 M of its senior notes at an interest rate of 5.47 %, maturing in 2052.

On September 28, 2023, NJNG entered into a Note Purchase Agreement for $ 100 M aggregate principal amount of its senior notes consisting of $ 50 M of 5.56 % senior notes due September 28, 2033, which closed on September 28, 2023, and $ 50 M of 5.85 % senior notes due October 30, 2053, which closed on October 30, 2023.

The senior notes are secured by an equal principal amount of NJNG’s FMBs issued under NJNG’s Mortgage Indenture.

Sale Leasebacks

NJNG received $ 17.3 million during fiscal 2022 in connection with the sale leaseback of its natural gas meters, with terms ranging from seven to 11 years.

NJNG records a finance lease liability that is paid over the term of the lease and has the option to purchase the meters back at fair value upon expiration of the lease.

NJNG exercised early purchase options with respect to certain outstanding meter leases by making final principal payments of $ 1.1 million and $ 1.2 million for fiscal 2022 and 2021, respectively.

There were no natural gas meter sale leasebacks recorded during fiscal 2021.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Contractual commitments for finance lease payments, as of the fiscal years ended September 30, are as follows:

(Thousands) Lease Payments

Thereafter 3,262

Subtotal 32,034

NJNG received $ 8.4 M and $ 17.3 M during fiscal 2023 and 2022, respectively, in connection with the sale leaseback of its natural gas meters, with terms ranging from seven to 10 years.

These transactions are treated as financing obligations that are paid over the term of the arrangement and NJNG has the option to purchase the meters back upon lease expiration.

During fiscal 2022, NJNG exercised an early purchase option with respect to certain outstanding meter leases by making a final principal payment of $ 1.1 M for fiscal 2022.

There were no early purchase options exercised during fiscal 2023.

Contractual commitments for meter financing obligation payments, which include the most likely outcome of cash payments to the lessor, as of the fiscal years ended September 30, are as follows:

(Thousands) 2024 2025 2026 2027 2028 Thereafter Subtotal

Lease Payments $ 9,362 7,479 6,407 4,083 4,715 1,676 $ 33,722

Interest component ( 2,370 )

Total $ 31,352

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Clean Energy Ventures

Clean Energy Ventures enters into transactions to sell the commercial solar assets concurrent with agreements to lease the assets back over a period of five to 15 years.

These transactions are treated as financing obligations for accounting purposes, and are typically secured by the renewable energy facility asset and its future cash flows from SREC, TRECs and energy sales.

CEV enters into transactions to sell the commercial solar assets concurrent with agreements to lease the assets back over a period of five to 15 years.

These transactions are treated as financing obligations for accounting purposes and are typically secured by the renewable energy facility asset and its future cash flows from RECs and energy sales.

ITCs and other tax benefits associated with these solar projects are transferred to the buyer, if applicable;

however, the lease payments are structured so that Clean Energy Ventures is compensated for the transfer of the related tax incentives.

Clean Energy Ventures continues to operate the solar assets, including related expenses, and retain the revenue generated from SRECs, TRECs and energy sales, and has the option to renew the lease or repurchase the assets sold at the end of the lease term.

Clean Energy Ventures received proceeds of $ 24.1 million and $ 17.7 million during fiscal 2022 and 2021, respectively, in connection with the sale leaseback of commercial solar assets.

however, the lease payments are structured so that CEV is compensated for the transfer of the related tax incentives.

CEV continues to operate the solar assets, including related expenses, and retain the revenue generated from RECs and energy sales, and has the option to renew the lease or repurchase the assets sold at the end of the lease term.

CEV received proceeds of $ 167.8 M and $ 24.1 M during fiscal 2023 and 2022, respectively, in connection with the sale leaseback of commercial solar assets.

The proceeds received were recognized as a financing obligation on the Consolidated Balance Sheets.

Contractual commitments for the solar financing obligation payments, as of the fiscal years ended September 30, are as follows:

(Thousands) Lease Payments

2023 $ 15,755

Thereafter 16,442

Subtotal 123,019

Contractual commitments for the solar asset financing obligation payments, as of the fiscal years ended September 30, are as follows:

(Thousands) 2024 2025 2026 2027 2028 Thereafter Subtotal

Lease Payments $ 54,033 50,663 13,875 16,385 26,392 87,881 $ 249,229

Interest component ( 42,942 )

Total $ 206,287

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Credit Facilities and Short-term Debt

On February 8, 2022, NJR entered into a 364-day $ 150 million term loan credit agreement with an interest rate based on SOFR plus 0.85 percent, which expires on February 7, 2023.

The Company borrowed $ 50 million on February 9, 2022 and $ 100 million on February 14, 2022.

A summary of NJR’s credit facility and NJNG’s commercial paper program and credit facility as of September 30, are as follows:

(Thousands) 2022 2021 Expiration Dates

On February 7, 2023, NJR's 364-day $ 150 M term loan credit agreement, that was entered into in February 2022, expired.

The Company had $ 50 M that was borrowed on February 9, 2022 and $ 100 M that was borrowed on February 14, 2022, which was paid in full at expiration of the term loan agreement.

The following table summarizes NJR’s credit facility and NJNG’s commercial paper program and credit facility as of September 30:

At end of period

(Thousands) Total borrowing capacity Loans outstanding Weighted average interest rate Remaining borrowing capacity Expiration dates

Bank revolving credit facilities (1)

$ 650,000 $ 500,000 September 2027

Notes outstanding at end of period $ 200,150 $ 219,100

Weighted average interest rate at end of period 3.97 % 1.05 %

Amount available at end of period (2)

$ 440,177 $ 270,312

Bank term loan credit agreement $ 150,000 $ — February 2023

Loans outstanding at end of period $ 150,000 $ —

Weighted average interest rate at end of period 3.81 % — %

Amount available at end of period $ — $ —

$ 650,000 $ 217,300 6.53 % $ 426,967 (2) Sep 2027

Bank revolving credit facilities (3)

$ 250,000 $ 250,000 September 2027

Commercial paper outstanding at end of period $ 73,800 $ 158,200

Weighted average interest rate at end of period 3.34 % .17 %

Amount available at end of period (4)

$ 175,469 $ 91,069

(1) Committed credit facilities, which require commitment fees of 0.10 percent on the unused amounts.

(2) Letters of credit outstanding total $ 9.7 million and $ 10.6 million as of September 30, 2022 and September 30, 2021, respectively, which reduces amount available by the same amount.

(3) Committed credit facilities, which require commitment fees of 0.075 percent on the unused amounts.

(4) Letters of credit outstanding total $ 731,000 as of both September 30, 2022 and 2021, which reduces amount available by the same amount.

$ 250,000 $ 34,800 5.48 % $ 214,469 (4) Sep 2027

Bank revolving credit facilities (1)

$ 650,000 $ 200,150 3.97 % $ 440,177 (2) Sep 2027

Bank term loan credit agreement $ 150,000 $ 150,000 3.81 % $ — Feb 2023

Bank revolving credit facilities (3)

$ 250,000 $ 73,800 3.34 % $ 175,469 (4) Sep 2027

(1) Committed credit facilities, which require commitment fees of 0.10 % on the unused amounts.

(2) Letters of credit outstanding total $ 5.7 M and $ 9.7 M as of September 30, 2023 and September 30, 2022, respectively, which reduces amount available by the same amount.

(3) Committed credit facilities, which require commitment fees of 0.075 % on the unused amounts.

(4) Letters of credit outstanding total $ 0.7 M as of both September 30, 2023 and 2022, which reduces amount available by the same amount.

Amounts available under credit facilities are reduced by bank or commercial paper borrowings, as applicable, and any outstanding letters of credit.

Neither NJNG nor the results of its operations are obligated or pledged to support the NJR credit or debt shelf facilities.

During fiscal 2021, NJR entered into a Second Amended and Restated Credit Agreement governing a $ 500 million NJR Credit Facility, which was to expire on September 2, 2026.

The NJR Credit Facility is subject to two mutual options for a one-year extension beyond that date and includes an accordion feature, which allows NJR, in the absence of a default or event of default, to increase from time to time, with the existing or new lenders, the revolving credit commitments under the NJR Credit Facility in increments of $ 50 million up to a maximum of $ 250 million.

The NJR Credit Facility also permits the borrowing of revolving loans and swingline loans, as well as a $ 75 million sublimit for the issuance of letters of credit.

On August 30, 2022, NJR amended the Second Amended and Restated Credit Agreement to $ 650 million and extended the maturity date of the facility to September 2, 2027.

The amendment also increased the swingline to $ 70 million from $ 60 million and moved to SOFR as the benchmark rate, replacing the existing LIBOR.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

On August 30, 2022, NJR entered into a First Amendment to NJR’s Second Amended and Restated Credit Agreement governing a $ 650 M NJR Credit Facility with a maturity date of September 2, 2027.

