NEW JERSEY RESOURCES CORP [NJR] Filings

10-K 1 njr-20210930.htm 10-K njr-20210930

–

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-08359

NEW JERSEY RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

New Jersey

22-2376465

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

1415 Wyckoff Road,

Wall,

New Jersey

07719

(732)

938‑1000

(Address of principal executive offices)

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12 (b) of the Act:
Title of each class	Trading symbol(s)	Name of each exchange on which registered)
Common Stock ‑ $2.50 Par Value	NJR	New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☒ Yes ☐ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The aggregate market value of the registrant’s common stock held by non-affiliates was $3,824,984,427 based on the closing price of $39.87 per share on March 31, 2021, as reported on the New York Stock Exchange.

The number of shares outstanding of $2.50 par value common stock as of November 15, 2021 was 95,949,116.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareowners (Proxy Statement) to be held on January 26, 2022, are incorporated by reference into Part I and Part III of this report.

New Jersey Resources Corporation

TABLE OF CONTENTS


			Page
Glossary of Terms			1
Information Concerning Forward-Looking Statements			3
PART I
	ITEM 1.	Business	4
		Organizational Structure	4
		Reporting Segments	5
		Natural Gas Distribution	7
		Clean Energy Ventures	10
		Energy Services	11
		Storage and Transportation	12
		Other Business Operations	13
		Home Services and Other	13
		Environment	13
		Human Capital Resources	13
		Information About our Executive Officers	15
	ITEM 1A.	Risk Factors	15
	ITEM 1B.	Unresolved Staff Comments	26
	ITEM 2.	Properties	26
	ITEM 3.	Legal Proceedings	27
	ITEM 4.	Mine Safety Disclosures	28
PART II
	ITEM 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
	ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
	ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	61
	ITEM 8.	Financial Statements and Supplementary Data	65
		Management’s Report on Internal Control over Financial Reporting	65
		Report of Independent Registered Public Accounting Firm	66
		Consolidated Financial Statements	69
		Notes to Consolidated Financial Statements	74
		Note 1. Nature of the Business	74
		Note 2. Summary of Significant Accounting Policies	74
		Note 3. Revenue	88
		Note 4. Regulation	95
		Note 5. Derivative Instruments	97
		Note 6. Fair Value	103
		Note 7. Investments in Equity Investees	106
		Note 8. Earnings Per Share	107
		Note 9. Debt	107
		Note 10. Stock-Based Compensation	111
		Note 11. Employee Benefit Plans	114
		Note 12. Asset Retirement Obligations	119
		Note 13. Income Taxes	120
		Note 14. Leases	123
		Note 15. Commitments and Contingent Liabilities	125
		Note 16. Common Stock Equity	127
		Note 17. Reporting Segment and Other Operations Data	128
		Note 18. Related Party Transactions	132



	ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	133
	ITEM 9A.	Controls and Procedures	133
	ITEM 9B.	Other Information	133
PART III*
	ITEM 10.	Directors, Executive Officers and Corporate Governance	134
	ITEM 11.	Executive Compensation	134
	ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	134
	ITEM 13.	Certain Relationships and Related Transactions and Director Independence	134
	ITEM 14.	Principal Accountant Fees and Services	134
PART IV
	ITEM 15.	Exhibits and Financial Statement Schedules	135
		Index to Financial Statement Schedules	136
		Exhibit Index	138
		Signatures	145
* Portions of Item 10 and Items 11-14 are Incorporated by Reference from the Proxy Statement.

New Jersey Resources Corporation

GLOSSARY OF KEY TERMS


Adelphia Gateway			Adelphia Gateway, LLC
AFUDC			Allowance for Funds Used During Construction
ARO			Asset Retirement Obligations
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
Bcf			Billion Cubic Feet
BGSS			Basic Gas Supply Service
BPU			New Jersey Board of Public Utilities
CARES Act			Coronavirus Aid, Relief, and Economic Security Act
CIP			Conservation Incentive Program
Clean Energy Ventures			Clean Energy Ventures segment
CME			Chicago Mercantile Exchange
COVID-19			Novel coronavirus disease
CR&R			Commercial Realty & Resources Corp.
Degree-day			The measure of the variation in the weather based on the extent to which the average daily temperature falls below 65 degrees Fahrenheit
DEI			Diversity, equity and inclusion
DRP			NJR Direct Stock Purchase and Dividend Reinvestment Plan
Dths			Dekatherms
EDECA			Electric Discount and Energy Competition Act
EE			Energy Efficiency
EMP			New Jersey Energy Master Plan
Energy Services			Energy Services segment
EPS			Earnings Per Share
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
FCM			Futures Commission Merchant
FERC			Federal Energy Regulatory Commission
Financial Margin			A non-GAAP financial measure, which represents revenues earned from the sale of natural gas less costs of natural gas sold including any transportation and storage costs, and excludes any accounting impact from the change in the fair value of certain derivative instruments
Fitch			Fitch Ratings Company
FMB			First Mortgage Bonds
GAAP			Generally Accepted Accounting Principles of the United States
GWRA			Global Warming Response Act of 2007
HCCTR			Health Care Cost Trend Rate
Home Services and Other			Home Services and Other Operations
ICE			Intercontinental Exchange
IIP			Infrastructure Investment Program
IRS			Internal Revenue Service
ISDA			The International Swaps and Derivatives Association
ITC			Investment Tax Credit
LDCC			Leadership Development and Compensation Committee
Leaf River			Leaf River Energy Center LLC
LNG			Liquefied Natural Gas
MGP			Manufactured Gas Plant
MMBtu			Million British Thermal Units
Moody’s			Moody’s Investors Service, Inc.
Mortgage Indenture			The Amended and Restated Indenture of Mortgage, Deed of Trust and Security Agreement between NJNG and U.S. Bank National Association dated as of September 1, 2014, as amended
MW			Megawatts
MWh			Megawatt Hour
NAESB			The North American Energy Standards Board
NAV			Net Asset Value

Page 1

New Jersey Resources Corporation


GLOSSARY OF KEY TERMS (cont.)
Natural Gas Distribution			Natural Gas Distribution segment
NFE			Net Financial Earnings
NJ RISE			New Jersey Reinvestment in System Enhancement
NJCEP			New Jersey’s Clean Energy Program
NJDEP			New Jersey Department of Environmental Protection
NJNG			New Jersey Natural Gas Company or Natural Gas Distribution segment
NJNG Credit Facility			The $250 million unsecured committed credit facility expiring in September 2026
NJR Credit Facility			The $500 million unsecured committed credit facility expiring in September 2026
NJR or The Company			New Jersey Resources Corporation
NJRCEV			NJR Clean Energy Ventures Corporation or Clean Energy Ventures Segment
NJRES			NJR Energy Services Company
NJRHS			NJR Home Services Company
Non-GAAP			Not in accordance with GAAP
NPNS			Normal Purchase/Normal Sale
NYMEX			New York Mercantile Exchange
OASDI			Old Age, Survivors and Disability Insurance tax
OCI			Other Comprehensive Income
O&M			Operations and Maintenance
OPEB			Other Postemployment Benefit Plans
PBO			Projected Benefit Obligation
PennEast			PennEast Pipeline Company, LLC
PEP			Pension Equalization Plan
PIM			Pipeline Integrity Management
PPA			Power Purchase Agreement
RAC			Remediation Adjustment Clause
REC			Renewable Energy Certificate
SAFE I			Safety Acceleration and Facility Enhancement Program, Phase I
SAFE II			Safety Acceleration and Facility Enhancement Program, Phase II
Sarbanes-Oxley			Sarbanes-Oxley Act of 2002
SAVEGREEN			The SAVEGREEN Project®
Savings Plan			Employees’ Retirement Savings Plan
SBC			Societal Benefits Charge
SEC			Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended
SREC			Solar Renewable Energy Certificate
SRL			Southern Reliability Link
S&P			Standard & Poor’s Financial Services, LLC
Steckman Ridge			Collectively, Steckman Ridge GP, LLC and Steckman Ridge, LP
Storage and Transportation			Storage and Transportation segment
Supreme Court			Supreme Court of the U.S.
TETCO			Texas Eastern Transmission
The Tax Act			An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, previously known as The Tax Cuts and Jobs Act of 2017
TREC			Transition Renewable Energy Certificate
Trustee			U.S. Bank National Association
TSR			Total Shareholder Return
U.S.			The United States of America
Union			International Brotherhood of Electrical Workers Local 1820
USF			Universal Service Fund

