South Jersey Industries
Morgan Stanley Utilities Conference - NY
March 2, 2017
Forward Looking Statements
Certain statements contained in this presentation may qualify as “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. All statements other than statements of historical
fact should be considered forward-looking statements made in good faith and are intended
to qualify for the safe harbor from liability established by the Private Securities Litigation
Reform Act of 1995. Words such as “anticipate”, “believe”, “expect”, “estimate”, “forecast”,
“goal”, “intend”, “objective”, “plan”, “project”, “seek”, “strategy” and similar expressions are
intended to identify forward-looking statements. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ materially from
those expressed or implied in the statements. These risks and uncertainties include, but are
not limited to, the following: general economic conditions on an international, national, state
and local level; weather conditions in our marketing areas; changes in commodity costs;
changes in the availability of natural gas; “non-routine” or “extraordinary” disruptions in our
distribution system; regulatory, legislative and court decisions; competition; the availability
and cost of capital; costs and effects of legal proceedings and environmental liabilities; the
failure of customers or suppliers to fulfill their contractual obligations; and changes in
business strategies. These cautionary statements should not be construed by you to be
exhaustive. While SJI believes these forward-looking statements to be reasonable, there can
be no assurance that they will approximate actual experience. Further, SJI undertakes no
obligation to update or revise any of its forward-looking statements, whether as a result of
new information, future events or otherwise.
2
3
SJI Overview
4
*SJI uses the non-GAAP measure of Economic Earnings when discussing results. Economic Earnings eliminates all unrealized gains and losses
on commodity derivative transactions and on the ineffective portion of interest rate derivative transactions. It also adjusts for realized gains
and losses attributed to hedges on inventory transactions and for the impact of transactions or contractual arrangements where the true
economic impact will be realized in a future period. A full explanation and reconciliation of this non-GAAP measure is provided under
“Explanation and Reconciliation of Non-GAAP Financial Measures” in the Earnings Release.
2016 Performance Overview
Economic
Earnings
Q4
2016
Q4
2015 Variance
FY
2016
FY
2015 Variance
In millions, except per share data
Gas Utility $22.9 $22.2 $0.7 $69.0 $66.6 $2.4
SJ Energy Group $7.3 $10.7 ($3.4) $17.7 $16.8 $0.9
SJ Energy Services $3.3 $9.3 ($6.0) $16.5 $14.7 $1.8
SJI $33.2 $43.2 ($10.0) $102.8 $99.0 $3.8
SJI EPS $0.42 $0.62 ($0.20) $1.34 $1.44 ($0.10)
For the three and twelve months ended December 31
Strategic Focus
5
Grow
Economic
Earnings
Improve
Quality of
Earnings
Strengthen
Balance
Sheet
Maintain Low
to Moderate
Risk Profile
2016 Achievements
• Economic EPS of $1.34
• Reduced ITC by $29.2M
• $225M of utility capital investment
• 7,163 new utility customers added
• Doubled fuel management contribution
to FY earnings with 5 contracts active
• Positive contribution to earnings from
solar operating performance based on
$7.3M improvement
• Successful equity offering generating
$203M in net proceeds
What’s next?
• $150M of Economic Earnings in 2020
• High quality earnings with zero ITC
• Rate case filed 1/27/17
• $1.4B of cap-ex from 2017 through
2020, 93% regulated/utility
• 10 fuel management contracts
executed, Panda Stonewall coming
on-line in 1H 2017
• PennEast final FERC certificate
anticipated in July 2017
6
Improving Earnings Quality
-
20,000
40,000
60,000
80,000
100,000
120,000
2012 2013 2014 2015 2016
Economic Earnings
Non-ITC ITC
$97.1
$104.0
$99.0
$102.8
$93.3
$26.0 $36.9
$30.3 $38.3
$9.1
$67.3 $60.2 $73.7 $60.7 $93.7
$mm
7
Financial Position
0.0%
20.0%
40.0%
60.0%
80.0%
2014 2015 2016
Dividend Payout
Equity to Cap = 49%
Commitment to a strong
balance sheet
SJI & SJG rated BBB+ by S&P
SJG rated A2 by Moody’s
Dividend Payout Ratio = 79%
Commitment to secure and
growing dividend that reflects
significant growth opportunities
ahead
36.0%
38.0%
40.0%
42.0%
44.0%
46.0%
48.0%
50.0%
2014 2015 2016
Equity to Capitalization
8
Utility / Regulated Business Update
9
Utility Earnings Growth
¹ Slide depicts changes to period over period net income, it is not intended to be a substitute for financial statements.
² Depreciation expenses associated with accelerated infrastructure investments are reflected within that line item.
