PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables)

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Net periodic benefit cost related to the employee and officer pension and other postretirement benefit plans consisted of the following components (in thousands):



	Pension Benefits									Other Postretirement Benefits
	2016			2015			2014			2016			2015			2014
Service Cost	$	4,144		$	4,430		$	3,697		$	576		$	726		$	585
Interest Cost	10,292			9,357			8,952			2,120			2,406			2,297
Expected Return on Plan Assets	(11,029		)	(11,914		)	(10,818		)	(2,823		)	(2,708		)	(2,467		)
Amortization:
Prior Service Cost (Credits)	203			203			177			(257		)	499			133
Actuarial Loss	7,975			8,969			4,864			945			1,107			770
Net Periodic Benefit Cost	11,585			11,045			6,872			561			2,030			1,318
Capitalized Benefit Costs	(4,645		)	(4,805		)	(3,047		)	(277		)	(1,043		)	(722		)
Affiliate SERP Allocations	(1,960		)	(1,688		)	(1,313		)	—			—			—
Deferred Benefit Costs	(644		)	(1,007		)	—			—			(256		)	—
Total Net Periodic Benefit Expense	$	4,336		$	3,545		$	2,512		$	284		$	731		$	596

Activity within Regulatory Asset and Accumulated Other Comprehensive Loss

Details of the activity within the Regulatory Asset and Accumulated Other Comprehensive Loss associated with Pension and Other Postretirement Benefits are as follows (in thousands):



	Regulatory Assets						Accumulated Other Comprehensive Loss (pre-tax)
	Pension Benefits			Other Postretirement Benefits			Pension Benefits			Other Postretirement Benefits
Balance at January 1, 2015	$	71,177		$	27,863		$	23,170		$	—
Amounts Arising during the Period:
Net Actuarial (Gains)/Losses	(463		)	(3,155		)	184			—
Prior Service Cost	—			(499		)	—			—
Amounts Amortized to Net Periodic Costs:
Net Actuarial Loss	(6,079		)	(1,107		)	(2,891		)	—
Prior Service Cost	(203		)	(7,755		)	—			—
Balance at December 31, 2015	64,432			15,347			20,463			—
Amounts Arising during the Period:
Net Actuarial Loss	9,706			2,584			6,129			—
Prior Service Credit	—			257			—			—
Amounts Amortized to Net Periodic Costs:
Net Actuarial Loss	(5,485		)	(945		)	(2,490		)	—
Prior Service Cost	(203		)	—			—			—
Balance at December 31, 2016	$	68,450		$	17,243		$	24,102		$	—

Estimated costs that will be amortized from Regulatory Assets

The estimated costs that will be amortized from Regulatory Assets into net periodic benefit costs in 2017 are as follows (in thousands):



	Pension Benefits		Other Postretirement Benefits
Prior Service Cost/(Credit)	$	127	$	(257	)
Net Actuarial Loss	$	6,202	$	1,040

Estimated costs that will be amortized from Accumulated Other Comprehensive Loss

The estimated costs that will be amortized from Accumulated Other Comprehensive Loss into net periodic benefit costs in 2017 are as follows (in thousands):



	Pension Benefits		Other Postretirement Benefits
Net Actuarial Loss	$	2,378	$	—

Reconciliation of the plants' benefit obligations, fair value, funded status and amounts recognized

A reconciliation of the plans’ benefit obligations, fair value of plan assets, funded status and amounts recognized in our balance sheets follows (in thousands):



							Other
	Pension Benefits						Postretirement Benefits
	2016			2015			2016			2015
Change in Benefit Obligations:
Benefit Obligation at Beginning of Year	$	213,660		$	221,605		$	46,518		$	60,670
Service Cost	4,144			4,430			576			726
Interest Cost	10,292			9,357			2,120			2,406
Actuarial Loss (Gain)	17,463			(13,107		)	2,292			(6,257		)
Retiree Contributions	—			—			70			608
Plan Amendments	—			—			—			(7,755		)
Benefits Paid	(9,203		)	(8,625		)	(3,027		)	(3,880		)
Benefit Obligation at End of Year	$	236,356		$	213,660		$	48,549		$	46,518
Change in Plan Assets:
Fair Value of Plan Assets at Beginning of Year	$	149,032		$	144,568		$	43,428		$	40,951
Actual Return on Plan Assets	12,656			(913		)	2,531			(395		)
Employer Contributions	2,244			14,002			2,946			6,144
Retiree Contributions	—			—			70			608
Benefits Paid	(9,203		)	(8,625		)	(3,027		)	(3,880		)
Fair Value of Plan Assets at End of Year	$	154,729		$	149,032		$	45,948		$	43,428



