Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Investor Day (October 2015)
92 slides from Newjersey Resources's investor day presentation, Oct 21, 2015
Slide 1: 2015 Investor Conference
2015 INVESTOR CONFERENCE October 21, 2015
Slide 2: 2015 Investor Conference Agenda
2015 Investor Conference Agenda 2 7:45 – 8:30 REGISTRATION & BREAKFAST 8:30 – 9:00 CEO Perspective Laurence M. Downes Chairman and CEO 9:00 – 10:00 NJNG Utility Review Kathleen T. Ellis – EVP and CO O Craig A. Lynch – SVP, Energy Delivery Thomas J. Massaro – VP, Marketing Mark R. Sperduto – SVP, Reg
Slide 3: Regarding Forward-Looking Statements
Regarding Forward - Looking Statements 3 Certain statements contained in this presentation are forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 . New Jersey Resources (NJR or the Company) cautions readers that the assumptions forming the basis f
Slide 4: Disclaimer Regarding Non-GAAP Financial Measures
Disclaimer Regarding Non - GAAP Financial Measures 4 This presentation includes the non - GAAP measures net financial earnings (NFE), utility gross margin and financial margin . As indicators of the Company’s operating performance, these measures should not be considered alternatives to, or more mea
Slide 5: CEO Perspective
CEO Perspective 5 Laurence M. Downes Chairman of the Board and Chief Executive Officer
Slide 6: What You Can Expect Today
What You Can Expect Today w e will discuss our: ▪ P lan to achieve average annual net financial earnings growth (NFE) rate forecast of 5 to 9 percent ▪ Goal to increase dividend by 6 to 8 percent annually ▪ C ustomer growth outlook and regulated infrastructure status ▪ Base rate case filing ▪ Clean
Slide 7: Strong Natural Gas Utility and Assets Across the Country
NJR : Strong Natural Gas Utility and Assets Across the Country NJR Headquarters NJNG Service Area BGSS Sales NJRES Sales Both NJRES and BGSS Sales NJRCEV Wind Farm 2015 Investor Conference 7
Slide 8: Our Business Model
Our Business Model 2015 Investor Conference R e g u l a t e d New Jersey Natural Gas • Strong customer growth • Infrastructure investments to ensure safety and reliability • Regulatory incentives NJR Midstream • Steckman Ridge – 12 Bcf storage facility • 20 percent interest in PennEast Pipeline • 1.
Slide 9: Our Value Chain for Creating Shareholder Value
Our Value Chain f or Creating Shareholder Value 9 Value through: • Focused capital spending plan Supported by: • Capital discipline • Strong financial profile Leading to: • Earnings and cash flow growth Generating: • Above - average dividend growth • Earnings retention 2015 Investor Conference
Slide 10: Let's Start Where We Finished Last Year
Let’s Start Where We Finished Last Y ear 10 Fiscal 2015 NJNG x Customer growth x CIP x BGSS incentives x Infrastructure programs x SAVEGREEN x NJ RISE x SRL Energy Services x Physical natural gas services x Producer services Clean Energy x Continued solar investment x More SRECs; stable prices x Car
Slide 11: Percent of Estimated Capital Expenditures to be Regulated
We Expect 60 - 70 Percent of Estimated Capital Expenditures to be Regulated 11 $373 $519 $540 $338 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 FY15F FY16E FY17E FY18E Millions NJNG PennEast Solar Wind 2015 Investor Conference
Slide 12: Regulated Infrastructure Investments to Contribute 60 to 75 Percent of NFE
We Expect Regulated Infrastructure Investments to Contribute 60 to 75 Percent of NFE 12 NJR Energy Services Physical and producer services positioned to take advantage of market volatility NJR Midstream PennEast investment should increase future contribution NJR Clean Energy Ventures Transition to w
Slide 13: Plan to Mitigate Impact from Pending ITC Reduction
