What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-11-26 compared with 2023-11-21 · 293 added, 298 removed, 615 unchanged (49% of the section changed)

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OPERATIONS (Continued)

Should there be a significant change in the underlying market prices or pricing assumptions, ES may experience a significant impact on its financial position, results of operations and cash flows.

Refer to Item 7A.

Quantitative and Qualitative Disclosures About Market Risks for a sensitivity analysis related to the impact to derivative fair values resulting from changes in commodity prices.

The valuation methods we use to determine fair values remained consistent for fiscal 2024, 2023 and 2022.

We apply a discount to our derivative assets to factor in an adjustment associated with the credit risk of our physical natural gas counterparties and to our derivative liabilities to factor in an adjustment associated with our own credit risk.

We determine this amount by using historical default probabilities corresponding to the appropriate S&P issuer ratings.

Since the majority of our counterparties are rated investment grade, this results in an immaterial credit risk adjustment.

Gains and losses associated with derivatives utilized by NJNG to manage the price risk inherent in its natural gas purchasing activities are recoverable through its BGSS, subject to BPU approval.

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

The Company hedges certain of its expected production of SRECs through forward and futures contracts.

Upon physical delivery of SRECs to the counterparty, the Company recognizes SREC revenue as operating revenue on the Consolidated Statements of Operations.

We have not designated any derivatives as fair value or cash flow hedges as of September 30, 2024 and 2023.

The determination of our provision for income taxes requires the use of estimates and the interpretation and application of tax laws.

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Interest and penalties related to unrecognized tax benefits, if any, are recognized within income tax expense, and accrued interest and penalties are recognized within accrued taxes on the Consolidated Balance Sheets.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

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.

1 unchanged sentence

The contra-asset is amortized on the Consolidated Statements of Operations as a reduction to depreciation expense over the useful lives of the related assets.

Changes to the federal statutes related to ITCs, which have the effect of reducing or eliminating the credits, could have a negative impact on earnings and cash flows.

Changes to the federal statutes related to ITCs that have the effect of reducing or eliminating the credits could have a negative impact on earnings and cash flows.

Recently Issued Accounting Standards

5 unchanged sentences

A more detailed description of our organizational structure can be found in Item 1.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

The following sections include a discussion of results for fiscal 2024 compared to fiscal 2023.

5 unchanged sentences

These operations, which comprise HSO, include appliance repair services, sales and installations at NJRHS and commercial real estate holdings at CR&R.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Operating Results

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(1) Consists of transactions between subsidiaries that are eliminated in consolidation.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

The decrease in net income of $10.2M during fiscal 2023, compared with fiscal 2022, is due primarily to decreased earnings at NJNG due to higher O&M and higher interest expense related to new debt at higher interest rates, and decreased earnings at S&T resulting from increased interest and depreciation expenses.

These decreases are partially offset by increased earnings at ES due primarily to higher natural gas price volatility in December 2022 and February 2023 and by increased earnings at CEV related to the reversal of a valuation allowance for certain deferred tax assets.

Consolidated net income increased approximately $25.1M during fiscal 2024, compared with fiscal 2023, due primarily to the following factors:

• $27.9M increase in earnings at ES primarily due to increased operating revenue related to the timing of permanent releases of certain capacity related to the AMAs, reduced by unrealized gains and losses on hedging transactions;

partially offset by

• $10.8M decrease in earnings at CEV due to the reversal of a valuation allowance for certain deferred tax assets during fiscal 2023 that did not reoccur.

The primary drivers of the changes noted above are described in more detail in the individual reporting segment and other business operations discussions.

The increase in assets during fiscal 2023, compared with fiscal 2022, was due primarily to additional investment in utility plant at NJNG and solar asset investments at CEV, partially offset by a decrease in accounts receivable, gas in storage and restricted broker margin at ES and NJNG resulting from a decline in natural gas prices.

Consolidated assets increased approximately $444.1M as of September 30, 2024, compared with September 30, 2023, due primarily to the following factors:

• $301.7M increase in utility plant expenditures at NJNG;

• $79.4M increase in nonutility plant and equipment, net at CEV and S&T.

Non-GAAP Financial Measures

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Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for or a replacement of, the comparable GAAP measure and should be read in conjunction with those GAAP results.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Below is a reconciliation of consolidated net income, the most directly comparable GAAP measure, to NFE for the fiscal years ended September 30:

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Net income $ 289,775 $ 264,724 $ 274,922

Unrealized (gain) loss on derivative instruments and related transactions (38,081) (59,906) 54,203

Unrealized loss (gain) on derivative instruments and related transactions 19,574 (38,081) (59,906)

Tax effect (4,652) 9,050 14,248

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Tax effect 4,323 (8,246) (4,738)

(Gain on) impairment of equity method investment (300) (5,521) 92,000

Gain on equity method investment — (300) (5,521)

Tax effect — (19) 1,377

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Basic earnings per share $ 2.94 $ 2.73 $ 2.86

Unrealized (gain) loss on derivative instruments and related transactions (0.39) (0.62) 0.56

Unrealized loss (gain) on derivative instruments and related transactions 0.20 (0.39) (0.62)

Tax effect (0.05) 0.09 0.15

2 unchanged sentences

Tax effect 0.04 (0.09) (0.05)

(Gain on) impairment of equity method investment — (0.06) 0.96

Gain on equity method investment — — (0.06)

Tax effect — — 0.01

1 unchanged sentence

(1) Effects of hedging natural gas inventory transactions where the economic impact is realized in a future period.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

NFE by reporting segment and other business operations for the fiscal years ended September 30, discussed in more detail within the operating results sections of each reporting segment and other business operations, is summarized as follows:

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(1) Consists of transactions between subsidiaries that are eliminated in consolidation.

The increase in NFE of $21.5M during fiscal 2023, compared with fiscal 2022, was due primarily to higher Financial Margin at ES along with an increase in the benefit from income taxes at CEV, partially offset by decreases at NJNG and S&T, as previously discussed.

Consolidated NFE increased approximately $29.0M during fiscal 2024, compared with fiscal 2023, due primarily to the following factors:

• $43.0M increase in earnings at ES as a result of higher operating revenues from AMAs, as previously discussed;

partially offset by

• $10.8M decrease in earnings at CEV due to the reversal of a valuation allowance in fiscal year 2023 that did not reoccur as previously discussed.

Natural Gas Distribution

Natural Gas Distribution is comprised of NJNG, a natural gas utility that provides regulated natural gas service throughout Burlington, Middlesex, Monmouth, Morris, Ocean and Sussex counties in New Jersey to approximately 576,000 residential and commercial customers in its service territory and also participates in the off-system sales and capacity release markets.

Natural Gas Distribution is comprised of NJNG, a natural gas utility that provides regulated natural gas service to residential and commercial customers throughout Burlington, Middlesex, Monmouth, Morris, Ocean and Sussex counties in New Jersey and also participates in the off-system sales and capacity release markets.

The business is subject to various risks, which may include but are not limited to impacts to customer growth and customer usage, customer collections, the timing and costs of capital expenditures and construction of infrastructure projects, operating and financing costs, fluctuations in commodity prices and customer conservation efforts.

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It is often difficult to predict the impact of events or trends associated with these risks.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

NJNG’s business is seasonal by nature, as weather conditions directly influence the volume of natural gas delivered to customers on an annual basis.

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Base Rate Case

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

In addition, the order also included approval for the final increase for the NJ RISE/SAFE II programs, which totaled $0.3M.

These increases include 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 composite depreciation rate of 2.78%.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

On January 31, 2024, NJNG filed a base rate case with the BPU requesting a natural gas revenue increase of approximately $222.6M including a recovery of infrastructure investments, a change in the Company’s overall rate of return on rate base to 7.57% and a change in the return on common equity to 10.42%.

On May 15, 2024, the filing was updated to reflect actual results through March 31, 2024, which reduced the requested increase to approximately $219.6M.

On August 7, 2024, the filing was updated to reflect actual results through June 30, 2024, which modified the requested increase to approximately $219.9M.

On November 21, 2024, the BPU issued an order adopting a stipulation of settlement approving a $157.0M increase to base rates, effective November 21, 2024.

The increase includes an overall rate of return on rate base of 7.08%, return on common equity of 9.6%, a common equity ratio of 54.0% and a composite depreciation rate of 3.21%.

Infrastructure Projects

NJNG has significant annual capital expenditures associated with the management of its natural gas distribution and transmission system, including new utility plant associated with customer growth and its associated PIM and infrastructure programs.

NJNG has significant annual capital expenditures associated with the management of its natural gas distribution and transmission system, including new utility plant expenditures associated with customer growth and its associated PIM and infrastructure programs.

Below is a summary of NJNG’s capital expenditures, including accruals for fiscal 2024 and estimates of expected investments over the next fiscal year:

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NJNG continues to implement BPU-approved infrastructure projects that are designed to enhance the reliability and integrity of NJNG’s natural gas distribution system.

Infrastructure Investment Program

In February 2019, NJNG filed a petition with the BPU seeking authority to implement a five-year IIP.

The IIP consisted of two components:

transmission and distribution investments and information technology replacement and enhancements.

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

All approved 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 $150.0M over five years, effective November 1, 2020.

