x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | 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 | Exact name of registrant as specified in its charter and principal office address and telephone number | State of Incorporation | I.R.S. Employer Identification No. |
1-6364 | South Jersey Industries, Inc. 1 South Jersey Plaza Folsom, NJ 08037 (609) 561-9000 | New Jersey | 22-1901645 |
000-22211 | South Jersey Gas Company 1 South Jersey Plaza Folsom, NJ 08037 (609) 561-9000 | New Jersey | 21-0398330 |
South Jersey Industries, Inc.: | ||
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o |
Smaller reporting company o | Emerging growth company o | |
South Jersey Gas Company: | ||
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x |
Smaller reporting company o | Emerging growth company o |
PART I | FINANCIAL INFORMATION | Page No. |
Item 1. | Financial Statements (Unaudited) | |
South Jersey Industries, Inc. | ||
South Jersey Gas Company | ||
South Jersey Industries, Inc. and South Jersey Gas Company - Combined | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | OTHER INFORMATION | |
Item 1. | ||
Item 1A. | ||
Item 6. | ||
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Operating Revenues (See Note 16): | |||||||
Utility | $ | 231,768 | $ | 195,769 | |||
Nonutility | 290,177 | 230,060 | |||||
Total Operating Revenues | 521,945 | 425,829 | |||||
Operating Expenses: | |||||||
Cost of Sales - (Excluding depreciation) | |||||||
- Utility | 87,117 | 71,379 | |||||
- Nonutility | 195,951 | 215,763 | |||||
Operations (See Note 1) | 47,044 | 38,448 | |||||
Maintenance | 6,862 | 4,981 | |||||
Depreciation | 24,662 | 24,323 | |||||
Energy and Other Taxes | 2,439 | 2,071 | |||||
Total Operating Expenses | 364,075 | 356,965 | |||||
Operating Income (See Note 1) | 157,870 | 68,864 | |||||
Other Income and Expense (See Note 1) | 2,761 | 4,487 | |||||
Interest Charges | (13,972 | ) | (16,745 | ) | |||
Income Before Income Taxes | 146,659 | 56,606 | |||||
Income Taxes | (36,415 | ) | (21,870 | ) | |||
Equity in Earnings of Affiliated Companies | 1,062 | 3,011 | |||||
Income from Continuing Operations | 111,306 | 37,747 | |||||
Loss from Discontinued Operations - (Net of tax benefit) | (66 | ) | (30 | ) | |||
Net Income | $ | 111,240 | $ | 37,717 | |||
Basic Earnings Per Common Share: | |||||||
Continuing Operations | $ | 1.40 | $ | 0.47 | |||
Discontinued Operations | — | — | |||||
Basic Earnings Per Common Share | $ | 1.40 | $ | 0.47 | |||
Average Shares of Common Stock Outstanding - Basic | 79,595 | 79,519 | |||||
Diluted Earnings Per Common Share: | |||||||
Continuing Operations | $ | 1.40 | $ | 0.47 | |||
Discontinued Operations | — | — | |||||
Diluted Earnings Per Common Share | $ | 1.40 | $ | 0.47 | |||
Average Shares of Common Stock Outstanding - Diluted | 79,724 | 79,641 | |||||
Dividends Declared Per Common Share | $ | 0.28 | $ | 0.27 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net Income | $ | 111,240 | $ | 37,717 | |||
Other Comprehensive Income, Net of Tax:* | |||||||
Unrealized Gain on Derivatives - Other | 9 | 1,515 | |||||
Other Comprehensive Income - Net of Tax* | 9 | 1,515 | |||||
Comprehensive Income | $ | 111,249 | $ | 39,232 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net Cash Provided by Operating Activities | $ | 95,201 | $ | 79,528 | |||
Cash Flows from Investing Activities: | |||||||
Capital Expenditures | (58,816 | ) | (67,278 | ) | |||
Proceeds from Sale of Property, Plant & Equipment | — | 3,058 | |||||
Investment in Long-Term Receivables | (1,916 | ) | (2,362 | ) | |||
Proceeds from Long-Term Receivables | 2,390 | 2,554 | |||||
Notes Receivable | — | 3,000 | |||||
Purchase of Company-Owned Life Insurance | (279 | ) | (8,074 | ) | |||
Investment in Affiliate | (3,975 | ) | (5,902 | ) | |||
Net Repayment of Notes Receivable - Affiliate | 1,065 | 2,251 | |||||
Net Cash Used in Investing Activities | (61,531 | ) | (72,753 | ) | |||
Cash Flows from Financing Activities: | |||||||
Net Repayments of Short-Term Credit Facilities | (98,300 | ) | (91,000 | ) | |||
Proceeds from Issuance of Long-Term Debt | 50,000 | 273,000 | |||||
Principal Repayments of Long-Term Debt | — | (200,000 | ) | ||||
Payments for Issuance of Long-Term Debt | (1,264 | ) | (2,021 | ) | |||
Net Settlement of Restricted Stock | (776 | ) | (751 | ) | |||
Net Cash Used in Financing Activities | (50,340 | ) | (20,772 | ) | |||
Net Decrease in Cash, Cash Equivalents and Restricted Cash | (16,670 | ) | (13,997 | ) | |||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 39,695 | 31,910 | |||||
Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 23,025 | $ | 17,913 |
March 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Property, Plant and Equipment: | |||||||
Utility Plant, at original cost | $ | 2,696,087 | $ | 2,652,244 | |||
Accumulated Depreciation | (504,936 | ) | (498,161 | ) | |||
Nonutility Property and Equipment, at cost | 745,826 | 741,027 | |||||
Accumulated Depreciation | (205,230 | ) | (194,913 | ) | |||
Property, Plant and Equipment - Net | 2,731,747 | 2,700,197 | |||||
Investments: | |||||||
Available-for-Sale Securities | 36 | 36 | |||||
Restricted | 16,713 | 31,876 | |||||
Investment in Affiliates | 66,970 | 62,292 | |||||
Total Investments | 83,719 | 94,204 | |||||
Current Assets: | |||||||
Cash and Cash Equivalents | 6,312 | 7,819 | |||||
Accounts Receivable | 243,395 | 202,379 | |||||
Unbilled Revenues | 62,601 | 73,377 | |||||
Provision for Uncollectibles | (14,684 | ) | (13,988 | ) | |||
Notes Receivable - Affiliate | 3,848 | 4,913 | |||||
Natural Gas in Storage, average cost | 33,422 | 48,513 | |||||
Materials and Supplies, average cost | 4,233 | 4,239 | |||||
Prepaid Taxes | 20,391 | 41,355 | |||||
Derivatives - Energy Related Assets | 24,386 | 42,139 | |||||
Other Prepayments and Current Assets | 29,602 | 28,247 | |||||
Total Current Assets | 413,506 | 438,993 | |||||
Regulatory and Other Noncurrent Assets: | |||||||
Regulatory Assets | 491,629 | 469,224 | |||||
Derivatives - Energy Related Assets | 12,268 | 5,988 | |||||
Notes Receivable - Affiliate | 13,275 | 13,275 | |||||
Contract Receivables | 27,638 | 28,721 | |||||
Goodwill | 3,578 | 3,578 | |||||
Identifiable Intangible Assets | 12,240 | 12,480 | |||||
Other | 100,480 | 98,426 | |||||
Total Regulatory and Other Noncurrent Assets | 661,108 | 631,692 | |||||
Total Assets | $ | 3,890,080 | $ | 3,865,086 |
March 31, 2018 | December 31, 2017 | ||||||
Capitalization and Liabilities | |||||||
Equity: | |||||||
Common Stock | $ | 99,516 | $ | 99,436 | |||
Premium on Common Stock | 709,756 | 709,658 | |||||
Treasury Stock (at par) | (274 | ) | (271 | ) | |||
Accumulated Other Comprehensive Loss | (36,756 | ) | (36,765 | ) | |||
Retained Earnings | 509,255 | 420,351 | |||||
Total Equity | 1,281,497 | 1,192,409 | |||||
Long-Term Debt | 974,749 | 1,122,999 | |||||
Total Capitalization | 2,256,246 | 2,315,408 | |||||
Current Liabilities: | |||||||
Notes Payable | 248,100 | 346,400 | |||||
Current Portion of Long-Term Debt | 263,809 | 63,809 | |||||
Accounts Payable | 259,684 | 284,899 | |||||
Customer Deposits and Credit Balances | 29,356 | 43,398 | |||||
Environmental Remediation Costs | 60,846 | 66,372 | |||||
Taxes Accrued | 6,814 | 2,932 | |||||
Derivatives - Energy Related Liabilities | 12,486 | 46,938 | |||||
Deferred Contract Revenues | 262 | 259 | |||||
Derivatives - Other Current | 526 | 748 | |||||
Dividends Payable | 22,334 | — | |||||
Interest Accrued | 7,790 | 9,079 | |||||
Pension Benefits | 2,388 | 2,388 | |||||
Other Current Liabilities | 9,785 | 15,860 | |||||
Total Current Liabilities | 924,180 | 883,082 | |||||
Deferred Credits and Other Noncurrent Liabilities: | |||||||
Deferred Income Taxes - Net | 123,239 | 86,884 | |||||
Pension and Other Postretirement Benefits | 104,262 | 101,544 | |||||
Environmental Remediation Costs | 101,551 | 106,483 | |||||
Asset Retirement Obligations | 59,807 | 59,497 | |||||
Derivatives - Energy Related Liabilities | 4,153 | 6,025 | |||||
Derivatives - Other Noncurrent | 7,194 | 9,622 | |||||
Regulatory Liabilities | 300,358 | 287,105 | |||||
Other | 9,090 | 9,436 | |||||
Total Deferred Credits and Other Noncurrent Liabilities | 709,654 | 666,596 | |||||
Commitments and Contingencies (Note 11) | |||||||
Total Capitalization and Liabilities | $ | 3,890,080 | $ | 3,865,086 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Operating Revenues (See Note 16) | $ | 234,459 | $ | 196,814 | |||
Operating Expenses: | |||||||
Cost of Sales (Excluding depreciation) | 89,808 | 72,424 | |||||
Operations (See Note 1) | 29,370 | 24,175 | |||||
Maintenance | 6,862 | 4,981 | |||||
Depreciation | 14,363 | 12,714 | |||||
Energy and Other Taxes | 1,255 | 1,295 | |||||
Total Operating Expenses | 141,658 | 115,589 | |||||
Operating Income (See Note 1) | 92,801 | 81,225 | |||||
Other Income and Expense (See Note 1) | 2,510 | 1,042 | |||||
Interest Charges | (6,728 | ) | (5,878 | ) | |||
Income Before Income Taxes | 88,583 | 76,389 | |||||
Income Taxes | (21,836 | ) | (29,911 | ) | |||
Net Income | $ | 66,747 | $ | 46,478 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net Income | $ | 66,747 | $ | 46,478 | |||
Other Comprehensive Income - Net of Tax: * | |||||||
Unrealized Gain on Derivatives - Other | 9 | 7 | |||||
Other Comprehensive Income - Net of Tax * | 9 | 7 | |||||
Comprehensive Income | $ | 66,756 | $ | 46,485 | |||
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net Cash Provided by Operating Activities | $ | 44,492 | $ | 56,986 | |||
Cash Flows from Investing Activities: | |||||||
Capital Expenditures | (54,960 | ) | (56,086 | ) | |||
Purchase of Company-Owned Life Insurance | — | (4,875 | ) | ||||
Investment in Long-Term Receivables | (1,916 | ) | (2,362 | ) | |||
Proceeds from Long-Term Receivables | 2,390 | 2,554 | |||||
Net Cash Used in Investing Activities | (54,486 | ) | (60,769 | ) | |||
Cash Flows from Financing Activities: | |||||||
Net Borrowings from (Repayments of) Short-Term Credit Facilities | 11,100 | (104,300 | ) | ||||
Proceeds from Issuance of Long-Term Debt | — | 273,000 | |||||
Principal Repayments of Long-Term Debt | — | (200,000 | ) | ||||
Payments for Issuance of Long-Term Debt | (5 | ) | (2,021 | ) | |||
Additional Investment by Shareholder | — | 40,000 | |||||
Net Cash Provided by Financing Activities | 11,095 | 6,679 | |||||
Net Increase in Cash, Cash Equivalents and Restricted Cash | 1,101 | 2,896 | |||||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 4,619 | 1,391 | |||||
Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 5,720 | $ | 4,287 |
March 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Property, Plant and Equipment: | |||||||
Utility Plant, at original cost | $ | 2,696,087 | $ | 2,652,244 | |||
Accumulated Depreciation | (504,936 | ) | (498,161 | ) | |||
Property, Plant and Equipment - Net | 2,191,151 | 2,154,083 | |||||
Investments: | |||||||
Restricted Investments | 2,322 | 2,912 | |||||
Total Investments | 2,322 | 2,912 | |||||
Current Assets: | |||||||
Cash and Cash Equivalents | 3,398 | 1,707 | |||||
Accounts Receivable | 128,583 | 78,571 | |||||
Accounts Receivable - Related Parties | 2,842 | 988 | |||||
Unbilled Revenues | 44,287 | 54,980 | |||||
Provision for Uncollectibles | (14,491 | ) | (13,799 | ) | |||
Natural Gas in Storage, average cost | 5,190 | 14,932 | |||||
Materials and Supplies, average cost | 824 | 825 | |||||
Prepaid Taxes | 17,156 | 38,326 | |||||
Derivatives - Energy Related Assets | 404 | 7,327 | |||||
Other Prepayments and Current Assets | 12,895 | 12,670 | |||||
Total Current Assets | 201,088 | 196,527 | |||||
Regulatory and Other Noncurrent Assets: | |||||||
Regulatory Assets | 491,629 | 469,224 | |||||
Long-Term Receivables | 24,874 | 25,851 | |||||
Derivatives - Energy Related Assets | — | 5 | |||||
Other | 19,063 | 17,372 | |||||
Total Regulatory and Other Noncurrent Assets | 535,566 | 512,452 | |||||
Total Assets | $ | 2,930,127 | $ | 2,865,974 |
March 31, 2018 | December 31, 2017 | ||||||
Capitalization and Liabilities | |||||||
Equity: | |||||||
Common Stock | $ | 5,848 | $ | 5,848 | |||
Other Paid-In Capital and Premium on Common Stock | 355,744 | 355,744 | |||||
Accumulated Other Comprehensive Loss | (25,988 | ) | (25,997 | ) | |||
Retained Earnings | 652,584 | 585,838 | |||||
Total Equity | 988,188 | 921,433 | |||||
Long-Term Debt | 558,218 | 758,052 | |||||
Total Capitalization | 1,546,406 | 1,679,485 | |||||
Current Liabilities: | |||||||
Notes Payable | 63,100 | 52,000 | |||||
Current Portion of Long-Term Debt | 263,809 | 63,809 | |||||
Accounts Payable - Commodity | 37,810 | 43,341 | |||||
Accounts Payable - Other | 34,923 | 41,365 | |||||
Accounts Payable - Related Parties | 13,176 | 17,029 | |||||
Derivatives - Energy Related Liabilities | 784 | 9,270 | |||||
Derivatives - Other Current | 337 | 389 | |||||
Customer Deposits and Credit Balances | 24,788 | 41,656 | |||||
Environmental Remediation Costs | 60,528 | 66,040 | |||||
Taxes Accrued | 5,785 | 1,760 | |||||
Pension Benefits | 2,353 | 2,353 | |||||
Interest Accrued | 5,938 | 7,615 | |||||
Other Current Liabilities | 5,755 | 7,027 | |||||
Total Current Liabilities | 519,086 | 353,654 | |||||
Regulatory and Other Noncurrent Liabilities: | |||||||
Regulatory Liabilities | 300,358 | 287,105 | |||||
Deferred Income Taxes - Net | 302,524 | 280,746 | |||||
Environmental Remediation Costs | 100,736 | 105,656 | |||||
Asset Retirement Obligations | 59,018 | 58,714 | |||||
Pension and Other Postretirement Benefits | 91,264 | 88,871 | |||||
Derivatives - Energy Related Liabilities | 328 | 170 | |||||
Derivatives - Other Noncurrent | 5,669 | 6,639 | |||||
Other | 4,738 | 4,934 | |||||
Total Regulatory and Other Noncurrent Liabilities | 864,635 | 832,835 | |||||
Commitments and Contingencies (Note 11) | |||||||
Total Capitalization and Liabilities | $ | 2,930,127 | $ | 2,865,974 |
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: |
▪ | South Jersey Gas Company (SJG) is a regulated natural gas utility. SJG distributes natural gas in the seven southernmost counties of New Jersey. |
▪ | South Jersey Energy Company (SJE) acquires and markets natural gas and electricity to retail end users and provides total energy management services to commercial, industrial and residential customers. |
▪ | South Jersey Resources Group, LLC (SJRG) markets natural gas storage, commodity and transportation assets along with fuel management services on a wholesale basis in the mid-Atlantic, Appalachian and southern states. |
▪ | South Jersey Exploration, LLC (SJEX) owns oil, gas and mineral rights in the Marcellus Shale region of Pennsylvania. |
▪ | Marina Energy, LLC (Marina) develops and operates on-site energy-related projects. It currently operates projects in New Jersey, Maryland, Massachusetts and Vermont. The significant wholly-owned subsidiaries of Marina include: |
▪ | South Jersey Energy Service Plus, LLC (SJESP) serviced residential and small commercial HVAC systems, installed small commercial HVAC systems, provided plumbing services and serviced appliances under warranty via a subcontractor arrangement as well as on a time and materials basis. On September 1, 2017, SJESP sold certain assets of its residential and small commercial HVAC and plumbing business to a third party. SJESP continues to receive commissions paid on service contracts from the third party and will do so on a go forward basis. |
▪ | SJI Midstream, LLC (Midstream) invests in infrastructure and other midstream projects, including a current project to build an approximately 118-mile natural gas pipeline in Pennsylvania and New Jersey. |
• | In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This standard improves the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis. |
• | In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This standard clarifies identifying performance obligations and the licensing implementation guidance. |
• | In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This standard provides additional guidance on (a) the objective of the collectibility criterion, (b) the presentation of sales tax collected from customers, (c) the measurement date of non-cash consideration received, (d) practical expedients in respect of contract modifications and completed contracts at transition, and (e) disclosure of the effects of the accounting change in the period of adoption. |
• | In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which amends certain narrow aspects of the guidance, including the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. |
2. | STOCK-BASED COMPENSATION PLAN: |
Grants | Shares Outstanding | Fair Value Per Share | Expected Volatility | Risk-Free Interest Rate | ||||||||||
Officers & Key Employees - | 2016 - TSR | 58,205 | $ | 22.53 | 18.1 | % | 1.31 | % | ||||||
2016 - CEGR, Time | 73,344 | $ | 23.52 | N/A | N/A | |||||||||
2017 - TSR | 49,981 | $ | 32.17 | 20.8 | % | 1.47 | % | |||||||
2017 - CEGR, Time | 81,372 | $ | 33.69 | N/A | N/A | |||||||||
2018 - TSR | 64,290 | $ | 31.05 | 21.9 | % | 2.00 | % | |||||||
2018 - CEGR, Time | 120,924 | $ | 31.23 | N/A | N/A | |||||||||
Directors - | 2018 | 26,416 | $ | 31.16 | N/A | N/A | ||||||||
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Officers & Key Employees | $ | 1,100 | $ | 1,070 | |||
Directors | 206 | 256 | |||||
Total Cost | 1,306 | 1,326 | |||||
Capitalized | (101 | ) | (88 | ) | |||
Net Expense | $ | 1,205 | $ | 1,238 |
Officers &Other Key Employees | Directors | Weighted Average Fair Value | |||||||
Nonvested Shares Outstanding, January 1, 2018 | 342,793 | 30,394 | $ | 28.60 | |||||
Granted | 185,214 | 26,416 | $ | 31.17 | |||||
Cancelled/Forfeited | (34,990 | ) | — | $ | 28.21 | ||||
Vested | (44,901 | ) | (30,394 | ) | $ | 30.56 | |||
Nonvested Shares Outstanding, March 31, 2018 | 448,116 | 26,416 | $ | 29.46 |
3. | AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED-PARTY TRANSACTIONS: |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Loss before Income Taxes: | ||||||||
Sand Mining | $ | (40 | ) | $ | (17 | ) | ||
Fuel Oil | (42 | ) | (29 | ) | ||||
Income Tax Benefits | 16 | 16 | ||||||
Loss from Discontinued Operations — Net | $ | (66 | ) | $ | (30 | ) | ||
Earnings Per Common Share from | ||||||||
Discontinued Operations — Net: | ||||||||
Basic and Diluted | $ | — | $ | — |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Operating Revenues/Affiliates: | ||||||||
SJRG | $ | 2,588 | $ | 963 | ||||
Marina | 103 | 82 | ||||||
Other | 23 | 21 | ||||||
Total Operating Revenue/Affiliates | $ | 2,714 | $ | 1,066 |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Costs of Sales/Affiliates (Excluding depreciation) | ||||||||
SJRG* | $ | 25,338 | $ | 10,450 | ||||
Operations Expense/Affiliates: | ||||||||
SJI | $ | 7,043 | $ | 6,050 | ||||
Millennium | 697 | 708 | ||||||
Other | (115 | ) | (39 | ) | ||||
Total Operations Expense/Affiliates | $ | 7,625 | $ | 6,719 |
4. | COMMON STOCK: |
2018 | ||
Beginning Balance, January 1 | 79,549,080 | |
New Issuances During the Period: | ||
Stock-Based Compensation Plan | 63,809 | |
Ending Balance, March 31 | 79,612,889 |
5. | FINANCIAL INSTRUMENTS: |
As of March 31, 2018 | |||||||
Balance Sheet Line Item | SJI | SJG | |||||
Cash and Cash Equivalents | $ | 6,312 | $ | 3,398 | |||
Restricted Investments | 16,713 | 2,322 | |||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 23,025 | $ | 5,720 |
As of December 31, 2017 | |||||||
Balance Sheet Line Item | SJI | SJG | |||||
Cash and Cash Equivalents | $ | 7,819 | $ | 1,707 | |||
Restricted Investments | 31,876 | 2,912 | |||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 39,695 | $ | 4,619 |
• | For Long-Term Debt, in estimating the fair value, SJI and SJG use the present value of remaining cash flows at the balance sheet date. SJI and SJG based the estimates on interest rates available at the end of each period for debt with similar terms and maturities (Level 2 in the fair value hierarchy, see Note 13). |
• | The estimated fair values of SJI's long-term debt (which includes SJG and all consolidated subsidiaries), including current maturities, as of March 31, 2018 and December 31, 2017, were $1,257.1 million and $1,216.1 million, respectively. The carrying amounts of SJI's long-term debt, including current maturities, as of March 31, 2018 and December 31, 2017, were $1,238.6 million and $1,186.8 million, respectively. SJI's carrying amounts as of March 31, 2018 and December 31, 2017 are net of unamortized debt issuance costs of $15.6 million and $17.4 million, respectively. |
• | The estimated fair values of SJG's long-term debt, including current maturities, as of March 31, 2018 and December 31, 2017, were $831.6 million and $838.5 million, respectively. The carrying amount of SJG's long-term debt, including current maturities, as of March 31, 2018 and December 31, 2017, was $822.0 million and $821.9 million, respectively. The carrying amounts as of March 31, 2018 and December 31, 2017 are net of unamortized debt issuance costs of $7.1 million and $7.3 million, respectively. |
6. | SEGMENTS OF BUSINESS: |
• | Gas utility operations (SJG) consist primarily of natural gas distribution to residential, commercial and industrial customers. The result of SJG are only included in this operating segment. |
• | Wholesale energy operations include the activities of SJRG and SJEX. |