The NJR Credit Facility is subject to a one-year extension beyond that date and includes an accordion feature, which allows NJR, in the absence of a default or event of default, to increase from time to time, with the existing or new lenders, the revolving credit commitments under the NJR Credit Facility in increments of $ 50 M, with the total revolving credit commitments not exceeding $ 750 M.

The NJR Credit Facility also permits the borrowing of revolving loans and swingline loans, as well as a $ 75 M sublimit for the issuance of letters of credit.

Certain of NJR’s unregulated subsidiaries have guaranteed all of NJR’s obligations under the NJR Credit Facility.

The credit facility is used primarily to finance its share repurchases, to satisfy Energy Services’ short-term liquidity needs and to finance, on an initial basis, unregulated investments.

As of September 30, 2022, NJR had seven letters of credit outstanding totaling $ 9.7 million on behalf of Energy Services and Clean Energy Ventures.

The credit facility is used primarily to finance its share repurchases, to satisfy ES’s short-term liquidity needs and to finance, on an initial basis, unregulated investments.

As of September 30, 2023, NJR had seven letters of credit outstanding totaling $ 5.7 M on behalf of ES and CEV.

These letters of credit reduce the amount available under NJR’s committed credit facility by the same amount.

NJR does not anticipate that these letters of credit will be drawn upon by the counterparties, and they will be renewed as necessary.

Energy Services’ letters of credit are used for margin requirements for natural gas transactions, collateral and security deposit for retail natural gas sales, and they expire on dates ranging from September 2023 to December 2023.

ES’s letters of credit are used for margin requirements for natural gas transactions, collateral and security deposit for retail natural gas sales, and they expire on dates ranging from September 2024 to December 2024.

Neither NJNG nor the results of its operations are obligated or pledged to support the NJR credit or debt shelf facilities.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

During fiscal 2021, NJNG entered into a Second Amended and Restated Credit Agreement governing a $ 250 million, NJNG Credit Facility, which was to expire on September 2, 2026.

The NJNG Credit Facility is subject to two mutual options for a one-year extension beyond that date and permits the borrowing of revolving loans and swingline loans, as well as a $ 30 million sublimit for the issuance of letters of credit.

The NJNG Credit Facility also includes an accordion feature, which would allow NJNG, in the absence of a default or event of default, to increase from time to time, with the existing or new lenders, the revolving credit commitments under the NJNG Credit Facility in minimum increments of $ 50 million up to a maximum of $ 100 million.

On August 30, 2022, NJNG amended the Second Amended and Restated Credit Agreement to extend the maturity date of the facility to September 2, 2027, and moved to SOFR as the benchmark rate, replacing the existing LIBOR.

As of September 30, 2022, NJNG has two letters of credit outstanding for 731,000 , which reduced the amount available under the NJNG Credit Facility by the same amount.

On August 30, 2022, NJNG amended the Second Amended and Restated Credit Agreement governing a $ 250 M NJNG Credit Facility with a maturity date of September 2, 2027.

The NJNG Credit Facility is subject to a one-year extension beyond that date and includes an accordion feature, which allows NJNG, in the absence of a default or event of default, to increase from time to time, with the existing or new lenders, the revolving credit commitments under the NJNG Credit Facility in minimum increments of $ 50 M up to a maximum of $ 100 M.

The NJNG Credit Facility also permits the borrowing of revolving loans and swingline loans, as well as a $ 30 M sublimit for the issuance of letters of credit.

As of September 30, 2023, NJNG has two letters of credit outstanding for $ 0.7 M, which reduced the amount available under the NJNG Credit Facility by the same amount.

NJNG does not anticipate that these letters of credit will be drawn upon by the counterparties.

13 unchanged sentences

Total, net of tax $ 11,153 $ 11,203 $ 5,536

(1) Excludes additional tax (expense) benefit related to delivered shares of $( 144,000 ), $( 159,000 ) and $ 647,000 as of September 30, 2022, 2021 and 2020, respectively.

(1) Excludes additional tax (expense) benefit related to delivered shares of $( 0.6 )M, $( 0.1 )M and $( 0.2 )M as of September 30, 2023, 2022 and 2021, respectively.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Performance Share Units

6 unchanged sentences

The vesting of these awards are shown in the table below.

There is approximately $ 4.4 million of deferred compensation related to unvested performance shares that is expected to be recognized over the weighted average period of 1.7 years.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

There is approximately $ 5.2 M of deferred compensation related to unvested performance shares that is expected to be recognized over the weighted average period of 1.7 years.

The following table summarizes the performance share activity under the stock award and incentive plans for the past three fiscal years:

14 unchanged sentences

Non-vested and outstanding at September 30, 2023 190,255 $ 42.60 —

(1) The number of common shares issued related to certain performance shares may range from zero to 150 percent of the number of shares shown in the table above based on the Company’s achievement of performance goals.

(2) As certified by the Company’s Leadership and Compensation Committee on November 9, 2020, there were no common shares earned related to TSR performance, the number of common shares earned related to NFE performance was 114 percent or 28,513 shares, and the number of common shares earned related to Performance Based Restricted Stock was 100 percent or 11,139 shares.

(1) The number of common shares issued related to certain performance shares may range from zero to 150 % of the number of shares shown in the table above based on the Company’s achievement of performance goals.

(2) As certified by the Company’s Leadership and Compensation Committee on November 10, 2021, there were no common shares earned related to TSR performance, the number of common shares earned related to NFE performance was 93 % or 31,116 shares, and the number of common shares earned related to Performance Based Restricted Stock was 100 % or 25,982 shares.

Each award earned excludes accumulated dividends.

The number represented on this line is the target number of 100 percent.

(3) As certified by the Company’s Leadership and Compensation Committee on November 10, 2021, there were no common shares earned related to TSR performance, the number of common shares earned related to NFE performance was 93 percent or 31,116 shares, and the number of common shares earned related to Performance Based Restricted Stock was 100 percent or 25,982 shares.

The number represented on this line is the target number of 100 %.

(3) As certified by the Company’s Leadership and Compensation Committee on November 9, 2022, the number of common shares earned related to TSR performance was 112 % or 30,472 shares, the number of common shares earned related to NFE performance was 105 % or 26,282 shares, and the number of common shares earned related to Performance Based Restricted Stock was 100 % or 28,965 shares.

Each award earned excludes accumulated dividends.

The number represented on this line is the target number of 100 percent.

(4) As certified by the Company’s Leadership and Compensation Committee on November 9, 2022, the number of common shares earned related to TSR performance was 112 percent or 30,472 shares, the number of common shares earned related to NFE performance was 105 percent or 26,282 shares and the number of common shares earned related to Performance Based Restricted Stock was 100 percent or 28,965 shares.

The number represented on this line is the target number of 100 %.

(4) As certified by the Company’s Leadership and Compensation Committee on November 15, 2023, the number of common shares earned related to TSR performance was 150 % or 59,192 shares, the number of common shares earned related to NFE performance was 150 % or 55,832 shares, and the number of common shares earned related to Performance Based Restricted Stock was 100 % or 30,598 shares.

Each award earned excludes accumulated dividends.

The number represented on this line is the target number of 100 percent.

The number represented on this line is the target number of 100 %.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The Company measures compensation expense related to performance shares based on the fair value of these awards at their date of grant.

1 unchanged sentence

The Company estimated the fair value of these grants on the date of grant using a lattice model.

Performance condition grants are initially fair valued at the Company’s stock price on grant date, and are subsequently adjusted for actual achievement of the performance goals.

Performance condition grants are initially fair valued at the Company’s stock price on the grant date and are subsequently adjusted for actual achievement of the performance goals.

Restricted Stock Units

1 unchanged sentence

The shares vest annually over a three-year period beginning in October of the fiscal year in which they were granted.

There is approximately $ 1.0 million of deferred compensation related to unvested restricted stock shares that is expected to be recognized over the weighted average period of 1.8 years.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

There is approximately $ 1.4 M of deferred compensation related to unvested restricted stock shares that is expected to be recognized over the weighted average period of 1.8 years.

The following table summarizes the restricted stock activity under the stock award and incentive plans for the past three fiscal years:

27 unchanged sentences

Delivered ( 163,499 ) $ 47.95 $ 6,167

Forfeited ( 6,818 ) $ 40.33 —

Outstanding at September 30, 2022 231,267 $ 39.16 —

1 unchanged sentence

Delivered ( 38,115 ) $ 40.67 $ 1,517

Forfeited ( 6,818 ) 40.33 —

Outstanding at September 30, 2023 328,093 $ 41.74 —

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Non-Employee Director Stock

5 unchanged sentences

Weighted average grant date fair value $ 49.58 $ 39.09 $ 35.72

(1) Approximately $ 300,000 of expense remains as of September 30, 2022, to be recognized through December 31, 2022.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

(1) Approximately $ 0.3 M of expense remains as of September 30, 2023, to be recognized through December 31, 2023.

EMPLOYEE BENEFIT PLANS

13 unchanged sentences

However, the Company is required to fund certain amounts due to regulatory agreements with the BPU.