NJNG voluntarily withdrew the information technology upgrade component and will seek to recover associated costs in future rate case proceedings.

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 $28.9M through June 30, 2022.

In September 2022, the BPU approved the rate increase resulting in a $3.2M 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 $31.4M through June 30, 2023.

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

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

New Jersey Resources Corporation

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OPERATIONS (Continued)

SAFE II and NJ RISE

The BPU approved the 5-year SAFE II program and the associated rate mechanism to replace the remaining unprotected steel mains and services from NJNG’s natural gas distribution system at an estimated cost of approximately $200.0M, excluding AFUDC.

With the approval of SAFE II, $157.5M was approved for accelerated cost recovery methodology.

The remaining $42.5M in capital expenditures was requested for recovery in base rate cases, of which $23.4M was approved in NJNG’s 2019 base rate case and $19.1M was approved in the 2021 base rate case.

The BPU approved NJNG’s NJ RISE capital infrastructure program, which consists of six capital investment projects estimated to cost $102.5M, excluding AFUDC, for natural gas distribution storm hardening and mitigation projects, along with associated depreciation expense.

These system enhancements are intended to minimize service impacts during extreme weather events to customers in the most storm-prone areas of NJNG’s service territory.

Recovery of NJ RISE investments is included in NJNG’s base rates.

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 costs of approximately $3.4M 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 $0.3M.With this approval, the filings with respect to NJ RISE and SAFE II are complete.

Infrastructure Investment Program

In October 2020, the BPU approved NJNG’s five-year IIP filing for $150.0M of transmission and distribution investments, effective November 1, 2020, which will be recovered through annual filings to adjust base rates.

In September 2023, the BPU approved NJNG’s annual IIP filing, which requested a rate increase for capital expenditures of $28.2M through June 30, 2023, which resulted in a $3.2M revenue increase, effective October 1, 2023.

On March 28, 2024, NJNG submitted its annual IIP filing to the BPU requesting a rate increase for capital expenditures of $43.5M through June 30, 2024.

The filing was updated July 26, 2024, to reflect actual expenses of $41.2M.

The BPU approved this filing on September 25, 2024, which resulted in a $4.7M revenue increase, effective October 1, 2024.

Customer Growth

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NJNG expects new customer additions, and those customers who added additional natural gas services to their premises, to contribute approximately $6.8M of incremental Utility Gross Margin on an annualized basis.

NJNG expects its new customer annual growth rate to be approximately 1.9%.

Based on information from municipalities and developers, as well as external industry analysts and management’s experience, NJNG estimates that approximately 67% of the growth will come from new construction markets and 33% from customer conversions to natural gas from other fuel sources.

This new customer and conversion growth would increase Utility Gross Margin under NJNG’s base rates by approximately $8.5M annually, as calculated under NJNG’s CIP tariff.

Energy Efficiency Programs

SAVEGREEN conducts home energy audits and provides various grants, incentives and financing alternatives designed to encourage the installation of high-efficiency heating and cooling equipment and other energy efficiency upgrades.

Depending on the specific incentive 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 consisting of approximately $126.1M of direct investment, $109.4M in financing options and approximately $23.4M in O&M.

In September 2023, the BPU approved an increase to the energy efficiency rate for the SAVEGREEN programs established from 2010 through the present, which increased annual recoveries by $9.0M, effective October 1, 2023.

On November 9, 2023, NJNG filed a letter of petition seeking BPU approval to extend NJNG’s current SAVEGREEN program through December 31, 2024, with an additional $76.9M in order to meet customer demand for this program, which was approved by the BPU on April 30, 2024.

On December 1, 2023, NJNG filed a petition seeking BPU approval of its 2024 SAVEGREEN program, which would support new energy efficiency, demand response and building decarbonization start-up programs for two-and-a-half-years from January 1, 2025 through June 30, 2027.

The 2024 SAVEGREEN program filing, which totals $482.4M, includes $245.1M of direct investment, $217.2M in financing options and $20.1M in O&M.

On October 30, 2024, the BPU approved a settlement consisting of $205.0M of direct investment, $160.5M in financing options and $20.1M in O&M, which totals $385.6M.

On May 31, 2024, NJNG submitted its annual EE filing with the BPU for the recovery of SAVEGREEN costs, proposing an increase in annual recoveries of approximately $5.6M, to be effective January 1, 2025, if approved.

New Jersey Resources Corporation

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OPERATIONS (Continued)

Energy Efficiency Programs

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

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

In May 2020, NJNG filed a petition with the BPU to decrease its EE recovery rate.

In October 2020, the BPU approved NJNG to maintain its existing rate, which resulted in an annual recovery of approximately $11.4M, effective November 1, 2020.

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

In January 2022, the BPU approved the stipulation, which increased annual recoveries by $2.2M, effective February 1, 2022.

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 rate decrease, which resulted in an annual decrease of approximately $3.5M, effective October 1, 2022.

On June 1, 2023, NJNG submitted its annual cost recovery filing for the SAVEGREEN programs established from 2010 through the present, which would increase annual recoveries by approximately $10.7M.

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

The following table summarizes loans, grants, rebates and related investments as of September 30:

(Thousands) 2023 2022

Loans $ 198,600 $ 175,300

Grants, rebates and related investments 205,200 168,700

Total $ 403,800 $ 344,000

Loans amounted to approximately $37.5M and $23.3M and grants, rebates and related investments amounted to approximately $33.8M and $36.5M during the fiscal years ended September 30, 2024 and 2023, respectively.

Program recoveries from customers during the fiscal years ended September 30, 2024 and 2023, were $28.6M and $26.3M, respectively.

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Conservation Incentive Program/BGSS

The CIP facilitates normalizing NJNG’s Utility Gross Margin for variances not only due to weather but also other factors affecting customer usage, such as conservation and energy efficiency.

The CIP facilitates normalizing NJNG’s Utility Gross Margin for variances due not only to weather but also other factors affecting customer usage, such as conservation and energy efficiency.

Recovery of Utility Gross Margin for the non-weather variance through the CIP is limited to the amount of certain natural gas supply cost savings achieved and is subject to a variable margin revenue test.

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(1) Compared with the 20-year average, weather was 11.3%, 13.4% and 8.3% warmer-than-normal during fiscal 2024, 2023 and 2022, respectively.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Recovery of Natural Gas Costs

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however, customers who purchase natural gas from another supplier continue to use NJNG for transportation service.

During fiscal 2021, NJNG notified the BPU of its intent to provide BGSS bill credits to residential and small commercial sales customers.

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

In November 2021, the BPU approved on a preliminary basis a $2.9M increase to the annual revenues credited to BGSS, a $13.0M annual increase related to its balancing charge, as well as changes to CIP rates, which resulted in a $6.3M annual recovery decrease, effective December 1, 2021, and 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 resulted in an approximately $24.2M increase to annual revenues credited to BGSS, effective December 1, 2021.

In June 2022, NJNG submitted its annual petition to modify its BGSS, balancing charge and CIP rates for residential and small business customers, which was approved by the BPU on a preliminary basis in September 2022.

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

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

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

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 included a $38.6M decrease to the annual revenues credited to BGSS, a $7.4M annual decrease related to its balancing charge and a $27.5M 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 $27.0M increase to CIP rates, based on updated information since the initial filing.

In April 2023, the BPU approved, on a final basis, NJNG’s February 2023 filing for a reduction to the BGSS rate, which reduced annual recoveries by approximately $29.9M, effective March 1, 2023.

NJNG’s February 2023 filing also advised the BPU of a bill credit for residential and small commercial customers.

Total bill credits given back to customers from March 2023 through May 2023, totaled approximately $32.4M.

On April 30, 2024, the BPU approved, on a final basis, NJNG's June 2023 annual filing, which included a decrease of approximately $38.6M to the annual revenues credited to BGSS, an annual decrease of approximately $7.4M related to its balancing charge and an increase of approximately $27.0M to CIP rates for residential and small business customers, effective October 1, 2023.

On September 25, 2024, the BPU approved, on a provisional basis, NJNG’s May 2024 annual filing, which included a decrease of approximately $31.0M to the annual revenues credited to BGSS, an annual increase of approximately $40.3M related to its balancing charge and a decrease of approximately $0.8M to CIP rates, effective October 1, 2024.

The balancing charge rate includes the cost of balancing natural gas deliveries with customer usage for sales and transportation customers, and balancing charge revenues are credited to BGSS.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

BGSS Incentive Programs

NJNG is eligible to receive financial incentives for reducing BGSS costs through a series of Utility Gross Margin-sharing programs that include off-system sales, capacity release and storage incentive programs.

These programs are designed to encourage better utilization and hedging of NJNG’s natural gas supply, transportation and storage assets.

These programs are designed to encourage better utilization and hedging of NJNG’s natural gas supply and transportation and storage assets.

Depending on the program, NJNG shares 80 or 85% of Utility Gross Margin generated by these programs with firm customers.

Utility Gross Margin from incentive programs was $17.9M, $20.0M and $19.6M during the fiscal years ended September 30, 2024, 2023 and 2022, respectively.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

In order to provide relative price stability to its natural gas supply portfolio, NJNG employs a hedging strategy with the goal of having at least 75% of the Company’s projected winter periodic BGSS natural gas sales volumes hedged by each November 1 and at least 25% of the projected periodic BGSS natural gas sales hedged for the following April-through-March period.

