----

----

| [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.) |

| Large      accelerated filer | [   ]                                        | Accelerated      filer         | [   ] |
|------------------------------|-------------------------------------------------------------|--------------------------------|----------------------|
| Non-accelerated      filer   | [X] (Do not check if a      smaller reporting company) | Smaller      reporting company | [        ]      |

----

----

----

----

| SOUTH      JERSEY GAS COMPANY                                                                          |   |
|--------------------------------------------------------------------------------------------------------|--------|
|                                                                                                   |   |   |   |   |   |   |
| CONDENSED      STATEMENTS OF INCOME (UNAUDITED)                                                        |   |
| (In      Thousands)                                                                                    |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   | Three      Months Ended |   |
|                                                                                                   |   | September      30, |   |
|                                                                                                   |   | 2008 |   |   | 2007 |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |
| Operating      Revenues                                                                                |   | $ | 64,563 |   |   | $ | 84,420 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Operating      Expenses:                                                                               |   |   |   |   |   |   |   |   |
|    Cost      of Sales (Excluding depreciation)                                          |   |   | 41,201 |   |   |   | 62,223 |   |
|    Operations                                                                           |   |   | 12,488 |   |   |   | 10,968 |   |
|    Maintenance                                                                          |   |   | 1,925 |   |   |   | 1,544 |   |
|    Depreciation                                                                         |   |   | 6,409 |   |   |   | 6,188 |   |
|    Energy      and Other Taxes                                                          |   |   | 1,356 |   |   |   | 1,307 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|       Total      Operating Expenses                                      |   |   | 63,379 |   |   |   | 82,230 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Operating      Income                                                                                  |   |   | 1,184 |   |   |   | 2,190 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Other      Income and Expense                                                                          |   |   | 242 |   |   |   | 157 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Interest      Charges                                                                                  |   |   | (4,586 | ) |   |   | (5,371 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Loss      Before Income Taxes                                                                          |   |   | (3,160 | ) |   |   | (3,024 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Income      Tax Benefit                                                                                |   |   | 1,306 |   |   |   | 1,278 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Net      Loss                                                                                          |   | $ | (1,854 | ) |   | $ | (1,746 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of the unaudited condensed      financial statements. |   |   |   |   |   |