The Company contributed $ 6.1 million and $ 7.2 million in fiscal 2022 and 2021, respectively, and estimates that it will contribute between $ 5 million and $ 10 million over each of the next five years.

The Company contributed $ 4.2 M and $ 6.1 M in fiscal 2023 and 2022, respectively, and estimates that it will contribute between $ 5 M and $ 10 M over each of the next five years.

Additional contributions may be required based on market conditions and changes to assumptions.

The Affordable Care Act was enacted in March 2010 and created an excise tax applicable to high-cost health plans, commonly known as the Cadillac Tax.

Beginning in 2022, employers who sponsor health plans that have an annual cost that exceeded an amount defined by the law pay a 40 percent tax on the excess plan costs.

The 2020 federal spending package permanently eliminated the Affordable Care Act-mandated Cadillac tax on high-cost employer-sponsored health coverage.

Due to the repeal, the Company’s OPEB liability was revalued for these changes.

The Company applied a practical expedient to remeasure the plan assets and obligations as of December 31, 2019, which was the nearest calendar month-end date.

The impact of the revaluation of the OPEB liability was recorded as of January 1, 2020 and is incorporated within actuarial assumptions at September 30, 2020.

New Jersey Resources Corporation

8 unchanged sentences

32 59 552 423

Actuarial (gain) ( 109,320 ) ( 7,319 ) ( 77,775 ) ( 4,715 )

Actuarial (gain) loss ( 7,057 ) ( 109,320 ) 25,363 ( 77,775 )

Benefits paid, net of retiree subsidies received ( 14,053 ) ( 13,386 ) ( 7,343 ) ( 4,765 )

2 unchanged sentences

Fair value of plan assets at beginning of year $ 284,347 $ 355,284 $ 99,736 $ 114,183

Actual (loss) return on plan assets ( 58,239 ) 58,874 ( 15,996 ) 18,144

Actual return (loss) on plan assets 27,456 ( 58,239 ) 9,826 ( 15,996 )

Employer contributions 579 628 4,192 6,082

12 unchanged sentences

(2) Employees hired prior to July 1, 1998, that were eligible to elect an additional participant contribution to enhance their benefits, and contributions made during the periods were immaterial.

The actuarial gains on the Company’s pension and OPEB are due primarily to an increase in the discount rate used to measure the benefit obligation.

The Company recognizes a liability for its underfunded benefit plans as required by ASC 715, Compensation - Retirement Benefits .

2 unchanged sentences

Regulatory Assets Accumulated Other Comprehensive Income (Loss)

Pension OPEB Pension OPEB

(Thousands) Pension OPEB Pension OPEB

Balance at September 30, 2021 $ 56,187 $ 60,335 $ 22,790 $ 12,696

6 unchanged sentences

Amounts arising during the period:

Net actuarial (gain) ( 14,922 ) ( 35,781 ) ( 14,885 ) ( 18,422 )

Net actuarial (gain) loss ( 10,493 ) 9,936 ( 4,048 ) 12,320

Amounts amortized to net periodic costs:

Net actuarial (loss) ( 87 ) — ( 213 ) —

Prior service (cost) credit ( 101 ) 133 — 11

Prior service (cost) ( 103 ) — — —

Balance at September 30, 2023 $ 24,638 $ 30,046 $ 742 $ 5,498

7 unchanged sentences

Net actuarial loss (gain) $ 24,577 $ 35,157 $ 30,046 $ 20,110 $ 742 $ 5,003 $ 5,498 $ ( 6,822 )

Prior service cost (credit) 164 265 — ( 133 ) — — — ( 11 )

Prior service cost 61 164 — — — — — —

Total $ 24,638 $ 35,321 $ 30,046 $ 20,110 $ 742 $ 5,003 $ 5,498 $ ( 6,822 )

To the extent the unrecognized amounts in accumulated OCI or regulatory assets exceed 10 percent of the greater of the benefit obligation or the fair value of plan assets, an amortized amount over the average expected future working lifetime of the active plan participants is recognized.

To the extent the unrecognized amounts in accumulated OCI or regulatory assets exceed 10% of the greater of the benefit obligation or the fair value of plan assets, an amortized amount over the average expected future working lifetime of the active plan participants is recognized.

Amounts included in regulatory assets and accumulated OCI expected to be recognized as components of net periodic benefit cost in fiscal 2024 are as follows:

1 unchanged sentence

(Thousands) Pension OPEB Pension OPEB

Net actuarial (gain) loss $ ( 36 ) $ — $ 217 $ —

Net actuarial loss (gain) $ 815 $ 667 $ ( 12 ) $ 661

Prior service cost 62 — — —

Total $ 877 $ 667 $ ( 12 ) $ 661

12 unchanged sentences

Net periodic benefit cost recognized as expense $ 1,007 $ 5,494 $ 9,240 $ 4,896 $ 8,625 $ 12,148

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The weighted average assumptions used to determine the Company’s benefit costs during the fiscal years below and obligations as of September 30, are as follows:

27 unchanged sentences

(1) Percentages for represented and non-represented plans, respectively.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

When measuring its PBO, the Company uses an aggregate discount rate at which its obligation could be effectively settled.

2 unchanged sentences

The Company applies the duration-specific spot rates from the full yield curve, as of the measurement date, to each year’s future benefit payments, which aligns the timing of the plans’ separate future cash flows to the corresponding spot rates on the yield curve.

Information relating to the assumed HCCTR used to determine expected OPEB benefits as of September 30, and the effect of a 1 percent change in the rate, are as follows:

Information relating to the assumed HCCTR used to determine expected OPEB benefits as of September 30, and the effect of a 1% change in the rate, are as follows:

($ in thousands) 2023 2022 2021

8 unchanged sentences

Total service and interest costs $ ( 1,700 ) $ ( 1,966 ) $ ( 2,253 )

The Company’s investment objective is a long-term real rate of return on assets before permissible expenses that is approximately 5 percent greater than the assumed rate of inflation, as measured by the consumer price index.

The Company’s investment objective is a long-term real rate of return on assets before permissible expenses that is approximately 5% greater than the assumed rate of inflation, as measured by the consumer price index.

The expected long-term rate of return is based on the asset categories in which the Company invests and the current expectations and historical performance for these categories.

10 unchanged sentences

The adoption of the new mortality projection scale, MP-2021, and the Pri-2012 mortality study, did not materially impact the projected benefit obligation for the plans.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid during the following fiscal years:

(Thousands) Pension OPEB

2023 $ 14,112 $ 6,878

2024 $ 15,143 $ 7,508

2025 $ 16,150 $ 8,220

2026 $ 17,137 $ 8,938

2027 $ 18,104 $ 9,656

2028 - 2032 $ 104,614 $ 57,488

(Thousands) 2024 2025 2026 2027 2028 2029 - 2033

Pension $ 15,227 $ 16,233 $ 17,255 $ 18,246 $ 19,219 $ 110,341

OPEB $ 6,925 $ 7,602 $ 8,481 $ 9,337 $ 10,211 $ 63,780

The Company’s OPEB plans provide prescription drug benefits that are actuarially equivalent to those provided by Medicare Part D.

Therefore, under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, the Company qualifies for federal subsidies.

The following estimated subsidy payments are expected to be paid during the following fiscal years:

Estimated Subsidy

(Thousands) Payments

2028 - 2032 $ 3,426

Pension and OPEB assets held in the master trust, measured at fair value, as of September 30, are summarized as follows:

Estimated subsidy payments for fiscal 2024 and 2025 are immaterial and zero thereafter.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Pension and OPEB assets held in the master trust, measured at fair value, are summarized as follows:

(Thousands) Quoted Prices in Active Markets for Identical Assets

1 unchanged sentence

(Level 1) Total

As of September 30, 2022 Pension OPEB

Money market funds $ — $ — $ 28 $ 28

As of September 30, 2023

Registered Investment Companies:

6 unchanged sentences

Core Fixed Income — — 22,241 22,241

Opportunistic Income — — 3,283 3,283

Ultra Short Duration — — 3,296 3,296

High Yield Bond Fund 20,685 20,685 7,651 7,651

4 unchanged sentences

Total assets at fair value $ 298,361 $ 106,783

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

(Thousands) Quoted Prices in Active Markets for Identical Assets

(Level 1) Total Quoted Prices in Active Markets for Identical Assets

(Level 1) Total

As of September 30, 2022

16 unchanged sentences

Total assets at fair value $ 284,347 $ 99,736

The Plan had no Level 2 or Level 3 fair value measurements during fiscal 2022 and 2021, and there have been no changes in valuation methodologies as of September 30, 2022.

The Plan had no Level 2 or Level 3 fair value measurements during fiscal 2023 and 2022, and there have been no changes

in valuation methodologies as of September 30, 2023.

The Plan held assets that are valued using NAV as a practical expedient, which are excluded from the fair value hierarchy.

The following is a description of the valuation methodologies used for assets measured at fair value:

Asset Types Description of the Valuation Methodologies

Money Market funds Represents bank balances and money market funds that are valued based on the NAV of shares held at year end.