Funded Status at End of Year:
Accrued Net Benefit Cost at End of Year	$	(81,627	)	$	(64,628	)	$	(2,601	)	$	(3,090	)
Amounts Recognized in the Statement of Financial Position Consist of:
Current Liabilities	$	(2,428	)	$	(2,227	)	$	—		$	—
Noncurrent Liabilities	(79,199		)	(62,401		)	(2,601		)	(3,090		)
Net Amount Recognized at End of Year	$	(81,627	)	$	(64,628	)	$	(2,601	)	$	(3,090	)
Amounts Recognized in Regulatory Assets Consist of:
Prior Service Costs	$	538		$	741		$	(3,032	)	$	(3,289	)
Net Actuarial Loss	67,912			63,691			20,275			18,636
Net Amount Recognized at End of Year	$	68,450		$	64,432		$	17,243		$	15,347
Amounts Recognized in Accumulated Other Comprehensive Loss Consist of:
Net Actuarial Loss	$	24,102		$	20,463		$	—		$	—

Schedule of assumptions used

The weighted-average assumptions used to determine benefit obligations at December 31 were:



	Pension Benefits				Other Postretirement Benefits
	2016		2015		2016		2015
Discount Rate	4.30	%	4.83	%	4.13	%	4.73	%
Rate of Compensation Increase	3.50	%	3.50	%	3.50	%	3.50	%

The weighted-average assumptions used to determine net periodic benefit cost for years ended December 31 were:



	Pension Benefits						Other Postretirement Benefits
	2016		2015		2014		2016		2015		2014
Discount Rate	4.83	%	4.25	%	5.09	%	4.73	%	4.20	%	4.91	%
Expected Long-Term Return on Plan Assets	7.50	%	7.75	%	7.75	%	6.50	%	6.25	%	6.25	%
Rate of Compensation Increase	3.50	%	3.50	%	3.50	%	3.50	%	3.50	%	3.50	%

Fair value of plan assets

The fair values of SJG’s other postretirement benefit plan assets at December 31, 2016 and 2015 by asset category are as follows (in thousands):



Asset Category	Total		Level 1		Level 2		Level 3
As of December 31, 2016
Cash	$	—	$	—	$	—	$	—
Equity Securities:
Common/Collective Trust Funds - U.S. (a)	13,372		—		13,372		$	—
Common/Collective Trust Funds - International (a)	7,796		—		7,796		—
Fixed Income:
Common/Collective Trust Funds - Bonds (a)	12,167		—		12,167		—
Other Types of Investments:
Company Owned Life Insurance (c)	12,613		—		12,613		—
Total	$	45,948	$	—	$	45,948	$	—

Asset Category	Total		Level 1		Level 2		Level 3
As of December 31, 2015
Cash	$	26	$	26	$	—	$	—
Equity Securities:
Common/Collective Trust Funds - U.S. (a)	12,154		—		12,154		$	—
Common/Collective Trust Funds - International (a)	7,471		—		7,471		—
Mutual Fund - U.S. (b)	1,228		1,228		—		—
Mutual Funds - International (b)	922		922		—		—
Fixed Income:
Common/Collective Trust Funds - Bonds (a)	11,852		—		11,852		—
Mutual Funds - Bonds (b)	1,352		1,352		—		—
Other Types of Investments:
Mutual Funds - REITS (b)	142		142		—		—
Company Owned Life Insurance (c)	8,281		—		8,281		—
Total	$	43,428	$	3,670	$	39,758	$	—

(a)

This category represents common/collective trust fund investments through a commingled employee benefit trust (excluding real estate). These commingled funds are not traded publicly; however, the majority of the underlying assets held in these funds are stocks and bonds that are traded on active markets and prices for these assets are readily observable. Also included in these funds are interest rate swaps, asset backed securities, mortgage backed securities and other investments with observable market values. Holdings in these commingled funds are classified as Level 2 investments.


(b)	This category represents mutual fund investments. The mutual funds are actively traded on exchanges and price quotes for the shares are readily available. These mutual funds are classified as Level 1 investments.


(c)	This category represents Company-owned life insurance policies with a nationally known life insurance company. The value of these policies is backed by a series of common/collective trust funds held by the insurance carrier similar to category (a) above. Holdings in these insurance policies are classified as Level 2 investments.

The fair values of SJG’s pension plan assets at December 31, 2016 and 2015 by asset category are as follows (in thousands):



Asset Category	Total		Level 1		Level 2		Level 3
As of December 31, 2016
Cash / Cash Equivalents:
Cash	$	52	$	52	$	—	$	—
Common/Collective Trust Funds (a)	376		—		376		—
STIF-Type Instrument (b)	1,168		—		1,168		—
Equity securities:
Common/Collective Trust Funds – U.S. (a)	42,369		—		42,369		—
Common/Collective Trust Funds – International (a)	27,017		—		27,017		—
U.S. Large-Cap (c)	14,523		14,523		—		—
U.S. Mid-Cap (c)	2,024		2,024		—		—
U.S. Small-Cap (c)	—		—		—
International (c)	2,727		2,727		—		—
Fixed Income:
Common/Collective Trust Funds (a)	44,873		—		44,873		—
Guaranteed Insurance Contract (d)	7,930		—		—		7,930
Hedge Funds (e)	—		—		—		—
Other types of investments:
Private Equity Fund (f)	4,164		—		—		4,164
Common/Collective Trust Fund – Real Estate (g)	7,506		—		—		7,506
Total	$	154,729	$	19,326	$	115,803	$	19,600