----

| SOUTH      JERSEY GAS COMPANY                                                                               |   |
|-------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                        |   |   |   |   |   |   |
| CONDENSED      STATEMENTS OF INCOME (UNAUDITED)                                                             |   |
| (In      Thousands)                                                                                         |   |
|                                                                                                        |   |   |   |   |   |   |
|                                                                                                        |   | Nine      Months Ended |   |
|                                                                                                        |   | September      30, |   |
|                                                                                                        |   | 2008 |   |   | 2007 |   |
|                                                                                                        |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |
|        Operating      Revenues                                           |   | $ | 396,038 |   |   | $ | 458,280 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|        Operating      Expenses:                                          |   |   |   |   |   |   |   |   |
|           Cost      of Sales (Excluding depreciation)     |   |   | 264,381 |   |   |   | 331,615 |   |
|           Operations                                      |   |   | 41,144 |   |   |   | 36,423 |   |
|           Maintenance                                     |   |   | 5,412 |   |   |   | 4,446 |   |
|           Depreciation                                    |   |   | 19,064 |   |   |   | 18,356 |   |
|           Energy      and Other Taxes                     |   |   | 7,424 |   |   |   | 7,803 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|              Total      Operating Expenses |   |   | 337,425 |   |   |   | 398,643 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|        Operating      Income                                             |   |   | 58,613 |   |   |   | 59,637 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|        Other      Income and Expense                                     |   |   | 869 |   |   |   | 613 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|        Interest      Charges                                             |   |   | (14,179 | ) |   |   | (15,403 | ) |
|                                                                                                        |   |   |   |   |   |   |   |   |
|        Income      Before Income Taxes                                   |   |   | 45,303 |   |   |   | 44,847 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|        Income      Taxes                                                 |   |   | (18,706 | ) |   |   | (18,431 | ) |
|                                                                                                        |   |   |   |   |   |   |   |   |
|        Net      Income                                                   |   | $ | 26,597 |   |   | $ | 26,416 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| 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 |   |
|                                                                                                   |   | September      30, |   |
|                                                                                                   |   | 2008 |   |   | 2007 |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |
| Net      Loss                                                                                          |   | $ | (1,854 | ) |   | $ | (1,746 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Loss - Net of Tax:                                                            |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|   Unrealized      (Loss) Gain on Equity Investments                                          |   |   | (355 | ) |   |   | 41 |   |
|   Unrealized      Gain (Loss) on Derivatives - Other                                         |   |   | 7 |   |   |   | (487 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
|      Other      Comprehensive Loss - Net of Tax  *                  |   |   | (348 | ) |   |   | (446 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Comprehensive      Loss                                                                                |   | $ | (2,202 | ) |   | $ | (2,192 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   | Nine      Months Ended |   |
|                                                                                                   |   | September      30, |   |
|                                                                                                   |   | 2008 |   |   | 2007 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Net      Income                                                                                        |   | $ | 26,597 |   |   | $ | 26,416 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Other      Comprehensive (Loss) Income - Net of Tax:                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|   Unrealized      (Loss) Gain on Equity Investments                                          |   |   | (635 | ) |   |   | 221 |   |
|   Unrealized      Gain on Derivatives - Other                                                |   |   | 385 |   |   |   | 192 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|      Other      Comprehensive (Loss) Income - Net of Tax  *         |   |   | (250 | ) |   |   | 413 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| Comprehensive      Income                                                                              |   | $ | 26,347 |   |   | $ | 26,829 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| *  Determined      using a combined statutory tax rate of 41.08%                             |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |
| 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)                                                                                              |   |
|                                                                                                             |   |   |   |   |   |   |
|                                                                                                             |   | Nine      Months Ended |   |
|                                                                                                             |   | September      30, |   |
|                                                                                                             |   | 2008 |   |   | 2007 |   |
|                                                                                                             |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |
| Net      Cash Provided by Operating Activities                                                                   |   | $ | 35,773 |   |   | $ | 67,544 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Cash      Flows from Investing Activities:                                                                       |   |   |   |   |   |   |   |   |
|      Capital      Expenditures                                                          |   |   | (37,271 | ) |   |   | (34,386 | ) |
|      Merchandise      Loans                                                             |   |   | (2,857 | ) |   |   | (2,695 | ) |
|      Proceeds      from Merchandise Loans                                               |   |   | 2,923 |   |   |   | 2,975 |   |
|      Purchase      of Restricted Investments with Escrowed Loan Proceeds                |   |   | (36 | ) |   |   | (323 | ) |
|      Proceeds      from Sale of Restricted Investments from Escrowed Loan      Proceeds |   |   | - |   |   |   | 4,495 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
|         Net      Cash Used in Investing Activities                       |   |   | (37,241 | ) |   |   | (29,934 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Cash      Flows from Financing Activities:                                                                       |   |   |   |   |   |   |   |   |
|   Net      Borrowing (Repayments) of Lines of Credit                                                   |   |   | 10,285 |   |   |   | (25,700 | ) |
|   Principal      Repayments of Long-Term Debt                                                          |   |   | (25,000 | ) |   |   | (2,290 | ) |
|   Proceeds      from Issuance of Long-Term Debt                                                        |   |   | 25,000 |   |   |   | - |   |
|   Payments      for Issuance of Long-Term Debt                                                         |   |   | (247 | ) |   |   | - |   |
|   Dividends      on Common Stock                                                                       |   |   | (9,866 | ) |   |   | (9,366 | ) |
|   Excess      Tax Benefit from Restricted Stock Plan                                                   |   |   | 236 |   |   |   | - |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
|         Net      Cash Provided By (Used in) Financing Activities         |   |   | 408 |   |   |   | (37,356 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Net      (Decrease) Increase in Cash and Cash Equivalents                                                        |   |   | (1,060 | ) |   |   | 254 |   |
| Cash      and Cash Equivalents at Beginning of Period                                                            |   |   | 3,230 |   |   |   | 1,967 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents at End of Period                                                                  |   | $ | 2,170 |   |   | $ | 2,221 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of the unaudited condensed      financial statements.           |   |   |   |   |   |