Page 2

New Jersey Resources Corporation

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained in this report, including, without limitation, statements as to management expectations, assumptions and beliefs presented in Part I, Item 1. Business and Item 3. Legal Proceedings, and in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 7A. Quantitative and Qualitative Disclosures About Market Risk, and in the notes to the financial statements, are forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements can also be identified by the use of forward-looking terminology such as “anticipate,” “estimate,” “may,” “could,” “might,” “intend,” “expect,” “believe,” “will,” “plan” or “should” or comparable terminology and are made based upon management’s current expectations, assumptions and beliefs as of this date concerning future developments and their potential effect on us. Forward-looking statements made in this report apply only as of the date of this report. There can be no assurance that future developments will be in accordance with management’s expectations, assumptions or beliefs, or that the effect of future developments on us will be those anticipated by management.

We caution readers that the expectations, assumptions and beliefs that form the basis for forward-looking statements regarding customer growth, customer usage, qualifications for ITCs, RECs, base rate case proceedings, financial condition, results of operations, cash flows, capital requirements, future capital expenditures, market risk, effective tax rate and other matters for fiscal 2022 and thereafter include many factors that are beyond our ability to control or estimate precisely, such as estimates of future market conditions, the behavior of other market participants and changes in the debt and equity capital markets. The factors listed in the foregoing sentence are neither presented in order of importance nor weighted. The factors that could cause actual results to differ materially from our expectations, assumptions and beliefs include, but are not limited to, those discussed in Part I, Item 1A. Risk Factors, as well as the following:

•risks related to the impact of COVID-19 on business operations, financial performance and condition and cash flows;

•our ability to obtain governmental and regulatory approvals, land-use rights, electric grid connection (in the case of clean energy projects) and/or financing for the construction, development and operation of our unregulated energy investments, pipeline transportation systems and NJNG and Storage and Transportation infrastructure projects, including Adelphia Gateway, in a timely manner;

•risks associated with our investments in clean energy projects, including the availability of regulatory incentives and federal tax credits, the availability of viable projects, our eligibility for ITCs, the future market for SRECs and electricity prices, our ability to complete construction of the projects and operational risks related to projects in service;

•risks associated with the integration of acquired assets with our current operations, including of Adelphia Gateway and Leaf River;

•our ability to comply with current and future regulatory requirements;

•volatility of natural gas and other commodity prices and their impact on NJNG customer usage, NJNG’s BGSS incentive programs, our Energy Services segment operations and our risk management efforts;

•the performance of our subsidiaries;

•access to adequate supplies of natural gas and dependence on third-party storage and transportation facilities for natural gas supply;

•the level and rate at which NJNG’s costs and expenses are incurred and the extent to which they are approved for recovery from customers through the regulatory process, including through future base rate case filings;

•the impact of a disallowance of recovery of environmental-related expenditures and other regulatory changes;

•the regulatory and pricing policies of federal and state regulatory agencies;

•operating risks incidental to handling, storing, transporting and providing customers with natural gas;

•demographic changes in our service territory and their effect on our customer growth;

•changes in rating agency requirements and/or credit ratings and their effect on availability and cost of capital to the Company;

•the impact of volatility in the equity and credit markets on our access to capital;

•our ability to comply with debt covenants;

•the results of legal or administrative proceedings with respect to claims, rates, environmental issues, natural gas cost prudence reviews and other matters;

•risks related to cyberattacks or failure of information technology systems;

•the impact to the asset values and resulting higher costs and funding obligations of our pension and postemployment benefit plans as a result of potential downturns in the financial markets, lower discount rates, revised actuarial assumptions or impacts associated with the Patient Protection and Affordable Care Act;

•commercial and wholesale credit risks, including the availability of creditworthy customers and counterparties, and liquidity in the wholesale energy trading market;

•accounting effects and other risks associated with hedging activities and use of derivatives contracts;

•our ability to optimize our physical assets;

•weather and economic conditions;

•the costs of compliance with present and future environmental laws and regulations, including potential climate change-related legislation or regulation, or legislation resulting from the 2019 EMP;

•uncertainties related to litigation, regulatory, administrative or environmental proceedings;

•changes to tax laws and regulations;

•any potential need to record a valuation allowance for our deferred tax assets;

•the impact of natural disasters, terrorist activities and other extreme events on our operations and customers;

•risks related to our employee workforce and succession planning;

•risks associated with the management of our joint ventures and partnerships; and

•risks associated with keeping pace with technological change.

While we periodically reassess material trends and uncertainties affecting our results of operations and financial condition in connection with the preparation of Management’s Discussion and Analysis of Results of Operations and Financial Condition contained in our Quarterly and Annual Reports on Form 10-Q and Form 10-K, respectively, we do not, by including this statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events.

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New Jersey Resources Corporation

Part I

ITEM 1. BUSINESS

ORGANIZATIONAL STRUCTURE

New Jersey Resources Corporation is a New Jersey corporation formed in 1981 pursuant to a corporate reorganization. We are a diversified energy services holding company whose 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. We are an exempt holding company under Section 1263 of the Energy Policy Act of 2005.

Our primary subsidiaries include the following:

New Jersey Natural Gas Company provides regulated natural gas utility service to approximately 564,000 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. NJNG, a local natural gas distribution company, is regulated by the 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. NJRCEV comprises the Company’s Clean Energy Ventures segment.

NJR Energy Services Company maintains and transacts around a portfolio of physical assets consisting of natural gas transportation and storage contracts in the U.S. and Canada. NJRES also provides unregulated wholesale energy management services to other energy companies and natural gas producers. NJRES comprises our 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 our wholly-owned subsidiaries of Leaf River, located in southeastern Mississippi, and Adelphia Gateway, located in eastern Pennsylvania, are subject to FERC regulation along with our 20 percent ownership interest in PennEast; and NJR Steckman Ridge Storage Company, which holds our 50 percent combined ownership interest in Steckman Ridge, located in Pennsylvania. See Note 7. Investments in Equity Investees for more information on PennEast and Steckman Ridge.