• | SJE is involved in both retail gas and retail electric activities. |
◦ | Retail gas and other operations include natural gas acquisition and transportation service business lines. |
◦ | Retail electric operations consist of electricity acquisition and transportation to commercial, industrial and residential customers. |
• | On-site energy production consists of Marina's thermal energy facility and other energy-related projects. Also included in this segment are the activities of ACB, ACLE, BCLE, SCLE, SXLE, MCS, NBS and SBS. |
• | Appliance service operations includes SJESP, which serviced residential and small commercial HVAC systems, installed small commercial HVAC systems, provided plumbing services and serviced appliances under warranty via a subcontractor arrangement as well as on a time and materials basis. On September 1, 2017, SJESP sold certain assets of its residential and small commercial HVAC and plumbing business to a third party. SJESP continues to receive commissions paid on service contracts from the third party and will do so on a go forward basis. |
• | Midstream was formed to invest in infrastructure and other midstream projects, including a current project to build a natural gas pipeline in Pennsylvania and New Jersey. |
• | Costs incurred related to the agreement to acquire Elizabethtown Gas and Elkton Gas are recorded in the Corporate & Services segment. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Operating Revenues: | |||||||
Gas Utility Operations | $ | 234,459 | $ | 196,814 | |||
Energy Group: | |||||||
Wholesale Energy Operations | 190,343 | 127,517 | |||||
Retail Gas and Other Operations | 40,201 | 36,878 | |||||
Retail Electric Operations | 44,035 | 48,957 | |||||
Subtotal Energy Group | 274,579 | 213,352 | |||||
Energy Services: | |||||||
On-Site Energy Production | 21,157 | 19,612 | |||||
Appliance Service Operations | 520 | 1,658 | |||||
Subtotal Energy Services | 21,677 | 21,270 | |||||
Corporate and Services | 13,000 | 11,596 | |||||
Subtotal | 543,715 | 443,032 | |||||
Intersegment Sales | (21,770 | ) | (17,203 | ) | |||
Total Operating Revenues | $ | 521,945 | $ | 425,829 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Operating Income (See Note 1): | |||||||
Gas Utility Operations | $ | 92,801 | $ | 81,225 | |||
Energy Group: | |||||||
Wholesale Energy Operations | 75,657 | (11,626 | ) | ||||
Retail Gas and Other Operations | (5,758 | ) | (1,667 | ) | |||
Retail Electric Operations | (208 | ) | 1,306 | ||||
Subtotal Energy Group | 69,691 | (11,987 | ) | ||||
Energy Services: | |||||||
On-Site Energy Production | (554 | ) | (1,969 | ) | |||
Appliance Service Operations | 503 | (72 | ) | ||||
Subtotal Energy Services | (51 | ) | (2,041 | ) | |||
Corporate and Services | (4,571 | ) | 1,667 | ||||
Total Operating Income | $ | 157,870 | $ | 68,864 | |||
Depreciation and Amortization: | |||||||
Gas Utility Operations | $ | 20,315 | $ | 17,362 | |||
Energy Group: | |||||||
Wholesale Energy Operations | 23 | 28 | |||||
Retail Gas and Other Operations | 75 | 83 | |||||
Subtotal Energy Group | 98 | 111 | |||||
Energy Services: | |||||||
On-Site Energy Production | 10,271 | 11,593 | |||||
Appliance Service Operations | — | 54 | |||||
Subtotal Energy Services | 10,271 | 11,647 | |||||
Corporate and Services | 3,214 | 401 | |||||
Total Depreciation and Amortization | $ | 33,898 | $ | 29,521 | |||
Interest Charges (See Note 1): | |||||||
Gas Utility Operations | $ | 6,728 | $ | 5,878 | |||
Energy Group: | |||||||
Wholesale Energy Operations | — | 3,059 | |||||
Retail Gas and Other Operations | 146 | 85 | |||||
Subtotal Energy Group | 146 | 3,144 | |||||
Energy Services: | |||||||
On-Site Energy Production | 3,847 | 5,814 | |||||
Midstream | 426 | 510 | |||||
Corporate and Services | 7,470 | 4,731 | |||||
Subtotal | 18,617 | 20,077 | |||||
Intersegment Borrowings | (4,645 | ) | (3,332 | ) | |||
Total Interest Charges | $ | 13,972 | $ | 16,745 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Income Taxes (See Note 1): | |||||||
Gas Utility Operations | $ | 21,836 | $ | 29,911 | |||
Energy Group: | |||||||
Wholesale Energy Operations | 19,127 | (6,319 | ) | ||||
Retail Gas and Other Operations | (1,534 | ) | (447 | ) | |||
Retail Electric Operations | (58 | ) | 535 | ||||
Subtotal Energy Group | 17,535 | (6,231 | ) | ||||
Energy Services: | |||||||
On-Site Energy Production | (1,157 | ) | (3,069 | ) | |||
Appliance Service Operations | 131 | (17 | ) | ||||
Subtotal Energy Services | (1,026 | ) | (3,086 | ) | |||
Midstream | 62 | (84 | ) | ||||
Corporate and Services | (1,992 | ) | 1,360 | ||||
Total Income Taxes | $ | 36,415 | $ | 21,870 | |||
Property Additions (See Note 1): | |||||||
Gas Utility Operations | $ | 50,237 | $ | 62,280 | |||
Energy Group: | |||||||
Wholesale Energy Operations | 5 | 3 | |||||
Retail Gas and Other Operations | 173 | 295 | |||||
Subtotal Energy Group | 178 | 298 | |||||
Energy Services: | |||||||
On-Site Energy Production | 1,113 | 7,349 | |||||
Appliance Service Operations | — | 6 | |||||
Subtotal Energy Services | 1,113 | 7,355 | |||||
Midstream | 211 | 152 | |||||
Corporate and Services | 3,345 | 93 | |||||
Total Property Additions | $ | 55,084 | $ | 70,178 |
March 31, 2018 | December 31, 2017 | ||||||
Identifiable Assets: | |||||||
Gas Utility Operations | $ | 2,930,127 | $ | 2,865,974 | |||
Energy Group: | |||||||
Wholesale Energy Operations | 150,330 | 208,785 | |||||
Retail Gas and Other Operations | 57,497 | 56,935 | |||||
Retail Electric Operations | 32,149 | 34,923 | |||||
Subtotal Energy Group | 239,976 | 300,643 | |||||
Energy Services: | |||||||
On-Site Energy Production | 584,349 | 582,587 | |||||
Appliance Service Operations | 491 | 1,338 | |||||
Subtotal Energy Services | 584,840 | 583,925 | |||||
Midstream | 64,831 | 63,112 | |||||
Discontinued Operations | 1,751 | 1,757 | |||||
Corporate and Services | 640,996 | 711,038 | |||||
Intersegment Assets | (572,441 | ) | (661,363 | ) | |||
Total Identifiable Assets | $ | 3,890,080 | $ | 3,865,086 |
7. | RATES AND REGULATORY ACTIONS: |
8. | REGULATORY ASSETS AND REGULATORY LIABILITIES: |
March 31, 2018 | December 31, 2017 | ||||||
Environmental Remediation Costs: | |||||||
Expended - Net | $ | 110,529 | $ | 100,327 | |||
Liability for Future Expenditures | 161,263 | 171,696 | |||||
Deferred Asset Retirement Obligation Costs | 42,622 | 42,368 | |||||
Deferred Pension and Other Postretirement Benefit Costs | 78,211 | 78,211 | |||||
Deferred Gas Costs - Net | 54,351 | 16,838 | |||||
Conservation Incentive Program Receivable | 12,118 | 26,652 | |||||
Societal Benefit Costs Receivable | 2,699 | 2,484 | |||||
Deferred Interest Rate Contracts | 6,006 | 7,028 | |||||
Energy Efficiency Tracker | 1,832 | 2,094 | |||||
Pipeline Supplier Service Charges | 686 | 708 | |||||
Pipeline Integrity Cost | 4,977 | 5,280 | |||||
AFUDC - Equity Related Deferrals | 12,899 | 12,785 | |||||
Other Regulatory Assets | 3,436 | 2,753 | |||||
Total Regulatory Assets | $ | 491,629 | $ | 469,224 |
March 31, 2018 | December 31, 2017 | ||||||
Excess Plant Removal Costs | $ | 23,527 | $ | 23,295 | |||
Excess Deferred Taxes | 276,831 | 263,810 | |||||
Total Regulatory Liabilities | $ | 300,358 | $ | 287,105 |
9. | PENSION AND OTHER POSTRETIREMENT BENEFITS: |
Pension Benefits | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Service Cost | $ | 2,177 | $ | 1,382 | ||||
Interest Cost | 5,108 | 2,955 | ||||||
Expected Return on Plan Assets | (7,633 | ) | (3,524 | ) | ||||
Amortizations: | ||||||||
Prior Service Cost | 71 | 33 | ||||||
Actuarial Loss | 4,132 | 2,613 | ||||||
Net Periodic Benefit Cost | 3,855 | 3,459 | ||||||
Capitalized Benefit Cost | (483 | ) | (1,271 | ) | ||||
Deferred Benefit Cost | (751 | ) | (161 | ) | ||||
Total Net Periodic Benefit Expense | $ | 2,621 | $ | 2,027 |
Other Postretirement Benefits | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Service Cost | $ | 81 | $ | 247 | ||||
Interest Cost | 217 | 601 | ||||||
Expected Return on Plan Assets | (305 | ) | (853 | ) | ||||
Amortizations: | ||||||||
Prior Service Cost | (31 | ) | (86 | ) | ||||
Actuarial Loss | 111 | 312 | ||||||
Net Periodic Benefit Cost | 73 | 221 | ||||||
Capitalized Benefit Cost | (5 | ) | (55 | ) | ||||
Total Net Periodic Benefit Expense | $ | 68 | $ | 166 |
10. | LINES OF CREDIT: |
Company | Total Facility | Usage | Available Liquidity | Expiration Date | ||||||||||
SJI: | ||||||||||||||
Syndicated Revolving Credit Facility | $ | 400,000 | $ | 141,000 | (A) | $ | 259,000 | August 2022 | ||||||
Revolving Credit Facility | 50,000 | 50,000 | — | September 2019 | ||||||||||
Total SJI | 450,000 | 191,000 | 259,000 | |||||||||||
SJG: | ||||||||||||||
Commercial Paper Program/Revolving Credit Facility | 200,000 | 64,000 | (B) | 136,000 | August 2022 | |||||||||
Uncommitted Bank Line | 10,000 | 10,000 | August 2018 (C) | |||||||||||
Total SJG | 210,000 | 64,000 | 146,000 | |||||||||||
Total | $ | 660,000 | $ | 255,000 | $ | 405,000 |
11. | COMMITMENTS AND CONTINGENCIES: |
12. | DERIVATIVE INSTRUMENTS: |
SJI Consolidated | SJG | |||
Derivative contracts intended to limit exposure to market risk to: | ||||
Expected future purchases of natural gas (in MMdts) | 45.3 | 13.3 | ||
Expected future sales of natural gas (in MMdts) | 53.8 | 0.3 | ||
Expected future purchases of electricity (in MMmWh) | 2.4 | — | ||
Expected future sales of electricity (in MMmWh) | 2.0 | — | ||
Basis and Index related net purchase (sale) contracts (in MMdts) | 31.8 | (3.1 | ) |
Notional Amount | Fixed Interest Rate | Start Date | Maturity | Obligor | ||||||
$ | 20,000,000 | 3.049% | 3/15/2017 | 3/15/2027 | SJI | |||||
$ | 20,000,000 | 3.049% | 3/15/2017 | 3/15/2027 | SJI | |||||
$ | 10,000,000 | 3.049% | 3/15/2017 | 3/15/2027 | SJI | |||||
$ | 12,500,000 | 3.530% | 12/1/2006 | 2/1/2036 | SJG | |||||
$ | 12,500,000 | 3.430% | 12/1/2006 | 2/1/2036 | SJG |
SJI (includes SJG and all other consolidated subsidiaries): | ||||||||||||||||
Derivatives not designated as hedging instruments under GAAP | March 31, 2018 | December 31, 2017 | ||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Energy-related commodity contracts: | ||||||||||||||||
Derivatives - Energy Related - Current | $ | 24,386 | $ | 12,486 | $ | 42,139 | $ | 46,938 | ||||||||
Derivatives - Energy Related - Non-Current | 12,268 | 4,153 | 5,988 | 6,025 | ||||||||||||
Interest rate contracts: | ||||||||||||||||
Derivatives - Other - Current | — | 526 | — | 748 | ||||||||||||
Derivatives - Other - Noncurrent | — | 7,194 | — | 9,622 | ||||||||||||
Total derivatives not designated as hedging instruments under GAAP | $ | 36,654 | $ | 24,359 | $ | 48,127 | $ | 63,333 | ||||||||
Total Derivatives | $ | 36,654 | $ | 24,359 | $ | 48,127 | $ | 63,333 |
SJG: | ||||||||||||||||
Derivatives not designated as hedging instruments under GAAP | March 31, 2018 | December 31, 2017 | ||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Energy-related commodity contracts: | ||||||||||||||||
Derivatives – Energy Related – Current | $ | 404 | $ | 784 | $ | 7,327 | $ | 9,270 | ||||||||
Derivatives – Energy Related – Non-Current | — | 328 | 5 | 170 | ||||||||||||
Interest rate contracts: | ||||||||||||||||
Derivatives – Other Current | — | 337 | — | 389 | ||||||||||||
Derivatives – Other Noncurrent | — | 5,669 | — | 6,639 | ||||||||||||
Total derivatives not designated as hedging instruments under GAAP | $ | 404 | $ | 7,118 | $ | 7,332 | $ | 16,468 | ||||||||
Total Derivatives | $ | 404 | $ | 7,118 | $ | 7,332 | $ | 16,468 |
As of March 31, 2018 | ||||||||||||||||||||||||
Description | Gross amounts of recognized assets/liabilities | Gross amount offset in the balance sheet | Net amounts of assets/liabilities in balance sheet | Gross amounts not offset in the balance sheet | Net amount | |||||||||||||||||||
Financial Instruments | Cash Collateral Posted | |||||||||||||||||||||||
SJI (includes SJG and all other consolidated subsidiaries): | ||||||||||||||||||||||||
Derivatives - Energy Related Assets | $ | 36,654 | $ | — | $ | 36,654 | $ | (10,086 | ) | (A) | $ | — | $ | 26,568 | ||||||||||
Derivatives - Energy Related Liabilities | $ | (16,639 | ) | $ | — | $ | (16,639 | ) | $ | 10,086 | (B) | $ | 755 | $ | (5,798 | ) | ||||||||
Derivatives - Other | $ | (7,720 | ) | $ | — | $ | (7,720 | ) | $ | — | $ | — | $ | (7,720 | ) | |||||||||
SJG: | ||||||||||||||||||||||||
Derivatives - Energy Related Assets | $ | 404 | $ | — | $ | 404 | $ | (342 | ) | (A) | $ | — | $ | 62 | ||||||||||
Derivatives - Energy Related Liabilities | $ | (1,112 | ) | $ | — | $ | (1,112 | ) | $ | 342 | (B) | $ | 755 | $ | (15 | ) | ||||||||
Derivatives - Other | $ | (6,006 | ) | $ | — | $ | (6,006 | ) | $ | — | $ | — | $ | (6,006 | ) |
As of December 31, 2017 | ||||||||||||||||||||||||
Description | Gross amounts of recognized assets/liabilities | Gross amount offset in the balance sheet | Net amounts of assets/liabilities in balance sheet | Gross amounts not offset in the balance sheet | Net amount | |||||||||||||||||||
Financial Instruments | Cash Collateral Posted | |||||||||||||||||||||||
SJI (includes SJG and all other consolidated subsidiaries): | ||||||||||||||||||||||||
Derivatives - Energy Related Assets | $ | 48,127 | $ | — | $ | 48,127 | $ | (24,849 | ) | (A) | $ | — | $ | 23,278 | ||||||||||
Derivatives - Energy Related Liabilities | $ | (52,963 | ) | $ | — | $ | (52,963 | ) | $ | 24,849 | (B) | $ | 8,832 | $ | (19,282 | ) | ||||||||
Derivatives - Other | $ | (10,370 | ) | $ | — | $ | (10,370 | ) | $ | — | $ | — | $ | (10,370 | ) | |||||||||
SJG: | ||||||||||||||||||||||||
Derivatives - Energy Related Assets | $ | 7,332 | $ | — | $ | 7,332 | $ | (208 | ) | (A) | $ | — | $ | 7,124 | ||||||||||
Derivatives - Energy Related Liabilities | $ | (9,440 | ) | $ | — | $ | (9,440 | ) | $ | 208 | (B) | $ | 1,543 | $ | (7,689 | ) | ||||||||
Derivatives - Other | $ | (7,028 | ) | $ | — | $ | (7,028 | ) | $ | — | $ | — | $ | (7,028 | ) |
Three Months Ended March 31, | ||||||||
Derivatives in Cash Flow Hedging Relationships under GAAP | 2018 | 2017 | ||||||
SJI (includes SJG and all other consolidated subsidiaries): | ||||||||
Interest Rate Contracts: | ||||||||
Losses reclassified from AOCL into income (a) | $ | (12 | ) | $ | (2,487 | ) | ||
SJG: | ||||||||
Interest Rate Contracts: | ||||||||
Losses reclassified from AOCL into income (a) | $ | (12 | ) | $ | (12 | ) |
Three Months Ended March 31, | ||||||||
Derivatives Not Designated as Hedging Instruments under GAAP | 2018 | 2017 | ||||||
SJI (includes SJG and all other consolidated subsidiaries): | ||||||||
Gains on energy-related commodity contracts (a) | $ | 23,353 | $ | 14,688 | ||||
Gains (Losses) on interest rate contracts (b) | 1,628 | (1,005 | ) | |||||
Total | $ | 24,981 | $ | 13,683 |
13. | FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES: |
• | Level 1: Observable inputs, such as quoted prices in active markets for identical assets or liabilities. |
• | Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
• | Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. |
As of March 31, 2018 | Total | Level 1 | Level 2 | Level 3 | |||||||||||
SJI (includes SJG and all other consolidated subsidiaries): | |||||||||||||||
Assets | |||||||||||||||
Available-for-Sale Securities (A) | $ | 36 | $ | 36 | $ | — | $ | — | |||||||
Derivatives – Energy Related Assets (B) | 36,654 | 935 | 14,121 | 21,598 | |||||||||||
$ | 36,690 | $ | 971 | $ | 14,121 | $ | 21,598 | ||||||||
SJG: | |||||||||||||||
Assets | |||||||||||||||
Derivatives – Energy Related Assets (B) | $ | 404 | $ | 342 | $ | 62 | $ | — | |||||||
$ | 404 | $ | 342 | $ | 62 | $ | — | ||||||||
SJI (includes SJG and all other consolidated subsidiaries): | |||||||||||||||
Liabilities | |||||||||||||||
Derivatives – Energy Related Liabilities (B) | $ | 16,639 | $ | 3,947 | $ | 7,680 | $ | 5,012 | |||||||
Derivatives – Other (C) | 7,720 | — | 7,720 | — | |||||||||||
$ | 24,359 | $ | 3,947 | $ | 15,400 | $ | 5,012 | ||||||||
SJG: | |||||||||||||||
Liabilities | |||||||||||||||
Derivatives – Energy Related Liabilities (B) | $ | 1,112 | $ | 1,097 | $ | 9 | $ | 6 | |||||||
Derivatives – Other (C) | 6,006 | — | 6,006 | — | |||||||||||
$ | 7,118 | $ | 1,097 | $ | 6,015 | $ | 6 |
As of December 31, 2017 | Total | Level 1 | Level 2 | Level 3 | |||||||||||
SJI (includes SJG and all other consolidated subsidiaries): | |||||||||||||||
Assets | |||||||||||||||
Available-for-Sale Securities (A) | $ | 36 | $ | 36 | $ | — | $ | — | |||||||
Derivatives – Energy Related Assets (B) | 48,127 | 5,155 | 21,869 | 21,103 | |||||||||||
$ | 48,163 | $ | 5,191 | $ | 21,869 | $ | 21,103 | ||||||||
SJG: | |||||||||||||||
Assets | |||||||||||||||
Derivatives – Energy Related Assets (B) | $ | 7,332 | $ | 208 | $ | 230 | $ | 6,894 | |||||||
$ | 7,332 | $ | 208 | $ | 230 | $ | 6,894 | ||||||||
SJI (includes SJG and all other consolidated subsidiaries): | |||||||||||||||
Liabilities | |||||||||||||||
Derivatives – Energy Related Liabilities (B) | $ | 52,963 | $ | 10,687 | $ | 24,283 | $ | 17,993 | |||||||
Derivatives – Other (C) | 10,370 | — | 10,370 | — | |||||||||||
$ | 63,333 | $ | 10,687 | $ | 34,653 | $ | 17,993 | ||||||||
SJG: | |||||||||||||||
Liabilities | |||||||||||||||
Derivatives – Energy Related Liabilities (B) | $ | 9,440 | $ | 1,750 | $ | 2,848 | $ | 4,842 | |||||||
Derivatives – Other (C) | 7,028 | — | 7,028 | — | |||||||||||
$ | 16,468 | $ | 1,750 | $ | 9,876 | $ | 4,842 |
Type | Fair Value at March 31, 2018 | Valuation Technique | Significant Unobservable Input | Range [Weighted Average] | ||
Assets | Liabilities | |||||
Forward Contract - Natural Gas | $14,669 | $3,037 | Discounted Cash Flow | Forward price (per dt) | $1.72 - $7.14 [$2.65] | (A) |
Forward Contract - Electric | $6,929 | $1,975 | Discounted Cash Flow | Fixed electric load profile (on-peak) | 37.45% - 100.00% [53.28%] | (B) |
Fixed electric load profile (off-peak) | 0.00% - 62.55% [46.72%] | (B) |
Type | Fair Value at December 31, 2017 | Valuation Technique | Significant Unobservable Input | Range [Weighted Average] | ||
Assets | Liabilities | |||||
Forward Contract - Natural Gas | $13,519 | $15,686 | Discounted Cash Flow | Forward price (per dt) | $1.79 - $12.09 [$3.01] | (A) |
Forward Contract - Electric | $7,584 | $2,307 | Discounted Cash Flow | Fixed electric load profile (on-peak) | 36.36% - 100.00% [53.39%] | (B) |
Fixed electric load profile (off-peak) | 0.00% - 63.64% [46.61%] | (B) |
Type | Fair Value at March 31, 2018 | Valuation Technique | Significant Unobservable Input | Range [Weighted Average] | ||||||
Assets | Liabilities | |||||||||
Forward Contract - Natural Gas | $ | — | $ | 6 | Discounted Cash Flow | Forward price (per dt) | $2.16- $2.61 [$2.28] | (A) |
Type | Fair Value at December 31, 2017 | Valuation Technique | Significant Unobservable Input | Range [Weighted Average] | ||||||
Assets | Liabilities | |||||||||
Forward Contract - Natural Gas | $ | 6,894 | $ | 4,842 | Discounted Cash Flow | Forward price (per dt) | $2.42 - $6.67 [$5.25] | (A) |
Three Months Ended March 31, 2018 | |||
SJI (includes SJG and all other consolidated subsidiaries): | |||
Balance at beginning of period | $ | 3,110 | |
Other Changes in Fair Value from Continuing and New Contracts, Net | 3,989 | ||
Settlements | 9,487 | ||
Balance at end of period | $ | 16,586 | |
SJG: | |||
Balance at beginning of period | $ | 2,052 | |
Other Changes in Fair Value from Continuing and New Contracts, Net | (6 | ) | |
Settlements | (2,052 | ) | |
Balance at end of period | $ | (6 | ) |
Three Months Ended March 31, 2017 | |||
SJI (includes SJG and all other consolidated subsidiaries): | |||
Balance at beginning of period | $ | 9,035 | |
Other Changes in Fair Value from Continuing and New Contracts, Net | (988 | ) | |
Settlements | 8,187 | ||
Balance at end of period | $ | 16,234 | |
SJG: | |||
Balance at beginning of period | $ | 926 | |
Other Changes in Fair Value from Continuing and New Contracts, Net | 511 | ||
Settlements | (926 | ) | |
Balance at end of period | $ | 511 |
14. | LONG-TERM DEBT: |
15. | ACCUMULATED OTHER COMPREHENSIVE LOSS: |
Postretirement Liability Adjustment | Unrealized Gain (Loss) on Derivatives-Other | Unrealized Gain (Loss) on Available-for-Sale Securities | Other Comprehensive Income (Loss) of Affiliated Companies | Total | |||||||||||
Balance at January 1, 2018 (a) | $ | (36,262 | ) | $ | (396 | ) | $ | (10 | ) | $ | (97 | ) | $ | (36,765 | ) |
Other comprehensive income before reclassifications | — | — | — | — | — | ||||||||||
Amounts reclassified from AOCL (b) | — | 9 | — | — | 9 | ||||||||||
Net current period other comprehensive income | — | 9 | — | — | 9 | ||||||||||
Balance at March 31, 2018 (a) | $ | (36,262 | ) | $ | (387 | ) | $ | (10 | ) | $ | (97 | ) | $ | (36,756 | ) |
Components of AOCL | Amounts Reclassified from AOCL | Affected Line Item in the Condensed Consolidated Statements of Income | |||||
Three Months Ended March 31, 2018 | |||||||
Unrealized Loss on Derivatives-Other - interest rate contracts designated as cash flow hedges | $ | 12 | Interest Charges | ||||
Income Taxes | (3 | ) | Income Taxes (a) | ||||
Losses from reclassifications for the period net of tax | $ | 9 |
Postretirement Liability Adjustment | Unrealized Gain (Loss) on Derivatives-Other | Total | |||||||||
Balance at January 1, 2018 (a) | $ | (25,507 | ) | $ | (490 | ) | $ | (25,997 | ) | ||
