INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of components of income tax expense (benefit) and effective income tax rate reconciliation

Total income taxes applicable to operations differ from the tax that would have resulted by applying the statutory Federal income tax rate to pre-tax income for SJI and SJG for the following reasons (in thousands):



	2018			2017			2016
SJI (includes SJG and all other consolidated subsidiaries):
Tax at Statutory Rate*	$	3,877		$	(9,915	)	$	60,624
Increase (Decrease) Resulting from:
State Income Taxes	622			2,778			6,438
ESOP Dividend	(791		)	(1,314		)	(1,300		)
Tax Reform Adjustments	(588		)	(13,521		)	—
AFUDC	(1,835		)	(3,094		)	(900		)
Amortization of Excess Deferred Taxes	(893		)	—			—
Investment and Other Tax Credits	(93		)	(666		)	(10,706		)
Other - Net	262			795			(5		)
Income Taxes:
Continuing Operations	561			(24,937		)	54,151
Discontinued Operations	(62		)	(173		)	(133		)
Total Income Tax (Benefit) Expense	$	499		$	(25,110	)	$	54,018

SJG:
Tax at Statutory Rate*	22,966			41,390			37,944
Increase (Decrease) Resulting from:
State Income Taxes	5,220			5,955			4,096
ESOP Dividend	(712		)	(1,182		)	(1,170		)
AFUDC	(1,126		)	(1,446		)	(900		)
Research and Development Credits	—			—			(613		)
Other - Net	65			983			9
Total Income Tax Expense	26,413			45,700			39,366

The provision for Income Taxes is comprised of the following (in thousands):

SJI (includes SJG and all other consolidated subsidiaries):	2018			2017			2016
Current:
Federal	$	(13,790	)	$	(34,971	)	$	—
State	3,959			(48		)	(1,638		)
Total Current	(9,831		)	(35,019		)	(1,638		)
Deferred:
Federal	13,564			5,761			44,246
State	(3,172		)	4,321			11,543
Total Deferred	10,392			10,082			55,789
Income Taxes:
Continuing Operations	561			(24,937		)	54,151
Discontinued Operations	(62		)	(173		)	(133		)
Total Income Tax (Benefit) Expense	$	499		$	(25,110	)	$	54,018

SJG:
Current:



Federal	$	(12,766	)	$	(33,012	)	$	—
State	—			—			(1,614		)
Total Current	(12,766		)	(33,012		)	(1,614		)
Deferred:
Federal	32,571			69,550			33,064
State	6,608			9,162			7,916
Total Deferred	39,179			78,712			40,980
Total Income Tax Expense	$	26,413		$	45,700		$	39,366

Schedule of deferred tax assets and liabilities

The net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes resulted in the following net deferred tax assets and liabilities for SJI and SJG at December 31 (in thousands):



SJI (includes SJG and all other consolidated subsidiaries):	2018		2017
Deferred Tax Assets:
Net Operating Loss Carryforward	$	125,418	$	152,541
Investment and Other Tax Credits	214,698		214,605
Derivatives / Unrealized Loss	—		2,068
Conservation Incentive Program	1,701		—
Deferred State Tax	16,087		16,905
Income Taxes Recoverable Through Rates	103,434		76,426
Pension & Other Post Retirement Benefits	16,560		16,624
Deferred Revenues	5,736		5,726
Provision for Uncollectibles	5,319		3,854
Other	4,639		1,949
Total Deferred Tax Asset	$	493,592	$	490,698
Deferred Tax Liabilities:
Book versus Tax Basis of Property	$	458,772	$	486,854
Deferred Gas Costs - Net	25,812		10,254
Derivatives / Unrealized Gain	4,463		—
Environmental Remediation	20,250		31,393
Deferred Regulatory Costs	14,351		3,554
Budget Billing - Customer Accounts	4,550		4,043
Deferred Pension & Other Post Retirement Benefits	34,095		21,349
Conservation Incentive Program	—		7,721
Equity In Loss Of Affiliated Companies	1,417		1,377
Other	15,718		11,037
Total Deferred Tax Liability	$	579,428	$	577,582
Deferred Tax Liability - Net	$	85,836	$	86,884