2 unchanged sentences

The NAV is based on the value of the underlying assets owned by the fund less liabilities.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

2 unchanged sentences

The Company offers a Savings Plan to eligible employees.

The Company matches 85 percent of participants’ contributions up to 6 percent of base compensation.

Represented NJRHS employees, non-represented employees hired on or after October 1, 2009, and NJNG represented employees hired on or after January 1, 2012, are eligible for an employer special contribution of between 3.5 percent and 4.5 percent of base compensation, depending on years of service, into the Savings Plan on their behalf.

The amount expensed and contributed for the matching provision of the Savings Plan was $ 5.5 million in fiscal 2022, $ 5.1 million in fiscal 2021 and $ 4.5 million in fiscal 2020.

The amount contributed for the employer special contribution of the Savings Plan was $ 2.4 million in fiscal 2022, $ 2.1 million in fiscal 2021 and $ 1.6 million in fiscal 2020.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

ASSET RETIREMENT OBLIGATIONS

The Company recognizes ARO when the legal obligation to retire an asset has been incurred and a reasonable estimate of fair value can be made.

Accordingly, the Company recognizes ARO related to the costs associated with cutting and capping its main and service natural gas distribution pipelines of NJNG, which is required by New Jersey law when taking such natural gas distribution pipeline out of service.

The Company also recognizes ARO related to Clean Energy Ventures’ solar assets when there are decommissioning provisions in Clean Energy Ventures’ lease agreements that require removal of the asset.

Accretion amounts associated with Clean Energy Ventures’ ARO are recognized as a component of operations and maintenance expense on the Consolidated Statements of Operations.

The following is an analysis of the change in the Company’s ARO for the fiscal years ended September 30:

(Thousands) NJNG NJRCEV NJNG NJRCEV

Balance at October 1 $ 41,611 $ 4,694 $ 29,280 $ 4,444

Accretion 2,052 186 1,612 182

Additions 161 281 5,697 68

Change in assumptions 7,339 — 6,151 —

Retirements ( 1,289 ) — ( 1,129 ) —

Balance at period end $ 49,874 $ 5,161 $ 41,611 $ 4,694

Accretion for the next five years, for the fiscal years ended September 30, is estimated to be as follows:

(Thousands) Accretion

Total $ 15,213

The Company matches 85 % of participants’ contributions up to 6 % of base compensation.

Represented NJRHS employees, non-represented employees hired on or after October 1, 2009, and NJNG represented employees hired on or after January 1, 2012, are eligible for an employer special contribution of between 3.5 % and 4.5 % of base compensation, depending on years of service, into the Savings Plan on their behalf.

The amount expensed and contributed for the matching provision of the Savings Plan was $ 5.9 M in fiscal 2023, $ 5.5 M in fiscal 2022 and $ 5.1 M in fiscal 2021.

The amount contributed for the employer special contribution of the Savings Plan was $ 2.1 M in fiscal 2023, $ 2.4 M in fiscal 2022 and $ 2.1 M in fiscal 2021.

The income tax provision from operations for the fiscal years ended September 30, consists of the following:

6 unchanged sentences

Income tax provision $ 49,275 $ 76,195 $ 33,286

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

As of September 30, the temporary differences, which give rise to deferred tax assets (liabilities), consist of the following:

4 unchanged sentences

State net operating losses 39,612 36,950

Deferred revenue 8,205 —

Fair value of derivatives 5,386 6,506

13 unchanged sentences

Investments in equity investees ( 28,325 ) ( 19,176 )

Conservation incentive plan ( 6,457 ) ( 3,309 )

Conservation incentive program ( 14,075 ) ( 6,457 )

Other ( 4,670 ) ( 4,615 )

1 unchanged sentence

Total net deferred tax liabilities $ ( 257,044 ) $ ( 236,000 )

(1) Includes approximately $ 732,000 and $ 814,000 for NJNG for fiscal 2022 and 2021, respectively, which is being amortized over the life of the related assets.

(2) See discussion of federal net operating loss utilization in the Other Tax Items section of this note.

(1) Includes approximately $ 0.7 M for NJNG for both fiscal 2023 and 2022, which is being amortized over the life of the related assets.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

A reconciliation of the U.S.

7 unchanged sentences

State income taxes, net of federal benefit 13,293 13,072 6,124

NJ Unitary method change — — ( 15,345 )

Valuation allowance ( 16,494 ) ( 1,372 ) 5,974

4 unchanged sentences

The Company and one or more of its subsidiaries files or expects to file income and/or franchise tax returns in the U.S.

federal jurisdiction and in the states of Colorado, Connecticut, Delaware, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Texas and Virginia.

federal jurisdiction and in the states of Colorado, Connecticut, Delaware, Florida, Indiana, Louisiana, Maryland, Michigan, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Texas and Virginia.

The Company neither files in, nor believes it has a filing requirement in, any foreign jurisdictions other than Canada.

Due to certain available tax treaty benefits, the Company incurs no tax liability in Canada.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The Company’s U.S.

4 unchanged sentences

NJR evaluates its tax positions to determine the appropriate accounting and recognition of potential future obligations associated with uncertain tax positions.

A tax benefit claimed, or expected to be claimed, on a tax return may be recognized only if it is more likely than not that the position will be upheld upon examination by the applicable taxing authority.

A tax benefit claimed, or expected to be claimed, on a tax return may be recognized only if it is more likely than not that the tax position will be upheld upon examination by the applicable taxing authority and is measured based on the largest tax benefit that is more than 50% likely to be realized.

Interest and penalties related to unrecognized tax benefits, if any, are recognized within income tax expense, and accrued interest and penalties are recognized within other noncurrent liabilities on the Consolidated Balance Sheets.

The Company evaluates certain tax benefits that have been recorded in the financial statements for uncertainties.

During fiscal 2019, the Company concluded that a portion of tax benefits were uncertain and recorded a reserve against deferred taxes on the Consolidated Balance Sheets.

During fiscal 2021, a federal tax audit was completed and, as a result, the positions that the prior tax reserves related to are considered effectively settled and the related tax reserve was released.

As a result of the change in the Company’s method of accounting for ITCs from the flow-through method to the deferral method, which was effective October 1, 2020, the settlement of the reserve was recorded as an adjustment to nonutility plant and equipment, at cost on the Consolidated Balance Sheets.

The tax benefits related to fiscal tax years open to examination by the IRS may be subject to subsequent adjustments.

The reserve for uncertain tax benefits for the fiscal year ended September 30, is as follows:

(Thousands) 2022 2021

Balance at October 1, $ — $ 4,930

Reversal of settled tax positions during the current fiscal period — ( 4,930 )

Balance at period end $ — $ —

On March 27, 2020, the President of the U.S.

signed the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S.

The CARES Act, among other things, includes several business tax provisions which include, but are not limited to modifications of federal net operating loss carrybacks and deductibility;

changes to prior year refundable alternative minimum tax liabilities;

increase of limitations on business interest deductions from 30 percent to 50 percent of earnings before interest, taxes, depreciation and amortization;

technical corrections of the classification of qualified improvement property making them eligible for bonus depreciation;

increase of the limits on charitable contribution deductions from 10 percent to 25 percent of adjusted taxable income;

modifications of the treatment of federal loans, loan guarantees and other investments;

suspension of industry specific excise taxes;

deferral of the company portion of OASDI;

and implementation of a refundable employee retention tax credit.

The CARES Act provides for the delay in the required deposit of the employer portion of the OASDI payroll tax from the date of enactment through the end of 2020.

Of the taxes that the Company can defer, 50 percent of the deferred taxes were required to be deposited by the end of 2021 and the remaining 50 percent were required to be deposited by the end of 2022.

Additionally, the CARES Act provides a refundable tax credit, the employee retention tax credit, to certain employers who are ordered by a competent governmental authority to suspend or reduce business operations due to concern about the spread of COVID-19 or suffered a significant decline in the business during a calendar quarter during 2020 compared to the same calendar quarter during the previous year.

As of September 30, 2021, the Company deferred approximately $ 5.1 million related to the employer portion of the OASDI tax.

During fiscal 2022, the Company made the first of two installment payments, which reduced the balance to $ 2.7 million as of September 30, 2022.

The second installment payment will be made during the first quarter of fiscal 2023.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

American Rescue Plan Act

On March 11, 2021, the President of the U.S.

signed the American Rescue Plan Act of 2021, which is primarily an economic stimulus package.

It also expanded the scope of Section 162(m) of the Internal Revenue Code, which imposes a $1.0 million deduction limit on compensation paid to covered employees from the top five officers, to also include the next five highest paid employees for tax years beginning after December 31, 2026.

The CARES Act provided for the delay in the required deposit of the employer portion of the OASDI payroll tax from the date of enactment through the end of 2020.

Of the taxes that the Company can defer, 50% of the deferred taxes were required to be deposited by the end of 2021 and the remaining 50% were required to be deposited by the end of 2022.

