----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| New Jersey               |   | 21-0398330                       |
|--------------------------|--------|----------------------------------|
| (State of incorporation) |   | IRS employer identification no.) |

| Large accelerated filer o                                             | Accelerated filer o         |
|-----------------------------------------------------------------------|-----------------------------|
| Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company o |

----

----

----

ONT

|       | Page No.                                                                              |
|------------|---------------------------------------------------------------------------------------|
|       |                                                                                  |
| PART I     | FINANCIAL INFORMATION                                                                 | 3 |
|       |                                                                                  |   |
| Item 1.    | Financial Statements                                                                  | 3 |
|       |                                                                                  |   |
| Item 2.    | Management's Discussion and Analysis of Financial Condition and Results of Operations | 16 |
|       |                                                                                  |   |
| Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                            | 23 |
|       |                                                                                  |   |
| Item 4.    | Controls and Procedures                                                               | 24 |
|       |                                                                                  |   |
| PART II    | OTHER INFORMATION                                                                     | 25 |
|       |                                                                                  |   |
| Item 1.    | Legal Proceedings                                                                     | 25 |
|       |                                                                                  |   |
| Item 1A.   | Risk Factors                                                                          | 25 |
|       |                                                                                  |   |
| Item 6.    | Exhibits                                                                              | 25 |
|       |                                                                                  |   |
| Signatures | 25                                                                                    |

----

Table of Contents

NC

|                                   |   | Three Months Ended |    |
|----------------------------------------|--------|--------------------|---------|
|                                   |   | March 31,          |    |
|                                   |   | 2011               |    |   | 2010 |   |
|                                   |   |               |    |   |   |   |
| Operating Revenues                     |   | $                  | 180,323 |   |   | $ | 196,716 |   |
|                                   |   |               |    |   |   |   |   |   |
| Operating Expenses:                    |   |               |    |   |   |   |   |   |
| Cost of Sales (Excluding depreciation) |   |               | 88,574  |   |   |   | 116,875 |   |
| Operations                             |   |               | 18,273  |   |   |   | 17,807 |   |
| Maintenance                            |   |               | 3,009   |   |   |   | 2,816 |   |
| Depreciation                           |   |               | 7,460   |   |   |   | 7,079 |   |
| Energy and Other Taxes                 |   |               | 4,514   |   |   |   | 4,348 |   |
|                                   |   |               |    |   |   |   |   |   |
| Total Operating Expenses               |   |               | 121,830 |   |   |   | 148,925 |   |
|                                   |   |               |    |   |   |   |   |   |
| Operating Income                       |   |               | 58,493  |   |   |   | 47,791 |   |
|                                   |   |               |    |   |   |   |   |   |
| Other Income and Expense               |   |               | 878     |   |   |   | 233 |   |
|                                   |   |               |    |   |   |   |   |   |
| Interest Charges                       |   |               | (5,029  | ) |   |   | (4,015 | ) |
|                                   |   |               |    |   |   |   |   |   |
| Income Before Income Taxes             |   |               | 54,342  |   |   |   | 44,009 |   |
|                                   |   |               |    |   |   |   |   |   |
| Income Taxes                           |   |               | (22,046 | ) |   |   | (18,139 | ) |
|                                   |   |               |    |   |   |   |   |   |
| Net Income                             |   | $                  | 32,296  |   |   | $ | 25,870 |   |

----

Table of Contents

|                                                     |   | Three Months Ended |   |
|----------------------------------------------------------|--------|--------------------|--------|
|                                                     |   | March 31,          |   |
|                                                     |   | 2011               |   |   | 2010 |   |
|                                                     |   |               |   |   |   |   |
| Net Income                                               |   | $                  | 32,296 |   |   | $ | 25,870 |   |
|                                                     |   |               |   |   |   |   |   |   |
| Other Comprehensive (Loss) Gain  - Net of Tax: |   |               |   |   |   |   |   |   |
|                                                     |   |               |   |   |   |   |   |   |
| Unrealized (Loss) Gain on Available-for-Sale Securities  |   |               | (154   | ) |   |   | 144 |   |
| Unrealized Gain on Derivatives - Other                   |   |               | 7      |   |   |   | 7 |   |
|                                                     |   |               |   |   |   |   |   |   |
| Other Comprehensive (Loss) Gain - Net of Tax *           |   |               | (147   | ) |   |   | 151 |   |
|                                                     |   |               |   |   |   |   |   |   |
| Comprehensive Income                                     |   | $                  | 32,149 |   |   | $ | 26,021 |   |