----

| SOUTH JERSEY GAS COMPANY                                                                                      |
|---------------------------------------------------------------------------------------------------------------|
|                                                                                                          |   |   |   |   |   |   |
| CONDENSED      BALANCE SHEETS (UNAUDITED)                                                                     |
| (In      Thousands)                                                                                           |
|                                                                                                          |   |   |   |   |   |   |
|                                                                                                          |   | September      30, |   |   | December      31, |   |
|                                                                                                          |   | 2008 |   |   | 2007 |   |
| Assets                                                                                                        |   |   |   |   |   |   |
|                                                                                                          |   |   |   |   |   |   |
| Property,      Plant and Equipment:                                                                           |   |   |   |   |   |   |
|    Utility      Plant, at original cost                                                        |   | $ | 1,156,565 |   |   | $ | 1,123,992 |   |
|      Accumulated      Depreciation                                                   |   |   | (290,215 | ) |   |   | (276,301 | ) |
|                                                                                                          |   |   |   |   |   |   |   |   |
|           Property,      Plant and Equipment - Net          |   |   | 866,350 |   |   |   | 847,691 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Investments:                                                                                                  |   |   |   |   |   |   |   |   |
|    Available-for-Sale      Securities                                                          |   |   | 5,633 |   |   |   | 6,714 |   |
|    Restricted      Investments                                                                 |   |   | 2,275 |   |   |   | 2,239 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
|           Total      Investments                            |   |   | 7,908 |   |   |   | 8,953 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Current      Assets:                                                                                          |   |   |   |   |   |   |   |   |
|    Cash      and Cash Equivalents                                                              |   |   | 2,170 |   |   |   | 3,230 |   |
|    Accounts      Receivable                                                                    |   |   | 29,614 |   |   |   | 48,984 |   |
|    Accounts      Receivable - Related Parties                                                  |   |   | 675 |   |   |   | 2,267 |   |
|    Unbilled      Revenues                                                                      |   |   | 7,692 |   |   |   | 41,576 |   |
|    Provision      for Uncollectibles                                                           |   |   | (3,726 | ) |   |   | (3,265 | ) |
|    Natural      Gas in Storage, average cost                                                   |   |   | 78,259 |   |   |   | 56,404 |   |
|    Materials      and Supplies, average cost                                                   |   |   | 2,022 |   |   |   | 1,436 |   |
|    Prepaid      Taxes                                                                          |   |   | 21,030 |   |   |   | 10,849 |   |
|    Derivatives      - Energy Related Assets                                                    |   |   | 2,653 |   |   |   | 2,236 |   |
|    Other      Prepayments and Current Assets                                                   |   |   | 2,713 |   |   |   | 2,278 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
|           Total      Current Assets                         |   |   | 143,102 |   |   |   | 165,995 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Regulatory      and Other Noncurrent Assets:                                                                  |   |   |   |   |   |   |   |   |
|    Regulatory      Assets                                                                      |   |   | 212,743 |   |   |   | 188,688 |   |
|    Unamortized      Debt Issuance Costs                                                        |   |   | 6,196 |   |   |   | 6,307 |   |
|    Prepaid      Pension                                                                        |   |   | 5,756 |   |   |   | 1,472 |   |
|    Accounts      Receivable - Merchandise                                                      |   |   | 6,039 |   |   |   | 6,118 |   |
|    Derivatives      - Energy Related Assets                                                    |   |   | 20 |   |   |   | 93 |   |
|    Other                                                                                       |   |   | 3,426 |   |   |   | 1,845 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
|           Total      Regulatory and Other Noncurrent Assets |   |   | 234,180 |   |   |   | 204,523 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
|                Total      Assets   |   | $ | 1,251,540 |   |   | $ | 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)                                                                                        |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                                                                 |   | September      30, |   |   | 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                                                                          |   |   | (5,606 | ) |   |   | (5,356 | ) |
|    Retained      Earnings                                                                                             |   |   | 191,770 |   |   |   | 177,539 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|           Total      Common Equity                                                 |   |   | 392,565 |   |   |   | 378,348 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| Long-Term      Debt                                                                                                                  |   |   | 294,873 |   |   |   | 294,873 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|           Total      Capitalization                                                |   |   | 687,438 |   |   |   | 673,221 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| Current      Liabilities:                                                                                                            |   |   |   |   |   |   |   |   |
|    Notes      Payable                                                                                                 |   |   | 88,625 |   |   |   | 78,340 |   |
|    Accounts      Payable - Commodity                                                                                  |   |   | 20,800 |   |   |   | 34,870 |   |
|    Accounts      Payable - Other                                                                                      |   |   | 10,728 |   |   |   | 13,650 |   |
|    Accounts      Payable - Related Parties                                                                            |   |   | 10,652 |   |   |   | 22,417 |   |
|    Derivatives      - Energy Related Liabilities                                                                      |   |   | 15,010 |   |   |   | 4,360 |   |
|    Deferred      Income Taxes - Net                                                                                   |   |   | 10,819 |   |   |   | 11,582 |   |
|    Customer      Deposits and Credit Balances                                                                         |   |   | 30,033 |   |   |   | 18,067 |   |
|    Environmental      Remediation Costs                                                                               |   |   | 18,174 |   |   |   | 25,447 |   |
|    Taxes      Accrued                                                                                                 |   |   | 1,714 |   |   |   | 2,937 |   |
|    Pension      Benefits                                                                                              |   |   | 841 |   |   |   | 765 |   |
|    Interest      Accrued                                                                                              |   |   | 4,499 |   |   |   | 6,245 |   |
|    Dividends      Declared                                                                                            |   |   | 2,501 |   |   |   | - |   |
|    Other      Current Liabilities                                                                                     |   |   | 5,407 |   |   |   | 5,777 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|           Total      Current Liabilities                                           |   |   | 219,803 |   |   |   | 224,457 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
| Deferred      Credits and Other Noncurrent Liabilities:                                                                         |   |   |   |   |   |   |   |   |
|    Regulatory      Liabilities                                                                                        |   |   | 52,336 |   |   |   | 55,779 |   |
|    Deferred      Income Taxes - Net                                                                                   |   |   | 181,829 |   |   |   | 168,254 |   |
|    Environmental      Remediation Costs                                                                               |   |   | 52,986 |   |   |   | 48,433 |   |
|    Asset      Retirement Obligations                                                                                  |   |   | 23,682 |   |   |   | 24,364 |   |
|    Pension      and Other Postretirement Benefits                                                                     |   |   | 23,665 |   |   |   | 24,682 |   |
|    Investment      Tax Credits                                                                                        |   |   | 1,912 |   |   |   | 2,149 |   |
|    Derivatives      - Energy Related Liabilities                                                                      |   |   | 1,570 |   |   |   | 61 |   |
|    Derivatives      - Other                                                                                           |   |   | 1,413 |   |   |   | 618 |   |
|    Other                                                                                                              |   |   | 4,906 |   |   |   | 5,144 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|             Total      Deferred Credits and Other Noncurrent Liabilities |   |   | 344,299 |   |   |   | 329,484 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|    Commitments      and Contingencies (Note 9)                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |
|                Total      Capitalization and Liabilities  |   | $ | 1,251,540 |   |   | $ | 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 |   |        | 8,234  |   |            | $      | 27.950 |       |   |               | 16.9% |   |   | 4.5% |
| Jan.      2007 |   |        | 9,045  |   |            | $      | 29.210 |       |   |               | 18.5% |   |   | 4.9% |
| Jan.      2008 |   |        | 9,238  |   |            | $      | 34.030 |       |   |               | 21.7% |   |   | 2.9% |

