SEGMENTS OF BUSINESS:

SJI operates in several different reportable operating segments which reflect the financial information regularly evaluated by the chief operating decision maker ("CODM"). These segments are as follows:


•	SJG utility operations consist primarily of natural gas distribution to residential, commercial and industrial customers in southern New Jersey.


•	ETG utility operations consist of natural gas distribution to residential, commercial and industrial customers in northern and central New Jersey.


•	ELK utility operations consist of natural gas distribution to residential, commercial and industrial customers in Maryland.


•	Wholesale energy operations include the activities of SJRG and SJEX.


•	SJE is involved in both retail gas and retail electric activities.


◦	Retail gas and other operations include natural gas acquisition and transportation service business lines.


◦	Retail electric operations consist of electricity acquisition and transportation to commercial, industrial and residential customers.

•

On-site energy production consists of Marina's thermal energy facility and other energy-related projects. Also included in this segment are the activities of ACB, ACLE, BCLE, SCLE, SXLE, MCS, NBS and SBS. As discussed in Notes 1 and 18, in October 2018, Marina closed on the sale of the first group of sites related to Marina's portfolio of solar energy assets to a third party. Included in this group of sites were the wholly-owned subsidiaries of MCS, NBS and SBS.

•

Appliance service operations includes SJESP, which serviced residential and small commercial HVAC systems, installed small commercial HVAC systems, provided plumbing services and serviced appliances under warranty via a subcontractor arrangement as well as on a time and materials basis. On September 1, 2017, SJESP sold certain assets of its residential and small commercial HVAC and plumbing business to a third party. SJESP continues to receive commissions paid on service contracts from the third party and will do so on a going forward basis.


•	Midstream was formed to invest in infrastructure and other midstream projects, including a current project to build a natural gas pipeline in Pennsylvania and New Jersey.


•	Corporate & Services segment includes the costs related to Acquistion, along with other unallocated costs.

SJI groups its utility businesses under its wholly-owned subsidiary SJI Utilities (SJIU). This group consists of gas utility operations of SJG, ETG and ELK. SJI groups its nonutility operations into two categories: Energy Group and Energy Services. Energy Group includes wholesale energy, retail gas and other, and retail electric operations. Energy Services includes on-site energy production and appliance service operations. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are treated as if the sales or transfers were to third parties at current market prices.

Information about SJI’s operations in different reportable operating segments is presented below (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Operating Revenues:
SJI Utilities:
SJG Utility Operations	$	56,371		$	66,755		$	367,631		$	346,820
ETG Utility Operations	29,117			—			29,117			—
ELK Utility Operations	770			—			770			—
Subtotal SJI Utilities	86,258			66,755			397,518			346,820
Energy Group:
Wholesale Energy Operations	134,867			70,741			392,430			274,667
Retail Gas and Other Operations	18,292			18,156			81,661			76,793
Retail Electric Operations	51,269			45,316			137,966			136,893
Subtotal Energy Group	204,428			134,213			612,057			488,353
Energy Services:
On-Site Energy Production	15,317			29,942			61,208			74,689
Appliance Service Operations	509			1,552			1,480			5,190
Subtotal Energy Services	15,826			31,494			62,688			79,879
Corporate and Services	9,126			9,577			33,208			32,186
Subtotal	315,638			242,039			1,105,471			947,238
Intersegment Sales	(13,158		)	(14,912		)	(53,716		)	(49,908		)
Total Operating Revenues	$	302,480		$	227,127		$	1,051,755		$	897,330



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Operating (Loss) Income (See Note 1):
SJI Utilities:
SJG Utility Operations	$	(6,827	)	$	(4,049	)	$	94,417		$	85,911
ETG Utility Operations	(19,808		)	—			(19,808		)	—
ELK Utility Operations	(518		)	—			(518		)	—
Subtotal SJI Utilities	(27,153		)	(4,049		)	74,091			85,911
Energy Group:
Wholesale Energy Operations	(11,992		)	(11,346		)	53,193			(41,163		)
Retail Gas and Other Operations	590			(574		)	(3,509		)	(3,801		)
Retail Electric Operations	557			(344		)	1,443			2,117
Subtotal Energy Group	(10,845		)	(12,264		)	51,127			(42,847		)
Energy Services:
On-Site Energy Production	2,966			(38,351		)	(98,023		)	(35,216		)
Appliance Service Operations	(322		)	(392		)	623			(398		)
Subtotal Energy Services	2,644			(38,743		)	(97,400		)	(35,614		)
Corporate and Services	(3,238		)	979			(17,072		)	3,952
Total Operating (Loss) Income	$	(38,592	)	$	(54,077	)	$	10,746		$	11,402

