DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 03, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SOUTH JERSEY GAS Co | |
Entity Central Index Key | 1,035,216 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 2,339,139 |
CONDENSED STATEMENTS OF INCOME
CONDENSED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Operating Revenues | $ 75,812 | $ 69,159 | $ 343,470 | $ 279,704 |
Operating Expenses: | ||||
Cost of Sales (Excluding depreciation) | 25,419 | 24,879 | 171,521 | 128,172 |
Operations | 23,939 | 22,100 | 57,297 | 52,412 |
Maintenance | 3,928 | 3,181 | 7,926 | 6,440 |
Depreciation | 9,711 | 9,164 | 19,302 | 18,220 |
Energy and Other Taxes | 854 | 830 | 2,274 | 2,015 |
Total Operating Expenses | 63,851 | 60,154 | 258,320 | 207,259 |
Operating Income | 11,961 | 9,005 | 85,150 | 72,445 |
Other Income and Expense | 1,670 | 1,477 | 2,430 | 2,563 |
Interest Charges | (5,113) | (4,292) | (10,303) | (8,634) |
Income Before Income Taxes | 8,518 | 6,190 | 77,277 | 66,374 |
Income Taxes | (3,292) | (2,379) | (29,464) | (24,906) |
Net Income | $ 5,226 | $ 3,811 | $ 47,813 | $ 41,468 |
CONDENSED STATEMENTS OF COMPREH
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net Income | $ 5,226 | $ 3,811 | $ 47,813 | $ 41,468 | |
Other Comprehensive (Loss) Gain - Net of Tax: | |||||
Unrealized (Loss) Gain on Available-for-Sale Securities | [1] | (37) | 154 | 17 | 216 |
Unrealized Gain on Derivatives - Other | [1] | 7 | 7 | 9 | 15 |
Other Comprehensive (Loss) Gain - Net of Tax | [1] | (30) | 161 | 26 | 231 |
Comprehensive Income | $ 5,196 | $ 3,972 | $ 47,839 | $ 41,699 | |
[1] | Determined using a combined average statutory tax rate of 40% and 41% in 2015 and 2014, respectively. |
CONDENSED STATEMENTS OF COMPRE4
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Combined statutory tax rate | 40.00% | 41.00% | 40.00% | 41.00% |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Cash Flows [Abstract] | ||
Net Cash Provided by Operating Activities | $ 89,031 | $ 33,638 |
Cash Flows from Investing Activities: | ||
Capital Expenditures | (95,861) | (88,668) |
Note Receivable | (9,887) | 0 |
Net Purchase of Restricted Investments in Margin Accounts | 1,969 | (818) |
Investment in Long-Term Receivables | (3,381) | (3,410) |
Proceeds from Long-Term Receivables | 2,040 | 3,536 |
Net Cash Used in Investing Activities | (105,120) | (89,360) |
Cash Flows from Financing Activities: | ||
Net Borrowings from (Repayments of) Short-Term Credit Facilities | 26,200 | (55,500) |
Proceeds from Issuance of Long-Term Debt | 0 | 89,000 |
Payments for Issuance of Long-Term Debt | 0 | (581) |
Dividends on Common Stock | (9,891) | 0 |
Additional Investment by Shareholder | 0 | 25,000 |
Net Cash Provided by Financing Activities | 16,309 | 57,919 |
Net Increase in Cash and Cash Equivalents | 220 | 2,197 |
Cash and Cash Equivalents at Beginning of Period | 1,778 | 2,020 |
Cash and Cash Equivalents at End of Period | $ 1,998 | $ 4,217 |
CONDENSED BALANCE SHEETS (UNAUD
CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment: | |||
Utility Plant, at original cost | $ 2,101,634 | $ 2,002,966 | |
Accumulated Depreciation | (426,190) | (413,597) | |
Property, Plant and Equipment - Net | 1,675,444 | 1,589,369 | |
Investments: | |||
Available-for-Sale Securities | 8,974 | 8,894 | |
Restricted Investments | 5,992 | 7,961 | |
Total Investments | 14,966 | 16,855 | |
Current Assets: | |||
Cash and Cash Equivalents | 1,998 | 1,778 | |
Note Receivable | 9,887 | 0 | |
Accounts Receivable | 117,457 | 60,535 | |
Accounts Receivable - Related Parties | 995 | 1,157 | |
Unbilled Revenues | 10,374 | 49,910 | |
Provision for Uncollectibles | (9,402) | (6,601) | |
Natural Gas in Storage, average cost | 11,356 | 25,325 | |
Materials and Supplies, average cost | 1,112 | 1,104 | |
Deferred Income Taxes - Net | 35,487 | 44,064 | |
Prepaid Taxes | 20,577 | 13,601 | |
Derivatives - Energy Related Assets | 158 | 2,051 | |
Other Prepayments and Current Assets | 11,126 | 3,688 | |
Total Current Assets | 211,125 | 196,612 | |
Regulatory and Other Noncurrent Assets: | |||
Regulatory Assets | 335,182 | 357,160 | |
Unamortized Debt Issuance Costs | 6,991 | 7,382 | |
Long-Term Receivables | 19,744 | 15,223 | |
Derivatives - Energy Related Assets | 127 | 0 | |
Other | 2,654 | 3,071 | |
Total Regulatory and Other Noncurrent Assets | 364,698 | 382,836 | |
Total Assets | 2,266,233 | 2,185,672 | |
Common Equity: | |||
Common Stock, Par Value $2.50 per share: Authorized - 4,000,000 shares Outstanding - 2,339,139 shares | 5,848 | 5,848 | |
Other Paid-In Capital and Premium on Common Stock | 250,899 | 250,899 | |
Accumulated Other Comprehensive Loss | [1] | (14,453) | (14,479) |
Retained Earnings | 476,222 | 438,300 | |
Total Common Equity | 718,516 | 680,568 | |
Long-Term Debt | 507,091 | 507,091 | |
Total Capitalization | 1,225,607 | 1,187,659 | |
Current Liabilities: | |||
Notes Payable | 127,600 | 101,400 | |
Current Portion of Long-Term Debt | 35,909 | 35,909 | |
Accounts Payable - Commodity | 13,237 | 22,359 | |
Accounts Payable - Other | 34,659 | 32,711 | |
Accounts Payable - Related Parties | 9,635 | 11,249 | |
Derivatives - Energy Related Liabilities | 5,217 | 6,305 | |
Customer Deposits and Credit Balances | 18,633 | 17,626 | |
Environmental Remediation Costs | 40,134 | 28,480 | |
Taxes Accrued | 1,692 | 1,177 | |
Pension Benefits | 1,515 | 1,515 | |
Interest Accrued | 6,122 | 6,099 | |
Other Current Liabilities | 3,030 | 6,580 | |
Total Current Liabilities | 297,383 | 271,410 | |
Regulatory and Other Noncurrent Liabilities: | |||
Regulatory Liabilities | 64,655 | 41,899 | |
Deferred Income Taxes - Net | 452,160 | 435,022 | |
Environmental Remediation Costs | 85,631 | 95,828 | |
Asset Retirement Obligations | 42,292 | 41,976 | |
Pension and Other Postretirement Benefits | 84,362 | 95,241 | |
Investment Tax Credits | 74 | 149 | |
Derivatives - Energy Related Liabilities | 353 | 1,298 | |
Derivatives - Other | 6,615 | 7,325 | |
Other | 7,101 | 7,865 | |
Total Regulatory and Other Noncurrent Liabilities | $ 743,243 | $ 726,603 | |
Commitments and Contingencies | |||
Total Capitalization and Liabilities | $ 2,266,233 | $ 2,185,672 | |
[1] | Determined using a combined average statutory tax rate of 40%. |
CONDENSED BALANCE SHEETS (UNAU7
CONDENSED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par Value (in dollars per share) | $ 2.50 | $ 2.50 |
Authorized (in shares) | 4,000,000 | 4,000,000 |
Outstanding (in shares) | 2,339,139 | 2,339,139 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: THE ENTITY - South Jersey Industries, Inc. (SJI) owns all of the outstanding common stock of South Jersey Gas Company (SJG or the Company), a regulated natural gas utility. SJG distributes natural gas in the seven southern most counties of New Jersey. In our opinion, the condensed financial statements reflect all normal and recurring adjustments needed to fairly present our financial position and operating results at the dates and for the periods presented. SJG’s business is subject to seasonal fluctuations and accordingly, this interim financial information should not be the basis for estimating the full year’s operating results. As permitted by the rules and regulations of the Securities and Exchange Commission, the accompanying condensed financial statements contain certain condensed financial information and exclude certain note disclosures normally included in annual audited financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). These condensed financial statements should be read in conjunction with SJG’s Annual Report on Form 10-K for the year ended December 31, 2014 for a more complete discussion of our accounting policies and certain other information. REVENUE AND THROUGHPUT - BASED TAXES - SJG collects certain revenue-based energy taxes from its customers. Such taxes include New Jersey State Sales Tax and Public Utilities Assessment (PUA). State sales tax is recorded as a liability when billed to customers and is not included in revenue or operating expenses. The PUA is included in both revenues and energy and other taxes, and totaled $ 0.2 million for each of the three month-periods ended June 30, 2015 and 2014 , and $0.8 million and $0.6 million for the six months ended June 30, 2015 and 2014, respectively. NEW ACCOUNTING PRONOUNCEMENTS — Other than as described below, no new accounting pronouncement issued or effective during 2015 or 2014 had, or is expected to have, a material impact on the condensed financial statements. In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU supersedes the revenue recognition requirements in FASB ASC 605, Revenue Recognition , and in most industry-specific topics. The new guidance identifies how and when entities should recognize revenue. The new rules establish a core principle requiring the recognition of revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for such goods or services. The new guidance is effective for fiscal years, and interim periods within those annual periods, beginning after December 15, 2017. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern . The new guidance requires management of a company to evaluate whether there is substantial doubt about the company's ability to continue as a going concern. This ASU is effective for the annual reporting period ending after December 15, 2016, and for interim and annual reporting periods thereafter, with early adoption permitted. Management does not expect this standard to have an impact on the Company's financial statements upon adoption. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810)—Amendments to the Consolidation Analysis , which changes the analysis to be performed in determining whether certain types of legal entities should be consolidated. Specifically, the standard amends the evaluation of whether (a) fees paid to a decision maker or service providers represent a variable interest, (b) a limited partnership or similar entity has the characteristics of a Variable Interest Entity ("VIE") and (c) a reporting entity is the primary beneficiary of a VIE. The standard is effective for annual periods beginning after December 15, 2015 and interim periods therein, with early adoption permitted. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . This ASU requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. Also in April 2015, the FASB issued ASU 2015-5, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) . This ASU provides guidance to customers (1) in determining whether a cloud computing arrangement includes a software license, and (2) on how the arrangement should be accounted for, depending on whether or not it includes a software license. The amended guidance is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory . This ASU states that inventory for which cost is determined using a method other than last-in, first-out (LIFO) or the retail method should be subsequently measured at the lower of cost or net realizable value (NRV), rather than at the lower of cost or market. