----

----

| [X] | QUARTERLY 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.) |

----

----

----

----

| SOUTH      JERSEY GAS COMPANY                                                                          |   |
|--------------------------------------------------------------------------------------------------------|--------|
|                                                                                                   |   |   |   |   |   |   |
| CONDENSED      STATEMENTS OF INCOME (UNAUDITED)                                                        |   |
| (In      Thousands)                                                                                    |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   | Three      Months Ended |   |
|                                                                                                   |   | March      31, |   |
|                                                                                                   |   | 2008 |   |   | 2007 |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |
| Operating      Revenues                                                                                |   | $ | 237,904 |   |   | $ | 277,864 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Operating      Expenses:                                                                               |   |   |   |   |   |   |   |   |
|    Cost      of Sales (Excluding depreciation)                                          |   |   | 162,917 |   |   |   | 205,544 |   |
|    Operations                                                                           |   |   | 15,125 |   |   |   | 13,901 |   |
|    Maintenance                                                                          |   |   | 1,852 |   |   |   | 1,472 |   |
|    Depreciation                                                                         |   |   | 6,305 |   |   |   | 6,053 |   |
|    Energy      and Other Taxes                                                          |   |   | 4,357 |   |   |   | 4,624 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|       Total      Operating Expenses                                      |   |   | 190,556 |   |   |   | 231,594 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Operating      Income                                                                                  |   |   | 47,348 |   |   |   | 46,270 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Other      Income and Expense                                                                          |   |   | 170 |   |   |   | 100 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Interest      Charges                                                                                  |   |   | (4,975 | ) |   |   | (5,241 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Income      Before Income Taxes                                                                        |   |   | 42,543 |   |   |   | 41,129 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Income      Taxes                                                                                      |   |   | (17,530 | ) |   |   | (16,870 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Net      Income                                                                                        |   | $ | 25,013 |   |   | $ | 24,259 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of the unaudited condensed      financial statements. |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |

----

| SOUTH JERSEY GAS COMPANY                                                                               |   |
|--------------------------------------------------------------------------------------------------------|--------|
|                                                                                                   |   |   |   |   |   |   |
| CONDENSED      STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)                                          |   |
| (In      Thousands)                                                                                    |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   | Three      Months Ended |   |
|                                                                                                   |   | March      31, |   |
|                                                                                                   |   | 2008 |   |   | 2007 |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |
| Net      Income                                                                                        |   | $ | 25,013 |   |   | $ | 24,259 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Other      Comprehensive (Loss) Income - Net of Tax:                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|   Unrealized      (Loss) Gain on Available-for-Sale Securities                          |   |   | (238 | ) |   |   | 66 |   |
|   Unrealized      Gain on Derivatives - Other                                                |   |   | 7 |   |   |   | 121 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|      Other      Comprehensive (Loss) Income - Net of Tax                      |   |   | (231 | ) |   |   | 187 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Comprehensive      Income                                                                              |   | $ | 24,782 |   |   | $ | 24,446 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of the unaudited condensed      financial statements. |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |

----

| SOUTH      JERSEY GAS COMPANY                                                                          |   |
|--------------------------------------------------------------------------------------------------------|--------|
|                                                                                                   |   |   |   |   |   |   |
| CONDENSED      STATEMENTS OF CASH FLOWS (UNAUDITED)                                                    |   |
| (In      Thousands)                                                                                    |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   | Three      Months Ended |   |
|                                                                                                   |   | March      31, |   |
|                                                                                                   |   | 2008 |   |   | 2007 |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |
| Net      Cash Provided by Operating Activities                                                         |   | $ | 60,772 |   |   | $ | 77,099 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Cash      Flows from Investing Activities:                                                             |   |   |   |   |   |   |   |   |
|   Capital      Expenditures                                                                  |   |   | (11,414 | ) |   |   | (10,553 | ) |
|   Merchandise      Loans                                                                     |   |   | (1,166 | ) |   |   | (1,124 | ) |
|   Proceeds      from Merchandise Loans                                                       |   |   | 928 |   |   |   | 1,099 |   |
|   Purchase      of Restricted Investment with Escrowed Loan Proceeds                         |   |   | (18 | ) |   |   | (120 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
|         Net      Cash Used in Investing Activities             |   |   | (11,670 | ) |   |   | (10,698 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Cash      Flows from Financing Activities:                                                             |   |   |   |   |   |   |   |   |
|        Net Repayments of Lines of Credit                                                          |   |   | (46,540 | ) |   |   | (61,300 | ) |
|   Excess      Tax Benefit from Restricted Stock Plan                                         |   |   | 236 |   |   |   | - |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|         Net      Cash Used in Financing Activities             |   |   | (46,304 | ) |   |   | (61,300 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Net      Increase in Cash and Cash Equivalents                                                         |   |   | 2,798 |   |   |   | 5,101 |   |
| Cash      and Cash Equivalents at Beginning of Period                                                  |   |   | 3,230 |   |   |   | 1,967 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents at End of Period                                                        |   | $ | 6,028 |   |   | $ | 7,068 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of the unaudited condensed      financial statements. |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |

----

| SOUTH      JERSEY GAS COMPANY                                                                                 |
|---------------------------------------------------------------------------------------------------------------|
|                                                                                                          |   |   |   |   |   |   |
| CONDENSED      BALANCE SHEETS (UNAUDITED)                                                                     |
| (In      Thousands)                                                                                           |
|                                                                                                          |   |   |   |
|                                                                                                          |   | March      31, |   |   | December      31, |   |
|                                                                                                          |   | 2008 |   |   | 2007 |   |
| Assets                                                                                                        |   |   |   |   |   |   |
|                                                                                                          |   |   |   |   |   |   |
| Property,      Plant and Equipment:                                                                           |   |   |   |   |   |   |
|    Utility      Plant, at original cost                                                        |   | $ | 1,134,288 |   |   | $ | 1,123,992 |   |
|      Accumulated      Depreciation                                                   |   |   | (281,588 | ) |   |   | (276,301 | ) |
|                                                                                                          |   |   |   |   |   |   |   |   |
|           Property,      Plant and Equipment - Net          |   |   | 852,700 |   |   |   | 847,691 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Investments:                                                                                                  |   |   |   |   |   |   |   |   |
|    Available-for-Sale      Securities                                                          |   |   | 6,251 |   |   |   | 6,714 |   |
|    Restricted      Investments                                                                 |   |   | 2,257 |   |   |   | 2,239 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
|           Total      Investments                            |   |   | 8,508 |   |   |   | 8,953 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Current      Assets:                                                                                          |   |   |   |   |   |   |   |   |
|    Cash      and Cash Equivalents                                                              |   |   | 6,028 |   |   |   | 3,230 |   |
|    Accounts      Receivable                                                                    |   |   | 89,723 |   |   |   | 48,984 |   |
|    Accounts      Receivable - Related Parties                                                  |   |   | 991 |   |   |   | 2,267 |   |
|    Unbilled      Revenues                                                                      |   |   | 29,404 |   |   |   | 41,576 |   |
|    Provision      for Uncollectibles                                                           |   |   | (3,424 | ) |   |   | (3,265 | ) |
|    Natural      Gas in Storage, average cost                                                   |   |   | 11,666 |   |   |   | 56,404 |   |
|    Materials      and Supplies, average cost                                                   |   |   | 1,566 |   |   |   | 1,436 |   |
|    Prepaid      Taxes                                                                          |   |   | - |   |   |   | 10,849 |   |
|    Derivatives      - Energy Related Assets                                                    |   |   | 14,078 |   |   |   | 2,236 |   |
|    Other      Prepayments and Current Assets                                                   |   |   | 2,044 |   |   |   | 2,278 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
|           Total      Current Assets                         |   |   | 152,076 |   |   |   | 165,995 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Regulatory      and Other Noncurrent Assets:                                                                  |   |   |   |   |   |   |   |   |
|    Regulatory      Assets                                                                      |   |   | 184,702 |   |   |   | 188,688 |   |
|    Unamortized      Debt Issuance Costs                                                        |   |   | 6,188 |   |   |   | 6,307 |   |
|    Prepaid      Pension                                                                        |   |   | 6,129 |   |   |   | 1,472 |   |
|    Accounts      Receivable - Merchandise                                                      |   |   | 6,287 |   |   |   | 6,118 |   |
|    Derivatives      - Energy Related Assets                                                    |   |   | 222 |   |   |   | 93 |   |
|    Other                                                                                       |   |   | 2,170 |   |   |   | 1,845 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
|           Total      Regulatory and Other Noncurrent Assets |   |   | 205,698 |   |   |   | 204,523 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
|                Total      Assets   |   | $ | 1,218,982 |   |   | $ | 1,227,162 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of the unaudited condensed      financial statements.        |   |   |   |   |   |