|                                                  |   | Shares |   |   | Weighted      AverageGrant      DateFair      Value |   |
|-------------------------------------------------------|--------|--------|--------|--------|-----------------------------------------------------|--------|
| Nonvested      Shares Outstanding, January 1, 2008    |   |   | 17,976 |   |                                                | $      | 28.618 |   |
|                                                  |   |   |   |   |                                                |   |   |   |
| Granted                                               |   |   | 10,000 |   |                                                |   | 34.030 |   |
| Vested                                                |   |   | -      |   |                                                |   | - |   |
| Forfeited                                             |   |   | (1,459 | )      |                                                |   | 31.541 |   |
|                                                  |   |   |   |   |                                                |   |   |   |
| Nonvested      Shares Outstanding, September 30, 2008 |   |   | 26,517 |   |                                                | $      | 30.498 |   |
|                                                  |   |   |   |   |                                                |   |   |   |

----

| · | 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 $2.7 million and cash inflows from the      principal collection on these loans of $3.0 million during the nine months      ended September 30, 2007 are now included within Cash Flows from      Investing Activities. The overall net impact resulted in $0.3      million of Cash Flows from Operating Activities for the nine months ended      September 30, 2007 now being included within Cash Flows from Investing      Activities. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                             |   | September      30, |    |   | December      31, |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                                                                                             |   | 2008               |    |   | 2007              |   |
| Environmental      Remediation Costs:Expended      - Net                                                         |   | $                  | 43,930  |   |              | $      | 25,960 |   |
| Liability      for Future Expenditures                                                                           |   |               | 71,161  |   |              |   | 73,880 |   |
| Income      Taxes - Flowthrough Depreciation                                                                     |   |               | 2,974   |   |              |   | 3,707 |   |
| Deferred      Asset Retirement Obligation Costs                                                                  |   |               | 21,942  |   |              |   | 21,572 |   |
| Deferred      Pension and Other Postretirement Benefit Costs                                                     |   |               | 32,422  |   |              |   | 32,686 |   |
| Interest      Rate Swaps                                                                                         |   |               | 1,413   |   |              |   | - |   |
| Deferred      Gas Costs and Revenues - Net                                                                       |   |               | 10,913  |   |              |   | - |   |
| Temperature      Adjustment Clause Receivable                                                                    |   |               | 399     |   |              |   | 6,516 |   |
| Conservation      Incentive Program Receivable                                                                   |   |               | 23,543  |   |              |   | 18,173 |   |
| Societal      Benefit Costs Receivable                                                                           |   |               | 601     |   |              |   | 2,952 |   |
| Premium      for Early Retirement of Debt                                                                        |   |               | 1,248   |   |              |   | 1,370 |   |
| Other      Regulatory Assets                                                                                     |   |               | 2,197   |   |              |   | 1,872 |   |
|                                                                                                             |   |               |    |   |              |   |   |   |
|               Total      Regulatory Assets |   | $                  | 212,743 |   |              | $      | 188,688 |   |

|                                                  |   | September      30, |   |   | December      31, |   |
|-------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                  |   | 2008               |   |   | 2007              |   |
| Excess      Plant Removal Costs                       |   | $                  | 48,814 |   |              | $      | 48,705 |   |
| Liability      for NJCEP                              |   |               | 1,672  |   |              |   | 2,797 |   |
| Deferred      Gas Costs and  Revenues - Net |   |               | -      |   |              |   | 2,586 |   |
| Other                                                 |   |               | 1,850  |   |              |   | 1,691 |   |
|                                                  |   |               |   |   |              |   |   |   |
| Total      Regulatory Liabilities                     |   | $                  | 52,336 |   |              | $      | 55,779 |   |

