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FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Tables)
 12 Months Ended
Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Summary of Financial 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):

As of December 31, 2017
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
SJI (includes SJG and all other consolidated subsidiaries):
 
 
 
 
 
 
 
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



As of December 31, 2016
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
SJI (includes SJG and all other consolidated subsidiaries):
 
 
 
 
 
 
 
Available-for-Sale Securities (A)
$
32

 
$
32

 
$
—

 
$
—

Derivatives – Energy Related Assets (B)
80,893

 
33,994

 
11,814

 
35,085

 
$
80,925

 
$
34,026

 
$
11,814

 
$
35,085

 
 
 
 
 
 
 
 
SJG:
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Derivatives – Energy Related Assets (B)
$
5,807

 
$
4,767

 
$
—

 
$
1,040

 
$
5,807

 
$
4,767

 
$
—

 
$
1,040

 
 
 
 
 
 
 
 
SJI (includes SJG and all other consolidated subsidiaries):
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Derivatives – Energy Related Liabilities (B)
$
64,622

 
$
16,502

 
$
22,070

 
$
26,050

Derivatives – Other (C)
10,030

 
—

 
10,030

 
—

 
$
74,652

 
$
16,502

 
$
32,100

 
$
26,050

 
 
 
 
 
 
 
 
SJG:
 
 
 
 
 
 
 
 Liabilities
 
 
 
 
 
 
 
Derivatives – Energy Related Liabilities (B)
$
1,372

 
$
6

 
$
1,252

 
$
114

Derivatives – Other (C)
7,365

 
—

 
7,365

 
—

 
$
8,737

 
$
6

 
$
8,617

 
$
114


(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.  The remaining securities consist of funds that are not publicly traded.  These funds, which consist of stocks and bonds that are traded individually in active markets, are valued using quoted prices for similar assets and are categorized in Level 2 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.
Quantitative Information Regarding Significant Unobservable Inputs
The following table provides quantitative information regarding significant unobservable inputs in Level 3 fair value measurements (in thousands, except for ranges):


SJI (includes SJG and all other consolidated subsidiaries):
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 December 31, 2016
Valuation Technique
Significant Unobservable Input
Range [Weighted Average]


Assets
Liabilities




Forward Contract - Natural Gas
$
23,301

$
18,109

Discounted Cash Flow
Forward price (per dt)

$1.03 - $11.33 [$2.71]
(A)
Forward Contract - Electric
$
11,784

$
7,941

Discounted Cash Flow
Fixed electric load profile (on-peak)
21.43% - 100.00% [55.14%]
(B)
Fixed electric load profile (off-peak)
0.00% - 78.57% [44.86%]
(B)


SJG:

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)

Type
Fair Value at December 31, 2016
Valuation Technique
Significant Unobservable Input
Range [Weighted Average]
 
 
Assets
Liabilities
 
 
 
 
Forward Contract - Natural Gas
$
1,040

$
114

Discounted Cash Flow
Forward price (per dt)

$3.25 - $6.33 [$5.09]
(A)

(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.
Changes in Measurements Using Significant Unobservable Inputs
The changes in fair value measurements of Derivatives – Energy Related Assets and Liabilities at December 31, 2017 and 2016, using significant unobservable inputs (Level 3), are as follows (in thousands):

SJI (includes SJG and all other consolidated subsidiaries):
 
 
Year Ended December 31, 2017
Balance at January 1, 2017
 
$
9,035

   Other changes in fair value from continuing and new contracts, net
 
1,857

   Transfers in to/(out of) of Level 3 (A)
 
(954
)
   Settlements
 
(6,828
)
 
 
 
Balance at December 31, 2017
 
$
3,110

 
 
Year Ended December 31, 2016
Balance at January 1, 2016
 
$
(632
)
   Other changes in fair value from continuing and new contracts, net
 
5,657

   Transfers in to/(out of) of Level 3 (A)
 
4,116

   Settlements
 
(106
)
 
 
 
Balance at December 31, 2016
 
$
9,035




SJG:

 
 
Year Ended December 31, 2017
Balance at January 1, 2017
 
$
926

   Other changes in fair value from continuing and new contracts, net
 
2,258

   Transfers in to/(out of) of Level 3 (A)
 