Our Plan to Mitigate the Impact on NFE from the Pending ITC Reduction ITC drops to 10 percent on January 1, 2017 ▪ Our plan – Continued investment in solar drives growing production of Solar Renewable Energy Certificates (SRECs) – Stable SREC prices as grid - connected projects are capped and balanc
Slide 14: New Jersey Natural Gas Overview
New Jersey Natural Gas Overview 14 Kathleen T. Ellis Executive Vice President and Chief Operating Officer 2015 Investor Conference
Slide 15: Strong Fundamentals Drive Majority of NJNG's Earnings Growth
S trong F undamentals Drive the Majority of NJNG’s Earnings G rowth Largest stand - alone natural gas utility in New Jersey ▪ 512,000 customers ▪ Growing customer base ▪ Balanced mix of new construction and conversions ▪ 14,450 miles of distribution, service and transmission pipeline 15 Parsippany T
Slide 16: Strengths of a Reliable, Growing Utility
Strengths of a Reliable, Growing Utility Reputation for Excellent Service ▪ Highest ranked in East Region in J.D. Power’s 2015 Gas Utility Residential Customer Satisfaction Study SM * ▪ Cogents Reports awards for Most T rusted Utility B rand and Utility Environmental Champion in the Northeast ** Mut
Slide 17: Infrastructure Investment Improves System Performance
Infrastructure Investment I mproves S ystem P erformance 17 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Leaks per Mile Pending Leaks Leaks per Mile and Pending Le aks Pending Leaks Leaks per Mile 2015 Investor Conference
Slide 18: Infrastructure Projects
Infrastructure Projects 18 Craig A. Lynch Senior Vice President Energy Delivery 2015 Investor Conference
Slide 19: NJNG Infrastructure Capital Projects
NJNG Infrastructure Capital Projects SAFE NJ RISE Liquefaction SRL Capital Cost ($MM) $130 $102.5 $27.8 $177 Project Description Replace 276 miles of cast iron and bare steel pipe Six system hardening projects within NJNG’s coastal communities Constructing liquefaction plant to serve peak - day dema
Slide 20: SAFE Program Improves Safety and Reliability
SAFE Program Improves Safety and Reliability Safety Acceleration & Facility Enhancement (SAFE) Program ▪ Four - year expedited pipeline replacement plan implemented in October 2012 ▪ Consistent with New Jersey’s Energy Master Plan ▪ $130 million program to replace 276 miles of NJNG’s bare steel and
Slide 21: NJ RISE Investment to Harden NJNG's System
NJ RISE Investment to “Harden” NJNG’s System 21 ▪ NJ RISE approved by BPU in July 2014 ▪ Five - year program incorporating six system enhancement projects ▪ Earns immediate return ▪ All projects complete by 2019 ▪ Capital investment - $102.5 million 2015 Investor Conference
Slide 22: NJ RISE – Secondary Feeds & Reinforcements
NJ RISE – Secondary Feeds & Reinforcements 22 2015 Investor Conference Location of projects and investments on the barrier islands
Slide 23: Current Liquefaction Process to Help Meet Peak Demand
Current Liquefaction Process to Help Meet Peak Demand 23 1 - Transport LNG 4 - Vaporize up to 162 MMCF/D 2 - Store 11 million gallons of LNG 5 - Inject Into System 3 - Available for Peak Day 2015 Investor Conference
Slide 24: Future Liquefaction Process to Help Meet Peak Demand
Future Liquefaction Process to Help Meet Peak Demand 24 1 - Inject NJNG pipeline gas 4 - Vaporize up to 162 MMCF/D 2 - Store 11 million gallons of LNG 5 - Inject Into System 3 - Available for Peak Day 2015 Investor Conference BENEFITS Eliminates 700 annual truckloads, helps the environment, improves
Slide 25: Expanding System Resiliency: Southern Reliability Link
Expanding System Resiliency 25 2015 Investor Conference Southern Reliability Link (SRL) ▪ 30 - mile, 30 - inch natural gas transmission pipeline to diversify supplier base and strengthen system resilience in Monmouth, Ocean and Burlington Counties — Filed with BPU April 2015 — Delivery of 180,000 Dt
Slide 26: Customer Growth