----

|                                           |   | Three      Months EndedSeptember      30, |   |   | Nine      Months EndedSeptember      30, |   |
|------------------------------------------------|--------|-------------------------------------------|--------|--------|------------------------------------------|--------|
|                                           |   | 2008                                      |   |   | 2007                                     |   |   | 2008 |   |   | 2007 |   |
| Operating      Revenues/Affiliates:       |   |                                      |   |   |                                     |   |   |   |   |   |   |   |
|  SJRG                                     |   | $                                         | 840    |   |                                     | $      | 995 |   |   | $ | 2,585 |   |   | $ | 17,041 |   |
|  Other                                    |   |                                      | 81     |   |                                     |   | 87 |   |   |   | 315 |   |   |   | 289 |   |
|  Total Operating      Revenues/Affiliates |   | $                                         | 921    |   |                                     | $      | 1,082 |   |   | $ | 2,900 |   |   | $ | 17,330 |   |

|                                                                 |   |        Three      Months Ended  September      30, |   |   | Nine      Months EndedSeptember      30, |   |
|----------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                                 |   | 2008                                                              |   |   | 2007                                     |   |   | 2008 |   |   | 2007 |   |
|  Costs      of Sales/Affiliates (Excluding depreciation):  |   |                                                              |   |   |                                     |   |   |   |   |   |   |   |
|   SJRG                                           |   | $                                                                 | 2,624  |   |                                     | $      | 562 |   |   | $ | 18,396 |   |   | $ | 14,423 |   |
|                                                                 |   |

| Derivative      Gains (Losses) (See Note 1):  |   |   |   |    |   |   |   |   |   |   |    |    |
|----------------------------------------------------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|---------|---------|
|           SJRG            |   | $      | (5,375 | )  |   | $      | 6,835  |   |   | $      | (12,723 | )  |   | $ | 16,007 |   |

| Operations      Expense/Affiliates:       |   |   |   |    |   |   |   |    |   |   |   |    |
|------------------------------------------------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
|      SJI              |   | $      | 1,450  |    |   | $      | 1,007  |    |   | $      | 4,873  |    |   | $ | 3,785 |   |
|      SJIS             |   |   | 1,073  |    |   |   | 1,020  |    |   |   | 3,183  |    |   |   | 3,175 |   |
|      Millennium       |   |   | 735    |    |   |   | 716    |    |   |   | 2,245  |    |   |   | 2,128 |   |
|      Other            |   |   | (58    | )  |   |   | (42    | )  |   |   | (160   | )  |   |   | (231 | )  |
|  Total Operations      Expense/Affiliates |   | $      | 3,200  |    |   | $      | 2,701  |    |   | $      | 10,141 |    |   | $ | 8,857 |   |
|                                           |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |

----

|                                                                                                               |   | Pension      Benefits                     |                                                                        |
|--------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-----------------------------------------------------------------------------|
|                                                                                                               |   | Three      Months EndedSeptember      30, |                                                                        |   | Nine      Months EndedSeptember      30, |   |
|                                                                                                               |   | 2008                                      |                                                                        |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                                                                                                               |   |                                      |                                                                        |   |   |   |   |   |   |   |   |   |
| Service      Cost                                                                                                  |   | $                                         | 572                                                                         |   |   | $ | 427 |   |   | $ | 1,715 |   |   | $ | 1,686 |   |
| Interest      Cost                                                                                                 |   |                                      | 1,488                                                                       |   |   |   | 1,028 |   |   |   | 4,462 |   |   |   | 3,982 |   |
| Expected      Return on Plan Assets                                                                                |   |                                      | (1,863                                                                      | ) |   |   | (1,240 | ) |   |   | (5,587 | ) |   |   | (5,012 | ) |
| Amortizations:                                                                                                     |   |                                      |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Prior Service      Cost                                                                               |   |                                      | 52                                                                          |   |   |   | 36 |   |   |   | 157 |   |   |   | 147 |   |
|               Actuarial      Loss            |   |                                      | 288                                                                         |   |   |   | 296 |   |   |   | 862 |   |   |   | 1,044 |   |
| Net      Periodic Benefit Cost                                                                                     |   |                                      | 537                                                                         |   |   |   | 547 |   |   |   | 1,609 |   |   |   | 1,847 |   |
|               Capitalized      Benefit Costs |   |                                      | (263                                                                        | ) |   |   | (266 | ) |   |   | (788 | ) |   |   | (900 | ) |
|            Total      Net Periodic Benefit Expense          |   | $                                         |             274 |   |   | $ | 281 |   |   | $ | 821 |   |   | $ | 947 |   |
|                                                                                                               |   |                                      |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                                               |   | Other      Postretirement Benefits        |   |
|--------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                                                               |   | Three      Months EndedSeptember      30, |   |   | Nine      Months EndedSeptember      30, |   |
|                                                                                                               |   | 2008                                      |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                                                                                                               |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Service      Cost                                                                                                  |   | $                                         | 175    |   |   | $ | 160 |   |   | $ | 524 |   |   | $ | 575 |   |
| Interest      Cost                                                                                                 |   |                                      | 534    |   |   |   | 438 |   |   |   | 1,600 |   |   |   | 1,579 |   |
| Expected      Return on Plan Assets                                                                                |   |                                      | (396   | ) |   |   | (342 | ) |   |   | (1,188 | ) |   |   | (1,232 | )  |
| Amortizations:                                                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Prior Service Credits                                                                                  |   |                                      | (64    | ) |   |   | (58 | ) |   |   | (192 | )  |   |   | (209 | )  |
|               Actuarial      Loss            |   |                                      | 135    |   |   |   | 99 |   |   |   | 403 |   |   |   | 357 |   |
| Net      Periodic Benefit Cost                                                                                     |   |                                      | 384    |   |   |   | 297 |   |   |   | 1,147 |   |   |   | 1,070 |   |
|               Capitalized      Benefit Costs |   |                                      | (188   | ) |   |   | (145 | ) |   |   | (562 | ) |   |   | (525 | )  |
|            Total      Net Periodic Benefit Expense          |   | $                                         | 196    |   |   | $ | 152 |   |   | $ | 585 |   |   | $ | 545 |   |