(206
)
   Settlements
 
(926
)
 
 
 
Balance at December 31, 2017
 
$
2,052


 
 
Year Ended December 31, 2016
Balance at January 1, 2016
 
$
183

   Other changes in fair value from continuing and new contracts, net
 
926

   Settlements
 
(183
)
 
 
 
Balance at December 31, 2016
 
$
926


(A) Transfers between different levels of the fair value hierarchy may occur based on the level of observable inputs used to value the instruments from period to period, and are assessed quarterly by management.  During the year ended December 31, 2017, $1.0 million and $0.2 million of SJI's and SJG's net derivative assets, respectively, were transferred from Level 3 to Level 2, due to increased observability of market data. During the year ended December 31, 2016, $4.1 million of SJI's net derivative assets were transferred from Level 2 to Level 3, due to decreased observability of market data.
South Jersey Gas Company  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Summary of Financial 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):

As of December 31, 2017
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
SJI (includes SJG and all other consolidated subsidiaries):
 
 
 
 
 
 
 
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



As of December 31, 2016
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
SJI (includes SJG and all other consolidated subsidiaries):
 
 
 
 
 
 
 
Available-for-Sale Securities (A)
$
32

 
$
32

 
$
—

 
$
—

Derivatives – Energy Related Assets (B)
80,893

 
33,994

 
11,814

 
35,085

 
$
80,925

 
$
34,026

 
$
11,814

 
$
35,085

 
 
 
 
 
 
 
 
SJG:
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Derivatives – Energy Related Assets (B)
$
5,807

 
$
4,767

 
$
—

 
$
1,040

 
$
5,807

 
$
4,767

 
$
—

 
$
1,040

 
 
 
 
 
 
 
 
SJI (includes SJG and all other consolidated subsidiaries):
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Derivatives – Energy Related Liabilities (B)
$
64,622

 
$
16,502

 
$
22,070

 
$
26,050

Derivatives – Other (C)
10,030

 
—

 
10,030

 
—

 
$
74,652

 
$
16,502

 
$
32,100

 
$
26,050

 
 
 
 
 
 
 
 
SJG:
 
 
 
 
 
 
 
 Liabilities
 
 
 
 
 
 
 
Derivatives – Energy Related Liabilities (B)
$
1,372

 
$
6

 
$
1,252

 
$
114

Derivatives – Other (C)
7,365

 
—

 
7,365

 
—

 
$
8,737

 
$
6

 
$
8,617

 
$
114


(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.  The remaining securities consist of funds that are not publicly traded.  These funds, which consist of stocks and bonds that are traded individually in active markets, are valued using quoted prices for similar assets and are categorized in Level 2 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.
Quantitative Information Regarding Significant Unobservable Inputs
SJG:

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)

Type
Fair Value at December 31, 2016
Valuation Technique
Significant Unobservable Input
Range [Weighted Average]
 
 
Assets
Liabilities
 
 
 
 
Forward Contract - Natural Gas
$
1,040

$
114

Discounted Cash Flow
Forward price (per dt)

$3.25 - $6.33 [$5.09]
(A)

(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.
Changes in Measurements Using Significant Unobservable Inputs
SJG:

 
 
Year Ended December 31, 2017
Balance at January 1, 2017
 
$
926

   Other changes in fair value from continuing and new contracts, net
 
2,258

   Transfers in to/(out of) of Level 3 (A)
 
(206
)
   Settlements
 
(926
)
 
 
 
Balance at December 31, 2017
 
$
2,052


 
 
Year Ended December 31, 2016
Balance at January 1, 2016
 
$
183

   Other changes in fair value from continuing and new contracts, net
 
926

   Settlements
 
(183
)
 
 
 
Balance at December 31, 2016
 
$
926


(A) Transfers between different levels of the fair value hierarchy may occur based on the level of observable inputs used to value the instruments from period to period, and are assessed quarterly by management.  During the year ended December 31, 2017, $1.0 million and $0.2 million of SJI's and SJG's net derivative assets, respectively, were transferred from Level 3 to Level 2, due to increased observability of market data. During the year ended December 31, 2016, $4.1 million of SJI's net derivative assets were transferred from Level 2 to Level 3, due to decreased observability of market data.