26 Thomas J. Massaro, Jr. Vice President Marketing , Customer Services and Energy Efficiency 2015 Investor Conference Customer Growth
Slide 27: Marketing Based on Key Advantages
Marketing Based on Key Advantages ▪ Demographic Advantage – Median household income above national average ▪ Geographic Advantage - location , location, location! ▪ New Customer G rowth Advantage – Natural gas enjoys a healthy price advantage over competing fuels – Consistent balance of new construc
Slide 28: We Capture Percent of New Construction Market
We Capture 95 Percent of New Construction Residential New Construction Market ▪ Strong relationships with planning officials, builders and developers to promote the benefits of natural gas ▪ Natural gas remains the preferred fuel in both the single and multi - family markets Results: ▪ Our ” land -
Slide 29: Target Marketing for Customer Conversions
Target Marketing for Customer C onversions Conversion p rograms focus on: ▪ Fuel cost comparisons ▪ Promoting high - efficiency rebates and incentives ▪ Partnering with contractors, community organizations and municipalities Prescreening for targets based on: ▪ Demographics ▪ Proximity to existing m
Slide 30: Our Online Comparison Tool
Our Online Comparison Tool 30 2015 Investor Conference Assists in a ggressively targeting customer conversions
Slide 31: Cost-effective Targeting of Conversion Customers
Cost - effective Targeting of Conversion C ustomers Community conversion projects represent 30 to 35 percent of total conversion market ▪ Our community “conversion - bank” includes nearly 5,000 potential conversions over a five - year period Remainder of conversion market is targeted at potential cu
Slide 32: Potential Mine Hill Community Conversion Project
Potential Mine Hill Community Conversion Project 2015 Investor Conference 32
Slide 33: Mine Hill Conversion Replies
Mine Hill Conversion Replies 2015 Investor Conference 33
Slide 34: Mine Hill Conversions and Proposed Gas Main Extensions
Mine Hill Conversions and Proposed Gas Main Extensions 2015 Investor Conference 34
Slide 35: Key Trends Support Future Customer Growth
Key Trends Support Future Customer Growth 35 2015 - 2017, 10,920 2018 - Build Out, 74,922 1. Source: A.D. Little Non Heat 6,900 On Main 36,322 Near Main 28,974 Off Main 47,840 2. Source: NJNG Marketing 2015 Investor Conference Conversions 2 Total = 120,036 New Construction 1 Total = 85,842
Slide 36: Customer Growth Drives Gross Margin
Customer Growth Drives Gross Margin Average utility gross margin per customer ▪ Residential: $410 annually ▪ Commercial: $1,445 annually 90 percent of new customer additions are residential, which represents 70 percent of utility gross margin 36 7,456 7,599 7,800 8,150 8,550 8,750 0 1,000 2,000 3,00
Slide 37: Diverse Sources of Utility Gross Margin
Diverse Sources of Utility Gross Margin $24.7 $33.5 $33.0 $33.8 $37.3 $0 $5 $10 $15 $20 $25 $30 $35 $40 FY14A FY15F FY16E FY17E FY18E Customer Growth SAVEGREEN BGSS Incentives 2015 Investor Conference 37
Slide 38: Regulation
38 Mark R. Sperduto Senior Vice President Regulatory Affairs 2015 Investor Conference Regulation
Slide 39: NJNG's Regulatory Agenda
NJNG’s Regulatory Agenda 39 ▪ Regulatory programs have generated mutual benefits for customers and shareowners ▪ B ase rate case filing in November 2015 ▪ Outline of the base rate case process ▪ Post base rate c ase outlook 2015 Investor Conference
Slide 40: Regulatory Programs Generate Earnings and Customer Savings
Regulatory P rograms Generate Earnings and Customer Savings Margin Programs ▪ BGSS Incentive Programs ▪ Off - system sales/capacity release ▪ Storage incentive program ▪ Added an average of $. 05 to NFE per share annually and saved customers over $ 778 million since inception ▪ Conservation Incentiv