As of September 30, 2021, the Company deferred approximately $ 5.1 M related to the employer portion of the OASDI tax.

During fiscal 2022, the Company made the first of two installment payments, which reduced the balance to approximately $ 2.7 M.

The second installment payment was made during the first quarter of fiscal 2023, which reduced the balance to zero as of September 30, 2023.

Inflation Reduction Act

On August 16, 2022, the President of the U.S.

In August 2022, the President of the U.S.

signed the Inflation Reduction Act, which contains provisions addressing inflation, clean energy, healthcare and taxes beginning in 2023.

The Inflation Reduction Act imposes a 15 percent minimum tax rate on corporations with higher than $1 billion of annual income, along with a 1 percent excise tax on corporate stock repurchases.

The Inflation Reduction Act raised the ITC from 26 percent to 30 percent through the end of 2032, dropping to 26 percent for property under construction before the end of 2033 and to 22 percent for property under construction before the end of 2034.

The ITC expires starting in 2035 unless it is renewed.

The Inflation Reduction Act imposes a 15% minimum tax rate on corporations with higher than $1B of annual income, along with a 1% excise tax on corporate stock repurchases.

The Inflation Reduction Act raised the ITC from 26% to 30% through the end of 2032, dropping to 26% for property under construction before the end of 2033 and to 22% for property under construction before the end of 2034.

The ITC expires

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

starting in 2035 unless it is renewed.

There are additional opportunities to increase the credit amount for certain facilities that are placed in service after December 31, 2022.

The credit amount can be increased by 10 percent if certain domestic content requirements are satisfied or if the facility is located in an energy community, such as a brownfield site.

ITCs are also expanded to include stand-alone energy storage projects without being integrated into a solar facility, allowing solar to claim PTCs that are a production-based credit extending for 10 years following the placed-in-service date of the facility and introduced the concept of transferability of tax credits, providing an additional option to monetize such credits.

The Company is currently evaluating the impacts of the Inflation Reduction Act on its financial position, results of operations and cash flows.

The credit amount can be increased by 10% if certain domestic content requirements are satisfied or if the facility is located in an energy community, such as a brownfield site.

ITCs are also expanded to include stand-alone energy storage projects without being integrated into a solar facility, allowing solar to claim production tax credits that are a production-based credit extending for 10 years following the placed-in-service date of the facility, and introducing the concept of transferability of tax credits, providing an additional option to monetize such credits.

The Company evaluated the impacts of the Inflation Reduction Act on its financial position, results of operations and cash flows, noting the corporate alternative minimum tax does not impact the Company as the applicable income thresholds have not been met.

Upon the repurchase of common stock through the Company’s share repurchase program, the Company would be subject to the 1% excise tax.

Other Tax Items

As of September 30, 2022 and 2021, the Company has tax credit carryforwards of approximately $ 211.8 million and $ 224.2 million, respectively, which each have a life of 20 years.

As of September 30, 2023 and 2022, the Company has tax credit carryforwards of approximately $ 191.2 M and $ 211.8 M, respectively, which each have a life of 20 years.

The Company expects to utilize this entire carryforward prior to expiration, which would begin in fiscal 2036.

As of September 30, 2022 and 2021, the Company has state income tax net operating losses of approximately $ 544.4 million and $ 554.6 million, respectively.

The impairment of the equity method investment in PennEast created net capital loss attributes totaling approximately $ 56.6 M, which could only be utilized to offset capital gains income and carried back three years and forward five years prior to expiration.

During the fourth quarter of fiscal 2023, the Company determined that the tax losses created by the impairment may qualify as an ordinary loss, rather than a capital loss.

As of September 30, 2023 and 2022, the Company had a valuation allowance of approximately $ 5.0 M and $ 5.1 M, respectively.

As of September 30, 2023, the Company evaluated certain tax benefits recorded in the Consolidated Financial Statements and concluded that a portion of the tax benefits are uncertain at this time.

As a result, the Company recorded a reserve for uncertain tax benefits.

The reserve for uncertain tax benefits is as follows:

(Thousands) 2023 2022

Balance at October 1, $ — $ —

Additions based on tax positions related to the current fiscal period 4,978 —

Balance at September 30, $ 4,978 $ —

As of September 30, 2023, there are $ 5.0 M of unrecognized tax benefits that if recognized would affect the annual effective tax rate.

The tax benefits relate to fiscal tax years open to examination by the IRS and the state of Pennsylvania and may be subject to subsequent adjustment.

As of September 30, 2023 and 2022, the Company has state income tax net operating losses of approximately $ 631.2 M and $ 544.4 M, respectively.

These state net operating losses have varying carry-forward periods dictated by the state in which they were incurred;

1 unchanged sentence

The Company expects to utilize this entire carryforward, other than as described below.

The impairment of the equity method investment in PennEast created potential net capital loss attributes totaling approximately $ 56.6 million and $ 61.8 million as of September 30, 2022 and 2021, respectively, which can only be utilized to offset capital gains income and can be carried back three years and forward five years prior to expiration.

As of September 30, 2022, the Company has a valuation allowance totaling $ 22.2 million comprised of approximately $ 17.2 million, related to the recognition of state net operating loss carryforwards, which primarily relate to New Jersey and approximately $ 5.1 million related to potential capital loss carryforwards resulting from the impairment of the equity method investment in PennEast, which the Company believes may not be fully utilized prior to expiration.

As of September 30, 2021, the Company had a valuation allowance totaling $ 23.6 million comprised of approximately $ 17.3 million, related to the recognition of state net operating loss carryforwards, which primarily relate to New Jersey and approximately $ 6.4 million related to potential capital loss carryforwards resulting from the impairment of the equity method investment in PennEast.

The Consolidated Appropriations Act extended the 30 percent ITC for solar property that is under construction on or before December 31, 2019.

Projects placed in service after December 31, 2019, may also qualify 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 ITC safe harbor determination.

The credit declined to 26 percent for property under construction before the end of 2020.

The Consolidated Appropriations Act of 2021 extended the 26 percent tax credit for property under construction during 2021 and 2022.

The Inflation Reduction Act raised the ITC from 26 percent to 30 percent through the end of 2032, as previously stated.

As of September 30, 2022, the Company had a valuation allowance of approximately $ 17.2 M related to the recognition of state net operating loss carryforwards.

As of September 30, 2023, it was determined that the realization of certain deferred tax assets was more likely than not, and thus the associated valuation allowance of approximately $ 15.8 M was no longer required.

Reversal of the valuation allowance resulted in a corresponding income tax benefit on the Consolidated Statement of Operations.

As of September 30, 2023, the remaining valuation allowance of approximately $ 0.7 M related primarily to other state income tax attributes which the Company could not conclude were realizable on a more-likely-than-not basis.

The Consolidated Appropriations Act extended the 30% ITC for solar property that is under construction on or before December 31, 2019.

Projects placed in service after December 31, 2019, may also qualify for a 30% federal ITC if 5% 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 toward completion of the project, based on the IRS guidance around ITC safe harbor determination.

The credit declined to 26 % for property under construction before the end of 2020.

The Consolidated Appropriations Act of 2021 extended the 26 % tax credit for property under construction during 2021 and 2022.

The Inflation Reduction Act raised the ITC from 26% to 30% through the end of 2032, as previously stated.

New Jersey Resources Corporation

2 unchanged sentences

The Company determines if an arrangement is a lease at inception based on whether the Company has the right to control the use of an identified asset, the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

After the criteria is satisfied, the Company accounts for these arrangements as leases in accordance with ASC 842, Leases .

After the criteria are satisfied, the Company accounts for these arrangements as leases in accordance with ASC 842, Leases .

Right-of-use assets represent the Company’s right to use the underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

5 unchanged sentences

Lease expense and lease income are recognized on a straight-line basis over the lease term for operating leases.

The Company’s lease agreements primarily consist of commercial solar land leases, storage and capacity leases, equipment and real property, including land and office facilities, office equipment and the sale leaseback of its natural gas meters.

Certain leases contain escalation provisions for inflation metrics.

5 unchanged sentences

The Company’s office leases vary in duration, ranging from two to 17 years, and may or may not include extension or early purchase options.

The Company’s meter lease terms are between seven and ten years with purchase options available prior to the end of the term.

Equipment leases include general office equipment that also vary in duration, with an average term of seven years .

The Company’s meter lease terms are between seven and 10 years with purchase options available prior to the end of the term.

Equipment leases include general office equipment that also vary in duration, with an average term of eight years .

The Company’s storage and capacity leases have assumed terms of 50 years to coincide with the expected useful lives of the cavern assets with which the leases are associated.