SOUTH JERSEY GAS
(In millions) In millions¹ Q4 FY Performance Notes
2015 Net Income $22.2 $66.6
Customer Growth $0.6 $2.3 1.2% YOY customer growth
Accelerated Infrastructure Investments $1.7 $5.3 Full year SHARP benefit; increased
AIRP investments and roll-in to base
rates
Off System Sales $0.0 $0.3
O & M Expenses $0.0 ($1.1) Increased costs for pension/benefits;
support for customer facing system
improvements
Depreciation² ($0.6) ($3.2) Additional assets placed in service,
including work management system
Other ($1.0) ($1.2) Miscellaneous smaller variances
2016 Net Income $22.9 $69.0
10
Utility Customer Growth
12 Months Ending
December 31, 2016
Margin Growth from Customer Additions $2.3M
Conversions 4,631
New Construction 2,532
Total Gross Customer Additions 7,163
Net Customer Additions 4,525
Year Over Year Net Growth Rate 1.2%
11
BL England
Base Rate Case
PennEast
Pipeline
AIRP
• Filed base rate case with the NJBPU January 27, 2017
• Requesting an increase to base rates of $75M
• $500M+ of anticipated system investments since last case
• Extension and expansion of program to invest $302.5M over 5 years
• Nearly doubled current annual investment
• Investments will roll in to base rates annually
• Received Water Quality Certificate from Pennsylvania DEP
• FERC review extension sets target for FERC approval in July 2017
• Project approved by Pinelands Commission on 2/24 by vote of 9-5
• Legal appeal of Commission approval expected from opposition
• Construction expected to commence upon resolution of appeal
Regulatory Highlights
12
Non-Utility Business Update
13
Non-Utility Total Contributions to Earnings
Economic Earnings
($ in millions)
Q4
2016
Q4
2015 Variance FY 2016 FY 2015 Variance
SJ ENERGY GROUP $7.3 $10.7 ($3.4) $17.7 $16.8 $0.9
Retail Commodity $0 ($0.1) $0.1 $1.3 $1.7 ($0.4)
Wholesale Mktg /
Asset Optimization $6.1 $10.1 $(4.0) $12.1 $11.5 $0.6
Fuel Management $1.2 $0.7 $0.5 $4.2 $2.1 $2.1
SJ Exploration $0 $0 $0 $0.1 $1.5 ($1.4)
SJ ENERGY SERVICES $3.3 $9.3 ($6.0) $16.5 14.7 $1.8
Solar ($0.8) ($2.4) $1.6 $2.9 ($4.4) $7.3
CHP $0.7 ($0.2) $0.9 $2.6 $3.7 ($1.1)
Landfills ($1.1) ($1.3) $0.2 ($2.6) ($4.5) $1.9
ITC $4.5 $19.7 ($15.2) $9.1 $38.3 ($29.2)
Other $0.1 $0.1 $0.0 $0.8 $0.6 $0.2
Non-Recurring ($0.1) ($6.6) $6.5 $3.7 ($19.0) $22.7
For the three and twelve months ended December 31
13
14
Counterparty Location
Capacity
(MW)
Volume
(Dth/day)
Start
Date Term
Starwood Marcus Hook, PA 750 80,000 In service 18 years
LS Power West Deptford, NJ 738 36,000 In service 15 Years
LS Power II West Deptford, NJ 400 31,000 In service 15 Years
Moxie - Liberty Bradford Co, PA 825 137,655
In service
June 2016 5 Years
Moxie - Patriot Lycoming Co, PA 825 137,655
In service
June 2016 4 Years
Panda - Stonewall Leesburg, VA 750 110,000
Expected
1H 2017 4 Years
Moxie - Freedom Luzerne, PA 1,029 157,000 2018 10 Years
Lordstown Trumbell, OH 1,029 160,000 2018 5 Years
Invenergy -
Lackawanna Jessup, PA 1,045 210,000 2018 10 Years
To Be Announced TBA 990 121,000 TBA 4 Years
Fuel Supply Management
15
Solar SREC Generation
Number of
SRECs
MW DC
-
50,000
100,000
150,000
200,000
250,000
0
50
100
150
200
250
2012 2013 2014 2015 2016
SRECs generated
MWs Installed
16
Drivers of 2020 Goal
73%
20%
7%
56%
1%
43%
17
$1.7B of planned Cap Ex 2016-2020¹
Focused on regulated utility and FERC pipeline growth
(1) Capital expenditures shown are inclusive of affiliate investments
2013A-2015A
2016A-2020P
% Utility
and FERC
regulated:
57%
% Utility
and FERC
regulated:
93%
$291M
$316M
$472M
$353M
$259M
2016A 2017P 2018P 2019P 2020P
Regulated Utility FERC regulated Non-Utility
SJI Capital Investment
18
$114
$147
$117 $140 $118
$39
$72
$61
$61
$61
$39
$20
$20
$20
$68
$24
$28 $33
$250 $236
$293
$236
2016A 2017P 2018P 2019P 2020P
$225
Base Capital
Two rate case filings expected through 2020
≈ $635M planned capital investment 2016-2020
Other / Liquefaction
Planned spending of ≈$100M for 2016-2020
Liquefaction spend complete
BL England
Proposed ≈ $115M pipeline to supply natural gas to the
former BL England generating facility
Final Pinelands Commission approval received 2/24
AIRP (Accelerated Infrastructure Replacement Program)
Earn ROI with annual roll-in to base rates
Approval received in October for 5-year, $302.5M program
SHARP (Storm Hardening and Reliability Program)
Earn ROI with annual roll-in to base rates
Planned investments total $105M for 2016-2020,
pending a program extension
Base
capital
51%
AIRP
24%
SHARP
9%
Other
6% Liquefaction
1%
BL England
9%
2016A-2020P:
$1.2B
2016-2020 Utility Cap-Ex Breakdown
$ in millions
Utility Capital Investment
19
PennEast Pipeline Project
• $200M investment with FERC level
returns projected
• 20% equity owner in $1.0B+, 1 BCF,
118-mile interstate pipeline from
Marcellus region of PA into NJ
• Fully subscribed with 80% of
capacity under 15-year agreements
with utility/energy affiliates of project
sponsors
Application
submitted
9/24/15
FERC draft EIS
issued
7/22/16
Final EIS
expected
April 2017
Targeted in-
service date
2H 2018
20
Appendix