FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2022

Investments, All Other Investments [Abstract]

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS:

RESTRICTED INVESTMENTS — SJI and SJG maintain margin accounts with certain counterparties to support their risk management activities associated with hedging commodities. 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.

The following table provides SJI's (including SJG) and SJG's balances of Restricted Investments as well as presents a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that total to the amounts shown in the condensed consolidated statements of cash flows (in thousands):

	September 30, 2022
Balance Sheet Line Item	SJI		SJG
Cash and Cash Equivalents	$	52,763	$	1,331
Restricted Investments	775		725
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	53,538	$	2,056

	December 31, 2021
Balance Sheet Line Item	SJI		SJG
Cash and Cash Equivalents	$	28,754	$	3,360
Restricted Investments	686		686
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	29,440	$	4,046

The carrying amounts of the Restricted Investments for both SJI and SJG approximate their fair values at September 30, 2022 and December 31, 2021, which would be included in Level 1 of the fair value hierarchy (see Note 13).

ALLOWANCE FOR CREDIT LOSSES - Accounts receivable and unbilled revenues are recorded gross on the condensed consolidated balance sheets with allowance for credit losses shown as a separate line item titled Provision for Uncollectibles. A summary of changes in the allowance for credit losses for the three and nine months ended September 30, 2022 and 2021 is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
SJI (includes SJG and all other consolidated subsidiaries):
Balance at beginning of period	$	50,876	$	42,233	$	41,763	$	30,582
Provision for expected credit losses	2,435		2,375		7,355		7,621
Regulated assets (a)	(5,863)		(293)		815		8,982
Recoveries of accounts previously written off	326		414		1,324		772
Uncollectible accounts written off	(3,367)		(1,664)		(6,850)		(4,892)
Balance at end of period	$	44,407	$	43,065	$	44,407	$	43,065
SJG:
Balance at beginning of period	$	29,791	$	21,706	$	25,166	$	17,359
Provision for expected credit losses	1,816		1,411		5,499		5,529
Regulated assets (a)	(1,598)		1,059		(44)		3,030
Recoveries of accounts previously written off	156		400		814		503
Uncollectible accounts written off	(1,200)		(702)		(2,470)		(2,547)
Balance at end of period	$	28,965	$	23,874	$	28,965	$	23,874

(a) Net change in COVID-19 pandemic incremental expected credit losses from uncollectible accounts deferred as a regulatory asset, resulting from a July 2, 2020 BPU Order (see Note 8).

NOTES RECEIVABLE-AFFILIATES - The carrying amounts of the Note Receivable - Affiliates balances approximate their fair values at September 30, 2022 and December 31, 2021, which would be included in Level 2 of the fair value hierarchy. See Note 3 for information about these balances and Note 13 for information about the fair value hierarchy.

CONTRACT 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 three to five years, with no interest. The carrying amounts of such loans were $1.3 million and $1.7 million as of September 30, 2022 and December 31, 2021, respectively. The current portion of these receivables is reflected in Accounts Receivable and the non-current portion is reflected in Contract Receivables on the condensed consolidated balance sheets. The carrying amounts noted above are net of unamortized discounts resulting from imputed interest. The amount of such discounts and the annualized amortization to interest is not material to SJI's or SJG's consolidated financial statements.

In addition, as part of the EET program, SJG and ETG provide funding to customers to upgrade equipment for the purpose of promoting energy efficiency. The terms of these loans range from two to ten years. The carrying amounts of such loans for SJG were $62.7 million and $55.4 million as of September 30, 2022 and December 31, 2021, respectively. The carrying amounts of such loans for ETG were not material at September 30, 2022 and December 31, 2021. On the condensed consolidated balance sheets of SJG, the current portion of EET loans receivable totaled $12.1 million and $11.1 million as of September 30, 2022 and December 31, 2021, respectively, and is reflected in Accounts Receivable; and the non-current portion totaled $50.6 million and $44.3 million as of September 30, 2022 and December 31, 2021, respectively, and is reflected in Contract Receivables. Given the risk of uncollectibility is low due to the oversight and preapproval required by the BPU, no allowance for credit loss has been recognized on the above-mentioned receivables.

There have been no material impacts to this risk of uncollectibility as a result of COVID-19.

The carrying amounts of these receivables approximate their fair value at September 30, 2022 and December 31, 2021, which would be included in Level 2 of the fair value hierarchy (see Note 13).

CREDIT RISK - As of September 30, 2022, there were no individual counterparties that totaled more than five percent of SJI's current and noncurrent Derivatives - Energy Related Assets.

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 September 30, 2022 and December 31, 2021, except as noted below (in thousands):

	September 30, 2022		December 31, 2021
SJI (includes SJG and all consolidated entities)
Estimated fair values of long-term debt	$	3,282,165	$	3,653,868
Carrying amounts of long-term debt, including current maturities (A)	$	3,597,838	$	3,255,085
Net of:
Unamortized debt issuance costs	$	37,673	$	38,462
Unamortized debt discounts	$	5,068	$	5,135
SJG
Estimated fair values of long-term debt	$	888,073	$	1,171,657
Carrying amounts of long-term debt, including current maturities	$	1,019,145	$	1,041,811
Net of:
Unamortized debt issuance costs	$	8,217	$	8,726

(A) SJI Long-Term Debt on the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 includes $5.7 million and $5.6 million of finance leases, respectively.

For Long-Term Debt (including current maturities), 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 13).