NEW JERSEY RESOURCES CORP

Previous wording

Net income (loss) by reporting segment and other business operations, which are discussed in detail within the operating results sections of each reporting segment and other business operations, are as follows:

Current wording

Net (loss) income by reporting segment and other business operations, which are discussed in detail within the operating results sections of each reporting segment and other business operations, are as follows:

Previous wording

•$42.6M decrease in earnings at ES due to a period of higher volatility in natural gas prices related to Winter Storm Elliott in December 2022 that did not reoccur; partially offset by

Current wording

•$38.2M decrease at ES due to a period of higher volatility in natural gas prices related to Winter Storm Elliott in December 2022 that did not reoccur during the current fiscal year; partially offset by

Previous wording

•$17.9M increase in earnings at CEV due to higher SREC and TREC sales and an increase in the recognition of ITCs associated with solar sale leaseback financing transactions.

Current wording

•$3.9M increase at CEV due to higher SREC, TREC and electricity sales along with an increase in recognition of the value of ITCs associated with solar sale leaseback financing transactions, partially offset by the valuation allowance reversal in June 2023 as previously discussed.

Previous wording

Consolidated assets increased approximately $109.9M as of March 31, 2024, compared with September 30, 2023, due primarily to the following factors:

Current wording

Consolidated assets increased approximately $246.6M as of June 30, 2024, compared with September 30, 2023, due primarily to the following factors:

Previous wording

•$115.5M increase in utility plant expenditures, net at NJNG;

Current wording

•$199.0M increase in utility plant expenditures, net at NJNG;

Previous wording

•$28.0M increase in nonutility plant and equipment, net at CEV and S&T; partially offset by

Current wording

•$63.8M increase in nonutility plant and equipment, net at CEV and S&T; and

Previous wording

•142.9M increase in receivables primarily at NJNG; and

Current wording

•$32.2M increase in receivables primarily at NJNG; partially offset by

Previous wording

•$118.5M decrease in gas in storage at NJNG and ES;

Current wording

•$67.3M decrease in gas in storage at NJNG and ES; and

Previous wording

•$49.7M decrease in noncurrent regulatory assets due primarily to the remeasurement of the Company's other postretirement benefits at NJNG; and

Current wording

•$27.5M decrease in noncurrent regulatory assets due primarily to the remeasurement of the Company's other postretirement benefits at NJNG.

Previous wording

•$17.9M increase in earnings at CEV, as previously discussed.

Current wording

Consolidated NFE decreased approximately $18.6M during the three months ended June 30, 2024, compared with the three months ended June 30, 2023, due primarily to a $14.0M decrease in earnings at CEV, as previously discussed.

Previous wording

•$28.2M decrease at ES due to higher volatility in natural gas prices in the prior year, as previously discussed; partially offset by

Current wording

•$28.8M decrease at ES due to higher volatility in natural gas prices in the prior year, as previously discussed; partially offset by

Previous wording

•$3.8M increase in earnings at CEV, as previously discussed.

Current wording

•$3.9M increase at CEV, as previously discussed.

Previous wording

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 581,600 residential and commercial customers in its service territory 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. In addition, NJNG may be subject to adverse economic conditions such as inflation and rising natural gas costs, certain regulatory actions, environmental remediation and severe weather conditions. It is often difficult to predict the impact of events or trends associated with these risks.

Current wording

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 582,100 residential and commercial customers in its service territory 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. In addition, NJNG may be subject to adverse economic conditions such as inflation and rising natural gas costs, certain regulatory actions, environmental remediation and severe weather conditions. It is often difficult to predict the impact of events or trends associated with these risks.

Previous wording

On January 31, 2024, NJNG filed a base rate case with the BPU requesting a natural gas revenue increase of $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%.

Current wording

On January 31, 2024, NJNG filed a base rate case with the BPU requesting a natural gas revenue increase of $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 $219.6M.