Other comprehensive loss before reclassifications | — | — | — | ||||||||
Amounts reclassified from AOCL (b) | — | 9 | 9 | ||||||||
Net current period other comprehensive income | — | 9 | 9 | ||||||||
Balance at March 31, 2018 (a) | $ | (25,507 | ) | $ | (481 | ) | $ | (25,988 | ) |
Components of AOCL | Amounts Reclassified from AOCL | Affected Line Item in the Condensed Statements of Income | ||||||
Three Months Ended March 31, 2018 | ||||||||
Unrealized Loss in on Derivatives - Other - Interest Rate Contracts designated as cash flow hedges | $ | 12 | Interest Charges | |||||
Income Taxes | (3 | ) | Income Taxes (a) | |||||
Losses from reclassifications for the period net of tax | $ | 9 |
16. | REVENUE: |
• | SJI and SJG have elected the Practical Expedient in ASC 606 for recognizing revenue on contracts with customers on a portfolio of performance obligations with similar characteristics, as we reasonably expect the effects of applying the guidance to the portfolio would not differ materially from applying it to individual contracts. |
• | SJI and SJG apply the accounting guidance for recognizing revenue on contracts with customers on a series of distinct goods and services as one performance obligation, as long as the distinct goods and services are part of a series that are substantially the same and satisfied over time, and the same method would be used to measure progress towards satisfaction of the performance obligation. All performance obligations noted below under "Revenue Recognized Over Time" apply this guidance. |
Revenue Recognized Over Time: | ||
Reportable Segment | Performance Obligation | Description |
Gas Utility Operations; Wholesale Energy Operations; Retail Gas and Other Operations | Natural Gas | SJG sells natural gas to residential, commercial and industrial customers, and price is based on regulated tariff rates which are established by the BPU. There is an implied contract between SJG and a customer for the purchase, delivery, and sale of gas, and the customer is billed monthly, with payment due within 30 days. SJRG sells natural gas to commercial customers at either a fixed quantity or at variable quantities based on a customer's needs. Payment is due on the 25th of each month for the previous month's deliveries. SJE sells natural gas to commercial, industrial and residential customers at fixed prices throughout the life of the contract, with the customer billed monthly and payment due within 30 days. For all three segments, revenue is currently being recognized over time based upon volumes delivered (i.e. unit of output) or through the passage of time ratably as the customer uses natural gas, which represents satisfaction of the performance obligation. |
Gas Utility Operations; Wholesale Energy Operations | Pipeline transportation capacity | SJG and SJRG sell pipeline transportation capacity on a wholesale basis to various customers on the interstate pipeline system and transport natural gas purchased directly from producers or suppliers to their customers. These contracts to sell this capacity are at a price, quantity and time period agreed to by both parties determined on a contract by contract basis. Payment is due on the 25th of each month for the previous month's deliveries. Revenue is currently being recognized over time based upon volumes delivered (i.e. unit of output) or through the passage of time ratably coinciding with the delivery of gas and the customer obtaining control, which represents satisfaction of the performance obligation. |
Wholesale Energy Operations | Fuel Management Services | SJRG currently has ten fuel supply management contracts where SJRG has acquired pipeline transportation capacity that allows SJRG to match end users, many of which are merchant generators, with producers looking to find a long-term solution for their supply. Natural gas is sold to the merchant generator daily based on their needs, with payment made either weekly or biweekly depending on the contract. Revenue is currently being recognized over time based upon volumes delivered (i.e. unit of output) coinciding with the delivery of gas and the customer obtaining control, which represents satisfaction of the performance obligation. |
Retail Electric Operations | Electricity | SJE sells electricity to commercial, industrial and residential customers at fixed prices throughout the life of the contract, with the customer billed monthly and payment due within 30 days. Revenue is currently being recognized over time based upon volumes delivered (i.e. unit of output) or through the passage of time ratably coinciding with the delivery of electricity and the customer obtaining control, which represents satisfaction of the performance obligation. |
On-Site Energy Production | Solar | Marina has several wholly-owned solar projects that earn revenue based on electricity generated. The customer pays monthly as electricity is being generated, with payment due within 30 days. The performance obligation is satisfied as kwh's of energy are generated (i.e. unit of output), which is when revenue is recognized. |
On-Site Energy Production | Marina Thermal Facility | Marina has a contract with a casino and resort in Atlantic City, NJ to provide cooling, heating and emergency power. There are multiple performance obligations with this contract, including electric, chilled water and hot water, and each of these are considered distinct and separately identifiable, and they are all priced separately. These performance obligations are satisfied over time ratably as they are used by the customer, who is billed monthly. Payment is due within 30 days. |
Revenue Recognized at a Point in Time: | ||
Reportable Segment | Performance Obligation | Description |
On-Site Energy Production | SREC's | The customer is billed based on a contracted amount of SREC's to be sold, with the price based on the market price of the SRECs at the time of generation. This does not represent variable consideration as the price is known and established at the time of generation and delivery to the customer. The performance obligation is satisfied at the point in time the SREC is delivered to the customer, which is when revenue is recognized. Payment terms are approximately 10 days subsequent to delivery. |
Three Months Ended March 31, 2018 | ||||||||||||||||
Gas Utility Operations | Wholesale Energy Operations | Retail Gas and Other Operations | Retail Electric Operations | On-Site Energy Production | Appliance Service Operations | Corporate Services and Intersegment | Total | |||||||||
Customer Type: | ||||||||||||||||
Residential | 147,262 | — | — | 8,096 | — | 520 | — | 155,878 | ||||||||
Commercial & Industrial | 40,805 | 173,846 | 33,246 | 21,950 | 21,157 | — | (8,770 | ) | 282,234 | |||||||
OSS & Capacity Release | 5,204 | — | — | — | — | — | — | 5,204 | ||||||||
Other | 663 | — | — | — | — | — | — | 663 | ||||||||
193,934 | 173,846 | 33,246 | 30,046 | 21,157 | 520 | (8,770 | ) | 443,979 | ||||||||
Product Line: | ||||||||||||||||
Gas | 193,934 | 173,846 | 33,246 | — | — | — | (4,574 | ) | 396,452 | |||||||
Electric | — | — | — | 30,046 | — | — | (1,668 | ) | 28,378 | |||||||
Solar | — | — | — | — | 11,836 | — | (2,528 | ) | 9,308 | |||||||
CHP | — | — | — | — | 7,853 | — | — | 7,853 | ||||||||
Landfills | — | — | — | — | 1,468 | — | — | 1,468 | ||||||||
Other | — | — | — | — | — | 520 | — | 520 | ||||||||
193,934 | 173,846 | 33,246 | 30,046 | 21,157 | 520 | (8,770 | ) | 443,979 |
Accounts Receivable (1) | Unbilled Revenue (2) | |||||
SJI (including SJG and all other consolidated subsidiaries): | ||||||
Beginning balance as of 1/1/18 | $ | 202,379 | $ | 73,377 | ||
Ending balance as of 3/31/18 | 243,395 | 62,601 | ||||
Increase (Decrease) | $ | (41,016 | ) | $ | 10,776 | |
SJG: | ||||||
Beginning balance as of 1/1/18 | $ | 78,571 | $ | 54,980 | ||
Ending balance as of 3/31/18 | 128,583 | 44,287 | ||||
Increase (Decrease) | $ | (50,012 | ) | $ | 10,693 |
17. | SUBSEQUENT EVENTS: |
• | SJI offered 12,669,491 shares of its common stock, par value $1.25 per share, at a public offering price of $29.50 per share. Of the offered shares, 5,889,830 shares were issued at closing, including 1,652,542 shares pursuant to the underwriters’ option. The gross proceeds from these shares was $173.7 million, with net proceeds after deducting underwriting discounts and commissions of $167.7 million. The remaining 6,779,661 shares of common stock ("Forward Shares") are to be sold by Bank of America, N.A., as forward seller, pursuant to a forward sale agreement. The Company received no proceeds from the sale of the Forward Shares at the closing. SJI has an option to settle the forward sale agreement by delivering newly issued shares of SJI common stock and receive proceeds, subject to certain adjustments, from the sale of those shares, assuming one or more future physical settlements of the forward sale agreement, no later than April 2019. SJI may also choose to settle the forward sale contract with a cash payment, or multiple cash payments, no later than April 2019. In the event SJI elects to settle all or a portion of the forward sale contract with a cash payment, no additional shares of SJI common stock would be issued under the forward sale contract for the portions that were cash settled. |
• | SJI issued and sold 5,750,000 Equity Units, initially in the form of Corporate Units, which included 750,000 Corporate Units pursuant to the underwriters’ option. Each Corporate Unit has a stated amount of $50 and is comprised of (a) a purchase contract obligating the holder to purchase from the Company, and for the Company to sell to the holder for a price in cash of $50, on the purchase contract settlement date, or April 15, 2021, subject to earlier termination or settlement, a certain number of shares of common stock; and (b) a 1/20, or 5%, undivided beneficial ownership interest in $1,000 principal amount of SJI’s 2018 Series A 3.70% Remarketable Junior Subordinated Notes due 2031. This offering resulted in gross proceeds of approximately $287.5 million, with net proceeds after deducting underwriting discounts and commissions of $278.9 million. |
• | SJI - This section describes the financial condition and results of operations of South Jersey Industries, Inc. and its subsidiaries on a consolidated basis. It includes discussions of our regulated operations, including South Jersey Gas Company (SJG), and our non-regulated operations. |
• | SJG - This section describes the financial condition and results of operations of SJG, a subsidiary of SJI, which comprises the gas utility operations segment. |
• | Gas utility operations (SJG) consist primarily of natural gas distribution to residential, commercial and industrial customers. The result of SJG are only included in this operating segment. |
• | Wholesale energy operations include the activities of South Jersey Resources Group, LLC (SJRG) and South Jersey Exploration, LLC (SJEX). |
• | South Jersey Energy Company (SJE) is involved in both retail gas and retail electric activities. |
◦ | Retail gas and other operations include natural gas acquisition and transportation service business lines. |
◦ | Retail electric operations consist of electricity acquisition and transportation to commercial, industrial and residential customers. |
• | On-site energy production consists of the thermal energy facility of Marina Energy, LLC (Marina) and other energy-related projects. Also included in this segment are the activities of ACB Energy Partners, LLC (ACB), AC Landfill Energy, LLC (ACLE), BC Landfill Energy, LLC (BCLE), SC Landfill Energy, LLC (SCLE), SX Landfill Energy, LLC (SXLE), MCS Energy Partners, LLC (MCS), NBS Energy Partners, LLC (NBS) and SBS Energy Partners, LLC (SBS). |
• | Appliance service operations includes South Jersey Energy Service Plus, LLC (SJESP), which serviced residential and small commercial HVAC systems, installed small commercial HVAC systems, provided plumbing services and serviced appliances under warranty via a subcontractor arrangement as well as on a time and materials basis. On September 1, 2017, SJESP sold certain assets of its residential and small commercial HVAC and plumbing business to a third party. SJESP continues to receive commissions paid on service contracts from the third party and will do so on a go forward basis. |
• | SJI Midstream, LLC (Midstream) was formed to invest in infrastructure and other midstream projects, including a current project to build a natural gas pipeline in Pennsylvania and New Jersey. |
• | Costs incurred related to the agreement to acquire Elizabethtown Gas and Elkton Gas are recorded in the Corporate & Services segment. |
• | The net income contribution from the wholesale energy operations at SJRG for the three months ended March 31, 2018 increased $65.0 million to $56.6 million compared with the same period in 2017, primarily due to the following: |
◦ | $26.9 million increase primarily due to higher margins on daily energy trading activities and an overall increase in sales due to cold weather experienced in the first quarter of 2018, as discussed under "Gross Margin - Energy Group" below. Also contributing was the impact of the Tax Cuts and Jobs Act ("Tax Reform"), as discussed in Note 1 to the condensed consolidated financial statements. |
◦ | $25.9 million increase due to lower legal fees, reserves and interest recorded on a pricing dispute between SJI and a gas supplier during the first quarter of 2018 versus 2017 (see Note 11 to the condensed consolidated financial statements). |
◦ | $12.2 million increase due to the change in unrealized gains and losses on derivatives used by the wholesale energy operations to mitigate natural gas commodity price risk, as discussed under "Operating Revenues - Energy Group" below. |
• | The net income contribution from gas utility operations at SJG for the three months ended March 31, 2018 increased $20.3 million to $66.7 million compared with the same period in 2017, primarily due to the base rate case settlement, the roll-in of investments for infrastructure replacement and improvement, along with customer growth. |
• | SJI recorded $6.9 million (after-tax) of expenses related to costs incurred in connection with the expected acquisition of the assets of Elizabethtown Gas and Elkton Gas (the "Acquisition"); see Note 1 to the condensed consolidated financial statements. These include consulting and legal charges, along with fees and interest on loans to fund the acquisition. These costs are recorded in the Corporate & Services segment. |
• | The net income contribution from the retail gas and electric operations at SJE for the three months ended March 31, 2018 decreased $4.3 million to a net loss of $4.1 million compared with the same period in 2017, primarily due to the change in unrealized gains and losses on forward financial contracts used to mitigate price risk on retail gas as discussed under "Operating Revenues – Energy Group" below, along with the expiration in the second quarter of 2017 of a large electric sales contract with a group of school boards. Also contributing was a lower tax benefit on SJE's quarterly net loss as a result of Tax Reform. |
• | The wholesale energy operations at SJRG purchases and holds natural gas in storage and maintains capacity on interstate pipelines to earn profit margins in the future. The wholesale energy operations utilize derivatives to mitigate commodity price risk in order to substantially lock-in the profit margin that will ultimately be realized. However, both gas stored in inventory and pipeline capacity are not considered derivatives and are not subject to fair value accounting. Conversely, the derivatives used to reduce the risk associated with a change in the value of inventory and pipeline capacity are accounted for at fair value, with changes in fair value recorded in operating results in the period of change. As a result, earnings are subject to volatility as the market price of derivatives change, even when the underlying hedged value of inventory and pipeline capacity are unchanged. Additionally, |
• | The retail electric operations at SJE use forward contracts to mitigate commodity price risk on fixed price electric contracts with customers. In accordance with GAAP, the forward contracts are recorded at fair value, with changes in fair value recorded in earnings in the period of change. Several related customer contracts are not considered derivatives and, therefore, are not recorded in earnings until the electricity is delivered. As a result, earnings are subject to volatility as the market price of the forward contracts change, even when the underlying hedged value of the customer contract is unchanged. Over time, gains or losses on the sale of the fixed price electric under contract will be offset by losses or gains on the forward contracts, resulting in the realization of the profit margin expected when the transactions were initiated. |
• | For the three months ended March 31, 2017, Economic Earnings excludes an approximately $2.4 million pre-tax loss related to a new interest rate derivative and amendments made to an existing interest rate derivative linked to unrealized losses previously recorded in Accumulated Other Comprehensive Loss (AOCL). SJI reclassified this amount from AOCL to Interest Charges on the condensed consolidated statements of income as a result of the prior hedged transactions being deemed probable of not occurring. Since the economic impact will not be realized until future periods, this amount is excluded from Economic Earnings. See Note 12 to the condensed consolidated financial statements. |
• | For the three months ended March 31, 2017, Economic Earnings excludes an approximately $0.3 million pre-tax charge incurred related to an impairment charge due to a reduction in the expected cash flows to be received from a solar generating facility, for which the economic impact will not be realized until a future period. See Note 1 to the condensed consolidated financial statements. An impairment charge was also recorded in 2012 within Income from Continuing Operations on a separate solar generating facility which reduced its depreciable basis and recurring depreciation expense, and this was also excluded from Economic Earnings. |
• | For the three months ended March 31, 2018, there were no items that fit part (iii) of the definition of Economic Earnings. |
• | The income contribution from the wholesale energy operations at SJRG for the three months ended March 31, 2018 increased $26.9 million to $36.0 million compared with the same period in 2017, primarily due to higher margins on daily energy trading activities and an overall increase in sales due to cold weather experienced in the first quarter of 2018, as discussed under "Gross Margin - Energy Group" below. Also contributing was the impact of the Tax Cuts and Jobs Act ("Tax Reform"), as discussed in Note 1 to the condensed consolidated financial statements. |
• | The income contribution from gas utility operations at SJG for the three months ended March 31, 2018 increased $20.3 million to $66.7 million compared with the same period in 2017, primarily due to the base rate case settlement, the roll-in of investments for infrastructure replacement and improvement, along with customer growth. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Income from Continuing Operations | $ | 111,306 | $ | 37,747 | |||
Minus/Plus: | |||||||
Unrealized Mark-to-Market Gains on Derivatives | (25,190 | ) | (13,908 | ) | |||
Realized Losses on Inventory Injection Hedges | — | 332 | |||||
Unrealized Loss on Property, Plant and Equipment (A) | — | 256 | |||||
Net Losses from a Legal Proceeding in a Pricing Dispute (B) | 1,345 | 43,987 | |||||
Acquisition Costs (C) | 9,277 | — | |||||
Other (D) | — | 2,351 | |||||
Income Taxes (E) | 3,680 | (13,207 | ) | ||||
Economic Earnings | $ | 100,418 | $ | 57,558 | |||
Earnings per Share from Continuing Operations | $ | 1.40 | $ | 0.47 | |||
Minus/Plus: | |||||||
Unrealized Mark-to-Market Gains on Derivatives | (0.32 | ) | (0.18 | ) | |||
Net Losses from a Legal Proceeding in a Pricing Dispute (B) | 0.02 | 0.56 | |||||
Acquisition Costs (C) | 0.11 | — | |||||
Other (D) | — | 0.03 | |||||
Income Taxes (E) | 0.05 | (0.16 | ) | ||||
Economic Earnings per Share | $ | 1.26 | $ | 0.72 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Gains on Energy Related Commodity Contracts | $ | 23,353 | $ | 14,688 | |||
Gains (Losses) on Interest Rate Contracts | 1,628 | (1,005 | ) | ||||
Total before income taxes | 24,981 | 13,683 | |||||
Unrealized mark-to-market gains on derivatives held by affiliated companies, before taxes | 209 | 225 | |||||
Total unrealized mark-to-market gains on derivatives | 25,190 | 13,908 | |||||
Realized Losses on Inventory Injection Hedges | — | (332 | ) | ||||
Unrealized Loss on Property, Plant and Equipment (A) | — | (256 | ) | ||||
Net Losses from a Legal Proceeding in a Pricing Dispute (B) | (1,345 | ) | (43,987 | ) | |||
Acquisition Costs (C) | (9,277 | ) | — | ||||
Other (D) | — | (2,351 | ) | ||||
Income Taxes (E) | (3,680 | ) | 13,207 | ||||
Total reconciling items between income (losses) from continuing operations and economic earnings | $ | 10,888 | $ | (19,811 | ) |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Utility Operating Revenues: | |||||||
