DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Outstanding derivative contracts

As of September 30, 2017, SJI had outstanding derivative contracts as follows (1 MMdts = one million decatherms; 1 MMmWh = one million megawatt hours): 

	SJI Consolidated	SJG
Derivative contracts intended to limit exposure to market risk to:
Expected future purchases of natural gas (in MMdts)	51.7	9.3
Expected future sales of natural gas (in MMdts)	44.9	0.3
Expected future purchases of electricity (in MMmWh)	2.6	—
Expected future sales of electricity (in MMmWh)	1.9	—
Basis and Index related net purchase (sales) contracts (in MMdts)	73.8	0.8

Schedule of notional amounts of outstanding derivative positions

As of September 30, 2017, 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 September 30, 2017 and December 31, 2016, are as follows (in thousands):

SJI (includes SJG and all other consolidated subsidiaries):
Derivatives not designated as hedging instruments under GAAP	September 30, 2017				December 31, 2016
	Assets		Liabilities		Assets		Liabilities
Energy-related commodity contracts:
Derivatives - Energy Related - Current	$	42,068	$	26,910	$	72,391	$	60,082
Derivatives - Energy Related - Non-Current	7,650		4,359		8,502		4,540
Interest rate contracts:
Derivatives - Other - Current	—		798		—		681
Derivatives - Other - Noncurrent	—		10,479		—		9,349
Total derivatives not designated as hedging instruments under GAAP	$	49,718	$	42,546	$	80,893	$	74,652
Total Derivatives	$	49,718	$	42,546	$	80,893	$	74,652

SJG:
Derivatives not designated as hedging instruments under GAAP	September 30, 2017				December 31, 2016
	Assets		Liabilities		Assets		Liabilities
Energy-related commodity contracts:
Derivatives – Energy Related – Current	$	7,608	$	4,467	$	5,434	$	1,372
Derivatives – Energy Related – Non-Current	58		69		373		—
Interest rate contracts:
Derivatives – Other Current	—		398		—		386
Derivatives – Other Noncurrent	—		6,881		—		6,979
Total derivatives not designated as hedging instruments under GAAP	$	7,666	$	11,815	$	5,807	$	8,737
Total Derivatives	$	7,666	$	11,815	$	5,807	$	8,737

Offsetting assets

As of September 30, 2017 and December 31, 2016, information related to these offsetting arrangements were as follows (in thousands):

As of September 30, 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	$	49,718		$	—	$	49,718		$	(18,251	)	(A)	$	—	$	31,467
Derivatives - Energy Related Liabilities	$	(31,269	)	$	—	$	(31,269	)	$	18,251		(B)	$	—	$	(13,018	)
Derivatives - Other	$	(11,277	)	$	—	$	(11,277	)	$	—			$	—	$	(11,277	)
SJG:
Derivatives - Energy Related Assets	$	7,666		$	—	$	7,666		$	(475	)	(A)	$	—	$	7,191
Derivatives - Energy Related Liabilities	$	(4,536	)	$	—	$	(4,536	)	$	475		(B)	$	—	$	(4,061	)
Derivatives - Other	$	(7,279	)	$	—	$	(7,279	)	$	—			$	—	$	(7,279	)

As of December 31, 2016
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	$	80,893		$	—	$	80,893		$	(38,809	)	(A)	$	(3,474	)	$	38,610
Derivatives - Energy Related Liabilities	$	(64,622	)	$	—	$	(64,622	)	$	38,809		(B)	$	—		$	(25,813	)
Derivatives - Other	$	(10,030	)	$	—	$	(10,030	)	$	—			$	—		$	(10,030	)
SJG:
Derivatives - Energy Related Assets	$	5,807		$	—	$	5,807		$	(6	)	(A)	$	(3,587	)	$	2,214
Derivatives - Energy Related Liabilities	$	(1,372	)	$	—	$	(1,372	)	$	6		(B)	$	—		$	(1,366	)
Derivatives - Other	$	(7,365	)	$	—	$	(7,365	)	$	—			$	—		$	(7,365	)

(A) The balances at September 30, 2017 and December 31, 2016 were related to derivative liabilities which can be net settled against derivative assets.

(B) The balances at September 30, 2017 and December 31, 2016 were related to derivative assets which can be net settled against derivative liabilities.

Offsetting liabilities

As of September 30, 2017 and December 31, 2016, information related to these offsetting arrangements were as follows (in thousands):

As of September 30, 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	$	49,718		$	—	$	49,718		$	(18,251	)	(A)	$	—	$	31,467
Derivatives - Energy Related Liabilities	$	(31,269	)	$	—	$	(31,269	)	$	18,251		(B)	$	—	$	(13,018	)
Derivatives - Other	$	(11,277	)	$	—	$	(11,277	)	$	—			$	—	$	(11,277	)
SJG:
Derivatives - Energy Related Assets	$	7,666		$	—	$	7,666		$	(475	)	(A)	$	—	$	7,191
Derivatives - Energy Related Liabilities	$	(4,536	)	$	—	$	(4,536	)	$	475		(B)	$	—	$	(4,061	)
Derivatives - Other	$	(7,279	)	$	—	$	(7,279	)	$	—			$	—	$	(7,279	)

As of December 31, 2016
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	$	80,893		$	—	$	80,893		$	(38,809	)	(A)	$	(3,474	)	$	38,610
Derivatives - Energy Related Liabilities	$	(64,622	)	$	—	$	(64,622	)	$	38,809		(B)	$	—		$	(25,813	)
Derivatives - Other	$	(10,030	)	$	—	$	(10,030	)	$	—			$	—		$	(10,030	)
SJG:
Derivatives - Energy Related Assets	$	5,807		$	—	$	5,807		$	(6	)	(A)	$	(3,587	)	$	2,214
Derivatives - Energy Related Liabilities	$	(1,372	)	$	—	$	(1,372	)	$	6		(B)	$	—		$	(1,366	)
Derivatives - Other	$	(7,365	)	$	—	$	(7,365	)	$	—			$	—		$	(7,365	)

(A) The balances at September 30, 2017 and December 31, 2016 were related to derivative liabilities which can be net settled against derivative assets.

(B) The balances at September 30, 2017 and December 31, 2016 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 and nine months ended September 30, 2017 and 2016 are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships under GAAP	2017			2016			2017			2016
SJI (includes SJG and all other consolidated subsidiaries):
Interest Rate Contracts:
Losses reclassified from AOCL into income (a)	$	(12	)	$	(82	)	$	(2,511	)	$	(250	)
SJG:
Interest Rate Contracts:
Losses reclassified from AOCL into income (a)	$	(12	)	$	(12	)	(36		)	(36		)

(a) Included in Interest Charges

	Three Months Ended September 30,					Nine Months Ended September 30,
Derivatives Not Designated as Hedging Instruments under GAAP	2017			2016		2017			2016
SJI (includes SJG and all other consolidated subsidiaries):
(Losses) Gains on energy-related commodity contracts (a)	$	(4,632	)	$	9,003	$	2,200		$	6,287
Gains (Losses) on interest rate contracts (b)	52			218		(1,332		)	(438		)
Total	$	(4,580	)	$	9,221	$	868		$	5,849

(a)  Included in Operating Revenues - Nonutility

(b)  Included in Interest Charges