5 unchanged sentences

In July 2021, NJNG entered into 16-year lease agreements, as Lessor, with various NJR subsidiaries, as Lessees, for office space at the Company’s headquarters in Wall, New Jersey, the effects of which are eliminated in consolidation.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The following table presents the Company’s lease costs included in the Consolidated Statements of Operations for the fiscal year ended September 30:

10 unchanged sentences

(1) Net of capitalized costs.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The following table presents supplemental cash flow information related to leases for the fiscal year ended September 30:

4 unchanged sentences

Financing cash flows for finance leases $ 7,379 $ 7,145 $ 8,180

Assets obtained or modified for operating lease liabilities totaled approximately $ 911,000 and $ 46.1 million during fiscal 2022 and 2021, respectively.

Assets obtained or modified through finance lease liabilities totaled $ 17.3 million during fiscal 2022.

There were no assets obtained or modified through finance lease liabilities during fiscal 2021.

Assets obtained or modified for operating lease liabilities totaled approximately $ 13.2 M and $ 0.9 M during fiscal 2023 and 2022, respectively.

Assets obtained or modified through other leases, including those which are finance leases and financing transactions for accounting purposes, totaled approximately $ 8.4 M and $ 17.3 M during fiscal 2023 and 2022, respectively.

The following table presents the balance and classifications of the Company’s right of use assets and lease liabilities included in the Consolidated Balance Sheets for the fiscal year ended September 30:

8 unchanged sentences

Total lease liabilities $ 184,147 $ 173,234

For operating lease assets and liabilities, the weighted average remaining lease term was 29.2 years and 29.6 years and the weighted average discount rate used in the valuation over the remaining lease term was 3.2 percent for both September 30, 2022 and 2021.

For finance lease assets and liabilities as of September 30, 2022 and 2021, the weighted average remaining lease term was 4.0 years and 3.4 years, respectively, and the weighted average discount rate used in the valuation over the remaining lease term is 2.7 percent and 3.5 percent as of September 30, 2022 and 2021, respectively.

For operating lease assets and liabilities, the weighted average remaining lease term was 29.2 years for both September 30, 2023 and 2022, and the weighted average discount rate used in the valuation over the remaining lease term was 3.5 % and 3.2 % for September 30, 2023 and 2022, respectively.

For finance lease assets and liabilities as of September 30, 2023 and 2022, the weighted average remaining lease term was 3.3 years and 4.0 years, respectively, and the weighted average discount rate used in the valuation over the remaining lease term was 2.7 % as of both September 30, 2023 and 2022.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The following table presents the Company’s maturities of lease liabilities as of September 30, 2023:

(Thousands) Operating Leases Finance Leases

(Thousands) Operating Finance

2024 $ 7,913 $ 9,362

4 unchanged sentences

Thereafter 213,927 1,676

Total future lease payments 227,705 32,034

Total future payments 253,060 33,722

( 100,265 ) ( 2,370 )

Total lease liability $ 142,944 $ 30,290

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Total liability $ 152,795 $ 31,352

COMMITMENTS AND CONTINGENT LIABILITIES

1 unchanged sentence

NJNG has entered into long-term contracts, expiring at various dates through September 2039, for the supply, transportation and storage of natural gas.

These contracts include annual fixed charges of approximately $ 196.6 million at current contract rates and volumes, which are recoverable through BGSS.

For the purpose of securing storage and pipeline capacity, Energy Services enters into storage and pipeline capacity contracts, which require the payment of certain demand charges by Energy Services to maintain the ability to access such natural gas storage or pipeline capacity, during a fixed time period, which generally ranges from one to 10 years.

These contracts include annual fixed charges of approximately $ 198.3 M at current contract rates and volumes, which are recoverable through BGSS.

For the purpose of securing storage and pipeline capacity, ES enters into storage and pipeline capacity contracts, which require the payment of certain demand charges by ES to maintain the ability to access such natural gas storage or pipeline capacity, during a fixed time period, which generally ranges from one to 10 years.

Demand charges are established by interstate storage and pipeline operators and are regulated by FERC.

2 unchanged sentences

(Thousands) 2024 2025 2026 2027 2028 Thereafter

Energy Services:

Natural gas purchases $ 66,525 $ 2,498 $ — $ — $ — $ —

1 unchanged sentence

Pipeline demand fees 43,755 43,271 31,749 24,234 13,719 14,457

Sub-total Energy Services $ 277,546 $ 59,428 $ 38,735 $ 35,673 $ 25,269 $ 21,543

Sub-total ES $ 127,224 $ 53,868 $ 37,759 $ 29,112 $ 17,224 $ 21,237

Natural gas purchases $ 23,952 $ — $ — $ — $ — $ —

3 unchanged sentences

Total $ 349,520 $ 240,100 $ 187,289 $ 167,926 $ 136,306 $ 988,200

Certain pipeline demand fees totaling approximately $ 4.0 million per year, for which Energy Services is the responsible party, are being paid for by the counterparty to a capacity release transaction beginning November 1, 2021 for a period of 10 years.

As of September 30, 2022, the Company’s future minimum lease payments under various operating leases will not be more than $ 8.0 million annually for the next five years and $ 191.0 million in the aggregate for all years thereafter.

As of September 30, 2022, there were NJR guarantees covering approximately $ 261.7 million of Energy Services’ natural gas purchases and demand fee commitments not yet reflected in accounts payable on the Consolidated Balance Sheets.

Certain pipeline demand fees totaling approximately $ 4.0 M per year, for which ES is the responsible party, are being paid for by the counterparty to a capacity release transaction beginning November 1, 2021 for a period of 10 years.

As of September 30, 2023, the Company’s future minimum lease payments under various operating leases will not be more than $ 7.9 M annually for the next five years and $ 213.9 M in the aggregate for all years thereafter.

As of September 30, 2023, there were NJR guarantees covering approximately $ 192.3 M of ES’s natural gas purchases and demand fee commitments not yet reflected in accounts payable on the Consolidated Balance Sheets.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Legal Proceedings

2 unchanged sentences

NJNG is currently involved in administrative proceedings with the NJDEP, and is participating in various studies and investigations by outside consultants, to determine the nature and extent of any such contaminated residues and to develop appropriate programs of remedial action, where warranted, under NJDEP regulations.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

NJNG periodically, and at least annually, performs an environmental review of former MGP sites located in Atlantic Highlands, Berkeley, Long Branch, Manchester, Toms River, Freehold and Aberdeen, New Jersey, including a review of potential liability for investigation and remedial action.

NJNG estimated at the time of the most recent review that total future expenditures at the former MGP sites for which it is responsible, including potential liabilities for natural resource damages that might be brought by the NJDEP for alleged injury to groundwater or other natural resources concerning these sites, will range from approximately $ 110.8 million to $ 167.1 million.

NJNG’s estimate of these liabilities is based upon known facts, existing technology and enacted laws and regulations in place when the review was completed.

1 unchanged sentence

If no point within the range is more likely than the other, it is NJNG’s policy to accrue the lower end of the range.

Accordingly, as of September 30, 2022, NJNG recorded a MGP remediation liability and a corresponding regulatory asset of approximately $ 127.1 million on the Consolidated Balance Sheets based on the most likely amount.

Accordingly, as of September 30, 2023, NJNG recorded a MGP remediation liability and a corresponding regulatory asset of approximately $ 169.4 M on the Consolidated Balance Sheets based on the most likely amount.

The actual costs to be incurred by NJNG are dependent upon several factors, including final determination of remedial action, changing technologies and governmental regulations, the ultimate ability of other responsible parties to pay and insurance recoveries, if any.

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.

The preliminary assessment and site investigation activities are ongoing at the Aberdeen site.

The estimated costs to complete the preliminary assessment and site investigation phase are included in the MGP remediation liability and corresponding regulatory asset on the Consolidated Balance Sheets at September 30, 2022 and 2021.

NJNG will continue to gather information to determine whether the obligation exists to undertake remedial action, if any, and refine its estimate of potential costs for this site as more information becomes available.

NJNG recovers its remediation expenditures, including carrying costs, over rolling seven-year periods pursuant to a RAC approved by the BPU.

On March 23, 2022, the BPU approved an increase in the RAC, which increased the pre-tax annual recovery from $ 11.1 million to $ 11.7 million, effective April 1, 2022.

On September 13, 2022, NJNG submitted its annual filing to the BPU requesting approval of RAC expenditures through June 30, 2022, as well as an increase to the RAC annual recoveries of $ 3.8 million, which will increase the pre-tax annual recovery to $ 15.5 million, effective April 1, 2023.

As of September 30, 2022, $ 66.1 million of previously incurred remediation costs, net of recoveries from customers and insurance proceeds, are included in regulatory assets on the Consolidated Balance Sheets.

In March 2022, the BPU approved an increase in the RAC, which increased the pre-tax annual recovery from $ 11.1 M to $ 11.7 M, effective April 1, 2022.

On April 12, 2023, the BPU approved on a final basis NJNG’s annual SBC filing of RAC expenditures through June 30, 2022, as well as an increase to the RAC annual recoveries of $ 3.7 M, which increased the pre-tax annual recovery to $ 15.4 M, effective May 1, 2023.