----

| SOUTH      JERSEY GAS COMPANY                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| CONDENSED      BALANCE SHEETS (UNAUDITED)                                                                                            |
| (In      Thousands, except per share amounts)                                                                                        |
|                                                                                                                                 |   |   |   |
|                                                                                                                                 |   | March      31, |   |   | December      31, |   |
|                                                                                                                                 |   | 2008 |   |   | 2007 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| 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                                                             |   |   | 200,553 |   |   |   | 200,317 |   |
|    Accumulated      Other Comprehensive Loss                                                                          |   |   | (5,587 | ) |   |   | (5,356 | ) |
|    Retained      Earnings                                                                                             |   |   | 197,619 |   |   |   | 177,539 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|           Total      Common Equity                                                 |   |   | 398,433 |   |   |   | 378,348 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| Long-Term      Debt                                                                                                                  |   |   | 294,873 |   |   |   | 294,873 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|           Total      Capitalization                                                |   |   | 693,306 |   |   |   | 673,221 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| Current      Liabilities:                                                                                                            |   |   |   |   |   |   |   |   |
|    Notes      Payable                                                                                                 |   |   | 31,800 |   |   |   | 78,340 |   |
|    Accounts      Payable - Commodity                                                                                  |   |   | 30,281 |   |   |   | 34,870 |   |
|    Accounts      Payable - Other                                                                                      |   |   | 13,644 |   |   |   | 13,650 |   |
|    Accounts      Payable - Related Parties                                                                            |   |   | 17,640 |   |   |   | 22,417 |   |
|    Derivatives      - Energy Related Liabilities                                                                      |   |   | 206 |   |   |   | 4,360 |   |
|    Deferred      Income Taxes - Net                                                                                   |   |   | 11,095 |   |   |   | 11,582 |   |
|    Customer      Deposits and Credit Balances                                                                         |   |   | 14,486 |   |   |   | 18,067 |   |
|    Environmental      Remediation Costs                                                                               |   |   | 20,572 |   |   |   | 25,447 |   |
|    Taxes      Accrued                                                                                                 |   |   | 19,272 |   |   |   | 2,937 |   |
|    Pension      Benefits                                                                                              |   |   | 841 |   |   |   | 765 |   |
|    Interest      Accrued                                                                                              |   |   | 4,602 |   |   |   | 6,245 |   |
|    Dividends      Declared                                                                                            |   |   | 4,933 |   |   |   | - |   |
|    Other      Current Liabilities                                                                                     |   |   | 4,782 |   |   |   | 5,777 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|           Total      Current Liabilities                                           |   |   | 174,154 |   |   |   | 224,457 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| Deferred      Credits and Other Noncurrent Liabilities:                                                                              |   |   |   |   |   |   |   |   |
|    Regulatory      Liabilities                                                                                        |   |   | 75,908 |   |   |   | 55,779 |   |
|    Deferred      Income Taxes - Net                                                                                   |   |   | 173,054 |   |   |   | 168,254 |   |
|    Environmental      Remediation Costs                                                                               |   |   | 46,330 |   |   |   | 48,433 |   |
|    Asset      Retirement Obligations                                                                                  |   |   | 23,706 |   |   |   | 24,364 |   |
|    Pension      and Other Postretirement Benefits                                                                     |   |   | 24,334 |   |   |   | 24,682 |   |
|    Investment      Tax Credits                                                                                        |   |   | 2,070 |   |   |   | 2,149 |   |
|    Derivatives      - Energy Related Liabilities                                                                      |   |   | 20 |   |   |   | 61 |   |
|    Derivatives      - Other                                                                                           |   |   | 1,601 |   |   |   | 618 |   |
|    Other                                                                                                              |   |   | 4,499 |   |   |   | 5,144 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|             Total      Deferred Credits and Other Noncurrent Liabilities |   |   | 351,522 |   |   |   | 329,484 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|    Commitments      and Contingencies (Note 9)                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|                Total      Capitalization and Liabilities  |   | $ | 1,218,982 |   |   | $ | 1,227,162 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of the unaudited condensed      financial statements.                               |   |   |   |   |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |

----

| Grant     |   | Shares      |   |   | Fair Value |   |   | Expected   |   |   | Risk-Free        |   |
|-----------|--------|-------------|--------|--------|------------|--------|--------|------------|--------|--------|------------------|--------|
| Date      |   | Outstanding |   |   | Per Share  |   |   | Volatility |   |   | Interest    Rate |   |
|      |   |        |   |   |       |   |   |       |   |   |             |   |
| Jan. 2006 |   |        | 8,450  |   |       | $      | 27.950 |       |   |   | 16.9             | %      |   |   | 4.5 | % |
| Jan. 2007 |   |        | 9,526  |   |       | $      | 29.210 |       |   |   | 18.5             | %      |   |   | 4.9 | % |
| Jan. 2008 |   |        | 10,000 |   |       | $      | 34.030 |       |   |   | 21.7             | %      |   |   | 2.9 | % |

----

|                                                                                                                                            |   | Shares |   |   | Weighted      AverageGrant DateFair Value |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|-------------------------------------------|--------|
| Nonvested Shares Outstanding,      January 1, 2008                                                                                              |   |   | 26,102 |   |                                      | $      | 27.540 |   |
|                                                                                                                                            |   |   |   |   |                                      |   |   |   |
| Granted                                                                                                                                         |   |   | 10,000 |   |                                      |   | 34.030 |   |
| Vested*                                                                                                                                         |   |   | (8,126 | )      |                                      |   | 25.155 |   |
|                                                                                                                                            |   |   |   |   |                                      |   |   |   |
| Nonvested Shares Outstanding,      March 31, 2008                                                                                               |   |   | 27,976 |   |                                      | $      | 30.552 |   |
|                                                                                                                                            |   |   |   |   |                                      |   |   |   |
| *      Actual Shares awarded upon vesting, including dividend equivalents and      adjustments for performance measures, totaled 12,299 shares. |   |

----

| · | Cash flows related to merchandise      loans to customers for the purpose of attracting conversions to natural      gas heating systems should have been classified under the caption Cash      Flows from Investing Activities on the statements of condensed cash flows. Accordingly,      cash outflows for loans originated of $1.1 million and cash inflows      from the principal collection on these loans of $1.1 million during the three months      ended March 31, 2007 are now included within Cash Flows from      Investing Activities. The overall net impact resulted      in an      insignificant amount      of Cash Flows from Operating Activities for the three months ended March      31, 2007 now being included within Cash Flows from Investing      Activities. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                         |   | March 31, |    |   | December31, |   |
|--------------------------------------------------------------|--------|-----------|---------|--------|-------------|--------|
|                                                         |   | 2008      |    |   | 2007        |   |
| Environmental Remediation      Costs:Expended -    Net       |   | $         | 29,738  |   |        | $      | 25,960 |   |
| Liability for Future      Expenditures                       |   |      | 66,902  |   |        |   | 73,880 |   |
| Income Taxes - Flowthrough      Depreciation                 |   |      | 3,463   |   |        |   | 3,707 |   |
| Deferred Asset Retirement      Obligation Costs              |   |      | 21,757  |   |        |   | 21,572 |   |
| Deferred Pension and Other      Postretirement Benefit Costs |   |      | 32,591  |   |        |   | 32,686 |   |
| Temperature Adjustment Clause      Receivable                |   |      | 2,580   |   |        |   | 6,516 |   |
| Conservation Incentive Program      Receivable               |   |      | 22,202  |   |        |   | 18,173 |   |
| Societal Benefit Costs      Receivable                       |   |      | 1,253   |   |        |   | 2,952 |   |
| Premium for Early Retirement of      Debt                    |   |      | 1,329   |   |        |   | 1,370 |   |
| Other Regulatory      Assets                                 |   |      | 2,887   |   |        |   | 1,872 |   |
|                                                         |   | $         | 184,702 |   |        | $      | 188,688 |   |

