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DERIVATIVE INSTRUMENTS
 12 Months Ended
Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS DERIVATIVE INSTRUMENTS:
Certain SJI subsidiaries, including SJG, are involved in buying, selling, transporting and storing natural gas, and buying and selling retail electricity for their own accounts as well as managing these activities for third parties. These subsidiaries are subject to market risk on expected future purchases and sales due to commodity price fluctuations. SJI and SJG use a variety of derivative instruments to limit this exposure to market risk in accordance with strict corporate guidelines.  These derivative instruments include forward contracts, swap agreements, options contracts and futures contracts.

As of December 31, 2020, SJI and SJG had outstanding derivative contracts as follows:
SJI ConsolidatedSJG
Derivative contracts intended to limit exposure to market risk to:
    Expected future purchases of natural gas (in MMdts)86.5 12.3 
    Expected future sales of natural gas (in MMdts)96.2 1.6 
    Expected future purchases of electricity (in MMmWh)0.1 — 
    Expected future sales of electricity (in MMmWh)0.1 — 
Basis and Index related net purchase/(sale) contracts (in MMdts)49.9 0.7 

These contracts, which have not been designated as hedging instruments under GAAP, are measured at fair value and recorded in Derivatives - Energy Related Assets or Derivatives - Energy Related Liabilities on the consolidated balance sheets of SJI and SJG. For SJE and SJRG contracts, the net unrealized pre-tax gains (losses) for these energy-related commodity contracts are included with realized gains (losses) in Operating Revenues – Nonutility on the consolidated statements of income for SJI. These unrealized pre-tax gains (losses) were $0.4 million, $(11.7) million and $34.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. For ETG's and SJG's contracts, the costs or benefits are recoverable through the BGSS clause, subject to BPU approval. As a result, the net unrealized pre-tax gains (losses) for SJG and ETG energy-related commodity contracts are included with realized gains and losses in Regulatory Assets or Regulatory Liabilities on the consolidated balance sheets of SJI (ETG and SJG) and SJG. As of December 31, 2020 and 2019, SJI had $2.4 million and $(4.0) million, respectively, and SJG had $1.1 million and $2.1 million, respectively, of unrealized gains (losses) included in its BGSS regulatory accounts related to energy-related commodity contracts.

As part of its gas purchasing strategy, SJG uses financial contracts through SJRG to limit exposure to forward price risk. The costs or benefits of these short-term contracts are recoverable through SJG's BGSS clause, subject to BPU approval.

The retail electric operations of SJE use forward physical and financial contracts to mitigate commodity price risk on fixed price electric contracts.

Management takes an active role in the risk management process and has developed policies and procedures that require specific administrative and business functions to assist in identifying, assessing and controlling various risks. Management reviews any open positions in accordance with strict policies to limit exposure to market risk.

SJG has interest rate derivatives to mitigate exposure to increasing interest rates and the impact of those rates on cash flows of variable-rate debt. These interest rate derivatives are measured at fair value and recorded in Derivatives - Other on the consolidated balance sheets. For SJG interest rate derivatives, the fair value represents the amount SJG would have to pay the counterparty to terminate these contracts as of those dates.
As of December 31, 2020, SJG's active interest rate swaps were as follows:

Notional AmountFixed Interest RateStart DateMaturity
$12,500,000 3.530%12/1/20062/1/2036
$12,500,000 3.430%12/1/20062/1/2036

For the unrealized gains and losses on interest rate derivatives at SJG, management believes that, subject to BPU approval, the market value upon termination can be recovered in rates and, therefore, these unrealized gains (losses) have been included in Other Regulatory Assets in the consolidated balance sheets.

SJI had interest rate derivatives that were terminated in December 2020 at a price equal to the fair value of the instruments of $8.2 million, which was recorded to Interest Charges on the consolidated statements of income for the year ended December 31, 2020.

