About New Jersey Resources
New Jersey Resources Corporation operates as a diversified energy services holding company. The company's principal business is the distribution of natural gas through a regulated utility, investing in and operating clean energy projects and natural gas storage and transportation assets, and providing other retail and wholesale energy services to customers. The company's primary subsidiaries include the following: New Jersey Natural Gas Company provides regulated natural gas utility service to approximately 576,000 residential and commercial customers throughout Burlington, Middlesex, Monmouth, Morris, Ocean and Sussex counties in New Jersey and participates in the off-system sales and capacity release markets. New Jersey Natural Gas Company (NJNG), a local natural gas distribution company, is regulated by the New Jersey Board of Public Utilities (BPU) and comprises the company's Natural Gas Distribution segment. NJR Clean Energy Ventures Corporation includes the results of operations and assets related to the company's unregulated capital investments in clean energy projects, including commercial and residential solar projects. NJR Clean Energy Ventures Corporation (NJRCEV) comprises the company's Clean Energy Ventures segment. NJR Energy Services Company, LLC maintains and transacts around a portfolio of physical assets consisting of natural gas transportation and storage contracts in the U.S. and Canada. NJR Energy Services Company (NJRES) also provides unregulated wholesale energy management services to other energy companies and natural gas producers. NJRES comprises the company's Energy Services segment. NJR Midstream Holdings Corporation, which comprises the Storage and Transportation segment, invests in energy-related ventures through its subsidiaries: NJR Midstream Company, which includes the company's wholly-owned subsidiaries of Leaf River, located in southeastern Mississippi, and Adelphia, located in eastern Pennsylvania, which are subject to Federal Energy Regulatory Commission (FERC) regulation, along with its 20% ownership interest in PennEast Pipeline Company, LLC (PennEast), which ceased operations in 2022; and NJR Steckman Ridge Storage Company, which holds the company's 50% combined ownership interest in Steckman Ridge, located in Pennsylvania. NJR Home Services Company (NJRHS) provides heating, ventilation and cooling service, sales and installation of appliances to approximately 101,500 service contract customers, as well as solar installation projects, and is the primary contributor to Home Services and Other operations. Segments The company operates through four segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services, and Storage and Transportation. Natural Gas Distribution New Jersey Natural Gas Company (NJNG) consists of regulated natural gas services, off-system sales, capacity and storage management operations. NJNG consists of regulated utility operations that provide natural gas service to approximately 576,000 customers. NJNG's service territory includes Burlington, Middlesex, Monmouth, Morris, Ocean and Sussex counties in New Jersey. It encompasses 1,516 square miles, covering 110 municipalities with an estimated population of 1.5 million people. It is primarily suburban, highlighted by approximately 100 miles of New Jersey coastline. NJNG employs strategies to pursue customer conversions from other fuel sources and monitor new construction markets through contact with developers, utilize incentive programs through BPU-approved mechanisms to reduce natural gas costs, pursue rate and other regulatory strategies designed to stabilize and decouple gross margin, and work actively with consultants and the New Jersey Department of Environmental Protection (NJDEP) to manage expectations related to its obligations associated with its former Manufactured Gas Plant (MGP) sites. NJNG added 8,800 new customers during the year ended September 30, 2023. Natural Gas Supply Firm Natural Gas Supplies For the year ended September 30, 2023, NJNG purchased natural gas from approximately 58 suppliers under contracts ranging from one day to seven months and purchased over 10% of its natural gas from two suppliers. Firm Transportation and Storage Capacity NJNG maintains agreements for firm transportation and storage capacity with several interstate pipeline companies to take delivery of firm natural gas supplies, which ensures the ability to reliably service its customers. NJNG receives natural gas at 11 citygate stations located in Burlington, Middlesex, Morris and Passaic counties in New Jersey. The pipeline companies that provide firm transportation service to NJNG's citygate stations include Eastern Gas Transmission and Storage, Inc.; Tennessee Gas Pipeline Co.; Transcontinental Gas Pipe Line Corp.; and Adelphia provide NJNG upstream firm contract transportation service and supply pipelines. In addition, NJNG has storage contracts that provide an additional 102,941 Dths (Dekatherms) of maximum daily deliverability to NJNG's citygate stations from storage fields in its Northeast market area. NJNG also has upstream storage contracts. NJNG utilizes its transportation contracts to transport natural gas to NJNG's citygates from the Eastern Gas Transmission and Storage, Inc.; Steckman Ridge (Collectively, Steckman Ridge GP, LLC and Steckman Ridge, LP); and