----

|                                                  |   | March 31, |   |   | December31, |   |
|-------------------------------------------------------|--------|-----------|--------|--------|-------------|--------|
|                                                  |   | 2008      |   |   | 2007        |   |
| Excess Plant Removal      Costs                       |   | $         | 48,782 |   |        | $      | 48,705 |   |
| Liability for      NJCEP                              |   |      | 2,404  |   |        |   | 2,797 |   |
| Deferred Gas Costs      and  Revenues - Net |   |      | 23,014 |   |        |   | 2,586 |   |
| Other                                                 |   |      | 1,708  |   |        |   | 1,691 |   |
|                                                  |   |      |   |   |        |   |   |   |
| Total Regulatory      Liabilities                     |   | $         | 75,908 |   |        | $      | 55,779 |   |

|                                                                                             |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                             |   |   |   |   |   |   |
| Operating Revenues /      Affiliates:                                                            |   |   |   |   |   |   |
|  SJRG                                                                                       |   | $      | 1,407  |   |   | $      | 12,503 |   |
|  Other                                                                                      |   |   | 127    |   |   |   | 92 |   |
|          Total      Operating Revenues / Affiliates |   | $      | 1,534  |   |   | $      | 12,595 |   |

|                                                                   |   | 2008   |   |   | 2007   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|  Costs of Sales / Affiliates      (Excluding depreciation):  |   |   |   |   |   |   |
|   SJRG                                                       |   | $      | 12,596 |   |   | $      | 18,088 |   |
|  Total Cost of Sales /      Affiliates                            |   | $      | 12596  |   |   | $      | 18,088 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Operations Expense /      Affiliates:                             |   |   |   |   |   |   |   |   |
|  SJI                                                         |   | $      | 1,646  |   |   | $      | 1,363 |   |
|  SJIS                                                             |   |   | 1,048  |   |   |   | 1,082 |   |
|  Millennium                                                       |   |   | 713    |   |   |   | 700 |   |
|           Other                                    |   |   | (158   | )      |   |   | (114 | ) |
|  Total      Operations Expense / Affiliates                  |   | $      | 3,249  |   |   | $      | 3,031 |   |

----

|                                                                                                               |   |        Pension      Benefits |   |   |        Other Postretirement      Benefits |   |
|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|------------------------------------------------|--------|
|                                                                                                               |   | Three Months      EndedMarch 31,  |   |   | Three Months EndedMarch 31,                    |   |
|                                                                                                               |   | 2008                              |   |   | 2007                                           |   |   | 2008 |   |   | 2007 |   |
|                                                                                                               |   |                              |   |   |                                           |   |   |   |   |   |   |   |
| ServiceCost                                                                                                        |   | $                                 | 556    |   |                                           | $      | 652 |   |   | $ | 201 |   |   | $ | 191 |   |
| Interest    Cost                                                                                                   |   |                              | 1,322  |   |                                           |   | 1,683 |   |   |   | 558 |   |   |   | 664 |   |
| Expected Return on Plan      Assets                                                                                |   |                              | (1,669 | )      |                                           |   | (2,069 | ) |   |   | (408 | ) |   |   | (476 | ) |
| Amortizations:                                                                                                     |   |                              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
|  Prior Service Cost (Credits)                                                                                 |   |                              | 48     |   |                                           |   | 60 |   |   |   | (65 | )  |   |   | (66 | )  |
|               Actuarial      Loss            |   |                              | 265    |   |                                           |   | 423 |   |   |   | 140 |   |   |   | 162 |   |
| Net Periodic Benefit      Cost                                                                                     |   |                              | 522    |   |                                           |   | 749 |   |   |   | 426 |   |   |   | 475 |   |
|               Capitalized      Benefit Costs |   |                              | (256   | )      |                                           |   | (367 | ) |   |   | (209 | ) |   |   | (233 | ) |
| Total Net Periodic Benefit      Expense                                                                            |   | $                                 | 266    |   |                                           | $      | 382 |   |   | $ | 217 |   |   | $ | 242 |   |
|                                                                                                               |   |                              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |

----

|   | · | 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. |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