Firm Sales - | |||||||
Residential | $ | 140,754 | $ | 114,592 | |||
Commercial | 28,749 | 25,640 | |||||
Industrial | 2,157 | 1,820 | |||||
Cogeneration & Electric Generation | 1,299 | 787 | |||||
Firm Transportation - | |||||||
Residential | 6,508 | 6,205 | |||||
Commercial | 16,472 | 12,785 | |||||
Industrial | 6,362 | 4,810 | |||||
Cogeneration & Electric Generation | 1,336 | 1,180 | |||||
Total Firm Revenues | 203,637 | 167,819 | |||||
Interruptible Sales | 115 | — | |||||
Interruptible Transportation | 322 | 239 | |||||
Off-System Sales | 27,585 | 26,778 | |||||
Capacity Release | 2,574 | 1,743 | |||||
Other | 226 | 235 | |||||
234,459 | 196,814 | ||||||
Less: Intercompany Sales | (2,691 | ) | (1,045 | ) | |||
Total Utility Operating Revenues | 231,768 | 195,769 | |||||
Less: | |||||||
Cost of Sales - Utility | 89,808 | 72,424 | |||||
Less: Intercompany Cost of Sales | (2,691 | ) | (1,045 | ) | |||
Total Cost of Sales - Utility (Excluding depreciation) | 87,117 | 71,379 | |||||
Conservation Recoveries* | 5,676 | 2,548 | |||||
RAC Recoveries* | 4,086 | 2,501 | |||||
EET Recoveries* | 512 | 384 | |||||
Revenue Taxes | 366 | 439 | |||||
Utility Margin** | $ | 134,011 | $ | 118,518 | |||
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Utility Margin: | |||||||
Residential | $ | 96,063 | $ | 73,446 | |||
Commercial and Industrial | 35,643 | 26,832 | |||||
Cogeneration and Electric Generation | 995 | 1,128 | |||||
Interruptible | 129 | 4 | |||||
Off-System Sales & Capacity Release | 1,935 | 1,956 | |||||
Other Revenues | 226 | 234 | |||||
Margin Before Weather Normalization & Decoupling | 134,991 | 103,600 | |||||
CIP Mechanism | (1,760 | ) | 13,975 | ||||
EET Mechanism | 780 | 943 | |||||
Utility Margin** | $ | 134,011 | $ | 118,518 |
• | Gross margin from the wholesale energy operations at SJRG increased $86.2 million to $79.0 million for the three months ended March 31, 2018 compared with the same period in 2017, primarily due to: |
◦ | $40.6 million change from prior year recorded on a pricing dispute between SJI and a gas supplier during the first quarter of 2018 versus 2017 (see Note 11 to the condensed consolidated financial statements). |
◦ | $13.6 million increase resulting from the change in unrealized gains and losses recorded on forward financial contracts due to price volatility, which is excluded for Economic Earnings. |
◦ | The remaining $32.0 million increase is primarily due to higher margins on daily energy trading activities and an overall increase in sales due to cold weather experienced in the first quarter of 2018. |
• | Gross margin from SJE’s retail gas and other operations decreased $4.1 million to a loss of $3.4 million for the three months ended March 31, 2018 compared with the same period in 2017. This was primarily due to the change in unrealized gains and losses recorded on forward financial contracts due to price volatility, which is excluded for Economic Earnings and represented a total decrease of $4.1 million. |
• | Gross margin from SJE’s retail electric operations decreased $1.6 million to $0.6 million for the three months ended March 31, 2018 compared with the same period in 2017. The three month comparative period decrease was primarily due to lower sales volumes resulting from the expiration in the second quarter of 2017 of a large electric sales contract with a group of school boards. Also contributing to the decrease was the change in unrealized gains and losses recorded on forward financial contracts due to price volatility, which is excluded for Economic Earnings and represented a total decrease of $0.9 million. |
• | Gross margin from on-site energy production at Marina decreased $0.2 million to $17.5 million for the three months ended March 31, 2018 compared with the same period in 2017. The three month comparative period increase does not represent a significant change. |
• | Gross margin from appliance service operations at SJESP decreased $0.3 million for the three months ended March 31, 2018 compared with the same period in 2017, primarily due to the sale of certain assets of SJESP's residential and small commercial HVAC and plumbing business to a third party, which was completed on September 1, 2017 (see Note 1 to the condensed consolidated financial statements). |
Three Months Ended March 31, 2018 vs. 2017 | |||
Gas Utility Operations | $ | 5,195 | |
Nonutility: | |||
Energy Group: | |||
Wholesale Energy Operations | (795 | ) | |
Retail Gas and Other Operations | 237 | ||
Retail Electric Operations | (134 | ) | |
Subtotal Energy Group | (692 | ) | |
Energy Services: | |||
On-Site Energy Production | (121 | ) | |
Appliance Service Operations | (765 | ) | |
Subtotal Energy Services | (886 | ) | |
Total Nonutility | (1,578 | ) | |
Corporate & Services and Intercompany Eliminations | 4,979 | ||
Total Operations Expense | $ | 8,596 |
Company | Total Facility | Usage | Available Liquidity | Expiration Date | ||||||||||
SJI: | ||||||||||||||
Syndicated Revolving Credit Facility | $ | 400,000 | $ | 141,000 | (A) | $ | 259,000 | August 2022 | ||||||
Revolving Credit Facility | 50,000 | 50,000 | — | September 2019 | ||||||||||
Total SJI | 450,000 | 191,000 | 259,000 | |||||||||||
SJG: | ||||||||||||||
Commercial Paper Program/Revolving Credit Facility | 200,000 | 64,000 | (B) | 136,000 | August 2022 | |||||||||
Uncommitted Bank Line | 10,000 | 10,000 | August 2018 (C) | |||||||||||
Total SJG | 210,000 | 64,000 | 146,000 | |||||||||||
Total | $ | 660,000 | $ | 255,000 | $ | 405,000 |
• | SJI offered 12,669,491 shares of its common stock, par value $1.25 per share, at a public offering price of $29.50 per share. Of the offered shares, 5,889,830 shares were issued at closing, including 1,652,542 shares pursuant to the underwriters’ option. The gross proceeds from these shares was $173.7 million, with net proceeds after deducting underwriting discounts and commissions of $167.7 million. The remaining 6,779,661 shares of common stock ("Forward Shares") are to be sold by Bank of America, N.A., as forward seller, pursuant to a forward sale agreement. The Company received no proceeds from the sale of the Forward Shares at the closing. SJI has an option to settle the forward sale agreement by delivering newly issued shares of SJI common stock and receive proceeds, subject to certain adjustments, from the sale of those shares, assuming one or more future physical settlements of the forward sale agreement, no later than April 2019. SJI may also choose to settle the forward sale contract with a cash payment, or multiple cash payments, no later than April 2019. In the event SJI elects to settle all or a portion of the forward sale contract with a cash payment, no additional shares of SJI common stock would be issued under the forward sale contract for the portions that were cash settled. |
• | SJI issued and sold 5,750,000 Equity Units, initially in the form of Corporate Units, which included 750,000 Corporate Units pursuant to the underwriters’ option. Each Corporate Unit has a stated amount of $50 and is comprised of (a) a purchase contract obligating the holder to purchase from the Company, and for the Company to sell to the holder for a price in cash of $50, on the purchase contract settlement date, or April 15, 2021, subject to earlier |
As of March 31, 2018 | As of December 31, 2017 | ||||
Equity | 46.3 | % | 43.7 | % | |
Long-Term Debt | 44.7 | % | 43.6 | % | |
Short-Term Debt | 9.0 | % | 12.7 | % | |
Total | 100.0 | % | 100.0 | % |
Three Months Ended March 31, | |||||
2018 | 2017 | ||||
Utility Throughput – decatherms(dt): | |||||
Firm Sales - | |||||
Residential | 12,730 | 10,828 | |||
Commercial | 2,709 | 2,508 | |||
Industrial | 215 | 201 | |||
Cogeneration & Electric Generation | 255 | 133 | |||
Firm Transportation - | |||||
Residential | 829 | 843 | |||
Commercial | 3,141 | 2,598 | |||
Industrial | 2,975 | 3,054 | |||
Cogeneration & Electric Generation | 1,021 | 1,162 | |||
Total Firm Throughput | 23,875 | 21,327 | |||
Interruptible Sales | 9 | — | |||
Interruptible Transportation | 301 | 391 | |||
Off-System Sales | 6,747 | 5,981 | |||
Capacity Release | 18,029 | 21,098 | |||
Total Throughput - Utility | 48,961 | 48,797 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net Income Impact: | |||||||
CIP – Weather Related | $ | 0.9 | $ | 5.9 | |||
CIP – Usage Related | (2.2 | ) | 2.5 | ||||
Total Net Income Impact | $ | (1.3 | ) | $ | 8.4 | ||
Weather Compared to 20-Year Average | 1.4% Warmer | 13.2% Warmer | |||||
Weather Compared to Prior Year | 12.5% Colder | 2.6% Warmer |
Three Months Ended March 31, 2018 vs. 2017 | ||
Operations | 5,195 | |
Maintenance | 1,881 | |
Depreciation | 1,649 | |
Energy and Other Taxes | (40 | ) |
As of March 31, 2018 | As of December 31, 2017 | ||||
Common Equity | 52.8 | % | 51.3 | % | |
Long-Term Debt | 43.8 | % | 45.8 | % | |
Short-Term Debt | 3.4 | % | 2.9 | % | |
Total | 100.0 | % | 100.0 | % |
Assets | |||||||||||||||
Source of Fair Value | Maturity < 1 Year | Maturity 1 -3 Years | Maturity Beyond 3 Years | Total | |||||||||||
Prices actively quoted | $ | 935 | $ | — | $ | — | $ | 935 | |||||||
Prices provided by other external sources | 11,753 | 2,355 | 13 | 14,121 | |||||||||||
Prices based on internal models or other valuation methods | 11,698 | 9,657 | 243 | 21,598 | |||||||||||
Total | $ | 24,386 | $ | 12,012 | $ | 256 | $ | 36,654 | |||||||
Liabilities | |||||||||||||||
Source of Fair Value | Maturity <1 Year | Maturity 1 -3 Years | Maturity Beyond 3 Years | Total | |||||||||||
Prices actively quoted | $ | 2,551 | $ | 1,370 | $ | 26 | $ | 3,947 | |||||||
Prices provided by other external sources | 6,135 | 1,545 | — | 7,680 | |||||||||||
Prices based on internal models or other valuation methods | 3,800 | 1,029 | 183 | 5,012 | |||||||||||
Total | $ | 12,486 | $ | 3,944 | $ | 209 | $ | 16,639 |
• | NYMEX (New York Mercantile Exchange) is the primary national commodities exchange on which natural gas is traded. Volumes of our NYMEX contracts included in the table above under "Prices actively quoted" are 25.6 million decatherms (dts) with a weighted average settlement price of $3.29 per dt. |
• | Basis represents the differential to the NYMEX natural gas futures contract for delivering gas to a specific location. Volumes of our basis contracts, along with volumes of our discounted index related purchase and sales contracts, included in the table above under "Prices provided by other external sources" and "Prices based on internal models or other valuation methods" are 31.8 million dts with a weighted average settlement price of $(0.97) per dt. |
• | Fixed Price Gas Daily represents the price of a NYMEX natural gas futures contract adjusted for the difference in price for delivering the gas at another location. Volumes of our Fixed Price Gas Daily contracts included in the table above under "Prices provided by other external sources" are 34.1 million dts with a weighted average settlement price of $2.32 per dt. |
• | Volumes of electric included in the table above under "Prices based on internal models or other valuation methods" are 0.4 million megawatt hours (mwh) with a weighted average settlement price of $32.91 per mwh. |
Net Derivatives — Energy Related Liabilities, January 1, 2018 | $ | (4,836 | ) |
Contracts Settled During the Three Months Ended March 31, 2018, Net | 15,511 | ||
Other Changes in Fair Value from Continuing and New Contracts, Net | 9,340 | ||
Net Derivatives — Energy Related Assets, March 31, 2018 | $ | 20,015 |
Notional Amount | Fixed Interest Rate | Start Date | Maturity | Obligor | ||||||
$ | 20,000,000 | 3.049% | 3/15/2017 | 3/15/2027 | SJI | |||||
$ | 20,000,000 | 3.049% | 3/15/2017 | 3/15/2027 | SJI | |||||
$ | 10,000,000 | 3.049% | 3/15/2017 | 3/15/2027 | SJI | |||||
$ | 12,500,000 | 3.530% | 12/1/2006 | 2/1/2036 | SJG | |||||
$ | 12,500,000 | 3.430% | 12/1/2006 | 2/1/2036 | SJG |
Assets | ||||||||||||
Source of Fair Value | Maturity < 1 Year | Maturity 1 - 3 Years | Total | |||||||||
Prices Actively Quoted (NYMEX) | $ | 342 | $ | — | $ | 342 | ||||||
Prices Provided by Other External Sources (Basis) | 62 | — | 62 | |||||||||
Prices based on internal models or other valuable methods | — | — | — | |||||||||
Total | $ | 404 | $ | — | $ | 404 |
Liabilities | ||||||||||||
Maturity | Maturity | |||||||||||
Source of Fair Value | < 1 Year | 1 - 3 Years | Total | |||||||||
Prices Actively Quoted (NYMEX) | $ | 769 | $ | 328 | $ | 1,097 | ||||||
Prices Provided by Other External Sources (Basis) | 9 | — | 9 | |||||||||
Prices based on internal models or other valuable methods | 6 | — | 6 | |||||||||
Total | $ | 784 | $ | 328 | $ | 1,112 |
Net Derivatives — Energy Related Liabilities, January 1, 2018 | $ | (2,108 | ) |
Contracts Settled During the Three Months ended March 31, 2018, Net | 1,202 | ||
Other Changes in Fair Value from Continuing and New Contracts, Net | 198 | ||
Net Derivatives — Energy Related Liabilities, March 31, 2018 | $ | (708 | ) |
• | our senior management’s attention may be diverted from the management of daily operations to the integration of the assets acquired in the Acquisition; |
• | we could incur significant unknown and contingent liabilities for which we have limited or no contractual remedies or insurance coverage; |
• | the assets to be acquired may not perform as well as we anticipate; and |
• | unexpected costs, delays and challenges may arise in integrating the assets acquired in the Acquisition into our existing operations. |
• | make it more difficult for us to repay or refinance our debts as they become due during adverse economic and industry conditions; |
• | limit our flexibility to pursue other strategic opportunities or react to changes in our business and the industry in which we operate and, consequently, place us at a competitive disadvantage to competitors with less debt; |
• | require an increased portion of our cash flows from operations to be used for debt service payments, thereby reducing the availability of cash flows to fund working capital, capital expenditures, dividend payments and other general corporate purposes; |
• | result in a downgrade in the credit rating of our indebtedness, which could limit our ability to borrow additional funds or increase the interest rates applicable to our indebtedness; |
• | result in higher interest expense in the event of increases in market interest rates for both long-term debt as well as short-term commercial paper, bank loans or borrowings under our line of credit at variable rates; |
• | reduce the amount of credit available to support hedging activities; and |
• | require that additional terms, conditions or covenants be placed on us. |
• | be dilutive to our existing shareholders and earnings per share; |
• | impact our capital structure and cost of the capital; |
• | be adversely impacted by movements in the overall equity markets or the utility or natural gas utility industry sectors of that market, which could impact the offering price of our new equity or necessitate the use of other equity or equity-like instruments such as preferred stock, convertible preferred shares, or convertible debt; and |
• | impact our ability to make our current and future dividend payments. |
• | we must pay costs related to the Acquisition, including legal, accounting, financial advisory, filing and printing costs, whether the Acquisition is completed or not; |
• | we could be subject to litigation related to the failure to complete the Acquisition or other factors, which litigation may adversely affect our business, financial results and stock price; and |
• | as a result of our recent issuance of common stock in anticipation of the Acquisition, we could be subject to significant earnings per share dilution if we do not find other attractive investment opportunities or undertake other means reduce our overall shares outstanding. |
Exhibit No. | Description | |
Certification of SJI's Principal Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act. | ||
Certification of SJI's Principal Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act. | ||
Certification of SJG's Principal Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act. | ||
Certification of SJG's Principal Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act. | ||
Certification of SJI's Principal Executive Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code). | ||
Certification of SJI's Principal Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code). | ||
Certification of SJG's Principal Executive Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code). | ||
Certification of SJG's Principal Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code). | ||
101 | The following financial statements from South Jersey Industries, Inc.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018, filed with the Securities and Exchange Commission on May 7, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income; (ii) the Condensed Consolidated Statements of Comprehensive Income; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Balance Sheets and (v) the Notes to Condensed Consolidated Financial Statements. The following financial statements from South Jersey Gas’ Quarterly Report on Form 10-Q for the three months ended March 31, 2018, filed with the Securities and Exchange Commission on May 7, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Statements of Income; (ii) the Condensed Statements of Comprehensive Income; (iii) the Condensed Statements of Cash Flows; and (iv) the Condensed Balance Sheets. |
SOUTH JERSEY INDUSTRIES, INC. | |||
and | |||
SOUTH JERSEY GAS COMPANY | |||
(Co-Registrants) | |||
Dated: | May 7, 2018 | By: | /s/ Stephen H. Clark |
Stephen H. Clark | |||
Executive Vice President & Chief Financial Officer - SJI | |||
Chief Financial Officer - SJG | |||
(Principal Financial Officer for both Registrants) |
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2018, of South Jersey Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15 d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
South Jersey Industries, Inc. | |||
Date: | May 7, 2018 | By: | /s/ Michael J. Renna |
Michael J. Renna | |||
Principal Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2018, of South Jersey Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15 d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
South Jersey Industries, Inc. | |||
Date: | May 7, 2018 | By: | /s/ Stephen H. Clark |
Stephen H. Clark | |||
Principal Financial Officer |
South Jersey Gas Company | |||
Date: | May 7, 2018 | By: | /s/ David Robbins, Jr. |
David Robbins, Jr. | |||
Principal Executive Officer |
South Jersey Gas Company | |||
Date: | May 7, 2018 | By: | /s/ Stephen H. Clark |
Stephen H. Clark | |||
Principal Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Michael J. Renna | |
Name: Michael J. Renna | |
Title: Principal Executive Officer | |
May 7, 2018 |
(1) | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Stephen H. Clark | |
Name: Stephen H. Clark | |
Title: Principal Financial Officer | |
May 7, 2018 |
/s/ David Robbins, Jr. | |
Name: David Robbins, Jr. | |
Principal Executive Officer | |
May 7, 2018 |
/s/ Stephen H. Clark | |
Name: Stephen H. Clark | |
Principal Financial Officer | |
May 7, 2018 |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
May 01, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | SOUTH JERSEY INDUSTRIES INC | |
Entity Central Index Key | 0000091928 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 85,502,759 | |
South Jersey Gas Company | ||
Document Information [Line Items] | ||
Entity Registrant Name | SOUTH JERSEY GAS Co | |
Entity Central Index Key | 0001035216 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 2,339,139 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
||||||
Net Income | $ 111,240 | $ 37,717 | |||||
Other Comprehensive Income, Net of Tax: | |||||||
Unrealized Gain on Derivatives - Other | 9 | 1,515 | |||||
Other Comprehensive Income - Net of Tax | [1] | 9 | 1,515 | ||||
Comprehensive Income | $ 111,249 | $ 39,232 | |||||
Combined statutory tax rate | 25.00% | 40.00% | |||||
South Jersey Gas Company | |||||||
Net Income | $ 66,747 | $ 46,478 | |||||
Other Comprehensive Income, Net of Tax: | |||||||
Unrealized Gain on Derivatives - Other | 9 | 7 | |||||
Other Comprehensive Income - Net of Tax | [2] | 9 | 7 | ||||
Comprehensive Income | $ 66,756 | $ 46,485 | |||||
Combined statutory tax rate | 25.00% | 40.00% | |||||
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: GENERAL - South Jersey Industries, Inc. (SJI or the Company) currently provides a variety of energy-related products and services primarily through the following wholly-owned subsidiaries:
•ACB Energy Partners, LLC (ACB) owns and operates a natural gas fueled combined heating, cooling and power facility located in Atlantic City, New Jersey. •AC Landfill Energy, LLC (ACLE), BC Landfill Energy, LLC (BCLE), SC Landfill Energy, LLC (SCLE) and SX Landfill Energy, LLC (SXLE) own and operate landfill gas-to-energy production facilities in Atlantic, Burlington, Salem and Sussex Counties located in New Jersey. •MCS Energy Partners, LLC (MCS), NBS Energy Partners, LLC (NBS) and SBS Energy Partners, LLC (SBS) own and operate solar-generation sites located in New Jersey.
