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AFFILIATIONS, DISCONTINUED OPERATIONS AND RELATED-PARTY TRANSACTIONS
 12 Months Ended
Dec. 31, 2021
Business Combinations [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 consisted of construction of a pipeline in Pennsylvania from the eastern Marcellus Shale region in Luzerne County that would terminate in Northampton County. Phase two included construction of the remaining original certificated route in Pennsylvania and New Jersey. Construction was 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, 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.
•On December 16, 2021, the FERC, recognizing the cancellation of the project, vacated its prior approval of the project.

Despite the favorable outcomes 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 consolidated statements of income for the year ended December 31, 2021 and reduced its investment in PennEast. As of December 31, 2021, the Company’s investment in PennEast totaled $8.2 million as compared to $91.3 million as of December 31, 2020. The impairment did not result in a tax benefit during the year ended December 31, 2021, as a valuation allowance had been established for the federal deferred tax asset related to the capital loss (see Note 4).

In September 2021, the PennEast partners, following extensive evaluation and discussion, determined that further development of the project was 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. It was determined that no additional impairment was needed as the current value of the investment represented 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 the years ended December 31 for PennEast, as derived from their statements of income for 2021, 2020 and 2019, is below (in thousands):


202120202019
Revenues$— $— $— 
Gross Profit$— $— $— 
(Loss) Income from Continuing Operations $(416,073)$34,663 $32,291 
Net (Loss) Income$(416,073)$34,663 $32,291 
Net (Loss) Income Attributable to South Jersey Industries, Inc.$(83,215)$6,933 $6,458 

Summarized financial information as of December 31 for PennEast as derived from their balance sheets for 2021 and 2020, is below (in thousands):

20212020
Current Assets$1,216 $3,079 
Noncurrent Assets$45,000 $456,205 
Current Liabilities$479 $2,789 
Noncurrent Liabilities$500 $— 

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; however, it owns cogeneration, long-lived assets for which Energenic has been pursuing project development opportunities. Marina has notes and related interest receivable related to Energenic; such notes are secured by the cogeneration assets.

Energenic reviewed these cogeneration assets for impairment as of December 31, 2021, as it was determined that future development of a project to utilize these assets is no longer probable, and thus the net book value of these assets may exceed their fair market value. The impairment assessment was performed in accordance with ASC 360, Property, Plant and Equipment, and included consideration of development opportunities for the assets as well as receiving a third-party price quote for similar assets. As a result of the impairment test performed, Energenic recorded an impairment charge of $12.7 million, of which Marina recorded its 50% equity interest, or $6.4 million, which was recorded in Equity in (Losses) Earnings of Affiliated Companies on the consolidated statements of income. This loss reduced the Notes Receivable – Affiliate balance on the consolidated balance sheets as our investment in the Energenic affiliate had been reduced to zero as a result of previous losses.

As a result of the impairment charge taken by Energenic, Marina evaluated the realizability of its remaining recorded interests in Energenic, which include notes receivable and accrued interest, and determined that these interests were no longer realizable above the amount of Marina's share in the fair market value of Energenic's cogeneration assets. As a result, we recognized an
other-than-temporary impairment charge of $9.1 million. Of this amount, $6.4 million was recorded in Other Income and Expense related to the write off of interest accrued on the notes receivable (which decreased Accounts Receivable on the consolidated balance sheets), and $2.7 million was recorded in Equity in (Losses) Earnings of Affiliated Companies (which decreased Notes Receivable – Affiliate on the consolidated balance sheets).

Summarized financial information for the years ended December 31 for Energenic, as derived from their statements of income for 2021, 2020 and 2019, is below (in thousands):


202120202019
Revenues$143 $144 $144 
Gross Profit$61 $64 $65 
Losses from Continuing Operations $(16,628)$(3,797)$(3,795)
Net Losses$(16,628)$(3,797)$(3,795)
Net Losses Attributable to South Jersey Industries, Inc.$(8,314)$(1,898)$(1,898)

Summarized financial information as of December 31 for Energenic as derived from their balance sheets for 2021 and 2020, is below (in thousands):

20212020
Current Assets$11,181 $10,284 
Noncurrent Assets$8,764 $24,296 
Current Liabilities$17,456 $15,319 
Noncurrent Liabilities$29,378 $29,522 

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 - SJI 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.
For the years ended December 31, 2021, 2020 and 2019, SJRG had net sales to EnergyMark of $25.6 million, $13.7 million and $27.8 million, 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.

Summarized financial information for the years ended December 31 for all affiliates, as derived from their statements of income for 2021, 2020 and 2019, is below (in thousands):


202120202019
Revenues$136,819 $77,266 $94,570 
Gross Profit$30,919 $16,278 $14,930 
(Loss) Income from Continuing Operations $(424,006)$36,906 $32,825 
Net (Loss) Income$(424,006)$36,906 $32,825 
Net (Loss) Income Attributable to South Jersey Industries, Inc.$(90,961)$8,294 $7,314 

Summarized financial information as of December 31 for all affiliates as derived from their balance sheets for 2021 and 2020, is below (in thousands):
20212020
Current Assets$67,160 $38,286 
Noncurrent Assets$113,685 $505,846 
Current Liabilities$40,214 $30,586 
Noncurrent Liabilities$93,285 $49,737 


AFFILIATE TRANSACTIONS - The Company made net investments in and net advances to certain of the above unconsolidated affiliates of $60.6 million, $28.9 million and $8.3 million in 2021, 2020 and 2019, respectively.

