Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Investor Day (October 2014)
94 slides from Newjersey Resources's investor day presentation, Oct 21, 2014
Slide 1: Annual Investor Conference
Vj: ANNUAL INVESTOR CONFERENCE New Jersey WW Resources
Slide 2: Today's Agenda
Today’s Agenda 7:45 - 8:30 REGISTRATION & BREAKFAST 8:30 - 9:00 CEO Perspective Laurence M. Downes Chairman and CEO 9:00 - 10:00 Utility Review Kathleen T. Ellis - Executive VP, Chief Operating Officer Thomas J. Massaro - VP Marketing & Business Intelligence Craig A. Lynch - Senior Vice President, E
Slide 3: CEO Perspective
ANNUAL INVESTOR CONFERENCE October 21, 2014 CEO Perspective Laurence M. Downes Chairman and Chief Executive Officer
Slide 4: 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 . Words such as “anticipates,” “estimates,” “expects,” “projects,” “forecasts”, “may,” "will," “inten
Slide 5: Disclaimer Regarding Non-GAAP Financial Measures
Disclaimer Regarding Non - GAAP Financial Measures 4 This presentation includes the non - GAAP measures net financial earnings (NFE) and utility gross margin . As indicators of the Company’s operating performance, these measures should not be considered alternatives to, or more meaningful than, GAAP
Slide 6: Key Industry Issues
Key Industry Issues 5 Macro Economic Environment Safety Infrastructure Customer/Margin Growth Regulation Commodity Prices/Demand Growth Public Policy Financial Performance
Slide 7: Fiscal 2014 Highlights: Solid Performance
Fiscal 2014 Highlights: Solid Performance » Record earnings growth driven primarily by NJR Energy Services (NJRES) and New Jersey Natural Gas (NJNG) » 7.1 percent dividend increase » Robust infrastructure investments driven by customer growth and system reliability » Constructive regulatory relation
Slide 8: How Do Lower Natural Gas Prices Affect NJR?
How Do Lower Natural Gas Prices Affect NJR? » Natural gas reserve base has increased due to shale revolution x Natural gas prices remain relatively low x Production and demand continue to grow » What does this mean for NJR? x More competitive prices for NJNG customers x Strengthens support for new n
Slide 9: Energy Value Chain Growth Opportunities
Energy Value Chain Growth Opportunities 8 Mid - Stream Upstream Downstream Natural Gas Business Exploration Production Transportation Transmission Distribution Commodity Transportation Generation Transmission Distribution End Use Electric Business Distributed Power End Use On - Site Generation Distr
Slide 10: Our Growth Strategy
Our Growth Strategy » Increased regulated infrastructure investments drives safe, reliable service and anchors our business portfolio x NJNG drives our long - term growth x PennEast Pipeline » Provide customers with cost - efficient renewable electricity, while reducing ITC reliance x Portfolio dive
Slide 11: Fiscal 2014-2017 Capital Forecast
Fiscal 2014 - 2017 Capital Forecast 10 Capital forecast approximates $1.5 billion through fiscal 2017 » Almost 70 percent of capital allocated to regulated businesses » Already earning a return on more than half of NJNG capital » Diversified renewable portfolio
Slide 12: Regulated Businesses Expected to Contribute Percent of Fiscal 2015 NFE
Regulated Businesses Expected to Contribute 65 - 80 Percent of Fiscal 2015 NFE 11 Long - term NFE growth goal remains 5 to 9 percent New Jersey Natural Gas NJR Clean Energy Ventures NJR Energy Services NJR Midstream NJR Home Services
Slide 13: Dividend Growth and Payout Ratio
Dividend Growth and Payout Ratio 12 Dividend growth goal of 6 to 8 percent annually * Current annual rate ** Assumes 6 - 8 percent average annual dividend growth *** Based on the midpoint of NFE Consensus Payout Ratio Dividend Growth
Slide 14: Our ITC Transition
Our ITC Transition » Expected drop in ITC to 10 percent – January 1, 2017 » Our plan: x Continued investment in solar drives production of Solar Renewable Energy Certificates (SRECs) x SREC prices increase as grid - connected projects are capped and Renewable Portfolio Standard (RPS) increases x Win
