SEGMENTS OF BUSINESS | SEGMENTS OF BUSINESS: SJI operates in several different reportable operating segments which reflect the financial information regularly evaluated by the 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. • Retail gas and other operations at SJE included natural gas acquisition and transportation service business lines. This business was sold on November 30, 2018. • Retail electric operations at SJE 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 and SXLE. • Appliance service operations includes SJESP, which receives commissions on service contracts from a third party. • 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 costs related to the Acquisition, along with other unallocated costs. Also included in this segment are the results of AEP. • Intersegment represents intercompany transactions among the above SJI consolidated entities. SJI groups its utility businesses under its wholly-owned subsidiary SJIU. This group consists of gas utility operations of SJG, ETG and ELK. SJI groups its nonutility operations into separate 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. Information about SJI’s operations in different reportable operating segments is presented below (in thousands): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Operating Revenues: SJI Utilities: SJG Utility Operations 62,039 $ 56,371 $ 396,505 $ 367,631 ETG Utility Operations 30,619 29,117 215,647 29,117 ELK Utility Operations 892 770 5,210 770 Subtotal SJI Utilities 93,550 86,258 617,362 397,518 Energy Group: Wholesale Energy Operations 135,856 134,867 452,346 392,430 Retail Gas and Other Operations — 18,292 — 81,661 Retail Electric Operations 22,395 51,269 65,617 137,966 Subtotal Energy Group 158,251 204,428 517,963 612,057 Energy Services: On-Site Energy Production 11,980 15,317 38,098 61,208 Appliance Service Operations 514 509 1,529 1,480 Subtotal Energy Services 12,494 15,826 39,627 62,688 Corporate and Services 10,252 9,126 31,438 33,208 Subtotal 274,547 315,638 1,206,390 1,105,471 Intersegment Sales (13,344) (13,158) (40,955) (53,716) Total Operating Revenues $ 261,203 $ 302,480 $ 1,165,435 $ 1,051,755 Three Months Ended Nine Months Ended 2019 2018 2019 2018 Operating (Loss) Income: SJI Utilities: SJG Utility Operations $ (8,319) $ (6,827) $ 100,241 $ 94,417 ETG Utility Operations (5,112) (19,808) 41,088 (19,808) ELK Utility Operations (197) (518) 401 (518) Subtotal SJI Utilities (13,628) (27,153) 141,730 74,091 Energy Group: Wholesale Energy Operations (8,371) (11,992) (13,263) 53,193 Retail Gas and Other Operations — 590 — (3,509) Retail Electric Operations (3) 557 (3,972) 1,443 Subtotal Energy Group (8,374) (10,845) (17,235) 51,127 Energy Services: On-Site Energy Production 2,634 2,966 5,049 (98,023) Appliance Service Operations 468 (322) 1,484 623 Subtotal Energy Services 3,102 2,644 6,533 (97,400) Corporate and Services (125) (3,238) (5,680) (17,072) Total Operating (Loss) Income $ (19,025) $ (38,592) $ 125,348 $ 10,746 Depreciation and Amortization: SJI Utilities: SJG Utility Operations $ 23,564 $ 20,427 $ 69,349 $ 61,016 ETG Utility Operations 7,461 6,403 20,932 6,403 ELK Utility Operations 158 94 383 94 Subtotal SJI Utilities 31,183 26,924 90,664 67,513 Energy Group: Wholesale Energy Operations 22 36 70 88 Retail Gas and Other Operations — 75 — 228 Subtotal Energy Group 22 111 70 316 Energy Services: On-Site Energy Production 1,248 1,210 3,756 21,805 Appliance Service Operations — — — — Subtotal Energy Services 1,248 1,210 3,756 21,805 Corporate and Services 1,094 2,651 4,092 11,816 Total Depreciation and Amortization $ 33,547 $ 30,896 $ 98,582 $ 101,450 Interest Charges: SJI Utilities: SJG Utility Operations $ 7,840 $ 7,108 $ 23,584 $ 20,835 ETG Utility Operations 7,165 4,835 20,106 4,835 ELK Utility Operations 4 3 15 3 Subtotal SJI Utilities 15,009 11,946 43,705 25,673 Energy Group: Retail Gas and Other Operations — 141 — 392 Subtotal Energy Group — 141 — 392 Energy Services: On-Site Energy Production 2,097 4,115 6,520 12,060 Midstream 573 541 1,672 1,446 Corporate and Services 14,433 15,303 44,496 36,141 Subtotal 32,112 32,046 96,393 75,712 Intersegment Borrowings (3,255) (5,512) (10,449) (15,645) Total Interest Charges $ 28,857 $ 26,534 $ 85,944 $ 60,067 Three Months Ended Nine Months Ended 2019 2018 2019 2018 Income Taxes: SJI Utilities: SJG Utility Operations $ (3,747) $ (2,818) $ 20,620 $ 19,500 ETG Utility Operations (2,065) (6,866) 4,028 (6,866) ELK Utility Operations (54) (143) 100 (143) Subtotal SJI Utilities (5,866) (9,827) 24,748 12,491 Energy Group: Wholesale Energy Operations (2,130) (3,036) (3,088) 13,613 Retail Gas and Other Operations — 144 — (916) Retail Electric Operations 4 157 (814) 406 Subtotal Energy Group (2,126) (2,735) (3,902) 13,103 Energy Services: On-Site Energy Production 242 (331) (115) (27,977) Appliance Service Operations 142 171 445 408 Subtotal Energy Services 384 (160) 330 (27,569) Midstream (18) (100) (83) (60) Corporate and Services (3,299) (3,827) (11,715) (10,171) Total Income Taxes $ (10,925) $ (16,649) $ 9,378 $ (12,206) Property Additions: SJI Utilities: SJG Utility Operations $ 73,059 $ 63,342 $ 195,621 $ 178,727 ETG Utility Operations 50,426 18,637 142,388 18,637 ELK Utility Operations 468 129 2,096 129 Subtotal SJI Utilities 123,953 82,108 340,105 197,493 Energy Group: Wholesale Energy Operations 1 — 1 32 Retail Gas and Other Operations — 186 — 495 Subtotal Energy Group 1 186 1 527 Energy Services: On-Site Energy Production — 696 164 2,379 Subtotal Energy Services — 696 164 2,379 Midstream 16 (279) 35 31 Corporate and Services 368 — 954 11,549 Total Property Additions $ 124,338 $ 82,711 $ 341,259 $ 211,979 September 30, 2019 December 31, 2018 Identifiable Assets: SJI Utilities: SJG Utility Operations $ 3,254,276 $ 3,118,236 ETG Utility Operations 2,335,164 2,148,175 ELK Utility Operations 19,808 16,482 Subtotal SJI Utilities 5,609,248 5,282,893 Energy Group: Wholesale Energy Operations 173,252 266,417 Retail Gas and Other Operations (A) 120 12,736 Retail Electric Operations 29,572 39,345 Subtotal Energy Group 202,944 318,498 Energy Services: On-Site Energy Production 163,716 195,329 Appliance Service Operations — — Subtotal Energy Services 163,716 195,329 Midstream 81,099 72,333 Discontinued Operations 1,778 1,777 Corporate and Services 394,897 387,482 Intersegment Assets (323,629) (301,735) Total Identifiable Assets $ 6,130,053 $ 5,956,577 (A) As of September 30, 2019, the remaining $0.1 million of assets in the retail gas and other operations segment represents outstanding accounts receivable balances. |