NEW JERSEY RESOURCES CORP

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 commercial solar projects, such as timing of construction schedules, the permitting and regulatory process, any delays related to electric grid interconnection, economic trends, changes in law, governmental policies, or incentives that support clean energy projects, including changes to U.S. trade policy and the impact tariffs and other costs and assessments may have on equipment used to construct, generate, and deliver clean energy, 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 regulation 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.

CEV placed one commercial solar project in service totaling 2.2 MWs during the three months ended March 31, 2025, with related expenditures of approximately $8.3M. CEV placed three commercial solar projects in service totaling 12.7 MWs during the six months ended March 31, 2025, with related expenditures of approximately $28.7M. CEV placed one commercial solar project in service totaling 2.8 MWs during the six months ended March 31, 2024, with related expenditures of approximately $7.9M. These projects are subject to sale leaseback arrangements. CEV did not place any commercial solar projects in service during the three months ended March 31, 2024.

CEV has approximately 399 MW of commercial 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.

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. 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 five 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 $13.2M during the three months ended March 31, 2025, and approximately $25.7M and $24.4M during the six months ended March 31, 2025 and 2024, respectively, in connection with the sale leaseback of commercial solar assets. There were no proceeds received during the three months ended March 31, 2024.

Part I

CEV operated a residential solar program, as part of The Sunlight Advantage®, which provided qualifying homeowners with the opportunity to have a solar system installed at their home with no installation or maintenance expenses. CEV owned, operated and maintained the system over the life of the lease in exchange for monthly lease payments. 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.

Following the close of the SREC market in New Jersey, the BPU established the TREC as the successor program to the SREC program. TRECs provide a fixed compensation base multiplied by an assigned project factor in order to determine their value. The project factor is determined by the type and location of the project, as defined. All TRECs generated are required to be purchased monthly by a TREC program administrator as appointed by the BPU.

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

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. Pricing is determined based on a competitive bid solicitation process.

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

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

CEV hedges its expected SREC production through the use of forward sales contracts. The following table reflects the hedged percentage of our projected inventory of SRECs related to CEV's in-service solar assets at March 31, 2025:

(1)Energy years are compliance periods for New Jersey's renewable portfolio standard that run from June 1 to May 31.

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 on the Unaudited Condensed Consolidated Statements of Operations, including such expenses as facility maintenance and broker fees.

Part I

CEV’s financial results are summarized as follows:

Net loss decreased approximately $1.7M during the three months ended March 31, 2025, compared with the three months ended March 31, 2024, due primarily to the following factors:

•$1.4M decrease in depreciation expense as a result of the sale of residential solar assets;

•$0.8M increase in other income, net due primarily to the recognition of ITCs associated with solar sale leaseback financing transactions; and

•$0.7M gain on the sale of the residential solar asset portfolio; partially offset by

•$1.4M decrease in operating revenues due to the sale of the residential solar assets, partially offset by higher electricity sales.

Net income increased approximately $39.3M during the six months ended March 31, 2025, compared with the six months ended March 31, 2024, due primarily to the following factors:

•$55.5M gain on the sale of the residential solar asset portfolio; partially offset by

•$10.2M decrease in operating revenues due to the timing of SREC sales and the sale of the residential solar assets; and

•$11.5M increase in income tax expense related to higher operating income.