In October 2017, SJI announced that it had entered into agreements to acquire the assets of Elizabethtown Gas and Elkton Gas from Pivotal Utility Holdings, Inc., a subsidiary of Southern Company Gas. SJI is acquiring the assets of both companies for total consideration of $1.7 billion. The transaction is expected to close in mid-2018, and is subject to approvals by the New Jersey Board of Public Utilities (BPU) and the Maryland Public Service Commission (PSC), with limited approvals also required from the Federal Energy Regulatory Commission (FERC), as well as certain anti-trust filings and approvals. In April 2018, SJI completed public equity offerings and issued long-term debt to help fund the acquisition (see Note 17). In connection with the acquisition, SJI has incurred total fees of $9.3 million during the three months ended March 31, 2018. Of these fees, $5.5 million were related to consulting and legal expenses and recorded as Operations Expenses in the condensed consolidated statements of income for the three months ended March 31, 2018. The remaining $3.8 million relates to a senior unsecured bridge facility (the “Bridge Facility”), which was entered into in the fourth quarter of 2017. Debt issuance costs associated with the Bridge Facility of $2.6 million were amortized to interest expense during the three months ended March 31, 2018. Also incurred was $1.2 million of ticking fees which are also recorded as interest expense during the three months ended March 31, 2018. The interest expenses noted above are recorded in Interest Charges in the condensed consolidated statements of income. All of the above costs are included in the Corporate & Services segment. BASIS OF PRESENTATION - SJI's condensed consolidated financial statements include the accounts of SJI, its wholly-owned subsidiaries (including SJG) and subsidiaries in which SJI has a controlling interest. SJI eliminates all significant intercompany accounts and transactions. In management’s opinion, the unaudited condensed consolidated financial statements of SJI and SJG reflect all normal and recurring adjustments needed to fairly present their respective financial positions, operating results and cash flows at the dates and for the periods presented. SJI’s and SJG's businesses are subject to seasonal fluctuations and, accordingly, this interim financial information should not be the basis for estimating the full year’s operating results. As permitted by the rules and regulations of the Securities and Exchange Commission (SEC), the accompanying unaudited condensed consolidated financial statements of SJI and SJG contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). These financial statements should be read in conjunction with SJI’s and SJG's Annual Reports on Form 10-K for the year ended December 31, 2017 for a more complete discussion of the accounting policies and certain other information. Certain reclassifications have been made to SJI's and SJG's prior period condensed consolidated statements of income to conform to the current period presentation. The non-service cost components of net periodic pension and postretirement benefit costs are now included as a reduction to Other Income and Expense, as opposed to being recorded as an Operations Expense, to conform with ASU 2017-07, which is described below under "New Accounting Pronouncements." This caused Other Income to be reduced, and Operations Expense to also be reduced, by $1.2 million and $0.6 million for SJI and SJG, respectively, for the three months ended March 31, 2017. This also caused a reclassification to SJI's prior period segments disclosure in Note 6 to increase Operating Income within both the Gas Utility Operations and Corporate & Services segments by $0.6 million for the three months ended March 31, 2017. Certain reclassifications have been made to SJI's prior period segments disclosures to conform to the current period presentation. The activities of SJI Midstream, which were presented in the Corporate & Services segment during the three months ended March 31, 2017, are now separated into the Midstream segment for the same period in 2018. This caused prior period adjustments to Interest Charges, Income Taxes and Property Additions in Note 6. REVENUE-BASED TAXES - SJG collects certain revenue-based energy taxes from its customers. Such taxes include the New Jersey State Sales Tax and Public Utilities Assessment (PUA). State sales tax is recorded as a liability when billed to customers and is not included in revenue or operating expenses. The PUA is included in both Utility Revenue and Energy and Other Taxes and totaled $0.4 million for both the three months ended March 31, 2018 and 2017. IMPAIRMENT OF LONG-LIVED ASSETS - Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances indicate carrying values may not be recoverable. Such reviews are performed in accordance with ASC 360. An impairment loss is indicated if the total future estimated undiscounted cash flows expected from an asset are less than its carrying value. An impairment charge is measured by the difference between an asset's carrying amount and fair value with the difference recorded within Operating Expenses on the condensed consolidated statements of income. Fair values can be determined by a variety of valuation methods, including third-party appraisals, sales prices of similar assets, and present value techniques. No impairments were identified at SJI or SJG for the three months ended March 31, 2018. SJI recorded an impairment charge of $0.3 million during the first quarter of 2017 due to a reduction in the expected cash flows to be received from a solar generating facility within the on-site energy production segment. For the three months ended March 31, 2017, no impairments were identified at SJG. Marina’s solar energy projects rely on returns from electricity and solar renewable energy credits (SRECs). A decrease in the value of electricity and SRECs due to market conditions and/or legislative changes may negatively impact Marina's return on its investments as well as lead to impairment of the respective assets. GAS EXPLORATION AND DEVELOPMENT - SJI capitalizes all costs associated with gas property acquisition, exploration and development activities under the full cost method of accounting. Capitalized costs include costs related to unproved properties, which are not amortized until proved reserves are found or it is determined that the unproved properties are impaired. All costs related to unproved properties are reviewed quarterly to determine if impairment has occurred. No impairment charges were recorded during the three months ended March 31, 2018 or 2017. As of March 31, 2018 and December 31, 2017, $8.6 million and $8.7 million, respectively, related to interests in proved and unproved properties in Pennsylvania, net of amortization, is included with Nonutility Property and Equipment and Other Noncurrent Assets on SJI's condensed consolidated balance sheets. TREASURY STOCK - SJI uses the par value method of accounting for treasury stock. As of March 31, 2018 and December 31, 2017, SJI held219,136 and 216,642 shares of treasury stock, respectively. These shares are related to deferred compensation arrangements where the amounts earned are held in the stock of SJI. INCOME TAXES - Deferred income taxes are provided for all significant temporary differences between the book and taxable bases of assets and liabilities in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740 - “Income Taxes.” A valuation allowance is established when it is determined that it is more likely than not that a deferred tax asset will not be realized. On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Reform") was enacted into law, which changed various corporate income tax provisions within the existing Internal Revenue Code. The law became effective January 1, 2018 but was required to be accounted for in the period of enactment, as such SJI adopted the new law in the fourth quarter of 2017. SJI and SJG were impacted in several ways as a result of Tax Reform, including provisions related to the permanent reduction in the U.S. federal corporate income tax rate from 35% to 21%, modification of bonus depreciation and changes to the deductibility of certain business-related expenses. The SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of Tax Reform. SAB 118 provides a measurement period that should not extend beyond one year from the enactment date of Tax Reform for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of Tax Reform for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of Tax Reform is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of Tax Reform. SJI and SJG were able to make reasonable, good faith estimates of certain effects and, therefore, recorded provisional adjustments for the following: the tax rules regarding the appropriate bonus deprecation rate that should be applied to assets placed in service after September 27, 2017, including the information required to compute the applicable depreciable tax basis. Further, Tax Reform is unclear in certain respects and will require interpretations and implementing regulations by the Internal Revenue Service, as well as state tax authorities. Tax Reform could also be subject to potential amendments and technical corrections which could impact the Company’s financial statements. Any required changes to the provisional estimates would result in the recording of regulatory assets or liabilities to the extent such amounts are probable of settlement or recovery through customer rates and a net change to income tax expense for any other amounts. Final adjustments to the provisional amounts are expected to be recorded by the third quarter of 2018. The accounting for all other applicable provisions of Tax Reform is considered complete based on the current interpretation. GOODWILL - Goodwill represents the excess of the consideration paid over the fair value of identifiable net assets acquired. Goodwill is not amortized, but instead is subject to impairment testing on an annual basis, and between annual tests whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying amount. No such events have occurred during the three months ended March 31, 2018. Goodwill totaled $3.6 million on the condensed consolidated balance sheets of SJI as of both March 31, 2018 and December 31, 2017. NEW ACCOUNTING PRONOUNCEMENTS - Other than as described below, no new accounting pronouncement issued or effective during 2018 or 2017 had, or are expected to have, a material impact on the condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC Topic 606). This ASU supersedes the revenue recognition requirements in FASB ASC 605, Revenue Recognition, and in most industry-specific topics. The new guidance identifies how and when entities should recognize revenue. The new rules establish a core principle requiring the recognition of revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for such goods or services. In connection with this new standard, the FASB has issued several amendments to ASU 2014-09, as follows:
The new guidance in ASU 2014-09, as well as all amendments discussed above, is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. On January 1, 2018, SJI and SJG adopted ASU 2014-09 and all amendments, which meant adopting the guidance in ASC 606. SJI and SJG adopted the new guidance using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. See Note 16. The methods of recognizing revenue for SJI's and SJG's contracts with customers is the same under ASC 605 and ASC 606, as revenues from contracts that SJI and SJG have with customers are currently recorded as gas or electricity is delivered to the customer, which is consistent with the new guidance under ASC 606. As such, there was no significant impact to revenues for the quarter ended March 31, 2018 as a result of applying ASC 606, and there was no cumulative catch-up to retained earnings under the modified retrospective method for changes in accounting for revenues. Further, there were no significant changes to our business processes, systems or internal controls over financial reporting needed to support recognition and disclosure under the new guidance. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which enhances the reporting model for financial instruments and includes amendments to address aspects of recognition, measurement, presentation and disclosure. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for only certain portions of the new guidance. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In March 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The new standard requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The new standard also will result in enhanced quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing leases. The accounting for leases by the lessor remains relatively the same. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. Management has formed an implementation team that is inventorying leases and evaluating the impact that adoption of this guidance will have on SJI's and SJG's financial statements, which includes monitoring industry specific developments including the exposure draft issued by the FASB that would introduce a land easement practical expedient to ASC 842. Consistent with the requirements of the standard, SJI and SJG expect to both transition to the new guidance using the modified retrospective approach, although this could be subject to change based on new guidance from the FASB. The Company does not plan to early adopt the new guidance. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This standard requires recognition of the current and deferred income tax effects of an intra-entity asset transfer, other than inventory, when the transfer occurs, as opposed to current GAAP, which requires companies to defer the income tax effects of intra-entity asset transfers until the asset has been sold to an outside party. The income tax effects of intra-entity inventory transfers will continue to be deferred until the inventory is sold. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, with early adoption permitted. The standard is required to be adopted on a modified retrospective basis with a cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard provides amended and clarifying guidance regarding whether an integrated set of assets and activities acquired is deemed the acquisition of a business (and, thus, accounted for as a business combination) or the acquisition of assets. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. The amendments in this update are effective for annual and any interim impairment tests performed in periods beginning after December 31, 2019. Management is currently determining the impact that adoption of this guidance will have on the financial statements of SJI and SJG. In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU is designed to improve guidance related to the presentation of defined benefit costs in the income statement. In particular, this ASU requires an employer to report the service cost component in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Adoption of this guidance was applied retrospectively and did not have a material impact on the financial statements of SJI or SJG; however, current and prior period presentation on the condensed consolidated statements of income were modified for SJI and SJG to conform to this guidance, as described under “Basis of Presentation” above. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies and reduces both (i) diversity in practice and (ii) cost and complexity when applying the guidance in Topic 718, to a change to the terms and conditions of a share-based payment award. This standard is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU is intended to improve the financial reporting of hedging relationships so that it represents a more faithful portrayal of an entity’s risk management activities (i.e. to help financial statement users understand an entity’s risk exposures and the manner in which hedging strategies are used to manage them), as well as to further simplify the application of the hedge accounting guidance in GAAP. The standard is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Management is currently determining the impact that adoption of this guidance will have on the financial statements of SJI and SJG. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income. This ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Reform. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Reform and will improve the usefulness of information reported to financial statement users. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Management is currently determining the impact that adoption of this guidance will have on the financial statements of SJI and SJG. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which gave improvements and enhancements to ASU 2016-01 discussed above. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. SJI and SJG adopted this guidance during the first quarter of 2018 in conjunction with adopting ASU 2016-01 discussed above. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In March 2018, the FASB issued ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update). This ASU incorporates recent SEC guidance which was issued in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulation. ASU No. 2018-04 was effective upon issuance. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update). This ASU incorporates recent SEC guidance related to the income tax accounting implications of Tax Reform. ASU No. 2018-05 was effective upon issuance. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. |
STOCK-BASED COMPENSATION PLAN |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION PLAN | STOCK-BASED COMPENSATION PLAN: On April 30, 2015, the shareholders of SJI approved the adoption of SJI's 2015 Omnibus Equity Compensation Plan (Plan), replacing the Amended and Restated 1997 Stock-Based Compensation Plan that had terminated on January 26, 2015. Under the Plan, shares may be issued to SJI’s officers (Officers), non-employee directors (Directors) and other key employees. No options were granted or outstanding during the three months ended March 31, 2018 and 2017. No stock appreciation rights have been issued under the plans. During the three months ended March 31, 2018 and 2017, SJI granted 185,214 and 158,688 restricted shares, respectively, to Officers and other key employees under the Plan. Performance-based restricted shares vest over a three-year period and are subject to SJI achieving certain market and earnings-based performance targets, which can cause the actual amount of shares that ultimately vest to range from 0% to 200% of the original shares granted. In 2015, SJI began granting time-based shares of restricted stock, one-third of which vest annually over a three-year period and which are limited to a 100% payout. Vesting of time-based grants is contingent upon SJI achieving a return on equity (ROE) of at least 7% during the initial year of the grant and meeting the service requirement. Provided that the 7% ROE requirement is met in the initial year, payout is solely contingent upon the service requirement being met in years two and three of the grant. Beginning in 2018, the vesting and payout of time-based shares of restricted stock is only contingent upon the service requirement being met in years one, two, and three of the grant. During the three months ended March 31, 2018 and 2017, Officers and other key employees were granted 56,634 and 48,790 shares of time-based restricted stock, respectively, which are included in the shares noted above. Grants containing market-based performance targets use SJI's total shareholder return (TSR) relative to a peer group to measure performance. As TSR-based grants are contingent upon market and service conditions, SJI is required to measure and recognize stock-based compensation expense based on the fair value at the date of grant on a straight-line basis over the requisite three-year period of each award. In addition, SJI identifies specific forfeitures of share-based awards, and compensation expense is adjusted accordingly over the requisite service period. Compensation expense is not adjusted based on the actual achievement of performance goals. The fair value of TSR-based restricted stock awards on the date of grant is estimated using a Monte Carlo simulation model. Through 2014, grants containing earnings-based targets were based on SJI's earnings growth rate per share (EGR) relative to a peer group to measure performance. In 2015, earnings-based performance targets included pre-defined EGR and ROE goals to measure performance. Beginning in 2016, performance targets include pre-defined compounded earnings annual growth rate (CEGR) for SJI. As EGR-based, ROE-based and CEGR-based grants are contingent upon performance and service conditions, SJI is required to measure and recognize stock-based compensation expense based on the fair value at the date of grant over the requisite three-year period of each award. The fair value is measured as the market price at the date of grant. The initial accruals of compensation expense are based on the estimated number of shares expected to vest, assuming the requisite service is rendered and probable outcome of the performance condition is achieved. That estimate is revised if subsequent information indicates that the actual number of shares is likely to differ from previous estimates. Compensation expense is ultimately adjusted based on the actual achievement of service and performance targets. During the three months ended March 31, 2018 and 2017, SJI granted 26,416 and 30,394 restricted shares, respectively, to Directors. Shares issued to Directors vest over twelve months and contain no performance conditions. As a result, 100% of the shares granted generally vest. The following table summarizes the nonvested restricted stock awards outstanding for SJI at March 31, 2018 and the assumptions used to estimate the fair value of the awards:
Expected volatility is based on the actual volatility of SJI’s share price over the preceding three-year period as of the valuation date. The risk-free interest rate is based on the zero-coupon U.S. Treasury Bond, with a term equal to the three-year term of the Officers’ and other key employees’ restricted shares. As notional dividend equivalents are credited to the holders during the three-year service period, no reduction to the fair value of the award is required. As the Directors’ restricted stock awards contain no performance conditions and dividends are paid or credited to the holder during the requisite service period, the fair value of these awards are equal to the market value of the shares on the date of grant. The following table summarizes the total stock-based compensation cost to SJI for the three months ended March 31, 2018 and 2017 (in thousands):
As of March 31, 2018, there was $9.3 million of total unrecognized compensation cost related to nonvested stock-based compensation awards granted under the plans. That cost is expected to be recognized over a weighted average period of 2.1 years. The following table summarizes information regarding restricted stock award activity for SJI during the three months ended March 31, 2018, excluding accrued dividend equivalents:
During the three months ended March 31, 2018 and 2017, SJI awarded 63,030 shares to its Officers and other key employees at a market value of $1.9 million, and 65,628 shares at a market value of $2.2 million, respectively. During the three months ended March 31, 2018 and 2017, SJI also granted 26,416 and 30,394 shares to its Directors at a market value of $0.8 million and $1.0 million, respectively. SJI has a policy of issuing new shares to satisfy its obligations under the Plan; therefore, there are no cash payment requirements resulting from the normal operation of the Plan. However, a change in control could result in such shares becoming nonforfeitable or immediately payable in cash. At the discretion of the Officers, Directors and other key employees, the receipt of vested shares can be deferred until future periods. These deferred shares are included in Treasury Stock on the condensed consolidated balance sheets. South Jersey Gas Company - Officers and other key employees of SJG participate in the stock-based compensation plans of SJI. During the three months ended March 31, 2018 and 2017, SJG officers and other key employees were granted 26,652 and 21,061 shares of SJI restricted stock, respectively. The cost of outstanding stock awards for SJG during the three months ended March 31, 2018 and 2017 was $0.2 million and $0.1 million, respectively. Approximately 60% of these costs were capitalized on SJG's condensed balance sheets to Utility Plant. |
AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED PARTY TRANSACTIONS |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED PARTY TRANSACTIONS | AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED-PARTY TRANSACTIONS: AFFILIATIONS — The following affiliated entities are accounted for under the equity method: PennEast Pipeline Company, LLC (PennEast) - Midstream has a 20% investment in PennEast, which is planning to construct an approximately 118-mile natural gas pipeline that will extend from Northeastern Pennsylvania into New Jersey. Energenic – US, LLC (Energenic) - Marina and a joint venture partner formed Energenic, in which Marina has a 50% equity interest. Energenic developed and operated on-site, self-contained, energy-related projects. Millennium Account Services, LLC (Millennium) - SJI and a joint venture partner formed Millennium, in which SJI has a 50% equity interest. Millennium reads utility customers’ meters on a monthly basis for a fee. Potato Creek, LLC (Potato Creek) - SJI and a joint venture partner formed Potato Creek, in which SJI has a 30% equity interest. Potato Creek owns and manages the oil, gas and mineral rights of certain real estate in Pennsylvania. EnergyMark, LLC (EnergyMark) - SJE has a 33% investment in EnergyMark, an entity that acquires and markets natural gas to retail end users. For the three months ended March 31, 2018 and 2017, SJRG had net sales to EnergyMark of $14.6 million and $15.2 million, respectively. During the first three months of 2018 and 2017, SJI made net investments in unconsolidated affiliates of $2.9 million and $3.7 million, respectively. As of March 31, 2018 and December 31, 2017, the outstanding balance of Notes Receivable – Affiliate was $17.1 million and $18.2 million, respectively. As of March 31, 2018, $13.6 million of these notes were secured by property, plant and equipment of the affiliates, accrue interest at 7.5% and are to be repaid through 2025. The remaining $3.5 million of these notes are unsecured and accrue interest at variable rates. SJI holds significant variable interests in these entities but is not the primary beneficiary. Consequently, these entities are accounted for under the equity method because SJI does not have both (a) the power to direct the activities of the entity that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity that could potentially be significant to the entity or the right to receive benefits from the entity that could potentially be significant to the entity. As of March 31, 2018, SJI had a net asset of approximately $67.0 million included in Investment in Affiliates on the condensed consolidated balance sheets related to equity method investees, in addition to Notes Receivable – Affiliate as discussed above. SJI’s maximum exposure to loss from these entities as of March 31, 2018, is limited to its combined equity contributions and the Notes Receivable-Affiliate in the aggregate amount of $84.1 million. DISCONTINUED OPERATIONS - Discontinued Operations consist of the environmental remediation activities related to the properties of South Jersey Fuel, Inc. (SJF) and the product liability litigation and environmental remediation activities related to the prior business of The Morie Company, Inc. (Morie). SJF is a subsidiary of Energy & Minerals, Inc. (EMI), an SJI subsidiary, which previously operated a fuel oil business. Morie is the former sand mining and processing subsidiary of EMI. EMI sold the common stock of Morie in 1996. SJI conducts tests annually to estimate the environmental remediation costs for these properties (see Note 11). Summarized operating results of the discontinued operations for the three months ended March 31, 2018 and 2017, were (in thousands, except per share amounts):
SJG RELATED-PARTY TRANSACTIONS - There have been no significant changes in the nature of SJG’s related-party transactions since December 31, 2017. See Note 3 to the Financial Statements in Item 8 of SJI's and SJG’s Form 10-K for the year ended December 31, 2017 for a detailed description of the related parties and their associated transactions. A summary of related-party transactions involving SJG, excluding pass-through items, included in SJG's Operating Revenues were as follows (in thousands):
Related-party transactions involving SJG, excluding pass-through items, included in SJG's Cost of Sales and Operating Expenses were as follows (in thousands):
*As discussed in Note 1 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2017, revenues and expenses related to the energy trading activities of the wholesale energy operations at SJRG are presented on a net basis in Operating Revenues – Nonutility on the condensed consolidated income statement. |
COMMON STOCK |
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Equity [Abstract] | ||||||||||||||||||||||
COMMON STOCK | COMMON STOCK: The following shares were issued and outstanding for SJI:
The par value ($1.25 per share) of stock issued was recorded in Common Stock and the net excess over par value of approximately $0.1 million was recorded in Premium on Common Stock. There were 2,339,139 shares of SJG's common stock (par value $2.50 per share) outstanding as of March 31, 2018. SJG did not issue any new shares during the period. SJI owns all of the outstanding common stock of SJG. SJI's EARNINGS PER COMMON SHARE (EPS) - SJI's Basic EPS is based on the weighted-average number of common shares outstanding. The incremental shares required for inclusion in the denominator for the diluted EPS calculation were 129,369 and 121,812 for the three months ended March 31, 2018 and 2017, respectively. These additional shares relate to SJI's restricted stock as discussed in Note 2. DIVIDEND REINVESTMENT PLAN (DRP) — SJI offers a DRP which allows participating shareholders to purchase shares of SJI common stock by automatic reinvestment of dividends or optional purchases. SJI currently purchases shares on the open market to fund share purchases by DRP participants, and as a result SJI did not raise any equity capital through the DRP in 2017 or 2018. SJI does not intend to issue equity capital via the DRP in 2018. |
FINANCIAL INSTRUMENTS |
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Financial Instruments, Owned, at Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS: RESTRICTED INVESTMENTS — Marina is required to maintain escrow accounts related to ongoing capital projects. As of both March 31, 2018 and December 31, 2017, the escrowed funds, including interest earned, totaled $0.3 million which are recorded in Restricted Investments on the condensed consolidated balance sheets. SJI and SJG maintain margin accounts with selected counterparties to support their risk management activities. The balances required to be held in these margin accounts increase as the net value of the outstanding energy-related contracts with the respective counterparties decrease. As of March 31, 2018 and December 31, 2017, SJI's balances (including SJG) in these accounts totaled $16.4 million and $31.6 million, respectively, held by the counterparty, which is recorded in Restricted Investments on the condensed consolidated balance sheets. As of March 31, 2018 and December 31, 2017, SJG's balance held by the counterparty totaled $2.3 million and $2.9 million and was recorded in Restricted Investments on the condensed balance sheets. The carrying amounts of the Restricted Investments for both SJI and SJG approximate their fair values at March 31, 2018 and December 31, 2017, which would be included in Level 1 of the fair value hierarchy (see Note 13). The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):
NOTES RECEIVABLE-AFFILIATES - As of March 31, 2018, SJI had approximately $13.6 million included in Notes Receivable - Affiliate on the condensed consolidated balance sheets, due from Energenic, which is secured by its cogeneration assets for energy service projects. This note is subject to a reimbursement agreement that secures reimbursement for SJI, from its joint venture partner, of a proportionate share of any amounts that are not repaid. LONG-TERM RECEIVABLES - SJG provides financing to customers for the purpose of attracting conversions to natural gas heating systems from competing fuel sources. The terms of these loans call for customers to make monthly payments over periods ranging from five to ten years, with no interest. The carrying amounts of such loans were $6.6 million and $7.0 million as of March 31, 2018 and December 31, 2017, respectively. The current portion of these receivables is reflected in Accounts Receivable and the non-current portion is reflected in Contract Receivables on the condensed consolidated balance sheets. The carrying amounts noted above are net of unamortized discounts resulting from imputed interest in the amount of $0.7 million as of both March 31, 2018 and December 31, 2017. The annualized amortization to interest is not material to SJI’s or SJG's condensed consolidated financial statements. The carrying amounts of these receivables approximate their fair value at March 31, 2018 and December 31, 2017, which would be included in Level 2 of the fair value hierarchy (see Note 13). CREDIT RISK - As of March 31, 2018, SJI had approximately $4.3 million, or 11.9%, of the current and noncurrent Derivatives – Energy Related Assets transacted with one counterparty. This counterparty has contracts with a large number of diverse customers which minimizes the concentration of this risk. A portion of these contracts may be assigned to SJI in the event of default by the counterparty. FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE - The fair value of a financial instrument is the market price to sell an asset or transfer a liability at the measurement date. The carrying amounts of SJI's and SJG's financial instruments approximate their fair values at March 31, 2018 and December 31, 2017, except as noted below.