As of December 31, 2021 and 2020, the outstanding balance of Notes Receivable – Affiliates was $69.9 million and $33.9 million, respectively. These Notes Receivable-Affiliates are comprised of:

•As of December 31, 2021 and 2020, $62.6 million and $19.3 million, respectively, of the notes are related to REV which accrue interest at variable rates.

•As of December 31, 2021 and 2020, $2.0 million and $12.1 million, respectively, of notes are related to Energenic, after the impairments discussed above. Such notes are secured by Energenic's cogeneration assets for energy service projects, accrue interest at 7.5%, which is no longer being recognized by Marina as a result of the impairments discussed above, and are to be repaid through 2025, although the Company does not expect to realize amounts above its share of the remaining fair value of Energenic's cogeneration assets discussed above. Current losses at Energenic have been offset against the Notes Receivable – Affiliate balance in recent years as our investment in the Energenic affiliate had been reduced to zero as a result of previous losses.

•As of December 31, 2021 and 2020, $5.3 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 December 31, 2021 and 2020, SJI had a net asset of approximately $38.5 million and $106.2 million, respectively, included in Investment in Affiliates on the 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 December 31, 2021 and 2020 is limited to its combined investments in these entities, which includes related Notes Receivable-Affiliates, in the aggregate amount of $108.5 million and $140.1 million, respectively.

DISCONTINUED OPERATIONS - Discontinued Operations consist of the environmental remediation activities related to the properties of SJF and the product liability litigation and environmental remediation activities related to the prior business of Morie. SJF is a subsidiary of EMI, an SJI subsidiary, which previously operated a fuel oil business. Morie is the former sand mining and processing subsidiary of EMI. EMI sold the common stock of Morie in 1996.

SJI conducts tests annually to estimate the environmental remediation costs for these properties (see Note 15).
Summarized operating results of the discontinued operations for the years ended December 31, were (in thousands, except per share amounts):
 202120202019
Income (Loss) before Income Taxes:   
Sand Mining$854 $(49)$(79)
Fuel Oil(789)(272)(263)
Income Tax (Expense) Benefits(14)66 70 
Income (Loss) from Discontinued Operations — Net$51 $(255)$(272)
Earnings Per Common Share from   
Discontinued Operations — Net:   
Basic and Diluted$— $— $— 

GUARANTEES - SJI has issued guarantees to third parties on behalf of its consolidated subsidiaries. See Note 15.

SJG RELATED-PARTY TRANSACTIONS - SJG conducts business with its parent, SJI, and several other related parties. A description of each of these affiliates and related transactions is as follows:

SJIEE - a wholly-owned subsidiary of SJI that serves as a holding company for all of SJI’s nonutility operating businesses, including the following subsidiaries:

•SJRG - SJG sells natural gas for resale and capacity release to SJRG and also meets some of SJG's gas purchasing requirements by purchasing natural gas from SJRG.

•Marina - Prior to the sale of MTF and ACB in February 2020 (see Note 1), SJG provided natural gas transportation services to Marina under BPU-approved tariffs.

Millennium - (a joint venture discussed above) - Reads SJG's utility customers’ meters on a monthly basis for a fee.

SJIU - a holding company that owns SJG. SJIU incurs corporate-level expenses such as employee salaries and benefits, legal fees, and consulting fees and charges a portion of these expenses to SJG.

In addition to the above, SJG provides various administrative and professional services to SJI and each of the affiliates discussed above. Likewise, SJI provides substantial administrative services on SJG's behalf. Amounts due to and due from these related parties for activities that are passed through to customers through billing rates at the same amounts that SJG earns from or is charged by the affiliates are not considered material to SJG's financial statements as a whole.

On July 1, 2021, SJG (the lessor) and SJI (the lessee) entered into an intercompany lease agreement for the Company's corporate headquarters in Folsom, NJ (see Note 9).

A summary of related party transactions involving SJG, excluding pass-through items, included in SJG's Operating Revenues were as follows (in thousands):
202120202019
Operating Revenues/Affiliates: 
SJRG$20,067 $7,483 $5,039 
Marina— 60 394 
Other83 80 80 
Total Operating Revenues/Affiliates$20,150 $7,623 $5,513 

Related-party transactions involving SJG, excluding pass-through items, included in SJG's Cost of Sales and Operating Expenses were as follows (in thousands):
202120202019
Costs of Sales/Affiliates (Excluding depreciation and amortization)
SJRG$5,013 $4,969 $9,612 
Operations Expense/Affiliates:
SJI (parent company only)$25,919 $26,173 $22,462 
SJIU4,281 3,825 1,833 
Millennium3,458 3,277 3,146 
Other180 1,516 1,680 
Total Operations Expense/Affiliates$33,838 $34,791 $29,121