As of September 30, 2023, $ 66.3 M of previously incurred remediation costs, net of recoveries from customers and insurance proceeds, are included in regulatory assets on the Consolidated Balance Sheets.

NJNG will continue to seek recovery of MGP-related costs through the RAC.

10 unchanged sentences

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

COMMON STOCK EQUITY

In December 2019, the Company completed an equity offering of 6,545,454 common shares, consisting of 5,333,334 common shares issued directly by the Company and 1,212,120 common shares issuable pursuant to forward sales agreements with investment banks.

The issuance of 5,333,334 common shares resulted in proceeds of approximately $ 212.9 million, net of issuance costs, and was reflected in shareholders' equity and as a financing activity on the statement of cash flows.

Under the forward sale agreements, a total of 1,212,120 common shares were borrowed from third parties and sold to the underwriters.

Each forward sale agreement allowed the Company, at its election and prior to September 30, 2020, to physically settle the forward sale agreement by issuing common shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreement, which was initially $ 40.0125 per share, or, alternatively, to settle the forward sale agreement in whole or in part through the delivery or receipt of shares or cash.

The forward sale price was subjected to adjustment daily based on a floating interest rate factor and would decrease in respect of certain fixed amounts specified in the agreement, such as anticipated dividends.

Issuances of shares under the forward sale agreements are classified as equity transactions.

Accordingly, no amounts relating to the forward sale agreements have or will be recorded in the financial statements until settlements take place.

Prior to any settlements, the only impact to the financial statements is the inclusion of incremental shares within the calculation of diluted Earnings Per Share using the treasury stock method until settlement of the forward sale agreements.

Under this method, the number of the Company common shares used in calculating diluted Earnings Per Share is deemed to be increased by the excess, if any, of the number of shares that would be issued upon physical settlement of the forward sale agreements less the number of shares that would be purchased by the Company in the market (based on the average market price during the same reporting period) using the proceeds receivable upon settlement (based on the adjusted forward sale price at the end of that reporting period).

Share dilution occurs when the average market price of the Company’s common shares is higher than the adjusted forward sale price.

On September 18, 2020, the Company amended its forward sale agreements to extend the maturity date of such forward sales agreements from September 30, 2020 to September 10, 2021.

On March 3, 2021, the Company cash settled a portion of the forward sale agreement for a payout of approximately $ 388,000 in lieu of the issuance of 727,272 common shares.

On May 26, 2021, the Company cash settled the rest of the forward sale agreements for a payout of approximately $ 2.4 million in lieu of the issuance of 484,848 common shares.

REPORTING SEGMENT AND OTHER OPERATIONS DATA

1 unchanged sentence

As a result, the Company manages its businesses through the following reporting segments and other business operations:

Natural Gas Distribution consists of regulated energy and off-system, capacity and storage management operations;

Clean Energy Ventures consists of capital investments in clean energy projects;

Energy Services consists of unregulated wholesale and retail energy operations;

Storage and Transportation consists of the Company’s investments in natural gas transportation and storage facilities;

the Home Services and Other operations consist of heating, cooling and water appliance sales, installations and services, other investments and general corporate activities.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Information related to the Company’s various reporting segments and other business operations is detailed below:

Fiscal Years Ended September 30, 2022 2021 2020

NJNG consists of regulated energy and off-system, capacity and storage management operations;

CEV consists of capital investments in clean energy projects;

ES consists of unregulated wholesale and retail energy operations;

S&T consists of the Company’s investments in natural gas transportation and storage facilities;

the HSO business operations consist of heating, cooling and water appliance sales, installations and services, other investments and general corporate activities.

Information related to the Company’s various reporting segments and other business operations, as of September 30, is detailed below:

(Thousands) NJNG CEV ES S&T Subtotal HSO Elims Total

Operating revenues

Natural Gas Distribution

External customers $ 1,011,284 124,131 681,446 (1) 88,700 $ 1,905,561 57,433 — $ 1,962,994

Intercompany $ 1,349 — 10,170 4,159 $ 15,678 205 ( 15,883 ) $ —

Clean Energy Ventures

External customers 128,280 95,275 102,617

Energy Services

External customers (1)

Depreciation and amortization $ 102,326 25,320 221 (2) 24,185 $ 152,052 889 — $ 152,941

Interest income (3)

$ 1,713 — 1,119 6,957 $ 9,789 2,977 ( 3,847 ) $ 8,919

Intercompany 94 ( 426 ) 1,116

Storage and Transportation

Interest expense, net of capitalized interest $ 56,595 28,569 11,400 25,803 $ 122,367 647 — $ 123,014

Income tax provision (benefit) $ 33,065 ( 7,683 ) 24,343 3,444 $ 53,169 ( 1,477 ) ( 2,417 ) $ 49,275

Equity in earnings of affiliates $ — — — 3,126 $ 3,126 — 804 $ 3,930

Net financial earnings $ 131,414 44,458 68,517 12,835 $ 257,224 4,758 ( 155 ) $ 261,827

Capital expenditures $ 390,394 107,303 — 40,916 $ 538,613 2,306 — $ 540,919

Operating revenues

External customers $ 1,127,417 128,280 1,529,178 (1) 65,286 $ 2,850,161 55,818 — $ 2,905,979

Intercompany $ 1,350 — 94 2,449 $ 3,893 364 ( 4,257 ) $ —

Subtotal 2,854,054 2,106,511 1,907,687

Home Services and Other

Depreciation and amortization $ 94,579 21,396 148 (2) 12,302 $ 128,425 824 — $ 129,249

Interest income (3)

$ 895 — 16 2,110 $ 3,021 944 ( 1,249 ) $ 2,716

Interest expense, net of capitalized interest $ 46,394 21,968 4,725 12,097 $ 85,184 646 — $ 85,830

Income tax provision $ 40,141 11,361 21,776 1,879 $ 75,157 1,059 ( 21 ) $ 76,195

Equity in earnings of affiliates $ — — — 9,865 $ 9,865 — ( 1,688 ) $ 8,177

Net financial earnings (loss) $ 140,124 39,403 39,121 22,454 $ 241,102 ( 781 ) — $ 240,321

Capital expenditures $ 298,374 146,676 — 151,988 $ 597,038 1,390 — $ 598,428

Return of capital from equity investees $ — — — ( 5,479 ) $ ( 5,479 ) — — $ ( 5,479 )

Operating revenues

External customers $ 731,796 95,275 1,228,846 (1) 49,252 $ 2,105,169 51,444 — $ 2,156,613

Intercompany $ — — ( 426 ) 1,768 $ 1,342 785 ( 2,127 ) $ —

Eliminations ( 4,257 ) ( 2,127 ) ( 5,036 )

Total $ 2,905,979 $ 2,156,613 $ 1,953,668

Depreciation and amortization $ 80,045 20,567 111 (2) 9,960 $ 110,683 980 ( 276 ) $ 111,387

Natural Gas Distribution $ 94,579 $ 80,045 $ 71,883

Clean Energy Ventures 21,396 20,567 25,329

Energy Services (2)

Storage and Transportation 12,302 9,960 9,293

Subtotal 128,425 110,683 106,628

Home Services and Other 824 980 1,032

Eliminations — ( 276 ) ( 292 )

Total $ 129,249 $ 111,387 $ 107,368

Interest income (3)

Natural Gas Distribution $ 895 $ 85 $ 538

Clean Energy Ventures — 241 240

Energy Services 16 11 99

Storage and Transportation 2,110 2,243 3,510

Subtotal 3,021 2,580 4,387

Home Services and Other 944 522 8,633

Eliminations ( 1,249 ) ( 935 ) ( 10,061 )

Total $ 2,716 $ 2,167 $ 2,959

(1) Includes sales to Canada for Energy Services, which are $ 2.4 million, $ 75,000 and $ 584,000 in the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

(2) The amortization of acquired wholesale energy contracts is excluded above and is included in natural gas purchases - nonutility on the Consolidated Statements of Operations.