OTHER FINANCIAL INSTRUMENTS - The carrying amounts of SJI's and SJG's other financial instruments approximate their fair values at March 31, 2018 and December 31, 2017. |
SEGMENTS OF BUSINESS |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS OF BUSINESS | SEGMENTS OF BUSINESS: SJI operates in several different reportable operating segments which reflect the financial information regularly evaluated by the chief operating decision maker (CODM). These segments are as follows:
SJI groups its nonutility operations into two categories: Energy Group and Energy Services. Energy Group includes wholesale energy, retail gas and other, and retail electric operations. Energy Services includes on-site energy production and appliance service operations. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are treated as if the sales or transfers were to third parties at current market prices. Information about SJI’s operations in different reportable operating segments is presented below (in thousands):
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RATES AND REGULATORY ACTIONS |
3 Months Ended |
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Mar. 31, 2018 | |
Public Utilities, General Disclosures [Abstract] | |
RATES AND REGULATORY ACTIONS | RATES AND REGULATORY ACTIONS: SJG is subject to the rules and regulations of the New Jersey Board of Public Utilities (BPU). In March 2018, SJG filed a petition with the BPU for a change in rates, customer refund and rider associated with the implementation of Tax Reform. The BPU subsequently approved an interim rate reduction, effective April 1, 2018, to reflect the change in the corporate tax rate within SJG’s base rates. This petition is currently pending. Also in March 2018, SJG filed a petition with the BPU seeking to continue its existing Energy Efficiency Programs (EEP's), with modifications, and to implement new programs (the “EEP IV”) for a five-year period with a proposed budget of approximately $195.4 million and with the same rate recovery mechanism that exists for its current EEP's. Under its existing EEP's, SJG is permitted to recover incremental operating and maintenance expenses and earn a return of, and return on, program investments. The matter is currently pending BPU approval. There have been no other significant regulatory actions or changes to SJG's rate structure since December 31, 2017. See Note 10 to the Consolidated Financial Statements in Item 8 of SJI's and SJG's Annual Report on Form 10-K for the year ended December 31, 2017. |
REGULATORY ASSETS AND REGULATORY LIABILITIES |
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Regulatory Assets and Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY ASSETS AND REGULATORY LIABILITIES | REGULATORY ASSETS AND REGULATORY LIABILITIES: There have been no significant changes to the nature of SJG’s regulatory assets and liabilities since December 31, 2017, which are described in Note 11 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2017. SJI has no regulatory assets or regulatory liabilities other than those of SJG. SJI's and SJG's Regulatory Assets consisted of the following items (in thousands):
ENVIRONMENTAL REMEDIATION COSTS - SJG has two regulatory assets associated with environmental costs related to the cleanup of 12 sites where SJG or its predecessors previously operated gas manufacturing plants. The first asset, "Environmental Remediation Cost: Expended - Net," represents what was actually spent to clean up the sites, less recoveries through the Remediation Adjustment Clause (RAC) and insurance carriers. These costs meet the deferral requirements of GAAP, as the BPU allows SJG to recover such expenditures through the RAC. The other asset, "Environmental Remediation Cost: Liability for Future Expenditures," relates to estimated future expenditures required to complete the remediation of these sites. SJG recorded this estimated amount as a regulatory asset with the corresponding current and noncurrent liabilities on the condensed consolidated balance sheets under the captions "Current Liabilities" (both SJI and SJG), "Deferred Credits and Other Noncurrent Liabilities" (SJI) and "Regulatory and Other Noncurrent Liabilities" (SJG). The BPU allows SJG to recover the deferred costs over seven-year periods after they are spent. DEFERRED GAS COSTS - NET - Over/Under collections of gas costs are monitored through SJG's Basic Gas Supply Service (BGSS) bill credit. Net undercollected gas costs are classified as a regulatory asset, and net overcollected gas costs are classified as a regulatory liability. Derivative contracts used to hedge natural gas purchases are also included in the BGSS, subject to BPU approval. The BGSS regulatory asset increased $37.5 million from December 31, 2017 to March 31, 2018, primarily due to the actual gas commodity costs exceeding recoveries from customers. CONSERVATION INCENTIVE PROGRAM (CIP) RECEIVABLE – The CIP tracking mechanism adjusts earnings when actual usage per customer experienced during the period varies from an established baseline usage per customer. Actual usage per customer was more than the established baseline during the first three months of 2018, resulting in a decrease in the receivable. This is primarily the result of cold weather experienced in the region. SOCIETAL BENEFIT COSTS (SBC) RECEIVABLE - This regulatory asset primarily represents the deferred expenses incurred under the New Jersey Clean Energy Program, which is a mechanism designed to recover costs associated with energy efficiency and renewable energy programs. Previous SBC rates produced recoveries greater than SBC costs, which resulted in the regulatory liability. SJI's and SJG's Regulatory Liabilities consisted of the following items (in thousands):
EXCESS DEFERRED TAXES - As disclosed in Note 11 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2017, the Excess Deferred Tax balance relates to Tax Reform enacted into law December 22, 2017 (see Note 1). The increase in this regulatory liability of $13.0 million during the first three months of 2018 is related to excess tax amounts that were billed to customers in the first quarter of 2018. Pending approval by the BPU of the refund methodology, amounts are expected to be returned to customers in May 2018. |
PENSION AND OTHER POSTRETIREMENT BENEFITS |
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Defined Benefit Plan [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION AND OTHER POSTRETIREMENT BENEFITS | PENSION AND OTHER POSTRETIREMENT BENEFITS: For the three months ended March 31, 2018 and 2017, net periodic benefit cost related to the employee and officer pension and other postretirement benefit plans for SJI consisted of the following components (in thousands):
The Pension Benefits Net Periodic Benefit Cost incurred by SJG was approximately $2.5 million of the totals presented in the table above for both the three months ended March 31, 2018 and 2017.During the three months ended March 31, 2018, and 2017, the Other Postretirement Benefits Net Periodic Benefit Cost incurred by SJG was less than $0.1 million and approximately $0.1 million, respectively, of the totals presented in the table above. Capitalized benefit costs reflected in the table above relate to SJG’s construction program. Effective January 1, 2018, SJI and SJG adopted FASB ASU 2017-07 which stipulates that only the service cost component of net benefit cost is eligible for capitalization. In SJG's rate case settlement in October 2017, The BPU allowed the deferral until the next base rate case of incremental expense associated with the adoption. SJI contributed $10.0 million to the pension plans, of which SJG contributed $8.0 million, in January 2017. No contributions were made to the pension plans by either SJI or SJG during the three months ended March 31, 2018. SJI and SJG do not expect to make any additional contributions to the pension plans in 2018; however, changes in future investment performance and discount rates may ultimately result in a contribution. Payments related to the unfunded supplemental executive retirement plan (SERP) are expected to be approximately $2.4 million in 2018. Prior to the base rate case settlement in October 2017, SJG also had a regulatory obligation to contribute approximately $3.6 million annually to the other postretirement benefit plans’ trusts, less direct costs incurred. The recent rate case settlement allows SJG to modify the future funding requirement level up to a limit that represents full funding of its obligation and to the maximum tax deduction allowed. See Note 12 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2017 for additional information related to SJI’s and SJG's pension and other postretirement benefits. |
LINES OF CREDIT |
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Line of Credit Facility [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LINES OF CREDIT | LINES OF CREDIT: Credit facilities and available liquidity as of March 31, 2018 were as follows (in thousands):
(A) Includes letters of credit outstanding in the amount of $6.0 million. (B) Includes letters of credit outstanding in the amount of $0.9 million. (C) SJG expects to renew this facility prior to expiration. The SJG facilities are restricted as to use and availability specifically to SJG; however, if necessary, the SJI facilities can also be used to support SJG’s liquidity needs. Borrowings under these credit facilities are at market rates. SJI's weighted average interest rate on these borrowings, which changes daily, was 2.67% and 1.98% at March 31, 2018 and 2017, respectively. SJG did not have any outstanding borrowings at March 31, 2018 under the credit facility; however, SJG did have $64.0 million outstanding under the commercial paper program. SJG's weighted average interest rate on these borrowings, which changes daily, was 2.32% and 1.15% at March 31, 2018 and March 31, 2017, respectively. SJI's average borrowings outstanding under these credit facilities (which includes SJG), not including letters of credit, during the three months ended March 31, 2018 and 2017 were $238.0 million and $287.9 million, respectively. The maximum amounts outstanding under these credit facilities, not including letters of credit, during the three months ended March 31, 2018 and 2017 were $431.0 million and $354.1 million, respectively. SJG's average borrowings outstanding under its credit facilities during the three months ended March 31, 2018 and 2017 were $47.7 million and $34.7 million, respectively. The maximum amounts outstanding under its credit facilities during the three months ended March 31, 2018 and 2017 were $85.0 million and $110.1 million, respectively. The SJI and SJG principal credit facilities are provided by a syndicate of banks. In January 2018, the Note Purchase Agreements (NPA) for Senior Unsecured Notes issued by SJI were amended to reflect a financial covenant limiting the ratio of indebtedness to total capitalization (as defined in the respective NPA) to not more than 0.70 to 1, measured at the end of each fiscal quarter. SJI and SJG were in compliance with this covenant as of March 31, 2018. However, one SJG bank facility still contains a financial covenant limiting the ratio of indebtedness to total capitalization (as defined in the respective credit agreement) to not more that 0.65 to 1 measured at the end of each fiscal quarter. As a result, SJG must ensure that the ratio of indebtedness to total capitalization (as defined in the respective credit agreement) does not exceed 0.65 to 1, as measured at the end of each fiscal quarter. SJG has a commercial paper program under which SJG may issue short-term, unsecured promissory notes to qualified investors up to a maximum aggregate amount outstanding at any time of $200.0 million. The notes have fixed maturities which vary by note, but may not exceed 270 days from the date of issue. Proceeds from the notes are used for general corporate purposes. SJG uses the commercial paper program in tandem with its $200.0 million revolving credit facility and does not expect the principal amount of borrowings outstanding under the commercial paper program and the credit facility at any time to exceed an aggregate of $200.0 million. In the fourth quarter of 2017, SJI entered into a $2.6 billion syndicated, committed Bridge Facility to support its $1.7 billion bid for the assets of the Elizabethtown Gas Company and Elkton Gas Company. The Bridge Facility was upsized to accommodate the aggregate amount of SJI's bank credit facilities and Senior Unsecured Notes pending the amendment of the one financial covenant of the amount of debt-to-capitalization from 0.65 to 1 to 0.70 to 1. In April 2018, the Bridge Facility was subsequently reduced to approximately $1.16 billion (see Note 17). |
COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES: GUARANTEES — As of March 31, 2018, SJI had issued $6.1 million of parental guarantees on behalf of an unconsolidated subsidiary. These guarantees generally expire within the next two years and were issued to enable the subsidiary to market retail natural gas. GAS SUPPLY CONTRACTS - In the normal course of business, SJG and SJRG have entered into long-term contracts for natural gas supplies, firm transportation and gas storage service. The transportation and storage service agreements with interstate pipeline suppliers were made under Federal Energy Regulatory Commission (FERC) approved tariffs. SJG's cumulative obligation for gas supply-related demand charges and reservation fees paid to suppliers for these services averages approximately $5.8 million per month and is recovered on a current basis through the BGSS. SJRG's cumulative obligation for demand charges and reservation fees paid to suppliers for these services is approximately $0.5 million per month. SJRG has also committed to purchase a minimum of 604,000 dts/d and up to 954,000 dts/d of natural gas, from various suppliers, for terms ranging from 3 to 10 years at index-based prices. COLLECTIVE BARGAINING AGREEMENTS — Unionized personnel represent approximately 40% and 57% of SJI's and SJG's workforce at March 31, 2018, respectively. SJI has collective bargaining agreements with two unions that represent these employees: the International Brotherhood of Electrical Workers (IBEW) Local 1293 and the International Association of Machinists and Aerospace Workers (IAM) Local 76. SJG employees represented by the IBEW operate under a collective bargaining agreement that runs through February 2022. SJG's remaining unionized employees are represented by the IAM and operate under a collective bargaining agreement that runs through August 2021. STANDBY LETTERS OF CREDIT — As of March 31, 2018, SJI provided $6.0 million of standby letters of credit through its revolving credit facility to enable SJE to market retail electricity and for various construction and operating activities. SJG provided a $0.9 million letter of credit under its revolving credit facility to support the remediation of environmental conditions at certain locations in SJG's service territory. SJG has provided $25.1 million of additional letters of credit under a separate facility outside of the revolving credit facility to support variable-rate demand bonds issued through the New Jersey Economic Development Authority (NJEDA) to finance the expansion of SJG’s natural gas distribution system. PENDING LITIGATION — SJI and SJG are subject to claims arising in the ordinary course of business and other legal proceedings. SJI has been named in, among other actions, certain gas supply contract disputes and certain product liability claims related to our former sand mining subsidiary. SJI is currently involved in a pricing dispute related to two long-term gas supply contracts. On May 8, 2017, a jury from the United States District Court for the District of Colorado returned a verdict in favor of the plaintiff supplier. On July 21, 2017, the Court entered Final Judgment against SJG and SJRG. As a result of this ruling, SJG and SJRG have accrued, including interest, $20.6 million and $53.9 million, respectively, from the first quarter of 2017 through March 31, 2018. We believe that the amount to be paid by SJG reflects a gas cost that ultimately will be recovered from SJG’s customers through adjusted rates. As such, this amount was recorded as both an Accounts Payable and a reduction of Regulatory Liabilities on the condensed consolidated balance sheets of both SJI and SJG as of March 31, 2018. The amount associated with SJRG was also recorded as an Accounts Payable on the condensed consolidated balance sheets of SJI as of March 31, 2018, with charges of $0.1 million to Cost of Sales - Nonutility on the condensed consolidated statements of income of SJI for the three months ended March 31, 2018. SJI also recorded $0.2 million to Interest Charges on the condensed consolidated statements of income for the three months ended March 31, 2018. In April 2018, SJI filed an appeal of this judgment. During the pendency of the appeal, SJI continues to dispute the supplier invoices received and has created a reserve to reflect the difference between the invoices and paid amounts. The plaintiff supplier filed a second related lawsuit against SJG and SJRG in the United States District Court for the District of Colorado on December 21, 2017, alleging that SJG and SJRG have continued to breach the gas supply contracts notwithstanding the judgment in the prior lawsuit. The plaintiff supplier is seeking recovery of the amounts disputed by SJI since the earlier judgment, and a declaration regarding the price under the disputed contracts going forward until the contracts terminate in October 2019. SJI moved to stay the second lawsuit pending resolution of the post-judgment motions in the first lawsuit and any appeal of that lawsuit. All legal reserves related to this second lawsuit are recorded as part of the accrued amounts disclosed above. Liabilities related to claims are accrued when the amount or range of amounts of probable settlement costs or other charges for these claims can be reasonably estimated. For matters other than the pricing dispute noted above, SJI has accrued approximately $3.1 million and $3.0 million related to all claims in the aggregate as of March 31, 2018 and December 31, 2017, respectively, of which SJG has accrued approximately $0.8 million and $0.7 million as of March 31, 2018 and December 31, 2017, respectively. Although SJI and SJG do not presently believe that these matters will have a material adverse effect on its business, given the inherent uncertainties in such situations, SJI and SJG can provide no assurance regarding the outcome of litigation. ENVIRONMENTAL REMEDIATION COSTS — SJG incurred and recorded costs for environmental cleanup of 12 sites where SJG or its predecessors operated gas manufacturing plants. SJG stopped manufacturing gas in the 1950s. SJI and some of its nonutility subsidiaries also recorded costs for environmental cleanup of sites where SJF previously operated a fuel oil business and Morie maintained equipment, fueling stations and storage. Other than the changes discussed in Note 8 to the condensed consolidated financial statements, there have been no changes to the status of SJI’s environmental remediation efforts since December 31, 2017, as described in Note 15 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2017. |
DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS: Certain SJI subsidiaries, including SJG, are involved in buying, selling, transporting and storing natural gas and buying and selling retail electricity for their own accounts as well as managing these activities for third parties. These subsidiaries are subject to market risk on expected future purchases and sales due to commodity price fluctuations. SJI and SJG use a variety of derivative instruments to limit this exposure to market risk in accordance with strict corporate guidelines. These derivative instruments include forward contracts, swap agreements, options contracts and futures contracts. As of March 31, 2018, SJI and SJG had outstanding derivative contracts as follows (1 MMdts = one million decatherms; 1 MMmWh = one million megawatt hours):
These contracts, which have not been designated as hedging instruments under GAAP, are measured at fair value and recorded in Derivatives - Energy Related Assets or Derivatives - Energy Related Liabilities on the condensed consolidated balance sheets of SJI and SJG. For SJE and SJRG contracts, the net unrealized pre-tax gains (losses) for these energy-related commodity contracts are included with realized gains (losses) in Operating Revenues – Nonutility on the condensed consolidated statements of income for SJI. These pre-tax gains were $23.4 million and $14.7 million for the three months ended March 31, 2018 and 2017, respectively. For SJG's contracts, the costs or benefits are recoverable through the BGSS clause, subject to BPU approval. As a result, the net unrealized pre-tax gains and losses for these energy-related commodity contracts are included with realized gains and losses in Regulatory Assets or Regulatory Liabilities on the condensed consolidated balance sheets of both SJI and SJG. As of March 31, 2018 and December 31, 2017, SJG had $0.7 million and $2.1 million of unrealized losses, respectively, included in its BGSS related to energy-related commodity contracts. SJI, including SJG, has also entered into interest rate derivatives to hedge exposure to increasing interest rates and the impact of those rates on cash flows of variable-rate debt. These interest rate derivatives, some of which had been designated as hedging instruments under GAAP, are measured at fair value and recorded in Derivatives - Other on the condensed consolidated balance sheets. Hedge accounting has been discontinued prospectively for these derivatives. As a result, any unrealized gains and losses on these derivatives, that were previously included in Accumulated Other Comprehensive Loss (AOCL) on the condensed consolidated balance sheets, are being recorded in earnings over the remaining life of the derivative. In March 2017, SJI entered into a new interest rate derivative and amended the existing interest rate derivative linked to unrealized losses previously recorded in AOCL. SJI reclassified $2.4 million of pre-tax unrealized loss in AOCL to Interest Charges on the condensed consolidated statements of income as a result of the prior hedged transactions being deemed probable of not occurring. For SJG interest rate derivatives, the fair value represents the amount SJG would have to pay the counterparty to terminate these contracts as of those dates. As of March 31, 2018, SJI’s active interest rate swaps were as follows:
The unrealized gains and losses on interest rate derivatives that are not designated as cash flow hedges are included in Interest Charges in the condensed consolidated statements of income. However, for selected interest rate derivatives at SJG, management believes that, subject to BPU approval, the market value upon termination can be recovered in rates and, therefore, these unrealized losses have been included in Other Regulatory Assets in the condensed consolidated balance sheets. The fair values of all derivative instruments, as reflected in the condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017, are as follows (in thousands):
SJI and SJG enter into derivative contracts with counterparties, some of which are subject to master netting arrangements, which allow net settlements under certain conditions. These derivatives are presented at gross fair values on the condensed consolidated balance sheets. As of March 31, 2018 and December 31, 2017, information related to these offsetting arrangements were as follows (in thousands):
(A) The balances at March 31, 2018 and December 31, 2017 were related to derivative liabilities which can be net settled against derivative assets. (B) The balances at March 31, 2018 and December 31, 2017 were related to derivative assets which can be net settled against derivative liabilities. The effect of derivative instruments on the condensed consolidated statements of income for the three months ended March 31, 2018 and 2017 are as follows (in thousands):
(a) Included in Interest Charges
(a) Included in Operating Revenues - Nonutility (b) Included in Interest Charges Certain of SJI’s derivative instruments contain provisions that require immediate payment or demand immediate and ongoing collateralization on derivative instruments in net liability positions in the event of a material adverse change in the credit standing of SJI. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position on March 31, 2018, is $1.0 million. If the credit-risk-related contingent features underlying these agreements were triggered on March 31, 2018, SJI would have been required to settle the instruments immediately or post collateral to its counterparties of approximately $0.2 million after offsetting asset positions with the same counterparties under master netting arrangements. |
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES | FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES: GAAP establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The levels of the hierarchy are described below:
Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. For financial assets and financial liabilities measured at fair value on a recurring basis, information about the fair value measurements for each major category is as follows (in thousands):
(A) Available-for-Sale Securities include securities that are traded in active markets and securities that are not traded publicly. The securities traded in active markets are valued using the quoted principal market close prices that are provided by the trustees and are categorized in Level 1 in the fair value hierarchy. (B) Derivatives – Energy Related Assets and Liabilities are traded in both exchange-based and non-exchange-based markets. Exchange-based contracts are valued using unadjusted quoted market sources in active markets and are categorized in Level 1 in the fair value hierarchy. Certain non-exchange-based contracts are valued using indicative price quotations available through brokers or over-the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask mid-point prices and are obtained from sources that management believes provide the most liquid market. For non-exchange-based derivatives that trade in less liquid markets with limited pricing information, model inputs generally would include both observable and unobservable inputs. In instances where observable data is unavailable, management considers the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 as the model inputs generally are not observable. Significant Unobservable Inputs - Management uses the discounted cash flow model to value Level 3 physical and financial forward contracts, which calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. Inputs to the valuation model are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third party pricing sources. The validity of the mark-to-market valuations and changes in mark-to-market valuations from period to period are examined and qualified against historical expectations by the risk management function. If any discrepancies are identified during this process, the mark-to-market valuations or the market pricing information is evaluated further and adjusted, if necessary. Level 3 valuation methods for natural gas derivative contracts include utilizing another location in close proximity adjusted for certain pipeline charges to derive a basis value. The significant unobservable inputs used in the fair value measurement of certain natural gas contracts consist of forward prices developed based on industry-standard methodologies. Significant increases (decreases) in these forward prices for purchases of natural gas would result in a directionally similar impact to the fair value measurement and for sales of natural gas would result in a directionally opposite impact to the fair value measurement. Level 3 valuation methods for electric represent the value of the contract marked to the forward wholesale curve, as provided by daily exchange quotes for delivered electricity. The significant unobservable inputs used in the fair value measurement of electric contracts consist of fixed contracted electric load profiles; therefore, no change in unobservable inputs would occur. Unobservable inputs are updated daily using industry-standard techniques. Management reviews and corroborates the price quotations to ensure the prices are observable which includes consideration of actual transaction volumes, market delivery points, bid-ask spreads and contract duration. (C) Derivatives – Other are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment. The following table provides quantitative information regarding significant unobservable inputs in Level 3 fair value measurements (in thousands): SJI (includes SJG and all other consolidated subsidiaries):
SJG:
(A) Represents the range, along with the weighted average, of forward prices for the sale and purchase of natural gas. (B) Represents the range, along with the weighted average, of the percentage of contracted usage that is loaded during on-peak hours versus off-peak. The changes in fair value measurements of Derivatives – Energy Related Assets and Liabilities for the three months ended March 31, 2018 and 2017, using significant unobservable inputs (Level 3), are as follows (in thousands):
