FINANCIAL INSTRUMENTS:

RESTRICTED INVESTMENTS — SJI and SJG maintain margin accounts with selected counterparties to support their risk management activities. The balances required to be held in these margin accounts increase as the net value of the outstanding energy-related contracts with the respective counterparties decrease. As of December 31, 2018 and 2017, SJI's balances (including SJG) in these accounts totaled $1.6 million and $31.6 million, respectively, held by the counterparty, which is recorded in Restricted Investments on the consolidated balance sheets. The Restricted Investments balance as of December 31, 2017 also included $0.3 million related to capital project escrow funds that Marina was previously required to maintain. SJI also had balances held by SJRG as collateral of $7.9 million which is recorded in Accounts Payable on the consolidated balance sheets. As of December 31, 2018 and 2017, SJG's balance held by the counterparty totaled $1.3 million and $2.9 million, respectively, which is recorded in Restricted Investments on the balance sheets.

The carrying amounts of the Restricted Investments for both SJI and SJG approximate their fair values at December 31, 2018 and 2017, which would be included in Level 1 of the fair value hierarchy (see Note 17).

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):



	As of December 31, 2018
Balance Sheet Line Item	SJI		SJG
Cash and Cash Equivalents	30,030		1,984
Restricted Investments	1,649		1,278
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	31,679	$	3,262



	As of December 31, 2017
Balance Sheet Line Item	SJI		SJG
Cash and Cash Equivalents	7,819		1,707
Restricted Investments	31,876		2,912
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	39,695	$	4,619

NOTES RECEIVABLE-AFFILIATES - As of December 31, 2018, SJI had approximately $13.6 million included in Notes Receivable - Affiliate on the consolidated balance sheets, due from Energenic, which is secured by its cogeneration assets for energy service projects. This note is subject to a reimbursement agreement that secures reimbursement for SJI, from its joint venture partner, of a proportionate share of any amounts that are not repaid.

LONG-TERM RECEIVABLES — SJG provides financing to customers for the purpose of attracting conversions to natural gas heating systems from competing fuel sources. The terms of these loans call for customers to make monthly payments over periods ranging from five to ten years, with no interest. The carrying amounts of such loans were $5.3 million and $7.0 million as of December 31, 2018 and 2017, respectively. The current portion of these receivables is reflected in Accounts Receivable and the non-current portion is reflected in Contract Receivables on the consolidated balance sheets. The carrying amounts noted above are net of unamortized discounts resulting from imputed interest in the amount of $0.7 million and $0.7 million as of December 31, 2018 and 2017, respectively. The annual amortization to interest is not material to SJI's or SJG's consolidated financial statements. The carrying amounts of these receivables approximate their fair value at December 31, 2018 and 2017, which would be included in Level 2 of the fair value hierarchy (see Note 17).

CREDIT RISK - As of December 31, 2018, SJI had approximately $11.7 million, or 19.1%, of current and noncurrent Derivatives–Energy Related Assets transacted with three counterparties. These counterparties are investment-grade rated.

FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE - The fair value of a financial instrument is the market price to sell an asset or transfer a liability at the measurement date. The carrying amounts of SJI's and SJG's financial instruments approximate their fair values at December 31, 2018 and 2017, except as noted below.


•	For Long-Term Debt, in estimating the fair value, SJI and SJG use the present value of remaining cash flows at the balance sheet date. SJI and SJG based the estimates on interest rates available at the end of each period for debt with similar terms and maturities (Level 2 in the fair value hierarchy, see Note 17).

•

The estimated fair values of SJI's long-term debt (which includes SJG and all consolidated subsidiaries), including current maturities, as of December 31, 2018 and 2017, were $2.91 billion and $1.22 billion, respectively. The carrying amounts of SJI's long-term debt, including current maturities, as of December 31, 2018 and 2017, were $2.84 billion and $1.19 billion, respectively. The carrying amounts as of December 31, 2018 and 2017 are net of unamortized debt issuance costs of $27.0 million and $17.4 million, respectively.

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The estimated fair values of SJG's long-term debt, including current maturities, as of December 31, 2018 and 2017, were $895.1 million and $838.5 million, respectively. The carrying amount of SJG's long-term debt, including current maturities, as of December 31, 2018 and 2017, was $893.4 million and $821.9 million, respectively. The carrying amounts as of December 31, 2018 and 2017 are net of unamortized debt issuance costs of $6.8 million and $7.3 million, respectively.

OTHER FINANCIAL INSTRUMENTS - The carrying amounts of SJI's and SJG's other financial instruments approximate their fair values at December 31, 2018 and 2017.