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 GAAPDecember 31, 2020December 31, 2019
 AssetsLiabilitiesAssetsLiabilities
Energy-related commodity contracts:    
Derivatives - Energy Related - Current$41,439 $27,006 $52,892 $41,965 
Derivatives - Energy Related - Noncurrent6,935 4,947 7,243 8,206 
Interest rate contracts:    
Derivatives - Other - Current— 659 — 1,155 
Derivatives - Other - Noncurrent— 9,279 — 11,505 
Total derivatives not designated as hedging instruments under GAAP$48,374 $41,891 $60,135 $62,831 
Total Derivatives$48,374 $41,891 $60,135 $62,831 

SJG:
Derivatives not designated as hedging instruments under GAAPDecember 31, 2020December 31, 2019
 AssetsLiabilitiesAssetsLiabilities
Energy-related commodity contracts:    
Derivatives – Energy Related – Current$4,053 $2,868 $16,904 $14,671 
Derivatives – Energy Related – Noncurrent87 190 5 95 
Interest rate contracts:    
Derivatives - Other - Current— 659 — 488 
Derivatives - Other - Noncurrent— 9,279 — 7,368 
Total derivatives not designated as hedging instruments under GAAP4,140 12,996 16,909 22,622 
Total Derivatives$4,140 $12,996 $16,909 $22,622 
SJI and SJG enter into derivative contracts with counterparties, some of which are subject to master netting arrangements, which allow net settlements under certain conditions. These derivatives are presented at gross fair values on the consolidated balance sheets.
As of December 31, 2020 and 2019, information related to these offsetting arrangements were as follows (in thousands):
As of December 31, 2020
DescriptionGross amounts of recognized assets/liabilitiesGross amount offset in the balance sheetNet amounts of assets/liabilities in balance sheetGross amounts not offset in the balance sheetNet amount
Financial InstrumentsCash Collateral Posted
SJI (includes SJG and all other consolidated subsidiaries):
Derivatives - Energy Related Assets$48,374 $— $48,374 $(24,027)(A)$— $24,347 
Derivatives - Energy Related Liabilities$(31,953)$— $(31,953)$24,027 (B)$2,176 $(5,750)
Derivatives - Other$(9,938)$— $(9,938)$— $— $(9,938)
SJG:
Derivatives - Energy Related Assets$4,140 $— $4,140 $(716)(A)$— $3,424 
Derivatives - Energy Related Liabilities$(3,058)$— $(3,058)$716 (B)$2,176 $(166)
Derivatives - Other$(9,938)$— $(9,938)$— $— $(9,938)

As of December 31, 2019
DescriptionGross amounts of recognized assets/liabilitiesGross amount offset in the balance sheetNet amounts of assets/liabilities in balance sheetGross amounts not offset in the balance sheetNet amount
Financial InstrumentsCash 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)

(A) The balances at December 31, 2020 and 2019 were related to derivative liabilities which can be net settled against derivative assets.

(B) The balances at December 31, 2020 and 2019 were related to derivative assets which can be net settled against derivative liabilities.
The effect of derivative instruments on the consolidated statements of income for the year ended December 31 is as follows (in thousands):

Derivatives Previously in Cash Flow Hedging Relationships under GAAP (a)202020192018
SJI (includes SJG and all other consolidated subsidiaries):
Interest Rate Contracts:
Losses reclassified from AOCL into income (b)$(46)$(46)$(46)
SJG:
Interest Rate Contracts:
Losses reclassified from AOCL into income (b)$(46)$(46)(46)

(a) See "Derivative Instruments" in Note 1
(b) Included in Interest Charges

Derivatives Not Designated as Hedging Instruments under GAAP202020192018
SJI (no balances for SJG; includes all other consolidated subsidiaries):
Gains (Losses) on energy-related commodity contracts (a)$385 $(11,748)$34,509 
Gains (Losses) on interest rate contracts (b)4,760 (2,798)1,337 
Total$5,145 $(14,546)$35,846 

(a)  Included in Operating Revenues - Nonutility
(b)  Included in Interest Charges

Certain of SJI's derivative instruments contain provisions that require immediate payment or demand immediate and ongoing collateralization on derivative instruments in net liability positions in the event of a material adverse change in the credit standing of SJI. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position on December 31, 2020, was approximately $0.3 million.  If the credit-risk-related contingent features underlying these agreements were triggered on December 31, 2020, SJI would have been required to settle the instruments immediately or post collateral to its counterparties of approximately $0.1 million after offsetting asset positions with the same counterparties under master netting arrangements.