Stagecoach Pipeline & Storage Company LLC storage fields. NJNG has sufficient firm transportation, storage and supply capacity to fully meet its customer demand for natural gas within its service territory. Citygate Supplies from ES NJNG has one Asset Management Agreement (AMA) with ES. NJNG and Energy Services (ES) have an agreement where NJNG releases 7,150 Dths/day of TETCO capacity, 2,200 Dths/day of Eastern Gas Transmission and Storage, Inc. capacity, 10,728 Dths/day of Tennessee Gas Pipeline capacity and 1.6 million Dths of Stagecoach Pipeline & Storage Company LLC storage capacity to ES through March 31, 2024. NJNG can call upon a supply of up to 14,300 Dths/day delivered to NJNG's TETCO citygate through March 31, 2024. ES manages the storage inventory and NJNG can call on that storage supply as needed at NJNG's Tennessee citygate or storage point. Peaking Supply To manage its winter peak day demand, NJNG maintains two Liquefied Natural Gas (LNG) facilities with a combined deliverability of approximately 170,000 Dths/day, which represents approximately 18% of its estimated peak day sendout. NJNG's liquefaction facility allows NJNG to convert natural gas into LNG to fill NJNG's existing LNG storage tanks. Basic Gas Supply Service (BGSS) BGSS is a BPU-approved clause designed to allow for the recovery of natural gas commodity costs on an annual basis. The clause requires all New Jersey natural gas utilities to make an annual filing by each June 1 for review of BGSS rates and to request a potential rate change effective the following October 1. The BGSS also allows each natural gas utility to provisionally increase residential and small commercial customer BGSS rates on December 1 and February 1 for up to a 5% increase to the average residential heat customer's bill on a self-implementing basis with proper notice. Such increases are subject to subsequent BPU review and final approval. Future Natural Gas Supplies NJNG expects to meet the natural gas requirements for existing and projected firm customers. If NJNG's long-term natural gas requirements change, NJNG expects to renegotiate and restructure its contract portfolio to better match the changing needs of its customers and changing natural gas supply landscape. Regulation and Rates State NJNG is subject to the jurisdiction of the BPU with respect to a wide range of matters, such as base rates and regulatory rider rates, the issuance of securities, the safety and adequacy of service, the manner of keeping its accounts and records, the sufficiency of natural gas supply, pipeline safety, environmental issues, compliance with affiliate standards and the sale or encumbrance of its properties. Clean Energy Ventures Clean Energy Ventures (CEV) consists of capital investments in clean energy projects. CEV invests in, owns and operates clean energy projects, including commercial and residential solar installations located in six states, including New Jersey, Rhode Island, New York, Connecticut, Michigan and Indiana. As of September 30, 2023, CEV had approximately 468.8 MW of solar capacity in service, including a combination of residential and commercial net-metered and grid-connected solar systems. As part of its solar investment portfolio, CEV operates a residential and small commercial solar program, The Sunlight Advantage, that provides qualifying homeowners and small business owners with the opportunity to have a solar system installed at their home or place of business with no installation or maintenance expenses. 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. CEV's commercial solar projects are sourced through various channels and include both net-metered and grid-connected systems. Net-metered projects involve the sale of energy to a host and grid-connected systems into the wholesale energy markets. Project construction is competitively sourced through third parties. New Jersey has the eighth largest solar market in the U.S., according to the Solar Energy Industries Association, with a large number of firms competing in all facets of the market, including development, financing and construction. The company's solar systems are registered and certified with the BPU's Office of Clean Energy and qualified to produce RECs. One REC is created for every Megawatt Hour (MWh) of electricity produced by a solar generator. CEV sells SRECs generated to a variety of counterparties, including electric load-serving entities that serve electric customers in New Jersey and are required to comply with the solar carve-out of the Renewable Portfolio Standard, a regulation that requires the increased production of energy from renewable energy sources. In December 2019, the BPU established the Transition Renewable Energy Certificate (TREC) as the interim program successor to the Solar Renewable Energy Certificate (SREC) program. TRECs provide a fixed compensation base multiplied by an assigned project factor in order to determine their value. The project factor is determined by the type and location of the project, as defined. All TRECs generated are required to be purchased monthly by a TREC program administrator as appointed by the BPU. In July 2021, the BPU approved the first portion of the solar successor program for net-metered projects under 5 Megawatts (MWs). The new program opened to new applications on August 28, 2021. Incentives are structured as a 15-year