NJR Home Services Company provides heating, ventilation and cooling service, sales and installation of appliances to approximately 106,000 service contract customers, as well as solar installation projects, and is the primary contributor to Home Services and Other operations.

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New Jersey Resources Corporation

Part I

ITEM 1. BUSINESS (Continued)

REPORTING SEGMENTS

We operate within four reporting segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services and Storage and Transportation, formerly known as Midstream.

The Natural Gas Distribution segment consists of regulated natural gas services, off-system sales, capacity and storage management operations. The Energy Services segment consists of unregulated wholesale and retail energy operations, as well as energy management services. The Clean Energy Ventures segment consists of capital investments in clean energy projects. The Storage and Transportation segment consists of investments in the natural gas storage and transportation market, such as natural gas storage and transportation facilities.

Net income by reporting segment and other business operations for the fiscal years ended September 30, are as follows:

Our Storage and Transportation segment incurred a net loss of $67.8 million during fiscal 2021 and Energy Services incurred a net loss of $11.0 million and $1.3 million during fiscal 2020 and 2019, respectively, which is not shown clearly in the above graph.

Assets composition by reporting segment and other business operations at September 30, are as follows:


2021			2020

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New Jersey Resources Corporation

Part I

ITEM 1. BUSINESS (Continued)

Management uses NFE, a non-GAAP financial measure, when evaluating its operating results. NFE is a measure of the earnings based on eliminating timing differences surrounding the recognition of certain gains or losses to effectively match the earnings effects of the economic hedges with the physical sale of natural gas and, therefore, eliminates the impact of volatility to GAAP earnings associated with the derivative instruments. Energy Services economically hedges its natural gas inventory with financial derivative instruments and calculates the related tax effect based on the statutory rate. NFE also excludes impairment charges associated with equity method investments, which are a non-cash charge considered unusual in nature that occur infrequently and are not indicative of the Company's performance for its ongoing operations. Included in the tax effects are current and deferred income tax expense corresponding with the components of NFE.

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


(Thousands)	2021		2020		2019
Net income	$	117,890	$	163,007	$	123,935
Add:
Unrealized loss (gain) on derivative instruments and related transactions	54,203		(9,644)		2,881
Tax effect	(12,887)		2,296		(711)
Effects of economic hedging related to natural gas inventory	(42,405)		12,690		4,309
Tax effect	10,078		(3,016)		(1,024)
Impairment of equity method investment	92,000		—		—
Tax effect	(11,167)		—		—
NFE	$	207,712	$	165,333	$	129,390
Basic earnings per share	$	1.23	$	1.72	$	1.39
Add:
Unrealized loss (gain) on derivative instruments and related transactions	0.56		(0.10)		0.03
Tax effect	(0.13)		0.02		(0.01)
Effects of economic hedging related to natural gas inventory	(0.44)		0.13		0.05
Tax effect	0.10		(0.03)		(0.01)
Impairment of equity method investment	0.96		—		—
Tax effect	(0.12)		—		—
Basic NFE per share	$	2.16	$	1.74	$	1.45

NFE by reporting segment and other business operations for the fiscal years ended September 30, are as follows:

NFE at Energy Services was a loss of $7.9 million in fiscal 2020 and had income of $2.9 million in fiscal 2019, which is not shown clearly in the above graph.

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New Jersey Resources Corporation

Part I

ITEM 1. BUSINESS (Continued)

Natural Gas Distribution

General

Our Natural Gas Distribution segment consists of regulated utility operations that provide natural gas service to approximately 564,000 customers. NJNG’s service territory includes Burlington, Middlesex, Monmouth, Morris, Ocean and Sussex counties in New Jersey. It encompasses 1,516 square miles, covering 108 municipalities with an estimated population of 1.5 million people. It is primarily suburban, highlighted by approximately 100 miles of New Jersey coastline. It is in close proximity to New York City, Philadelphia and the metropolitan areas of northern New Jersey, and is accessible through a network of major roadways and mass transportation.

NJNG’s business is subject to various risks, such as those associated with adverse economic conditions, which can negatively impact customer growth and operating and financing costs; fluctuations in commodity prices, which can impact customer usage; customer conservation efforts; certain regulatory actions; and environmental remediation. It is often difficult to predict the impact of trends associated with these risks. NJNG employs strategies to manage the challenges it faces, including pursuing customer conversions from other fuel sources and monitoring new construction markets through contact with developers, utilizing incentive programs through BPU-approved mechanisms to reduce natural gas costs, pursuing rate and other regulatory strategies designed to stabilize and decouple gross margin, and working actively with consultants and the NJDEP to manage expectations related to its obligations associated with its former MGP sites.

Operating Revenues/Throughput

For the fiscal years ended September 30, operating revenues and throughput by customer class for our Natural Gas Distribution segment are as follows:


	2021			2020			2019
($ in thousands)	Operating Revenue		Bcf	Operating Revenue		Bcf	Operating Revenue		Bcf
Residential	$	484,407	46.2	$	500,271	44.6	$	450,515	46.0
Commercial and other	103,341		8.6	98,463		8.2	104,372		9.7
Firm transportation	69,353		13.7	66,871		13.3	57,513		13.7
Total residential and commercial	657,101		68.5	665,605		66.1	612,400		69.4
Interruptible/off-tariff agreements	7,239		22.9	6,322		30.9	6,637		39.0
Total system	664,340		91.4	671,927		97.0	619,037		108.4
BGSS incentive programs (1)	67,456		20.8	57,996		118.4	91,756		37.8
Total	$	731,796	112.2	$	729,923	215.4	$	710,793	146.2

(1)Does not include 80.5, 86.3 and 86.0 Bcf for the capacity release program and related amounts of $3.1 million, $3.1 million and $4.1 million, which are recorded as a reduction of natural gas purchases on the Consolidated Statements of Operations during fiscal 2021, 2020 and 2019, respectively.

NJNG added 7,854 and 8,349 new customers during fiscal 2021 and 2020, respectively. NJNG expects its new customer annual growth rate to continue to be approximately 1.7 percent with projected additions in the range of approximately 28,000 to 30,000 new customers over the next three fiscal years. This anticipated customer growth represents approximately $6.2 million in new annual utility gross margin, a non-GAAP financial measure, as calculated under NJNG’s current CIP tariff. For a definition and reconciliation of utility gross margin to operating income see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Natural Gas Distribution Segment.

In fiscal 2021, no single customer represented more than 10 percent of consolidated operating revenues.

Seasonality of Natural Gas Revenues

Therm sales are significantly affected by weather conditions, with customer demand being greatest during the winter months when natural gas is used for heating purposes. The relative measurement of the impact of weather is in Degree-days. Degree-day data is used to estimate amounts of energy required to maintain comfortable indoor temperature levels based on each day’s average temperature. Each degree of temperature below 65 degrees Fahrenheit is counted as one heating Degree-day. Normal heating Degree-days are based on a 20-year average, calculated based on three reference areas representative of NJNG’s service territory.