Slide 41: Programs Support Public Policy Objectives
Programs Support Public Policy Objectives Capital Programs NGV Refueling Stations ▪ Three agreements signed, total investment of approximately $10 million NJ RISE ▪ Six system enhancement/reliability projects driven by the impacts of Superstorm Sandy and other weather events SAFE Program ▪ $130 mill
Slide 42: November 2015 Base Rate Case Filing
November 2015 Base Rate Case Filing ▪ Required as part of the SAFE program approval ▪ Request recovery of infrastructure investments from 2008 through test y ear ‒ “Normal” capital expenditures ‒ Superstorm Sandy ‒ SRL ‒ Liquefaction ‒ SAFE ‒ NJ RISE 42 2015 Investor Conference
Slide 43: Base Rate Cases in NJ
Base Rate Cases in NJ ▪ Base rate cases in New Jersey are a judicial proceeding ▪ Burden on the utility to prove that its request is justified ▪ The test - year period for measuring income at current rates will be historical at the time of settlement ▪ NJNG began its test year on July 1, 2015 ▪ Most
Slide 44: Capital Associated with the Upcoming Base Rate Case
Capital Associated with the Upcoming Base Rate Case 2015 Investor Conference ($MM) 2009-2014A 2015F 2016P Total New Customer $134.1 $36.3 $35.2 $205.6 NJ RISE - 7.0 17.9 24.9 SAVEGREEN 91.6 26.1 42.0 159.7 Subtotal $225.7 $69.4 $95.1 $390.2 SAFE $63.8 $34.5 $31.7 $130.0 NGV Stations 5.6 4.2 - 9.8 Su
Slide 45: Recent Rate Case Decisions in NJ
Recent Rate Case Decisions in NJ Company Filing Date Settlement Date Overall Weighted Cost of Capital Return on Equity Equity Ratio Programs SAFE 3/20/12 10/23/12 6.90% 9.75% 53.5% NJ RISE 9/3/13 7/23/14 6.74% 9.75% 53.5% SAVEGREEN 12/14/14 7/23/15 6.69% 9.75% 53.3% Base Rate Cases South Jersey Gas
Slide 46: Regulatory Agenda – Post Base Rate Case
Regulatory Agenda – Post Base Rate Case Following the conclusion of the base r ate c ase ▪ Continue strong customer growth ▪ Continue existing programs – CIP – SAVEGREEN – BGSS Incentives ▪ NJ RISE – Complete hardening projects ▪ File for SAFE Extension – Approximately $200 million – Would complete
Slide 47: NJNG Key Messages
NJNG Key Messages Infrastructure projects improve safety, reliability and resiliency Customer growth outlook remains strong Collaborative regulatory programs generate earnings and customer savings NFE contribution expected to be 60 - 70 percent in fiscal 2016 and beyond 2015 Investor Conference 47
Slide 48: NJR Clean Energy Ventures
48 Stanley M. Kosierowski President Richard R. Gardner Vice President Lawrence M. Barth Director, Policy and Strategic Initiatives 2015 Investor Conference NJR Clean Energy Ventures
Slide 49: New Jersey Clean Energy Market
New Jersey Clean Energy Market RPS Renewable Portfolio Standard SACP Solar Alternative Compliance Payment Compliance Options SREC Market 2015 Investor Conference Law established requirements for Load Serving Entities (LSEs) for each Energy Year (June 1 - May 31) Set penalties for non - compliance wi
Slide 50: NJ Renewable Portfolio Standard (RPS)
0% 3% 6% 9% 12% 15% 18% 21% 24% 27% 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 % of Retail Sales Energy Year Solar Carve Out Class I Class II NJ Renewable Portfolio Standard (RPS) Class I includes wind energy, fuel cells powered by renewable fuels, geothermal, wave or tidal action, met
Slide 51: New Jersey RPS Drives Investment Opportunities
New Jersey RPS Drives Investment Opportunities 0.2% 0.3% 0.4% 0.7% 2.1% 2.5% 2.8% 3.0% 3.2% 3.3% 3.4% 3.5% 3.6% 3.7% 3.7% 3.8% 3.9% 4.0% 4.1% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 % of Retail S
Slide 52: Solar Alternative Compliance Payment
Solar Alternative Compliance Payment 2015 Investor Conference ▪ Legislated penalty paid by LSE if fails to meet solar RPS obligation ▪ Sets the ceiling for SREC prices 52 $693 $675 $658 $641 $339 $331 $323 $315 $308 $300 $293 $286 $279 $272 $266 $260 $253 $250 $239 $0 $100 $200 $300 $400 $500 $600 $