----

Table of Contents

|                                                  |   | Three Months Ended |    |
|-------------------------------------------------------|--------|--------------------|---------|
|                                                  |   | March 31,          |    |
|                                                  |   | 2011               |    |   | 2010 |   |
|                                                  |   |               |    |   |   |   |
| Net Cash Provided by Operating Activities             |   | $                  | 64,707  |   |   | $ | 72,204 |   |
|                                                  |   |               |    |   |   |   |   |   |
| Cash Flows from Investing Activities:                 |   |               |    |   |   |   |   |   |
| Capital Expenditures                                  |   |               | (25,605 | ) |   |   | (37,414 | ) |
| Purchase of Restricted Investments in Margin Accounts |   |               | (211    | ) |   |   | - |   |
| Investment in Long-Term Receivables                   |   |               | (1,492  | ) |   |   | (910 | ) |
| Proceeds from Long-Term Receivables                   |   |               | 1,691   |   |   |   | 609 |   |
|                                                  |   |               |    |   |   |   |   |   |
| Net Cash Used in Investing Activities                 |   |               | (25,617 | ) |   |   | (37,715 | ) |
|                                                  |   |               |    |   |   |   |   |   |
| Cash Flows from Financing Activities:                 |   |               |    |   |   |   |   |   |
| Net Repayments of Lines of Credit                     |   |               | (38,650 | ) |   |   | (47,400 | ) |
| Proceeds from Issuance of Long-Term Debt              |   |               | -       |   |   |   | 15,000 |   |
| Payments for Issuance of Long-Term Debt               |   |               | (10     | ) |   |   | (559 | ) |
|                                                  |   |               |    |   |   |   |   |   |
| Net Cash Used in Financing Activities                 |   |               | (38,660 | ) |   |   | (32,959 | ) |
|                                                  |   |               |    |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents             |   |               | 430     |   |   |   | 1,530 |   |
| Cash and Cash Equivalents at Beginning of Period      |   |               | 2,030   |   |   |   | 1,993 |   |
|                                                  |   |               |    |   |   |   |   |   |
| Cash and Cash Equivalents at End of Period            |   | $                  | 2,460   |   |   | $ | 3,523 |   |

----

Table of Contents

|                                         |   | March 31, |      |   | December 31, |   |
|----------------------------------------------|--------|-----------|-----------|--------|--------------|--------|
|                                         |   | 2011      |      |   | 2010         |   |
| Assets                                       |   |      |      |   |         |   |
|                                         |   |      |      |   |         |   |
| Property, Plant and Equipment:               |   |      |      |   |         |   |
| Utility Plant, at original cost              |   | $         | 1,403,985 |   |         | $      | 1,384,797 |   |
| Accumulated Depreciation                     |   |      | (344,365  | )      |         |   | (337,993 | ) |
|                                         |   |      |      |   |         |   |   |   |
| Property, Plant and Equipment - Net          |   |      | 1,059,620 |   |         |   | 1,046,804 |   |
|                                         |   |      |      |   |         |   |   |   |
| Investments:                                 |   |      |      |   |         |   |   |   |
| Available-for-Sale Securities                |   |      | 7,015     |   |         |   | 6,700 |   |
| Restricted Investments                       |   |      | 4,512     |   |         |   | 4,301 |   |
|                                         |   |      |      |   |         |   |   |   |
| Total Investments                            |   |      | 11,527    |   |         |   | 11,001 |   |
|                                         |   |      |      |   |         |   |   |   |
| Current Assets:                              |   |      |      |   |         |   |   |   |
| Cash and Cash Equivalents                    |   |      | 2,460     |   |         |   | 2,030 |   |
| Accounts Receivable                          |   |      | 74,112    |   |         |   | 37,619 |   |
| Accounts Receivable - Related Parties        |   |      | 3,700     |   |         |   | 4,885 |   |
| Unbilled Revenues                            |   |      | 35,167    |   |         |   | 58,197 |   |
| Provision for Uncollectibles                 |   |      | (3,823    | )      |         |   | (4,577 | ) |
| Natural Gas in Storage, average cost         |   |      | 6,010     |   |         |   | 20,109 |   |
| Materials and Supplies, average cost         |   |      | 2,764     |   |         |   | 2,511 |   |
| Prepaid Taxes                                |   |      | -         |   |         |   | 15,907 |   |
| Derivatives - Energy Related Assets          |   |      | 2,488     |   |         |   | 5,864 |   |
| Other Prepayments and Current Assets         |   |      | 2,470     |   |         |   | 2,353 |   |
|                                         |   |      |      |   |         |   |   |   |
| Total Current Assets                         |   |      | 125,348   |   |         |   | 144,898 |   |
|                                         |   |      |      |   |         |   |   |   |
| Regulatory and Other Noncurrent Assets:      |   |      |      |   |         |   |   |   |
| Regulatory Assets                            |   |      | 239,436   |   |         |   | 248,413 |   |
| Unamortized Debt Issuance Costs              |   |      | 6,539     |   |         |   | 6,718 |   |
| Long-Term Receivables                        |   |      | 7,402     |   |         |   | 7,285 |   |
| Derivatives - Energy Related Assets          |   |      | 195       |   |         |   | 1,005 |   |
| Other                                        |   |      | 2,415     |   |         |   | 2,511 |   |
|                                         |   |      |      |   |         |   |   |   |
| Total Regulatory and Other Noncurrent Assets |   |      | 255,987   |   |         |   | 265,932 |   |
|                                         |   |      |      |   |         |   |   |   |
| Total Assets                                 |   | $         | 1,452,482 |   |         | $      | 1,468,635 |   |