Previous wording

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 pipeline integrity management and infrastructure programs. Below is a summary of NJNG’s capital expenditures, including accruals, for the six months ended March 31, 2024, and estimates of expected investments for fiscal 2024 and 2025:

Current wording

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 pipeline integrity management and infrastructure programs. Below is a summary of NJNG’s capital expenditures, including accruals, for the nine months ended June 30, 2024, and estimates of expected investments for fiscal 2024 and 2025:

Previous wording

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, which will result in a $5.6M revenue increase, with a proposed effective date of October 1, 2024.

Current wording

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 through June 30, 2024, which will result in a $5.3M revenue increase, with a proposed effective date of October 1, 2024.

Previous wording

During the six months ended March 31, 2024 and 2023, NJNG added 4,058 and 4,064 new customers, respectively. NJNG expects new customer additions, and those customers who added additional natural gas services to their premises to contribute approximately $3.4M of incremental Utility Gross Margin on an annualized basis.

Current wording

During the nine months ended June 30, 2024 and 2023, NJNG added 5,939 and 5,892 new customers, respectively. NJNG expects new customer additions, and those customers who added additional natural gas services to their premises to contribute approximately $5.1M of incremental Utility Gross Margin on an annualized basis.

Previous wording

Program recoveries from customers during the six months ended March 31, 2024 and 2023, were $15.1M and $8.5M, respectively. The recovery includes a weighted average cost of capital that ranges from 6.84% to 6.9%, with a return on equity of 9.6% to 9.75%.

Current wording

Program recoveries from customers during the nine months ended June 30, 2024 and 2023, were $22.6M and $15.9M, respectively. The recovery includes a weighted average cost of capital that ranges from 6.84% to 6.9%, with a return on equity of 9.6% to 9.75%.

Previous wording

(1)Compared with the 20-year average, weather was 12.4% and 10.8% warmer-than-normal during the three and six months ended March 31, 2024 and 21.2% and 13.1% warmer-than-normal during the three and six months ended March 31, 2023.

Current wording

(1)Compared with the 20-year average, weather was 12.6% and 11.0% warmer-than-normal during the three and nine months ended June 30, 2024 and 17.2% and 13.5% warmer-than-normal during the three and nine months ended June 30, 2023.

Previous wording

In September 2023, the BPU approved, on a provisional basis, NJNG's annual BGSS filing to decrease the annual revenues credited to BGSS by approximately $38.6M, a $7.4M annual decrease related to its balancing charge, and a $27.0M increase to CIP rates, effective October 1, 2023, which was approved on a final basis by the BPU on April 30, 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.

Current wording

In September 2023, the BPU approved, on a provisional basis, NJNG's annual BGSS filing to decrease the annual revenues credited to BGSS by approximately $38.6M, a $7.4M annual decrease related to its balancing charge, and a $27.0M increase to CIP rates, effective October 1, 2023, which was approved on a final basis by the BPU on April 30, 2024.

Previous wording

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. 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 approximately $7.9M and $5.8M during the three months ended March 31, 2024 and 2023, respectively, and $13.3M and $14.5M during the six months ended March 31, 2024 and 2023, respectively.

Current wording

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. 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 approximately $2.9M during both the three months ended June 30, 2024 and 2023, and $16.2M and $17.4M during the nine months ended June 30, 2024 and 2023, respectively.

Previous wording

The maximum price per MMBtu was $20.98 and $32.46 and the minimum price was $0.89 and $0.67 for the six months ended March 31, 2024 and 2023, respectively. A more detailed discussion of the impacts of the price of natural gas on operating revenues, natural gas purchases and cash flows can be found in the Operating Resultsand Cash Flow sections of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

The maximum price per MMBtu was $20.98 and $32.46 and the minimum price was $0.89 and $0.67 for the nine months ended June 30, 2024 and 2023, respectively. A more detailed discussion of the impacts of the price of natural gas on operating revenues, natural gas purchases and cash flows can be found in the Operating Resultsand Cash Flow sections of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

NJNG is responsible for the environmental remediation of former MGP sites, which contain contaminated residues from former gas manufacturing operations that ceased operating at these sites by the mid-1950s and, in some cases, had been discontinued many years earlier. 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 $157.8M as of March 31, 2024, a decrease of $11.6M compared with the prior fiscal period. See Note 13. Commitments and Contingent Liabilities for more details.