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION PLANS | STOCK-BASED COMPENSATION PLANS: Officers and other key employees of SJG participate in the Stock-Based Compensation Plan (Plan) of SJI. Restricted performance-based shares issued under the Plan vest over a three-year period and are subject to SJI achieving certain market or earnings-based performance targets as compared to a peer group average, which can cause the actual amount of shares that ultimately vest to range from between 0% to 200% of the original share units granted. In 2015, SJI also granted time-based shares of restricted stock, one-third of which vests annually over a three -year period and is limited to 100% payout. Vesting of time-based grants is contingent upon SJI achieving a return on equity (ROE) of at least 7% during the initial year of the grant and meeting the service requirement. Provided that the 7% ROE requirement is met in the initial year, payment is solely contingent upon the service requirement being met in years two and three of the grant. In 2015, SJG officers and other key employees were granted 7,912 shares of time-based restricted stock. Grants containing market-based performance targets use SJI's total shareholder return (TSR) relative to a peer group to measure performance. As TSR-based grants are contingent upon market and service conditions, SJI is required to measure and recognize stock-based compensation expense based on the fair value at the date of grant on a straight-line basis over the requisite three-year period of each award. In addition, SJI identifies specific forfeitures of share-based awards, and compensation expense is adjusted accordingly over the requisite service period. Compensation expense is not adjusted based on the actual achievement of performance goals. The fair value of TSR-based restricted stock awards on the date of grant is estimated using a Monte Carlo simulation model. Through 2014, grants containing earnings-based targets were based on SJI's earnings per share (EPS) growth rate relative to a peer group to measure performance. Beginning in 2015, earning-based performance targets include predefined EPS and return on equity (ROE) goals to measure performance. As EPS-based and ROE-based grants are contingent upon performance and service conditions, SJI is required to measure and recognize stock-based compensation expense based on the fair value at the date of grant over the requisite three-year period of each award. The fair value is measured as the market price at the date of grant. The initial accruals of compensation expense are based on the estimated number of shares expected to vest, assuming the requisite service is rendered and probable outcome of the performance condition is achieved. That estimate is revised if subsequent information indicates that the actual number of shares is likely to differ from previous estimates. Compensation expense is ultimately adjusted based on the actual achievement of service and performance targets. We are allocated a portion of SJI's compensation cost during the vesting period. We accrue a liability and record compensation cost over the requisite three-year service period based on the grant date fair value as described above for each type of grant. Upon vesting, we make a cash payment to SJI equal to the amounts accrued as compensation cost during the vesting period. Since the inception of the Plan, our expense recognition policy has been consistent with the expense recognition policy at SJI. The following table summarizes the SJI nonvested restricted stock awards pertaining to SJG outstanding at June 30, 2015 , and the assumptions used to estimate the fair value of the awards: Grants Shares Outstanding Fair Value Per Share Expected Volatility Risk-Free Interest Rate 2013 - TSR 7,945 $ 22.19 21.1 % 0.40 % 2013 - EPS 7,945 $ 25.59 n/a n/a 2014 - TSR 10,261 $ 21.31 20.0 % 0.80 % 2014 - EPS 10,261 $ 27.22 n/a n/a 2015 - TSR 7,267 $ 26.31 16.0 % 1.10 % 2015 - EPS, ROE, Time 18,693 $ 29.47 n/a n/a Expected volatility is based on the actual volatility of SJI’s share price over the preceding three -year period as of the valuation date. The risk-free interest rate is based on the zero-coupon U.S. Treasury Bond, with a term equal to the three -year term of the restricted shares. As notional dividend equivalents are credited to the holders during the three -year service period, no reduction to the fair value of the award is required. The cost for restricted stock awards during 2015 and 2014 is approximately $0.1 million per quarter. Of these costs, approximately one half was capitalized to Utility Plant. As of June 30, 2015 , there was $0.9 million of total unrecognized compensation cost related to nonvested share-based compensation awards granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.1 years. The following table summarizes information regarding restricted stock award activity during the six months ended June 30, 2015 , excluding accrued dividend equivalents: Shares Weighted Average Grant Date Fair Value Nonvested Shares Outstanding, January 1, 2015 36,794 $ 24.10 Granted 26,378 $ 28.58 Canceled / Forfeited (800 ) $ 26.47 Nonvested Shares Outstanding, June 30, 2015 62,372 $ 25.97 Performance targets during the three -year vesting periods were not attained for the January 2011 grant that vested at December 31, 2013, or the January 2012 grant that vested at December 31, 2014. As a result, no shares were awarded in 2014 or 2015. SJG has a policy of making cash payments to SJI to satisfy its obligations under the Plan. Cash payments to SJI during the six months ended June 30, 2015 and 2014 were approximately $0.2 million and $0.4 million , respectively, relating to stock awards. Additionally, a change in control could result in the nonvested shares becoming nonforfeitable or immediately payable in cash. |
RATES AND REGULATORY ACTIONS
RATES AND REGULATORY ACTIONS | 6 Months Ended |
Jun. 30, 2015 | |
Public Utilities, General Disclosures [Abstract] | |
RATES AND REGULATORY ACTIONS | RATES AND REGULATORY ACTIONS: SJG is subject to the rules and regulations of the New Jersey Board of Public Utilities (BPU). In January 2015, SJG filed a petition with the BPU seeking to continue offering energy efficiency programs through June 2018 with a proposed total budget of $56 million and with the same rate recovery mechanism that exists for its current energy efficiency programs. This petition is currently pending. In April 2015, SJG filed a petition requesting to increase annual revenues from base rates by $4.6 million to reflect the roll-in of investments made through June 2015 under its Storm Hardening and Reliability Program (“SHARP”), with rates to become effective on October 1, 2015. This petition is currently pending. In May 2015, the BPU approved an $18.2 million decrease in annual revenues collected from customers through the Societal Benefits Clause ("SBC") charge and the Transportation Initiation Clause ("TIC") charge, comprised of a $6.2 million decrease in revenues from the Remediation Adjustment Clause (“RAC”) component of the SBC, an $11.5 million decrease in revenues from the Clean Energy Program (“CLEP”) component of the SBC and a $0.5 million decrease in TIC revenues, effective June 1, 2015. The decreases in the RAC and CLEP components of the SBC are primarily driven by the accumulation of prior year over-recoveries, as rate recovery exceeded program costs. The decrease in the TIC is being caused by a decrease in costs. The SBC and TIC allow SJG to recover costs associated with certain State-mandated programs. In June 2015, SJG filed its annual Basic Gas Supply Service (“BGSS”) and Conservation Incentive Program (“CIP”) rate adjustment petition, requesting a $39.7 million decrease in annual revenues to be implemented on October 1, 2015, comprised of a $28.4 million decrease in BGSS revenues and an $11.3 million decrease in CIP revenues. The level of BGSS revenues is based on forecasted gas costs and customer usage information for the upcoming BGSS/CIP year, which runs from October to September. SJG’s request is based on decreases in forecasted gas commodity costs for the upcoming BGSS/CIP year. The decrease in CIP revenues is caused primarily by higher than normal customer usage caused by weather that was 10.4% colder than normal during the 2014-2015 winter season. This petition is currently pending. Also in June 2015, SJG filed its annual Energy Efficiency Tracker (“EET”) rate adjustment petition, requesting a $7.6 million decrease in revenues to continue recovering the costs of, and the allowed return on, prior investments associated with energy efficiency programs ("EEPs"). SJG's original EEPs, approved by the BPU in 2009, and its EEP extension, approved by the BPU in 2013, ended in July 2013 and June 2015, respectively. The revenue requirements associated with these prior investments decrease over time as they are amortized and recovered. Also contributing to the revenue decrease is the forecasted October 2015 over-recovery of $1.7 million , which further reduces the revenue requirement for the upcoming EET year. This petition is currently pending. The various revenue decreases noted above do not impact SJG's earnings. They represent decreases in the cash requirements of the Company corresponding to lower costs and/or the return of previously over-recovered costs associated with each respective mechanism. There have been no other significant regulatory actions or changes to SJG's rate structure since December 31, 2014 . See Note 3 to the Financial Statements in Item 8 of SJG's Form 10-K for the year ended December 31, 2014 . |
REGULATORY ASSETS AND LIABILITI
REGULATORY ASSETS AND LIABILITIES | 6 Months Ended |
Jun. 30, 2015 | |
Regulatory Assets and Liabilities Disclosure [Abstract] | |
REGULATORY ASSETS AND LIABILITIES | REGULATORY ASSETS AND LIABILITIES: There have been no significant changes to the nature of SJG’s regulatory assets and liabilities since December 31, 2014 , which are described in Notes 3 and 4 to the Financial Statements in Item 8 of SJG’s Form 10-K for the year ended December 31, 2014 . Regulatory Assets consisted of the following items (in thousands): June 30, 2015 December 31, 2014 Environmental Remediation Costs: Expended - Net $ 29,145 $ 29,540 Liability for Future Expenditures 125,769 124,308 Deferred Asset Retirement Obligation Costs 31,799 31,584 Deferred Pension and Other Postretirement Benefit Costs 99,040 99,040 Deferred Gas Costs - Net 20,194 32,202 Societal Benefit Costs Receivable — 385 Deferred Interest Rate Contracts (Note 11) 6,615 7,325 Energy Efficiency Tracker 852 11,247 Pipeline Supplier Service Charges 4,608 5,441 Pipeline Integrity Cost 3,851 3,431 AFUDC - Equity Related Deferrals 11,330 10,781 Other Regulatory Assets 1,979 1,876 Total Regulatory Assets $ 335,182 $ 357,160 DEFERRED GAS COSTS - NET - Over/under collections of gas costs are monitored through SJG's Basic Gas Supply Service (BGSS) mechanism. Net undercollected gas costs are classified as a regulatory asset and net overcollected gas costs are classified as a regulatory liability. Derivative contracts used to hedge natural gas purchases are also included in the BGSS, subject to BPU approval. The reduction in deferred gas costs from December 31, 2014 was due to gas costs recovered from customers exceeding the actual cost of the commodity incurred during the first six months of 2015 as a result of lower natural gas prices. SJG's BGSS mechanism is designed to over-collect gas costs during the winter season when usage is highest. ENERGY EFFICIENCY TRACKER - This regulatory asset primarily represents energy efficiency measures installed in customer homes and businesses. The decrease from December 31, 2014 is due to higher recoveries in the first six months of 2015 resulting from extremely cold weather. Regulatory Liabilities consisted of the following items (in thousands): June 30, 2015 December 31, 2014 Excess Plant Removal Costs $ 34,701 $ 35,940 Conservation Incentive Program Payable 17,255 4,700 Societal Benefit Costs 12,699 — Other Regulatory Liabilities — 1,259 Total Regulatory Liabilities $ 64,655 $ 41,899 EXCESS PLANT REMOVAL COSTS - Represents amounts accrued in excess of actual utility plant removal costs incurred to date. The decrease in the balance from year end is due to an amortization as a credit to depreciation expense, as required as part of our September 2014 base rate increase. CONSERVATION INCENTIVE PROGRAM (CIP) PAYABLE – The CIP tracking mechanism adjusts earnings when actual usage per customer experienced during the period varies from an established baseline usage per customer. Actual usage per customer was greater than the established baseline during 2014 and more notably during the first six months of 2015, resulting in a payable. This is primarily the result of extremely cold weather experienced in the region. SOCIETAL BENEFIT COSTS (SBC) - This regulatory liability primarily represents the excess recoveries over the expenses incurred under the New Jersey Clean Energy Program which is a mechanism designed to recover costs associated with energy efficiency and renewable energy programs. The change from a $0.4 million regulatory asset to a $12.7 million regulatory liability is due to current SBC rates, which are producing revenue greater than SBC expenses. In July 2014, SJG made its annual 2014-2015 SBC filing requesting a decrease in SBC revenues, in part, to avoid this liability. The petition was approved and new rates went into effect on June 1, 2015. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS: There have been no significant changes in the nature of SJG’s related-party transactions since December 31, 2014 . See Note 5 to the Financial Statements in Item 8 of SJG’s Form 10-K for the year ended December 31, 2014 for a detailed description of the related parties and their associated transactions. A summary of related party transactions, excluding pass-through items, included in Operating Revenues were as follows (in thousands): Three Months Ended Six Months Ended 2015 2014 2015 2014 Operating Revenues/Affiliates: SJRG $ 479 $ 225 $ 1,531 $ 383 Marina 135 303 367 636 Total Operating Revenue/Affiliates $ 614 $ 528 $ 1,898 $ 1,019 Related-party transactions, excluding pass-through items, included in Operating Expenses were as follows (in thousands): Three Months Ended Six Months Ended 2015 2014 2015 2014 Costs of Sales/Affiliates (Excluding depreciation) SJRG $ 1,508 $ 1,442 $ 20,531 $ 6,926 Energy-Related Derivative Losses / (Gains) * SJRG $ 69 $ (490 ) $ 65 $ (1,520 ) * Contracts used to hedge natural gas purchases. Included in Cost of Sales on the Condensed Statements of Income. Operations Expense/Affiliates SJI $ 3,364 $ 3,148 $ 7,281 $ 7,178 Millennium 693 687 1,353 1,295 Other (108 ) (112 ) (217 ) (216 ) Total Operations Expense/Affiliates $ 3,949 $ 3,723 $ 8,417 $ 8,257 |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2015 | |