----

| · | Level      1:  Observable inputs such as quoted prices in active markets      for identical assets orliabilities. |
|--------|-----------------------------------------------------------------------------------------------------------------------------|

| · | 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)                  |   | $      | 5,633  |   |         | $      | 5,633  |         |   | $      | -            |   |   | $ | - |   |
| Derivatives      – Energy Related Assets (B)      |   |   | 2,673  |   |         |   | 2,673  |         |   |   | -            |   |   |   | - |   |
|                                                    |   | $      | 8,306  |   |         | $      | 8,306  |         |   | $      | -            |   |   | $ | - |   |
|                                                    |   |   |   |   |         |   |   |         |   |   |         |   |   |   |   |   |
| Liabilities    -                                        |   |   |   |   |         |   |   |         |   |   |         |   |   |   |   |   |
|                                                    |   |   |   |   |         |   |   |         |   |   |         |   |   |   |   |   |
| Derivatives      – Energy Related Liabilities (B) |   | $      | 16,580 |   |         | $      | 16,497 |         |   | $      | 83           |   |   | $ | - |   |
| Derivatives      – Other (C)                      |   |   | 1,413  |   |         |   | -      |         |   |   | 1,413        |   |   |   | - |   |
|                                                    |   | $      | 17,993 |   |         | $      | 16,497 |         |   | $      | 1,496        |   |   | $ | - |   |
|                                                    |   |   |   |   |         |   |   |         |   |   |         |   |   |   |   |   |

----

----

|                                        |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|---------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                        |   | September      30,      |   |   | September      30,     |   |
|                                        |   | 2008                    |   |   | 2007                   |   |   | 2008 |   |   | 2007 |   |
| Throughput –      dth:                |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Firm      Sales -                           |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Residential                                 |   |                    | 1,559  |   |                   |   | 1,556 |   |   |   | 14,490 |   |   |   | 16,069 |   |
| Commercial                                  |   |                    | 652    |   |                   |   | 637 |   |   |   | 4,065 |   |   |   | 4,497 |   |
| Industrial                                  |   |                    | 13     |   |                   |   | 17 |   |   |   | 103 |   |   |   | 138 |   |
| Cogeneration      & Electric Generation |   |                    | 156    |   |                   |   | 791 |   |   |   | 528 |   |   |   | 953 |   |
| Firm      Transportation -                  |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                 |   |                    | 136    |   |                   |   | 129 |   |   |   | 1,351 |   |   |   | 1,273 |   |
| Commercial                                  |   |                    | 598    |   |                   |   | 607 |   |   |   | 3,927 |   |   |   | 4,271 |   |
| Industrial                                  |   |                    | 3,095  |   |                   |   | 2,835 |   |   |   | 9,542 |   |   |   | 8,903 |   |
| Cogeneration      & Electric Generation |   |                    | 1,115  |   |                   |   | 1,288 |   |   |   | 2,040 |   |   |   | 2,415 |   |
|                                        |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Firm Throughput                  |   |                    | 7,324  |   |                   |   | 7,860 |   |   |   | 36,046 |   |   |   | 38,519 |   |
|                                        |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interruptible      Sales                    |   |                    | 1      |   |                   |   | 1 |   |   |   | 28 |   |   |   | 39 |   |
| Interruptible      Transportation           |   |                    | 509    |   |                   |   | 722 |   |   |   | 2,034 |   |   |   | 2,101 |   |
| Off-System                                  |   |                    | 1,458  |   |                   |   | 3,505 |   |   |   | 7,330 |   |   |   | 13,419 |   |
| Capacity      Release                       |   |                    | 20,196 |   |                   |   | 23,738 |   |   |   | 47,253 |   |   |   | 55,217 |   |
|                                        |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Throughput                       |   |                    | 29,488 |   |                   |   | 35,826 |   |   |   | 92,691 |   |   |   | 109,295 |   |