Slide 53: SREC Prices Influenced by Supply/Demand and Capped by SACP
SREC Prices Influenced By Supply/Demand And Capped By SACP RPS LSE’s Solar project o wners Bid Ask SREC m arket SACP 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Solar Carve Out $0 $200 $400 $600 $800 SACP 53 2015 Investor Conference
Slide 54: Market Fundamentals Drive SREC Prices
$70 $230 $- $50 $100 $150 $200 $250 $175 Market Fundamentals Drive SREC Prices 54 Source: Karbone 2015 Investor Conference
Slide 55: Monthly Solar Capacity Additions
Monthly Solar Capacity Additions Trailing three, six and twelve month average installation rates of 15.2 MW, 12.8 MW and 16.0 MW Source: NJ Clean Energy Program 55 85.0 11.8 - 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 2015 Investor Conference
Slide 56: SREC Market Could Approach Balance by EY18
SREC Market Could Approach Balance by EY18 2015 Investor Conference 1,364 1,620 1,948 2,233 2,419 790 586 341 159 43 1,568 1,865 2,131 2,349 2,528 - 500 1,000 1,500 2,000 2,500 3,000 2014 2015 2016 2017 2018 SRECs (thousands) Ability to Generate Carryover from Prior Year RPS 2014A 2015E/A 2016F 2017
Slide 57: Diversified Clean Energy Strategy
Diversified Clean E nergy Strategy 2015 Investor Conference Current Clean Energy Portfolio Net Metered Solar (Residential & Commercial) Continue review of other technologies and markets 57 Wholesale Solar ( Grid - connected ) On - shore Wind Capital Invested: $ 218.8 million $171 million $62.7 milli
Slide 58: Commercial and Residential Solar Portfolio
Commercial a nd Residential Solar Portfolio Commercial Solar ▪ Projects include roof - and ground - mounted installations, both grid - connected and net - metered ▪ 22 projects in service ▪ 82.4 MW Residential Solar - The Sunlight Advantage® ▪ Approximately 4,000 customers added since inception ▪ 35
Slide 59: On-shore Wind Portfolio
On - shore Wind Portfolio 2015 Investor Conference Two Dot Carroll Area Size 9.7 MW 20 MW Location 93 miles SE of Helena, MT 65 miles NW of Des Moines, IA Capital $21 million $42 million Contractor Mortensen Construction Mortenson Construction Turbines General Electric Siemens PPA 25 - year with Nor
Slide 60: NJRCEV Capital Plan
NJRCEV Capital Plan Solar Investment Strategy ▪ Leverage current incentives and increase SREC production by maximizing solar construction ▪ Post - ITC reduction: Focus on residential solar in Sunlight Advantage® and commercial solar ▪ Cost of capital – 9 percent unlevered IRR; 15 percent ROE Wind In
Slide 61: Capital Investment Increases SREC Generation
Capital Investment Increases SREC Generation 2015 Investor Conference 82 125 164 194 216 0 40 80 120 160 200 240 2014A 2015E 2016E 2017E 2018E Thousands of SRECs Commercial Solar Residential Solar 61
Slide 62: Greatest Post-ITC Investment Opportunities
Greatest Post - ITC Investment Opportunities Sunlight Advantage provides customers with 25 - 30 percent savings versus current utility rates ▪ O fferings in 2017 likely to offer 15 - 20 percent savings Solar panel and inverter prices are projected to decline ▪ More efficient panels help to control l
Slide 63: Wind Portfolio Expected to Grow by December 2015
NJR Expects its Wind Portfolio to be Nearly 78 MW by December 2015 2015 Investor Conference ▪ Third onshore wind project ▪ 48 MW wind farm project located in Rush County, Kansas ▪ Approximately $85 million investment ▪ PTC eligible ▪ Power Purchase Agreements and financial hedges with Kansas City BP
Slide 64: Alternative Compliance Payments Drive the REC Market