Financial Instruments, Owned, at Fair Value [Abstract] | |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS: RESTRICTED INVESTMENTS - In accordance with the terms of our tax-exempt first mortgage bonds, unused proceeds are required to be escrowed pending approved construction expenditures. As of both June 30, 2015 and December 31, 2014 , the escrowed proceeds, including interest earned, totaled $0.1 million . SJG maintains a margin account with a counterparty in conjunction with SJG's risk management activities as detailed in Note 11. The funds provided by SJG will increase or decrease as the number and value of outstanding energy-related contracts held with this counterparty change. As of June 30, 2015 and December 31, 2014 , the balance held with this counterparty totaled $5.9 million and 7.8 million , respectively. The carrying amounts of the Restricted Investments approximate their fair value at June 30, 2015 and December 31, 2014 , which would be included in Level 1 of the fair value hierarchy. (See Note 10 - Fair Value of Financial Assets and Financial Liabilities.) NOTE RECEIVABLE - In June 2015, SJG advanced $10.0 million to a not-for-profit organization formed to spur economic development in Atlantic City, New Jersey. The Note bears interest at 1% for an initial term of six months, with the borrower’s option to extend the term for two additional terms of three months each. SJG holds a first lien security interest on land in Atlantic City as collateral against this note. 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 a period of up to five years with no interest. The carrying amounts of such loans were $14.0 million and $15.0 million as of June 30, 2015 and December 31, 2014 , respectively. The current portion of these receivables is reflected in Accounts Receivable and the non-current portion is reflected in Long-Term Receivables on the condensed balance sheets. The carrying amounts noted above are net of unamortized discounts resulting from imputed interest in the amount of $1.1 million and $1.3 million as of June 30, 2015 and December 31, 2014 , respectively. The annualized amortization to interest is not material to SJG’s financial statements. The carrying amounts of these receivables approximate their fair value at June 30, 2015 and December 31, 2014 , which would be included in Level 2 of the fair value hierarchy. (See Note 10 - Fair Value of Financial Assets and Financial Liabilities.) 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 SJG's financial instruments approximate their fair values at June 30, 2015 and December 31, 2014 , except as noted below. • For Long-Term Debt, in estimating the fair value, we use the present value of remaining cash flows at the balance sheet date. We based the estimates on interest rates available to SJG at the end of each period for debt with similar terms and maturities (Level 2 in the fair value hierarchy. See Note 10 - Fair Value of Financial Assets and Financial Liabilities). The estimated fair values of SJG's long-term debt, including current maturities, as of June 30, 2015 and December 31, 2014 , were $579.1 million and $587.3 million , respectively. The carrying amount of SJG's long-term debt, including current maturities, as of both June 30, 2015 and December 31, 2014 was $543.0 million . |
LINES OF CREDIT
LINES OF CREDIT | 6 Months Ended |
Jun. 30, 2015 | |
Line of Credit Facility [Abstract] | |
LINES OF CREDIT | LINES OF CREDIT: Credit facilities and available liquidity as of June 30, 2015 were as follows (in thousands): Total Facility Usage Available Liquidity Expiration Date Commercial Paper Program/ Revolving Credit Facility $ 200,000 $ 127,600 $ 72,400 May 2018 Uncommitted Bank Lines 10,000 — 10,000 Various Total $ 210,000 $ 127,600 $ 82,400 The SJG revolving credit facility is provided by a syndicate of banks and contains one financial covenant limiting the ratio of indebtedness to total capitalization (as defined in the credit agreement) to not more than 0.65 to 1 measured at the end of each fiscal quarter. SJG was in compliance with this covenant as of June 30, 2015 . SJG manages a commercial paper program under which SJG may issue short-term, unsecured promissory notes to qualified investors up to a maximum aggregate amount outstanding at any time of $200.0 million . The notes have fixed maturities which vary by note, but may not exceed 270 days from the date of issue. Proceeds from the notes are used for general corporate purposes. SJG uses the commercial paper program in tandem with the $200.0 million revolving credit facility and does not expect the principal amount of borrowings outstanding under the commercial paper program and the credit facility at any time to exceed an aggregate of $200.0 million . Average borrowings outstanding under these credit facilities during the six months ended June 30, 2015 and 2014 were $112.0 million and $43.3 million , respectively. The maximum amount outstanding under these credit facilities during the six months ended June 30, 2015 and 2014 were $ 139.1 million and $ 70.1 million , respectively. Borrowings under these credit facilities are at market rates. The weighted average interest rate on these borrowings, which changes daily, was 0.45% and 0.25% at June 30, 2015 and 2014 , respectively. |
PENSION AND OTHER POSTRETIREMEN
PENSION AND OTHER POSTRETIREMENT BENEFITS | 6 Months Ended |
Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
PENSION AND OTHER POSTRETIREMENT BENEFITS | PENSION AND OTHER POSTRETIREMENT BENEFITS: For the three and six months ended June 30, 2015 and 2014 , net periodic benefit cost related to the employee and officer pension and other postretirement benefit plans consisted of the following components (in thousands): Pension Benefits Pension Benefits Three Months Ended Six Months Ended 2015 2014 2015 2014 Service Cost $ 925 $ 966 $ 1,992 $ 1,932 Interest Cost 2,120 2,027 4,168 4,054 Expected Return on Plan Assets (2,784 ) (2,455 ) (5,519 ) (4,910 ) Amortizations: Prior Service Cost 40 33 79 66 Actuarial Loss 1,995 1,072 3,959 2,144 Net Periodic Benefit Cost 2,296 1,643 4,679 3,286 Capitalized Benefit Cost (1,194 ) (854 ) (2,433 ) (1,708 ) Deferred Benefit Cost (325 ) — (325 ) — Total Net Periodic Benefit Expense $ 777 $ 789 $ 1,921 $ 1,578 Other Postretirement Benefits Other Postretirement Benefits Three Months Ended Six Months Ended 2015 2014 2015 2014 Service Cost $ 190 $ 172 $ 372 $ 344 Interest Cost 561 510 991 1,020 Expected Return on Plan Assets (581 ) (473 ) (997 ) (946 ) Amortizations: Prior Service Cost 118 26 202 52 Actuarial Loss 233 167 447 334 Net Periodic Benefit Cost 521 402 1,015 804 Capitalized Benefit Cost (271 ) (209 ) (528 ) (418 ) Deferred Benefit Cost (79 ) — (79 ) — Total Net Periodic Benefit Expense $ 171 $ 193 408 386 Capitalized benefit cost reflected in the table above relate to our construction program. Deferred benefit costs relate to the deferral of incremental expenses associated with the adoption of new mortality tables (RP-2014 base table with MP-2014 generational projection scale) in 2015. Deferred costs are expected to be recovered through rates as part of our next base rate case. SJG contributed $12.0 million to the pension plans in January 2015. No contributions were made to the pension plans during 2014. Payments related to the unfunded Supplemental Executive Retirement Plan (SERP) are expected to approximate $1.5 million in 2015. We also have a regulatory obligation to contribute approximately $3.6 million annually to the other postretirement benefit plans’ trusts, less direct costs incurred. See Note 11 to the Financial Statements in Item 8 of SJG’s Form 10-K for the year ended December 31, 2014 for additional information related to SJG’s pension and other postretirement benefits. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES: STANDBY LETTER OF CREDIT - SJG provided a $25.2 million letter of credit under a separate facility outside of its revolving credit facility to support variable-rate demand bonds issued through the New Jersey Economic Development Authority (NJEDA) to finance the expansion of SJG’s natural gas distribution system. ENVIRONMENTAL REMEDIATION COSTS - SJG incurred and recorded costs for environmental cleanup of 12 sites where SJG or its predecessors operated gas manufacturing plants. SJG stopped manufacturing gas in the 1950s. There have been no significant changes to the status of SJG’s environmental remediation efforts since December 31, 2014 , as described in Note 12 to the Financial Statements in Item 8 of SJG’s Form 10-K for the year ended December 31, 2014 . GAS SUPPLY RELATED CONTRACTS - In the normal course of conducting business, we have entered into long-term contracts for natural gas supplies, firm transportation and gas storage service. The earliest date at which any of the primary terms of these contracts expire is October 2017. The transportation and storage agreements entered into between us and each of our interstate pipeline service providers were done so in accordance with their respective FERC-approved tariff. Our cumulative obligation for gas supply-related demand charges and reservation fees paid for these services averages approximately $4.6 million per month and is recovered on a current basis through the BGSS. PENDING LITIGATION - We are subject to claims arising in the ordinary course of business and other legal proceedings. We accrue liabilities related to these claims when we can reasonably estimate the amount or range of amounts of probable settlement costs or other charges for these claims. The Company has accrued approximately $0.6 million and $0.5 million related to all claims in the aggregate as of June 30, 2015 and December 31, 2014 , respectively. Management does not believe that it is reasonably possible that there will be a material change in the Company's estimated liability in the near term and does not currently anticipate the disposition of any known claims that would have a material effect on the Company's financial position, results of operations or cash flows. COLLECTIVE BARGAINING AGREEMENTS - Unionized personnel represent approximately 61% of our workforce at June 30, 2015 . The Company has collective bargaining agreements with two unions who represent these employees: the International Brotherhood of Electrical Workers (IBEW) operates under a collective bargaining agreement that runs through February 2017; and the International Association of Machinists and Aerospace Workers (IAM) operates under a collective bargaining agreement that expires in August 2017. |
FAIR VALUE OF FINANCIAL ASSETS