Asset Category	Total		Level 1		Level 2		Level 3
As of December 31, 2015
Cash / Cash Equivalents:
Cash	$	28	$	28	—		$	—
Common/Collective Trust Funds (a)	692		—		692		—
STIF-Type Instrument (b)	1,096		—		1,096		—
Equity securities:
Common/Collective Trust Funds – U.S. (a)	41,976		—		41,976		—
Common/Collective Trust Funds – International (a)	26,800		—		26,800		—
U.S. Large-Cap (c)	11,535		11,535		—		—
U.S. Mid-Cap (c)	2,748		2,748		—		—
U.S. Small-Cap (c)	210		210
International (c)	1,367		1,367		—		—
Fixed Income:
Common/Collective Trust Funds (a)	40,853		—		40,853		—
Guaranteed Insurance Contract (d)	8,031		—		—		8,031
Hedge Funds (e)	3,353		—		—		3,353
Other types of investments:
Private Equity Fund (f)	3,477		—		—		3,477
Common/Collective Trust Fund – Real Estate (g)	6,866		—		—		6,866
Total	$	149,032	$	15,888	$	111,417	$	21,727

(a)

(b)

This category represents short-term investment funds held for the purpose of funding disbursement payment arrangements. Underlying assets are valued based on quoted prices in active markets, or where quoted prices are not available, based on models using observable market information. Since not all values can be obtained from quoted prices in active markets, these funds are classified as Level 2 investments.


(c)	This category of equity investments represents a managed portfolio of common stock investments in five sectors: telecommunications, electric utilities, gas utilities, water and energy. These common stocks are actively traded on exchanges and price quotes for these shares are readily available. These common stocks are classified as Level 1 investments.

(d)

This category represents SJI’s Group Annuity contracts with a nationally recognized life insurance company. The contracts are the assets of the plan, while the underlying assets of the contracts are owned by the contract holder. Valuation is based on a formula and calculation specified within the contract. Since the valuation is based on the reporting entity’s own assumptions, these contracts are classified as Level 3 investments.


(e)	This category represents a collection of underlying funds which are all domiciled outside of the United States. All of the underlying fund managers are based in the U.S.; however, they do not necessarily trade only in the U.S. markets. The fair value of these funds is determined by the underlying fund's general partner or manager. These funds are classified as Level 3 investments.

(f)

This category represents a limited partnership which includes several investments in U.S. leveraged buyout, venture capital, and special situation funds. Fund valuations are reported on a 90 to 120 day lag and, therefore, the value reported herein represents the market value as of June or September 30, 2016 and 2015, respectively, with cash flow changes through December applied. The fund’s investments are stated at fair value, which is generally based on the valuations provided by the general partners or managers of such investments. Fund investments are illiquid and resale is restricted. These funds are classified as Level 3 investments.

(g)

This category represents real estate common/collective trust fund investments through a commingled employee benefit trust. These commingled funds are part of a direct investment in a pool of real estate properties. These funds are valued by investment managers on a periodic basis using pricing models that use independent appraisals from sources with professional qualifications. Since these valuation inputs are not highly observable, the real estate funds are classified as Level 2 investments.

Changes in plan assets

Fair Value Measurement Using Significant

Unobservable Inputs (Level 3)

(In thousands)



	Guaranteed Insurance Contract			Hedge Funds			Private Equity Funds			Real Estate		Total
Balance at January 1, 2015	$	8,738		$	3,469		$	2,895		$	5,987	$	21,089
Actual return on plan assets:
Relating to assets still held at the reporting date	(26		)	(116		)	(223		)	879		514
Relating to assets sold during the period	21			—			346			—		367
Purchases, Sales and Settlements	(702		)	—			459			—		(243		)
Balance at December 31, 2015	$	8,031		$	3,353		$	3,477		$	6,866	$	21,727
Actual return on plan assets:
Relating to assets still held at the reporting date	541			(13		)	(71		)	640		1,097
Relating to assets sold during the period	12			—			200			—		212
Purchases, Sales and Settlements	(654		)	(3,340		)	558			—		(3,436		)
Balance at December 31, 2016	$	7,930		$	—		$	4,164		$	7,506	$	19,600

Future benefit payments

Future Benefit Payments - The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid during the following years (in thousands):



	Pension Benefits		Other Postretirement Benefits
2017	$	10,339	$	3,600
2018	$	10,619	$	3,577
2019	$	11,472	$	3,677
2020	$	11,921	$	3,790
2021	$	12,481	$	3,811
2022 - 2026	$	73,847	$	18,131