Alternative Compliance Payments (ACP) Drives the REC Market ▪ Similar to SRECs, a Class 1 REC is created for each megawatt hour of energy produced by a wind facility ▪ The ACP is a legislated payment that must be paid by LSEs if they fail to meet their RPS obligation ▪ The ACP sets the ceiling REC p
Slide 65: Drivers of Post-PTC Wind Economics
Today With PTC* Post PTC Typical Wind Investment In PJM Drivers of Post - PTC Wind Economics 2015 Investor Conference *Assumes PJM wind project @ $2 million per megawatt cost, 20 - year life, 34% net capacity factor, Navigant Consulting’s July 2015 Wholesale Energy Forward Curve, $23 REC price over
Slide 66: Post-PTC Cumulative Wind Capacity Forecast Additions
Post - PTC Cumulative Wind Capacity Forecast Additions 2017 - 2030 2015 Investor Conference 880 726 7,500 3,500 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 ISO-NE NYISO PJM California MW Source: IHS Large market opportunity for wind investments – highlighted by PJM 66
Slide 67: Results of Executing Clean Energy Strategy
Results of Executing Clean Energy Strategy 2015 Investor Conference 60% 26% 14% Fiscal 2015 Estimate $453 million Commercial Solar Residential Solar Wind 38% 25% 37% Fiscal 2018 Year - end Plan $937 million 67
Slide 68: NJRCEV Key Messages
NJRCEV Key Messages Long - term prospects for wind and solar are solid NJ SREC market has stabilized and moving towards balance Regulatory Outlook ▪ State RPS policies will drive project development post - tax credits ▪ Clean Power Plan favors renewables, but impact appears to be long term even if l
Slide 69: NJR Energy Services
NJR Energy Services 69 Stephen D. Westhoven Senior Vice President 2015 Investor Conference
Slide 70: NJR Energy Services Purpose and Business Lines
NJR Energy Services Purpose ▪ Provides physical, producer and asset management services to wholesale customers across North America Strategy ▪ Create value from a diverse portfolio of physical gas assets and services Business Lines ▪ Firm storage (40 Bcf in the US and Canada) ▪ Firm transportation (
Slide 71: Macro Strategy
Macro Strategy 2015 Investor Conference Create significant upside potential while managing downside risk ▪ Contract or acquire physical assets in opportunistic locations and execute revenue - generating strategies based on market fluctuations ▪ Develop strong customer relationships within the market
Slide 72: NJRES: Asset Portfolio
NJRES: Asset Portfolio Physical Assets Firm Storage Firm Transportation Producer Service Area 72 2015 Investor Conference
Slide 73: NJRES Expectations
NJRES Expectations ▪ In business since 1995 and generated NFE every year ▪ Realistic NJRES earnings forecast for fiscal 2016 and beyond ▪ Expected FY2016 - 2018 performance to mirror FY2011 - 2013 2015 Investor Conference $0 $30 $60 $90 FY11A FY12A FY13A 3 Yr Avg FY14 FY15F FY16E FY17E FY18E $MM NFE
Slide 74: Market Continues to Grow in Size Through 2020
While most of the growth in overall market size through 2015 was supply - driven, demand will be the main catalyst for future growth. Source: EIA, Citi Commodities 65.0 70.0 75.0 80.0 85.0 90.0 95.0 2013 2014 2015 2016 2017 2018 2019 2020 Total US Natural Gas Demand Market Continues to Grow in Size
Slide 75: NJRES: Things to Watch
NJRES: Things to Watch ▪ El Niño conditions point towards a mild start to winter ▪ Q4 2015 pipeline expansions will facilitate Marcellus supply growth as constraints are eased ▪ Record natural gas - fired electric generation exceeds coal generation output for the first time in history – Will it cont
Slide 76: NJRES Key Messages
NJRES Key Messages Significant upside potential, while managing downside risk NFE not assumed to match record fiscal 2014 and 2015 performance NFE contribution expected to be 5 – 15 percent in fiscal 2016 and beyond 2015 Investor Conference 76
Slide 77: Midstream
Midstream 77 David Johnson Managing Director 2015 Investor Conference