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES | FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES: GAAP establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The levels of the hierarchy are described below: • Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. For financial assets and financial liabilities measured at fair value on a recurring basis, information about the fair value measurements for each major category is as follows (in thousands): As of June 30, 2015 Total Level 1 Level 2 Level 3 Assets Available-for-Sale Securities (A) $ 8,974 $ 5,335 $ 3,639 $ — Derivatives – Energy Related Assets (B) 285 285 — — $ 9,259 $ 5,620 $ 3,639 $ — Liabilities Derivatives – Energy Related Liabilities (B) $ 5,570 $ 4,655 $ 331 $ 584 Derivatives – Other (C) 6,615 — 6,615 — $ 12,185 $ 4,655 $ 6,946 $ 584 As of December 31, 2014 Total Level 1 Level 2 Level 3 Assets Available-for-Sale Securities (A) $ 8,894 $ 5,924 $ 2,970 $ — Derivatives - Energy Related Assets (B) 2,051 2 2,049 — $ 10,945 $ 5,926 $ 5,019 $ — Liabilities Derivatives - Energy Related Liabilities (B) $ 7,603 $ 7,254 $ 349 $ — Derivatives - Other (C) 7,325 — 7,325 — $ 14,928 $ 7,254 $ 7,674 $ — (A) Available-for-Sale Securities include securities that are traded in active markets and securities that are not traded publicly. The securities traded in active markets are valued using the quoted principal market close prices that are provided by the trustees and are categorized in Level 1 in the fair value hierarchy. The remaining securities consist of funds that are not publicly traded. These funds, which consist of stocks and bonds that are traded individually in active markets, are valued using quoted prices for similar assets and are categorized in Level 2 in the fair value hierarchy. (B) Derivatives – Energy Related Assets and Liabilities are traded in both exchange-based and non-exchange-based markets. Exchange-based contracts are valued using unadjusted quoted market sources in active markets and are categorized in Level 1 in the fair value hierarchy. Certain non-exchange-based contracts are valued using indicative price quotations available through brokers or over-the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask mid-point prices and are obtained from sources that management believes provide the most liquid market. For non-exchange-based derivatives that trade in less liquid markets with limited pricing information, model inputs generally would include both observable and unobservable inputs. In instances where observable data is unavailable, management considers the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 as the model inputs generally are not observable. Significant Unobservable Inputs - Management uses the discounted cash flow model to value Level 3 physical and financial forwards, which calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. Inputs to the valuation model are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third party pricing sources. The validity of the mark-to-market valuations and changes in mark-to-market valuations from period to period are examined and qualified against historical expectations by the risk management function. If any discrepancies are identified during this process, the mark-to-market valuations or the market pricing information is evaluated further and adjusted, if necessary. Level 3 valuation methods for natural gas derivative contracts include utilizing another location in close proximity adjusted for certain pipeline charges to derive a basis value. The significant unobservable inputs used in the fair value measurement of certain natural gas contracts consist of forward prices developed based on industry-standard methodologies. Significant increases (decreases) in these forward prices for purchases of natural gas would result in a directionally similar impact to the fair value measurement and for sales of natural gas would result in a directionally opposite impact to the fair value measurement. (C) Derivatives – Other, include interest rate swaps that are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment. The following table provides quantitative information regarding significant unobservable inputs in Level 3 fair value measurements (in thousands): Type Fair Value at June 30, 2015 Valuation Technique Significant Unobservable Input Range [Weighted Average] Assets Liabilities Forward Contract - Natural Gas $— $584 Discounted Cash Flow Forward price (per dt) $1.21 - $7.51 [$4.28] The changes in fair value measurements of Derivatives - Energy Related Assets and Liabilities for the three and six months ended June 30, 2015 and 2014, using significant unobservable inputs (Level 3), are as follows (in thousands): Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 Balance at beginning of period $ — $ — Total unrealized losses included in Regulatory Liabilities (see note 4) (584 ) (584 ) Balance at end of period (584 ) (584 ) Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Balance at beginning of period $ — $ — Total unrealized losses included in Regulatory Liabilities (see note 4) (8 ) (8 ) Balance at end of period (8 ) (8 ) |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS: SJG is involved in buying, selling, transporting and storing natural gas and is subject to market risk on expected future purchases and sales due to commodity price fluctuations. The Company, through a counterparty, uses a variety of derivative instruments to limit this exposure to market risk in accordance with strict corporate guidelines. These derivative instruments include forward contracts, futures contracts, swap agreements and options contracts. As of June 30, 2015 , SJG had outstanding derivative contracts intended to limit the exposure to market risk on 10.1 million decatherms (MMdts) of expected future purchases of natural gas and 0.65 MMdts of expected future sales of natural gas. In addition to these derivative contracts, SJG had basis and index related purchase and sales contracts totaling 1.0 MMdts. These contracts, which do not qualify for the normal purchase and sale exemption and have not been designated as hedging instruments under GAAP, are measured at fair value and recorded in Derivatives — Energy Related Assets or Derivatives — Energy Related Liabilities on the condensed balance sheets. The costs or benefits of these short-term contracts are recoverable through SJG’s BGSS clause, subject to BPU approval. As a result, the net unrealized pre-tax gains and losses for these energy-related commodity contracts are included with realized gains and losses in Regulatory Assets or Regulatory Liabilities on the condensed balance sheets. As of June 30, 2015 and December 31, 2014 , SJG had $5.3 million and $5.6 million of unrealized losses, respectively, included in its BGSS related to open financial contracts. The Company has also entered into interest rate derivatives to hedge exposure to increasing interest rates and the impact of those rates on cash flows of variable-rate debt. These interest rate derivatives, which have not been designated as hedging instruments under GAAP, are measured at fair value and recorded in Derivatives-Other on the condensed balance sheets. The fair value represents the amount SJG would have to pay the counterparty to terminate these contracts as of those dates. There have been no significant changes to the Company’s active interest rate swaps since December 31, 2014 , which are described in Note 1 to the Financial Statements in Item 8 of SJG’s Annual Report on Form 10-K for the year ended December 31, 2014 . Subject to BPU approval, the market value upon termination of these interest rate derivatives can be recovered in rates and, therefore, these unrealized losses have been included in Regulatory Assets on the condensed balance sheets. We previously used derivative transactions known as “Treasury Locks” to hedge against the impact on our cash flows of possible interest rate increases on debt issued in September 2005. The initial $1.4 million cost of the Treasury Locks has been included in Accumulated Other Comprehensive Loss and is being amortized over the 30 -year life of the associated debt issue. As of June 30, 2015 and December 31, 2014 , the unamortized balance was approximately $0.9 million , and $1.0 million , respectively. The fair values of all derivative instruments, as reflected in the condensed balance sheets as of June 30, 2015 and December 31, 2014 , are as follows (in thousands): Derivatives not designated as hedging instruments under GAAP June 30, 2015 December 31, 2014 Assets Liabilities Assets Liabilities Energy related commodity contracts: Derivatives – Energy Related – Current $ 158 $ 5,217 $ 2,051 $ 6,305 Derivatives – Energy Related – Non-Current 127 353 — 1,298 Interest rate contracts: Derivatives – Other — 6,615 — 7,325 Total derivatives not designated as hedging instruments under GAAP 285 12,185 2,051 14,928 Total Derivatives $ 285 $ 12,185 $ 2,051 $ 14,928 The Company enters into derivative contracts with counterparties, some of which are subject to master netting arrangements, which allow net settlements under certain conditions. The Company presents derivatives at gross fair values on the condensed balance sheets. As of June 30, 2015 , and December 31, 2014 , information related to these offsetting arrangements were as follows (in thousands): As of June 30, 2015: Description Gross amounts of recognized assets/liabilities Gross amount offset in the balance sheet Net amounts of assets/liabilities in balance sheet Gross amounts not offset in the balance sheet Net amount Financial Instruments Cash Collateral Posted Derivatives - Energy Related Assets $ 285 $ — $ 285 $ (285 ) (A) $ — $ — Derivatives - Energy Related Liabilities (5,570 ) — (5,570 ) 285 (B) 4,370 (915 ) Derivatives - Other (6,615 ) — (6,615 ) — — (6,615 ) As of December 31, 2014: Description Gross amounts of recognized assets/liabilities Gross amount offset in the balance sheet Net amounts of assets/liabilities in balance sheet Gross amounts not offset in the balance sheet Net amount Financial Instruments Cash Collateral Posted Derivatives - Energy Related Assets $ 2,051 $ — $ 2,051 $ (2 ) (A) $ — $ 2,049 Derivatives - Energy Related Liabilities (7,603 ) — (7,603 ) 2 (B) 7,253 (348 ) Derivatives - Other (7,325 ) — (7,325 ) — — (7,325 ) (A) The balances at June 30, 2015 and December 31, 2014 were related to derivative liabilities which can be net settled against derivative assets. (B) The balances at June 30, 2015 and December 31, 2014 were related to derivative assets which can be net settled against derivative liabilities. The effect of derivative instruments on the condensed statements of income for the three and six months ended June 30, 2015 and 2014 are as follows (in thousands): Three months ended Six months ended Derivatives in Cash Flow Hedging Relationships 2015 2014 2015 2014 Interest Rate Contracts: Losses reclassified from Accumulated Other Comprehensive Loss into income (a) $ (12 ) $ (12 ) $ (24 ) $ (24 ) (a) Included in Interest Charges Net realized loss of $2.1 million and gain of $1.2 million associated with SJG's energy-related financial commodity contracts for the three months ended June 30, 2015 and 2014 , and loss of $4.8 million and gain of $3.6 million for the six month ended June 30, 2015 and 2014, respectively, are not included in the above table. These contracts are part of SJG’s regulated risk management activities that serve to mitigate BGSS costs passed on to its customers. As these transactions are entered into pursuant to, and recoverable through, regulatory riders, any changes in the value of SJG’s energy-related financial commodity contracts are deferred in Regulatory Assets or Liabilities, as applicable, and there is no impact to earnings. |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2015 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT: The Company did not issue or retire any long-term debt during the three and six months ended June 30, 2015 . We retire debt when it is cost effective as permitted by the debt agreements. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS: The changes in Accumulated Other Comprehensive Loss (AOCL) for the three and six months ended June 30, 2015 are as follows (in thousands): Postretirement Liability Adjustment Unrealized Gain (Loss) on Derivatives-Other Unrealized Gain (Loss) on Available-for-Sale Securities Total Balance at April 1, 2015 (a) $ (13,837 ) $ (565 ) $ (21 ) $ (14,423 ) Other comprehensive loss before reclassifications — — (43 ) (43 ) Amounts reclassified from AOCL (b) — 7 6 13 Net current period other comprehensive income (loss) — 7 (37 ) (30 ) Balance at June 30, 2015 (a) $ (13,837 ) $ (558 ) $ (58 ) $ (14,453 ) Postretirement Liability Adjustment Unrealized Gain (Loss) on Derivatives-Other Unrealized Gain (Loss) on Available-for-Sale Securities Total Balance at January 1, 2015 (a) $ (13,837 ) $ (567 ) $ (75 ) $ (14,479 ) Other comprehensive income before reclassifications — — 49 49 Amounts reclassified from AOCL (b) — 9 (32 ) (23 ) Net current period other comprehensive income — 9 17 26 Balance at June 30, 2015 (a) $ (13,837 ) $ (558 ) $ (58 ) $ (14,453 ) (a) Determined using a combined average statutory tax rate of 40% . (b) See table below. The reclassifications out of AOCL during the three and six months ended June 30, 2015 are as follows (in thousands): Components of AOCL Amounts Reclassified from AOCL (in thousands) Affected Line Item in the Condensed Statements of Income Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 Unrealized Loss in on Derivatives-Other - Interest Rate Contracts designated as cash flow hedges $ 12 $ 23 Interest Charges Unrealized Loss(Gain) on Available-for-Sale Securities 10 (54 ) Other Income & Expense 22 (31 ) Loss(Income) Before Income Taxes Income Taxes (a) (9 ) 8 Income Taxes Losses(Gains) from reclassifications for the period net of tax $ 13 $ (23 ) (a) Determined using a combined average statutory tax rate of 40% . |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS: On July 1, 2015, the Board of Directors of SJG declared a cash dividend of $9,891,000 payable to SJI. The dividend was paid on July 2, 2015. |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