----

Table of Contents

|                                              |   | March 31, |      |   | December 31, |   |
|---------------------------------------------------|--------|-----------|-----------|--------|--------------|--------|
|                                              |   | 2011      |      |   | 2010         |   |
|                                              |   |      |      |   |         |   |
| Capitalization and Liabilities                    |   |      |      |   |         |   |
|                                              |   |      |      |   |         |   |
| 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 |   |      | 200,841   |   |         |   | 200,841 |   |
| Accumulated Other Comprehensive Loss              |   |      | (9,267    | )      |         |   | (9,120 | ) |
| Retained Earnings                                 |   |      | 261,612   |   |         |   | 229,316 |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Common Equity                               |   |      | 459,034   |   |         |   | 426,885 |   |
|                                              |   |      |      |   |         |   |   |   |
| Long-Term Debt                                    |   |      | 340,000   |   |         |   | 340,000 |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Capitalization                              |   |      | 799,034   |   |         |   | 766,885 |   |
|                                              |   |      |      |   |         |   |   |   |
| Current Liabilities:                              |   |      |      |   |         |   |   |   |
| Notes Payable                                     |   |      | 20,250    |   |         |   | 58,900 |   |
| Current Portion of Long-Term Debt                 |   |      | 50,000    |   |         |   | 50,000 |   |
| Accounts Payable - Commodity                      |   |      | 17,655    |   |         |   | 26,915 |   |
| Accounts Payable - Other                          |   |      | 20,613    |   |         |   | 19,628 |   |
| Accounts Payable - Related Parties                |   |      | 9,476     |   |         |   | 10,830 |   |
| Derivatives - Energy Related Liabilities          |   |      | 5,796     |   |         |   | 11,406 |   |
| Deferred Income Taxes - Net                       |   |      | 3,721     |   |         |   | 4,982 |   |
| Customer Deposits and Credit Balances             |   |      | 10,150    |   |         |   | 10,525 |   |
| Environmental Remediation Costs                   |   |      | 19,697    |   |         |   | 25,662 |   |
| Taxes Accrued                                     |   |      | 13,191    |   |         |   | 1,915 |   |
| Pension Benefits                                  |   |      | 1,182     |   |         |   | 1,182 |   |
| Interest Accrued                                  |   |      | 5,110     |   |         |   | 7,011 |   |
| Other Current Liabilities                         |   |      | 3,962     |   |         |   | 5,156 |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Current Liabilities                         |   |      | 180,803   |   |         |   | 234,112 |   |
|                                              |   |      |      |   |         |   |   |   |
| Regulatory and Other Noncurrent Liabilities:      |   |      |      |   |         |   |   |   |
| Regulatory Liabilities                            |   |      | 61,146    |   |         |   | 69,248 |   |
| Deferred Income Taxes - Net                       |   |      | 250,809   |   |         |   | 239,648 |   |
| Environmental Remediation Costs                   |   |      | 63,248    |   |         |   | 61,731 |   |
| Asset Retirement Obligations                      |   |      | 28,214    |   |         |   | 27,925 |   |
| Pension and Other Postretirement Benefits         |   |      | 61,178    |   |         |   | 59,754 |   |
| Investment Tax Credits                            |   |      | 1,132     |   |         |   | 1,207 |   |
| Derivatives - Energy Related Liabilities          |   |      | 134       |   |         |   | 430 |   |
| Derivatives - Other                               |   |      | 2,630     |   |         |   | 3,150 |   |
| Other                                             |   |      | 4,154     |   |         |   | 4,545 |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Regulatory and Other Noncurrent Liabilities |   |      | 472,645   |   |         |   | 467,638 |   |
|                                              |   |      |      |   |         |   |   |   |
| Commitments and Contingencies (Note 9)            |   |      |      |   |         |   |   |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Capitalization and Liabilities              |   | $         | 1,452,482 |   |         | $      | 1,468,635 |   |

----

Table of Contents

| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: |
|----|---------------------------------------------|

| 2. | STOCK-BASED COMPENSATION PLANS: |
|----|---------------------------------|

| Grant Date |   | Shares Outstanding |   |   | Fair Value Per Share |   |   | Expected Volatility |   |   | Risk-Free Interest Rate |   |
|------------|--------|--------------------|--------|--------|----------------------|--------|--------|---------------------|--------|--------|-------------------------|--------|
|       |   |               |   |   |                 |   |   |                |   |   |                    |   |
| Jan. 2009  |   |               | 8,318  |   |                 | $      | 39.350 |                |   |   | 28.6                    | %      |   |   | 1.20 | % |
| Jan. 2010  |   |               | 10,024 |   |                 | $      | 39.020 |                |   |   | 29.0                    | %      |   |   | 1.65 | % |
| Jan. 2011  |   |               | 7,544  |   |                 | $      | 50.940 |                |   |   | 27.5                    | %      |   |   | 1.01 | % |