Slide 15: Today's Program
Today’s Program 14 Natural Gas Distribution Kathleen Ellis Thomas Massaro Craig Lynch Mark Sperduto Midstream • PennEast Pipeline Project • Storage and pipeline investments Clean Energy • ITC transition • 92 MW installed capacity • Onshore wind projects Energy Services • Physical natural gas and pro
Slide 16: New Jersey Natural Gas - Overview
ANNUAL INVESTOR CONFERENCE October 21, 2014 New Jersey Natural Gas - Overview Kathleen T. Ellis Executive Vice President and Chief Operating Officer
Slide 17: New Jersey Natural Gas: The Foundation of Our Business
New Jersey Natural Gas: The Foundation of Our Business » Growing customer base – primarily residential and commercial x New construction market continues to expand x Healthy mix of new construction and conversions » Infrastructure investments to strengthen distribution and transmission system are su
Slide 18: Meeting Customer Needs
Meeting Customer Needs » 6.1 million meter reads » 1.1 million customer calls handled » 69,000 walk - in payments processed » 50,500 web transactions 17 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 ACE PEG SJG ETG NJNG 3.5 1.5 1.3 1.0 0.4 BPU Inquiries per 1,000 Customers Fiscal 2014 Customer Transa
Slide 19: System Safety and Reliability
System Safety and Reliability 18 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 Pending Leaks Leaks per Mile Infrastructure investment improves system performance
Slide 20: New Jersey Natural Gas - Customer Growth
ANNUAL INVESTOR CONFERENCE October 21, 2014 New Jersey Natural Gas – Customer Growth Thomas J. Massaro Vice President, Marketing and Business Intelligence
Slide 21: Our Marketing Strategy
Our Marketing Strategy » Our marketing strategy is based on our competitive advantages » Why are we growing faster than other companies? x Demographics • Median household income above national average • Median home value above the national average x Geographic proximity • One hour commute to NYC or
Slide 22: A Growing Service Area
A Growing Service Area 21 0.0% 5.0% 10.0% 15.0% N.J. Morris Monmouth Ocean 1.2% 6.2% 2.3% 14.1% Population Change 2000 - 2013* M onmouth 43% Ocean 44% M iddlesex/ Burlington 1% Morris 12% Service Territory Customer Breakdown Our service territory is among the fastest growing in the state w ith Ocean
Slide 23: Value for Customers
Value for Customers 22 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 NJNG Fuel Oil Propane Electricity $1.02 $2.95 $4.51 $3.96 Source: US Energy Information Administration Data as September 2014. Based on 100,000 comparable BTUs NJNG enjoys a distinct price advantage in its service area
Slide 24: Potential Customer Growth
Potential Customer Growth 23 2014 - 2016 10,200 Beyond 2017 - 78,206 New Construction Non Heat 6,900 On Main 36,322 Near Main 28,974 Off Main 47,840 Conversions NJNG sees total potential of over 201,500 new customers Source for new construction data is A.D. Little Source for conversions data is Hart
Slide 25: Future New Construction
Future New Construction » Estimates based on: x Local construction trends x Economic forecasts » Strong new residential construction market x Existing home sale inventory remains low, spurring new construction x Mortgage rates remain low x In 2013, Ocean, Morris and Monmouth counties ranked 3 rd thr
Slide 26: New Construction - Active Developments
New Construction – Active Developments 25 » Our top 15 growth towns over the next three years » Nearly 8,500 potential new homes » Additionally, spot lot market adds about 700 customers annually
Slide 27: Future Conversion Market
Future Conversion Market » Aggressive marketing to communities using a mix of fuels including oil, electric and propane » To encourage conversions: x Fuel cost comparisons x Promote high - efficiency rebates and incentives x Partner with contractors » Long - term conversion growth outlook is strong
Slide 28: Conversion Market - Community Projects
