DISCONTINUED OPERATIONS AND AFFILATIONS

6 Months Ended

Jun. 30, 2011

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS AND AFFILATIONS

3. DISCONTINUED OPERATIONS AND AFFILATIONS:

Discontinued Operations consist of the environmental remediation activities related to the properties of South Jersey Fuel, Inc. (SJF) and the product liability litigation and environmental remediation activities related to the prior business of The Morie Company, Inc. (Morie). SJF is a subsidiary of Energy & Minerals, Inc. (EMI), an SJI subsidiary, which previously operated a fuel oil business. Morie is the former sand mining and processing subsidiary of EMI. EMI sold the common stock of Morie in 1996.

SJI conducts tests annually to estimate the environmental remediation costs for these properties.

Summarized operating results of the discontinued operations for the three and six months ended June 30, were (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Gain (Loss) before Income Taxes:
Sand Mining	$	(157	)	$	68		$	(351	)	$	26
Fuel Oil		(99	)		(223	)		(494	)		(226	)
Income Tax Benefits		90			54			296			70
Loss from Discontinued Operations - Net	$	(166	)	$	(101	)	$	(549	)	$	(130	)
Earnings Per Common Share from
Discontinued Operations - Net:
Basic	$	(0.006	)	$	(0.003	)	$	(0.019	)	$	(0.005	)
Diluted	$	(0.006	)	$	(0.003	)	$	(0.018	)	$	(0.004	)

AFFILIATIONS - The following affiliated entities are accounted for under the equity method:

SJI and Conectiv Solutions, LLC formed Millennium Account Services, LLC in which SJI has a 50% equity interest, to provide meter reading services in southern New Jersey.

Marina and a joint venture partner formed the following entities in which Marina has a 50% equity interest:

LVE Energy Partners, LLC (LVE), which has entered into a contract to design, build, own and operate a district energy system and central energy center for a planned resort in Las Vegas, Nevada.

Energenic – US, LLC (Energenic), which develops and operates on-site, self-contained, energy-related projects.

During the first six months of 2011 and 2010, the Company made investments in, and provided net advances to, unconsolidated affiliates of $7.3 million and $36.5 million, respectively. The purpose of these investments and advances was to cover certain project related costs of LVE (See Note 11), to provide working capital for a retail marketing operation, and to develop several landfill gas-fired electric production facilities, solar and thermal energy projects.  As of June 30, 2011 and December 31, 2010, the outstanding balance on these Notes Receivable – Affiliate was $110.2 million and $127.9 million, respectively. Approximately $48.3 million of these notes are secured by property, plant and equipment of the affiliates, accrue interest at 7.5% and are to be repaid through 2025. The remaining $61.9 million of these notes are unsecured, and are either non-interest bearing or accrue interest at variable rates and are to be repaid when the affiliate secures permanent financing.

SJI holds significant variable interests in these entities, but is not the primary beneficiary. Consequently, these entities are accounted for under the equity method because SJI does not have both a) the power to direct the activities of the entity that most significantly impact the entity's economic performance and b) the obligation to absorb losses of the entity that could potentially be significant to the entity or the right to receive benefits from the entity that could potentially be significant to the entity. As of June 30, 2011, the Company had a net asset of approximately $28.9 million included in Investment in Affiliates and Other Noncurrent Liabilities on the condensed consolidated balance sheets related to Millennium, LVE and Energenic, in addition to Notes Receivable – Affiliate as discussed above. SJI's maximum exposure to loss from these entities as of June 30, 2011 is limited to its combined equity contributions and the Notes Receivable-Affiliate in the amount of $142.1 million.

SJRG and a joint venture partner formed Potato Creek, LLC (Potato Creek) in which SJRG has a 30% equity interest.  Potato Creek owns and manages the oil, gas and mineral rights of certain real estate in Pennsylvania.  The mineral rights have been leased to a third-party production company (See Note 15, Subsequent Events).