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New Jersey Resources Corporation

Part I

ITEM 1. BUSINESS (Continued)

The CIP, a mechanism authorized by the BPU, stabilizes NJNG’s utility gross margin, regardless of variations in weather. In addition, the CIP decouples the link between utility gross margin and customer usage, allowing NJNG to promote energy conservation measures. Recovery of utility gross margin is subject to additional conditions, including an earnings test, a revenue test and an evaluation of BGSS-related savings achieved over a 12-month period. The BPU approved the continuation of the CIP program with no expiration date.

Concurrent with its annual BGSS filing, NJNG files for an annual review of its CIP, during which time it can request rate changes, as appropriate. For additional information regarding the CIP, including rate actions and impact to margin, see Note 4. Regulation in the accompanying Consolidated Financial Statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Natural Gas Distribution Segment.

Natural Gas Supply

Firm Natural Gas Supplies

In fiscal 2021, NJNG purchased natural gas from approximately 57 suppliers under contracts ranging from one day to seven months and purchased over 10 percent of its natural gas from one supplier. NJNG believes the loss of this supplier would not have a material adverse impact on its results of operations, financial position or cash flows, as an adequate number of alternative suppliers exist. NJNG believes that its supply strategy should adequately meet its expected firm load for the upcoming winter season.

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, the maximum daily deliverability of that capacity and the contract expiration dates are as follows:


Pipeline	Dths (1)	Expiration
Texas Eastern Transmission, L.P.	383,588	Various dates between 2022 and 2025
Columbia Gas Transmission Corp.	50,000	Various dates between 2024 and 2030
Tennessee Gas Pipeline Co.	25,166	Various dates between 2023 and 2024
Transcontinental Gas Pipe Line Corp.	340,606	Various dates between 2022 and 2033
Algonquin Gas Transmission	12,000	2023
Total	811,360

(1) Numbers are shown net of any capacity release contracted amounts.

Eastern Gas Transmission and Storage, Inc. provides NJNG firm contract transportation service and supplies the pipelines included in the table above.

In addition, NJNG has storage contracts that provide an additional 102,941 Dths of maximum daily deliverability to NJNG’s citygate stations from storage fields in its Northeast market area. The storage suppliers, the maximum daily deliverability of that storage capacity and the contract expiration dates are as follows:


Pipeline	Dths	Expiration
Texas Eastern Transmission, L.P.	94,557	2023
Transcontinental Gas Pipe Line Corp.	8,384	2028
Total	102,941

NJNG also has upstream storage contracts. The maximum daily deliverability and contract expiration dates are as follows:


Company	Dths	Expiration
Eastern Gas Transmission and Storage, Inc.	286,829	Various dates between 2023 and 2026
Steckman Ridge	38,000	2025
Stagecoach Pipeline & Storage Company LLC	25,337	2023
Total	350,166

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New Jersey Resources Corporation

Part I

ITEM 1. BUSINESS (Continued)

NJNG utilizes its transportation contracts to transport natural gas to NJNG’s citygates from the Eastern Gas Transmission and Storage, Inc., Steckman Ridge and Stagecoach Pipeline & Storage Company LLC storage fields. NJNG has sufficient firm transportation, storage and supply capacity to fully meet its firm sales contract obligations.

Citygate Supplies from Energy Services

NJNG has two citygate supply agreements with Energy Services. NJNG and Energy Services 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 Energy Services through March 31, 2022. NJNG can call upon a supply of up to 14,300 Dths/day delivered to NJNG’s TETCO citygate through March 31, 2022. Energy Services manages the storage inventory and NJNG can call on that storage supply as needed at NJNG’s Tennessee citygate or storage point.

NJNG also had agreements where it released 80,000 Dths/day of its TETCO capacity to Energy Services for the period of November 1, 2018 to October 31, 2021. Under these agreements, NJNG could call upon a supply of up to 80,000 Dths/day delivered to its TETCO citygate as needed. See Note 18. Related Party Transactions in the accompanying Consolidated Financial Statements for additional information regarding these transactions. These agreements were not renewed after the October 31, 2021 expiration date.

Peaking Supply

To manage its winter peak day demand, NJNG maintains two LNG facilities with a combined deliverability of approximately 170,000 Dths/day, which represents approximately 18 percent 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. See Item 2. Properties-Natural Gas Distribution for additional information regarding the LNG storage facilities.

Basic Gas Supply Service

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 five percent 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.

In addition to making periodic rate adjustments to reflect changes in commodity prices, NJNG is also permitted to refund or credit back a portion of the commodity costs to customers when the natural gas commodity costs decrease in comparison to amounts projected or to amounts previously collected from customers. Decreases in the BGSS rate and BGSS refunds can be implemented with five days’ notice to the BPU. Rate changes, as well as other regulatory actions related to BGSS, are discussed further in Note 4. Regulation in the accompanying Consolidated Financial Statements.

Wholesale natural gas prices are, by their nature, volatile. NJNG mitigates the impact of volatile price changes on customers through the use of financial derivative instruments, which are part of its storage incentive program and its BGSS clause.

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. See Note 4. Regulation in the accompanying Consolidated Financial Statements for additional information regarding NJNG’s rate proceedings.

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Federal

FERC regulates rates charged by interstate pipeline companies for the transportation and storage of natural gas. This affects NJNG’s agreements with several interstate pipeline companies for the purchase of such services. Costs associated with these services are currently recoverable through the BGSS.

Competition

Although its franchises are nonexclusive, NJNG is not currently subject to competition from other natural gas distribution utilities with regard to the transportation of natural gas in its service territory. Due to significant distances between NJNG’s current large industrial customers and the nearest interstate natural gas pipelines, as well as the availability of its transportation tariff, NJNG currently does not believe it has significant exposure to the risk that its distribution system will be bypassed. Competition does exist from suppliers of oil, electricity and propane. At the present time, however, natural gas is used in over 95 percent of new construction due to its efficiency, reliability and price advantage. Natural gas prices are a function of market supply and demand. Although NJNG believes natural gas will remain competitive with alternate fuels, no assurance can be given in this regard.

The BPU, within the framework of the EDECA, fully opened NJNG’s residential markets to competition, including third-party suppliers, and restructured rates to segregate its BGSS and delivery (i.e., transportation) prices. New Jersey’s natural gas utilities must provide BGSS in the absence of a third-party supplier. On September 30, 2021, NJNG had 21,882 residential and 8,815 commercial and industrial customers utilizing the transportation service.

Clean Energy Ventures

Our Clean Energy Ventures segment invests in, owns and operates clean energy projects, including commercial and residential solar installations located in New Jersey, Connecticut, Rhode Island and New York.

As of September 30, 2021, Clean Energy Ventures has constructed a total of 367.8 MW of solar capacity in New Jersey and Connecticut that has qualified for ITCs, including a combination of residential and commercial net-metered and grid-connected solar systems.

As part of its solar investment portfolio, Clean Energy Ventures 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. Clean Energy Ventures owns, operates and maintains the system over the life of the lease in exchange for monthly lease payments. The program is operated by Clean Energy Ventures using qualified contracting partners in addition to strategic suppliers for material standardization and sourcing. The residential solar lease and PPA market is highly competitive, with a large number of companies operating in New Jersey. Clean Energy Ventures competes on price, quality and brand reputation, leveraging its partner network and customer referrals.

Clean Energy Ventures’ 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 seventh 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.

