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AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED-PARTY TRANSACTIONS
 9 Months Ended
Sep. 30, 2021
Investment, Discontinued Operations And Related Party Transactions [Abstract]  
AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED-PARTY TRANSACTIONS AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED-PARTY TRANSACTIONS:
AFFILIATIONS — The following affiliated entities are accounted for under the equity method:

PennEast - Midstream has a 20% investment in PennEast. The following events have occurred with respect to PennEast:

•On September 10, 2019, the U.S. Court of Appeals for the Third Circuit ruled that PennEast does not have eminent domain authority over NJ state-owned lands. A Petition for Rehearing En Banc was denied by the U.S. Court of Appeals for the Third Circuit on November 5, 2019.
•On October 8, 2019, the NJDEP denied and closed PennEast’s application for several permits without prejudice, citing the Third Circuit decision. On October 11, 2019, PennEast submitted a letter to the NJDEP objecting to its position that the application is administratively incomplete. PennEast's objections were rejected by the NJDEP on November 18, 2019.
•In December 2019, PennEast asked the FERC for a two-year extension to construct the pipeline.
•On January 30, 2020, the FERC voted to approve PennEast’s petition for a declaratory order and expedited action requesting that FERC issue an order interpreting the Natural Gas Act’s eminent domain authority. On the same day, PennEast filed an amendment with the FERC to construct PennEast in two phases. Phase one consists of construction of a pipeline in Pennsylvania from the eastern Marcellus Shale region in Luzerne County that would terminate in Northampton County. Phase two includes construction of the remaining original certificated route in Pennsylvania and New Jersey. Construction is expected to begin following approval by the FERC of the phased approach and receipt of any remaining governmental and regulatory permits.
•On February 18, 2020, PennEast filed a Petition for a Writ of Certiorari with the Supreme Court of the United States ("petition") to review the September 10, 2019 Third Circuit decision.
•On February 20, 2020, the FERC granted PennEast’s request for a two-year extension to complete the construction of the pipeline.
•On April 14, 2020, The U.S. Supreme Court ordered the state of New Jersey to respond to PennEast's petition. The court directed NJ respondents, including state agencies and the NJ Conservation Foundation, to answer the petition by PennEast. The state responded on June 2, 2020.
•On June 29, 2020, the U.S. Supreme Court invited the U.S. Solicitor General to file a brief expressing the views of the United States.
•On December 9, 2020 the Solicitor General filed a brief supporting PennEast's petition for a Writ of Certiorari.
•On December 23, 2020 the NJ Attorney General filed a brief with the Supreme Court in response to the brief of the Solicitor General.
•On February 3, 2021, the Supreme Court granted PennEast's petition for a Writ of Certiorari.
•On June 29, 2021, the Supreme Court ruled that PennEast can sue New Jersey to secure key land-use rights for the project.
•On September 27, 2021, the PennEast partners announced that further development of the project is no longer supported.

Despite the favorable outcome from the Supreme Court, PennEast continued to experience regulatory and legal challenges resulting in continued delays preventing the commencement of construction and commercial operation of the project. As a result, the Company evaluated its investment in PennEast for an other-than-temporary impairment as of June 30, 2021. Our impairment assessment used a discounted cash flow income approach, including consideration of the severity and duration of any decline in fair value of our investment in the project. Our significant estimates and assumptions included development options and the likelihoods of success of such options, potential regulatory and legal outcomes, construction costs, timing of in-service dates, revenues (including forecasted volumes and rates), and discount rates. The Company estimated the fair value of its investment in PennEast using probability weighted scenarios assigned to discounted future cash flows. Based upon this analysis, in the second quarter of 2021, the Company recognized an other-than-temporary impairment charge of $87.4 million, which is recorded in Equity in (Losses) Earnings from Affiliates in the condensed consolidated statements of (loss)/income for the nine months ended September 30, 2021. After this charge, the Company’s investment in PennEast totaled $8.0 million as of September 30, 2021 as compared to $91.3 million as of December 31, 2020. The impairment did not result in a tax benefit during the nine months ended September 30, 2021, as a valuation allowance had been established for the federal deferred tax asset related to the capital loss (see Note 1).

In September 2021, the PennEast partners, following extensive evaluation and discussion, determined that further development of the project is no longer supported, and thus all further development of the project has ceased. Given that construction of the pipeline will not continue, the Company re-evaluated its investment for an additional other-than temporary impairment as of September 30, 2021. It was determined that no additional impairment was needed as the current value of the investment noted above represents the best estimate of the salvage value of the remaining assets of the project. It is possible that future developments could impact the fair value and could result in the recognition of additional impairment charges.