----

Table of Contents

|                                          |   | Shares |   |   | Weighted AverageGrant DateFair Value |   |
|-----------------------------------------------|--------|--------|--------|--------|--------------------------------------|--------|
| Nonvested Shares Outstanding, January 1, 2011 |   |   | 18,342 |   |                                 | $      | 39.170 |   |
|                                          |   |   |   |   |                                 |   |   |   |
| Granted                                       |   |   | 7,544  |   |                                 | $      | 50.940 |   |
|                                          |   |   |   |   |                                 |   |   |   |
| Nonvested Shares Outstanding, March 31, 2011  |   |   | 25,886 |   |                                 | $      | 42.600 |   |

| 3. | RATES AND REGULATORY ACTIONS: |
|----|-------------------------------|

----

Table of Contents

| 4. | REGULATORY ASSETS AND LIABILITIES: |
|----|------------------------------------|

|                                                    |   | March 31, |    |   | December 31, |   |
|---------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                                                    |   | 2011      |    |   | 2010         |   |
| Environmental Remediation Costs:                        |   |      |    |   |         |   |   |   |
| Expended - Net                                          |   | $         | 40,818  |   |         | $      | 39,056 |   |
| Liability for Future Expenditures                       |   |      | 82,945  |   |         |   | 87,393 |   |
| Income Taxes - Flowthrough Depreciation                 |   |      | 529     |   |         |   | 774 |   |
| Deferred Asset Retirement Obligation Costs              |   |      | 24,485  |   |         |   | 24,247 |   |
| Deferred Pension and Other Postretirement Benefit Costs |   |      | 68,922  |   |         |   | 69,017 |   |
| Conservation Incentive Program Receivable               |   |      | 4,416   |   |         |   | 12,291 |   |
| Societal Benefit Costs Receivable                       |   |      | 5,199   |   |         |   | 4,216 |   |
| Premium for Early Retirement of Debt                    |   |      | 659     |   |         |   | 699 |   |
| Other Regulatory Assets                                 |   |      | 11,463  |   |         |   | 10,720 |   |
|                                                    |   |      |    |   |         |   |   |   |
| Total Regulatory Assets                                 |   | $         | 239,436 |   |         | $      | 248,413 |   |

|                         |   | March 31, |   |   | December 31, |   |
|------------------------------|--------|-----------|--------|--------|--------------|--------|
|                         |   | 2011      |   |   | 2010         |   |
| Excess Plant Removal Costs   |   | $         | 48,170 |   |         | $      | 48,409 |   |
| Deferred Revenues - Net      |   |      | 9,591  |   |         |   | 20,179 |   |
| Other Regulatory Liabilities |   |      | 3,385  |   |         |   | 660 |   |
|                         |   |      |   |   |         |   |   |   |
| Total Regulatory Liabilities |   | $         | 61,146 |   |         | $      | 69,248 |   |

| 5. | RELATED PARTY TRANSACTIONS: |
|----|-----------------------------|

----

Table of Contents

|                                |   | Three Months EndedMarch 31, |   |
|-------------------------------------|--------|-----------------------------|--------|
|                                |   | 2011                        |   |   | 2010 |   |
| Operating Revenues/Affiliates:      |   |                        |   |   |   |   |
| SJRG                                |   | $                           | 5,875  |   |   | $ | 563 |   |
| Other                               |   |                        | 317    |   |   |   | 127 |   |
| Total Operating Revenues/Affiliates |   | $                           | 6,192  |   |   | $ | 690 |   |

|                                                |   | Three Months EndedMarch 31, |   |
|-----------------------------------------------------|--------|-----------------------------|--------|
|                                                |   | 2011                        |   |   | 2010 |   |
| Costs of Sales/Affiliates (Excluding depreciation): |   |                        |   |   |   |   |
| SJRG                                                |   | $                           | 5,244  |   |   | $ | 14,582 |   |
| Energy-Related Derivative Losses *                  |   |                        |   |   |   |   |   |   |
| SJRG                                                |   | $                           | 4,601  |   |   | $ | 4,047 |   |

| Operations Expense/Affiliates       |   |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| SJI                                 |   | $      | 2,496  |   |   | $      | 1,928 |   |
| SJIS                                |   |   | 1,142  |   |   |   | 1,503 |   |
| Millennium                          |   |   | 731    |   |   |   | 688 |   |
| Other                               |   |   | (97    | )      |   |   | (54 | ) |
| Total Operations Expense/Affiliates |   | $      | 4,272  |   |   | $      | 4,065 |   |