Depreciation and Amortization:
SJI Utilities:
SJG Utility Operations	$	20,427		$	17,751		$	61,016		$	52,559
ETG Utility Operations	6,403			—			6,403			—
ELK Utility Operations	94			—			94			—
Subtotal SJI Utilities	26,924			17,751			67,513			52,559
Energy Group:
Wholesale Energy Operations	36			31			88			92
Retail Gas and Other Operations	75			80			228			247
Subtotal Energy Group	111			111			316			339
Energy Services:
On-Site Energy Production	1,210			11,731			21,805			34,998
Appliance Service Operations	—			43			—			153
Subtotal Energy Services	1,210			11,774			21,805			35,151
Corporate and Services	2,651			448			11,816			1,267
Total Depreciation and Amortization	$	30,896		$	30,084		$	101,450		$	89,316

Interest Charges (See Note 1):
SJI Utilities
SJG Utility Operations	$	7,108		$	6,437		$	20,835		$	18,392
ETG Utility Operations	4,835			—			4,835			—
ELK Utility Operations	3			—			3			—
Subtotal SJI Utilities	11,946			6,437			25,673			18,392
Energy Group:
Wholesale Energy Operations	—			(162		)	—			3,031
Retail Gas and Other Operations	141			55			392			204
Subtotal Energy Group	141			(107		)	392			3,235



Energy Services:
On-Site Energy Production	4,115			3,549			12,060			13,240
Midstream	541			160			1,446			795
Corporate and Services	15,303			4,895			36,141			14,442
Subtotal	32,046			14,934			75,712			50,104
Intersegment Borrowings	(5,512		)	(4,367		)	(15,645		)	(11,813		)
Total Interest Charges	$	26,534		$	10,567		$	60,067		$	38,291



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Income Taxes (See Note 1):
SJI Utilities:
SJG Utility Operations	$	(2,818	)	$	(3,688	)	$	19,500		$	27,654
ETG Utility Operations	(6,866		)	—			(6,866		)	—
ELK Utility Operations	(143		)	—			(143		)	—
Subtotal SJI Utilities	(9,827		)	(3,688		)	12,491			27,654
Energy Group:
Wholesale Energy Operations	(3,036		)	(4,281		)	13,613			(16,984		)
Retail Gas and Other Operations	144			(225		)	(916		)	(1,265		)
Retail Electric Operations	157			(141		)	406			866
Subtotal Energy Group	(2,735		)	(4,647		)	13,103			(17,383		)
Energy Services:
On-Site Energy Production	(331		)	(16,270		)	(27,977		)	(19,120		)
Appliance Service Operations	171			(220		)	408			(201		)
Subtotal Energy Services	(160		)	(16,490		)	(27,569		)	(19,321		)
Midstream	(100		)	—			(60		)	(85		)
Corporate and Services	(3,827		)	60			(10,171		)	696
Total Income Taxes	$	(16,649	)	$	(24,765	)	$	(12,206	)	$	(8,439	)

Property Additions (See Note 1):
SJI Utilities:
SJG Utility Operations	$	63,342		$	59,179		$	178,727		$	187,587
ETG Utility Operations	18,637			—			18,637			—
ELK Utility Operations	129			—			129			—
Subtotal SJI Utilities	82,108			59,179			197,493			187,587
Energy Group:
Wholesale Energy Operations	—			—			32			5
Retail Gas and Other Operations	186			204			495			632
Subtotal Energy Group	186			204			527			637
Energy Services:
On-Site Energy Production	696			1,633			2,379			11,899
Appliance Service Operations	—			—			—			260
Subtotal Energy Services	696			1,633			2,379			12,159
Midstream	(279		)	42			31			200
Corporate and Services	—			63			11,549			991
Total Property Additions	$	82,711		$	61,121		$	211,979		$	201,574



	September 30, 2018			December 31, 2017
Identifiable Assets:
SJI Utilities:
SJG Utility Operations	$	2,966,384		$	2,865,974
ETG Utility Operations	2,044,378			—
ELK Utility Operations	15,158			—
Subtotal SJI Utilities	5,025,920			2,865,974
Energy Group:
Wholesale Energy Operations	187,258			208,785
Retail Gas and Other Operations	43,899			56,935
Retail Electric Operations	41,367			34,923
Subtotal Energy Group	272,524			300,643
Energy Services:
On-Site Energy Production	477,573			582,587
Appliance Service Operations	28			1,338
Subtotal Energy Services	477,601			583,925
Midstream	70,753			63,112
Discontinued Operations	1,781			1,757
Corporate and Services	621,152			711,038
Intersegment Assets	(555,209		)	(661,363		)
Total Identifiable Assets	$	5,914,522		$	3,865,086