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DERIVATIVE INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2019

As of December 31, 2019, 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)	102.7	34.1
Expected future sales of natural gas (in MMdts)	116.5	24.4
Expected future purchases of electricity (in MMmWh)	0.6	—
Expected future sales of electricity (in MMmWh)	0.5	—

Basis and Index related net purchase/(sale) contracts (in MMdts)	85.0	0.6

Summary of Interest Rate Swaps

As of December 31, 2019, 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 consolidated balance sheets as of December 31, are as follows (in thousands):


SJI (includes SJG and all other consolidated subsidiaries):
Derivatives not designated as hedging instruments under GAAP	December 31, 2019						December 31, 2018
	Assets		Liabilities		Assets		Liabilities
Energy-related commodity contracts:
Derivatives - Energy Related - Current	$	52,892	$	41,965	$	54,021	$	24,134
Derivatives - Energy Related - Non-Current	7,243		8,206		7,169		7,256
Interest rate contracts:
Derivatives - Other - Current	—		1,155		—		588
Derivatives - Other - Noncurrent	—		11,505		—		7,285
Total derivatives not designated as hedging instruments under GAAP	$	60,135	$	62,831	$	61,190	$	39,263







Total Derivatives	$	60,135	$	62,831	$	61,190	$	39,263

Offsetting Arrangements

As of December 31, 2019 and 2018, information related to these offsetting arrangements were as follows (in thousands):


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)


As of December 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	$	61,190	$	—	$	61,190	$	(21,045)	(A)	$	(7,252)	$	32,893
Derivatives - Energy Related Liabilities	$	(31,390)	$	—	$	(31,390)	$	21,045	(B)	$	—	$	(10,345)
Derivatives - Other	$	(7,873)	$	—	$	(7,873)	$	—		$	—	$	(7,873)
SJG:
Derivatives - Energy Related Assets	$	5,479	$	—	$	5,479	$	(347)	(A)	$	688	$	5,820
Derivatives - Energy Related Liabilities	$	(2,189)	$	—	$	(2,189)	$	347	(B)	$	—	$	(1,842)
Derivatives - Other	$	(5,867)	$	—	$	(5,867)	$	—		$	—	$	(5,867)

(A) The balances at December 31, 2019 and 2018 were related to derivative liabilities which can be net settled against derivative assets.

(B) The balances at December 31, 2019 and 2018 were related to derivative assets which can be net settled against derivative liabilities.

Effect of Derivatives on Income

The effect of derivative instruments on the consolidated statements of income for the year ended December 31 is as follows (in thousands):


Derivatives in Cash Flow Hedging Relationships under GAAP	2019		2018		2017
SJI (includes SJG and all other consolidated subsidiaries):
Interest Rate Contracts:

Losses reclassified from AOCL into income (a)	$	(46)	$	(46)	$	(2,524)


SJG:
Interest Rate Contracts:
Losses reclassified from AOCL into income (a)	$	(46)	$	(46)	(46)

(a) Included in Interest Charges


Derivatives Not Designated as Hedging Instruments under GAAP	2019		2018		2017
SJI (no balances for SJG; includes all other consolidated subsidiaries):
(Losses) gains on energy-related commodity contracts (a)	$	(11,748)	$	34,509	$	(13,667)
(Losses) gains on interest rate contracts (b)	(2,798)		1,337		(677)

Total	$	(14,546)	$	35,846	$	(14,344)

(a) Included in Operating Revenues - Nonutility

(b) Included in Interest Charges

South Jersey Gas Company

Derivative [Line Items]

Schedule of Derivative Instruments

As of December 31, 2019, 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)	102.7	34.1
Expected future sales of natural gas (in MMdts)	116.5	24.4
Expected future purchases of electricity (in MMmWh)	0.6	—
Expected future sales of electricity (in MMmWh)	0.5	—

Basis and Index related net purchase/(sale) contracts (in MMdts)	85.0	0.6

Fair Value of Derivative Instruments


SJG:
Derivatives not designated as hedging instruments under GAAP	December 31, 2019						December 31, 2018
	Assets		Liabilities		Assets		Liabilities
Energy-related commodity contracts:
Derivatives – Energy Related – Current	$	16,904	$	14,671	$	5,464	$	2,146
Derivatives – Energy Related – Non-Current	5		95		15		43
Interest rate contracts:
Derivatives - Other - Current	—		488		—		343
Derivatives - Other - Non-Current	—		7,368		—		5,524
Total derivatives not designated as hedging instruments under GAAP	16,909		22,622		5,479		8,056

Total Derivatives	$	16,909	$	22,622	$	5,479	$	8,056

Offsetting Arrangements

As of December 31, 2019 and 2018, information related to these offsetting arrangements were as follows (in thousands):


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)


As of December 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	$	61,190	$	—	$	61,190	$	(21,045)	(A)	$	(7,252)	$	32,893
Derivatives - Energy Related Liabilities	$	(31,390)	$	—	$	(31,390)	$	21,045	(B)	$	—	$	(10,345)
Derivatives - Other	$	(7,873)	$	—	$	(7,873)	$	—		$	—	$	(7,873)
SJG:
Derivatives - Energy Related Assets	$	5,479	$	—	$	5,479	$	(347)	(A)	$	688	$	5,820
Derivatives - Energy Related Liabilities	$	(2,189)	$	—	$	(2,189)	$	347	(B)	$	—	$	(1,842)
Derivatives - Other	$	(5,867)	$	—	$	(5,867)	$	—		$	—	$	(5,867)

(A) The balances at December 31, 2019 and 2018 were related to derivative liabilities which can be net settled against derivative assets.

(B) The balances at December 31, 2019 and 2018 were related to derivative assets which can be net settled against derivative liabilities.

Effect of Derivatives on Income

The effect of derivative instruments on the consolidated statements of income for the year ended December 31 is as follows (in thousands):


Derivatives in Cash Flow Hedging Relationships under GAAP	2019		2018		2017
SJI (includes SJG and all other consolidated subsidiaries):
Interest Rate Contracts:

Losses reclassified from AOCL into income (a)	$	(46)	$	(46)	$	(2,524)


SJG:
Interest Rate Contracts:
Losses reclassified from AOCL into income (a)	$	(46)	$	(46)	(46)

(a) Included in Interest Charges


Derivatives Not Designated as Hedging Instruments under GAAP	2019		2018		2017
SJI (no balances for SJG; includes all other consolidated subsidiaries):
(Losses) gains on energy-related commodity contracts (a)	$	(11,748)	$	34,509	$	(13,667)
(Losses) gains on interest rate contracts (b)	(2,798)		1,337		(677)

Total	$	(14,546)	$	35,846	$	(14,344)

(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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-Publisher FASB
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+ Details