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Commodity Prices

NJNG is affected by the price of natural gas, which can have a significant impact on our cash flows, short-term financing costs, the price of natural gas charged to our customers through the BGSS clause, our ability to collect accounts receivable, which impacts our bad debt expense, and our ability to maintain a competitive advantage over other energy sources.

NJNG is affected by the price of natural gas, which can have a significant impact on our cash flows and short-term financing costs, the price of natural gas charged to our customers through the BGSS clause, our ability to collect accounts receivable, which impacts our bad debt expense, and our ability to maintain a competitive advantage over other energy sources.

Natural gas commodity prices are shown in the graph below, which illustrates the daily natural gas prices (1) in the Northeast market region, also known as TETCO M-3.

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NJNG’s qualifying customers are eligible for the USF program, which is administered by the New Jersey Department of Community Affairs, to help make energy bills more affordable.

In March 2022, the BPU approved on a final basis NJNG’s annual SBC application to recover remediation expenses, including an increase in the RAC, of approximately $0.6M annually and a decrease to the NJCEP factor of approximately $2.9M, effective April 1, 2022.

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 $1.6M, effective October 1, 2022.

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 $3.8M and an increase to the NJCEP annual recoveries of $2.2M, 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 $3.7M and a decrease to the NJCEP annual recoveries of $0.9M, effective May 1, 2023.

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 $0.7M increase to annual recoveries.

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

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 $2.4M and an increase to the NJCEP annual recoveries of $5.0M, which would be effective April 1, 2024.

In April 2023, the BPU approved on a final basis NJNG’s annual SBC filing, which included an increase to the RAC annual recoveries of approximately $3.7M and a decrease to the NJCEP annual recoveries of approximately $0.9M, effective May 1, 2023.

In September 2023, the BPU approved NJNG’s annual USF filing, which included an increase to the statewide USF rate of approximately $0.7M, effective October 1, 2023.

On March 20, 2024, the BPU approved NJNG’s annual SBC filing of RAC expenditures through June 30, 2023, which included an increase to the RAC annual recoveries of approximately $2.4M and an increase to the NJCEP annual recoveries of approximately $5.5M, effective April 1, 2024.

On June 28, 2024, NJNG submitted its annual USF filing to the BPU requesting an increase to the statewide USF rate.

On September 25, 2024, the BPU approved the filing, which resulted in a $6.8M increase to annual recoveries, effective October 1, 2024.

On September 30, 2024, NJNG submitted its annual SBC filing to the BPU requesting approval of RAC expenditures through June 2024, which included an increase to the RAC annual recoveries of approximately $2.4M and an increase to the NJCEP annual recoveries of approximately $1.6M, which would be effective April 1, 2025.

Environmental Remediation

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Actual MGP remediation costs may vary from management’s estimates due to the developing nature of remediation requirements, regulatory decisions by the NJDEP and related litigation.

NJNG reviews these costs at the end of each fiscal year and adjusts its liability and corresponding regulatory asset as necessary to reflect its expected future remediation obligation.

Accordingly, NJNG recognized a regulatory asset and an obligation of $169.4M as of September 30, 2023, an increase of $42.3M compared with the prior fiscal period.

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 and, based on initial findings, will be moving to the remedial investigation phase.

The costs associated with preliminary assessment, site investigation and remedial investigation activities are considered immaterial and are included as a component of NJNG’s annual SBC application to recover remediation expenses.

We will continue to gather information to further refine and enhance the estimate of potential costs for this site as it becomes available.

Commitments and Contingent Liabilities for a more detailed description.

NJNG reviews these costs periodically, and at least annually, and adjusts its liability and corresponding regulatory asset as necessary to reflect its expected future remediation obligation.

Accordingly, NJNG recognized a regulatory asset and an obligation of $161.7M as of September 30, 2024, a decrease of $7.8M compared with the prior fiscal period.

Commitments and Contingent Liabilities for a more detailed description of MGP expenditures.

Other regulatory filings and a more detailed discussion of the filings in this section can be found in Note 4.

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Net income $ 133,400 $ 131,414 $ 140,124

(1) Includes nonutility revenue of approximately $1.3M, $1.4M and $0.3M for fiscal 2023, 2022 and 2021, respectively, for lease agreements with various NJR subsidiaries leasing office space from NJNG at the Company’s headquarters that commenced in July 2021, which are eliminated in consolidation.

(1) Includes nonutility revenue of approximately $1.4M, $1.3M and $1.4M for fiscal 2024, 2023 and 2022, respectively, for lease agreements with various NJR subsidiaries leasing office space from NJNG at the Company’s headquarters, which are eliminated in consolidation.

(2) Includes the purchased cost of the natural gas, fees paid to pipelines and storage facilities, adjustments as a result of BGSS incentive programs and hedging transactions.

These expenses are passed through to customers and are offset by corresponding revenues.

(3) Includes related party transactions of approximately $9.3M for both fiscal 2023 and 2022, and $13.0M for fiscal 2021, a portion of which is eliminated in consolidation.

(4) Consists of expenses associated with state-mandated programs, the RAC and energy efficiency programs, calculated on a per-therm basis.

(3) Includes related party transactions of approximately $9.3M for fiscal 2024, 2023 and 2022, a portion of which is eliminated in consolidation.

(4) Consists of expenses associated with state-mandated programs, the RAC and energy efficiency programs, which are calculated on a per-therm basis.

These expenses are passed through to customers and are offset by corresponding revenues.

Operating Revenues and Natural Gas Purchases

Operating revenues decreased 10.3% during fiscal 2023 compared with fiscal 2022.

Operating revenues increased 0.7% during fiscal 2024 compared with fiscal 2023.

Natural gas purchases decreased 2.5% during fiscal 2024 compared with fiscal 2023.

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CIP adjustments (1,658) —

Base rate impact 6,927 —

Riders and other (1)

9,543 (1,495)

Total decrease $ (116,134) $ (131,775)

Total increase (decrease) $ 7,199 $ (10,822)

(1) Riders and other includes changes in rider rates, including those related to Energy Efficiency, NJCEP and other programs, which is offset in regulatory rider expense.

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Utility Gross Margin may also not be comparable to the definition of gross margin used by others in the natural gas distribution business and other industries.

Management believes that Utility

Management believes that Utility Gross Margin provides a meaningful basis for evaluating utility operations since natural gas costs, sales tax and regulatory rider expenses are included in operating revenues and passed through to customers and, therefore, have no effect on Utility Gross Margin.

Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measure.

New Jersey Resources Corporation

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OPERATIONS (Continued)

Gross Margin provides a meaningful basis for evaluating utility operations since natural gas costs, sales tax and regulatory rider expenses are included in operating revenues and passed through to customers and, therefore, have no effect on Utility Gross Margin.

Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measure.

Utility Gross Margin

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Utility Gross Margin $ 544,870 $ 536,634 $ 512,098

(1) Excludes selling, general and administrative expenses of approximately $111.5M, $102.8M and $97.0M for the fiscal years 2023, 2022 and 2021, respectively.

(1) Excludes SG&A of approximately $111.3M, $111.5M and $102.8M for the fiscal years 2024, 2023 and 2022, respectively.

Utility Gross Margin consists of three components:

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Utility Firm Gross Margin

Utility firm gross margin increased $24.1M during fiscal 2023 compared with fiscal 2022, due primarily to an increase in customers along with increased base rates.

Utility firm gross margin increased approximately $10.4M during fiscal 2024 compared with fiscal 2023, due primarily to an increase in customers.

New Jersey Resources Corporation

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Off-system sales (551)

Total increase $ 433

The increase in BGSS incentive programs was due primarily to increased margins from storage incentive market opportunities and higher capacity release values, partially offset by lower off-system sales volumes.

Other Results

O&M expense increased $28.2M during fiscal 2023 compared with fiscal 2022, due primarily to the deferral of bad debt costs in accordance with the July 2020 BPU deferral order in fiscal 2022 that did not reoccur, as well as an increase in compensation and consulting expenditures.

Depreciation expense increased $7.7M in fiscal 2023, compared with fiscal 2022, as a result of additional utility plant being placed into service.

Interest expense increased $10.2M in fiscal 2023, compared with fiscal 2022, due primarily to increased outstanding long-term debt at higher interest rates.

Other income increased $5.9M during fiscal 2023, compared with fiscal 2022, due primarily to increased AFUDC equity, along with decreased pension and postemployment costs.

Income taxes decreased $7.1M during fiscal 2023, compared with fiscal 2022, due to lower income before income taxes.

Net income decreased $8.7M during fiscal 2023, compared with fiscal 2022, due primarily to increased O&M, depreciation and interest expenses, partially offset by higher Utility Gross Margin, as previously discussed.

Total decrease $ (2,144)

The decrease in BGSS incentive programs was due primarily to decreased margins from storage incentives along with lower off-system sales margin due to less market volatility and lower capacity release volumes.