fixed incentive ranging from $85 to $130/MWh depending on market segment, project siting and size. The second phase of the successor program, the Competitive Solar Incentive (CSI) Program, was established on December 7, 2022. The CSI program was designed to encourage grid scale solar generation with a goal of incentivizing development of at least 300 MW of solar annually until 2026. Solicitations take place annually, and all projects that meet pre-qualification requirements will compete on price only. The next solicitation will open on November 27, 2023, and will close to bids on February 29, 2024. Energy Services Energy Services (ES) consists of unregulated wholesale and retail energy operations, as well as energy management services. ES consists of unregulated wholesale and retail natural gas operations and provides producer and asset management services to a diverse customer base across North America. ES has acquired contractual rights to natural gas transportation and storage assets it utilizes to implement its strategic and opportunistic market strategies. The rights to these assets were acquired in anticipation of delivering natural gas, performing asset management services for customers or identifying strategic opportunities that exist in or between the market areas that it serves. These opportunities are driven by price differentials between market locations and/or time periods. ES's activities are conducted in the market areas in which it has strong expertise, including the U.S. and Canada. ES differentiates itself in the marketplace based on price, reliability and quality of service. ES's portfolio of customers includes regulated natural gas distribution companies, industrial companies, electric generators, natural gas/liquids processors, retail aggregators, wholesale marketers and natural gas producers. While focusing on maintaining a low-risk operating and counterparty credit profile, ES's activities specifically consist of the following elements: Providing natural gas portfolio management services to nonaffiliated and the company's affiliated natural gas utility, electric generation facilities and natural gas producers; Managing strategies for new and existing natural gas transportation and storage assets to capture value from changes in price due to location or timing differences as a means to generate Financial Margin; Managing transactional logistics to minimize the cost of natural gas delivery to customers while maintaining security of supply. Transactions utilize the most optimal and advantageous natural gas supply transportation routing available within its contractual asset portfolio and various market areas; and Managing economic hedging programs that are designed to mitigate the impact of changes in market prices on Financial Margin generated on its natural gas transportation and storage commitments. In an effort to deliver more predictable earnings contributions, reduce earnings volatility and monetize the value of its natural gas transportation portfolio, ES entered into a series of AMAs in December 2020 with an investment grade public utility to release pipeline capacity associated with certain natural gas transportation contracts. The AMAs include a series of initial and permanent releases, which commenced in November 2021. Transportation and Natural Gas Storage Transactions ES focuses on creating value from the use of its physical assets, which are typically amassed through contractual rights to natural gas transportation and storage capacity. These assets become more valuable when favorable price changes occur that impact the value between or within market areas and across time periods. On a forward basis, ES may hedge these price differentials through the use of financial instruments. In addition, ES may seek to optimize these assets on a daily basis, as market conditions warrant, by evaluating natural gas supply and transportation availability within its portfolio. ES also engages in park and loan transactions with storage and pipeline operators, where ES will either borrow (receive a loan of) natural gas with an obligation to repay the storage or pipeline operator at a later date or park natural gas with an obligation to withdraw at a later date. In these cases, ES evaluates the economics of the transaction to determine if it can capture pricing differentials in the marketplace and generate Financial Margin. ES evaluates deal attributes, such as fixed fees and calendar-spread value from deal inception until volumes are scheduled to be returned and/or repaid, as well as the time value of money. If this evaluation demonstrates that Financial Margin exists, ES may enter into the transaction and hedge with natural gas futures contracts, thereby locking in Financial Margin. ES maintains inventory balances to satisfy existing or anticipated sales of natural gas to its counterparties and/or to create additional value. During the year ended September 30, 2023, ES managed and sold 150.4 Bcf (billion cubic feet) of natural gas. In addition, as of September 30, 2023, ES had 14.6 Bcf or $24.5M of natural gas in storage. Weather/Seasonality ES activities are typically seasonal in nature as a result of changes in the supply and demand for natural gas. Storage and Transportation Storage and Transportation (S&T) consists of operations and investments in the natural gas storage and