REVENUE AND THROUGHPUT BASED TAXES | REVENUE AND THROUGHPUT - BASED TAXES - SJG collects certain revenue-based energy taxes from its customers. Such taxes include New Jersey State Sales Tax and Public Utilities Assessment (PUA). State sales tax is recorded as a liability when billed to customers and is not included in revenue or operating expenses. |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS — Other than as described below, no new accounting pronouncement issued or effective during 2015 or 2014 had, or is expected to have, a material impact on the condensed financial statements. In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU supersedes the revenue recognition requirements in FASB ASC 605, Revenue Recognition , and in most industry-specific topics. The new guidance identifies how and when entities should recognize revenue. The new rules establish a core principle requiring the recognition of revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for such goods or services. The new guidance is effective for fiscal years, and interim periods within those annual periods, beginning after December 15, 2017. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern . The new guidance requires management of a company to evaluate whether there is substantial doubt about the company's ability to continue as a going concern. This ASU is effective for the annual reporting period ending after December 15, 2016, and for interim and annual reporting periods thereafter, with early adoption permitted. Management does not expect this standard to have an impact on the Company's financial statements upon adoption. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810)—Amendments to the Consolidation Analysis , which changes the analysis to be performed in determining whether certain types of legal entities should be consolidated. Specifically, the standard amends the evaluation of whether (a) fees paid to a decision maker or service providers represent a variable interest, (b) a limited partnership or similar entity has the characteristics of a Variable Interest Entity ("VIE") and (c) a reporting entity is the primary beneficiary of a VIE. The standard is effective for annual periods beginning after December 15, 2015 and interim periods therein, with early adoption permitted. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . This ASU requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. Also in April 2015, the FASB issued ASU 2015-5, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) . This ASU provides guidance to customers (1) in determining whether a cloud computing arrangement includes a software license, and (2) on how the arrangement should be accounted for, depending on whether or not it includes a software license. The amended guidance is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory . This ASU states that inventory for which cost is determined using a method other than last-in, first-out (LIFO) or the retail method should be subsequently measured at the lower of cost or net realizable value (NRV), rather than at the lower of cost or market. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. Management is currently determining the impact that adoption of this guidance will have on the Company's financial statement results. |
FAIR VALUE | (A) Available-for-Sale Securities include securities that are traded in active markets and securities that are not traded publicly. The securities traded in active markets are valued using the quoted principal market close prices that are provided by the trustees and are categorized in Level 1 in the fair value hierarchy. The remaining securities consist of funds that are not publicly traded. These funds, which consist of stocks and bonds that are traded individually in active markets, are valued using quoted prices for similar assets and are categorized in Level 2 in the fair value hierarchy. (B) Derivatives – Energy Related Assets and Liabilities are traded in both exchange-based and non-exchange-based markets. Exchange-based contracts are valued using unadjusted quoted market sources in active markets and are categorized in Level 1 in the fair value hierarchy. Certain non-exchange-based contracts are valued using indicative price quotations available through brokers or over-the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask mid-point prices and are obtained from sources that management believes provide the most liquid market. For non-exchange-based derivatives that trade in less liquid markets with limited pricing information, model inputs generally would include both observable and unobservable inputs. In instances where observable data is unavailable, management considers the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 as the model inputs generally are not observable. Significant Unobservable Inputs - Management uses the discounted cash flow model to value Level 3 physical and financial forwards, which calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. Inputs to the valuation model are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third party pricing sources. The validity of the mark-to-market valuations and changes in mark-to-market valuations from period to period are examined and qualified against historical expectations by the risk management function. If any discrepancies are identified during this process, the mark-to-market valuations or the market pricing information is evaluated further and adjusted, if necessary. Level 3 valuation methods for natural gas derivative contracts include utilizing another location in close proximity adjusted for certain pipeline charges to derive a basis value. The significant unobservable inputs used in the fair value measurement of certain natural gas contracts consist of forward prices developed based on industry-standard methodologies. Significant increases (decreases) in these forward prices for purchases of natural gas would result in a directionally similar impact to the fair value measurement and for sales of natural gas would result in a directionally opposite impact to the fair value measurement. (C) Derivatives – Other, include interest rate swaps that are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment. |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of the SJI nonvested restricted stock awards pertaining to SJG outstanding at and the assumptions used to estimate the fair value of the awards | The following table summarizes the SJI nonvested restricted stock awards pertaining to SJG outstanding at June 30, 2015 , and the assumptions used to estimate the fair value of the awards: Grants Shares Outstanding Fair Value Per Share Expected Volatility Risk-Free Interest Rate 2013 - TSR 7,945 $ 22.19 21.1 % 0.40 % 2013 - EPS 7,945 $ 25.59 n/a n/a 2014 - TSR 10,261 $ 21.31 20.0 % 0.80 % 2014 - EPS 10,261 $ 27.22 n/a n/a 2015 - TSR 7,267 $ 26.31 16.0 % 1.10 % 2015 - EPS, ROE, Time 18,693 $ 29.47 n/a n/a |
Summary of the information regarding restricted stock award activity excluding accrued dividend equivalents | The following table summarizes information regarding restricted stock award activity during the six months ended June 30, 2015 , excluding accrued dividend equivalents: Shares Weighted Average Grant Date Fair Value Nonvested Shares Outstanding, January 1, 2015 36,794 $ 24.10 Granted 26,378 $ 28.58 Canceled / Forfeited (800 ) $ 26.47 Nonvested Shares Outstanding, June 30, 2015 62,372 $ 25.97 |
REGULATORY ASSETS AND LIABILI24
REGULATORY ASSETS AND LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Regulatory Assets and Liabilities Disclosure [Abstract] | |
Schedule of Regulatory Assets | Regulatory Assets consisted of the following items (in thousands): June 30, 2015 December 31, 2014 Environmental Remediation Costs: Expended - Net $ 29,145 $ 29,540 Liability for Future Expenditures 125,769 124,308 Deferred Asset Retirement Obligation Costs 31,799 31,584 Deferred Pension and Other Postretirement Benefit Costs 99,040 99,040 Deferred Gas Costs - Net 20,194 32,202 Societal Benefit Costs Receivable — 385 Deferred Interest Rate Contracts (Note 11) 6,615 7,325 Energy Efficiency Tracker 852 11,247 Pipeline Supplier Service Charges 4,608 5,441 Pipeline Integrity Cost 3,851 3,431 AFUDC - Equity Related Deferrals 11,330 10,781 Other Regulatory Assets 1,979 1,876 Total Regulatory Assets $ 335,182 $ 357,160 |
Schedule of Regulatory Liabilities | Regulatory Liabilities consisted of the following items (in thousands): June 30, 2015 December 31, 2014 Excess Plant Removal Costs $ 34,701 $ 35,940 Conservation Incentive Program Payable 17,255 4,700 Societal Benefit Costs 12,699 — Other Regulatory Liabilities — 1,259 Total Regulatory Liabilities $ 64,655 $ 41,899 |
RELATED-PARTY TRANSACTIONS (Tab
RELATED-PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Summary of related party transactions | A summary of related party transactions, excluding pass-through items, included in Operating Revenues were as follows (in thousands): Three Months Ended Six Months Ended 2015 2014 2015 2014 Operating Revenues/Affiliates: SJRG $ 479 $ 225 $ 1,531 $ 383 Marina 135 303 367 636 Total Operating Revenue/Affiliates $ 614 $ 528 $ 1,898 $ 1,019 Related-party transactions, excluding pass-through items, included in Operating Expenses were as follows (in thousands): Three Months Ended Six Months Ended 2015 2014 2015 2014 Costs of Sales/Affiliates (Excluding depreciation) SJRG $ 1,508 $ 1,442 $ 20,531 $ 6,926 Energy-Related Derivative Losses / (Gains) * SJRG $ 69 $ (490 ) $ 65 $ (1,520 ) * Contracts used to hedge natural gas purchases. Included in Cost of Sales on the Condensed Statements of Income. Operations Expense/Affiliates SJI $ 3,364 $ 3,148 $ 7,281 $ 7,178 Millennium 693 687 1,353 1,295 Other (108 ) (112 ) (217 ) (216 ) Total Operations Expense/Affiliates $ 3,949 $ 3,723 $ 8,417 $ 8,257 |
LINES OF CREDIT (Tables)
LINES OF CREDIT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Line of Credit Facility [Abstract] | |
Schedule of lines of credit | Credit facilities and available liquidity as of June 30, 2015 were as follows (in thousands): Total Facility Usage Available Liquidity Expiration Date Commercial Paper Program/ Revolving Credit Facility $ 200,000 $ 127,600 $ 72,400 May 2018 Uncommitted Bank Lines 10,000 — 10,000 Various Total $ 210,000 $ 127,600 $ 82,400 |
PENSION AND OTHER POSTRETIREM27
PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of defined benefit plans disclosures | For the three and six months ended June 30, 2015 and 2014 , net periodic benefit cost related to the employee and officer pension and other postretirement benefit plans consisted of the following components (in thousands): Pension Benefits Pension Benefits Three Months Ended Six Months Ended 2015 2014 2015 2014 Service Cost $ 925 $ 966 $ 1,992 $ 1,932 Interest Cost 2,120 2,027 4,168 4,054 Expected Return on Plan Assets (2,784 ) (2,455 ) (5,519 ) (4,910 ) Amortizations: Prior Service Cost 40 33 79 66 Actuarial Loss 1,995 1,072 3,959 2,144 Net Periodic Benefit Cost 2,296 1,643 4,679 3,286 Capitalized Benefit Cost (1,194 ) (854 ) (2,433 ) (1,708 ) Deferred Benefit Cost (325 ) — (325 ) — Total Net Periodic Benefit Expense $ 777 $ 789 $ 1,921 $ 1,578 Other Postretirement Benefits Other Postretirement Benefits Three Months Ended Six Months Ended 2015 2014 2015 2014 Service Cost $ 190 $ 172 $ 372 $ 344 Interest Cost 561 510 991 1,020 Expected Return on Plan Assets (581 ) (473 ) (997 ) (946 ) Amortizations: Prior Service Cost 118 26 202 52 Actuarial Loss 233 167 447 334 Net Periodic Benefit Cost 521 402 1,015 804 Capitalized Benefit Cost (271 ) (209 ) (528 ) (418 ) Deferred Benefit Cost (79 ) — (79 ) — Total Net Periodic Benefit Expense $ 171 $ 193 408 386 |
FAIR VALUE OF FINANCIAL ASSET28