Our 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 MWh of electricity produced by a solar generator. Clean Energy Ventures sold 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. Solar projects are also currently eligible for federal ITCs in the year that they are placed into service. In December 2019, the BPU established the TREC as the interim program successor to the SREC program. TRECs provide a fixed compensation base multiplied by an assigned project factor in order to determine their value. The project factor is determined by the type and location of the project, as defined. All TRECs generated are required to be purchased monthly by a TREC program administrator as appointed by the BPU.

On July 28, 2021, the BPU approved the first portion of the solar successor program for net metered projects under 5 MWs. The new program opened to new applications on August 28, 2021 following the closure of the TREC program. Incentives are structured as a 15-year fixed incentive ranging from $70-$120/MWh depending on market segment, project siting and size. The second phase of the successor program rollout is expected to include a competitive bid solicitation for projects greater than 5 MWs, with the solicitation program format and rules operational in 2022.

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Clean Energy Ventures is subject to various risks including those associated with adverse federal and state legislation and regulatory policies, supply chain and/or construction delays that can impact the timing or eligibility of tax incentives, technological changes and the future market of SRECs and TRECs. See Item 1A. Risk Factors for additional information regarding these risks.

Energy Services

Our Energy Services segment consists of unregulated wholesale and retail natural gas operations and provides producer and asset management services to a diverse customer base across North America. Energy Services 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. Energy Services’ activities are conducted in the market areas in which it has strong expertise, including the U.S. and Canada. Energy Services differentiates itself in the marketplace based on price, reliability and quality of service. Its competitors include wholesale marketing and trading companies, utilities, natural gas producers and financial institutions. Energy Services’ 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, Energy Services’ activities specifically consist of the following elements:

•Providing natural gas portfolio management services to nonaffiliated and our 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 (as defined below);

•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, Energy Services entered into a series of asset management agreements with an investment grade public utility to release pipeline capacity associated with certain natural gas transportation contracts. The asset management agreements include a series of initial and permanent releases commencing on November 1, 2021. NJR will receive approximately $260 million in cash from fiscal 2022 through fiscal 2024 and $34 million per year from fiscal 2025 through fiscal 2031 under the agreements.

During fiscal 2021, Energy Services did not purchase over 10 percent of its natural gas from any one supplier.

Transportation and Natural Gas Storage Transactions

Energy Services 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, Energy Services may hedge these price differentials through the use of financial instruments. In addition, Energy Services 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. This enables Energy Services to capture geographic pricing differences across various regions, as delivered natural gas prices may change favorably as a result of market conditions. Energy Services may, for example, initiate positions when intrinsic financial margin is present, and then enhance that financial margin as prices change across regions or time periods.

Energy Services also engages in park-and-loan transactions with storage and pipeline operators, where Energy Services 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, Energy Services evaluates the economics of the transaction to determine if it can capture pricing differentials in the marketplace and generate financial margin. Energy Services evaluates deal attributes such as fixed fees, calendar spread value from deal inception until volumes are scheduled to be

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returned and/or repaid, as well as the time value of money. If this evaluation demonstrates that financial margin exists, Energy Services may enter into the transaction and hedge with natural gas futures contracts, thereby locking in financial margin.

Energy Services maintains inventory balances to satisfy existing or anticipated sales of natural gas to its counterparties and/or to create additional value, as described above. During fiscal 2021 and 2020, Energy Services managed and sold 382.0 Bcf and 526.7 Bcf of natural gas, respectively. In addition, as of September 30, 2021 and 2020, Energy Services had 18.8 Bcf or $77.8 million of natural gas in storage and 34.3 Bcf or $57.4 million of natural gas in storage, respectively.

Weather/Seasonality

Energy Services activities are typically seasonal in nature as a result of changes in the supply and demand for natural gas. Demand for natural gas is generally higher during the winter months when there may also be supply constraints; however, during periods of milder temperatures, demand can decrease. In addition, demand for natural gas can also be high during periods of extreme heat in the summer months, resulting from the need for additional natural gas supply for natural gas-fired electric generation facilities. Accordingly, Energy Services can be subject to variations in earnings and working capital throughout the year as a result of changes in weather.

Volatility

Energy Services’ activities are also subject to price volatility or supply/demand dynamics within its North American wholesale markets, including in the Northeastern, Appalachian, Mid-Continent and Southeast regions. Changes in natural gas supply can affect capacity values and Energy Services’ financial margin, which, as described below, is generated from the optimization of transportation and storage assets. With its focus on risk management, Energy Services continues to diversify its revenue stream by identifying new growth opportunities in producer and asset management services. Energy Services monitors changing market dynamics and strategically adjusts its portfolio of transportation and storage assets, which currently includes an average of approximately 29.5 Bcf of firm storage and 1.2 Bcf of firm transportation capacity.

Financial Margin

To economically hedge the commodity price risk associated with its existing and anticipated commitments for the purchase and sale of natural gas, Energy Services enters into a variety of derivative instruments including, but not limited to, futures contracts, physical forward contracts, financial swaps and options. These derivative instruments are accounted for at fair value with changes in fair value recognized in earnings as they occur. Energy Services views “financial margin” as a key internal financial metric. Energy Services’ financial margin, which is a non-GAAP financial measure, represents revenues earned from the sale of natural gas less costs of natural gas sold including any transportation and storage costs, and excluding any accounting impact from changes in the fair value of certain derivative instruments. For additional information regarding financial margin, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Energy Services Segment.

Risk Management

In conducting its business, Energy Services mitigates risk by following formal risk management guidelines, including transaction limits, segregation of duties and formal contract and credit review approval processes. Energy Services continuously monitors and seeks to reduce the risk associated with its counterparty credit exposures. Our Risk Management Committee oversees compliance with these established guidelines.

Storage and Transportation

Our Storage and Transportation segment, includes investments in FERC-regulated interstate natural gas storage and transportation assets and is comprised of the following subsidiaries:

•NJR Midstream Company owns and operates Leaf River, a 32.2 million Dth salt dome natural gas facility, located in southeastern Mississippi and the FERC-regulated Adelphia Gateway, which owns and operates an 84-mile pipeline in southeastern Pennsylvania. NJR Midstream Company also holds our 20 percent equity method investment in PennEast; and

•NJR Steckman Ridge Storage Company holds our 50 percent equity method investment in Steckman Ridge. Steckman Ridge is a Delaware limited partnership, jointly owned and controlled by our 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 TETCO and Eastern Gas Transmission and Storage, Inc. pipelines and has access to the Northeast and Mid-Atlantic markets.

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OTHER BUSINESS OPERATIONS

Home Services and Other

Home Services and Other operations consist primarily of the following unregulated affiliates:

•NJRHS, which provides heating, ventilation and cooling service, sales and installation of appliances to approximately 106,000 service contract customers, as well as installation of solar equipment;

•NJR Plumbing Services, Inc., which provides plumbing repair and installation services;

•New Jersey Resources Corporation, a diversified energy services holding company;

•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.

ENVIRONMENT

We, along with our subsidiaries, are subject to legislation and regulation by federal, state and local authorities with respect to environmental matters. We believe that we are, in all material respects, in compliance with all applicable environmental laws and regulations.