| 6. | FINANCIAL INSTRUMENTS: |
|----|------------------------|

----

Table of Contents

| 7. | UNUSED LINES OF CREDIT: |
|----|-------------------------|

|                      |   | Total Facility |    |   | Usage  |   |    | Available Liquidity |   | Expiration Date |
|---------------------------|--------|----------------|---------|--------|--------|--------|---------|---------------------|--------|-----------------|
|                      |   |           |    |   |   |   |    |                |   |            |
| Revolving Credit Facility |   | $              | 100,000 |   |   | $      | 14,550  |                |   | $               | 85,450 |   | August 2011 (A) |
| Line of Credit            |   |           | 40,000  |   |   |   | — |                |   |            | 40,000 |   | August 2011 (A) |
| Uncommitted Bank Lines    |   |           | 40,000  |   |   |   | 5,700   |                |   |            | 34,300 |   | Various |
|                      |   |           |    |   |   |   |    |                |   |            |   |   |   |
| Total                     |   | $              | 180,000 |   |   | $      | 20,250  |                |   | $               | 159,750 |   |   |

| 8. | PENSION AND OTHER POSTRETIREMENT BENEFITS: |
|----|--------------------------------------------|

|                               | Pension Benefits | Other Postretirement Benefits |   |
|------------------------------------|------------------|-------------------------------|--------|
|                               |             | Three Months EndedMarch 31,   |   |   | Three Months EndedMarch 31, |   |
|                               |             | 2011                          |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Service Cost                       |             | $                             | 785    |   |   | $ | 662 |   |   | $ | 215 |   |   | $ | 199 |   |
| Interest Cost                      |             |                          | 1,826  |   |   |   | 1,744 |   |   |   | 619 |   |   |   | 686 |   |
| Expected Return on Plan Assets     |             |                          | (1,815 | ) |   |   | (1,498 | ) |   |   | (446 | ) |   |   | (338 | ) |
| Amortizations:                     |             |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prior Service Cost (Credits)       |             |                          | 52     |   |   |   | 47 |   |   |   | (71 | ) |   |   | (74 | ) |
| Actuarial Loss                     |             |                          | 1,009  |   |   |   | 1,062 |   |   |   | 312 |   |   |   | 382 |   |
| Net Periodic Benefit Cost          |             |                          | 1,857  |   |   |   | 2,017 |   |   |   | 629 |   |   |   | 855 |   |
| Capitalized Benefit Costs          |             |                          | (910   | ) |   |   | (988 | ) |   |   | (308 | ) |   |   | (419 | ) |
| Total Net Periodic Benefit Expense |             | $                             | 947    |   |   | $ | 1,029 |   |   | $ | 321 |   |   | $ | 436 |   |

----

Table of Contents

| 9. | COMMITMENTS AND CONTINGENCIES: |
|----|--------------------------------|

| 10. | FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES: |
|-----|-----------------------------------------------------------|

|   | ● | 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. |
|--------|---------|----------------------------------------------------------------------------------------------------|

----

Table of Contents

| As of March 31, 2011                               |   |   |   |   |    |   |   |    |   |   |    |   |
|----------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
|                                               |   | Total  |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|                                               |   |   |   |   |    |   |   |    |   |   |    |   |
| Assets -                                           |   |   |   |   |    |   |   |    |   |   |    |   |
|                                               |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Available-for-Sale Securities (A)                  |   | $      | 7,015  |   |    | $      | -      |    |   | $      | 7,015   |   |   | $ | - |   |
| Derivatives – Energy Related Assets (B)      |   |   | 2,683  |   |    |   | 1,333  |    |   |   | 1,350   |   |   |   | - |   |
|                                               |   | $      | 9,698  |   |    | $      | 1,333  |    |   | $      | 8,365   |   |   | $ | - |   |
|                                               |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Liabilities -                                      |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
|                                               |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Derivatives – Energy Related Liabilities (B) |   | $      | 5,930  |   |    | $      | 5,625  |    |   | $      | 305     |   |   | $ | - |   |
| Derivatives – Other (C)                      |   |   | 2,630  |   |    |   | -      |    |   |   | 2,630   |   |   |   | - |   |
|                                               |   | $      | 8,560  |   |    | $      | 5,625  |    |   | $      | 2,935   |   |   | $ | - |   |

| As of December 31, 2010                       |   | Total  |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|----------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Assets                                             |   |   |   |   |    |   |   |    |   |   |    |   |
| Available-for-Sale Securities (A)                  |   | $      | 6,700  |   |    | $      | 6,700  |    |   | $      | -       |   |   | $ | - |   |
| Derivatives – Energy Related Assets (B)      |   |   | 6,869  |   |    |   | 784    |    |   |   | 6,085   |   |   |   | - |   |
|                                               |   | $      | 13,569 |   |    | $      | 7,484  |    |   | $      | 6,085   |   |   | $ | - |   |
|                                               |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Liabilities                                        |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Derivatives – Energy Related Liabilities (B) |   | $      | 11,836 |   |    | $      | 10,614 |    |   | $      | 1,222   |   |   | $ | - |   |
| Derivatives – Other (C)                      |   |   | 3,150  |   |    |   | -      |    |   |   | 3,150   |   |   |   | - |   |
|                                               |   | $      | 14,986 |   |    | $      | 10,614 |    |   | $      | 4,372   |   |   | $ | - |   |