Conversion Market – Community Projects 27 » Current and proposed conversion projects » About 4,840 potential conversions over a 5 - year period » Represents about 30 - 35 percent of residential conversion market » Balance from on/near main conversion target markets
Slide 29: The SAVEGREEN Project
The SAVEGREEN Project ® 28 » Investment in high - efficiency equipment » Encourages energy savings » Plan to invest approximately $138 million in grants and financial incentives over life of the program » Since inception: x Assisted over 31,000 customers reduce energy consumption and lower their bil
Slide 30: The NGV Advantage Program
The NGV Advantage Program » Three agreements signed, total investment approximates $10 million » Open to the public - operational by end of 2014 » Stations generating interest from neighboring fleets » NJNG earns 10.3 percent ROE on infrastructure investment » NJ Transit increasing number of buses i
Slide 31: New Jersey Natural Gas - Capital Projects
ANNUAL INVESTOR CONFERENCE October 21, 2014 New Jersey Natural Gas - Capital Projects Craig A. Lynch Senior Vice President, Energy Delivery
Slide 32: Planned NJNG Infrastructure Capital Projects
Planned NJNG Infrastructure Capital Projects 31 » NJ RISE (Reinvestment in System Enhancement) - $102.5 million x NJNG storm response plan approved by BPU July 2014 x Six system enhancement/reliability projects driven by the impacts of Superstorm Sandy and other weather events » Liquefaction Project
Slide 33: NJ RISE
NJ RISE » NJNG storm response plan filed with BPU on September 3, 2013 » Approved on July 23, 2014 for the full amount requested » Comprises six system enhancement projects for storm hardening and mitigation in storm prone areas x Five - year capital expenditures = $102.5 million » Work to start in
Slide 34: NJ RISE Reinforcement Projects
NJ RISE Reinforcement Projects 33
Slide 35: Liquefaction Project
Liquefaction Project 34 Storage Transport Vaporization Everett, Mass. Howell and Stafford, NJ 162 MMCFD 11 million gallons 300 miles, 6 hours
Slide 36: Liquefaction Project
Liquefaction Project » Why does NJNG use LNG? x High “Peak Day” demands; 20 percent of peak day sendout x Provides economic alternative to pipeline gas during peak day prices x Engineering and pipeline integrity support x Cryogenic expansion ratio (600:1) x Enhances system reliability » Why now? x L
Slide 37: Southern Reliability Link (SRL)
Southern Reliability Link (SRL) » What is SRL? x High - pressure natural gas pipeline to support reliability, diversify supplier base in Ocean County x Approximately 28 miles x Delivery of 180,000 Dths/day x $130 - $160 million » Why SRL? x Reliability, Redundancy, Resiliency x Our system is current
Slide 38: SRL Pipeline Route
SRL Pipeline Route sournern ZV [RELIABILITY LINK BA ‘Always
Slide 39: SRL - Where Are We Now?
SRL – Where Are We Now? » Just finalized Transco interconnect agreement » URS Engineering awarded engineering services contract » Narrowing route options based on Pinelands feedback » Proceeding with Joint Base process on Lakehurst route segment » Engineering design Early 2015 x Route selection/refi
Slide 40: New Jersey Natural Gas - Regulatory Review
ANNUAL INVESTOR CONFERENCE October 21, 2014 New Jersey Natural Gas – Regulatory Review Mark R. Sperduto Senior Vice President, Regulatory Affairs
Slide 41: NJNG's Regulatory Strategy
NJNG’s Regulatory Strategy » How are we growing without base rate cases? » How have our regulatory programs added value? » Why file a base rate case in November 2015? » What is the rate case process? 40
Slide 42: New Jersey Board of Public Utilities
New Jersey Board of Public Utilities » Five Commissioners appointed by the Governor x Six - year staggered terms » Board of Public Utilities (BPU) staff – comprised of approximately 240 employees » New Jersey Division of Rate Counsel – statutory interveners in all rate cases 41 Richard Mroz (R) Pres
Slide 43: How Have We Grown Without Base Rate Cases?
