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DERIVATIVE INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

As of March 31, 2020, SJI and SJG had outstanding derivative contracts as follows:


	SJI Consolidated	SJG
Derivative contracts intended to limit exposure to market risk to:
Expected future purchases of natural gas (in MMdts)	79.0	16.7
Expected future sales of natural gas (in MMdts)	82.1	4.1
Expected future purchases of electricity (in MMmWh)	0.4
Expected future sales of electricity (in MMmWh)	0.3

Basis and Index related net purchase (sale) contracts (in MMdts)	113.7	1.3

Schedule of notional amounts of outstanding derivative positions

As of March 31, 2020, SJI’s active interest rate swaps were as follows:


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

Fair value of derivative instruments

The fair values of all derivative instruments, as reflected in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, are as follows (in thousands):


SJI (includes SJG and all other consolidated subsidiaries):
Derivatives not designated as hedging instruments under GAAP	March 31, 2020						December 31, 2019
	Assets		Liabilities		Assets		Liabilities
Energy-related commodity contracts:
Derivatives - Energy Related - Current	$	31,120	$	30,710	$	52,892	$	41,965
Derivatives - Energy Related - Non-Current	13,522		5,284		7,243		8,206
Interest rate contracts:
Derivatives - Other - Current	—		1,736		—		1,155
Derivatives - Other - Noncurrent	—		18,489		—		11,505
Total derivatives not designated as hedging instruments under GAAP	$	44,642	$	56,219	$	60,135	$	62,831

Total Derivatives	$	44,642	$	56,219	$	60,135	$	62,831


SJG:
Derivatives not designated as hedging instruments under GAAP	March 31, 2020						December 31, 2019
	Assets		Liabilities		Assets		Liabilities
Energy-related commodity contracts:
Derivatives – Energy Related – Current	$	7,553	$	6,628	$	16,904	$	14,671
Derivatives – Energy Related – Non-Current	80		89		5		95
Interest rate contracts:
Derivatives – Other - Current	—		464		—		488
Derivatives – Other - Noncurrent	—		10,911		—		7,368
Total derivatives not designated as hedging instruments under GAAP	$	7,633	$	18,092	$	16,909	$	22,622

Total Derivatives	$	7,633	$	18,092	$	16,909	$	22,622

Offsetting assets

As of March 31, 2020 and December 31, 2019, information related to these offsetting arrangements were as follows (in thousands):


As of March 31, 2020
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	$	44,642	$	—	$	44,642	$	(15,579)	(A)	$	—	$	29,063
Derivatives - Energy Related Liabilities	$	35,994	$	—	$	35,994	$	15,579	(B)	$	15,805	$	67,378
Derivatives - Other	$	(20,225)	$	—	$	(20,225)	$	—		$	—	$	(20,225)
SJG:
Derivatives - Energy Related Assets	$	7,633	$	—	$	7,633	$	(2,711)	(A)	$	—	$	4,922
Derivatives - Energy Related Liabilities	$	(6,717)	$	—	$	(6,717)	$	2,711	(B)	$	3,989	$	(17)
Derivatives - Other	$	(11,375)	$	—	$	(11,375)	$	—		$	—	$	(11,375)


As of December 31, 2019
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	$	60,135	$	—	$	60,135	$	(32,185)	(A)	$	—	$	27,950
Derivatives - Energy Related Liabilities	$	(50,171)	$	—	$	(50,171)	$	32,185	(B)	$	12,878	$	(5,108)
Derivatives - Other	$	(12,660)	$	—	$	(12,660)	$	—		$	—	$	(12,660)
SJG:
Derivatives - Energy Related Assets	$	16,909	$	—	$	16,909	$	(11,860)	(A)	$	—	$	5,049
Derivatives - Energy Related Liabilities	$	(14,766)	$	—	$	(14,766)	$	11,860	(B)	$	2,706	$	(200)
Derivatives - Other	$	(7,856)	$	—	$	(7,856)	$	—		$	—	$	(7,856)

(A) The balances at March 31, 2020 and December 31, 2019 were related to derivative liabilities which can be net settled against derivative assets.

(B) The balances at March 31, 2020 and December 31, 2019 were related to derivative assets which can be net settled against derivative liabilities.

Offsetting liabilities

As of March 31, 2020 and December 31, 2019, information related to these offsetting arrangements were as follows (in thousands):


As of March 31, 2020
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	$	44,642	$	—	$	44,642	$	(15,579)	(A)	$	—	$	29,063
Derivatives - Energy Related Liabilities	$	35,994	$	—	$	35,994	$	15,579	(B)	$	15,805	$	67,378
Derivatives - Other	$	(20,225)	$	—	$	(20,225)	$	—		$	—	$	(20,225)
SJG:
Derivatives - Energy Related Assets	$	7,633	$	—	$	7,633	$	(2,711)	(A)	$	—	$	4,922
Derivatives - Energy Related Liabilities	$	(6,717)	$	—	$	(6,717)	$	2,711	(B)	$	3,989	$	(17)
Derivatives - Other	$	(11,375)	$	—	$	(11,375)	$	—		$	—	$	(11,375)


As of December 31, 2019
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	$	60,135	$	—	$	60,135	$	(32,185)	(A)	$	—	$	27,950
Derivatives - Energy Related Liabilities	$	(50,171)	$	—	$	(50,171)	$	32,185	(B)	$	12,878	$	(5,108)
Derivatives - Other	$	(12,660)	$	—	$	(12,660)	$	—		$	—	$	(12,660)
SJG:
Derivatives - Energy Related Assets	$	16,909	$	—	$	16,909	$	(11,860)	(A)	$	—	$	5,049
Derivatives - Energy Related Liabilities	$	(14,766)	$	—	$	(14,766)	$	11,860	(B)	$	2,706	$	(200)
Derivatives - Other	$	(7,856)	$	—	$	(7,856)	$	—		$	—	$	(7,856)

(A) The balances at March 31, 2020 and December 31, 2019 were related to derivative liabilities which can be net settled against derivative assets.

(B) The balances at March 31, 2020 and December 31, 2019 were related to derivative assets which can be net settled against derivative liabilities.

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, 2020 and 2019 are as follows (in thousands):


	Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships under GAAP	2020		2019
SJI (includes SJG and all other consolidated subsidiaries):
Interest Rate Contracts:
Losses reclassified from AOCL into income (a)	$	(12)	$	(12)

SJG:
Interest Rate Contracts:
Losses reclassified from AOCL into income (a)	$	(12)	$	(12)

(a) Included in Interest Charges


	Three Months Ended March 31,
Derivatives Not Designated as Hedging Instruments under GAAP	2020		2019
SJI (includes SJG and all other consolidated subsidiaries):
Losses on energy-related commodity contracts (a)	$	(276)	$	(12,060)
Losses on interest rate contracts (b)	(4,046)		(1,090)

Total	$	(4,322)	$	(13,150)

(a) Included in Operating Revenues - Nonutility

(b) Included in Interest Charges

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

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+ Details