NJNG is responsible for the environmental remediation of identified former MGP sites, which contain contaminated residues from former gas manufacturing operations that ceased at these sites by the mid-1950s and, in some cases, had been discontinued many years earlier. NJNG periodically, and at least annually, performs an environmental review of the former MGP sites, including a review of potential estimated liabilities related to the investigation and remedial action on these sites. Based on this review, NJNG has estimated that the total future expenditures to remediate and monitor the former MGP sites for which it is responsible will range from approximately $115.4 million to $178.4 million.

NJNG’s estimate of these liabilities is based upon known and measurable facts, existing technology and enacted laws and regulations in place when the review was completed in fiscal 2021. Where it is probable that costs will be incurred, and the information is sufficient to establish a range of possible liability, NJNG accrues the most likely amount in the range. If no point within the range is more likely than the other, it is NJNG’s policy to accrue the lower end of the range. As of September 30, 2021, NJNG recorded an MGP remediation liability and a corresponding regulatory asset of $135.0 million on the Consolidated Balance Sheets, based on the most likely amount; however, actual costs may differ from these estimates.

HUMAN CAPITAL RESOURCES

Employee Overview

NJR fundamentally believes that its employees make the Company a unique, successful organization – in creativity, commitment, ingenuity, hard work and innovation. NJR employees fulfill the responsibilities that enable the Company to deliver natural gas service to its customers; to be a leader in clean energy investments; to grow its storage and transportation energy business; and, to earn the loyalty of its retail home services customers. NJR also is committed to provide every appropriate resource to ensure its employees’ safety. Through initiatives that start at the top, NJR has invested time, energy and manpower to foster a culture where safety is top-of-mind at all times, and where achieving safety goals is a shared priority for every NJR employee.

As of September 30, 2021, the Company and our subsidiaries employed 1,251 employees compared with 1,156 employees as of September 30, 2020. Of the total number of employees, NJNG had 492 and 469 and NJRHS had 108 and 101 Union or Represented employees as of September 30, 2021 and 2020, respectively. NJNG and NJRHS have collective bargaining agreements with the Union, which is affiliated with the American Federation of Labor and Congress of Industrial Organizations. NJNG and the Union recently negotiated an extension of their current collective bargaining agreement extending the term through December 7, 2022. The collective bargaining agreement between NJRHS and the Union is scheduled to expire April 2, 2023. The labor agreements cover wage increases and other benefits, including the defined benefit pension (which was closed to all employees hired on or after January 1, 2012, with the exception of certain rehires who are eligible to resume active participation), the postemployment benefit plan (which was closed to all employees hired on or after January 1, 2012) and the enhanced 401(k) retirement savings plan. We consider our relationship with employees, including those covered by collective bargaining agreements, to be in good standing.

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The Company depends on its key personnel to successfully operate its businesses, including its executive officers, senior corporate management and management at its operating units. NJR seeks to attract and retain its employees by offering competitive compensation packages including base and incentive compensation (and in certain instances share-based compensation and retention incentives), attractive benefits and opportunities for advancement and rewarding careers. NJR periodically reviews and adjusts, if needed, its employees’ total compensation (including salaries, annual cash incentive compensation, other cash and equity incentives, and benefits) to ensure that it is competitive within the industry and is consistent with our level of performance. NJR has also implemented enterprise-wide talent development and succession planning programs designed to identify future and/or replacement candidates for key positions. To promote a collaborative and rewarding work environment and support the communities we serve, NJR sponsors numerous charitable, philanthropic, and social awareness programs.

Further, in order to take advantage of available opportunities and successfully implement our long-term strategy, NJR must be able to employ, train and retain the necessary skilled personnel. As a result, NJR supports and utilizes various training and educational programs and has developed additional company-wide and project-specific employee training and educational programs. NJR continues key programs focused on employee safety, leadership development, work-life balance, talent management, health and wellness, DEI as well as employee engagement. Moreover, DEI and employee engagement are integral to NJR’s vision, strategy and business success. NJR prides itself on a culture that respects co-workers and values concern for others. Fostering an environment that values DEI and ethics helps create an organization that is able to embrace, leverage and respect the differences of employees, customers and the communities where we live, work and serve. We are proud of the strides we have made in furthering our DEI strategy and increasing employee engagement. NJR is committed to this journey and knows our success makes us stronger as a company and community. Complementing our efforts are a DEI Council and our six employee-led Business Resource Groups, cross functional teams of employees whose core mission is to advance their own professional development and cultivate deeper connections with co-workers and communities.

NJR regularly evaluates employees and their productivity against future demand expectations and historical trends. NJR employees continue to maintain high levels of engagement, satisfaction and retention according to NJR’s most recent employee survey.

NJR’s Board of Directors’ Role in Human Capital Resource Management

NJR’s Board of Directors believes that human capital management is an important component of the Company’s continued growth and success, and is essential for our ability to attract, retain and develop talented and skilled employees. We pride ourselves on a culture that promotes DEI, respects co-workers and values concern for others.

Management regularly reports to the LDCC of the Board of Directors on human capital management topics, including corporate culture, DEI, employee development, compensation and benefits. The LDCC maintains oversight of matters related to human capital management, including talent retention, development and succession planning, and the Board of Director’s provides input on important decisions in each of these areas.

NJR regularly conducts an employee feedback survey, which is reviewed by the LDCC, designed to help the Company measure overall employee engagement. The feedback employees provide during the survey helps NJR evaluate the Company’s culture, employee programs and benefits and monitor its current practices for potential areas of improvement.

Employee Benefits

The LDCC believes employee benefits are an essential component of the Company’s competitive total rewards package. These benefits are designed to attract and retain our employees and include medical, vision and dental insurance, short- and long-term disability insurance, accidental death and disability insurance, travel and accident insurance, and our 401(k) Plan. As part of the 401(k) Plan, NJR generally matches 85 percent of the first 6 percent of compensation contributed by the employee into the 401(k) Plan, subject to the Internal Revenue Code and NJR’s 401(k) Plan limits. Additionally, for employees who are not eligible to participate in the defined benefit plans, NJR contributes between 3.5 percent and 4.5 percent of base compensation, depending upon years of service, into the 401(k) Plan on their behalf.

AVAILABLE INFORMATION AND CORPORATE GOVERNANCE DOCUMENTS

The following reports and any amendments to those reports are available free of charge on our website at https://investor.njresources.com/financials/sec-filings/default.aspx as soon as reasonably possible after filing or furnishing them with the SEC:

•Annual reports on Form 10-K;

•Quarterly reports on Form 10-Q; and

•Current reports on Form 8-K.

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The following documents are available free of charge on our website at https://investor.njresources.com/governance/governance-documents/default.aspx:

•NJR Code of Conduct;

•Amended and Restated Bylaws;

•Corporate Governance Guidelines;

•Wholesale Trading Code of Conduct;

•Charters of the following Board of Directors Committees: Audit, Nominating/Corporate Governance and Leadership Development and Compensation;

•Audit Complaint Procedure;

•Communicating with Non-Management Directors Procedure;

•Statement of Policy with Respect to Related Person Transactions; and

•Legal Procedure.

In Part III of this Form 10-K, we incorporate certain information by reference from our Proxy Statement for our 2022 Annual Meeting of Shareowners. We expect to file the Proxy Statement with the SEC on or about December 16, 2021. We will make it available on our website as soon as reasonably possible following the filing date. Please refer to the Proxy Statement when it is available.