How Have We Grown Without Base Rate Cases? 42 ------------------------- Authorized ----------------------- Amount Rate Return Common Date Received Base on Equity Date Filed Implemented ($MM) ($MM) Equity Component WACC August 1991 June 1992 $ 2.2 $389.0 12.20% 53.00% 10.55 % April 1993 January 1994
Slide 44: How Have These Regulatory Programs Added Value?
How Have These Regulatory Programs Added Value? » BGSS Incentive Programs x Off - system sales/capacity release x Storage Incentive program x Financial Risk Management (FRM) program x Added an average of $.08 to NFE annually and saved customers over $712 million since inception » Conservation Incent
Slide 45: How Have These Regulatory Programs Added Value?
How Have These Regulatory Programs Added Value? » The SAVEGREEN Project® x In place through June 2015; intend to file late 2014 for extension x Investment of up to $138 million » The NGV Advantage Program x Three agreements signed, total investment of approximately $10 million » NJ RISE (Reinvestmen
Slide 46: Why File a Rate Case in November 2015?
Why File a R ate Case in November 2015? » As part of the SAFE program approval » Infrastructure Investments x Normal routine/capital additions x SAFE x SRL x Liquefaction x NJ RISE x Superstorm Sandy 45
Slide 47: Why File in November 2015?
Why File in November 2015? 46 ($MM) 2014F 2015E 2016E 2017E Total Customer Growth $103.9 $28.0 $26.8 $26.9 $27.0 $212.6 Yes Maintenance/Other 219.9 51.0 69.2 54.4 56.2 450.7 AIP/SAFE 182.0 44.7 41.2 39.0 2.4 309.3 Yes Superstorm Sandy 26.1 9.3 5.0 - - 40.4 NGV Fueling Stations 1.0 9.2 - - - 10.2 Yes
Slide 48: What is the Base Rate Case Process in New Jersey?
What is the Base Rate Case Process in New Jersey? 47 » A judicial proceeding heard at the Office of Administrative Law (OAL) x Burden is on utility through a preponderance of evidence » Statutory time is nine months x 12 months not unusual » Rate case valuation method – test period end » Rate case t
Slide 49: Time Line - Base Rate Case
Time Line – Base Rate Case » Pre - hearing phase x Pre - filed direct testimony - NJNG, Rate Counsel and Interveners x Discovery » Hearings x Public x Cross examination » Summations x Written briefs » Decision x ALJ x BPU 48 Pre - hearing Hearings Summations Decision ALJ BPU 3 ½ Months 1 Month 1 ½ M
Slide 50: NJR Energy Services Overview
ANNUAL INVESTOR CONFERENCE October 21, 2014 NJR Energy Services Overview Stephen D. Westhoven Senior Vice President
Slide 51: NJRES: Generated NFE Every Year Since 1995
NJRES: Generated NFE Every Year Since 1995 » Serves wholesale customers across North America » Average tenure of employees is 10+ years x Diverse portfolio of physical natural gas assets x Firm storage ( 40 Bcf in the US and Canada) » Firm transportation ( 1.5 Bcf/day) » Services include: x Transpor
Slide 52: NJRES: Macro Strategy
NJRES: Macro Strategy » Manage physical natural gas assets x Long option s trategy x Constantly reassess these assets and trade them to create value » Foster strong relationships within marketplace to provide services from these options » Arbitrage financial markets versus physical positions » Creat
Slide 53: Keys to Success
Keys to Success » Access to capital » Experienced, highly skilled and motivated people » Systems and mid - office infrastructure » Strong risk management and controls 52
Slide 54: New Jersey Resources
New Jersey Resources
Slide 55: NJRES: Portfolio of Assets
NJRES: Portfolio of Assets 54 Firm Storage Firm Transportation Producer Service Area » Typical annual portfolio: x Storage capacity – Approximately 40 Bcf in the United States and Canada x Pipeline transportation capacity – Approximately 1.5 Bcf/day Firm capacity on almost every pipeline in North Am