transportation market, such as natural gas storage and transportation facilities. S&T includes investments in FERC-regulated interstate natural gas storage and transportation assets and consisted of the following subsidiaries: NJR Midstream Company owns and operates Leaf River, a 32.2M Dth salt dome natural gas facility, located in southeastern Mississippi, and the FERC-regulated Adelphia, which owns and operates an 84-mile pipeline in southeastern Pennsylvania; and NJR Steckman Ridge Storage Company holds the company's 50% equity method investment in Steckman Ridge. Steckman Ridge is a Delaware limited partnership, jointly owned and controlled by the company's subsidiaries and subsidiaries of Enbridge Inc., which built, owns and operates a natural gas storage facility with up to 12 Bcf of working natural gas capacity in Bedford County, Pennsylvania. The facility has direct access to the Texas Eastern Transmission (TETCO) and Eastern Gas Transmission and Storage, Inc. pipelines and has access to the Northeast and Mid-Atlantic markets. Other Business Operations Home Services and Other Home Services and Other (HSO) operations consist primarily of the following unregulated affiliates: NJR Home Services, Inc., which provides heating, ventilation and cooling service, sales and installation of appliances to approximately 101,500 service contract customers, as well as installation of solar equipment; NJR Plumbing Services, Inc., which provides plumbing repair and installation services; Commercial Realty & Resources Corp. (CR&R), which holds commercial real estate; and NJR Service Corporation, which provides shared administrative and financial services to the company and all of its subsidiaries and affiliates. Properties As of September 30, 2023, NJNG owned approximately 7,334 miles of distribution main, 7,768 miles of service main, 251 miles of transmission main and 595,225 meters. Mains are primarily located under public roads. Where mains are located under private property, NJNG has obtained easements from the owners of record. Additionally, NJNG owns and operates two LNG storage plants in Stafford Township, Ocean County and Howell Township, Monmouth County. The two LNG plants have an aggregate estimated maximum capacity of approximately 170,000 Dths per day and 1 Bcf of total capacity. These facilities are used for peaking natural gas supply and for emergencies. NJNG's Liquefaction facility is also located on the Howell Township property and allows NJNG to convert natural gas into LNG to fill NJNG's existing LNG storage tanks. A Power-to-Gas System is also located at the LNG plant in Howell Township that uses solar power to produce hydrogen and then injects it into the natural gas system. It consists primarily of an electrolyzer unit, an electrical and instrumentation building and small hydrogen storage tank, along with other supporting systems. NJNG owns five service centers located in Rockaway Township, Morris County; Atlantic Highlands and Wall Township, Monmouth County; and Lakewood and Stafford Township, Ocean County. These service centers house storerooms, garages, natural gas distribution and administrative offices. NJNG leases a customer service office in Asbury Park, Monmouth County. These customer service offices support customer contact, marketing, economic development and other functions. NJNG also owns its headquarters and customer service facilities in Wall Township and a training facility in Howell Township, Monmouth County, to support the technical training of its employees. Clean Energy Ventures As of September 30, 2023, CEV had various solar contracts, including lease agreements and easements, allowing the installation, operation and maintenance of solar equipment and access to the various properties, including commercial and residential rooftops throughout the state of New Jersey. In addition to the lease agreements and easements, CEV owns solar projects with a total of 468.8 MW of capacity in New Jersey, Rhode Island, New York, Connecticut, Michigan and Indiana, 79.5 acres of land in Vineland, Cumberland County, New Jersey, 14.4 acres of land in Upper Deerfield Township, Cumberland County, New Jersey and 101.8 acres of land in Fairfield Township, Cumberland County, New Jersey. CEV leases office space in Wall Township, New Jersey. Energy Services As of September 30, 2023, ES leased office space in Wall Township, New Jersey. Storage and Transportation As of September 30, 2023, Adelphia (Adelphia Gateway, LLC) owned approximately 11.1 acres of land in Delaware County, Pennsylvania, 32.71 acres in Bucks County, Pennsylvania, 121.1 acres in Northampton County, Pennsylvania and 44.9 acres in Montgomery County, Pennsylvania and leases office space in Wall Township, New Jersey. Leaf River (Leaf River Energy Center LLC) owns 43.9 acres of land and a 5,000 square foot building in Smith County, Mississippi, 158.5 acres in Jasper County, Mississippi and 3.5 acres in Clarke County, Mississippi and leases office space in Houston, Texas. All Other Business Operations As of September 30, 2023, CR&R's real estate portfolio consisted of 23.1 acres of undeveloped land in Atlantic County, New Jersey. NJRHS leases service centers in Dover, New Jersey and Wall Township, New Jersey. NJR Service Corporation leases office space in Red Bank, New Jersey. History New Jersey Resources Corporation was incorporated in 1981.