SJG:
Deferred Tax Assets:
Net Operating Loss and Tax Credits	$	60,986	$	73,785
Deferred State Tax	16,754		14,688
Provision for Uncollectibles	3,776		3,811
Conservation Incentive Program	1,701		—
Income Taxes Recoverable Through Rates	67,372		76,426
Pension & Other Post Retirement Benefits	16,699		15,031
Deferred Revenues	5,906		6,066
Other	2,599		2,413
Total Deferred Tax Assets	$	175,793	$	192,220

Deferred Tax Liabilities:
Book Versus Tax Basis of Property	$	395,371	$	386,642
Deferred Fuel Costs - Net	23,642		10,254
Environmental Remediation	40,753		31,637
Deferred Regulatory Costs	5,061		3,554
Deferred Pension & Other Post Retirement Benefits	21,870		21,349
Budget Billing - Customer Accounts	4,550		4,043
Section 461 Prepayments	1,081		866
Conservation Incentive Program	—		7,721



Other	9,351		6,900
Total Deferred Tax Liabilities	$	501,679	$	472,966

Deferred Tax Liability - Net	$	325,886	$	280,746

Summary of operating loss carryforward

As of December 31, 2018, SJI has the following federal and state net operating loss carryforwards (in thousands):



	Net Operating Loss Carryforwards
Expire in:	Federal		State
2031	$	36,126	$	3,142
2032	42,988		17,982
2033	57,363		35,232
2034	106,899		28,853
2035	51,308		9,956
2036	72,199		170,497
2037	75,606		89,714
2038	—		68,865
	$	442,489	$	424,241

Summary of tax credit carryforwards

As of December 31, 2018, SJI has the following investment tax credit carryforwards (in thousands):



Expire in:	Investment Tax Credit Carryforward
2030	$	11,628
2031	25,664
2032	32,031
2033	45,606
2034	37,699
2035	45,005
2036	11,744
2037	636
2038	93
	$	210,106

Reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, is as follows (in thousands):



SJI (includes SJG and all other consolidated subsidiaries):	2018			2017		2016
Balance at January 1,	$	1,445		$	1,445	$	559
Increase as a result of tax positions taken in prior years	—			—		886
Decrease in prior year positions	(298		)	—		—
Balance at December 31,	$	1,147		$	1,445	$	1,445

SJG:
Balance at January 1,	$	1,361		$	1,361	$	559
Increase as a result of tax position taken in prior years	—			—		802
Decrease in prior year positions	(298		)	—		—
Balance at December 31,	$	1,063		$	1,361	$	1,361

South Jersey Gas Company

Schedule of components of income tax expense (benefit) and effective income tax rate reconciliation



	2018			2017			2016
SJI (includes SJG and all other consolidated subsidiaries):
Tax at Statutory Rate*	$	3,877		$	(9,915	)	$	60,624
Increase (Decrease) Resulting from:
State Income Taxes	622			2,778			6,438
ESOP Dividend	(791		)	(1,314		)	(1,300		)
Tax Reform Adjustments	(588		)	(13,521		)	—
AFUDC	(1,835		)	(3,094		)	(900		)
Amortization of Excess Deferred Taxes	(893		)	—			—
Investment and Other Tax Credits	(93		)	(666		)	(10,706		)
Other - Net	262			795			(5		)
Income Taxes:
Continuing Operations	561			(24,937		)	54,151
Discontinued Operations	(62		)	(173		)	(133		)
Total Income Tax (Benefit) Expense	$	499		$	(25,110	)	$	54,018

SJG:
Tax at Statutory Rate*	22,966			41,390			37,944
Increase (Decrease) Resulting from:
State Income Taxes	5,220			5,955			4,096
ESOP Dividend	(712		)	(1,182		)	(1,170		)
AFUDC	(1,126		)	(1,446		)	(900		)
Research and Development Credits	—			—			(613		)
Other - Net	65			983			9
Total Income Tax Expense	26,413			45,700			39,366

The provision for Income Taxes is comprised of the following (in thousands):