|                                        |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|---------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                        |   | September      30,      |   |   | September      30,     |   |
|                                        |   | 2008                    |   |   | 2007                   |   |   | 2008 |   |   | 2007 |   |
| Utility      Operating Revenues:            |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Firm      Sales -                           |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Residential                                 |   | $                       | 26,587 |   |                   | $      | 33,386 |   |   | $ | 214,098 |   |   | $ | 247,641 |   |
| Commercial                                  |   |                    | 9,650  |   |                   |   | 10,113 |   |   |   | 53,449 |   |   |   | 57,760 |   |
| Industrial                                  |   |                    | 874    |   |                   |   | 1,013 |   |   |   | 6,051 |   |   |   | 6,419 |   |
| Cogeneration      & Electric Generation |   |                    | 2,166  |   |                   |   | 6,202 |   |   |   | 7,453 |   |   |   | 8,269 |   |
| Firm      Transportation -                  |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                 |   |                    | 1,081  |   |                   |   | 1,136 |   |   |   | 7,161 |   |   |   | 5,924 |   |
| Commercial                                  |   |                    | 2,124  |   |                   |   | 2,293 |   |   |   | 12,532 |   |   |   | 11,917 |   |
| Industrial                                  |   |                    | 2,974  |   |                   |   | 3,497 |   |   |   | 9,247 |   |   |   | 9,230 |   |
| Cogeneration      & Electric Generation |   |                    | 599    |   |                   |   | 657 |   |   |   | 1,356 |   |   |   | 1,603 |   |
|                                        |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Firm Revenues                    |   |                    | 46,055 |   |                   |   | 58,297 |   |   |   | 311,347 |   |   |   | 348,763 |   |
|                                        |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interruptible      Sales                    |   |                    | 22     |   |                   |   | 14 |   |   |   | 304 |   |   |   | 450 |   |
| Interruptible      Transportation           |   |                    | 334    |   |                   |   | 451 |   |   |   | 1,301 |   |   |   | 1,389 |   |
| Off-System                                  |   |                    | 14,403 |   |                   |   | 22,008 |   |   |   | 72,989 |   |   |   | 98,304 |   |
| Capacity      Release                       |   |                    | 3,512  |   |                   |   | 3,324 |   |   |   | 9,265 |   |   |   | 8,406 |   |
| Other                                       |   |                    | 237    |   |                   |   | 326 |   |   |   | 832 |   |   |   | 968 |   |
|                                        |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Utility Operating Revenues       |   |                    | 64,563 |   |                   |   | 84,420 |   |   |   | 396,038 |   |   |   | 458,280 |   |

----

|                                                                        |   |   |   |   |   |   |   |    |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|---------|--------|
| Less:                                                                       |   |   |   |   |   |   |   |    |   |   |    |   |   |   |    |   |
| Cost      of Sales                                                          |   | $      | 41,201 |   |   | $      | 62,223 |    |   | $      | 264,381 |   |   | $      | 331,615 |   |
| Conservation      Recoveries*                                               |   |   | 1,116  |   |   |   | 633    |    |   |   | 6,149   |   |   |   | 2,888   |   |
| RAC      Recoveries*                                                        |   |   | 695    |   |   |   | 472    |    |   |   | 2,084   |   |   |   | 1,417   |   |
|          Revenue Taxes                                       |   |   | 870    |   |   |   | 883    |    |   |   | 5,912   |   |   |   | 6,316   |   |
| Utility      Margin                                                         |   | $      | 20,681 |   |   | $      | 20,209 |    |   | $      | 117,512 |   |   | $      | 116,044 |   |
|                                                                        |   |   |   |   |   |   |   |    |   |   |    |   |   |   |    |   |
| Margin:                                                                     |   |   |   |   |   |   |   |    |   |   |    |   |   |   |    |   |
| Residential                                                                 |   | $      | 12,094 |   |   | $      | 11,841 |    |   | $      | 69,230  |   |   | $      | 73,593  |   |
| Commercial      and Industrial                                              |   |   | 6,185  |   |   |   | 6,360  |    |   |   | 27,334  |   |   |   | 29,345  |   |
| Cogeneration      and Electric Generation                                   |   |   | 641    |   |   |   | 793    |    |   |   | 1,540   |   |   |   | 1,772   |   |
| Interruptible                                                               |   |   | 11     |   |   |   | 31     |    |   |   | 92      |   |   |   | 129     |   |
| Off-system      & Capacity Release                                      |   |   | 572    |   |   |   | 596    |    |   |   | 2,160   |   |   |   | 2,186   |   |
| Other      Revenues                                                         |   |   | 1,085  |   |   |   | 603    |    |   |   | 1,868   |   |   |   | 1,429   |   |
|    Margin      Before Weather Normalization & Decoupling |   |   | 20,588 |   |   |   | 20,224 |    |   |   | 102,224 |   |   |   | 108,454 |   |
|          CIP Mechanism                                       |   |   | 93     |   |   |   | (15    | )  |   |   | 15,288  |   |   |   | 7,590   |   |
| Utility      Margin                                                         |   | $      | 20,681 |   |   | $      | 20,209 |    |   | $      | 117,512 |   |   | $      | 116,044 |   |
|                                                                        |   |   |   |   |   |   |   |    |   |   |    |   |   |   |    |   |
|  Degree      Days:                                                     |   |   | 18     |   |   |   | 21     |    |   |   | 2,753   |   |   |   | 2,986   |   |
|                                                                        |   |   |   |   |   |   |   |    |   |   |    |   |   |   |    |   |

