FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2020

Financial Instruments, Owned, at Fair Value [Abstract]

FINANCIAL INSTRUMENTS: RESTRICTED INVESTMENTS — SJI and SJG maintain margin accounts with certain counterparties to support their risk management activities associated with hedging commodities. The balances required to be held in these margin accounts increase as the net value of the outstanding energy-related contracts with the respective counterparties decrease.

The following table provides SJI's (including SJG) and SJG's balances of Restricted Investments as well as presents a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that total to the amounts shown in the condensed consolidated statements of cash flows (in thousands):


	As of September 30, 2020
Balance Sheet Line Item	SJI		SJG
Cash and Cash Equivalents	$	10,103	$	1,528
Restricted Investments	199		199
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	10,302	$	1,727


	As of December 31, 2019
Balance Sheet Line Item	SJI		SJG
Cash and Cash Equivalents	$	6,417	$	2,678
Restricted Investments	21,964		4,073
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	28,381	$	6,751

The carrying amounts of the Restricted Investments for both SJI and SJG approximate their fair values at September 30, 2020 and December 31, 2019, which would be included in Level 1 of the fair value hierarchy (see Note 13).

ALLOWANCE FOR CREDIT LOSSES - Accounts receivable are recorded gross on the condensed consolidated balance sheets with allowance for credit losses shown as a separate line item titled Provision for Uncollectibles. A summary of changes in the allowance for credit losses is as follows (in thousands):


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
SJI (includes SJG and all other consolidated subsidiaries):
Balance at beginning of period	$	30,410	$	19,829
Provision for expected credit losses	5,416		19,994
Recoveries of accounts previously written off	126		688
Uncollectible accounts written off	(2,935)		(7,494)
Balance at end of period	$	33,017	$	33,017

SJG:
Balance at beginning of period	$	14,472	$	14,032
Provision for expected credit losses	4,783		8,255
Recoveries of accounts previously written off	4		295
Uncollectible accounts written off	(2,422)		(5,745)
Balance at end of period	$	16,837	$	16,837

As discussed in Note 8, as a result of a July 2, 2020 BPU Order, during the second quarter 2020, ETG and SJG deferred amounts of incremental costs related to the COVID-19 pandemic as regulatory assets. As of September 30, 2020, the amounts recorded within this regulatory asset related to the allowance for credit losses are approximately $9.3 million and $3.8 million for ETG and SJG, respectively, and are included in the provision for expected credit losses shown in the tables above.

NOTES RECEIVABLE-AFFILIATES - See Note 3.

LONG-TERM RECEIVABLES - SJG provides financing to customers for the purpose of attracting conversions to natural gas heating systems from competing fuel sources. The terms of these loans call for customers to make monthly payments over periods ranging from five to ten years, with no interest. The carrying amounts of such loans were $2.8 million and $3.7 million as of September 30, 2020 and December 31, 2019, respectively. The current portion of these receivables is reflected in Accounts Receivable and the non-current portion is reflected in Contract Receivables on the condensed consolidated balance sheets. The carrying amounts noted above are net of unamortized discounts resulting from imputed interest in the amount of $0.4 million and $0.5 million as of September 30, 2020 and December 31, 2019, respectively. The annualized amortization to interest is not material to SJI’s or SJG's condensed consolidated financial statements. In addition, as part of the EET/EEP programs, SJG provides funding to customers to upgrade equipment for the purpose of promoting energy efficiency. The terms of these loans range from two to ten years. The carrying amounts of such loans were $42.8 million and $33.5 million as of September 30, 2020 and December 31, 2019, respectively. On the condensed consolidated balance sheets of SJI and SJG, the current portion of EET/EEP loans receivable totaled $5.9 million and $4.6 million and is reflected in Accounts Receivable as of September 30, 2020 and December 31, 2019, respectively, and the non-current portion totaled $36.9 million and $28.9 million and is reflected in Contract Receivables as of September 30, 2020 and December 31, 2019, respectively. Given the risk of uncollectibility is low due to the oversight and preapproval required by the BPU, no allowance for credit loss has been recognized. There have been no impacts to this risk of uncollectibility as a result of COVID-19.

The carrying amounts of these receivables approximate their fair value at September 30, 2020 and December 31, 2019, which would be included in Level 2 of the fair value hierarchy (see Note 13).

CREDIT RISK - As of September 30, 2020, SJI had approximately $5.7 million, or 12.2%, of the current and noncurrent Derivatives – Energy Related Assets transacted with two counterparties. These counterparties are investment-grade rated.

FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE - The fair value of a financial instrument is the market price to sell an asset or transfer a liability at the measurement date. The carrying amounts of SJI's and SJG's financial instruments approximate their fair values at September 30, 2020 and December 31, 2019, except as noted below (in thousands):


	September 30, 2020		December 31, 2019
SJI (includes SJG and all consolidated entities)
Estimated fair values of long-term debt	$	2,836,407	$	2,734,745

Carrying amounts of long-term debt, including current maturities	$	2,674,441	$	2,537,995
Net of:
Unamortized debt issuance costs	$	29,168	$	25,547
Unamortized debt discounts	$	5,246	$	5,313

SJG
Estimated fair values of long-term debt	$	1,035,948	$	915,248

Carrying amounts of long-term debt, including current maturities	$	952,116	$	965,100
Net of:
Unamortized debt issuance costs	$	9,239	$	6,284

For Long-Term Debt (including current maturities), in estimating the fair value, SJI and SJG use the present value of remaining cash flows at the balance sheet date. SJI and SJG based the estimates on interest rates available at the end of each period for debt with similar terms and maturities (Level 2 in the fair value hierarchy, see Note 13)

OTHER FINANCIAL INSTRUMENTS - The carrying amounts of SJI's and SJG's other financial instruments approximate their fair values at September 30, 2020 and December 31, 2019.