----

|                                                    |   | Total  |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|---------------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Assets                                                  |   |   |   |   |    |   |   |    |   |   |    |   |
|                                                    |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Available-for-Sale      Securities (A)                  |   | $      | 6,251  |   |    | $      | 6,251  |    |   | $      | -       |   |   | $ | - |   |
| Derivatives      – Energy Related Assets (B)      |   |   | 14,300 |   |    |   | 14,300 |    |   |   | -       |   |   |   | - |   |
|                                                    |   | $      | 20,551 |   |    | $      | 20,551 |    |   | $      | -       |   |   | $ | - |   |
|                                                    |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Liabilities                                             |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
|                                                    |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Derivatives      – Energy Related Liabilities (B) |   | $      | 226    |   |    | $      | 226    |    |   | $      | -       |   |   | $ | - |   |
| Derivatives      – Other (C)                      |   |   | 1,601  |   |    |   | -      |    |   |   | 1,601   |   |   |   | - |   |
|                                                    |   | $      | 1,827  |   |    | $      | 226    |    |   | $      | 1,601   |   |   | $ | - |   |
|                                                    |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |

----

----

|                                                                                                                                                                                                |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Utility      Throughput – dth:                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Firm Sales-                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|      Residential                                                                                                                                                           |   |   | 10,183 |   |   |   | 28 | % |   |   | 11,281 |   |   |   | 30 | % |
|      Commercial                                                                                                                                                            |   |   | 2,584  |   |   |   | 7 | % |   |   | 2,929 |   |   |   | 8 | % |
|      Industrial                                                                                                                                                            |   |   | 75     |   |   |   | - |   |   |   | 106 |   |   |   | - |   |
|      Cogeneration      and      electric                    generation |   |   | 16     |   |   |   | - |   |   |   | 31 |   |   |   | - |   |
| Firm Transportation      -                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Residential                                                                                                                                                           |   |   | 952    |   |   |   | 3 | % |   |   | 871 |   |   |   | 2 | % |
|      Commercial                                                                                                                                                            |   |   | 2,460  |   |   |   | 7 | % |   |   | 2,610 |   |   |   | 7 | % |
|      Industrial                                                                                                                                                            |   |   | 3,280  |   |   |   | 9 | % |   |   | 3,111 |   |   |   | 8 | % |
|      Cogeneration      and electric generation                                                                                                                             |   |   | 352    |   |   |   | - |   |   |   | 414 |   |   |   | 1 | % |
|                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total      Firm Throughput                                                                                                                                            |   |   | 19,902 |   |   |   | 54 | % |   |   | 21,353 |   |   |   | 56 | % |
|                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interruptible      Sales                                                                                                                                                                            |   |   | 9      |   |   |   | - |   |   |   | 10 |   |   |   | - |   |
| Interruptible      Transportation                                                                                                                                                                   |   |   | 912    |   |   |   | 3 | % |   |   | 651 |   |   |   | 3 | % |
| Off-System                                                                                                                                                                                          |   |   | 4,239  |   |   |   | 12 | % |   |   | 6,835 |   |   |   | 18 | % |
| Capacity      Release                                                                                                                                                                               |   |   | 11,230 |   |   |   | 31 | % |   |   | 8,814 |   |   |   | 23 | % |
|                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total      Throughput                                                                                                                                                 |   |   | 36,292 |   |   |   | 100 | % |   |   | 37,663 |   |   |   | 100 | % |