Net income increased approximately $2.0M during fiscal 2024, compared with fiscal 2023, due primarily to the following factors:

• $8.2M increase in Utility Gross Margin, as previously discussed;

• $6.8M increase in other income, net resulting from the remeasurement of the Company's other postretirement benefits;

• $1.5M decrease in O&M due to lower consulting fees;

partially offset by

• $10.2M increase in depreciation expense as a result of additional utility plant being placed into service;

• $5.7M increase in interest expense due to higher outstanding long-term debt.

Clean Energy Ventures

CEV actively pursues opportunities in the renewable energy markets.

CEV enters into various agreements to install solar net-metered systems for residential and commercial customers, as well as large commercial grid-connected projects.

CEV actively pursues opportunities in the renewable energy markets, which includes the development, construction and operation of net-metered and grid-connected commercial solar projects.

In addition, CEV enters into various long-term agreements, including PPAs, to supply energy from commercial solar projects.

Capital expenditures related to clean energy projects are subject to change due to a variety of factors that may affect our ability to commence operations at these projects on a timely basis or at all, including logistics associated with the start-up of residential and commercial solar projects, such as timing of construction schedules, the permitting and regulatory process, any delays related to electric grid interconnection, economic trends, unforeseen events and the ability to access capital or allocation of capital to other investments or business opportunities.

CEV is also subject to various risks, which may include impacts to residential solar customer growth and customer collections, our ability to identify and develop commercial solar asset investments, impacts to our supply chain and our ability to source materials for construction.

The primary contributors toward the value of qualifying clean energy projects are tax incentives and RECs.

Capital expenditures related to clean energy projects are subject to change due to a variety of factors that may affect our ability to commence operations at these projects on a timely basis or at all, including logistics associated with the start-up of commercial solar projects, such as timing of construction schedules, the permitting and regulatory process, any delays related to electric grid interconnection, economic trends, unforeseen events and the ability to access capital or allocation of capital to other investments or business opportunities.

CEV is also subject to various risks, which may include our ability to identify and develop commercial solar asset investments, impacts to our supply chain and our ability to source materials for construction.

The primary contributors toward the value of qualifying clean energy projects are tax incentives, RECs and electricity sales.

Changes in the federal statutes related to the ITC and/or relevant state legislation and regulatory policies affecting the market for solar renewable energy credits could significantly affect future results.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Solar projects placed in service and related expenditures for the fiscal years ended September 30, are as follows:

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2 5.1 18,931 5 36.1 50,610 2 1.0 2,440

Residential 339 4.1 12,677 360 3.9 11,544 421 4.8 13,885

Sunlight Advantage® 282 3.4 10,660 339 4.1 12,677 360 3.9 11,544

Total placed in service 284 8.5 $ 29,591 349 82.2 $ 169,845 365 18.9 $ 45,395

(1) Includes projects subject to sale leaseback arrangements.

(2) Includes an operational 2.9 MW commercial solar project acquired in December 2020.

(3) Includes two operational commercial solar projects acquired in July 2023, totaling 20.7 MW.

CEV has approximately 468.8 MW of solar capacity in service.

(2) Fiscal 2023 includes two operational commercial solar projects acquired in July 2023, totaling 20.7 MW.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

As of September 30, 2024, CEV has approximately 477 MW of solar capacity in service.

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

The credit declined to 26% for property under construction during 2020.

In December 2020, the 26% federal ITC was extended through the end of 2022.

Following the signing of the Inflation Reduction Act into law in August 2022, the federal ITC was restored to 30% through the end of 2032.

There are additional opportunities to increase the credit amount up to 20% for certain facilities that are placed in service after December 31, 2022, based upon the type of project and location.

ITC-eligible projects placed in service prior to the enactment of the Inflation Reduction Act are not impacted by the change.

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

The credit declined to 26% for property under construction during 2020 through the end of 2022.

In August 2022, the federal ITC was restored to 30% through the end of 2032.

There are additional opportunities to increase the credit amount for certain facilities that are placed in service after December 31, 2022, based upon the type of project and location.

CEV may enter into transactions to sell certain of its commercial solar assets concurrent with agreements to lease the assets back over a period of five to seven years.

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

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

ITCs and other tax attributes associated with these solar projects transfer to the buyer if applicable;

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

Accordingly, for solar projects financed under sale leasebacks for which the assets were sold during the first 5 years of in-service life, CEV recognizes the equivalent value of the ITC in other income on the Consolidated Statements of Operations over the respective five-year ITC recapture periods, starting with the second year of the lease.

Accordingly, for solar projects financed under sale leasebacks for which the assets were sold during the first five years of in-service life, CEV recognizes the equivalent value of the ITC in other income on the Consolidated Statements of Operations over the respective five-year ITC recapture periods, starting with the second year of the lease.

During fiscal 2024, 2023 and 2022, CEV received proceeds of $64.7M, $167.8M and $24.1M, respectively, in connection with the sale leaseback of commercial solar assets.

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

CEV owns, operates and maintains the system over the life of the contract in exchange for monthly payments.

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

CEV owns, operates and maintains the system over the life of the lease in exchange for monthly lease payments.

The program is operated by CEV using qualified contracting partners in addition to strategic suppliers for material standardization and sourcing.

On November 25, 2024, CEV completed the sale of its 91 MW residential solar portfolio, and related assets and liabilities included in The Sunlight Advantage® program to a third party for a total purchase price of $132.5M.

For solar installations placed in-service in New Jersey prior to April 30, 2020, each MWh of electricity produced creates an SREC that represents the renewable energy attribute of the solar-electricity generated that can be sold to third parties, predominantly load-serving entities that are required to comply with the solar requirements under New Jersey’s renewable portfolio standard.

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In July 2021, the BPU established a new successor solar incentive program.

This Administratively Determined Incentive Program, which we refer to as SREC IIs, provides administratively set incentives for net metered residential projects and net metered non-residential projects of 5 MW or less.

In December 2022, the BPU established the Competitive Solar Incentive Program, which will serve as the permanent program within the successor solar incentive program and provide incentives to larger solar facilities.

This ADI Program provides administratively set incentives for net metered projects of 5 MW or less.

RECs generated through the production of electricity under this program are known as SREC IIs.

In December 2022, the BPU established the CSI program, which provides incentives to larger solar facilities.

It is open to qualifying grid supply solar facilities, non-residential net metered solar installations with a capacity greater than 5 MW and eligible grid supply solar facilities installed in combination with energy storage.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Pricing is determined based on a competitive bid solicitation process.

REC activity consisted of the following:

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6,013 19,087 (20,078) 5,022 $90

108,104 425,453 (417,305) 116,252 $202

TRECs 6,944 38,914 (35,099) 10,759 $139

SRECs 116,005 422,039 (393,906) 144,138 $202

9,270 31,767 (34,093) 6,944 $144

(1) The TRECs’ and SREC IIs’ inventory balance is due to the timing of the generation of the RECs and the delivery of the RECs by the state administrator, which is typically on a one month lag.

(2) Fiscal 2022 included 247 SREC IIs within SRECs, which are shown separately in fiscal 2023.

There were no SREC IIs generated during fiscal 2021.

TRECs 10,759 80,520 (81,159) 10,120 $144

SREC IIs 247 10,260 (4,494) 6,013 $90

(1) TREC and SREC II inventory balances are due primarily to the timing of generation and when RECs are delivered to the state administrator.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

CEV hedges its expected SREC production through the use of forward sales contracts.

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There are no direct costs associated with the production of RECs by our solar assets.

All related costs are included as a component of O&M expenses on the Consolidated Statements of Operations, including such expenses as facility maintenance and broker fees.

All related costs are included as a component of O&M on the Consolidated Statements of Operations, including such expenses as facility maintenance and broker fees.

Operating Results

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Interest expense, net 28,545 28,569 21,968

Income tax (benefit) provision (7,683) 11,361 5,048

Income tax provision (benefit) 11,406 (7,683) 11,361

Net income $ 33,662 $ 44,458 $ 39,403

Operating revenues decreased $4.1M in fiscal 2023, compared with fiscal 2022, due primarily to decreased SREC and electricity sales, partially offset by increased TREC sales.

Depreciation expense increased $3.9M in fiscal 2023, compared with fiscal 2022, due primarily to additional solar assets placed in service.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Income tax benefit increased $19.0M during fiscal 2023, compared with fiscal 2022, due primarily to the reversal of a valuation allowance for certain deferred tax assets.

Net income in fiscal 2023 increased $5.1M, compared with fiscal 2022, due primarily to the increased income tax benefit, partially offset by decreased operating revenues and higher depreciation expense, as previously discussed.

Net income decreased approximately $10.8M during fiscal 2024, compared with fiscal 2023, due primarily to the following factors:

• $19.1M increase in income tax expense due primarily to the reversal of a valuation allowance for certain deferred tax assets during fiscal 2023 that did not reoccur;

• $4.0M increase in O&M due to higher project maintenance expenses and lease expenses;

partially offset by

• $8.3M increase in other income, net due primarily to the recognition of ITCs associated with solar sale leaseback financing transactions;

• $6.4M increase in operating revenues due to higher SREC, TREC and electricity sales.

Energy Services

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ES also provides management of transportation and storage assets for natural gas producers and regulated utilities.

These management transactions typically involve the release of producer/utility-owned storage and/or transportation capacity in combination with an obligation to either purchase and/or deliver physical natural gas.