A printed copy of each document is available free of charge to any shareowner who requests it by contacting the Corporate Secretary at New Jersey Resources Corporation, 1415 Wyckoff Road, Wall, New Jersey 07719.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The Company’s Executive Officers and their age, position and business experience during the past five years are below.


Name	Age	Officer since	Business experience during last five years
Stephen D. Westhoven	53	2004	President and Chief Executive Officer (October 2019 - present) President and Chief Operating Officer (October 2018 - September 2019) Executive Vice President and Chief Operating Officer (November 2017 - September 2018) Senior Vice President and Chief Operating Officer, NJRES and NJRCEV (October 2016 - October 2017)
Patrick J. Migliaccio	47	2013	Senior Vice President and Chief Financial Officer (January 2016 - present)
Amanda E. Mullan	55	2015	Senior Vice President and Chief Human Resources Officer (January 2017 - present) Vice President and Chief Human Resources Officer (April 2015 - December 2016)
Amy Cradic	50	2018	Senior Vice President and Chief Operating Officer of Non-Utility Businesses, Strategy and External Affairs (March 2020 - present) Vice President, Corporate Strategy and External Affairs (January 2020 – February 2020) Vice President, Government Affairs and Policy (January 2018 – December 2019) Chief of Staff, Office of New Jersey Governor Chris Christie (April 2016 – January 2018)
Richard Reich	46	2016	Senior Vice President, General Counsel and Corporate Secretary (September 2021 - present) Corporate Secretary and Assistant General Counsel (January 2016 - September 2021)
Jacqueline K. Shea	57	2016	Vice President and Chief Information Officer (June 2016 - present)
Timothy F. Shea	55	2017	Vice President, Energy Trading (January 2017 - present) Managing Director, Energy Trading (January 2014 - December 2016)
Mark F. Valori	58	2017	Vice President, Clean Energy Ventures (November 2017 - present) Managing Director, Projects and Asset Management (January 2016 - October 2017)

ITEM 1A. RISK FACTORS

When considering any investment in our securities, investors should consider the following risk factors, as well as the information contained under the caption “Information Concerning Forward-Looking Statements,” in analyzing our present and future business performance. While this list is not exhaustive, management also places no priority or likelihood based on their descriptions or order of presentation. Listed below, not necessarily in order of importance or probability of occurrence, are the most significant risk factors applicable to us. Unless indicated otherwise or the content requires otherwise, references below to “we,” “us,” and “our” should be read to refer to the Company and its subsidiaries and affiliates

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Risks Related to the Ongoing COVID-19 Pandemic and Other Extreme Events

The Company and our subsidiaries and affiliates are subject to risk associated with the ongoing novel coronavirus, COVID-19 pandemic, which could materially and adversely impact our business, including our financial condition, results from operations, liquidity, cash flows and the market value of our common stock.

COVID-19 has been declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention and has spread globally, including throughout the U.S. In response, the U.S. federal government and many jurisdictions, including without limitation, New Jersey, Pennsylvania, Mississippi and Texas have instituted emergency orders, restrictions on travel, limitations on public gatherings and non-essential business, shelter-in-place requirements and government shutdowns. While some jurisdictions have relaxed some of these restrictions, many of these restrictions remain and there is no guarantee restrictions will not be reimposed in the future. These emergency orders and restrictions have significantly disrupted economic activity in the jurisdictions in which we operate and have caused volatility in the capital markets.

The effects of the ongoing COVID-19 pandemic and related government responses could include, and have at times included, extended disruptions to supply chains and capital markets, reduced labor availability and productivity and a prolonged reduction in economic activity. We are currently evaluating the potential prolonged impacts that the ongoing COVID-19 pandemic may have on our future operating results and liquidity, which include:

•impacts related to the health, safety, productivity and availability of our employees and contractors;

•reduced demand for energy and forecasted customer growth;

•our ability to develop, construct and operate facilities;

•suspension of collection activities and the inability to shutoff natural gas services for nonpayment;

•reduced demand for commercial, industrial and residential natural gas services;

•deterioration of the credit quality of our counterparties;

•increases in costs and supply chain delays and disruptions;

•delays and disruptions to capital construction and infrastructure operations and maintenance programs, including delays in the permitting process and base rate cases;

•delays and disruptions to financing plans and increasing costs related thereto;

•impacts on pension valuations and increased pension and post-retirement plan costs and funding requirements;

•deterioration in our financial metrics or the business environment that impacts our credit ratings;

•impacts to our liquidity position and cost of and ability to access funds from financial institutions and capital markets;

•impacts on our legal and regulatory matters, including the potential for delayed state regulatory filings and recovery of invested capital, as well as delays in newly enacted and proposed state regulatory actions and federal laws;

•exacerbation of other risks that may impact us; and

•other unpredictable events.

These uncertain economic conditions have also impacted the ability of certain customers to pay for utility and certain non-utility services, which could affect the collectability and recognition of our revenues and adversely affect our financial results.

While we have implemented our business continuity plan (including without limitation employee travel restrictions, employee remote work locations and cancellation of physical participation in meetings, events, and conferences) to conform to government restrictions and best practices encouraged by federal, state, and local government and regulatory authorities, if a large proportion of our employees in essential capacities were to contract COVID-19, there is no certainty that such measures will be sufficient to mitigate an adverse impact to our operations.

The situation surrounding the ongoing COVID-19 pandemic remains fluid and the likelihood of material impacts may increase the longer the pandemic impacts activity levels in the U.S. As of September 30, 2021, the ongoing COVID-19 pandemic has not had a material impact on the Company and our subsidiaries and affiliates; however, the ultimate severity and duration of the COVID-19 pandemic and the responses thereto are uncertain and we cannot predict whether they will have a material impact on our liquidity, financial condition, results of operations or cash flows and when and to what extent normal economic and operating conditions can resume.

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We may be adversely impacted by natural disasters, pandemic illness (including COVID-19), terrorist activities and other extreme events to which we may be unable to promptly respond.

Local or national natural disasters, pandemic illness (including COVID-19), terrorist activities, catastrophic failure of the interstate pipeline system and other extreme events are a threat to our assets and operations. Companies in our industry that are located in our service territory may face a heightened risk due to exposure to acts of terrorism that could target or impact our natural gas distribution, transmission and storage facilities and disrupt our operations and ability to meet customer requirements. In addition, the threat of terrorist activities could lead to increased economic instability and volatility in the price of natural gas that could affect our operations. Natural disasters or actual or threatened terrorist activities may also disrupt capital markets and our ability to raise capital or may impact our suppliers or our customers directly. A local disaster or pandemic illness (including COVID-19) could result in part of our workforce being unable to operate or maintain our infrastructure or perform other tasks necessary to conduct our business. In addition, these risks could result in loss of human life, significant damage to property, environmental damage, impairment of our operations and substantial loss to the Company. Our regulators may not allow us to recover from our customers part or all of the increased cost related to the foregoing events, which could negatively affect our financial condition, results of operations and cash flows.

A slow or inadequate response to events that could cause business interruption may have an adverse impact on operations and earnings. We may be unable to obtain sufficient insurance to cover all risks associated with local and national disasters, pandemic illness, terrorist activities, catastrophic failure of the interstate pipeline system and other events, which could increase the risk that an event adversely affects our financial condition, results of operations and cash flows.