Current wording

NJNG is responsible for the environmental remediation of former MGP sites, which contain contaminated residues from former gas manufacturing operations that ceased operating at these sites by the mid-1950s and, in some cases, had been discontinued many years earlier. 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 $153.8M as of June 30, 2024, a decrease of $15.6M compared with the prior fiscal period. See Note 13. Commitments and Contingent Liabilities for more details.

Previous wording

(1)Includes nonutility revenue of approximately $0.3M and $0.7M for both the three and six months ended March 31, 2024 and 2023, for lease agreements with various NJR subsidiaries leasing office space from NJNG at the Company’s headquarters, which are eliminated in consolidation.

Current wording

(1)Includes nonutility revenue of approximately $0.3M and $1.0M for both the three and nine months ended June 30, 2024 and 2023, for lease agreements with various NJR subsidiaries leasing office space from NJNG at the Company’s headquarters, which are eliminated in consolidation.

Previous wording

(3)Includes related party transactions of approximately $2.3M for both the three months ended March 31, 2024 and 2023, and $4.7M and $4.6M for the six months ended March 31, 2024 and 2023, respectively, a portion of which is eliminated in consolidation.

Current wording

(3)Includes related party transactions of approximately $2.3M and $7.0M for both the three and nine months ended June 30, 2024 and 2023, a portion of which is eliminated in consolidation.

Previous wording

Operating revenues increased 15.6% and natural gas purchases increased 30.2% during the three months ended March 31, 2024, compared with the three months ended March 31, 2023. Operating revenues decreased 0.3% and natural gas purchases decreased 5.3% during the six months ended March 31, 2024, compared with the six months ended March 31, 2023.

Current wording

Operating revenues increased 8.8% and natural gas purchases increased 24.7% during the three months ended June 30, 2024, compared with the three months ended June 30, 2023. Operating revenues increased 1.2% and natural gas purchases decreased 1.9% during the nine months ended June 30, 2024, compared with the nine months ended June 30, 2023.

Previous wording

(1)Excludes SG&A of approximately $30.0M and $27.8M for the three months ended March 31, 2024 and 2023, respectively, and $58.9M and $51.2M for the six months ended March 31, 2024 and 2023, respectively.

Current wording

(1)Excludes SG&A of approximately $28.8M and $26.9M for the three months ended June 30, 2024 and 2023, respectively, and $87.7M and $78.1M for the nine months ended June 30, 2024 and 2023, respectively.

Previous wording

Utility firm gross margin increased approximately $6.1M and $10.5M during the three and six months ended March 31, 2024, compared with the three and six months ended March 31, 2023, due primarily to increased residential customers.

Current wording

Utility firm gross margin remained relatively consistent during the three months ended June 30, 2024, compared with the three months ended June 30, 2023. Utility firm gross margin increased $10.0M during the nine months ended June 30, 2024, compared with the nine months ended June 30, 2023, due primarily to increased residential customers.

Previous wording

BGSS incentive programs increased during the three months ended March 31, 2024, compared with the three months ended March 31, 2023, due primarily to increased margins from off-system sales due to increased market volatility during periods of cold weather during January 2024. BGSS incentive programs decreased during the six months ended March 31, 2024, compared with the six months ended March 31, 2023, due primarily to decreased margins from storage due to reduced market volatility and off-system sales due to less volatile natural gas prices related to Winter Storm Elliott in December 2022 that did not reoccur.

Current wording

BGSS incentive programs remained relatively consistent during the three months ended June 30, 2024, compared with the three months ended June 30, 2023. BGSS incentive programs decreased during the nine months ended June 30, 2024, compared with the nine months ended June 30, 2023, due primarily to decreased margins from storage due to reduced market volatility.

Previous wording

•$1.1M increase in O&M due to higher employee related expenses and information technology costs.

Current wording

•$6.2M increase in O&M due to higher employee related expenses and information technology costs; and

Previous wording

•$2.8M increase in other income, net due primarily to the remeasurement of the Company's other postretirement benefits along with increased AFUDC equity; partially offset by

Current wording

•$2.0M increase in other income, net due primarily to the remeasurement of the Company's other postretirement benefits.