Slide 78: Our Midstream Portfolio
Our Midstream Portfolio ▪ Steckman Ridge – $127 million investment, 12 Bcf natural gas storage facility in southwest Pennsylvania – 50/50 joint venture with Spectra Energy – Direct access to Texas Eastern and Dominion Transmission pipelines and access to Northeast and Mid - Atlantic markets ▪ Domini
Slide 79: PennEast Pipeline
PennEast Pipeline 2015 Investor Conference 79
Slide 80: Receipt Points – >2 Bcf/d of Local Supply
Receipt Points - >2 Bcf/d of Local Supply 2015 Investor Conference 80
Slide 81: Available Delivery Points
Available Delivery Points 2015 Investor Conference 81
Slide 82: PennEast Pipeline Overview
PennEast Pipeline Overview 2015 Investor Conference ▪ 118 - mile , 36 - inch pipeline ▪ Pipeline capacity up to 1.1 MMdth/day ▪ Total capex $ 1.2 billion ▪ Signed precedent agreements for 990 Mdth/day ▪ Current ownership: NJR, GAS, SJI, UGI at 20 percent and PSEG and SEP at 10 percent ▪ Commercial o
Slide 83: LDCs Account for More Than Percent of PennEast Volumes
LDCs Account for More Than 70 Percent of PennEast Volumes 2015 Investor Conference 72% 13% 6% 9% PennEast Shippers LDCs Pipelines IPPs Producers 83
Slide 84: Midstream Key Messages
Midstream Key Messages Steckman Ridge storage facility provides steady annual earnings Dominion Midstream Partners diversifies portfolio PennEast investment development ongoing NFE contribution expected to be 5 - 10 percent in fiscal 2016 and beyond 2015 Investor Conference 84
Slide 85: Financial Review
Financial Review 85 Glenn C. Lockwood Executive Vice President and Chief Financial Officer 2015 Investor Conference
Slide 86: Capital Expenditures
Capital Expenditures 2015 Investor Conference ($MM) 2015F 2016P 2017P 2018P Total NJNG New Customer $36.3 $35.2 $32.6 $31.5 $135.6 Maintenance/other 83.9 81.1 81.8 87.7 334.5 SAFE/SAFE Extension 34.5 31.7 33.3 31.3 130.8 Sandy 5.0 - - - 5.0 NJ RISE 7.0 17.9 27.5 33.5 85.9 NGV Stations 4.2 - - - 4.2
Slide 87: Delivering Average Annual NFE Growth with Reduced ITC
Delivering Average Annual NFE Growth of 5 to 9 Percent with Reduced ITC 87 $1.36 $2.10 $1.70 - $1.80 $1.70 - $1.97 $0.75 $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 FY13A FY14A FY15F FY16E FY17E FY18E NFE ITC 2015 Investor Conference Total NFE Per Share
Slide 88: Long Track Record of Dividend Growth
Long Track Record of Dividend Growth 88 ▪ Committed to above average dividend growth of 6 – 8 percent annually ▪ 22 consecutive years of dividend increases ▪ Dividend payout ratio goal of 60 – 65 percent ▪ Recent 6.7 percent increase to current $0.96 annual rate $.48 $.51 $.55 $.62 $.68 $.72 $.77 $.
Slide 89: Strong Internal Cash Generation Reduces Equity Needs
Strong Internal Cash Generation Reduces Equity Needs 89 $MM 2015F 2016E 2017E 2018E Cash Flow from Operations $365.2 $127.9 $319.9 $340.2 Uses of Funds Capital expenditures - NJNG ($185.1) ($291.1) ($230.5) ($184.0) Capital expenditures - Penn East (5.3) (42.2) (160.2) (32.4) Capital expenditures -
Slide 90: Strong Investment Grade Ratings
Strong Investment Grade Ratings 90 Debt - to - Capitalization Ratios NJNG Credit Ratings S&P Moody’s Corporate Rating A Commercial Paper A - 1 P - 1 Senior Secured A+ Aa2 Ratings Outlook Stable Stable FY2015E – 2018E Equity Ratio 46 - 53% FFO/Total Debt 22 - 32% Interest Coverage 5 - 7x Debt/EBITDA
Slide 91: Wrap Up
Wrap Up 91 Laurence M. Downes Chairman of the Board and Chief Executive Officer 2015 Investor Conference
Slide 92: Let's Finish Where We Started
Let’s Finish Where We Started 92 Fiscal 2016 NJNG x Customer growth x CIP x BGSS incentives x Infrastructure programs x SAVEGREEN x NJ RISE x SRL x Rate case filing x Liquefaction plant in service Midstream x PennEast FERC final approval requested Clean Energy x Lower solar investment x More SRECs;