----

| Utility      Operating Revenues:                                                                                                                                               |   |   |    |   |   |   |   |   |   |   |    |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Firm Sales-                                                                                                                                                                    |   |   |    |   |   |   |   |   |   |   |    |   |
|      Residential                                                                                                                                      |   | $      | 143,468 |   |   |   | 60     | %      |   | $      | 168,072 |   |   |   | 60 | % |
|      Commercial                                                                                                                                       |   |   | 31,186  |   |   |   | 13     | %      |   |   | 36,578  |   |   |   | 13 | % |
|      Industrial                                                                                                                                       |   |   | 3,555   |   |   |   | 2      | %      |   |   | 3,983   |   |   |   | 1 | % |
|      Cogeneration      and electric generation                                                                                                        |   |   | 327     |   |   |   | -      |   |   |   | 449     |   |   |   | - |   |
| Firm Transportation      -                                                                                                                                                     |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
|      Residential                                                                                                                                      |   |   | 4,469   |   |   |   | 2      | %      |   |   | 3,574   |   |   |   | 2 | % |
|      Commercial                                                                                                                                       |   |   | 7,653   |   |   |   | 3      | %      |   |   | 7,028   |   |   |   | 3 | % |
|      Industrial                                                                                                                                       |   |   | 3,192   |   |   |   | 2      | %      |   |   | 3,090   |   |   |   | 1 | % |
|      Cogeneration      and electric generation                                                                                                        |   |   | 322     |   |   |   | -      |   |   |   | 394     |   |   |   | - |   |
|                                                                                                                                                                           |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
|      Total      Firm Revenues                                                                                                                         |   |   | 194,172 |   |   |   | 82     | %      |   |   | 223,168 |   |   |   | 80 | % |
|                                                                                                                                                                           |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Interruptible      Sales                                                                                                                                                       |   |   | 125     |   |   |   | -      |   |   |   | 140     |   |   |   | - |   |
| Interruptible      Transportation                                                                                                                                              |   |   | 596     |   |   |   | -      |   |   |   | 463     |   |   |   | - |   |
| Off-System                                                                                                                                                                     |   |   | 39,990  |   |   |   | 17     | %      |   |   | 52,066  |   |   |   | 19 | % |
| Capacity      Release                                                                                                                                                          |   |   | 2,800   |   |   |   | 1      | %      |   |   | 1,744   |   |   |   | 1 | % |
| Other                                                                                                                                                                          |   |   | 221     |   |   |   | -      |   |   |   | 283     |   |   |   | - |   |
|                                                                                                                                                                           |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
|      Total      Utility Operating Revenues                                                                                                            |   | $      | 237,904 |   |   |   | 100    | %      |   | $      | 277,864 |   |   |   | 100 | % |
|                                                                                                                                                                           |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Less:                                                                                                                                                                          |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Cost of    sales                                                                                                                                                               |   |   | 162,917 |   |   |   |   |   |   |   | 205,544 |   |   |   |   |   |
| Conservation recoveries      *                                                                                                                                                 |   |   | 3,065   |   |   |   |   |   |   |   | 1,213   |   |   |   |   |   |
| RAC recoveries      *                                                                                                                                                          |   |   | 695     |   |   |   |   |   |   |   | 472     |   |   |   |   |   |
|     Revenue      taxes                                                                                                                                     |   |   | 3,790   |   |   |   |   |   |   |   | 4,035   |   |   |   |   |   |
| Utility    Margin                                                                                                                                                              |   | $      | 67,437  |   |   |   |   |   |   | $      | 66,600  |   |   |   |   |   |
|                                                                                                                                                                           |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Margin:                                                                                                                                                                        |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Residential                                                                                                                                                                    |   | $      | 40,982  |   |   |   | 61     | %      |   | $      | 44,262  |   |   |   | 67 | % |
| Commercial and      industrial                                                                                                                                                 |   |   | 14,318  |   |   |   | 21     | %      |   |   | 15,360  |   |   |   | 23 | % |
| Cogeneration and electric      generation                                                                                                                                      |   |   | 289     |   |   |   | -      |   |   |   | 359     |   |   |   | - |   |
| Interruptible                                                                                                                                                                  |   |   | 65      |   |   |   | -      |   |   |   | 57      |   |   |   | - |   |
| Off-system & capacity      release                                                                                                                                         |   |   | 1,081   |   |   |   | 2      | %      |   |   | 991     |   |   |   | 2 | % |
| Other    revenues                                                                                                                                                              |   |   | 220     |   |   |   | -      |   |   |   | 282     |   |   |   | - |   |
| Margin before weather  normalization &      decoupling                                                                                                                |   |   | 56,955  |   |   |   | 84     | %      |   |   | 61,311  |   |   |   | 92 | % |
| CIP    mechanism                                                                                                                                                               |   |   | 10,482  |   |   |   | 16     | %      |   |   | 5,289   |   |   |   | 8 | % |
| Utility    Margin                                                                                                                                                              |   | $      | 67,437  |   |   |   | 100    | %      |   | $      | 66,600  |   |   |   | 100 | % |
|                                                                                                                                                                           |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| DegreeDays:                                                                                                                                                                    |   |   | 2,264   |   |   |   |   |   |   |   | 2,418   |   |   |   |   |   |
|                                                                                                                                                                           |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| * Represents revenues for which      there is a corresponding charge in operating expenses. Therefore,      such recoveries have no impact on our financial      results. |