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value of assets and liabilities | For financial assets and financial liabilities measured at fair value on a recurring basis, information about the fair value measurements for each major category is as follows (in thousands): As of June 30, 2015 Total Level 1 Level 2 Level 3 Assets Available-for-Sale Securities (A) $ 8,974 $ 5,335 $ 3,639 $ — Derivatives – Energy Related Assets (B) 285 285 — — $ 9,259 $ 5,620 $ 3,639 $ — Liabilities Derivatives – Energy Related Liabilities (B) $ 5,570 $ 4,655 $ 331 $ 584 Derivatives – Other (C) 6,615 — 6,615 — $ 12,185 $ 4,655 $ 6,946 $ 584 As of December 31, 2014 Total Level 1 Level 2 Level 3 Assets Available-for-Sale Securities (A) $ 8,894 $ 5,924 $ 2,970 $ — Derivatives - Energy Related Assets (B) 2,051 2 2,049 — $ 10,945 $ 5,926 $ 5,019 $ — Liabilities Derivatives - Energy Related Liabilities (B) $ 7,603 $ 7,254 $ 349 $ — Derivatives - Other (C) 7,325 — 7,325 — $ 14,928 $ 7,254 $ 7,674 $ — (A) Available-for-Sale Securities include securities that are traded in active markets and securities that are not traded publicly. The securities traded in active markets are valued using the quoted principal market close prices that are provided by the trustees and are categorized in Level 1 in the fair value hierarchy. The remaining securities consist of funds that are not publicly traded. These funds, which consist of stocks and bonds that are traded individually in active markets, are valued using quoted prices for similar assets and are categorized in Level 2 in the fair value hierarchy. (B) Derivatives – Energy Related Assets and Liabilities are traded in both exchange-based and non-exchange-based markets. Exchange-based contracts are valued using unadjusted quoted market sources in active markets and are categorized in Level 1 in the fair value hierarchy. Certain non-exchange-based contracts are valued using indicative price quotations available through brokers or over-the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask mid-point prices and are obtained from sources that management believes provide the most liquid market. For non-exchange-based derivatives that trade in less liquid markets with limited pricing information, model inputs generally would include both observable and unobservable inputs. In instances where observable data is unavailable, management considers the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 as the model inputs generally are not observable. Significant Unobservable Inputs - Management uses the discounted cash flow model to value Level 3 physical and financial forwards, which calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. Inputs to the valuation model are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third party pricing sources. The validity of the mark-to-market valuations and changes in mark-to-market valuations from period to period are examined and qualified against historical expectations by the risk management function. If any discrepancies are identified during this process, the mark-to-market valuations or the market pricing information is evaluated further and adjusted, if necessary. Level 3 valuation methods for natural gas derivative contracts include utilizing another location in close proximity adjusted for certain pipeline charges to derive a basis value. The significant unobservable inputs used in the fair value measurement of certain natural gas contracts consist of forward prices developed based on industry-standard methodologies. Significant increases (decreases) in these forward prices for purchases of natural gas would result in a directionally similar impact to the fair value measurement and for sales of natural gas would result in a directionally opposite impact to the fair value measurement. (C) Derivatives – Other, include interest rate swaps that are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment. |
Fair Value Inputs, Assets, Quantitative Information | The following table provides quantitative information regarding significant unobservable inputs in Level 3 fair value measurements (in thousands): Type Fair Value at June 30, 2015 Valuation Technique Significant Unobservable Input Range [Weighted Average] Assets Liabilities Forward Contract - Natural Gas $— $584 Discounted Cash Flow Forward price (per dt) $1.21 - $7.51 [$4.28] |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The changes in fair value measurements of Derivatives - Energy Related Assets and Liabilities for the three and six months ended June 30, 2015 and 2014, using significant unobservable inputs (Level 3), are as follows (in thousands): Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 Balance at beginning of period $ — $ — Total unrealized losses included in Regulatory Liabilities (see note 4) (584 ) (584 ) Balance at end of period (584 ) (584 ) Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Balance at beginning of period $ — $ — Total unrealized losses included in Regulatory Liabilities (see note 4) (8 ) (8 ) Balance at end of period (8 ) (8 ) |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value of derivative instruments | The fair values of all derivative instruments, as reflected in the condensed balance sheets as of June 30, 2015 and December 31, 2014 , are as follows (in thousands): Derivatives not designated as hedging instruments under GAAP June 30, 2015 December 31, 2014 Assets Liabilities Assets Liabilities Energy related commodity contracts: Derivatives – Energy Related – Current $ 158 $ 5,217 $ 2,051 $ 6,305 Derivatives – Energy Related – Non-Current 127 353 — 1,298 Interest rate contracts: Derivatives – Other — 6,615 — 7,325 Total derivatives not designated as hedging instruments under GAAP 285 12,185 2,051 14,928 Total Derivatives $ 285 $ 12,185 $ 2,051 $ 14,928 |
Offsetting assets and liabilities | As of June 30, 2015 , and December 31, 2014 , information related to these offsetting arrangements were as follows (in thousands): As of June 30, 2015: Description Gross amounts of recognized assets/liabilities Gross amount offset in the balance sheet Net amounts of assets/liabilities in balance sheet Gross amounts not offset in the balance sheet Net amount Financial Instruments Cash Collateral Posted Derivatives - Energy Related Assets $ 285 $ — $ 285 $ (285 ) (A) $ — $ — Derivatives - Energy Related Liabilities (5,570 ) — (5,570 ) 285 (B) 4,370 (915 ) Derivatives - Other (6,615 ) — (6,615 ) — — (6,615 ) As of December 31, 2014: Description Gross amounts of recognized assets/liabilities Gross amount offset in the balance sheet Net amounts of assets/liabilities in balance sheet Gross amounts not offset in the balance sheet Net amount Financial Instruments Cash Collateral Posted Derivatives - Energy Related Assets $ 2,051 $ — $ 2,051 $ (2 ) (A) $ — $ 2,049 Derivatives - Energy Related Liabilities (7,603 ) — (7,603 ) 2 (B) 7,253 (348 ) Derivatives - Other (7,325 ) — (7,325 ) — — (7,325 ) (A) The balances at June 30, 2015 and December 31, 2014 were related to derivative liabilities which can be net settled against derivative assets. (B) The balances at June 30, 2015 and December 31, 2014 were related to derivative assets which can be net settled against derivative liabilities. |
Derivatives in cash flow hedging relationships | The effect of derivative instruments on the condensed statements of income for the three and six months ended June 30, 2015 and 2014 are as follows (in thousands): Three months ended Six months ended Derivatives in Cash Flow Hedging Relationships 2015 2014 2015 2014 Interest Rate Contracts: Losses reclassified from Accumulated Other Comprehensive Loss into income (a) $ (12 ) $ (12 ) $ (24 ) $ (24 ) (a) Included in Interest Charges |
ACCUMULATED OTHER COMPREHENSI30
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Schedule of changes in accumulated other comprehensive loss (AOCL) | The changes in Accumulated Other Comprehensive Loss (AOCL) for the three and six months ended June 30, 2015 are as follows (in thousands): Postretirement Liability Adjustment Unrealized Gain (Loss) on Derivatives-Other Unrealized Gain (Loss) on Available-for-Sale Securities Total Balance at April 1, 2015 (a) $ (13,837 ) $ (565 ) $ (21 ) $ (14,423 ) Other comprehensive loss before reclassifications — — (43 ) (43 ) Amounts reclassified from AOCL (b) — 7 6 13 Net current period other comprehensive income (loss) — 7 (37 ) (30 ) Balance at June 30, 2015 (a) $ (13,837 ) $ (558 ) $ (58 ) $ (14,453 ) Postretirement Liability Adjustment Unrealized Gain (Loss) on Derivatives-Other Unrealized Gain (Loss) on Available-for-Sale Securities Total Balance at January 1, 2015 (a) $ (13,837 ) $ (567 ) $ (75 ) $ (14,479 ) Other comprehensive income before reclassifications — — 49 49 Amounts reclassified from AOCL (b) — 9 (32 ) (23 ) Net current period other comprehensive income — 9 17 26 Balance at June 30, 2015 (a) $ (13,837 ) $ (558 ) $ (58 ) $ (14,453 ) (a) Determined using a combined average statutory tax rate of 40% . (b) See table below. |
Reclassifications out of AOCL | The reclassifications out of AOCL during the three and six months ended June 30, 2015 are as follows (in thousands): Components of AOCL Amounts Reclassified from AOCL (in thousands) Affected Line Item in the Condensed Statements of Income Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 Unrealized Loss in on Derivatives-Other - Interest Rate Contracts designated as cash flow hedges $ 12 $ 23 Interest Charges Unrealized Loss(Gain) on Available-for-Sale Securities 10 (54 ) Other Income & Expense 22 (31 ) Loss(Income) Before Income Taxes Income Taxes (a) (9 ) 8 Income Taxes Losses(Gains) from reclassifications for the period net of tax $ 13 $ (23 ) (a) Determined using a combined average statutory tax rate of 40% . |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accounting Policies [Abstract] | ||||
Amount of Transitional Energy Facility Assessment and Public Utilities Assessment included in revenues and cost of sales | $ 0.2 | $ 0.2 | $ 0.8 | $ 0.6 |
STOCK-BASED COMPENSATION PLAN32
STOCK-BASED COMPENSATION PLANS (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Vesting period of shares | 3 years | ||||||
Granted (in shares) | 26,378 | ||||||
Shares Outstanding (in shares) | 62,372 | 36,794 | 36,794 | 36,794 | |||
Fair Value Per Share (in dollars per share) | $ 25.97 | $ 24.10 | $ 24.10 | $ 24.10 | |||
Expected volatility, measurement period | 3 years | ||||||
Service period of shares | 3 years | ||||||
Cost of Restricted Stock Awards | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | |||
Restricted stock awards percentage capitalized | 50.00% | ||||||
Unrecognized compensation cost of awards granted under the plan | $ 0.9 | ||||||
Weighted average period over which unrecognized compensation cost is to be recognized (in years) | 2 years 1 month 12 days | ||||||
Shares [Roll Forward] | |||||||
Nonvested Shares Outstanding, beginning balance (in shares) | 36,794 | 36,794 | |||||
Granted (in shares) | 26,378 | ||||||
Canceled / Forfeited (in shares) | (800) | ||||||
Nonvested Shares Outstanding, ending balance (in shares) | 62,372 | 62,372 | 36,794 | ||||
Weighted Average Grant Date Fair Value [Roll Forward] | |||||||
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, beginning balance (in dollars per share) | $ 24.10 | $ 24.10 | |||||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | 28.58 | ||||||
Weighted Average Grant Date Fair Value, Canceled / Forfeited (in dollars per share) | 26.47 | ||||||
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, ending balance (in dollars per share) | $ 25.97 | $ 25.97 | $ 24.10 | ||||
Number of shares awarded during the period | 0 | 0 | |||||
Cash payments to SJI relating to stock awards | $ 0.2 | $ 0.4 | |||||
2013 - TSR | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Shares Outstanding (in shares) | 7,945 | 7,945 | |||||
Fair Value Per Share (in dollars per share) | $ 22.19 | $ 22.19 | |||||
Expected Volatility | 21.10% | ||||||
Risk-Free Interest Rate | 0.40% | ||||||
Shares [Roll Forward] | |||||||
Nonvested Shares Outstanding, ending balance (in shares) | 7,945 | 7,945 | |||||
Weighted Average Grant Date Fair Value [Roll Forward] | |||||||
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, ending balance (in dollars per share) | $ 22.19 | $ 22.19 | |||||
2013 - EPS | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Shares Outstanding (in shares) | 7,945 | 7,945 | |||||
Fair Value Per Share (in dollars per share) | $ 25.59 | $ 25.59 | |||||
Shares [Roll Forward] | |||||||
Nonvested Shares Outstanding, ending balance (in shares) | 7,945 | 7,945 | |||||
Weighted Average Grant Date Fair Value [Roll Forward] | |||||||
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, ending balance (in dollars per share) | $ 25.59 | $ 25.59 | |||||
2014 - TSR | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Shares Outstanding (in shares) | 10,261 | 10,261 | |||||
Fair Value Per Share (in dollars per share) | $ 21.31 | $ 21.31 | |||||
Expected Volatility | 20.00% | ||||||
Risk-Free Interest Rate | 0.80% | ||||||
Shares [Roll Forward] | |||||||
Nonvested Shares Outstanding, ending balance (in shares) | 10,261 | 10,261 | |||||