These management transactions typically involve the release of producer/utility-owned storage and/or transportation capacity in combination with an obligation to purchase and/or deliver physical natural gas.

In addition to the contractual purchase and/or sale of physical natural gas, ES generates or pays fee-based margin in exchange for its active management and may provide the producer and/or utility with additional margin based on actual results.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

In conjunction with the active management of these contracts, ES generates Financial Margin by identifying market opportunities and simultaneously entering into natural gas purchase/sale, storage or transportation contracts and financial derivative contracts.

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Volatility in reported net income at ES can occur over periods of time due to changes in the fair value of derivatives, as well as timing differences related to certain transactions.

Unrealized gains and losses can fluctuate as a result of changes in the price of natural gas, SRECs and foreign currency from the original transaction price.

Unrealized gains and losses can fluctuate as a result of changes in the price of natural gas and SRECs from the original transaction price.

Volatility in earnings can also occur as a result of timing differences between the settlement of financial derivatives and the sale of the underlying physical commodity.

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

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

During fiscal 2023 and 2022, ES recognized $48.5M and $53.0M, respectively, of operating revenue on the Consolidated Statements of Operations.

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

During fiscal 2024 and 2023, ES recognized $137.2M and $48.5M, respectively, of operating revenue related to the AMAs on the Consolidated Statements of Operations.

Amounts received in excess of revenue, totaling $22.3M and $58.7M as of September 30, 2024 and 2023, respectively, are included in deferred revenue on the Consolidated Balance Sheets.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Operating Results

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(3) Includes related party transactions of approximately $1.2M, $0.9M and $1.0M for fiscal 2024, 2023 and 2022, respectively, a portion of which is eliminated in consolidation.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

ES’s portfolio of financial derivative instruments is composed of:

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During fiscal 2024, 2023 and 2022 the net short position resulted in unrealized gains (losses) of $3.1M, $16.2M and $(8.5)M, respectively.

Operating revenues decreased $837.7M and natural gas purchases decreased $835.5M during fiscal 2023, compared with fiscal 2022, due primarily to a 45.2% decrease in natural gas prices, partially offset by periods of volatility in natural gas prices during the first two quarters of fiscal 2023.

Operating revenues decreased approximately $206.2M and natural gas purchases decreased approximately $253.0M during fiscal 2024, compared with fiscal 2023, due primarily to a 36.0% decrease in natural gas prices, partially offset by increased operating revenue related to the timing of permanent releases of certain capacity related to the AMAs.

Future results at ES are contingent upon natural gas market price volatility driven by variations in both the supply and demand balances caused by weather and other factors.

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Management ’ s Discussion and Analysis of Financial Condition and Results of Operations - Natural Gas Distribution for TETCO M-3 Daily Prices, which illustrates the daily natural gas prices in the Northeast market region.

O&M expense decreased $19.7M during fiscal 2023, compared with fiscal 2022, due primarily to a reduction in the reserve for bad debt, and decreases in charitable contributions and compensation costs.

Interest expense increased $6.7M during fiscal 2023, compared with fiscal 2022, due primarily to increased borrowings at higher interest rates.

Net income increased $9.2M during fiscal 2023, compared with fiscal 2022, due primarily to increased operating income, partially offset by higher interest expense, as previously discussed.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Net income increased approximately $27.9M during fiscal 2024, compared with fiscal 2023, due primarily to the following factors:

• $253.0M decrease in natural gas purchases, as previously discussed;

partially offset by

• $206.2M decrease in operating revenues, as previously discussed;

• $9.0M increase in income tax expense related to higher operating income;

• $5.6M increase in O&M due to higher employee-related expenses and a reduction in the reserve for bad debt in the prior year;

• $3.8M increase in interest expense due to increased borrowings and higher interest rates.

Non-GAAP Financial Measures

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Financial Margin and NFE are based on removing timing differences associated with certain derivative instruments.

GAAP also requires us, during the interim periods, to estimate our annual effective tax rate and use this rate to calculate the year-to-date tax provision.

We also determine an annual estimated effective tax rate for NFE purposes and calculate a quarterly tax adjustment based on the differences between our forecasted net income and our forecasted NFE for the fiscal year.

This adjustment is applied to ES, as the adjustment primarily relates to timing differences associated with certain derivative instruments that impact the estimate of the annual effective tax rate for NFE.

No adjustment is needed during the fourth quarter, since the actual effective tax rate is calculated at year end.

Management views these measures as representative of the overall expected economic result and uses these measures to compare ES’s results against established benchmarks and earnings targets, as these measures eliminate the impact of volatility on GAAP earnings as a result of timing differences associated with the settlement of derivative instruments.

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Financial Margin and NFE also exclude the effects of economic hedging of the value of our natural gas in storage and, therefore, only include realized gains and losses related to natural gas withdrawn from storage, effectively matching the full earnings effects of the derivatives with realized margins on the related physical natural gas flows.

To the extent we utilize forwards, futures or other derivatives to hedge natural gas transactions and forecasted SREC production, the resulting unrealized gains and losses are also eliminated from NFE.

Financial Margin differs from gross margin as defined on a GAAP basis, as it excludes certain operations and maintenance expense and depreciation and amortization as well as the effects of derivatives, as discussed above.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Financial Margin

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Operating revenues (1)

$ 485,391 $ 691,616 $ 1,529,272

Natural gas purchases 305,938 558,932 1,394,405

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Depreciation and amortization 205 221 148

Unrealized (gain) loss on derivative instruments and related transactions (2) (48,251) (60,000) 58,362

Unrealized loss (gain) on derivative instruments and related transactions 24,449 (48,251) (60,000)

Effects of economic hedging related to natural gas inventory (3)

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Financial Margin $ 185,710 $ 119,132 $ 94,806

(1) Excludes general and administrative expenses of $(0.8)M, $15.4M and $17.6M for fiscal 2023, 2022 and 2021, respectively.

(2) Includes unrealized losses (gains) related to an intercompany transaction between NJNG and ES that have been eliminated in consolidation of approximately $7.8M, $0.1M and $(3.2)M, net of taxes for fiscal 2023, 2022 and 2021, respectively.

(1) Includes unrealized (gains) losses related to intercompany transactions between NJNG and ES that have been eliminated in consolidation of approximately $(4.9)M, $7.8M and $0.1M for fiscal 2024, 2023 and 2022, respectively.

(2) Excludes SG&A of approximately $1.8M, $(0.8)M and $15.4M for fiscal 2024, 2023 and 2022, respectively.

(3) Effects of hedging natural gas inventory transactions where the economic impact is realized in a future period.

Financial Margin increased $24.3M during fiscal 2023, compared with fiscal 2022, due primarily to higher natural gas price volatility in December 2022 and February 2023, as a result of cold weather in regions where ES had contracted rights to transportation and storage assets.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Financial Margin increased approximately $66.6M during fiscal 2024, compared with fiscal 2023, due primarily to increased operating revenue related to the AMAs, as previously discussed, partially offset by higher natural gas price volatility in fiscal 2023 as a result of cold weather in regions where ES had contracted rights to transportation and storage assets.

Net Financial Earnings

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Net income $ 106,745 $ 78,848 $ 69,650

Unrealized (gain) loss on derivative instruments and related transactions (48,251) (60,000) 58,362

Unrealized loss (gain) on derivative instruments and related transactions 24,449 (48,251) (60,000)

Tax effect (1)

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Net financial earnings $ 111,515 $ 68,517 $ 39,121

(1) Includes taxes related to an intercompany transaction between NJNG and ES that have been eliminated in consolidation of approximately $(2.4)M and $1.0M for fiscal 2023 and 2021, respectively.

(1) Includes taxes related to intercompany transactions between NJNG and ES that have been eliminated in consolidation of approximately $1.2M and $(2.4)M for fiscal 2024 and 2023, respectively.

Taxes that were eliminated in consolidation during fiscal 2022 were immaterial.

NFE increased $29.4M during fiscal 2023, compared with fiscal 2022, due primarily to higher Financial Margin, as previously discussed.

Future results are subject to ES’s ability to expand its wholesale sales and service activities and are contingent upon many other factors, including an adequate number of appropriate and credit-qualified counterparties in an active and liquid natural marketplace;

NFE increased approximately $43.0M during fiscal 2024, compared with fiscal 2023, due primarily to higher Financial Margin, as previously discussed.

Future results are subject to the ability of ES to expand its wholesale sales and service activities and are contingent upon many other factors, including an adequate number of appropriate and credit-qualified counterparties in an active and liquid natural marketplace;

volatility in the natural gas market due to weather or other fundamental market factors impacting supply and/or demand;

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and continued access to liquidity in the capital markets.

Storage and Transportation

S&T invests in natural gas assets, such as natural gas transportation and storage facilities.

We believe that acquiring, owning and developing these storage and transportation assets, which operate under a tariff structure that has either cost- or market-based rates, can provide us a growth opportunity.

S&T is subject to various risks, including the construction, development and operation of our transportation and storage assets, obtaining necessary governmental, environmental and regulatory approvals, our ability to obtain necessary property rights and our ability to obtain financing at reasonable costs for the construction, operation and maintenance of our assets.

S&T is comprised of Leaf River, a 32.2M Dth salt dome natural gas storage facility that operates under market-based rates, and Adelphia, an existing 84-mile pipeline in southeastern Pennsylvania.