Summarized financial information for PennEast as derived from its unaudited condensed financial statements is below (in thousands):

Nine Months Ended
September 30,
20212020
Revenues$— $— 
Gross Profit$— $— 
(Loss) Income from Continuing Operations $(414,593)$26,375 
Net (Loss) Income$(414,593)$26,375 
Net (Loss) Income Attributable to South Jersey Industries, Inc.$(82,919)$5,275 

Energenic - Marina and a joint venture partner formed Energenic, in which Marina has a 50% equity interest. Energenic developed and operated on-site, self-contained, energy-related projects. Energenic currently does not have any projects that are operational.

Millennium - SJI and a joint venture partner formed Millennium, in which SJI has a 50% equity interest. Millennium reads utility customers’ meters on a monthly basis for a fee.
Potato Creek - SJEX and a joint venture partner formed Potato Creek, in which SJEX has a 30% equity interest. Potato Creek owns and manages the oil, gas and mineral rights of certain real estate in Pennsylvania.

EnergyMark - SJE has a 33% investment in EnergyMark, an entity that acquires and markets natural gas to retail end users.

SJRG had net sales to EnergyMark of $5.0 million and $1.8 million for the three months ended September 30, 2021 and 2020, respectively, and $15.9 million and $10.4 million for the nine months ended September 30, 2021 and 2020, respectively.

REV - SJI Renewable Energy Ventures, LLC has a 35% equity interest in REV, an LNG distributor and developer of LNG and RNG assets and projects.

AFFILIATE TRANSACTIONS - SJI made net investments in and net advances to unconsolidated affiliates of $39.8 million for the nine months ended September 30, 2021, and received net repayments from unconsolidated affiliates of $1.2 million for the nine months ended September 30, 2020.

As of September 30, 2021 and December 31, 2020, the outstanding balance of Notes Receivable – Affiliate was $59.3 million and $33.9 million, respectively. These Notes Receivable-Affiliates balances are comprised of:

•As of September 30, 2021 and December 31, 2020, $11.4 million and $12.1 million, respectively, of notes are related to Energenic; such notes are secured by Energenic's cogeneration assets for energy service projects, accrue interest at 7.5% and are to be repaid through 2025. Current losses at Energenic are offset against the Notes Receivable – Affiliate balance as our investment in the Energenic affiliate has been reduced to zero as a result of previous losses.

•As of September 30, 2021 and December 31, 2020, $44.0 million and $19.3 million, respectively, of the notes related to REV, which accrue interest at variable rates.

•As of September 30, 2021 and December 31, 2020, $3.9 million and $2.5 million, respectively, of unsecured notes which accrue interest at variable rates.

SJI holds significant variable interests in these entities but is not the primary beneficiary. Consequently, these entities are accounted for under the equity method because SJI does not have both (a) the power to direct the activities of the entity that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity that could potentially be significant to the entity or the right to receive benefits from the entity that could potentially be significant to the entity. As of September 30, 2021 and December 31, 2020, SJI had a net asset of approximately $36.2 million and $106.2 million, respectively, included in Investment in Affiliates on the condensed consolidated balance sheets related to equity method investees; the decrease from prior year is due to the impairment charge related to PennEast noted above. SJI’s maximum exposure to loss from these entities as of September 30, 2021 and December 31, 2020 is limited to its combined investments in these entities and the Notes Receivable-Affiliate in the aggregate amount of $95.5 million and $140.1 million, respectively.

DISCONTINUED OPERATIONS - There have been no significant changes to the nature or balances of SJI's discontinued operations since December 31, 2020, which are defined and described in Note 3 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, 2020.

SJG RELATED-PARTY TRANSACTIONS - There have been no significant changes in the nature of SJG’s related-party transactions since December 31, 2020, other than an intercompany lease agreement between SJG and SJI for the Company's corporate headquarters in Folsom, NJ (see Note 1). See Note 3 to the Financial Statements in Item 8 of SJI's and SJG’s Annual Report on Form 10-K for the year ended December 31, 2020 for a description of related parties and associated transactions.
A summary of related-party transactions involving SJG, excluding pass-through items, included in SJG's Operating Revenues were as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Operating Revenues/Affiliates:  
SJRG$907 $595 $7,662 $2,192 
Marina— — — 60 
Other21 20 62 59 
Total Operating Revenue/Affiliates$928 $615 $7,724 $2,311 


Related-party transactions involving SJG, excluding pass-through items, included in SJG's Cost of Sales and Operating Expenses were as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Costs of Sales/Affiliates (Excluding depreciation and amortization)  
SJRG$954 $1,808 $4,924 $3,404 
Operations Expense/Affiliates:
SJI (parent company only)$5,832 $5,909 $17,082 $17,463 
SJIU1,045 743 2,957 2,616 
Millennium857 814 2,598 2,461 
Other18 453 163 1,335 
Total Operations Expense/Affiliates$7,752 $7,919 $22,800 $23,875