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| 11. | DERIVATIVE INSTRUMENTS: |
|-----|-------------------------|

| Derivatives not designated as hedging instruments under GAAP       |   | March 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                               |   | Assets         |   |   | Liabilities       |   |   | Assets |   |   | Liabilities |   |
| Energy related commodity contracts:                                |   |           |   |   |              |   |   |   |   |   |   |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |
| Derivatives – Energy Related – Current                 |   | $              | 2,488  |   |              | $      | 5,796 |   |   | $ | 5,864 |   |   | $ | 11,406 |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives – Energy Related – Non-Current             |   |           | 195    |   |              |   | 134 |   |   |   | 1,005 |   |   |   | 430 |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate contracts:                                           |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives – Other                                          |   |           | -      |   |              |   | 2,630 |   |   |   | - |   |   |   | 3,150 |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total derivatives not designated as hedging instruments under GAAP |   | $              | 2,683  |   |              | $      | 8,560 |   |   | $ | 6,869 |   |   | $ | 14,986 |   |

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|                                                                    |   | Three months ended March 31, |
|-------------------------------------------------------------------------|--------|------------------------------|
| Derivatives in Cash Flow Hedging Relationships Interest Rate Contracts: |   | 2011                         |   |   | 2010 |   |
|                                                                    |   |                         |   |   |   |   |
| Losses reclassified from accumulated OCI into income (a)                |   | $                            | (12 | ) |   | $ | (12 | ) |

| 12. | SUBSEQUENT EVENT: |
|-----|-------------------|

e

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|                                   |   | Three Months Ended |   |
|----------------------------------------|--------|--------------------|--------|
|                                   |   | March 31,          |   |
|                                   |   | 2011               |   |   | 2010 |   |
| Throughput – dth:                |   |               |   |   |   |   |
| Firm Sales -                           |   |               |   |   |   |   |
| Residential                            |   |               | 11,241 |   |   |   | 11,431 |   |
| Commercial                             |   |               | 2,795  |   |   |   | 2,694 |   |
| Industrial                             |   |               | 155    |   |   |   | 148 |   |
| Cogeneration & Electric Generation |   |               | 120    |   |   |   | 44 |   |
| Firm Transportation -                  |   |               |   |   |   |   |   |   |
| Residential                            |   |               | 1,253  |   |   |   | 982 |   |
| Commercial                             |   |               | 2,759  |   |   |   | 2,641 |   |
| Industrial                             |   |               | 3,445  |   |   |   | 3,089 |   |
| Cogeneration & Electric Generation |   |               | 2,401  |   |   |   | 2,193 |   |
| Total Firm Throughput                  |   |               | 24,169 |   |   |   | 23,222 |   |
|                                   |   |               |   |   |   |   |   |   |
| Interruptible Sales                    |   |               | 3      |   |   |   | 3 |   |
| Interruptible Transportation           |   |               | 692    |   |   |   | 586 |   |
| Off-System                             |   |               | 1,904  |   |   |   | 1,116 |   |
| Capacity Release                       |   |               | 10,155 |   |   |   | 10,189 |   |
| Total Throughput                       |   |               | 36,923 |   |   |   | 35,116 |   |