Adelphia operates under cost-of-service rates but can enter into negotiated rates with counterparties.

The northern portion of the pipeline was operational upon acquisition, and it currently serves two natural gas generation facilities.

In October 2020, we began the conversion of the southern zone of the pipeline to natural gas, which became fully operational in September 2022.

S&T also has a 50% ownership interest in Steckman Ridge, a storage facility located in western Pennsylvania that operates under market-based rates.

As of September 30, 2023, our investment in Steckman Ridge was $104.1M.

S&T also has a 20% interest in PennEast, a partnership whose purpose was to construct and operate a 120-mile natural gas pipeline that would have extended from northeast Pennsylvania to western New Jersey.

PennEast received a Certificate of Public Convenience and Necessity for the project from FERC in January 2018.

However, because of numerous regulatory and legal challenges, we evaluated our equity investment in PennEast for impairment during fiscal 2021, and determined that it was other-than-temporarily impaired.

We estimated the fair value of our investment in PennEast using probability weighted scenarios assigned to discounted future cash flows.

The impairment was the result of management’s estimates and assumptions regarding the likelihood of certain outcomes related to required regulatory approvals and pending legal matters, the timing and magnitude of construction costs and in-service dates, the evaluation of the current environmental and political climate as it relates to interstate pipeline development, and transportation capacity revenues and discount rates.

New Jersey Resources Corporation

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OPERATIONS (Continued)

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

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

Storage and Transportation

S&T invests in natural gas assets, such as natural gas transportation and storage facilities.

S&T is subject to various risks, including the construction, development and operation of our transportation and storage assets, as well as our ability to obtain necessary governmental, environmental and regulatory approvals, property rights and financing at reasonable costs for the construction, operation and maintenance of our assets.

S&T is comprised of Leaf River, a 32.2M Dth salt dome natural gas storage facility that operates under market-based rates, and Adelphia, a FERC-regulated interstate pipeline in southeastern Pennsylvania that operates under cost-of-service rates but can enter into negotiated rates with counterparties.

The northern portion of the pipeline was operational upon acquisition, and currently serves two natural gas generation facilities.The southern zone of the pipeline became fully operational in September 2022.

On September 30, 2024, Adelphia filed a Section 4 rate case with the FERC seeking approval to revise its transportation cost-of-service rates to reflect investments made in its pipeline system, as well as the ongoing costs of operating and maintaining the system.

Adelphia anticipates that FERC will allow it to place the rates into effect during the second half of 2025, subject to refund and the outcome of a hearing to be established by FERC.

S&T has a 50% ownership interest in Steckman Ridge, a storage facility located in western Pennsylvania that operates under market-based rates.

As of September 30, 2024, our investment in Steckman Ridge was $101.7M.

S&T also had a 20% interest in PennEast, a partnership whose purpose was to construct and operate a 120-mile natural gas pipeline that would have extended from northeast Pennsylvania to western New Jersey.

During fiscal 2021, we evaluated our equity investment in PennEast for impairment and determined that it was other-than-temporarily impaired.

In December 2021, the PennEast project ceased further development.

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.

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Interest expense, net 23,441 25,803 12,097

Income tax provision (benefit) 3,444 1,879 (10,043)

Equity in earnings (loss) of affiliates 3,126 9,865 (81,072)

Net income (loss) $ 13,154 $ 26,598 $ (67,787)

Income tax provision 4,551 3,444 1,879

Equity in earnings of affiliates 2,816 3,126 9,865

Net income $ 12,229 $ 13,154 $ 26,598

(1) Includes related party transactions of approximately $1.4M, $4.2M and $2.4M for the fiscal years ended September 30, 2024, 2023 and 2022, respectively, which are eliminated in consolidation.

Operating revenue increased $25.1M during fiscal 2023, compared with fiscal 2022, due primarily to increased fixed price contract revenue for Adelphia and increased hub services revenue for Leaf River.

O&M expense increased $4.1M during fiscal 2023, compared with fiscal 2022, due primarily to increased property taxes and contractor expenses.

Depreciation expense increased $11.9M during fiscal 2023, compared with fiscal 2022, due primarily to the southern portion of Adelphia, which was placed in service in September 2022.

Interest expense increased $13.7M during fiscal 2023, compared with fiscal 2022, due primarily to increased borrowings and higher interest rates.

Equity in earnings of affiliates decreased $6.7M during fiscal 2023, compared with fiscal 2022, due primarily to a decreased return of capital related to our equity method investment in PennEast, as previously discussed.

Net income decreased $13.4M during fiscal 2023, compared with fiscal 2022, due primarily to increased O&M, depreciation and interest expense, along with decreased equity in earnings of affiliates, partially offset by higher operating revenue, as previously discussed.

New Jersey Resources Corporation

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OPERATIONS (Continued)

Net income decreased approximately $0.9M during fiscal 2024, compared with fiscal 2023, due primarily to the following factors:

• $8.4M increase in O&M due to increased employee-related expenses and consulting fees;

partially offset by

• $3.4M increase in operating revenues due to higher fixed price contract revenue for Adelphia;

• $3.4M increase in other income due to increased interest income from the outstanding loan with Steckman Ridge, as a result of higher interest rates.

Non-GAAP Financial Measures

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(Thousands) 2024 2023 2022

Net income (loss) $ 13,154 $ 26,598 $ (67,787)

(Gain on) impairment of equity method investment (300) (5,521) 92,000

Net income $ 12,229 $ 13,154 $ 26,598

Gain on equity method investment — (300) (5,521)

Tax effect — (19) 1,377

Net financial earnings $ 12,229 $ 12,835 $ 22,454

NFE decreased $9.6M during fiscal 2023, compared with fiscal 2022, due primarily to increased O&M, depreciation and interest expense, partially offset by higher operating revenue, as previously discussed.

NFE decreased $0.6M during fiscal 2024, compared with fiscal 2023, due to lower net income, as previously discussed.

Home Services and Other

6 unchanged sentences

Operating revenues $ 62,635 $ 57,638 $ 56,182

Income (loss) before income taxes $ 3,281 $ 278 $ (1,022)

Income tax (benefit) provision (1,477) 1,059 (196)

Income before income taxes $ 2,692 $ 3,281 $ 278

Income tax provision (benefit) 2,666 (1,477) 1,059

Net income (loss) $ 26 $ 4,758 $ (781)

Operating revenues increased $1.5M during fiscal 2023, compared with fiscal 2022, due primarily to increased service contract and installation revenue at NJRHS.

Net income increased $5.5M during fiscal 2023, compared with fiscal 2022, due primarily to increased revenue, as previously discussed, along with decreased pension costs and increased income tax benefit.

Net income decreased approximately $4.7M during fiscal 2024, compared with fiscal 2023, due primarily to the following factors:

• $4.6M increase in O&M due to increased employee-related and contractor expenses;

• $4.1M increase in income tax expense due to a tax benefit in fiscal 2023 that did not reoccur;

partially offset by

• $5.0M increase in operating revenues due to higher installation and service contract revenue at NJRHS.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Liquidity and Capital Resources

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Total 100 % 100 %

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Common Stock Equity

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NJR raised approximately $14.7M and $15.0M of equity through the DRP during fiscal 2024 and 2023, respectively.

We also raised approximately $42.8M of equity by issuing approximately 948,000 shares through the waiver discount feature of the DRP during fiscal 2023.

There were no shares issued through the waiver discount feature during fiscal 2022.

In 1996, the Board of Directors authorized us to implement a share repurchase program, which has been expanded seven times since the inception of the program, authorizing a total of 19.5M shares of common stock for repurchase.

As of September 30, 2023, we had repurchased a total of approximately 17.8M of those shares and may repurchase an additional 1.7M shares under the approved program.

We also raised approximately $59.7M and $42.8M of equity by issuing approximately 1,380,000 and 948,000 shares through the waiver discount feature of the DRP during fiscal 2024 and 2023, respectively.

In 1996, the Board of Directors authorized us to implement a share repurchase program, which was expanded seven times since the inception of the program, authorizing a total of 19.5M shares of common stock for repurchase.

Since inception, we repurchased a total of approximately 17.8M of those shares and may repurchase an additional 1.7M shares under the approved program.

There were no shares repurchased during fiscal 2024 and 2023.

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We believe that as of September 30, 2024, NJR and NJNG were, and currently are, in compliance with all existing debt covenants, both financial and non-financial.

As a result of the COVID-19 pandemic, recent geopolitical tensions and inflationary pressures, there has been uncertainty and volatility in the credit and capital markets.

We have been able to obtain sufficient financing to meet our funding requirements for operations and capital expenditures;

however, our ability to access funds from financial institutions at a reasonable cost in the future may impact the nature and timing of future capital market transactions.

Short-Term Debt

We use our short-term borrowings primarily to finance ES’s short-term liquidity needs, S&T investments, share repurchases and, on an initial basis, CEV’s investments.

We use our short-term borrowings primarily to finance ES’s short-term liquidity needs, share repurchases and, on an initial basis, CEV’s investments.

ES’s use of high-volume storage facilities and anticipated pipeline park and loan arrangements, combined with related economic hedging activities in the volatile wholesale natural gas market, create significant short-term cash requirements.

