REGULATORY ASSETS AND REGULATORY LIABILITIES | REGULATORY ASSETS AND REGULATORY LIABILITIES: Except as described below, there have been no significant changes to the nature or balances of the Utilities' regulatory assets and liabilities since December 31, 2020, which are described in Note 11 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2020. The Utilities' Regulatory Assets as of March 31, 2021 and December 31, 2020 consisted of the following items (in thousands): March 31, 2021 SJG ETG Total SJI Environmental Remediation Costs: Expended - Net $ 149,979 $ 6,034 $ 156,013 Liability for Future Expenditures 98,579 88,705 187,284 Insurance Recovery Receivables — (6,807) (6,807) Deferred ARO Costs 43,704 27,594 71,298 Deferred Pension Costs - Unrecognized Prior Service Cost — 33,316 33,316 Deferred Pension and Other Postretirement Benefit Costs 77,426 8,466 85,892 Deferred Gas Costs - Net 19,198 — 19,198 CIP Receivable 10,028 — 10,028 SBC Receivable (excluding RAC) 4,771 — 4,771 Deferred Interest Rate Contracts 7,441 — 7,441 EET/EEP 16,848 2,909 19,757 Pipeline Supplier Service Charges 411 — 411 Pipeline Integrity Cost 5,981 — 5,981 AFUDC - Equity Related Deferrals 11,883 — 11,883 WNC — 6,120 6,120 Other Regulatory Assets 27,153 10,971 38,124 Total Regulatory Assets $ 473,402 $ 177,308 $ 650,710 December 31, 2020 SJG ETG Total SJI Environmental Remediation Costs: Expended - Net $ 157,340 $ 5,196 $ 162,536 Liability for Future Expenditures 101,243 91,837 193,080 Insurance Recovery Receivables — (6,807) (6,807) Deferred ARO Costs 42,365 25,453 67,818 Deferred Pension Costs - Unrecognized Prior Service Cost — 33,898 33,898 Deferred Pension and Other Postretirement Benefit Costs 77,426 8,466 85,892 Deferred Gas Costs - Net 19,178 — 19,178 CIP Receivable 21,013 — 21,013 SBC Receivable (excluding RAC) 3,453 — 3,453 Deferred Interest Rate Contracts 9,938 — 9,938 EET/EEP 18,725 3,062 21,787 Pipeline Supplier Service Charges 434 — 434 Pipeline Integrity Cost 6,091 — 6,091 AFUDC - Equity Related Deferrals 11,822 — 11,822 WNC — 7,444 7,444 Other Regulatory Assets 26,056 10,359 36,415 Total Regulatory Assets $ 495,084 $ 178,908 $ 673,992 Except where noted below, all regulatory assets are or are expected to be recovered through utility rate charges, as detailed in the following discussion. The Utilities are currently permitted to recover interest on Environmental Remediation Costs, SBC Receivable, EET and Pipeline Integrity Costs, while the other assets are being recovered without a return on investment. ENVIRONMENTAL REMEDIATION COSTS - SJG and ETG have regulatory assets associated with environmental costs related to the cleanup of environmental sites as discussed in Note 15 of SJI's and SJG's Annual Report on Form 10-K for the year ended December 31, 2020. The BPU allows SJG and ETG to recover the deferred costs not recovered from insurance carriers through their RAC mechanisms over seven-year periods after the costs are incurred. DEFERRED GAS COSTS - NET - Over/under collections of gas costs are monitored through SJG's and ETG's BGSS clause. SJG's balance as of both March 31, 2021 and December 31, 2020 includes $22.9 million of costs related to a previous pricing dispute on a long-term gas supply contract. The amount paid by SJG to the third party supplier to settle the pricing dispute reflects a gas cost that ultimately will be recovered from SJG's customers through adjusted rates through the BGSS clause, as approved by the BPU in May 2021 (see Note 7). ETG's deferred gas costs-net are over-recovered at March 31, 2021, resulting in a regulatory liability. CIP RECEIVABLE - The CIP tracking mechanism at SJG adjusts earnings when the actual usage per customer experienced during the period varies from an established baseline usage per customer. Actual usage per customer was more than the established baseline during the first three months of 2021, resulting in a reduction of the regulatory asset at March 31, 2021 as compared to December 31, 2020. This is primarily the result of colder than normal weather experienced in the region. OTHER REGULATORY ASSETS - The increase from December 31, 2020 to March 31, 2021 is primarily related to incremental costs incurred related to the impacts to our business from the COVID-19 pandemic. On July 2, 2020, the BPU issued an Order authorizing New Jersey's regulated utilities to create a COVID-19-related regulatory asset by deferring on their books and records the prudently incurred incremental costs related to COVID-19 beginning on March 9, 2020 and continuing through September 30, 2021, or 60 days after the termination of the public health emergency, whichever is later. The Company is required to file quarterly reports with the BPU, along with a petition of recovery of such incremental costs with the BPU by December 31, 2021 or within 60 days of the close of the tracking period, whichever is later. As of March 31, 2021 and December 31, 2020, ETG deferred $7.8 million and $5.8 million, respectively, and SJG deferred $6.8 million and $4.7 million, respectively, of incremental costs principally related to expected credit losses from uncollectibles as a result of the COVID-19 pandemic, specifically related to changes in payment patterns observed to date and consideration of macroeconomic factors. We have deemed these costs to be probable of recovery. The Utilities Regulatory Liabilities as of March 31, 2021 and December 31, 2020 consisted of the following items (in thousands): March 31, 2021 SJG ETG Total SJI Excess Plant Removal Costs $ 12,730 $ 33,772 $ 46,502 Excess Deferred Taxes 225,008 113,166 338,174 Deferred Gas Costs - Net — 22,689 22,689 Amounts to be Refunded to Customers — 9,257 9,257 Other Regulatory Liabilities — 1,467 1,467 Total Regulatory Liabilities $ 237,738 $ 180,351 $ 418,089 December 31, 2020 SJG ETG Total SJI Excess Plant Removal Costs $ 12,666 $ 37,953 $ 50,619 Excess Deferred Taxes 232,694 113,888 346,582 Deferred Gas Costs - Net — 15,322 15,322 Amounts to be Refunded to Customers — 6,969 6,969 Other Regulatory Liabilities — 1,085 1,085 Total Regulatory Liabilities $ 245,360 $ 175,217 $ 420,577 EXCESS DEFERRED TAXES - This liability is recognized as a result of Tax Reform enacted into law on December 22, 2017. The decrease in these liabilities for SJI and SJG from December 31, 2020 to March 31, 2021 is related to excess tax amounts returned to customers through customer billings. See Note 10 of SJI's and SJG's Annual Report on Form 10-K for the year ended December 31, 2020. |