SEGMENTS OF BUSINESS | SEGMENTS OF BUSINESS: ASC 280 , Segment Reporting, establishes standards for reporting information about operating segments and requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the CODM in deciding how to allocate resources and in assessing performance. Beginning with the first quarter of 2021, our internal management reporting, specifically around our nonutility businesses, changed primarily due to recent acquisitions and divestitures, and new product lines entered into. These were primarily within the fuel cell, solar, RNG, and retail businesses. Refer to Item 1, along with Note 1 to the Consolidated Financial Statements in Item 8, of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2020 for information about these acquisitions and divestitures. As a result of these changes in our businesses, the Company realigned its operating segments. The realigned segments reflect the financial information regularly evaluated by the CODM, which for SJI is the Company's Chief Executive Officer. The operating 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. On July 31, 2020, SJI sold ELK to a third-party buyer. • Wholesale energy operations include the activities of SJRG and SJEX. • Retail services operations includes the activities of SJE, SJESP and SJEI, as well as our equity interest in Millennium. • Renewables consists of: ◦ The Catamaran joint venture, which owns Annadale and Bronx Midco. ◦ Solar-generation sites located in New Jersey, and three legacy solar projects, one of which was sold during the first quarter of 2020. ◦ The activities of ACLE, BCLE, SCLE and SXLE, which have all ceased operations (see Note 1). ◦ MTF and ACB, which were sold in the first quarter of 2020. • Decarbonization consists of ◦ SJI Renewables Energy Ventures, LLC, which includes our equity interest in REV, which is included in Equity in (Loss)/Earnings of Affiliated Companies on the condensed consolidated statements of (loss)/income. ◦ SJI RNG Devco, LLC, which includes the renewable natural gas development rights in certain dairy farms; the operating results from this entity are not material at this time. • Midstream invests in infrastructure and other midstream projects, including an investment in PennEast (see Note 3). • Corporate & Services segment includes costs related to financing, acquisitions and divestitures, and other unallocated costs. 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 and ETG and, until its sale, ELK. SJI groups its nonutility operations into separate categori es: Energy Management; Energy Production; Midstream; and Corporate & Services. Energy Management includes wholesale energy and retail services. Energy Production in cludes renewables and decarbonization. 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). All prior periods were revised to conform to the new segment alignment noted above. Three Months Ended Nine Months Ended 2021 2020 2021 2020 Operating Revenues: SJI Utilities: SJG Utility Operations $ 69,958 $ 66,190 $ 412,572 $ 394,066 ETG Utility Operations 37,072 37,503 248,098 239,503 ELK Utility Operations — 285 — 4,792 Subtotal SJI Utilities 107,030 103,978 660,670 638,361 En ergy Management: Wholesale Energy Operations 247,402 143,338 669,067 373,308 Retail Services 5,360 8,836 13,382 32,735 Subtotal Energy Management 252,762 152,174 682,449 406,043 Energy Production : Renewables 7,352 6,317 17,980 15,459 Subtotal Energy Production 7,352 6,317 17,980 15,459 Corporate and Services 13,577 10,835 39,416 36,740 Subtotal 380,721 273,304 1,400,515 1,096,603 Intersegment Sales (15,090) (11,755) (48,756) (40,978) Total Operating Revenues $ 365,631 $ 261,549 $ 1,351,759 $ 1,055,625 Three Months Ended Nine Months Ended 2021 2020 2021 2020 Operating (Loss) Income: SJI Utilities: SJG Utility Operations $ (1,961) $ (6,080) $ 133,350 $ 108,297 ETG Utility Operations 5,634 (3,163) 66,521 57,274 ELK Utility Operations — (374) — 373 Subtotal SJI Utilities 3,673 (9,617) 199,871 165,944 Energy Management: Wholesale Energy Operations (15,534) 2,768 (5,393) 16,272 Retail Services 849 (1,573) 763 (2,238) Subtotal Energy Management (14,685) 1,195 (4,630) 14,034 Energy Production: Renewables 1,787 2,455 4,920 143 Decarbonization (63) — (71) — Subtotal Energy Production 1,724 2,455 4,849 143 Corporate and Services 315 (2,527) (626) (2,662) Total Operating (Loss) Income $ (8,973) $ (8,494) $ 199,464 $ 177,459 Depreciation and Amortization: SJI Utilities: SJG Utility Operations $ 30,252 $ 25,762 $ 89,786 $ 76,216 ETG Utility Operations 14,665 10,391 53,657 30,370 ELK Utility Operations — 52 — 354 Subtotal SJI Utilities 44,917 36,205 143,443 106,940 Energy Management: Wholesale Energy Operations 25 14 69 44 Retail Services 117 — 353 — Subtotal Energy Management 142 14 422 44 Energy Production: Renewables 1,172 30 3,573 36 Subtotal Energy Production 1,172 30 3,573 36 Corporate and Services 1,858 1,267 4,271 3,704 Total Depreciation and Amortization $ 48,089 $ 37,516 $ 151,709 $ 110,724 Interest Charges: SJI Utilities: SJG Utility Operations $ 9,444 $ 8,271 $ 28,782 $ 23,832 ETG Utility Operations 8,651 7,398 25,098 22,321 ELK Utility Operations — 2 — 21 Subtotal SJI Utilities 18,095 15,671 53,880 46,174 Energy Management: Retail Services 36 — 135 — Subtotal Energy Management 36 — 135 — Energy Production: Renewables 1,078 277 3,491 2,974 Decarbonization 286 — 853 — Subtotal Energy Production: 1,364 277 4,344 2,974 Midstream 322 677 1,627 1,837 Corporate and Services 13,406 12,490 39,744 43,332 Subtotal 33,223 29,115 99,730 94,317 Intersegment Borrowings (1,755) (1,353) (5,618) (5,430) Total Interest Charges $ 31,468 $ 27,762 $ 94,112 $ 88,887 Three Months Ended Nine Months Ended 2021 2020 2021 2020 Income Taxes: SJI Utilities: SJG Utility Operations $ (2,460) $ (3,293) $ 26,683 $ 23,157 ETG Utility Operations 132 (2,475) 11,320 7,869 ELK Utility Operations — (4) — 186 Subtotal SJI Utilities (2,328) (5,772) 38,003 31,212 Energy Management: Wholesale Energy Operations (4,043) 858 (907) 4,583 Retail Services 248 40 542 168 Subtotal Energy Management (3,795) 898 (365) 4,751 Energy Production: Renewables (2,134) (11,191) (2,301) (10,897) Decarbonization 205 — 329 — Subtotal Energy Production (1,929) (11,191) (1,972) (10,897) Midstream (107) (58) (197) (174) Corporate and Services (3,568) (3,344) (10,129) (11,167) Total Income Taxes $ (11,727) $ (19,467) $ 25,340 $ 13,725 Property Additions: SJI Utilities: SJG Utility Operations $ 64,988 $ 73,481 $ 186,948 $ 181,440 ETG Utility Operations 58,923 45,452 158,953 149,578 ELK Utility Operations — 112 — 971 Subtotal SJI Utilities 123,911 119,045 345,901 331,989 Energy Management: Wholesale Energy Operations 4 2 6 2 Subtotal Energy Management 4 2 6 2 Energy Production: Renewables 6,471 59,866 24,458 62,751 Decarbonization 8,140 — 10,014 — Subtotal Energy Production 14,611 59,866 34,472 62,751 Midstream 11 29 19 115 Corporate and Services 747 715 3,105 2,076 Total Property Additions $ 139,284 $ 179,657 $ 383,503 $ 396,933 September 30, 2021 December 31, 2020 Identifiable Assets: SJI Utilities: SJG Utility Operations $ 3,637,046 $ 3,522,265 ETG Utility Operations 2,717,842 2,561,067 Subtotal SJI Utilities 6,354,888 6,083,332 Energy Management: Wholesale Energy Operations 272,955 195,882 Retail Services 26,581 29,687 Subtotal Energy Management 299,536 225,569 Energy Production: Renewables 164,486 153,018 Decarbonization 89,910 40,482 Subtotal Energy Production 254,396 193,500 Midstream 8,795 92,208 Discontinued Operations 1,811 1,775 Corporate and Services 320,268 318,095 Intersegment Assets (215,683) (225,331) Total Identifiable Assets $ 7,024,011 $ 6,689,148 |