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|                                   |   | Three Months Ended |    |
|----------------------------------------|--------|--------------------|---------|
|                                   |   | March 31,          |    |
|                                   |   | 2011               |    |   | 2010 |   |
| Utility Operating Revenues:            |   |               |    |   |   |   |
| Firm Sales -                           |   |               |    |   |   |   |
| Residential                            |   | $                  | 114,852 |   |   | $ | 137,515 |   |
| Commercial                             |   |               | 26,800  |   |   |   | 29,623 |   |
| Industrial                             |   |               | 1,720   |   |   |   | 1,795 |   |
| Cogeneration & Electric Generation |   |               | 809     |   |   |   | 411 |   |
| Firm Transportation -                  |   |               |    |   |   |   |   |   |
| Residential                            |   |               | 6,550   |   |   |   | 4,454 |   |
| Commercial                             |   |               | 9,705   |   |   |   | 8,599 |   |
| Industrial                             |   |               | 4,395   |   |   |   | 3,976 |   |
| Cogeneration & Electric Generation |   |               | 1,742   |   |   |   | 2,009 |   |
| Total Firm Revenues                    |   |               | 166,573 |   |   |   | 188,382 |   |
|                                   |   |               |    |   |   |   |   |   |
| Interruptible Sales                    |   |               | 54      |   |   |   | 48 |   |
| Interruptible Transportation           |   |               | 634     |   |   |   | 607 |   |
| Off-System                             |   |               | 10,134  |   |   |   | 6,924 |   |
| Capacity Release                       |   |               | 2,671   |   |   |   | 518 |   |
| Other                                  |   |               | 257     |   |   |   | 237 |   |
| Total Utility Operating Revenues       |   |               | 180,323 |   |   |   | 196,716 |   |
|                                   |   |               |    |   |   |   |   |   |
| Less:                                  |   |               |    |   |   |   |   |   |
| Cost of Sales                          |   |               | 88,574  |   |   |   | 116,875 |   |
| Conservation Recoveries*               |   |               | 3,255   |   |   |   | 3,119 |   |
| RAC Recoveries*                        |   |               | 1,591   |   |   |   | 1,741 |   |
| EET Recoveries*                        |   |               | 509     |   |   |   | 179 |   |
| Revenue Taxes                          |   |               | 3,873   |   |   |   | 3,752 |   |
| Utility Margin                         |   | $                  | 82,521  |   |   | $ | 71,050 |   |

| Margin:                                              |   |   |   |   |   |   |   |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Residential                                          |   | $      | 58,799 |   |   | $      | 45,300 |   |
| Commercial and Industrial                            |   |   | 21,327 |   |   |   | 14,958 |   |
| Cogeneration and Electric Generation                 |   |   | 775    |   |   |   | 709    |   |
| Interruptible                                        |   |   | 48     |   |   |   | 38     |   |
| Off-system & Capacity Release                    |   |   | 695    |   |   |   | 309    |   |
| Other Revenues                                       |   |   | 256    |   |   |   | 236    |   |
| Margin Before Weather Normalization & Decoupling |   |   | 81,900 |   |   |   | 61,550 |   |
| CIRT Mechanism                                       |   |   | 566    |   |   |   | 2,024  |   |
| CIP Mechanism                                        |   |   | (26    | )      |   |   | 7,442  |   |
| EET Mechanism                                        |   |   | 81     |   |   |   | 34     |   |
| Utility Margin                                       |   | $      | 82,521 |   |   | $      | 71,050 |   |
|                                                 |   |   |   |   |   |   |   |   |
| Degree Days:                                         |   |   | 2,495  |   |   |   | 2,433  |   |

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|                                |   | Three Months EndedMarch 31, |   |
|-------------------------------------|--------|-----------------------------|--------|
|                                |   | 2011                        |   |   | 2010 |   |
| Net Income Benefit:                 |   |                        |   |   |   |   |
| CIP – Weather Related         |   | $                           | (0.6   | ) |   | $ | 0.4 |   |
| CIP – Usage Related           |   |                        | 0.6    |   |   |   | 4.0 |   |
| Total Net Income Benefit            |   | $                           | 0.0    |   |   | $ | 4.4 |   |
|                                |   |                        |   |   |   |   |   |   |
| Weather Compared to 20-Year Average |   | 1.6% colder                 |   |   | 0.2% colder |   |
| Weather Compared to Prior Year      |   | 2.6% colder                 |   |   | 3.4% warmer |   |

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|                   |   | Three Months EndedMarch 31, |
|------------------------|--------|-----------------------------|
|                   |   | 2011 vs. 2010               |
|                   |   |                        |
| Operations             |   | $                           | 466 |   |
| Maintenance            |   |                        | 193 |   |
| Depreciation           |   |                        | 381 |   |
| Energy and Other Taxes |   |                        | 166 |   |

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|                      |   | Total Facility |    |   | Usage  |   |    | Available Liquidity |   | Expiration Date |
|---------------------------|--------|----------------|---------|--------|--------|--------|---------|---------------------|--------|-----------------|
|                      |   |           |    |   |   |   |    |                |   |            |
| Revolving Credit Facility |   | $              | 100,000 |   |   | $      | 14,550  |                |   | $               | 85,450 |   | August 2011 (A) |
| Line of Credit            |   |           | 40,000  |   |   |   | — |                |   |            | 40,000 |   | August 2011 (A) |
| Uncommitted Bank Lines    |   |           | 40,000  |   |   |   | 5,700   |                |   |            | 34,300 |   | Various |
|                      |   |           |    |   |   |   |    |                |   |            |   |   |   |
| Total                     |   | $              | 180,000 |   |   | $      | 20,250  |                |   | $               | 159,750 |   |   |