----

|                                                                                                                                |   | Three Months      Ended |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                                                                                |   | March 31,               |   |
|                                                                                                                                |   | 2008                    |   |   | 2007 |   |
| Net Income      Benefit:                                                                                                            |   |                    |   |   |   |   |
|      CIP      – Weather Related                                                                      |   |  $                 | 1.6    |   |   |  $ | 0.3 |   |
|      CIP      – Usage Related                                                                        |   |                    | 4.6    |   |   |   | 2.8 |   |
|                  Total      Net Income Benefit |   |  $                 | 6.2    |   |   |  $ | 3.1 |   |
|                                                                                                                                |   |                    |   |   |   |   |   |   |
|  Weather Compared to 20-Year      Average                                                                                      |   | 6.8% warmer             |   |   | 0.5 %warmer |   |
|  Weather Compared to Prior      Year                                                                                           |   | 6.4% warmer             |   |   | 11.8 %    colder |   |

|                        |   | Three MonthsEnded March    31, |   |
|-----------------------------|--------|--------------------------------|--------|
|                        |   | 2008 vs.    2007               |   |
| Operations                  |   | $                              | 1,224  |   |
| Maintenance                 |   |                           | 380    |   |
| Depreciation                |   |                           | 252    |   |
| Energy and Other      Taxes |   |                           | (267   | )  |

----

----

|               |   | As ofMarch 31,2008 |   |   | As ofDecember 31,      2007 |   |
|--------------------|--------|--------------------|--------|--------|-----------------------------|--------|
|               |   |               |   |   |                        |   |
| Common Equity |   |               | 54.9   | %      |                        |   | 50.3 | % |
| Long-Term    Debt  |   |               | 40.7   |   |                        |   | 39.3 |   |
| Short-Term    Debt |   |               | 4.4    |   |                        |   | 10.4 |   |
|               |   |               |   |   |                        |   |   |   |
| Total              |   |               | 100.0  | %      |                        |   | 100.0 | % |

----

| Twelve MonthsEnded March    31, |                   |   | Year Ended December      31, |
|---------------------------------|------------------------|--------|------------------------------|
|                            |                   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                            |                   |   | 2007                         |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |
|                            |                   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |    4.3x |   |                         |   | 4.1x |   |   |   | 3.8x |   |   |   | 4.0x |   |   |   | 3.9x |   |   |   | 3.3x |

----

| Assets:                     |                            |   | Maturity   |   |   | Maturity    |   |   |   |   |
|-----------------------------|---------------------------------|--------|------------|--------|--------|-------------|--------|--------|--------|--------|
|                        | Source of Fair      Value       |   | <1 Year |   |   | 1 - 3 Years |   |   | Total  |   |
|                        |                            |   |       |   |   |        |   |   |   |   |
| Prices Actively      Quoted | NYMEX                           |   | $          | 14,078 |   |        | $      | 222    |   |   | $ | 14,300 |   |
|                        |                            |   |       |   |   |        |   |   |   |   |   |   |   |
| Liabilities:                |                            |   | Maturity   |   |   | Maturity    |   |   |   |   |   |
|                        |  Source of Fair      Value |   | <1 Year |   |   | 1 - 3 Years |   |   | Total  |   |
|                        |                            |   |       |   |   |        |   |   |   |   |   |   |   |
| Prices Actively      Quoted | NYMEX                           |   | $          | 206    |   |        | $      | 20     |   |   | $ | 226 |   |

| Net Derivatives — Energy Related      Liability, January 1, 2008   |   |  $ | (2,092 | )      |
|--------------------------------------------------------------------------|--------|---------|--------|--------|
| Contracts Settled During the Three      Months ended March 31, 2008, Net |   |    | 1,971  |   |
| Other Changes in Fair Value from      Continuing and New Contracts, Net  |   |    | 14,195 |   |
| Net Derivatives — Energy Related      Assets, March 31, 2008       |   | $       | 14,074 |   |

----

| Exhibit No. |  Description                                                                                                                                                                                                                                                       |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                    |
| 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). |

| Dated: May 13,      2008 | By: /s/ Edward J.      Graham                                                            |
|--------------------------|------------------------------------------------------------------------------------------|
|                     |            Edward J. Graham                                     |
|                     |            President & Chief Executive Officer              |
|                     |                                                                                     |
|                     |                                                                                     |
|                     |                                                                                     |
| Dated: May 13,      2008 | By: /s/ David A.      Kindlick                                                           |
|                     |            David A. Kindlick                                    |
|                     |            Senior Vice President & Chief Financial  Officer |

----