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NJNG obtains working capital for these requirements and for the temporary financing of construction and MGP remediation expenditures and energy tax payments, based on its financial profile, through the issuance of commercial paper supported by the NJNG Credit Facility or through short-term bank loans under the NJNG Credit Facility.

NJNG’s commercial paper is sold through several commercial banks under an issuing and paying agency agreement and is supported by the $250M NJNG Credit Facility.

As of September 30, 2023, the unused amount available under the NJNG Credit Facility, including amounts allocated to the backstop under the commercial paper program and the issuance of letters of credit, was $214.5M.

New Jersey Resources Corporation

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OPERATIONS (Continued)

Short-term borrowings were as follows:

Twelve Months Ended

(Thousands) September 30, 2023

NJNG’s commercial paper is sold through several commercial banks under an issuing and paying agency agreement and is supported by the $250M NJNG Credit Facility.

As of September 30, 2024, there was $194.2M available under the NJNG Credit Facility, including amounts allocated to the backstop under the commercial paper program and the issuance of letters of credit.

Short-term borrowings for the twelve months ended September 30, 2024, were as follows:

Notes Payable to banks:

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Due to the seasonal nature of natural gas prices and demand, and because inventory levels are built up during its natural gas injection season (April through October), NJR and NJNG’s short-term borrowings tend to peak in the November through January time frame.

On August 30, 2022, NJR entered into a First Amendment to NJR’s Second Amended and Restated Credit Agreement governing a $650M 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 $50M with the total revolving credit commitments not exceeding $750M.

On August 7, 2024, NJR entered into a second amendment to NJR’s Second Amended and Restated Credit Agreement, which reduced the NJR Credit Facility from $650M to $575M and extended the maturity date of the facility to August 7, 2029, pursuant to NJR’s option to extend the maturity date under the NJR Second Amended and Restated Credit Agreement, and permits NJR to request that the maturity date be extended up to two times for an additional period of one year each.

The NJR Credit Facility 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 at least $50M with the total revolving credit commitments not exceeding $750M.

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

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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 $5.7M, which reduced the amount available under the NJR Credit Facility by the same amount.

As of September 30, 2024, NJR had eleven letters of credit outstanding totaling $12.3M, which reduced the amount available under the NJR Credit Facility by the same amount.

NJR does not anticipate that these letters of credit will be drawn upon by the counterparties.

In February 2022, NJR entered into a 364-day $150M term loan credit agreement with an interest rate based on SOFR plus 0.85%, that expired on February 7, 2023.

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

Based on its average borrowings during fiscal 2024, NJR’s average interest rate was 6.53%, resulting in interest expense of approximately $14.4M.

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Neither NJNG nor its assets are obligated or pledged to support the NJR Credit Facility.

On August 30, 2022, NJNG amended the Second Amended and Restated Credit Agreement governing a $250M 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 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 $50M up to a maximum of $100M.

The NJNG Credit Facility also permits the borrowing of revolving loans and swingline loans, as well as a $30M sublimit for the issuance of letters of credit.

New Jersey Resources Corporation

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OPERATIONS (Continued)

On August 7, 2024, NJNG entered into a second amendment to NJNG’s Second Amended and Restated Credit Agreement governing a $250M NJNG Credit Facility, which extended the maturity date of the facility to August 7, 2029, pursuant to NJNG’s option to extend the maturity date under the NJNG Second Amended and Restated Credit Agreement, and permits NJNG to request that the maturity date be extended up to two times for an additional period of one year each.

The NJNG Credit Facility 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 increments of at least $50M with total revolving credit commitments not exceeding $350M.

The NJNG Credit Facility also permits the borrowing of revolving loans and swingline loans, as well as a $30M sublimit for the issuance of letters of credit.

As of September 30, 2024, NJNG had two letters of credit outstanding for $0.7M, which reduced the amount available under the NJNG Credit Facility by the same amount.

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The occurrence of an event of default under these agreements could result in all loans and other obligations of the borrower becoming immediately due and payable and the termination of the credit facilities or term loan.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Long-Term Debt

11 unchanged sentences

• $50M of 6.14% senior notes due December 15, 2032.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

On October 24, 2022, NJR entered into a Note Purchase Agreement, which closed on December 15, 2022, under which NJR issued $50M 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.

On November 7, 2024, NJR entered into a Note Purchase Agreement under which NJR issued $100M senior notes at a fixed interest rate of 5.55%, maturing in 2034.

Neither NJNG nor its assets are obligated or pledged to support NJR’s long-term debt.

As of September 30, 2023, NJNG’s long-term debt consisted of $1.5B in fixed-rate debt issuances secured by the Mortgage Indenture, with maturities ranging from 2024 to 2061, and $22.9M in finance leases with various maturities ranging from 2024 to 2028.

On October 24, 2022, NJNG entered into a Note Purchase Agreement under which it sold $125M 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 $100M aggregate principal amount of its senior notes consisting of $50M of 5.56% senior notes due September 28, 2033, which closed on September 28, 2023, and $50M of 5.85% senior notes due October 30, 2053, which closed on October 30, 2023.

As of September 30, 2024, NJNG’s long-term debt consisted of approximately $1.6B in fixed-rate debt issuances secured by the Mortgage Indenture, with maturities ranging from 2025 to 2061, and approximately $31.6M in sale leasebacks of natural gas meters with various maturities ranging from 2025 to 2030.

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

On June 26, 2024, NJNG entered into a Note Purchase Agreement for $200M aggregate principal amount of its senior notes consisting of $125M of 5.82% senior notes due June 26, 2054, which closed on June 26, 2024, and $75M of 5.49% senior notes due September 30, 2034, which closed on September 30, 2024.

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

NJR is not obligated directly or contingently with respect to NJNG’s fixed-rate debt issuances.

NJR is not obligated directly nor contingently with respect to NJNG’s fixed-rate debt issuances.

Long-Term Debt Covenants and Default Provisions

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The aforementioned covenants are subject to a number of exceptions and qualifications set forth in the applicable note purchase agreements.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

In addition, the FMBs issued by NJNG under the Mortgage Indenture are subject to certain default provisions.

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The interest rate on defaulted principal and interest, to the extent permitted by law, on the FMBs issued under the Mortgage Indenture is the rate stated in the applicable supplement or, if no such rate is stated, 6% per annum.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Sale Leaseback

NJNG received $8.4M and $17.3M in fiscal 2023 and 2022, respectively, in connection with the sale leaseback of its natural gas meters.

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 at fair value upon expiration.

NJNG received approximately $8.8M, $8.4M and $17.3M in fiscal 2024, 2023 and 2022, respectively, in connection with the sale leaseback of its natural gas meters.

NJNG utilizes sale leaseback arrangements as a financing mechanism to fund certain of its capital expenditures related to natural gas meters, whereby the physical asset is sold concurrent with an agreement to lease the asset back.

These agreements include options to repurchase the assets sold or renew the lease at the end of the term.

As NJNG retains control of the natural gas meters, these arrangements do not qualify as a sale.

NJNG uses the financing method to account for the transactions.

NJNG continues to evaluate this sale leaseback program based on current market conditions.

Natural gas meters are excepted and excluded from the lien on NJNG property under the Mortgage Indenture.

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

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 considered failed sale leasebacks for accounting purposes and are therefore treated as financing obligations, which are typically secured by the renewable energy facility asset and its future cash flows from RECs and energy sales.

Natural gas meters are excluded from the lien on NJNG property under the Mortgage Indenture.

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

The Company has concluded that these arrangements do not qualify as a sale for accounting purposes, as the Company retains control of the underlying assets, and are therefore treated as financing obligations, which 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;

1 unchanged sentence

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.

During fiscal 2023, 2022 and 2021, CEV received proceeds of $167.8M, $24.1M and $17.7M, respectively, in connection with the sale leaseback of commercial solar projects.

During fiscal 2024, 2023 and 2022, CEV received proceeds of approximately $64.7M, $167.8M and $24.1M, respectively, in connection with the sale leaseback of commercial solar projects.

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

Contractual Obligations and Capital Expenditures

As of September 30, 2023, there were NJR guarantees covering approximately $192.3M of natural gas purchases and ES demand fee commitments and nine outstanding letters of credit totaling $6.4M, as previously mentioned, not yet reflected in accounts payable on the Consolidated Balance Sheets.

As of September 30, 2024, there were NJR guarantees covering approximately $174.3M of natural gas purchases and ES demand fee commitments and thirteen outstanding letters of credit totaling approximately $13.0M, as previously mentioned, not yet reflected in accounts payable on the Consolidated Balance Sheets.

Estimated capital expenditures are reviewed on a regular basis and may vary based on the ongoing effects of regulatory constraints, environmental regulations, unforeseen events and the ability to access capital.

NJNG’s total capital expenditures spent or accrued during fiscal 2023 were $394.6M.

NJNG’s total capital expenditures spent or accrued during fiscal 2024 were approximately $431.8M.

During fiscal 2025 capital expenditures are projected to be between $365M and $415M.

NJNG expects to fund its obligations with a combination of cash flows from operations, cash on hand, issuance of commercial paper, available capacity under its revolving credit facility and the issuance of long-term debt.

