REVENUE

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE:

At contract inception, SJI and SJG assess the goods and services promised in all of its contracts with customers, and identify a performance obligation for each promise to transfer to a customer a distinct good or service.

Except as described below, along with the sale of MTF as noted in Note 1, there have been no significant changes to the nature of the Company's revenues since December 31, 2019, which are described in Note 19 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2019.

SJI and SJG disaggregate revenue from contracts with customers into customer type and product line. SJI and SJG have determined that disaggregating revenue into these categories achieves the disclosure objective in ASC 606 to depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors. Further, disaggregating revenue into these categories is consistent with information regularly reviewed by the CODM in evaluating the financial performance of SJI's operating segments. SJG only operates in the SJG Utility Operations segment. See Note 6 for further information regarding SJI's operating segments.

Disaggregated revenues from contracts with customers, by both customer type and product line, are disclosed below, by operating segment (in thousands):

Three Months Ended June 30, 2020
	SJG Utility Operations		ETG Utility Operations		ELK Utility Operations		Wholesale Energy Operations		Retail Electric Operations		On-Site Energy Production		Appliance Service Operations		Corporate Services and Intersegment		Total
Customer Type:
Residential	$	58,964	$	40,113	$	566	$	—	$	—	$	—	$	505	$	—	$	100,148
Commercial & Industrial	24,057		20,606		700		119,852		5,654		2,154		—		(592)		172,431
OSS & Capacity Release	1,463		—		—		—		—		—		—		—		1,463
Other	453		122		97		—		—		—		—		—		672
	$	84,937	$	60,841	$	1,363	$	119,852	$	5,654	$	2,154	$	505	$	(592)	$	274,714
Product Line:
Gas	$	84,937	$	60,841	$	1,363	$	119,852	$	—	$	—	$	—	$	(568)	$	266,425
Electric	—		—		—		—		5,654		—		—		(379)		5,275
Solar	—		—		—		—		—		1,390		—		—		1,390
Landfills	—		—		—		—		—		764		—		—		764
Other	—		—		—		—		—		—		505		355		860
	$	84,937	$	60,841	$	1,363	$	119,852	$	5,654	$	2,154	$	505	$	(592)	$	274,714

Six Months Ended June 30, 2020
	SJG Utility Operations		ETG Utility Operations		ELK Utility Operations		Wholesale Energy Operations		Retail Electric Operations		On-Site Energy Production		Appliance Service Operations		Corporate Services and Intersegment		Total
Customer Type:
Residential	$	201,772	$	132,522	$	2,102	$	—	$	—	$	—	$	994	$	—	$	337,390
Commercial & Industrial	65,892		57,754		2,359		258,847		12,648		9,142		—		(2,596)		404,046
OSS & Capacity Release	4,072		—		—		—		—		—		—		—		4,072
Other	1,010		3,971		180		—		—		—		—		—		5,161
	$	272,746	$	194,247	$	4,641	$	258,847	$	12,648	$	9,142	$	994	$	(2,596)	$	750,669
Product Line:
Gas	$	272,746	$	194,247	$	4,641	$	258,847	$	—	$	—	$	—	$	(1,657)	$	728,824
Electric	—		—		—		—		12,648		—		—		(1,662)		10,986
Solar	—		—		—		—		—		3,296		—		—		3,296
CHP	—		—		—		—		—		3,502		—		—		3,502
Landfills	—		—		—		—		—		2,344		—		—		2,344
Other	—		—		—		—		—		—		994		723		1,717
	$	272,746	$	194,247	$	4,641	$	258,847	$	12,648	$	9,142	$	994	$	(2,596)	$	750,669

Three Months Ended June 30, 2019
	SJG Utility Operations		ETG Utility Operations		ELK Utility Operations		Wholesale Energy Operations		Retail Electric Operations		On-Site Energy Production		Appliance Service Operations		Corporate Services and Intersegment		Total
Customer Type:
Residential	$	28,679	$	27,503	$	207	$	—	$	2,953	$	—	$	484	$	—	$	59,826
Commercial & Industrial	15,503		16,065		482		111,794		12,419		14,788		—		(3,418)		167,633
OSS & Capacity Release	2,244		—		—		—		—		—		—		—		2,244
Other	571		1,527		39		—		—		—		—		—		2,137
	$	46,997	$	45,095	$	728	$	111,794	$	15,372	$	14,788	$	484	$	(3,418)	$	231,840
Product Line:
Gas	$	46,997	$	45,095	$	728	$	111,794	$	—	$	—	$	—	$	(1,234)	$	203,380
Electric	—		—		—		—		15,372		—		—		(2,184)		13,188
Solar	—		—		—		—		—		6,438		—		—		6,438
CHP	—		—		—		—		—		6,794		—		—		6,794
Landfills	—		—		—		—		—		1,556		—		—		1,556
Other	—		—		—		—		—		—		484		—		484
	$	46,997	$	45,095	$	728	$	111,794	$	15,372	$	14,788	$	484	$	(3,418)	$	231,840