Slide 56: NJRES: Things to Watch
NJRES: Things to Watch » Weather is always the unknown variable x Early predictions calling for cooler than normal start to the winter season » United States economic growth x Electric generation demand stays strong x Continued growth in the industrials/petro - chemical markets » Gas storage levels
Slide 57: PennEast Update
ANNUAL INVESTOR CONFERENCE October 21, 2014 PennEast Update David Johnson, Managing Director NJR Energy Services
Slide 58: PennEast Pipeline
PennEast Pipeline ‘Always
Slide 59: PennEast Pipeline Overview
PennEast Pipeline Overview » 108 - mile, 36 - inch pipeline » Connecting Northeast Marcellus supply to Northeast markets » Contracted volume up to 1,000,000 dth/day » Total capex $ 1 billion » Current ownership: NJR, AGL, SJI, UGI at 22 percent and PSEG at 12 percent » Commercial operation in 2017 5
Slide 60: PennEast - Successful Open Season
PennEast – Successful Open Season » Concluded August 29 59 Shipper Profile Amount Utility - oriented natural gas market (includes one pending PA)* 710K/d Non - utility/Non - producer (includes 2 pending PAs)* 185K/d Producer based 40K/d Under review (mixed profile) 150K/d Total 1,085K/d * Pending me
Slide 61: PennEast Pipeline Market Developments
PennEast Pipeline Market Developments » Announcement of supporting p roject by Crestwood: MARC II x MARC II Project will connect an additional 1 BCF/day of supply from NE PA production to PennEast x Adds value to PennEast project by providing greater access to supply x Significant production constra
Slide 62: PennEast - Project Timeline
PennEast – Project Timeline Calendar Date Milestone August 2014 Binding open season October 2014 Pre - file with FERC July 2015 Full 7(c) file with FERC December 2016 Receive 7(c) Certificate January 2017 Implementation plan February 2017 Notice to proceed April 2017 Commence construction November 2
Slide 63: NJR Clean Energy Ventures Overview
ANNUAL INVESTOR CONFERENCE October 21, 2014 NJR Clean Energy Ventures Overview Stanley M. K osierowski – President Richard R. Gardner – Vice President Christopher Savastano – Director, Business Development
Slide 64: NJRCEV Strategy
NJRCEV Strategy 63 Clean Distributed Power Net Metered Solar (Residential & Commercial) Wholesale Solar Onshore Wind » Diversify portfolio throughout the distributed power platforms
Slide 65: Renewable Energy Market
Renewable Energy Market » Natural gas - fired generation and renewable generation sources such as wind and solar are shifting the energy generation mix away from base load coal » Wind and solar growth has been stimulated by federal tax credits, state policy incentives, improving technologies and con
Slide 66: Key Stakeholders Driving the Renewable Energy Market
Key Stakeholders Driving the Renewable Energy Market 65 Policymakers Balance constituent goals for jobs, environmental protection, resiliency and energy costs Customers Safe, reliable, affordable and green Manufacturers Competitive forces drive to grid parity Incumbents Distribution upgrades, Mainte
Slide 67: Renewable Portfolio Standard - AWEA Market Assessment 2013
Renewable Portfolio Standard – AWEA Market Assessment 2013 » Increased RPS requirements after 2016 will drive 2 - 4 GW of wind construction as capacity requirements increase 66 Source: AWEA RPS Market Assessment, 2013
Slide 68: NJRCEV Capital Expenditures
NJRCEV Capital Expenditures 67 Shift in capital spending promotes diversification from ITC - related solar $ 230, 69% $ 83, 25% $ 22, 6% Capex – Fiscal 2011A - 2014F Millions $ 136, 35% $ 102, 26% $ 125, 33% $ 25, 6% Capex – Fiscal 2015 - 2017E Millions Commercial Solar Residential Solar Onshore Win
Slide 69: NJRCEV Revenue Transition Mix