Total gains included in earnings for SJI for the three months ended March 31, 2018 that are attributable to the change in unrealized gains relating to those assets and liabilities included in Level 3 still held as of March 31, 2018, are $4.0 million. These gains are included in Operating Revenues-Nonutility on the condensed consolidated statements of income. |
LONG-TERM DEBT |
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Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT: In January 2018, SJI issued the following Medium Term Notes (MTN's): (a) $25.0 million aggregate principal amount of 3.32% Senior Notes, Series 2017A-2, due January 2025 and (b) $25.0 million aggregate principal amount of 3.56% Senior Notes, Series 2017B-2, due January 2028. SJI and SJG did not issue or retire any other long-term debt during the three months ended March 31, 2018. |
ACCUMULATED OTHER COMPREHENSIVE LOSS |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS: The following table summarizes the changes in SJI's accumulated other comprehensive loss (AOCL) for the three months ended March 31, 2018 (in thousands):
(a) Determined using a combined average statutory tax rate of 25%. (b) See table below. The following table provides details about reclassifications out of SJI's AOCL for the three months ended March 31, 2018 (in thousands):
(a) Determined using a combined average statutory tax rate of 25%. The following table summarizes the changes in SJG's AOCL for the three months ended March 31, 2018 (in thousands):
(a) Determined using a combined average statutory tax rate of 25%. (b) See table below. The reclassifications out of SJG's AOCL during the three months ended March 31, 2018 are as follows (in thousands):
(a) Determined using a combined average statutory tax rate of 25%. |
REVENUE |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | REVENUE: At contract inception, SJI and SJG assess the goods and services promised in all of its contracts with customers, and identifies a performance obligation for each promise to transfer to a customer a distinct good or service. As applicable for each revenue stream and customer contract type, SJI and SJG follow two approaches:
Below is a listing of all performance obligations that arise from contracts with customers, along with details on the satisfaction of each performance obligation, the significant payment terms, and the nature of the goods and services being transferred:
For all revenue streams listed above, revenue is recognized using the Practical Expedient in ASC 606 which allows an entity to recognize revenue in the amount that is invoiced, as long as that amount corresponds to the value to the customer ("Invoiced Practical Expedient"). SJI's and SJG's contracts with customers discussed above are at prices that are known to the customer at the time of delivery, either through a fixed contractual price or market prices that are established and tied to each delivery. These amounts match the value to the customer as they are purchasing and obtaining the good or service on the same day at the agreed-upon price. This eliminates any variable consideration in transaction price, and as a result revenue is recognized at this price at the time of delivery. SJI and SJG have determined that the above methods provide a faithful depiction of the transfer of goods or services to the customer. For all above performance obligations, SJI's and SJG's efforts are expended throughout the contract based on seasonality and customer needs. Further, for various contracts among each performance obligation, SJI and SJG may have a stand ready obligation to provide goods or services on an as needed basis to the customer. Because the Invoiced Practical Expedient is used for recognizing revenue, SJI and SJG further adopted the Practical Expedient in ASC 606 that allows both company's to not disclose additional information regarding remaining performance obligations. Revenues from contracts with customers total $444.0 million and $193.9 million for SJI and SJG, respectively. The SJG balance is a part of the gas utility operating segment, and is before intercompany eliminations with other SJI entities. Revenues on the condensed consolidated statements of income that are not with contracts with customers consist of (a) revenues from alternative revenue programs at the gas utility operations at SJG, and (b) nonutility revenue from derivative contracts at the wholesale energy, retail gas and retail electric operating segments. SJI and SJG disaggregate revenue from contracts with customers into customer type and product line. SJI and SJG have determined that disaggregating revenue into these categories achieves the disclosure objective in ASC 606 to depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors. Further, disaggregating revenue into these categories is consistent with information regularly reviewed by the CODM in evaluating the financial performance of SJI's operating segments. SJG only operates in the Gas Utility Operations segment. See Note 6 for further information regarding SJI's operating segments. Disaggregated revenues from contracts with customers, by both customer type and product line, are disclosed below, by operating segment, for the three months ended March 31, 2018 (in thousands):
The following table provides information about SJI's and SJG's receivables and unbilled revenue from contracts with customers (in thousands):
(1) Included in Accounts Receivable in the condensed consolidated balance sheets. A receivable is SJI's and SJG's right to consideration that is unconditional, as only the passage of time is required before payment is expected from the customer. All of SJI's and SJG's Accounts Receivable arise from contracts with customers. (2) Included in Unbilled Revenues in the condensed consolidated balance sheets. All unbilled revenue for SJI and SJG arises from contracts with customers. Unbilled revenue relates to SJI's and SJG's right to receive payment for commodity delivered but not yet billed. This represents contract assets that arise from contracts with customers, which is defined in ASC 606 as the right to payment in exchange for goods already transferred to a customer, excluding any amounts presented as a receivable. The unbilled revenue is transferred to accounts receivable when billing occurs and the rights to collection become unconditional. The change in unbilled revenues for the three months ended March 31, 2018 is due primarily to the timing difference between SJI and SJG delivering the commodity to the customer and the customer actually receiving the bill for payment. |
SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |||||||||
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS: In April 2018, the Company completed the following public offerings, the net proceeds of which are expected to fund a portion of the consideration to be paid for the assets of Elizabethtown Gas and Elkton Gas (see Note 1):
In April 2018, SJI entered into a Note Purchase Agreement (NPA) that provides for the issuance by the Company of an aggregate of $250.0 million of senior unsecured notes. Pursuant to the NPA, the Company issued $90.0 million of 3.18% Senior Notes, Series 2018A, due April 2021. The NPA also provides for the issuance of (a) $80.0 million aggregate principal amount of the Company’s 3.78% Senior Notes, Series 2018B, due 2028, on the ten-year anniversary of the date of initial issuance; and (b) $80.0 million aggregate principal amount of the Company’s 3.88% Senior Notes, Series 2018C, due 2030, on the twelve-year anniversary of the date of initial issuance. The Company anticipates issuing the additional notes at future dates to be determined. In April 2018, SJI paid down $116.0 million of its syndicated revolving credit facility, along with its $50.0 million revolving credit facility. As a result of SJI's equity and debt issuances noted above, along with the successful amendment of SJI's Senior Unsecured Notes and bank credit facilities (see Note 10), the Bridge Facility has subsequently been reduced to $1.16 billion and is expected to be reduced by future issuances of long-term and short-term debt closer to the date of the closing of the acquisition. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
GENERAL | GENERAL - South Jersey Industries, Inc. (SJI or the Company) currently provides a variety of energy-related products and services primarily through the following wholly-owned subsidiaries:
•ACB Energy Partners, LLC (ACB) owns and operates a natural gas fueled combined heating, cooling and power facility located in Atlantic City, New Jersey. •AC Landfill Energy, LLC (ACLE), BC Landfill Energy, LLC (BCLE), SC Landfill Energy, LLC (SCLE) and SX Landfill Energy, LLC (SXLE) own and operate landfill gas-to-energy production facilities in Atlantic, Burlington, Salem and Sussex Counties located in New Jersey. •MCS Energy Partners, LLC (MCS), NBS Energy Partners, LLC (NBS) and SBS Energy Partners, LLC (SBS) own and operate solar-generation sites located in New Jersey.
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BASIS OF PRESENTATION | BASIS OF PRESENTATION - SJI's condensed consolidated financial statements include the accounts of SJI, its wholly-owned subsidiaries (including SJG) and subsidiaries in which SJI has a controlling interest. SJI eliminates all significant intercompany accounts and transactions. In management’s opinion, the unaudited condensed consolidated financial statements of SJI and SJG reflect all normal and recurring adjustments needed to fairly present their respective financial positions, operating results and cash flows at the dates and for the periods presented. SJI’s and SJG's businesses are subject to seasonal fluctuations and, accordingly, this interim financial information should not be the basis for estimating the full year’s operating results. As permitted by the rules and regulations of the Securities and Exchange Commission (SEC), the accompanying unaudited condensed consolidated financial statements of SJI and SJG contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). These financial statements should be read in conjunction with SJI’s and SJG's Annual Reports on Form 10-K for the year ended December 31, 2017 for a more complete discussion of the accounting policies and certain other information. |
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RECLASSIFICATIONS | Certain reclassifications have been made to SJI's and SJG's prior period condensed consolidated statements of income to conform to the current period presentation. The non-service cost components of net periodic pension and postretirement benefit costs are now included as a reduction to Other Income and Expense, as opposed to being recorded as an Operations Expense, to conform with ASU 2017-07, which is described below under "New Accounting Pronouncements." This caused Other Income to be reduced, and Operations Expense to also be reduced, by $1.2 million and $0.6 million for SJI and SJG, respectively, for the three months ended March 31, 2017. This also caused a reclassification to SJI's prior period segments disclosure in Note 6 to increase Operating Income within both the Gas Utility Operations and Corporate & Services segments by $0.6 million for the three months ended March 31, 2017. Certain reclassifications have been made to SJI's prior period segments disclosures to conform to the current period presentation. The activities of SJI Midstream, which were presented in the Corporate & Services segment during the three months ended March 31, 2017, are now separated into the Midstream segment for the same period in 2018. This caused prior period adjustments to Interest Charges, Income Taxes and Property Additions in Note 6. |
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REVENUE-BASED TAXES | REVENUE-BASED TAXES - SJG collects certain revenue-based energy taxes from its customers. Such taxes include the New Jersey State Sales Tax and Public Utilities Assessment (PUA). State sales tax is recorded as a liability when billed to customers and is not included in revenue or operating expenses. |
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IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS - Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances indicate carrying values may not be recoverable. Such reviews are performed in accordance with ASC 360. An impairment loss is indicated if the total future estimated undiscounted cash flows expected from an asset are less than its carrying value. An impairment charge is measured by the difference between an asset's carrying amount and fair value with the difference recorded within Operating Expenses on the condensed consolidated statements of income. Fair values can be determined by a variety of valuation methods, including third-party appraisals, sales prices of similar assets, and present value techniques. |
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GAS EXPLORATION AND DEVELOPMENT | GAS EXPLORATION AND DEVELOPMENT - SJI capitalizes all costs associated with gas property acquisition, exploration and development activities under the full cost method of accounting. Capitalized costs include costs related to unproved properties, which are not amortized until proved reserves are found or it is determined that the unproved properties are impaired. All costs related to unproved properties are reviewed quarterly to determine if impairment has occurred. |
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TREASURY STOCK | TREASURY STOCK - SJI uses the par value method of accounting for treasury stock. |
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INCOME TAXES | INCOME TAXES - Deferred income taxes are provided for all significant temporary differences between the book and taxable bases of assets and liabilities in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740 - “Income Taxes.” A valuation allowance is established when it is determined that it is more likely than not that a deferred tax asset will not be realized. On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Reform") was enacted into law, which changed various corporate income tax provisions within the existing Internal Revenue Code. The law became effective January 1, 2018 but was required to be accounted for in the period of enactment, as such SJI adopted the new law in the fourth quarter of 2017. SJI and SJG were impacted in several ways as a result of Tax Reform, including provisions related to the permanent reduction in the U.S. federal corporate income tax rate from 35% to 21%, modification of bonus depreciation and changes to the deductibility of certain business-related expenses. The SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of Tax Reform. SAB 118 provides a measurement period that should not extend beyond one year from the enactment date of Tax Reform for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of Tax Reform for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of Tax Reform is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of Tax Reform. SJI and SJG were able to make reasonable, good faith estimates of certain effects and, therefore, recorded provisional adjustments for the following: the tax rules regarding the appropriate bonus deprecation rate that should be applied to assets placed in service after September 27, 2017, including the information required to compute the applicable depreciable tax basis. Further, Tax Reform is unclear in certain respects and will require interpretations and implementing regulations by the Internal Revenue Service, as well as state tax authorities. Tax Reform could also be subject to potential amendments and technical corrections which could impact the Company’s financial statements. Any required changes to the provisional estimates would result in the recording of regulatory assets or liabilities to the extent such amounts are probable of settlement or recovery through customer rates and a net change to income tax expense for any other amounts. Final adjustments to the provisional amounts are expected to be recorded by the third quarter of 2018. The accounting for all other applicable provisions of Tax Reform is considered complete based on the current interpretation. |
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GOODWILL | GOODWILL - Goodwill represents the excess of the consideration paid over the fair value of identifiable net assets acquired. Goodwill is not amortized, but instead is subject to impairment testing on an annual basis, and between annual tests whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying amount. No such events have occurred during the three months ended March 31, 2018. |
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NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS - Other than as described below, no new accounting pronouncement issued or effective during 2018 or 2017 had, or are expected to have, a material impact on the condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC Topic 606). This ASU supersedes the revenue recognition requirements in FASB ASC 605, Revenue Recognition, and in most industry-specific topics. The new guidance identifies how and when entities should recognize revenue. The new rules establish a core principle requiring the recognition of revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for such goods or services. In connection with this new standard, the FASB has issued several amendments to ASU 2014-09, as follows:
The new guidance in ASU 2014-09, as well as all amendments discussed above, is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. On January 1, 2018, SJI and SJG adopted ASU 2014-09 and all amendments, which meant adopting the guidance in ASC 606. SJI and SJG adopted the new guidance using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. See Note 16. The methods of recognizing revenue for SJI's and SJG's contracts with customers is the same under ASC 605 and ASC 606, as revenues from contracts that SJI and SJG have with customers are currently recorded as gas or electricity is delivered to the customer, which is consistent with the new guidance under ASC 606. As such, there was no significant impact to revenues for the quarter ended March 31, 2018 as a result of applying ASC 606, and there was no cumulative catch-up to retained earnings under the modified retrospective method for changes in accounting for revenues. Further, there were no significant changes to our business processes, systems or internal controls over financial reporting needed to support recognition and disclosure under the new guidance. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which enhances the reporting model for financial instruments and includes amendments to address aspects of recognition, measurement, presentation and disclosure. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for only certain portions of the new guidance. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In March 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The new standard requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The new standard also will result in enhanced quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing leases. The accounting for leases by the lessor remains relatively the same. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. Management has formed an implementation team that is inventorying leases and evaluating the impact that adoption of this guidance will have on SJI's and SJG's financial statements, which includes monitoring industry specific developments including the exposure draft issued by the FASB that would introduce a land easement practical expedient to ASC 842. Consistent with the requirements of the standard, SJI and SJG expect to both transition to the new guidance using the modified retrospective approach, although this could be subject to change based on new guidance from the FASB. The Company does not plan to early adopt the new guidance. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This standard requires recognition of the current and deferred income tax effects of an intra-entity asset transfer, other than inventory, when the transfer occurs, as opposed to current GAAP, which requires companies to defer the income tax effects of intra-entity asset transfers until the asset has been sold to an outside party. The income tax effects of intra-entity inventory transfers will continue to be deferred until the inventory is sold. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, with early adoption permitted. The standard is required to be adopted on a modified retrospective basis with a cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard provides amended and clarifying guidance regarding whether an integrated set of assets and activities acquired is deemed the acquisition of a business (and, thus, accounted for as a business combination) or the acquisition of assets. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. The amendments in this update are effective for annual and any interim impairment tests performed in periods beginning after December 31, 2019. Management is currently determining the impact that adoption of this guidance will have on the financial statements of SJI and SJG. In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU is designed to improve guidance related to the presentation of defined benefit costs in the income statement. In particular, this ASU requires an employer to report the service cost component in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Adoption of this guidance was applied retrospectively and did not have a material impact on the financial statements of SJI or SJG; however, current and prior period presentation on the condensed consolidated statements of income were modified for SJI and SJG to conform to this guidance, as described under “Basis of Presentation” above. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies and reduces both (i) diversity in practice and (ii) cost and complexity when applying the guidance in Topic 718, to a change to the terms and conditions of a share-based payment award. This standard is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU is intended to improve the financial reporting of hedging relationships so that it represents a more faithful portrayal of an entity’s risk management activities (i.e. to help financial statement users understand an entity’s risk exposures and the manner in which hedging strategies are used to manage them), as well as to further simplify the application of the hedge accounting guidance in GAAP. The standard is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Management is currently determining the impact that adoption of this guidance will have on the financial statements of SJI and SJG. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income. This ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Reform. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Reform and will improve the usefulness of information reported to financial statement users. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Management is currently determining the impact that adoption of this guidance will have on the financial statements of SJI and SJG. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which gave improvements and enhancements to ASU 2016-01 discussed above. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. SJI and SJG adopted this guidance during the first quarter of 2018 in conjunction with adopting ASU 2016-01 discussed above. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In March 2018, the FASB issued ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update). This ASU incorporates recent SEC guidance which was issued in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulation. ASU No. 2018-04 was effective upon issuance. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update). This ASU incorporates recent SEC guidance related to the income tax accounting implications of Tax Reform. ASU No. 2018-05 was effective upon issuance. Adoption of this guidance did not have an impact on the financial statement results of SJI or SJG. |
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FAIR VALUE | (A) Available-for-Sale Securities include securities that are traded in active markets and securities that are not traded publicly. The securities traded in active markets are valued using the quoted principal market close prices that are provided by the trustees and are categorized in Level 1 in the fair value hierarchy. (B) Derivatives – Energy Related Assets and Liabilities are traded in both exchange-based and non-exchange-based markets. Exchange-based contracts are valued using unadjusted quoted market sources in active markets and are categorized in Level 1 in the fair value hierarchy. Certain non-exchange-based contracts are valued using indicative price quotations available through brokers or over-the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask mid-point prices and are obtained from sources that management believes provide the most liquid market. For non-exchange-based derivatives that trade in less liquid markets with limited pricing information, model inputs generally would include both observable and unobservable inputs. In instances where observable data is unavailable, management considers the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 as the model inputs generally are not observable. Significant Unobservable Inputs - Management uses the discounted cash flow model to value Level 3 physical and financial forward contracts, which calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. Inputs to the valuation model are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third party pricing sources. The validity of the mark-to-market valuations and changes in mark-to-market valuations from period to period are examined and qualified against historical expectations by the risk management function. If any discrepancies are identified during this process, the mark-to-market valuations or the market pricing information is evaluated further and adjusted, if necessary. Level 3 valuation methods for natural gas derivative contracts include utilizing another location in close proximity adjusted for certain pipeline charges to derive a basis value. The significant unobservable inputs used in the fair value measurement of certain natural gas contracts consist of forward prices developed based on industry-standard methodologies. Significant increases (decreases) in these forward prices for purchases of natural gas would result in a directionally similar impact to the fair value measurement and for sales of natural gas would result in a directionally opposite impact to the fair value measurement. Level 3 valuation methods for electric represent the value of the contract marked to the forward wholesale curve, as provided by daily exchange quotes for delivered electricity. The significant unobservable inputs used in the fair value measurement of electric contracts consist of fixed contracted electric load profiles; therefore, no change in unobservable inputs would occur. Unobservable inputs are updated daily using industry-standard techniques. Management reviews and corroborates the price quotations to ensure the prices are observable which includes consideration of actual transaction volumes, market delivery points, bid-ask spreads and contract duration. (C) Derivatives – Other are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment. GAAP establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The levels of the hierarchy are described below:
Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. |
STOCK-BASED COMPENSATION PLAN (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the nonvested restricted stock awards outstanding and the assumptions used to estimate the fair value of the awards | The following table summarizes the nonvested restricted stock awards outstanding for SJI at March 31, 2018 and the assumptions used to estimate the fair value of the awards:
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Summary of the total stock-based compensation cost for the period | The following table summarizes the total stock-based compensation cost to SJI for the three months ended March 31, 2018 and 2017 (in thousands):
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Summary of information regarding restricted stock award activity during the period excluding accrued dividend equivalents | The following table summarizes information regarding restricted stock award activity for SJI during the three months ended March 31, 2018, excluding accrued dividend equivalents:
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AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED PARTY TRANSACTIONS (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of operating results of discontinued operations | Summarized operating results of the discontinued operations for the three months ended March 31, 2018 and 2017, were (in thousands, except per share amounts):
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Summary of related party transactions | A summary of related-party transactions involving SJG, excluding pass-through items, included in SJG's Operating Revenues were as follows (in thousands):
Related-party transactions involving SJG, excluding pass-through items, included in SJG's Cost of Sales and Operating Expenses were as follows (in thousands):