Six Months Ended June 30, 2019
	SJG Utility Operations		ETG Utility Operations		ELK Utility Operations		Wholesale Energy Operations		Retail Electric Operations		On-Site Energy Production		Appliance Service Operations		Corporate Services and Intersegment		Total
Customer Type:
Residential	$	213,633	$	127,492	$	1,961	—		$	6,761	—		$	1,015	—		$	350,862
Commercial & Industrial	61,091		58,213		2,140		311,561		25,422		26,118		—		(6,425)		478,120
OSS & Capacity Release	4,014		—		—		—		—		—		—		—		4,014
Other	1,243		4,174		104		—		—		—		—		—		5,521
	$	279,981	$	189,879	$	4,205	$	311,561	$	32,183	$	26,118	$	1,015	$	(6,425)	$	838,517
Product Line:
Gas	$	279,981	$	189,879	$	4,205	$	311,561	—		—		—		$	(2,634)	$	782,992
Electric	—		—		—		—		32,183		—		—		(3,791)		28,392
Solar	—		—		—		—		—		9,014		—		—		9,014
CHP	—		—		—		—		—		14,153		—		—		14,153
Landfills	—		—		—		—		—		2,951		—		—		2,951
Other	—		—		—		—		—		—		1,015		—		1,015
	$	279,981	$	189,879	$	4,205	$	311,561	$	32,183	$	26,118	$	1,015	$	(6,425)	$	838,517

The SJG balance is a part of the SJG utility operating segment, and is before intercompany eliminations with other SJI entities. Revenues on the condensed consolidated statements of income (loss) that are not with contracts with customers consist of (a) revenues from alternative revenue programs at the SJG, ETG and ELK utility operating segments (including CIP, AIRP, SHARP, and WNC), (b) both utility and nonutility realized revenue from derivative contracts at the SJG and ETG utility, wholesale energy and retail electric operating segments, and (c) unrealized revenues from derivative contracts of the wholesale energy and retail electric operating segments (see Note 12).

The Company’s rate mechanisms that qualify as alternative revenue programs are described in Note 10 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2019. These mechanisms are subject to compliance filings on at least an annual basis, and the tariff rate adjustments are designed to occur over this compliance period. These rate mechanisms satisfy the criteria in ASC 980-605-25-4, as (a) each mechanism is established by order of the BPU for SJG and ETG, and the MPSC for ELK; (b) the amounts recoverable under each program are determined by tracking and are probable of recovery; and (c) the adjustments to tariff rates are designed to recover from or refund to customers within a 24 month period. For each individual rate reconciling mechanism, operating revenues are recognized when allowable costs are greater than the amounts billed in the current period and are reduced when allowable costs are less than amounts billed in the current period. Total revenues arising from alternative revenue programs at SJI were $(3.1) million and $8.8 million for the three months ended June 30, 2020 and 2019, respectively, and $44.6 million and $21.3 million for the six months ended June 30, 2020 and 2019, respectively. Total revenues arising from alternative revenue programs at SJG were $(0.2) million and $8.8 million for the three months ended June 30, 2020 and 2019, respectively, and $37.0 million and $26.0 million for the six months ended June 30, 2020 and 2019, respectively. The SJI and SJG amounts for revenues arising from alternative revenue programs were negative during the three months ended June 30, 2020 as a result of ETG's WNC program and SJG's CIP, AIRP, and SHARP programs being in a net over-collected position during the period, which caused a net reduction in operating revenues as allowable costs were less than amounts billed.

The following table provides information about SJI's and SJG's receivables (excluding SJG receivables from related parties) and unbilled revenue from contracts with customers (in thousands):

	Accounts Receivable (A)		Unbilled Revenue (B)
SJI (including SJG and all other consolidated subsidiaries):
Beginning balance as of January 1, 2020	$	253,661	$	84,821
Ending balance as of June 30, 2020	231,434		16,148
Increase (Decrease)	$	(22,227)	$	(68,673)
Beginning balance as of January 1, 2019	$	337,502	$	79,538
Ending balance as of June 30, 2019	223,314		21,253
Increase (Decrease)	$	(114,188)	$	(58,285)
SJG:
Beginning balance as of January 1, 2020	$	84,940	$	45,016
Ending balance as of June 30, 2020	91,842		3,915
Increase (Decrease)	$	6,902	$	(41,101)
Beginning balance as of January 1, 2019	$	101,572	$	43,271
Ending balance as of June 30, 2019	90,190		8,415
Increase (Decrease)	$	(11,382)	$	(34,856)

(A) Included in Accounts Receivable in the condensed consolidated balance sheets. A receivable is SJI's and SJG's right to consideration that is unconditional, as only the passage of time is required before payment is expected from the customer. All of SJI's and SJG's Accounts Receivable arise from contracts with customers.

(B) Included in Unbilled Revenues in the condensed consolidated balance sheets. All unbilled revenue for SJI and SJG arises from contracts with customers. Unbilled revenue relates to SJI's and SJG's right to receive payment for commodity delivered but not yet billed. This represents contract assets that arise from contracts with customers, which is defined in ASC 606 as the right to payment in exchange for goods already transferred to a customer, excluding any amounts presented as a receivable. The unbilled revenue is transferred to accounts receivable when billing occurs and the rights to collection become unconditional.