Weighted Average Grant Date Fair Value [Roll Forward] | |||||||
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, ending balance (in dollars per share) | $ 21.31 | $ 21.31 | |||||
2014 - EPS | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Shares Outstanding (in shares) | 10,261 | 10,261 | |||||
Fair Value Per Share (in dollars per share) | $ 27.22 | $ 27.22 | |||||
Shares [Roll Forward] | |||||||
Nonvested Shares Outstanding, ending balance (in shares) | 10,261 | 10,261 | |||||
Weighted Average Grant Date Fair Value [Roll Forward] | |||||||
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, ending balance (in dollars per share) | $ 27.22 | $ 27.22 | |||||
2015 - TSR | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Shares Outstanding (in shares) | 7,267 | 7,267 | |||||
Fair Value Per Share (in dollars per share) | $ 26.31 | $ 26.31 | |||||
Expected Volatility | 16.00% | ||||||
Risk-Free Interest Rate | 1.10% | ||||||
Shares [Roll Forward] | |||||||
Nonvested Shares Outstanding, ending balance (in shares) | 7,267 | 7,267 | |||||
Weighted Average Grant Date Fair Value [Roll Forward] | |||||||
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, ending balance (in dollars per share) | $ 26.31 | $ 26.31 | |||||
2015 - EPS, ROE, Time | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Shares Outstanding (in shares) | 18,693 | 18,693 | |||||
Fair Value Per Share (in dollars per share) | $ 29.47 | $ 29.47 | |||||
Shares [Roll Forward] | |||||||
Nonvested Shares Outstanding, ending balance (in shares) | 18,693 | 18,693 | |||||
Weighted Average Grant Date Fair Value [Roll Forward] | |||||||
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, ending balance (in dollars per share) | $ 29.47 | $ 29.47 | |||||
Restricted Stock | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Vesting period of shares | 3 years | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Payout Limit, Percentage | 100.00% | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Return On Equity Award Threshold | 7.00% | ||||||
Granted (in shares) | 7,912 | ||||||
Shares [Roll Forward] | |||||||
Granted (in shares) | 7,912 | ||||||
Minimum | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Percentage of actual amount of shares that ultimately vest of original share units granted | 0.00% | ||||||
Maximum | |||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||||
Percentage of actual amount of shares that ultimately vest of original share units granted | 200.00% |
RATES AND REGULATORY ACTIONS (D
RATES AND REGULATORY ACTIONS (Details) - USD ($) $ in Millions | 1 Months Ended | |||
Apr. 30, 2015 | Jun. 30, 2015 | May. 31, 2015 | Jan. 31, 2015 | |
Energy Efficiency Tracker | ||||
Schedule of Capitalization [Line Items] | ||||
Amount of regulatory costs approved, statewide | $ 56 | |||
Increase (Decrease) in Amount of Regulatory Costs Approved | $ (7.6) | |||
SHARP | ||||
Schedule of Capitalization [Line Items] | ||||
Public utilities, approved base rate increase | $ 4.6 | |||
Societal Benefits Clause And Transportation Initiation Clause | ||||
Schedule of Capitalization [Line Items] | ||||
Increase (Decrease) in Amount of Regulatory Costs Approved | $ (18.2) | |||
Remediation Adjustment Clause | ||||
Schedule of Capitalization [Line Items] | ||||
Increase (Decrease) in Amount of Regulatory Costs Approved | (6.2) | |||
Clean Energy Program | ||||
Schedule of Capitalization [Line Items] | ||||
Increase (Decrease) in Amount of Regulatory Costs Approved | (11.5) | |||
Transportation Initiation Clause | ||||
Schedule of Capitalization [Line Items] | ||||
Increase (Decrease) in Amount of Regulatory Costs Approved | $ (0.5) | |||
Basic Gas Supply Service And Conservation Incentive Program | ||||
Schedule of Capitalization [Line Items] | ||||
Increase (Decrease) in Amount of Regulatory Costs Approved | (39.7) | |||
Basic Gas Supply Service | ||||
Schedule of Capitalization [Line Items] | ||||
Increase (Decrease) in Amount of Regulatory Costs Approved | (28.4) | |||
Conservation Incentive Program | ||||
Schedule of Capitalization [Line Items] | ||||
Increase (Decrease) in Amount of Regulatory Costs Approved | $ (11.3) | |||
Public Utilities, Colder Than Normal, Percentage | 10.40% | |||
Energy Efficiency Tracker, Over Under Recovery | ||||
Schedule of Capitalization [Line Items] | ||||
Increase (Decrease) in Amount of Regulatory Costs Approved | $ (1.7) |
REGULATORY ASSETS AND LIABILI34
REGULATORY ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | $ 335,182 | $ 357,160 |
Environmental Remediation Costs: Expended - Net | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 29,145 | 29,540 |
Environmental Remediation Costs: Liability for Future Expenditures | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 125,769 | 124,308 |
Deferred Asset Retirement Obligation Costs | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 31,799 | 31,584 |
Deferred Pension and Other Postretirement Benefit Costs | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 99,040 | 99,040 |
Deferred Gas Costs - Net | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 20,194 | 32,202 |
Societal Benefit Costs Receivable | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 0 | 385 |
Deferred Interest Rate Contracts | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 6,615 | 7,325 |
Energy Efficiency Tracker | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 852 | 11,247 |
Pipeline Supplier Service Charges | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 4,608 | 5,441 |
Pipeline Integrity Cost | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 3,851 | 3,431 |
AFUDC - Equity Related Deferrals | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | 11,330 | 10,781 |
Other Regulatory Assets | ||
Regulatory Assets [Line Items] | ||
Total Regulatory Assets | $ 1,979 | $ 1,876 |
REGULATORY ASSETS AND LIABILI35
REGULATORY ASSETS AND LIABILITIES 2 (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Regulatory Liabilities [Line Items] | ||
Total Regulatory Liabilities | $ 64,655 | $ 41,899 |
Excess Plant Removal Costs | ||
Regulatory Liabilities [Line Items] | ||
Total Regulatory Liabilities | 34,701 | 35,940 |
Conservation Incentive Program Payable | ||
Regulatory Liabilities [Line Items] | ||
Total Regulatory Liabilities | 17,255 | 4,700 |
Societal Benefit Costs | ||
Regulatory Liabilities [Line Items] | ||
Total Regulatory Liabilities | 12,699 | 0 |
Other Regulatory Liabilities | ||
Regulatory Liabilities [Line Items] | ||
Total Regulatory Liabilities | $ 0 | $ 1,259 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Related Party Transaction [Line Items] | |||||
Operating Revenues/Affiliates | $ 614 | $ 528 | $ 1,898 | $ 1,019 | |
Operations Expense/Affiliates | 3,949 | 3,723 | 8,417 | 8,257 | |
SJRG | |||||
Related Party Transaction [Line Items] | |||||
Operating Revenues/Affiliates | 479 | 225 | 1,531 | 383 | |
Costs of Sales/Affiliates (Excluding depreciation) | 1,508 | 1,442 | 20,531 | 6,926 | |
Energy-Related Derivative Losses / (Gains) | [1] | 69 | (490) | 65 | (1,520) |
Marina | |||||
Related Party Transaction [Line Items] | |||||
Operating Revenues/Affiliates | 135 | 303 | 367 | 636 | |
SJI | |||||
Related Party Transaction [Line Items] | |||||
Operations Expense/Affiliates | 3,364 | 3,148 | 7,281 | 7,178 | |
Millennium | |||||
Related Party Transaction [Line Items] | |||||
Operations Expense/Affiliates | 693 | 687 | 1,353 | 1,295 | |
Other | |||||
Related Party Transaction [Line Items] | |||||
Operations Expense/Affiliates | $ (108) | $ (112) | $ (217) | $ (216) | |
[1] | Contracts used to hedge natural gas purchases. Included in Cost of Sales on the Condensed Statements of Income. |
FINANCIAL INSTRUMENTS (Details)
FINANCIAL INSTRUMENTS (Details) $ in Millions | 1 Months Ended | |
Jun. 30, 2015USD ($)term | Dec. 31, 2014USD ($) | |
Schedule of Financial Instruments [Line Items] | ||
Restricted investments held in escrow | $ 0.1 | $ 0.1 |
Restricted investments, energy-related contracts | 5.9 | 7.8 |
Estimated fair value of long-term debt | 579.1 | 587.3 |
Carrying amount of long-term debt | 543 | 543 |
Financing Receivable | ||
Schedule of Financial Instruments [Line Items] | ||
Long-term receivables, net of unamortized discount | 14 | 15 |
Imputed interest | 1.1 | $ 1.3 |
Atlantic City Note Receivable | ||
Schedule of Financial Instruments [Line Items] | ||
Receivable with Imputed Interest, Face Amount | $ 10 | |
Receivable with Imputed Interest, Effective Yield (Interest Rate) | 1.00% | |
Receivable With Imputed Interest, Term | 6 months | |
Receivable With Imputed Interest, Number Of Additional Terms | term | 2 | |
Receivable With Imputed Interest, Extension Term | 3 months |
LINES OF CREDIT (Details)
LINES OF CREDIT (Details) | 6 Months Ended | |
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | |
Line of Credit Facility [Line Items] | ||
Total Facility | $ 210,000,000 | |
Usage | 127,600,000 | |
Available Liquidity | 82,400,000 | |
Average borrowings outstanding during the period | 112,000,000 | $ 43,300,000 |
Maximum amounts outstanding during the period | $ 139,100,000 | $ 70,100,000 |
Weighted average borrowing cost | 0.45% | 0.25% |
Minimum | ||
Line of Credit Facility [Line Items] | ||
Financial covenant, ratio of indebtedness to consolidated total capitalization minimum | 0.65 | |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Total Facility | $ 200,000,000 | |
Usage | 127,600,000 | |
Available Liquidity | 72,400,000 | |
Uncommitted Bank Lines | ||
Line of Credit Facility [Line Items] | ||
Total Facility | 10,000,000 | |
Usage | 0 | |
Available Liquidity | 10,000,000 | |
South Jersey Gas Commercial Paper Program | ||
Line of Credit Facility [Line Items] | ||
Total Facility | $ 200,000,000 | |
Fixed maturities of notes, at maximum number of days (in days) | 270 days |
PENSION AND OTHER POSTRETIREM39
PENSION AND OTHER POSTRETIREMENT BENEFITS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Pension Benefits | ||||||
Net periodic benefit cost | ||||||
Service Cost | $ 925,000 | $ 966,000 | $ 1,992,000 | $ 1,932,000 | ||
Interest Cost | 2,120,000 | 2,027,000 | 4,168,000 | 4,054,000 | ||
Expected Return on Plan Assets | (2,784,000) | (2,455,000) | (5,519,000) | (4,910,000) | ||
Amortizations: | ||||||
Prior Service Cost | 40,000 | 33,000 | 79,000 | 66,000 | ||
Actuarial Loss | 1,995,000 | 1,072,000 | 3,959,000 | 2,144,000 | ||
Net Periodic Benefit Cost | 2,296,000 | 1,643,000 | 4,679,000 | 3,286,000 | ||
Capitalized Benefit Cost | (1,194,000) | (854,000) | (2,433,000) | (1,708,000) | ||
Deferred Benefit Cost | (325,000) | 0 | (325,000) | 0 | ||
Total Net Periodic Benefit Expense | 777,000 | 789,000 | 1,921,000 | 1,578,000 | ||
Contributions | $ 12,000,000 | $ 0 | ||||
Other Postretirement Benefits | ||||||
Net periodic benefit cost | ||||||
Service Cost | 190,000 | 172,000 | 372,000 | 344,000 | ||
Interest Cost | 561,000 | 510,000 | 991,000 | 1,020,000 | ||
Expected Return on Plan Assets | (581,000) | (473,000) | (997,000) | (946,000) | ||
Amortizations: | ||||||
Prior Service Cost | 118,000 | 26,000 | 202,000 | 52,000 | ||
Actuarial Loss | 233,000 | 167,000 | 447,000 | 334,000 | ||
Net Periodic Benefit Cost | 521,000 | 402,000 | 1,015,000 | 804,000 | ||
Capitalized Benefit Cost | (271,000) | (209,000) | (528,000) | (418,000) | ||
Deferred Benefit Cost | (79,000) | 0 | (79,000) | 0 | ||
Total Net Periodic Benefit Expense | $ 171,000 | $ 193,000 | 408,000 | $ 386,000 | ||
Defined benefit plan regulatory obligation to contribute to the plan during the period | 3,600,000 | |||||
Supplemental Employee Retirement Plans, Defined Benefit | ||||||
Amortizations: | ||||||
Estimated future contributions | $ 1,500,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015USD ($)unions | Dec. 31, 2014USD ($)sites | |
Loss Contingencies [Line Items] | ||
Letter of credit provided | $ 210,000 | |
Number of sites for environmental cleanup | sites | 12 | |
Monthly gas supply related demand charges and reservation fees | 4,600 | |
Estimated litigation liability | $ 600 | $ 500 |
Percentage of personnel represented in collective bargaining agreements | 61.00% | |
Number of unions | unions | 2 | |
Standby Letter of Credit | ||
Loss Contingencies [Line Items] | ||
Letter of credit provided | $ 25,200 |
FAIR VALUE OF FINANCIAL ASSET41
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | ||
Fair Value, Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||
Balance at beginning of period | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Total unrealized losses included in Regulatory Liabilities | (584) | (8) | (584) | (8) | ||||
Balance at end of period | $ 0 | $ 0 | $ 0 | $ 0 | $ (584) | $ 0 | $ (8) | |