SJI (includes SJG and all other consolidated subsidiaries):	2018			2017			2016
Current:
Federal	$	(13,790	)	$	(34,971	)	$	—
State	3,959			(48		)	(1,638		)
Total Current	(9,831		)	(35,019		)	(1,638		)
Deferred:
Federal	13,564			5,761			44,246
State	(3,172		)	4,321			11,543
Total Deferred	10,392			10,082			55,789
Income Taxes:
Continuing Operations	561			(24,937		)	54,151
Discontinued Operations	(62		)	(173		)	(133		)
Total Income Tax (Benefit) Expense	$	499		$	(25,110	)	$	54,018

SJG:
Current:



Federal	$	(12,766	)	$	(33,012	)	$	—
State	—			—			(1,614		)
Total Current	(12,766		)	(33,012		)	(1,614		)
Deferred:
Federal	32,571			69,550			33,064
State	6,608			9,162			7,916
Total Deferred	39,179			78,712			40,980
Total Income Tax Expense	$	26,413		$	45,700		$	39,366

Schedule of deferred tax assets and liabilities



SJI (includes SJG and all other consolidated subsidiaries):	2018		2017
Deferred Tax Assets:
Net Operating Loss Carryforward	$	125,418	$	152,541
Investment and Other Tax Credits	214,698		214,605
Derivatives / Unrealized Loss	—		2,068
Conservation Incentive Program	1,701		—
Deferred State Tax	16,087		16,905
Income Taxes Recoverable Through Rates	103,434		76,426
Pension & Other Post Retirement Benefits	16,560		16,624
Deferred Revenues	5,736		5,726
Provision for Uncollectibles	5,319		3,854
Other	4,639		1,949
Total Deferred Tax Asset	$	493,592	$	490,698
Deferred Tax Liabilities:
Book versus Tax Basis of Property	$	458,772	$	486,854
Deferred Gas Costs - Net	25,812		10,254
Derivatives / Unrealized Gain	4,463		—
Environmental Remediation	20,250		31,393
Deferred Regulatory Costs	14,351		3,554
Budget Billing - Customer Accounts	4,550		4,043
Deferred Pension & Other Post Retirement Benefits	34,095		21,349
Conservation Incentive Program	—		7,721
Equity In Loss Of Affiliated Companies	1,417		1,377
Other	15,718		11,037
Total Deferred Tax Liability	$	579,428	$	577,582
Deferred Tax Liability - Net	$	85,836	$	86,884

SJG:
Deferred Tax Assets:
Net Operating Loss and Tax Credits	$	60,986	$	73,785
Deferred State Tax	16,754		14,688
Provision for Uncollectibles	3,776		3,811
Conservation Incentive Program	1,701		—
Income Taxes Recoverable Through Rates	67,372		76,426
Pension & Other Post Retirement Benefits	16,699		15,031
Deferred Revenues	5,906		6,066
Other	2,599		2,413
Total Deferred Tax Assets	$	175,793	$	192,220

Deferred Tax Liabilities:
Book Versus Tax Basis of Property	$	395,371	$	386,642
Deferred Fuel Costs - Net	23,642		10,254
Environmental Remediation	40,753		31,637
Deferred Regulatory Costs	5,061		3,554
Deferred Pension & Other Post Retirement Benefits	21,870		21,349
Budget Billing - Customer Accounts	4,550		4,043
Section 461 Prepayments	1,081		866
Conservation Incentive Program	—		7,721



Other	9,351		6,900
Total Deferred Tax Liabilities	$	501,679	$	472,966

Deferred Tax Liability - Net	$	325,886	$	280,746

Reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, is as follows (in thousands):



SJI (includes SJG and all other consolidated subsidiaries):	2018			2017		2016
Balance at January 1,	$	1,445		$	1,445	$	559
Increase as a result of tax positions taken in prior years	—			—		886
Decrease in prior year positions	(298		)	—		—
Balance at December 31,	$	1,147		$	1,445	$	1,445

SJG:
Balance at January 1,	$	1,361		$	1,361	$	559
Increase as a result of tax position taken in prior years	—			—		802
Decrease in prior year positions	(298		)	—		—
Balance at December 31,	$	1,063		$	1,361	$	1,361