(3) Included in other income, net on the Consolidated Statements of Operations.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

Fiscal Years Ended September 30, 2022 2021 2020

$ 85 241 11 2,243 $ 2,580 522 ( 935 ) $ 2,167

Interest expense, net of capitalized interest $ 36,405 22,548 2,204 13,348 $ 74,505 4,054 — $ 78,559

Natural Gas Distribution $ 46,394 $ 36,405 $ 30,975

Clean Energy Ventures 21,968 22,548 20,253

Energy Services 4,725 2,204 3,276

Storage and Transportation 12,097 13,348 13,124

Subtotal 85,184 74,505 67,628

Home Services and Other 646 4,054 10,327

Eliminations — — ( 10,358 )

Total $ 85,830 $ 78,559 $ 67,597

Income tax provision (benefit) $ 19,054 5,048 18,371 ( 10,043 ) $ 32,430 ( 196 ) 1,052 $ 33,286

Natural Gas Distribution $ 40,141 $ 19,054 $ 27,021

Clean Energy Ventures 11,361 5,048 11,034

Energy Services 21,776 18,371 ( 3,615 )

Storage and Transportation 1,879 ( 10,043 ) 4,247

Subtotal 75,157 32,430 38,687

Home Services and Other 1,059 ( 196 ) ( 2,478 )

Eliminations ( 21 ) 1,052 285

Total $ 76,195 $ 33,286 $ 36,494

Equity in earnings (loss) of affiliates

Storage and Transportation $ 9,865 $ ( 81,072 ) $ 15,903

Eliminations ( 1,688 ) ( 2,140 ) ( 1,592 )

Total $ 8,177 $ ( 83,212 ) $ 14,311

Equity in loss of affiliates $ — — — ( 81,072 ) $ ( 81,072 ) — ( 2,140 ) $ ( 83,212 )

Net financial earnings (loss) $ 107,375 16,789 71,117 13,046 $ 208,327 ( 826 ) 211 $ 207,712

Natural Gas Distribution $ 140,124 $ 107,375 $ 126,902

Clean Energy Ventures 39,403 16,789 22,111

Energy Services 39,121 71,117 ( 7,873 )

Storage and Transportation 22,454 13,046 18,311

Subtotal 241,102 208,327 159,451

Home Services and Other ( 781 ) ( 826 ) 5,784

Eliminations — 211 98

Total $ 240,321 $ 207,712 $ 165,333

Capital expenditures $ 426,628 87,852 — 107,500 $ 621,980 2,630 — $ 624,610

Natural Gas Distribution $ 298,374 $ 426,628 $ 290,040

Clean Energy Ventures 146,676 87,852 133,841

Storage and Transportation 151,988 107,500 20,998

Subtotal 597,038 621,980 444,879

Home Services and Other 1,390 2,630 3,230

Total $ 598,428 $ 624,610 $ 448,109

(Return of capital from) investments in equity investees

Storage and Transportation $ ( 5,479 ) $ 690 $ 2,117

Total $ ( 5,479 ) $ 690 $ 2,117

Investments in equity investees $ — — — 690 $ 690 — — $ 690

(1) Includes sales to Canada for ES, which are $ 8.4 M, $ 2.4 M and $ 0.1 M in the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

(2) The amortization of acquired wholesale energy contracts is excluded above and is included in natural gas purchases - nonutility on the Consolidated Statements of Operations.

(3) Included in other income, net on the Consolidated Statements of Operations.

New Jersey Resources Corporation

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

The Company’s assets for the various reporting segments and other business operations are detailed below:

(Thousands) 2022 2021 2020

Assets at end of period:

Natural Gas Distribution $ 4,030,686 $ 3,707,461 $ 3,531,477

Clean Energy Ventures 1,015,065 914,788 814,277

Energy Services 333,064 365,423 244,836

Storage and Transportation 999,520 862,407 844,799

Subtotal 6,378,335 5,850,079 5,435,389

Home Services and Other 159,068 162,134 138,375

Intercompany assets (1)

The Company’s assets at end of period for the various reporting segments and other business operations, as of September 30, are detailed below:

Segments Intercompany

(Thousands) NJNG CEV ES S&T Subtotal HSO Assets (1)

2023 $ 4,414,829 1,128,577 123,775 1,011,959 $ 6,679,140 171,275 ( 312,919 ) $ 6,537,496

Total $ 6,261,416 $ 5,722,278 $ 5,316,477

2022 $ 4,030,686 1,015,065 333,064 999,520 $ 6,378,335 159,068 ( 275,987 ) $ 6,261,416

2021 $ 3,707,461 914,788 365,423 862,407 $ 5,850,079 162,134 ( 289,935 ) $ 5,722,278

(1) Consists of transactions between subsidiaries that are eliminated and reclassified in consolidation.

The Chief Executive Officer, who uses NFE as a measure of profit or loss in measuring the results of the Company’s reporting segments and other business operations, is the chief operating decision maker of the Company.

A reconciliation of consolidated NFE to consolidated net income is as follows:

A reconciliation of consolidated NFE to consolidated net income, as of September 30, is as follows:

(Thousands) 2023 2022 2021

19 unchanged sentences

NFE also excludes certain transactions associated with equity method investments, including impairment charges, which are non-cash charges, and return of capital in excess of the carrying value of our investment.

These are considered unusual in nature and occur infrequently such that they are not indicative of the Company’s performance for our ongoing operations.

These are considered unusual in nature and occur infrequently such that they are not indicative of the Company’s performance for its ongoing operations.

Included in the tax effects are current and deferred income tax expense corresponding with the components of NFE.

3 unchanged sentences

Effective April 1, 2020, NJNG entered into a 5-year agreement for 3 Bcf of firm storage capacity with Steckman Ridge, which expires on March 31, 2025.

Under the terms of the agreement, NJNG incurs demand fees, at market rates, of approximately $ 9.3 million annually, a portion of which is eliminated in consolidation.

Under the terms of the agreement, NJNG incurs demand fees, at market rates, of approximately $ 9.3 M annually, a portion of which is eliminated in consolidation.

These fees are recoverable through NJNG’s BGSS mechanism and are included as a component of regulatory assets.

Energy Services may periodically enter into storage or park and loan agreements with an affiliated FERC-jurisdictional natural gas storage facility, Steckman Ridge.

As of September 30, 2022, Energy Services has entered into transactions with Steckman Ridge for varying terms, all of which expire by March 31, 2024.

ES may periodically enter into storage or park and loan agreements with an affiliated FERC-jurisdictional natural gas storage facility, Steckman Ridge.

As of September 30, 2023, ES has entered into transactions with Steckman Ridge for varying terms, all of which expire by March 31, 2024.

Demand fees, net of eliminations, associated with Steckman Ridge during the fiscal years ended September 30, were as follows:

(Thousands) 2023 2022 2021

Natural Gas Distribution $ 6,663 $ 6,449 $ 5,900

Energy Services 732 564 183

NJNG $ 6,549 $ 6,663 $ 6,449

ES 657 732 564

Total $ 7,206 $ 7,395 $ 7,013

1 unchanged sentence

(Thousands) 2023 2022

Natural Gas Distribution $ 775 $ 778

Energy Services 76 83

NJNG $ 775 $ 775

Total $ 859 $ 851

NJNG and Energy Services have entered into various AMAs, the effects of which are eliminated in consolidation.

Under the terms of these agreements, NJNG releases certain transportation and storage contracts to Energy Services.

As of September 30, 2022, NJNG and Energy Services had one AMA with an expiration date of March 31, 2023.

NJNG has entered into a 5-year transportation precedent agreement with Adelphia Gateway for committed capacity of 130,000 Dths per day, which began on August 9, 2022.

Energy Services has a 5-year agreement for 3 Bcf of firm storage capacity with Leaf River, which is eliminated in consolidation and expires in March 2024.

In March 2021, NJNG and Clean Energy Ventures entered into a 15-year sublease and PPA agreement related to an onsite solar array and the related energy output at the Company’s headquarters in Wall, New Jersey, the effects of which are immaterial to the consolidated financial statements.

NJNG and ES enter into various AMAs, the effects of which are eliminated in consolidation.

Under the terms of these agreements, NJNG releases certain transportation and storage contracts to ES.

As of September 30, 2023, NJNG and ES had one AMA with an expiration date of March 31, 2024.

NJNG entered into a 5-year transportation agreement with Adelphia for committed capacity of 130,000 Dths per day in Zone South, which began on August 9, 2022.

ES has a 5-year agreement for 3 Bcf of firm storage capacity with Leaf River, which is eliminated in consolidation and expires in March 2024.

In March 2021, NJNG and CEV entered into a 15-year sublease and PPA related to an onsite solar array and the related energy output at the Company’s headquarters in Wall, New Jersey, the effects of which are immaterial to the consolidated financial statements.

In June 2022, NJNG and Clean Energy Ventures entered into a 20-year sublease and PPA agreement related to an onsite solar array and the related energy output at the Company’s LNG plant in Howell, New Jersey, the effects of which are immaterial to the consolidated financial statements.

NJNG entered into a 15-year transportation precedent agreement with Adelphia Gateway for committed capacity of 130,000 Dth per day, beginning November 1, 2023;

however, the agreement term will automatically be reduced to 7 years if Transco has not placed its Regional Energy Access Expansion project into service by October 31, 2030.

The intercompany profit for certain transactions between NJNG and Energy Services and NJNG and Adelphia Gateway is not eliminated in accordance with ASC 980, Regulated Operations.

In June 2022, NJNG and CEV entered into a 20-year sublease and PPA related to an onsite solar array and the related energy output at the Company’s LNG plant in Howell, New Jersey, the effects of which are immaterial to the consolidated financial statements.

NJNG entered into a 15-year transportation agreement with Adelphia for committed capacity of 130,000 Dth per day in Zone North, beginning November 1, 2023.

The intercompany profits for certain transactions between NJNG and ES and NJNG and Adelphia are not eliminated in accordance with ASC 980, Regulated Operations.

New Jersey Resources Corporation

1 unchanged sentence

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data