*As discussed in Note 1 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2017, revenues and expenses related to the energy trading activities of the wholesale energy operations at SJRG are presented on a net basis in Operating Revenues – Nonutility on the condensed consolidated income statement. |
COMMON STOCK (Tables) |
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Equity [Abstract] | ||||||||||||||||||||||
Schedule of common stock shares issued and outstanding | The following shares were issued and outstanding for SJI:
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FINANCIAL INSTRUMENTS (Tables) |
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Financial Instruments, Owned, at Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of cash and cash equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):
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Reconciliation of restricted cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):
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SEGMENTS OF BUSINESS (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments of Business | Information about SJI’s operations in different reportable operating segments is presented below (in thousands):
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REGULATORY ASSETS AND REGULATORY LIABILITIES (Tables) |
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Regulatory Assets and Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Regulatory Assets | SJI's and SJG's Regulatory Assets consisted of the following items (in thousands):
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Schedule of Regulatory Liabilities | SJI's and SJG's Regulatory Liabilities consisted of the following items (in thousands):
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PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables) |
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of defined benefit plans disclosures | For the three months ended March 31, 2018 and 2017, net periodic benefit cost related to the employee and officer pension and other postretirement benefit plans for SJI consisted of the following components (in thousands):
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LINES OF CREDIT (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of lines of credit | Credit facilities and available liquidity as of March 31, 2018 were as follows (in thousands):
(A) Includes letters of credit outstanding in the amount of $6.0 million. (B) Includes letters of credit outstanding in the amount of $0.9 million. (C) SJG expects to renew this facility prior to expiration. |
DERIVATIVE INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding derivative contracts | As of March 31, 2018, SJI and SJG had outstanding derivative contracts as follows (1 MMdts = one million decatherms; 1 MMmWh = one million megawatt hours):
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Schedule of notional amounts of outstanding derivative positions | As of March 31, 2018, SJI’s active interest rate swaps were as follows:
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Fair value of derivative instruments | The fair values of all derivative instruments, as reflected in the condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017, are as follows (in thousands):
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Offsetting assets | As of March 31, 2018 and December 31, 2017, information related to these offsetting arrangements were as follows (in thousands):
(A) The balances at March 31, 2018 and December 31, 2017 were related to derivative liabilities which can be net settled against derivative assets. (B) The balances at March 31, 2018 and December 31, 2017 were related to derivative assets which can be net settled against derivative liabilities. |
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Offsetting liabilities | As of March 31, 2018 and December 31, 2017, information related to these offsetting arrangements were as follows (in thousands):
(A) The balances at March 31, 2018 and December 31, 2017 were related to derivative liabilities which can be net settled against derivative assets. (B) The balances at March 31, 2018 and December 31, 2017 were related to derivative assets which can be net settled against derivative liabilities. |
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Derivatives in cash flow hedging relationships | The effect of derivative instruments on the condensed consolidated statements of income for the three months ended March 31, 2018 and 2017 are as follows (in thousands):
(a) Included in Interest Charges
(a) Included in Operating Revenues - Nonutility (b) Included in Interest Charges |
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of assets and liabilities | For financial assets and financial liabilities measured at fair value on a recurring basis, information about the fair value measurements for each major category is as follows (in thousands):
(A) Available-for-Sale Securities include securities that are traded in active markets and securities that are not traded publicly. The securities traded in active markets are valued using the quoted principal market close prices that are provided by the trustees and are categorized in Level 1 in the fair value hierarchy. (B) Derivatives – Energy Related Assets and Liabilities are traded in both exchange-based and non-exchange-based markets. Exchange-based contracts are valued using unadjusted quoted market sources in active markets and are categorized in Level 1 in the fair value hierarchy. Certain non-exchange-based contracts are valued using indicative price quotations available through brokers or over-the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask mid-point prices and are obtained from sources that management believes provide the most liquid market. For non-exchange-based derivatives that trade in less liquid markets with limited pricing information, model inputs generally would include both observable and unobservable inputs. In instances where observable data is unavailable, management considers the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 as the model inputs generally are not observable. Significant Unobservable Inputs - Management uses the discounted cash flow model to value Level 3 physical and financial forward contracts, which calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. Inputs to the valuation model are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third party pricing sources. The validity of the mark-to-market valuations and changes in mark-to-market valuations from period to period are examined and qualified against historical expectations by the risk management function. If any discrepancies are identified during this process, the mark-to-market valuations or the market pricing information is evaluated further and adjusted, if necessary. Level 3 valuation methods for natural gas derivative contracts include utilizing another location in close proximity adjusted for certain pipeline charges to derive a basis value. The significant unobservable inputs used in the fair value measurement of certain natural gas contracts consist of forward prices developed based on industry-standard methodologies. Significant increases (decreases) in these forward prices for purchases of natural gas would result in a directionally similar impact to the fair value measurement and for sales of natural gas would result in a directionally opposite impact to the fair value measurement. Level 3 valuation methods for electric represent the value of the contract marked to the forward wholesale curve, as provided by daily exchange quotes for delivered electricity. The significant unobservable inputs used in the fair value measurement of electric contracts consist of fixed contracted electric load profiles; therefore, no change in unobservable inputs would occur. Unobservable inputs are updated daily using industry-standard techniques. Management reviews and corroborates the price quotations to ensure the prices are observable which includes consideration of actual transaction volumes, market delivery points, bid-ask spreads and contract duration. (C) Derivatives – Other are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment. |
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Quantitative information regarding significant unobservable inputs, assets | The following table provides quantitative information regarding significant unobservable inputs in Level 3 fair value measurements (in thousands): SJI (includes SJG and all other consolidated subsidiaries):
SJG:
(A) Represents the range, along with the weighted average, of forward prices for the sale and purchase of natural gas. (B) Represents the range, along with the weighted average, of the percentage of contracted usage that is loaded during on-peak hours versus off-peak. |
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Quantitative information regarding significant unobservable inputs, liabilities | The following table provides quantitative information regarding significant unobservable inputs in Level 3 fair value measurements (in thousands): SJI (includes SJG and all other consolidated subsidiaries):
SJG:
(A) Represents the range, along with the weighted average, of forward prices for the sale and purchase of natural gas. (B) Represents the range, along with the weighted average, of the percentage of contracted usage that is loaded during on-peak hours versus off-peak. |
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Changes in fair value using significant unobservable inputs | The changes in fair value measurements of Derivatives – Energy Related Assets and Liabilities for the three months ended March 31, 2018 and 2017, using significant unobservable inputs (Level 3), are as follows (in thousands):
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in accumulated other comprehensive loss (AOCL) | The following table summarizes the changes in SJG's AOCL for the three months ended March 31, 2018 (in thousands):
(a) Determined using a combined average statutory tax rate of 25%. (b) See table below. The following table summarizes the changes in SJI's accumulated other comprehensive loss (AOCL) for the three months ended March 31, 2018 (in thousands):
(a) Determined using a combined average statutory tax rate of 25%. (b) See table below. |
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Reclassifications out of AOCL | The reclassifications out of SJG's AOCL during the three months ended March 31, 2018 are as follows (in thousands):
(a) Determined using a combined average statutory tax rate of 25%. The following table provides details about reclassifications out of SJI's AOCL for the three months ended March 31, 2018 (in thousands):
(a) Determined using a combined average statutory tax rate of 25%. |
REVENUE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | Below is a listing of all performance obligations that arise from contracts with customers, along with details on the satisfaction of each performance obligation, the significant payment terms, and the nature of the goods and services being transferred:
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Disaggregation of Revenue | Disaggregated revenues from contracts with customers, by both customer type and product line, are disclosed below, by operating segment, for the three months ended March 31, 2018 (in thousands):
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Contract with Customer, Asset and Liability | The following table provides information about SJI's and SJG's receivables and unbilled revenue from contracts with customers (in thousands):
(1) Included in Accounts Receivable in the condensed consolidated balance sheets. A receivable is SJI's and SJG's right to consideration that is unconditional, as only the passage of time is required before payment is expected from the customer. All of SJI's and SJG's Accounts Receivable arise from contracts with customers. (2) Included in Unbilled Revenues in the condensed consolidated balance sheets. All unbilled revenue for SJI and SJG arises from contracts with customers. Unbilled revenue relates to SJI's and SJG's right to receive payment for commodity delivered but not yet billed. This represents contract assets that arise from contracts with customers, which is defined in ASC 606 as the right to payment in exchange for goods already transferred to a customer, excluding any amounts presented as a receivable. The unbilled revenue is transferred to accounts receivable when billing occurs and the rights to collection become unconditional. The change in unbilled revenues for the three months ended March 31, 2018 is due primarily to the timing difference between SJI and SJG delivering the commodity to the customer and the customer actually receiving the bill for payment. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Acquisition (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Oct. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Business Acquisition [Line Items] | ||||
Payment to acquire assets | $ 58,816 | $ 67,278 | ||
Unamortized debt issuance costs | 15,600 | $ 17,400 | ||
Interest Charges | 13,972 | $ 16,745 | ||
Elizabethtown Gas and Elkton Gas | ||||
Business Acquisition [Line Items] | ||||
Payment to acquire assets | $ 1,700,000 | |||
Legal fees | 9,300 | |||
Unamortized debt issuance costs | $ 3,800 | |||
Interest Charges | 2,600 | |||
Ticking fees | 1,200 | |||
Operating Expense | Elizabethtown Gas and Elkton Gas | ||||
Business Acquisition [Line Items] | ||||
Legal fees | $ 5,500 |
AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED PARTY TRANSACTIONS - Summarized Operating Results (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Loss Before Income Taxes: | ||
Income Tax Benefits | $ 16 | $ 16 |
Loss from Discontinued Operations — Net | $ (66) | $ (30) |
Earnings (Loss) Per Common Share from Discontinued Operations - Net | ||
Basic and Diluted (in dollars per share) | $ 0.00 | $ 0.00 |
Sand Mining | ||
Loss Before Income Taxes: | ||
Loss Before Income Taxes | $ (40) | $ (17) |
Fuel Oil | ||
Loss Before Income Taxes: | ||
Loss Before Income Taxes | $ (42) | $ (29) |
AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED PARTY TRANSACTIONS - Related Party Transactions (Details) - SJG - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Operating Revenues/Affiliates: | ||
Total Operating Revenue/Affiliates | $ 2,714 | $ 1,066 |
Operations Expense/Affiliates: | ||
Total Operations Expense/Affiliates | 7,625 | 6,719 |
SJRG | ||
Operating Revenues/Affiliates: | ||
Total Operating Revenue/Affiliates | 2,588 | 963 |
Costs of Sales/Affiliates (Excluding depreciation) | 25,338 | 10,450 |
Marina | ||
Operating Revenues/Affiliates: | ||
Total Operating Revenue/Affiliates | 103 | 82 |
SJI | ||
Operations Expense/Affiliates: | ||
Total Operations Expense/Affiliates | 7,043 | 6,050 |
Millennium | ||
Operations Expense/Affiliates: | ||
Total Operations Expense/Affiliates | 697 | 708 |
Other | ||
Operating Revenues/Affiliates: | ||
Total Operating Revenue/Affiliates | 23 | 21 |
Operations Expense/Affiliates: | ||
Total Operations Expense/Affiliates | $ (115) | $ (39) |
COMMON STOCK - Summary of Shares Issued and Outstanding (Details) |
3 Months Ended |
---|---|
Mar. 31, 2018
shares
| |
Common Stock [Roll Forward] | |
Beginning balance (in shares) | 79,549,080 |
New Issuances During the Period: | |
Stock-Based Compensation Plan (in shares) | 63,809 |
Ending balance (in shares) | 79,612,889 |
COMMON STOCK - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Par value of common stock (in dollars per share) | $ 1.25 | ||
Net excess over par value recorded in premium on common stock | $ 0.1 | ||
Shares of common stock outstanding (in shares) | 79,612,889 | 79,549,080 | |
Incremental shares included in diluted EPS calculation (in shares) | 129,369 | 121,812 | |
South Jersey Gas Company | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Par value of common stock (in dollars per share) | $ 2.50 | ||
Shares of common stock outstanding (in shares) | 2,339,139 |
FINANCIAL INSTRUMENTS - Credit Risk (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
counterparty
| |
Concentration Risk [Line Items] | |
Number of counterparties | counterparty | 1 |
Supplier Concentration Risk | Derivatives Energy Related Assets | |
Concentration Risk [Line Items] | |
Current and noncurrent derivatives | $ | $ 4.3 |
Percentage of current and noncurrent derivatives | 11.90% |
FINANCIAL INSTRUMENTS - Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Estimated fair value of long-term debt, including current maturities | $ 1,257.1 | $ 1,216.1 |
Carrying amount of long-term debt, including current maturities | 1,238.6 | 1,186.8 |
Unamortized debt issuance costs | 15.6 | 17.4 |
South Jersey Gas Company | ||
Debt Instrument [Line Items] | ||
Estimated fair value of long-term debt, including current maturities | 831.6 | 838.5 |
Carrying amount of long-term debt, including current maturities | 822.0 | 821.9 |
Unamortized debt issuance costs | $ 7.1 | $ 7.3 |
RATES AND REGULATORY ACTIONS (Details) - New Jersey Board of Public Utilities - South Jersey Gas Company $ in Millions |
1 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Schedule of Capitalization [Line Items] | |
Requested term (in years) | 5 years |
Public utilities, requested rate increase (decrease), amount | $ (195.4) |
REGULATORY ASSETS AND REGULATORY LIABILITIES - Narrative and Regulatory Liabilities (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
USD ($)
site
asset
|
Dec. 31, 2017
USD ($)
|
|
Regulatory Liabilities [Line Items] | ||
Total Regulatory Liabilities | $ 300,358 | $ 287,105 |
Deferred Revenues - Net | ||
Regulatory Liabilities [Line Items] | ||
Increase in Regulatory Assets | 37,500 | |
Tax Reform | ||
Regulatory Liabilities [Line Items] | ||
Increase in Regulatory Assets | 13,000 | |
Excess Plant Removal Costs | ||
Regulatory Liabilities [Line Items] | ||
Total Regulatory Liabilities | 23,527 | 23,295 |
Energy Efficiency Tracker | ||
Regulatory Liabilities [Line Items] | ||
Total Regulatory Liabilities | $ 276,831 | $ 263,810 |
Environmental restoration costs | ||
Regulatory Assets [Line Items] | ||
Number of regulatory assets | asset | 2 | |
Number of sites for environmental cleanup | site | 12 | |
Original recovery period of expenditures | 7 years |
DERIVATIVE INSTRUMENTS - Effect of Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Interest Rate Contracts: | ||
Total | $ 24,981 | $ 13,683 |
Fair value of derivative instruments with credit-risk-related features | 1,000 | |
Additional collateral, aggregate fair value | 200 | |
Derivatives in Cash Flow Hedging Relationships under GAAP | ||
Interest Rate Contracts: | ||
Losses reclassified from AOCL into income | (12) | (2,487) |
Derivatives in Cash Flow Hedging Relationships under GAAP | SJG | ||
Interest Rate Contracts: | ||
Losses reclassified from AOCL into income | (12) | (12) |
Derivatives not designated as hedging instruments under GAAP | ||
Interest Rate Contracts: | ||
(Losses) gains on energy-related commodity contracts | 23,353 | 14,688 |
Losses on interest rate contracts | $ 1,628 | $ (1,005) |
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Changes in Measurements (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Balance at beginning of period | $ 3,110 | $ 9,035 |
Other Changes in Fair Value from Continuing and New Contracts, Net | 3,989 | (988) |
Settlements | 9,487 | 8,187 |
Balance at end of period | 16,586 | 16,234 |
SJG | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Balance at beginning of period | 2,052 | 926 |
Other Changes in Fair Value from Continuing and New Contracts, Net | (6) | 511 |
Settlements | (2,052) | (926) |
Balance at end of period | $ (6) | $ 511 |
LONG-TERM DEBT (Details) - USD ($) |
Mar. 31, 2018 |
Jan. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Interest rate | 7.50% | |
Medium-term notes | Series 2017A-2, Due January 2025 | ||
Debt Instrument [Line Items] | ||
Principal amount issued | $ 25,000,000.0 | |
Interest rate | 3.32% | |
Medium-term notes | Series 2017B-2, Due January 2028 | ||
Debt Instrument [Line Items] | ||
Principal amount issued | $ 25,000,000.0 | |
Interest rate | 3.56% |
ACCUMULATED OTHER COMPREHENSIVE LOSS - Reclassifications out of AOCL (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||
Income Taxes | $ 36,415 | $ 21,870 |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $ (9) | |
Combined statutory tax rate | 25.00% | 40.00% |
South Jersey Gas Company | ||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||
Income Taxes | $ 21,836 | $ 29,911 |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $ (9) | |
Combined statutory tax rate | 25.00% | 40.00% |
Unrealized Loss in on Derivatives - Other - Interest Rate Contracts designated as cash flow hedges | South Jersey Gas Company | ||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $ (9) | |
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Loss on Derivatives-Other - interest rate contracts designated as cash flow hedges | ||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||
Income Taxes | (3) | |
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Loss in on Derivatives - Other - Interest Rate Contracts designated as cash flow hedges | South Jersey Gas Company | ||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||
Income Taxes | (3) | |
Net Income (Loss) Attributable to Parent | 9 | |
Interest Charges | Reclassification out of Accumulated Other Comprehensive Income | Unrealized Loss on Derivatives-Other - interest rate contracts designated as cash flow hedges | ||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||
Unrealized Loss on Derivatives-Other - interest rate contracts designated as cash flow hedges | 12 | |
Interest Charges | Reclassification out of Accumulated Other Comprehensive Income | Unrealized Loss in on Derivatives - Other - Interest Rate Contracts designated as cash flow hedges | South Jersey Gas Company | ||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||
Unrealized Loss on Derivatives-Other - interest rate contracts designated as cash flow hedges | $ 12 |
REVENUE (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 443,979 |
South Jersey Gas Company | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 193,900 |
REVENUE Disaggregated Revenue (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 443,979 |
Residential | |
Disaggregation of Revenue [Line Items] | |
Revenue | 155,878 |
Commercial & Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 282,234 |
OSS & Capacity Release | |
Disaggregation of Revenue [Line Items] | |
Revenue | 5,204 |
Other | |
Disaggregation of Revenue [Line Items] | |
Revenue | 663 |
Gas | |
Disaggregation of Revenue [Line Items] | |
Revenue | 396,452 |
Electric | |
Disaggregation of Revenue [Line Items] | |
Revenue | 28,378 |
Solar | |
Disaggregation of Revenue [Line Items] | |
Revenue | 9,308 |
CHP | |
Disaggregation of Revenue [Line Items] | |
Revenue | 7,853 |
Landfills | |
Disaggregation of Revenue [Line Items] | |
Revenue | 1,468 |
Other | |
Disaggregation of Revenue [Line Items] | |
Revenue | 520 |
Gas Utility Operations | |
Disaggregation of Revenue [Line Items] | |
Revenue | 193,934 |
Gas Utility Operations | Residential | |
Disaggregation of Revenue [Line Items] | |
Revenue | 147,262 |
Gas Utility Operations | Commercial & Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 40,805 |
Gas Utility Operations | OSS & Capacity Release | |
Disaggregation of Revenue [Line Items] | |
Revenue | 5,204 |
Gas Utility Operations | Other | |
Disaggregation of Revenue [Line Items] | |
Revenue | 663 |
Gas Utility Operations | Gas | |
Disaggregation of Revenue [Line Items] | |
Revenue | 193,934 |
Wholesale Energy Operations | |
Disaggregation of Revenue [Line Items] | |
Revenue | 173,846 |
Wholesale Energy Operations | Commercial & Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 173,846 |
Wholesale Energy Operations | Gas | |
Disaggregation of Revenue [Line Items] | |
Revenue | 173,846 |
Retail Gas and Other Operations | |
Disaggregation of Revenue [Line Items] | |
Revenue | 33,246 |
Retail Gas and Other Operations | Commercial & Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 33,246 |
Retail Gas and Other Operations | Gas | |
Disaggregation of Revenue [Line Items] | |
Revenue | 33,246 |
On-Site Energy Production | |
Disaggregation of Revenue [Line Items] | |
Revenue | 21,157 |
On-Site Energy Production | Commercial & Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 21,157 |
On-Site Energy Production | Solar | |
Disaggregation of Revenue [Line Items] | |
Revenue | 11,836 |
On-Site Energy Production | CHP | |
Disaggregation of Revenue [Line Items] | |
Revenue | 7,853 |
On-Site Energy Production | Landfills | |
Disaggregation of Revenue [Line Items] | |
Revenue | 1,468 |
Corporate Services and Intersegment | |
Disaggregation of Revenue [Line Items] | |
Revenue | (8,770) |
Corporate Services and Intersegment | Commercial & Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | (8,770) |
Corporate Services and Intersegment | Gas | |
Disaggregation of Revenue [Line Items] | |
Revenue | (4,574) |
Corporate Services and Intersegment | Electric | |
Disaggregation of Revenue [Line Items] | |
Revenue | (1,668) |
Corporate Services and Intersegment | Solar | |
Disaggregation of Revenue [Line Items] | |
Revenue | (2,528) |
Retail Electric Operations | |
Disaggregation of Revenue [Line Items] | |
Revenue | 30,046 |
Retail Electric Operations | Residential | |
Disaggregation of Revenue [Line Items] | |
Revenue | 8,096 |
Retail Electric Operations | Commercial & Industrial | |
Disaggregation of Revenue [Line Items] | |
Revenue | 21,950 |
Retail Electric Operations | Electric | |
Disaggregation of Revenue [Line Items] | |
Revenue | 30,046 |
Appliance Service Operations | |
Disaggregation of Revenue [Line Items] | |
Revenue | 520 |
Appliance Service Operations | Residential | |
Disaggregation of Revenue [Line Items] | |
Revenue | 520 |
Appliance Service Operations | Other | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 520 |
REVENUE Accounts Receivable (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Disaggregation of Revenue [Line Items] | ||
Accounts Receivable | $ 243,395 | $ 202,379 |
Unbilled Revenues | 62,601 | 73,377 |
South Jersey Gas Company | ||
Disaggregation of Revenue [Line Items] | ||
Accounts Receivable | 128,583 | 78,571 |
Unbilled Revenues | 44,287 | $ 54,980 |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||
Disaggregation of Revenue [Line Items] | ||
Accounts Receivable | (41,016) | |
Unbilled Revenues | 10,776 | |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | South Jersey Gas Company | ||
Disaggregation of Revenue [Line Items] | ||
Accounts Receivable | (50,012) | |
Unbilled Revenues | $ 10,693 |
SUBSEQUENT EVENTS (Details) - USD ($) |
1 Months Ended | |
---|---|---|
Apr. 30, 2018 |
Mar. 31, 2018 |
|
Subsequent Event [Line Items] | ||
Par value of common stock (in dollars per share) | $ 1.25 | |
Interest rate | 7.50% | |
Common Stock | Subsequent event | ||
Subsequent Event [Line Items] | ||
Shares available for issuance | 12,669,491 | |
Number of shares issued | 5,889,830 | |
Par value of common stock (in dollars per share) | $ 1.25 | |
Price per share (in usd per share) | $ 29.50 | |
Consideration received, gross | $ 173,700,000 | |
Consideration received | $ 167,700,000 | |
Common Stock | Over-Allotment Option | Subsequent event | ||
Subsequent Event [Line Items] | ||
Number of shares issued | 1,652,542 | |
Capital Units | Subsequent event | ||
Subsequent Event [Line Items] | ||
Number of shares issued | 5,750,000 | |
Corporate Unit, stated value per share (in usd per share) | $ 50 | |
Corporate Unit, cash redemption value (in usd per share) | $ 50 | |
Consideration received, gross | 287,500,000 | |
Consideration received | $ 278,900,000 | |
Capital Units | Over-Allotment Option | Subsequent event | ||
Subsequent Event [Line Items] | ||
Number of shares issued | 750,000 | |
Series 2018A, Due 2031 | Subsequent event | ||
Subsequent Event [Line Items] | ||
Interest rate | 3.70% | |
3.18% Notes, Due April 2021 | Subsequent event | ||
Subsequent Event [Line Items] | ||
Principal amount issued | $ 90,000,000.0 | |
Interest rate | 3.18% | |
Series 2018 B, 3.78% Senior Notes | Subsequent event | ||
Subsequent Event [Line Items] | ||
Principal amount issued | $ 80,000,000.0 | |
Interest rate | 3.78% | |
Term (in years) | 10 years | |
Series 2018 C. 3.88% Senior Notes | Subsequent event | ||
Subsequent Event [Line Items] | ||
Principal amount issued | $ 80,000,000.0 | |
Interest rate | 3.88% | |
Term (in years) | 12 years | |
Scenario, Forecast | Series 2018A, Due 2031 | Capital Units | ||
Subsequent Event [Line Items] | ||
Interest in notes issued, percent | 5.00% | |
Bank of America, N.A. | Common Stock | Private Placement | Subsequent event | ||
Subsequent Event [Line Items] | ||
Number of shares held for forward contract | 6,779,661 | |
Unsecured promissory notes | Subsequent event | ||
Subsequent Event [Line Items] | ||
Principal amount issued | $ 250,000,000.0 | |
Line of Credit | Line of Credit | Subsequent event | ||
Subsequent Event [Line Items] | ||
Repayments of debt | 116,000,000 | |
Revolving Credit Facility | Line of Credit | Subsequent event | ||
Subsequent Event [Line Items] | ||
Repayments of debt | 50,000,000 | |
Bridge Loan | Subsequent event | ||
Subsequent Event [Line Items] | ||
Principal amount issued | $ 1,160,000,000.00 |
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