ACQUISITIONS & BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS & BUSINESS COMBINATIONS

ACQUISITIONS & BUSINESS COMBINATIONS:

Bronx Midco

Catamaran and a third party formed Bronx Midco, of which Catamaran owns 99%. On June 9, 2021, Bronx Midco purchased a fuel cell project totaling 5 MW in Bronx, New York, which was completed and became operational during the third quarter of 2022. Marina, through its ownership in Catamaran, has a 92% ownership interest in Bronx Midco, and, as a result, Marina consolidates the entity as Marina has the power to direct the activities of the entity that most significantly impact the entity’s economic performance.

ASC Topic 805, “Business Combinations,” states that a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. As the acquisition did not meet the definition of a business combination under ASC 805, the Company accounted for the transaction as an asset acquisition. In an asset acquisition, goodwill is not recognized, but rather any excess consideration transferred over the fair value of the net assets acquired is allocated on a relative fair value basis to the identifiable net assets. The fuel cell project includes a land lease and working capital.

The total cost of the fuel cell project is $60.1 million, of which the partners have paid $50.8 million as of September 30, 2022; the remaining balance was paid in October 2022. Of this total, Marina invested $46.8 million as of September 30, 2022. To account for the third party partner's interest in Bronx Midco, Marina recorded $4.0 million of NCIs in Total Equity on the condensed consolidated balance sheets as of September 30, 2022. The major depreciable assets of the Bronx Midco fuel cell project are the fuel cell modules, which will be depreciated over their estimated useful lives of 35 years once placed in service. The lease cost associated with the land lease is being recognized on a straight-line basis over the lease term of 35 years.

All assets and financial results of Bronx Midco are included in the Renewables segment. Revenues and expenses incurred in the Company's condensed consolidated statements of (loss)/income in the three and nine months ended September 30, 2022 and 2021 are not material.

Red River

On March 22, 2022, SJI, through its wholly-owned subsidiary SJI RNG Devco, LLC, formed the Red River joint venture with two third party partners, of which SJI RNG Devco, LLC has an 80% ownership interest. Red River was formed for the purpose of building anaerobic digesters on certain dairy farms to produce RNG for injection into natural gas pipelines, and supporting SJI's commitment to decarbonization. In 2022, SJI invested $55.7 million into the Red River joint venture. There has been no other activity among this joint venture as of September 30, 2022.

Notes 1 and 20 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, 2021 describe asset acquisitions and business combinations that occurred in 2021.