As of September 30, 2023, NJNG’s future MGP expenditures are estimated to be $169.4M.

As of September 30, 2024, NJNG’s future MGP expenditures are estimated to be approximately $161.7M.

For a more detailed description of MGP expenditures, see Note 14.

Commitments and Contingent Liabilities in the accompanying Consolidated Financial Statements.

During fiscal 2023, S&T had capital expenditures spent or accrued for the Adelphia project totaling $18.8M, and capital expenditures spent or accrued for Leaf River totaling $12.2M.

During fiscal 2024, we expect expenditures related to the Adelphia project to be between $8M and $12M and expenditures related to Leaf River to be between $25M and $35M.

During fiscal 2023, total capital expenditures spent or accrued related to the purchase and installation of solar equipment were $110.4M.

CEV’s expenditures include clean energy projects that support our goal to promote renewable energy.

Accordingly, CEV enters into agreements to install solar equipment involving both residential and commercial projects.

We estimate solar-related capital expenditures for projects placed in service during fiscal 2024 to be between $140M and $204M.

Capital expenditures related to clean energy projects are subject to change due to a variety of factors that may affect our ability to commence operations at these projects on a timely basis or at all, including sourcing projects that meet our investment criteria, logistics associated with the start-up of residential and commercial solar projects, such as timing of construction schedules, the permitting and regulatory process, any delays related to electric grid interconnection, economic trends or unforeseen events and the ability to access capital or allocation of capital to other investments or business opportunities.

ES does not currently anticipate any significant capital expenditures during fiscal 2024 and 2025.

New Jersey Resources Corporation

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OPERATIONS (Continued)

During fiscal 2024, S&T had capital expenditures spent or accrued for the Adelphia project totaling approximately $6.6M, and capital expenditures spent or accrued for Leaf River totaling approximately $39.0M.

During fiscal 2025, we expect expenditures related to the Adelphia project to be between $5M and $15M and expenditures related to Leaf River to be between $15M and $20M.

During fiscal 2024, total capital expenditures spent or accrued related to the purchase and installation of solar equipment were approximately $95.8M.

CEV’s expenditures include clean energy projects that support our goal to promote renewable energy.

Accordingly, CEV enters into agreements to install solar equipment for commercial projects.

We estimate solar-related capital expenditures during fiscal 2025 to be between $160M and $265M.

Capital expenditures related to clean energy projects are subject to change due to a variety of factors that may affect our ability to commence operations at these projects on a timely basis or at all, including sourcing projects that meet our investment criteria, logistics associated with the start-up of commercial solar projects, such as timing of construction schedules, the permitting and regulatory process, any delays related to electric grid interconnection, economic trends or unforeseen events and the ability to access capital or allocation of capital to other investments or business opportunities.

ES does not currently anticipate any significant capital expenditures during fiscal 2025 and 2026.

During December 2020, ES entered into a series of AMAs with an investment grade public utility to release pipeline capacity associated with certain natural gas transportation contracts.

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The AMAs include a series of initial and permanent releases which commenced in November 2021.

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

During fiscal 2023 and 2022, ES recognized $48.5M and $53.0M, respectively, of operating revenue on the Consolidated Statements of Operations.

Amounts received in excess of revenue, totaling $58.7M and $33.8M as of September 30, 2023 and 2022, respectively, are included in deferred revenue on the Consolidated Balance Sheets.

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

During fiscal 2024 and 2023, ES recognized approximately $137.2M and $48.5M, respectively, of operating revenue related to the AMAs on the Consolidated Statements of Operations.

Amounts received in excess of revenue, totaling approximately $22.3M and $58.7M as of September 30, 2024 and 2023, respectively, are included in deferred revenue on the Consolidated Balance Sheets.

Operating Activities

Cash flows from operating activities during fiscal 2023 totaled $479.0M compared with $323.5M during fiscal 2022.

Cash flows from operating activities during fiscal 2024 totaled approximately $427.4M compared with approximately $479.0M during fiscal 2023.

Operating cash flows are primarily affected by variations in working capital, which can be impacted by several factors, including:

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• timing of storage injections and withdrawals;

• the deferral and recovery of natural gas costs;

• deferral and recovery of natural gas costs;

• changes in contractual assets utilized to optimize margins related to natural gas transactions;

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• timing of SREC deliveries.

The increase of $155.5M in cash flows from operating activities during fiscal 2023, compared with fiscal 2022, was due primarily to decreased working capital requirements related to the decline in natural gas prices.

The decrease of approximately $51.6M in cash flows from operating activities during fiscal 2024, compared with fiscal 2023, was due primarily to the changes in the mix of working capital components, partially offset by timing of cash received from certain ES AMAs.

Investing Activities

Cash flows used in investing activities totaled $538.6M during fiscal 2023, compared with $590.6M during fiscal 2022.

The decrease of $52.0M was due primarily to lower capital expenditures for S&T related to the conversion of the southern portion of Adelphia’s pipeline to natural gas, which was placed into service during September 2022, along with decreased solar asset expenditures, partially offset by increased utility plant expenditures.

Cash flows used in investing activities totaled approximately $569.1M during fiscal 2024, compared with approximately $538.6M during fiscal 2023.

The increase of approximately $30.5M was due primarily to increased utility plant expenditures.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Financing Activities

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Changes in financing cash flows can also be impacted by natural gas management and marketing activities at ES and clean energy investments at CEV.

Cash flows from financing activities totaled $59.7M during fiscal 2023, compared with $262.5M during fiscal 2022.

The decrease of $202.8M is due primarily to the repayment of the term loan of $150.0M that was borrowed during fiscal 2022, decreased long-term debt proceeds of $135.0M, partially offset by an increase in proceeds of $143.7M from solar sale leasebacks, a decrease in payments of short-term debt of $81.5M and an increase of $42.8M from the waiver discount issuance of common stock.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Cash flows from financing activities totaled approximately $141.8M during fiscal 2024, compared with approximately $59.7M during fiscal 2023.

The increase of approximately $82.1M is due primarily to reduced net short-term debt payments of approximately $61.6M, along with a payment of a $150M term loan in the prior year that did not occur in the current year, and an increase of approximately $16.9M from the waiver discount issuance of common stock, partially offset by a decrease in solar sale leaseback proceeds of approximately $103.1M and a $70.0M payment of long-term debt.

Credit Ratings

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Ratings Outlook Stable Stable

The Moody’s ratings and outlook were reaffirmed on July 3, 2024.

The Fitch ratings and outlook were reaffirmed on April 15, 2024.

The Moody’s ratings and outlook were reaffirmed on September 29, 2023.

NJNG’s Moody’s and Fitch ratings are investment-grade ratings.

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ES uses futures, options, swaps and physical contracts to economically hedge purchases and sales of natural gas.

New Jersey Resources Corporation

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)

The following table reflects the changes in the fair market value of financial derivatives related to natural gas purchases and sales:

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There were no changes in methods of valuations during the fiscal year ended September 30, 2024.

The following is a summary of fair market value of financial derivatives as of September 30, 2024, by method of valuation and by maturity for each fiscal year period:

(Thousands) 2025 2026 2027 - 2029 After 2029 Total

Price based on ICE $ 3,786 $ (325) $ (328) $ — $ 3,133

The following is a summary of financial derivatives by type as of September 30, 2024:

Volume Bcf Price per MMBtu Amounts included in Derivatives (Thousands)

NJNG Futures 31.9 $2.57 - $3.58 $ (2)

ES Futures (7.7) $1.69 - $4.22 3,135

Total $ 3,133

The following table reflects the changes in the fair market value of physical commodity contracts:

Balance Increase Less Balance

(Thousands) September 30,

2023 (Decrease) in Fair

Market Value Amounts

Settled September 30,

NJNG - Prices based on other external data $ (445) (2,201) (2,088) $ (558)

ES - Prices based on other external data (13,616) 5,666 4,767 (12,717)

Total $ (14,061) 3,465 2,679 $ (13,275)

Our market price risk is predominately linked with changes in the price of natural gas at the Henry Hub, the delivery point for the NYMEX natural gas futures contracts.

Based on price sensitivity analysis, an illustrative 10% movement in the natural gas futures contract price, for example, increases (decreases) the reported derivative fair value of all open, unadjusted Henry Hub natural gas futures and fixed price swap positions by approximately $3.1M.

This analysis does not include potential changes to reported credit adjustments embedded in the $3.0M reported fair value.

Derivative Fair Value Sensitivity Analysis

(Thousands) Henry Hub Futures and Fixed Price Swaps

Percent increase in NYMEX natural gas futures prices 0% 5% 10% 15% 20%

Estimated change in derivative fair value $ — $ (1,562) $ (3,124) $ (4,686) $ (6,248)

Ending derivative fair value $ 2,993 $ 1,431 $ (131) $ (1,693) $ (3,255)

Percent decrease in NYMEX natural gas futures prices 0% (5)% (10)% (15)% (20)%

Estimated change in derivative fair value $ — $ 1,562 $ 3,124 $ 4,686 $ 6,248

Ending derivative fair value $ 2,993 $ 4,555 $ 6,117 $ 7,679 $ 9,241

New Jersey Resources Corporation

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

What changed 10-K

Item 7. Management’s Discussion and Analysis