Risk Related to Our Business Operations

Uncertainties associated with our Adelphia Gateway pipeline project could adversely affect our business, results of operations, financial condition and cash flows.

In January 2020, our subsidiary Adelphia Gateway, LLC acquired Interstate Energy Company LLC, owner of a transmission pipeline extending approximately 90 miles through eastern Pennsylvania that it operated in either oil-only service or in dual-phase oil and natural gas service. As part of the Adelphia Gateway pipeline project, Adelphia is continuing to operate a portion of the pipeline in natural gas-only service, is converting the remaining sections of the southern mainline of the pipeline to transport natural gas and is constructing certain new facilities, including two compressor stations in Bucks County and Delaware County, PA and two new pipeline laterals in Delaware County, PA and New Castle County, DE. Timely completion of the project is subject to certain risks, including those related to regulatory proceedings regarding permitting and adverse outcomes from legal challenges related to the project's authorizations from federal and state regulatory agencies. Any delays in the expected timeframe for completing the conversion of the southern mainline of the pipeline to transport natural gas and constructing the new facilities could cause disruption and create uncertainties, which could have an adverse effect on our business, results of operations, financial condition and cash flows.

We may be unable to obtain governmental approvals, property rights and/or financing for the construction, development and operation of our proposed energy investments and projects in a timely manner or at all.

Construction, development and operation of energy investments, such as Leaf River and other natural gas storage facilities, NJNG infrastructure improvements, such as SRL and NJ RISE, pipeline transportation systems, such as the Adelphia Gateway pipeline project, and solar energy projects are subject to federal and state regulatory oversight and require certain property rights, such as easements and rights-of-way from public and private property owners, as well as regulatory approvals, including environmental and other permits and licenses for such facilities and systems. We or our joint venture partnerships may be unable to obtain, in a cost-efficient or timely manner, all such needed property rights, permits and licenses to successfully construct and develop our energy facilities and systems. Successful financing of our energy investments requires participation by willing financial institutions and lenders, as well as acquisition of capital at favorable interest rates. If we do not obtain the necessary regulatory approvals, property rights and financing, our equity method investments could be impaired. Such impairment could have a materially adverse effect on our financial condition, results of operations and cash flows.

Our investments in solar energy projects are subject to substantial risks and uncertainties.

Our investments in commercial and residential solar energy projects are dependent, in part, upon current state regulatory incentives and federal tax credits in order for the projects to be economically viable. Our return on investment for these solar projects is based substantially on our eligibility for ITCs and the future market value of SRECs that are traded in a competitive marketplace in the State of New Jersey. These projects face the risk that the current state regulatory programs and tax laws may expire or be adversely modified. A sustained decrease in the value of SRECs could negatively impact the return on our investments and could impair our portfolio of solar assets.

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New Jersey Resources Corporation

Part I

ITEM 1A. RISK FACTORS (Continued)

In addition, there are risks associated with our ability to execute on our investment strategy of clean energy projects, which includes our ability to develop and manage such projects profitably, including logistical risks and potential delays related to construction, permitting, regulatory approvals (including any approvals by the BPU required pursuant to solar energy legislation in the State of New Jersey, and similar approvals required by the States of Connecticut, Rhode Island and New York) and electric grid interconnection, as well as the operational risk that the projects in service will not perform according to expectations due to equipment failure, suboptimal weather conditions or other economic factors beyond our control. All of the aforementioned risks could reduce the availability of viable solar energy projects for development. Furthermore, at the development or acquisition stage, our ability to predict actual performance results may be hindered or inaccurate and the projects may not perform as predicted.

NJNG and Energy Services rely on storage, transportation assets and suppliers, which they do not own or control, to deliver natural gas.

NJNG and Energy Services depend on natural gas pipelines and other transportation and storage facilities owned and operated by third parties to deliver natural gas to wholesale and retail markets and to provide retail energy services to customers. Their ability to provide natural gas for their present and projected sales will depend upon their suppliers’ ability to obtain and deliver additional supplies of natural gas, as well as NJNG’s ability to acquire supplies directly from new sources. Factors beyond the control of NJNG, its suppliers and the independent suppliers that have obligations to provide natural gas to certain NJNG customers may affect NJNG’s ability to deliver such supplies. These factors include other parties’ control over the drilling of new wells and the facilities to transport natural gas to NJNG’s citygate stations, development of additional interstate pipeline infrastructure, availability of supply sources, third-party pipelines or other midstream facilities interconnected to our gathering or transportation system, such as the Texas Eastern Transmission Pipeline or Transcontinental Pipeline, becoming partially or fully unavailable, competition for the acquisition of natural gas, priority allocations, impact of severe weather disruptions to natural gas supplies and the regulatory and pricing policies of federal and state regulatory agencies, as well as the availability of Canadian reserves for export to the U.S. Energy deregulation legislation may increase competition among natural gas utilities and impact the quantities of natural gas requirements needed for sales service. Energy Services also relies on a firm supply source to meet its energy management obligations to its customers. If supply, transportation or storage is disrupted, including for reasons of force majeure, the ability of NJNG and Energy Services to sell and deliver their products and services may be hindered. As a result, they may be responsible for damages incurred by their customers, such as the additional cost of acquiring alternative supply at then-current market rates. Particularly for Energy Services, these conditions could have a material impact on our financial condition, results of operations and cash flows.

Energy Services’ earnings and cash flows are dependent upon optimization of its physical assets.

Energy Services’ earnings and cash flows are based, in part, on its ability to optimize its portfolio of contractually based natural gas storage and pipeline assets. The optimization strategy involves utilizing its physical assets to take advantage of differences in natural gas prices between geographic locations and/or time periods. Any change among various pricing points could affect these differentials. In addition, significant increases in the supply of natural gas in Energy Services’ market areas, including as a result of increased production along the Marcellus Shale, can reduce Energy Services’ ability to take advantage of pricing fluctuations in the future. Changes in pricing dynamics and supply could have an adverse impact on Energy Services’ optimization activities, earnings and cash flows. Energy Services incurs fixed demand fees to acquire its contractual rights to transportation and storage assets. Should commodity prices at various locations or time periods change in such a way that Energy Services is not able to recoup these costs from its customers, the cash flows and earnings at Energy Services, and ultimately the Company, could be adversely impacted.

Weather and weather patterns, including normal seasonal and quarterly fluctuations of weather, as well as extreme weather events that, individually or in aggregate, may be associated with climate change, could adversely affect our ability to manage our operational requirements to serve our customers, and ultimately adversely affect our results of operations and liquidity.

NJNG’s business is seasonal, and weather patterns can have a material impact on our financial performance. Demand for natural gas is often greater in the summer and winter months associated with cooling and heating. Because natural gas is heavily used for residential and commercial heating, the demand for this product depends heavily upon weather patterns throughout our market areas, and a significant amount of natural gas revenues are recognized in the first and second quarters related to the heating season. Accordingly, our operations have historically generated less revenue and income when weather conditions are milder in the winter and cooler in the summer. Unusually mild winters or cool summers could adversely affect our results of operations and financial position. In addition, exceptionally hot summer weather or unusually cold winter weather could add

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New Jersey Resources Corporation