NJRCEV Revenue Transition Mix 68 Revenue growth from wind and solar generation should replace ITC earnings 99% 1% Fiscal 2014 Forecast ~$14.5 Million 60 - 70% 20 - 30% 5 - 15% Fiscal 2017 Estimate - $80 - $90 Million Commercial and Residential Solar Onshore Wind CHP
Slide 70: Pipeline of Potential Investment Opportunities
Pipeline of Potential Investment Opportunities » Strong and diversified network of developers, engineering firms, manufacturers and constructors provide access to potential investment opportunities » Diversified pipeline of solar, wind and CHP projects 69 Robust pipeline to meet plan objectives
Slide 71: Alexander Wind Farm
Alexander Wind Farm » Third onshore wind project for NJRCEV » 48 MW wind farm project located in Rush County, Kansas » Approximately $85 million investment » PTC eligible » Power Purchase Agreements with Kansas City BPU and Yahoo !, Inc. for the entire output » Commercial operation expected in the f
Slide 72: Onshore Wind Portfolio
Onshore Wind Portfolio 71 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 $22 million $42 million Contractor Mortensen Construction Mortenson Construction Turbines General Electric Siemens PPA 25 - year with Northwestern Energy, PTC eli
Slide 73: Commercial Solar Portfolio
Commercial Solar Portfolio » 16 project sites x 33 megawatts of wholesale generation x 22.6 megawatts of net - metered power purchase agreements » Projects are a combination of roof - top and ground - mounted installations » Three projects currently under construction with two additional projects be
Slide 74: Sunlight Advantage
Sunlight Advantage® » Sunlight Advantage residential lease program recently acquired its 3,000th customer and growing x Utilizes contractor/partner network for customer marketing and acquisition x Seven contractors across New Jersey x Ranked in top 3 (based on share of NJ market )* » Program structu
Slide 75: New Jersey Solar Legislation Reform - Two Years Later
New Jersey Solar Legislation Reform – Two Years Later » New legislation signed – July 2012 » Legislation designed to bring long - term stability to the state’s growing solar industry » Key provisions: 74 Provision Intent Result Renewable portfolio standard (RPS) increased starting in energy year 201
Slide 76: Monthly Capacity Additions Declining
Monthly Capacity Additions Declining 75 6 - month moving average = 16.3 MW translating to 196 MW annually 12 - month moving average = 17.5 MW translating to 210 MW annually 85 7.8 0 10 20 30 40 50 60 70 80 90 MW Source: NJ Clean Energy Program
Slide 77: Solar Project Pipeline Down Over 50 Percent from Peak
Office of Clean Energy (BPU) Solar Project Pipeline Down Over 50 Percent f rom Peak (MW) 76 A flat monthly pipeline indicates that average monthly installation numbers should remain at current pace 807 358 0 100 200 300 400 500 600 700 800 900 MW NJRCEV is 18 percent of current pipeline Source: NJ C
Slide 78: SREC Prices Have Rallied
SREC Prices Have Rallied 77 $70 $175 $60 $80 $100 $120 $140 $160 $180 $200 Even though market is over - supplied - $175 represents 53 percent of SACP Source: Karbone
Slide 79: EY2014 RPS Requirements Reducing SREC Carryover
EY2014 RPS Requirements Reducing SREC Carryover 78 Policies are working – the excess SREC supply is shrinking 1,323 1,574 790 539 0 400 800 1200 1600 2000 2400 SREC Supply RPS SRECs (000) Generation Prior Year Carryover RPS Ending Carryover 2,113 2,113 Source: NJ Clean Energy Program
Slide 80: SREC Market - Balance Scenario
SREC Market - Balance Scenario 79 1,112 1,323 1,694 1,973 2,250 274 790 539 323 124 713 1,386 2,113 2,233 2,374 0 500 1000 1500 2000 2500 3000 2012A 2013A 2014F 2015E 2016E 2017E Carryover from Prior Year Ability to Generate 442 596 1,574 1,910 2,172 RPS Energy Year 240 MW per year of new capacity b