Fair Value, Measurements, Recurring | ||||||||
Assets | ||||||||
Available-for-sale Securities | [1] | 8,974 | 8,894 | |||||
Derivatives - Energy Related Assets | [2] | 285 | 2,051 | |||||
Total Assets | 9,259 | 10,945 | ||||||
Liabilities | ||||||||
Derivatives - Energy Related Liabilities | [2] | 5,570 | 7,603 | |||||
Derivatives - Other | [3] | 6,615 | 7,325 | |||||
Total Liabilities | 12,185 | 14,928 | ||||||
Fair Value, Measurements, Recurring | Level 1 | ||||||||
Assets | ||||||||
Available-for-sale Securities | [1] | 5,335 | 5,924 | |||||
Derivatives - Energy Related Assets | [2] | 285 | 2 | |||||
Total Assets | 5,620 | 5,926 | ||||||
Liabilities | ||||||||
Derivatives - Energy Related Liabilities | [2] | 4,655 | 7,254 | |||||
Derivatives - Other | [3] | 0 | 0 | |||||
Total Liabilities | 4,655 | 7,254 | ||||||
Fair Value, Measurements, Recurring | Level 2 | ||||||||
Assets | ||||||||
Available-for-sale Securities | [1] | 3,639 | 2,970 | |||||
Derivatives - Energy Related Assets | [2] | 0 | 2,049 | |||||
Total Assets | 3,639 | 5,019 | ||||||
Liabilities | ||||||||
Derivatives - Energy Related Liabilities | [2] | 331 | 349 | |||||
Derivatives - Other | [3] | 6,615 | 7,325 | |||||
Total Liabilities | 6,946 | 7,674 | ||||||
Fair Value, Measurements, Recurring | Level 3 | ||||||||
Assets | ||||||||
Available-for-sale Securities | [1] | 0 | 0 | |||||
Derivatives - Energy Related Assets | [2] | 0 | 0 | |||||
Total Assets | 0 | 0 | ||||||
Liabilities | ||||||||
Derivatives - Energy Related Liabilities | [2] | 584 | 0 | |||||
Derivatives - Other | [3] | 0 | 0 | |||||
Total Liabilities | $ 584 | $ 0 | ||||||
[1] | Available-for-Sale Securities include securities that are traded in active markets and securities that are not traded publicly. The securities traded in active markets are valued using the quoted principal market close prices that are provided by the trustees and are categorized in Level 1 in the fair value hierarchy. The remaining securities consist of funds that are not publicly traded. These funds, which consist of stocks and bonds that are traded individually in active markets, are valued using quoted prices for similar assets and are categorized in Level 2 in the fair value hierarchy. | |||||||
[2] | Derivatives – Energy Related Assets and Liabilities are traded in both exchange-based and non-exchange-based markets. Exchange-based contracts are valued using unadjusted quoted market sources in active markets and are categorized in Level 1 in the fair value hierarchy. Certain non-exchange-based contracts are valued using indicative price quotations available through brokers or over-the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask mid-point prices and are obtained from sources that management believes provide the most liquid market. For non-exchange-based derivatives that trade in less liquid markets with limited pricing information, model inputs generally would include both observable and unobservable inputs. In instances where observable data is unavailable, management considers the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 as the model inputs generally are not observable. Significant Unobservable Inputs - Management uses the discounted cash flow model to value Level 3 physical and financial forwards, which calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. Inputs to the valuation model are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third party pricing sources. The validity of the mark-to-market valuations and changes in mark-to-market valuations from period to period are examined and qualified against historical expectations by the risk management function. If any discrepancies are identified during this process, the mark-to-market valuations or the market pricing information is evaluated further and adjusted, if necessary.Level 3 valuation methods for natural gas derivative contracts include utilizing another location in close proximity adjusted for certain pipeline charges to derive a basis value. The significant unobservable inputs used in the fair value measurement of certain natural gas contracts consist of forward prices developed based on industry-standard methodologies. Significant increases (decreases) in these forward prices for purchases of natural gas would result in a directionally similar impact to the fair value measurement and for sales of natural gas would result in a directionally opposite impact to the fair value measurement. | |||||||
[3] | Derivatives – Other, include interest rate swaps that are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment. |
FAIR VALUE OF FINANCIAL ASSET42
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Level Three Inputs (Details) - Jun. 30, 2015 - Natural Gas (in MMdts) - Forward Contracts - Level 3 $ in Thousands | USD ($)$ / decatherm |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Derivative Asset | $ | $ 0 |
Derivative Liability | $ | $ 584 |
Minimum | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Forward price (in dollars per dt) | 1.21 |
Maximum | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Forward price (in dollars per dt) | 7.51 |
Weighted Average | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Forward price (in dollars per dt) | 4.28 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) dts in Thousands, $ in Millions | 1 Months Ended | ||
Sep. 30, 2005USD ($) | Jun. 30, 2015USD ($)dts | Dec. 31, 2014USD ($) | |
Derivative [Line Items] | |||
Unrealized gains (losses) included in its BGSS related to open financial contracts | $ | $ 5.3 | $ (5.6) | |
Initial cost of Treasury Locks | $ | $ 1.4 | ||
Amortization period of Treasury Locks (in years) | 30 years | ||
Unamortized balance of Treasury Locks | $ | $ 0.9 | $ 1 | |
Basis and Index Related Purchase and Sales Contracts | |||
Derivative [Line Items] | |||
Outstanding derivative contracts notional amount (dts) | 1,000 | ||
Natural Gas (in MMdts) | Derivative Transaction Type, Purchase | |||
Derivative [Line Items] | |||
Outstanding derivative contracts notional amount (dts) | 10,100 | ||
Natural Gas (in MMdts) | Derivative Transaction Type, Sale | |||
Derivative [Line Items] | |||
Outstanding derivative contracts notional amount (dts) | 650 |
DERIVATIVE INSTRUMENTS 2 (Detai
DERIVATIVE INSTRUMENTS 2 (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Derivatives, Fair Value [Line Items] | ||
Fair value Derivative Assets | $ 285 | $ 2,051 |
Fair value Derivative Liabilities | 12,185 | 14,928 |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair value Derivative Assets | 285 | 2,051 |
Fair value Derivative Liabilities | 12,185 | 14,928 |
Commodity Contract | Not Designated as Hedging Instrument | Derivatives-Energy Related-Current | ||
Derivatives, Fair Value [Line Items] | ||
Fair value Derivative Assets | 158 | 2,051 |
Fair value Derivative Liabilities | 5,217 | 6,305 |
Commodity Contract | Not Designated as Hedging Instrument | Derivatives-Energy Related-NonCurrent | ||
Derivatives, Fair Value [Line Items] | ||
Fair value Derivative Assets | 127 | 0 |
Fair value Derivative Liabilities | 353 | 1,298 |
Interest Rate Contract | Not Designated as Hedging Instrument | Derivatives-Other | ||
Derivatives, Fair Value [Line Items] | ||
Fair value Derivative Assets | 0 | 0 |
Fair value Derivative Liabilities | $ 6,615 | $ 7,325 |
DERIVATIVE INSTRUMENTS 3 (Detai
DERIVATIVE INSTRUMENTS 3 (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | |
Commodity Contract | |||
Offsetting Derivative Assets [Abstract] | |||
Gross amounts of recognized assets/liabilities | $ 285 | $ 2,051 | |
Gross amount offset in the balance sheet | 0 | 0 | |
Net amounts of assets/liabilities in balance sheet | 285 | 2,051 | |
Gross amounts not offset in the balance sheet, Financial Instruments | [1] | (285) | (2) |
Gross amounts not offset in the balance sheet, Cash Collateral Posted | 0 | 0 | |
Net amount | 0 | 2,049 | |
Offsetting Derivative Liabilities [Abstract] | |||
Gross amounts of recognized assets/liabilities | (5,570) | (7,603) | |
Gross amount offset in the balance sheet | 0 | 0 | |
Net amounts of assets/liabilities in balance sheet | (5,570) | (7,603) | |
Gross amounts not offset in the balance sheet, Financial Instruments | [2] | 285 | 2 |
Gross amounts not offset in the balance sheet, Cash Collateral Posted | 4,370 | 7,253 | |
Net amount | (915) | (348) | |
Interest Rate Contract | |||
Offsetting Derivative Liabilities [Abstract] | |||
Gross amounts of recognized assets/liabilities | (6,615) | (7,325) | |
Gross amount offset in the balance sheet | 0 | 0 | |
Net amounts of assets/liabilities in balance sheet | (6,615) | (7,325) | |
Gross amounts not offset in the balance sheet, Financial Instruments | 0 | 0 | |
Gross amounts not offset in the balance sheet, Cash Collateral Posted | 0 | 0 | |
Net amount | $ (6,615) | $ (7,325) | |
[1] | The balances at June 30, 2015 and December 31, 2014 were related to derivative liabilities which can be net settled against derivative assets. | ||
[2] | The balances at June 30, 2015 and December 31, 2014 were related to derivative assets which can be net settled against derivative liabilities. |
DERIVATIVE INSTRUMENTS 4 (Detai
DERIVATIVE INSTRUMENTS 4 (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||
Losses reclassified from Accumulated Other Comprehensive Loss into income | [1] | $ (12) | $ (12) | $ (24) | $ (24) |
Net Realized gains (losses), derivative instruments, energy-related contracts | $ (2,100) | $ 1,200 | $ (4,800) | $ 3,600 | |
[1] | Included in Interest Charges |
ACCUMULATED OTHER COMPREHENSI47
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||
Beginning balance | [1] | $ (14,423) | $ (14,479) | ||
Other comprehensive (loss) income before reclassifications | (43) | 49 | |||
Amounts reclassified from AOCL | [2] | 13 | (23) | ||
Other Comprehensive (Loss) Gain - Net of Tax | [3] | (30) | $ 161 | 26 | $ 231 |
Ending balance | [1] | $ (14,453) | $ (14,453) | ||
Combined statutory tax rate | 40.00% | 41.00% | 40.00% | 41.00% | |
Postretirement Liability Adjustment | |||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||
Beginning balance | [1] | $ (13,837) | $ (13,837) | ||
Other comprehensive (loss) income before reclassifications | 0 | 0 | |||
Amounts reclassified from AOCL | [2] | 0 | 0 | ||
Other Comprehensive (Loss) Gain - Net of Tax | 0 | 0 | |||
Ending balance | [1] | (13,837) | (13,837) | ||
Unrealized Gain (Loss) on Derivatives-Other | |||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||
Beginning balance | [1] | (565) | (567) | ||
Other comprehensive (loss) income before reclassifications | 0 | 0 | |||
Amounts reclassified from AOCL | [2] | 7 | 9 | ||
Other Comprehensive (Loss) Gain - Net of Tax | 7 | 9 | |||
Ending balance | [1] | (558) | (558) | ||
Unrealized Gain (Loss) on Available-for-Sale Securities | |||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||
Beginning balance | [1] | (21) | (75) | ||
Other comprehensive (loss) income before reclassifications | (43) | 49 | |||
Amounts reclassified from AOCL | [2] | 6 | (32) | ||
Other Comprehensive (Loss) Gain - Net of Tax | (37) | 17 | |||
Ending balance | [1] | $ (58) | $ (58) | ||
[1] | Determined using a combined average statutory tax rate of 40%. | ||||
[2] | See table below. | ||||
[3] | Determined using a combined average statutory tax rate of 40% and 41% in 2015 and 2014, respectively. |
ACCUMULATED OTHER COMPREHENSI48
ACCUMULATED OTHER COMPREHENSIVE LOSS 2 (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Interest Charges | $ 5,113 | $ 4,292 | $ 10,303 | $ 8,634 | |
Other Income & Expense | (1,670) | (1,477) | (2,430) | (2,563) | |
Loss(Income) Before Income Taxes | (8,518) | (6,190) | (77,277) | (66,374) | |
Income Taxes | 3,292 | 2,379 | 29,464 | 24,906 | |
Net Income | (5,226) | $ (3,811) | (47,813) | $ (41,468) | |
Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Loss(Income) Before Income Taxes | 22 | (31) | |||
Income Taxes | [1] | (9) | 8 | ||
Net Income | 13 | (23) | |||
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Loss in on Derivatives-Other - Interest Rate Contracts designated as cash flow hedges | |||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Interest Charges | 12 | 23 | |||
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Loss(Gain) on Available-for-Sale Securities | |||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Other Income & Expense | $ 10 | $ (54) | |||
[1] | Determined using a combined average statutory tax rate of 40%. |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Thousands | Jul. 01, 2015USD ($) |
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividends Payable | $ 9,891 |