Previous wording

•$6.1M increase in O&M; and

Current wording

•$12.3M increase in O&M; and

Previous wording

CEV has approximately 473.5 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 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.

Current wording

CEV has approximately 476.5 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 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.

Previous wording

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 Company will continue to operate the solar assets and are 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; 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 Unaudited Condensed Consolidated Statements of Operations over the respective five-year ITC recapture periods, starting with the second year of the lease. CEV received proceeds of approximately $28.7M during the three months ended March 31, 2023, and $24.4M and $61.8M during the six months ended March 31, 2024 and 2023, respectively, in connection with sale leasebacks of commercial solar assets. There were no proceeds received during the three months ended March 31, 2024.

Current wording

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 Company will continue to operate the solar assets and are responsible for related expenses and entitled to retain the revenue generated from RECs and energy sales. 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 Unaudited Condensed Consolidated Statements of Operations over the respective five-year ITC recapture periods, starting with the second year of the lease. CEV received proceeds of approximately $101.8M during the three months ended June 30, 2023, and $24.4M and $163.6M during the nine months ended June 30, 2024 and 2023, respectively, in connection with sale leasebacks of commercial solar assets. There were no proceeds received during the three months ended June 30, 2024.

Previous wording

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.

Current wording

In July 2021, the BPU established a new successor solar incentive program. This Administratively Determined Incentive Program provides administratively set incentives for net metered residential projects and net metered non-residential projects of 5 MW or less. RECs generated through the production of electricity under this program are known as SREC IIs.

Previous wording

REC activity during the six months ended, consisted of the following:

Current wording

REC activity during the nine months ended, consisted of the following:

Previous wording

•$7.7M increase in other income, net due primarily to the recognition of ITCs associated with solar sale leaseback financing transactions; partially offset by

Current wording

•$11.4M increase in other income, net due primarily to the recognition of ITCs associated with solar sale leaseback financing transactions; partially offset by

Previous wording

•$2.1M increase in depreciation expense as a result of additional utility plant being placed into service; and

Current wording

•$2.1M increase in depreciation expense as a result of additional solar assets being placed into service; and

Previous wording

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. The utility provides certain asset management services and ES may deliver natural gas to the utility in exchange for aggregate net proceeds of approximately $500M, payable through November 1, 2030. The AMAs include a series of initial and permanent releases, which commenced on November 1, 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. ES recognized operating revenue of approximately $9.5M and $9.5M during the three months ended March 31, 2024 and 2023, respectively, and $19.0M and $29.5M during the six months ended March 31, 2024 and 2023, respectively, on the Unaudited Condensed Consolidated Statements of Operations. Amounts received in excess of revenue totaling $107.2M and $58.7M as of March 31, 2024 and September 30, 2023, respectively, are included in deferred revenue on the Unaudited Condensed Consolidated Balance Sheets.

Current wording

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. The utility provides certain asset management services and ES may deliver natural gas to the utility in exchange for aggregate net proceeds of approximately $500M, payable through November 1, 2030. The AMAs include a series of initial and permanent releases, which commenced on November 1, 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. ES recognized operating revenue of approximately $9.5M during both the three months ended June 30, 2024 and 2023, and $28.5M and $39.0M during the nine months ended June 30, 2024 and 2023, respectively, on the Unaudited Condensed Consolidated Statements of Operations. Amounts received in excess of revenue totaling $97.7M and $58.7M as of June 30, 2024 and September 30, 2023, respectively, are included in deferred revenue on the Unaudited Condensed Consolidated Balance Sheets.

Previous wording

(1)Includes related party transactions of approximately $(3.7)M and $0.2M during the three months ended March 31, 2024 and 2023, respectively, and approximately $(4.9)M and $8.6M during the six months ended March 31, 2024 and 2023, respectively, which are eliminated in consolidation.

Current wording

(1)Includes related party transactions of approximately $0.6M during the three months ended June 30, 2023, and approximately $(4.9)M and $9.2M during the nine months ended June 30, 2024 and 2023, respectively, which are eliminated in consolidation. There were no related party transactions during the three months ended June 30, 2024.