REVENUE

9 Months Ended

Sep. 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 acquisitions and sales 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. Revenues recorded for the newly acquired businesses (see Note 1) during the nine months ended September 30, 2020 are not material.

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 September 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	$	40,900	$	20,974	$	77	$	—	$	—	$	—	$	491	$	—	$	62,442
Commercial & Industrial	24,625		16,998		185		197,580		4,814		6,317		—		(267)		250,252
OSS & Capacity Release	1,859		—		—		—		—		—		—		—		1,859
Other	381		191		23		—		—		—		—		—		595
	$	67,765	$	38,163	$	285	$	197,580	$	4,814	$	6,317	$	491	$	(267)	$	315,148
Product Line:
Gas	$	67,765	$	38,163	$	285	$	197,580	$	—	$	—	$	—	$	(595)	$	303,198
Electric	—		—		—		—		4,814		—		—		(324)		4,490
Solar	—		—		—		—		—		5,429		—		—		5,429
Landfills	—		—		—		—		—		888		—		—		888
Other	—		—		—		—		—		—		491		652		1,143
	$	67,765	$	38,163	$	285	$	197,580	$	4,814	$	6,317	$	491	$	(267)	$	315,148

Nine Months Ended September 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	$	244,114	$	153,496	$	2,179	$	—	$	—	$	—	$	1,485	$	—	$	401,274
Commercial & Industrial	100,689		74,752		2,544		456,427		17,462		15,459		—		(2,862)		664,471
OSS & Capacity Release	5,931		—		—		—		—		—		—		—		5,931
Other	1,393		4,162		203		—		—		—		—		—		5,758
	$	352,127	$	232,410	$	4,926	$	456,427	$	17,462	$	15,459	$	1,485	$	(2,862)	$	1,077,434
Product Line:
Gas	$	352,127	$	232,410	$	4,926	$	456,427	$	—	$	—	$	—	$	(2,252)	$	1,043,638
Electric	—		—		—		—		17,462		—		—		(1,986)		15,476
Solar	—		—		—		—		—		8,725		—		—		8,725
CHP	—		—		—		—		—		3,502		—		—		3,502
Landfills	—		—		—		—		—		3,232		—		—		3,232
Other	—		—		—		—		—		—		1,485		1,376		2,861
	$	352,127	$	232,410	$	4,926	$	456,427	$	17,462	$	15,459	$	1,485	$	(2,862)	$	1,077,434

Three Months Ended September 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	$	31,256	$	16,092	$	243	$	—	$	4,205	$	—	$	514	$	—	$	52,310
Commercial & Industrial	21,164		12,799		629		158,244		10,275		11,980		—		(3,092)		211,999
OSS & Capacity Release	2,234		—		—		—		—		—		—		—		2,234
Other	544		1,733		23		—		—		—		—		—		2,300
	$	55,198	$	30,624	$	895	$	158,244	$	14,480	$	11,980	$	514	$	(3,092)	$	268,843
Product Line:
Gas	$	55,198	$	30,624	$	895	$	158,244	$	—	$	—	$	—	$	(1,173)	$	243,788
Electric	—		—		—		—		14,480		—		—		(2,184)		12,296
Solar	—		—		—		—		—		3,429		—		—		3,429
CHP	—		—		—		—		—		7,218		—		—		7,218
Landfills	—		—		—		—		—		1,333		—		—		1,333
Other	—		—		—		—		—		—		514		265		779
	$	55,198	$	30,624	$	895	$	158,244	$	14,480	$	11,980	$	514	$	(3,092)	$	268,843

Nine Months Ended September 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	$	244,889	$	143,584	$	2,204	$	—	$	10,966	$	—	$	1,529	$	—	$	403,172
Commercial & Industrial	82,255		71,013		2,769		469,805		35,697		38,098		—		(9,517)		690,120
OSS & Capacity Release	6,248		—		—		—		—		—		—		—		6,248
Other	1,787		5,906		127		—		—		—		—		—		7,820
	$	335,179	$	220,503	$	5,100	$	469,805	$	46,663	$	38,098	$	1,529	$	(9,517)	$	1,107,360
Product Line:
Gas	$	335,179	$	220,503	$	5,100	$	469,805	$	—	$	—	$	—	$	(3,807)	$	1,026,780
Electric	—		—		—		—		46,663		—		—		(5,975)		40,688
Solar	—		—		—		—		—		12,443		—		—		12,443
CHP	—		—		—		—		—		21,371		—		—		21,371
Landfills	—		—		—		—		—		4,284		—		—		4,284
Other	—		—		—		—		—		—		1,529		265		1,794
	$	335,179	$	220,503	$	5,100	$	469,805	$	46,663	$	38,098	$	1,529	$	(9,517)	$	1,107,360

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 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 $(6.4) million and $1.2 million for the three months ended September 30, 2020 and 2019, respectively, and $26.6 million and $22.5 million for the nine months ended September 30, 2020 and 2019, respectively. Total revenues arising from alternative revenue programs at SJG were $(5.8) million and $1.2 million for the three months ended September 30, 2020 and 2019, respectively, and $19.6 million and $27.2 million for the nine months ended September 30, 2020 and 2019, respectively. The SJI and SJG amounts for revenues arising from alternative revenue programs were negative during the three months ended September 30, 2020 as a result of ETG's WNC program and SJG's CIP program 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 September 30, 2020	167,534		22,712
Increase (Decrease)	$	(86,127)	$	(62,109)
Beginning balance as of January 1, 2019	$	337,502	$	79,538
Ending balance as of September 30, 2019	179,108		18,714
Increase (Decrease)	$	(158,394)	$	(60,824)
SJG:
Beginning balance as of January 1, 2020	$	84,940	$	45,016
Ending balance as of September 30, 2020	62,447		9,985
Increase (Decrease)	$	(22,493)	$	(35,031)
Beginning balance as of January 1, 2019	$	101,572	$	43,271
Ending balance as of September 30, 2019	65,511		7,831
Increase (Decrease)	$	(36,061)	$	(35,440)

(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.

(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.