Slide 81: SREC Price Range Forecast
SREC Price Range Forecast 80 $100 $150 $200 $250 $300 $350 EY 2015 EY 2016 EY 2017 SACP Projected SREC - High Projected SREC - Low 70 to 80 50 to 60 Source: NJRCEV estimates Percentage of SACP
Slide 82: Strategic Summary
Strategic Summary » Investment focus is based on increasing long - term earnings by diversifying from ITC - driven solar and expanding across a range of distributed power opportunities x Expanding onshore wind portfolio and evaluating combined heat and power opportunities » Portfolio growth along wi
Slide 83: Financial Update
ANNUAL INVESTOR CONFERENCE October 21, 2014 Financial Update Glenn Lockwood Chief Financial Officer
Slide 84: Key Drivers for Consistent Growth
Key Drivers for Consistent Growth 83 » New Jersey Natural Gas (NJNG) x 1.5 percent customer growth rate x Regulatory Initiatives x Rate Base Growth x New base rates in fiscal 2017 » Midstream x Steady returns from Steckman and Iroquois x PennEast in - service in 2018 » NJR Energy Services (NJRES) x
Slide 85: NJR Capital Investment
NJR Capital Investment 84 ($MM) 2014F 2015E 2016E 2017E Total Immediate Return NJNG Customer Growth $28.0 $26.8 $26.9 $27.0 $108.7 Yes Maintenance/Other 51.0 69.2 54.4 56.2 230.8 AIP/SAFE 44.7 41.2 39.0 2.4 127.3 Yes Superstorm Sandy 9.3 5.0 - - 14.3 NGV Fueling Stations 9.2 - - - 9.2 Yes NJ RISE -
Slide 86: Diversified Sources of Utility Growth
Diversified Sources of Utility Growth 85 NJNG expects incremental utility gross margin to more than double by fiscal 2017 $0 $5 $10 $15 $20 $25 $30 $35 $40 FY13A FY14F FY15E FY16E FY17E $15.6 $28.1 $31.6 $35.3 $38.4 Millions Customer Growth SAVEGREEN NGV BGSS Incentives $0 $1 $2 $3 $4 $5 $6 $7 2013A
Slide 87: Growing SREC Generation
Growing SREC Generation 86 0 40 80 120 160 200 2014F 2015E 2016E 2017E 82 125 164 194 Thousands of SRECs Commercial Solar Residential Solar Capital investment increases SREC inventory
Slide 88: SREC Revenue
SREC Revenue 87 $0.0 $15.0 $30.0 $45.0 FY14F FY15E FY16E FY17E $9.6 $22.7 $32.3 $40.9 Revenue (Millions) SREC prices continue improvement to 70 – 80 percent of SACP
Slide 89: Cash Flow Estimates
Cash Flow Estimates 88 2014F 2015 - 2017E Cash Flow from Operations $323.1 $746.0 Uses of Funds Capital expenditures - NJNG ($168.2) ($604.3) Capital expenditures - CEV (97.3) (388.2) Dividends (69.7) (240.0) Total Uses of Funds ($335.2) ($1,232.5) Financing Activities Common stock proceeds, net $7.
Slide 90: Key Credit Metrics
Key Credit Metrics 89 2014F 2015E – 2017E Equity Ratio 47 - 53% 46 - 53% FFO/Total Debt 35 - 45% 22 - 32% Interest Coverage 11x 5 - 7x Debt/EBITDA 2.9x 4 - 5 x Regulated NFE Contribution NJNG 40 - 45% 60 – 70% Midstream 3 - 5% 5 – 10% Total 43 - 5 0% 65 – 80%
Slide 91: NFE Growth with Reduced Impact of ITC
NFE Growth with Reduced Impact of ITC 90 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 2012A 2013A 2014F 2015E 2016E 2017E $2.71 $2.73 $4.00 - $4.20 $3.28 - $3.71 Our plan reduces the reliance on ITC while continuing NFE growth over the planning horizon
Slide 92: Wrap Up
ANNUAL INVESTOR CONFERENCE October 21, 2014 Wrap Up Laurence M. Downes Chairman and Chief Executive Officer
Slide 93: An Ambitious, Yet Achievable Plan
An Ambitious, Yet Achievable Plan » Total capital investment approximates $1.5 billion through fiscal 2017 x About 70 percent is regulated » Energy infrastructure investment and margin growth drive the majority of our long - term earnings outlook x NJNG remains the largest contributor to earnings »
Slide 94: Our Path to Continued Growth
Our Path to Continued Growth 93 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; higher prices x Carroll Area wi