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|            |   | As ofMarch 31,2011 |   |   | As ofDecember 31,2010 |   |
|-----------------|--------|--------------------|--------|--------|-----------------------|--------|
|            |   |               |   |   |                  |   |
| Common Equity   |   |               | 52.8   | %      |                  |   | 48.8 | % |
| Long-Term Debt  |   |               | 44.9   |   |                  |   | 44.5 |   |
| Short-Term Debt |   |               | 2.3    |   |                  |   | 6.7 |   |
|            |   |               |   |   |                  |   |   |   |
| Total           |   |               | 100.0  | %      |                  |   | 100.0 | % |

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| Twelve MonthsEnded Mar. 31, |   |   | Year Ended December 31, |   |
|-----------------------------|--------|--------|-------------------------|--------|
| 2011                        |   |   | 2010                    |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 5.4x                        |   |   |                    | 5.1x   |   |   |   | 4.9x |   |   |   | 4.4x |   |   |   | 4.1x |   |   |   | 3.7x |   |

lit

| Assets                         |   |                |   |   |                |   |   |   |   |
|--------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|--------|--------|
| Source of Fair Value           |   | Maturity< 1 Year |   |   | Maturity1 - 3 Years |   |   | Total  |   |
|                           |   |                |   |   |                |   |   |   |   |
| Prices Actively Quoted (NYMEX) |   | $                   | 1,138  |   |                | $      | 195    |   |   | $ | 1,333 |   |
|                           |   |                |   |   |                |   |   |   |   |   |   |   |
| Prices Provided by Other       |   |                | 1,350  |   |                |   | -      |   |   |   | 1,350 |   |
|                           |   |                |   |   |                |   |   |   |   |   |   |   |
| Total                          |   | $                   | 2,488  |   |                | $      | 195    |   |   | $ | 2,683 |   |

| Liabilities                                       |   |        |   |   |        |   |   |   |   |
|---------------------------------------------------|--------|-------------|--------|--------|-------------|--------|--------|--------|--------|
|                                              |   | Maturity    |   |   | Maturity    |   |   |   |   |
| Source of Fair Value                              |   | < 1 Year |   |   | 1 - 3 Years |   |   | Total  |   |
|                                              |   |        |   |   |        |   |   |   |   |
| Prices Actively Quoted (NYMEX)                    |   | $           | 5,491  |   |        | $      | 134    |   |   | $ | 5,625 |   |
|                                              |   |        |   |   |        |   |   |   |   |   |   |   |
| Prices Provided by Other External Sources (Basis) |   |        | 305    |   |        |   | -      |   |   |   | 305 |   |
|                                              |   |        |   |   |        |   |   |   |   |   |   |   |
| Total                                             |   | $           | 5,796  |   |        | $      | 134    |   |   | $ | 5,930 |   |

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| Net Derivatives — Energy Related Liability, January 1, 2011   |   | $      | (4,967 | )      |
|---------------------------------------------------------------------|--------|--------|--------|--------|
| Contracts Settled During the Three Months ended March 31, 2011, Net |   |   | 1,349  |   |
| Other Changes in Fair Value from Continuing and New Contracts, Net  |   |   | 371    |   |
| Net Derivatives — Energy Related Liability, March 31, 2011    |   | $      | (3,247 | )      |

| Amount |       |   | FixedInterest Rate |   | Start Date |   | Maturity   |   | Type       |
|--------|------------|--------|--------------------|--------|------------|--------|------------|--------|------------|
| $      | 12,500,000 |   |               |   | 3.430      | %      | 12/01/2006 |   | 02/01/2036 |   | Tax-exempt |
| $      | 12,500,000 |   |               |   | 3.430      | %      | 12/01/2006 |   | 02/01/2036 |   | Tax-exempt |

roce

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oc

k 

ibi

| Exhibit No. |   | Description                                                                                                                                                                                                                                         |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                |
| 3(b)        |   | Bylaws of South Jersey Gas Company, as amended and restated through April 28, 2011 (filed herewith)                                                                                                                                                 |
|        |   |                                                                                                                                                                                                                                                |
| 31.1        |   | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act.                                                                                                                                                            |
|        |   |                                                                                                                                                                                                                                                |
| 31.2        |   | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act.                                                                                                                                                            |
|        |   |                                                                                                                                                                                                                                                |
| 32.1        |   | Certification of Chief Executive Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code). |
|        |   |                                                                                                                                                                                                                                                |
| 32.2        |   | Certification of Chief Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code). |

RES

| Dated: May 9, 2011 | By:    | /s/ Edward J. Graham                                |
|--------------------|--------|-----------------------------------------------------|
|               |   | Edward J. Graham                                    |
|               |   | President & Chief Executive Officer             |
|               |   |                                                |
|               |   |                                                |
| Dated: May 9, 2011 | By:    | /s/ David A. Kindlick                               |
|               |   | David A. Kindlick                                   |
|               |   | Senior Vice President & Chief Financial Officer |

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