|                                            |   | Three      Months EndedSeptember      30, |   |   | Nine      Months EndedSeptember      30, |   |
|-------------------------------------------------|--------|-------------------------------------------|--------|--------|------------------------------------------|--------|
|                                            |   | 2008                                      |   |   | 2007                                     |   |   | 2008 |   |   | 2007 |   |
| Net      Income Benefit:                   |   |                                      |   |   |                                     |   |   |   |   |   |   |   |
| CIP      – Weather Related                |   | $                                         | -      |   |                                     | $      | - |   |   | $ | 1.6 |   |   | $ | 0.2 |   |
| CIP      – Usage Related                  |   |                                      | 0.1    |   |                                     |   | - |   |   |   | 7.4 |   |   |   | 4.2 |   |
| Total      Net Income Benefit                   |   | $                                         | 0.1    |   |                                     | $      | - |   |   | $ | 9.0 |   |   | $ | 4.4 |   |
|                                            |   |                                      |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
|        Weather Compared to 20-Year Average |   | 62.5%      warmer                         |   |   | 56.2%      warmer                        |   |   | 9.0%      warmer |   |   | 1.3%      warmer |   |
|        Weather Compared to Prior Year      |   | 14.3%      warmer                         |   |   | 40.0%      warmer                        |   |   | 7.8%      warmer |   |   | 14.9%      colder |   |

----

|                        |   | Three      MonthsEnded      September 30, |   |   | Nine      MonthsEnded      September 30, |   |
|-----------------------------|--------|-------------------------------------------|--------|--------|------------------------------------------|--------|
|                        |   | 2008      vs. 2007                        |   |   | 2008      vs. 2007                       |   |
|                        |   |                                      |   |   |                                     |   |
| Operations                  |   | $                                         | 1,520  |   |                                     | $      | 4,721 |   |
| Maintenance                 |   |                                      | 381    |   |                                     |   | 966 |   |
| Depreciation                |   |                                      | 221    |   |                                     |   | 708 |   |
| Energy      and Other Taxes |   |                                      | 49     |   |                                     |   | (379 | ) |

----

----

|                 |   | As      ofSeptember      30, 2008 |   |   | As      ofDecember      31, 2007 |   |
|----------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|
|                 |   |                              |   |   |                             |   |
| Common Equity   |   |                              | 50.6   | %      |                             |   | 50.3 | % |
| Long-Term      Debt  |   |                              | 38.0   |   |                             |   | 39.3 |   |
| Short-Term      Debt |   |                              | 11.4   |   |                             |   | 10.4 |   |
|                 |   |                              |   |   |                             |   |   |   |
| Total                |   |                              | 100.0  | %      |                             |   | 100.0 | % |

----

| Twelve      MonthsEnded      Sept. 30, |       |   | Year      Ended December 31, |
|----------------------------------------|------------|--------|------------------------------|
|                                   |       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                   |       |   | 2007                         |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |
|                                   |       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |  4.3x |   |                         |   | 4.1x |   |   |   | 3.8x |   |   |   | 4.0x |   |   |   | 3.9x |   |   |   | 3.3x |

| Assets                      |                          |   |                     |   |   |                     |   |   |   |   |
|-----------------------------|-------------------------------|--------|--------------------------|--------|--------|--------------------------|--------|--------|--------|--------|
|                        | Source      ofFair      Value |   | Maturity<      1 Year |   |   | Maturity1 -      3 Years |   |   | Total  |   |
|                        |                     |   |                     |   |   |                     |   |   |   |   |
| Prices      Actively Quoted | NYMEX                         |   | $                        | 2,521  |   |                     | $      | 20     |   |   | $ | 2,541 |   |
|                        |                          |   |                     |   |   |                     |   |   |   |   |   |   |   |
| Other      External Sources | Basis                         |   |                     | 132    |   |                     |   | -      |   |   |   | 132 |   |
|                        |                          |   |                     |   |   |                     |   |   |   |   |   |   |   |
| Total                       |                          |   | $                        | 2,653  |   |                     | $      | 20     |   |   | $ | 2,673 |   |

|                        |                  |   |             |   |   |             |   |   |   |   |
|-----------------------------|-----------------------|--------|------------------|--------|--------|------------------|--------|--------|--------|--------|
| Liabilities                 | Source      of        |   | Maturity         |   |   | Maturity         |   |   |   |   |
|                        | Fair      Value  |   | <      1 Year |   |   | 1 -      3 Years |   |   | Total  |   |
|                        |                  |   |             |   |   |             |   |   |   |   |
| Prices      Actively Quoted | NYMEX                 |   | $                | 14,927 |   |             | $      | 1,570  |   |   | $ | 16,497 |   |
|                        |                  |   |             |   |   |             |   |   |   |   |   |   |   |
| Other      External Sources | Basis                 |   |             | 83     |   |             |   | -      |   |   |   | 83 |   |
|                        |                  |   |             |   |   |             |   |   |   |   |   |   |   |
| Total                       |                  |   | $                | 15,010 |   |             | $      | 1,570  |   |   | $ | 16,580 |   |

----

| Net      Derivatives — Energy Related Liability, January 1, 2008         |   |  $ | (2,092  | )       |
|--------------------------------------------------------------------------------|--------|---------|---------|---------|
| Contracts      Settled During the Nine Months ended September 30, 2008,    Net |   |    | 2,205   |    |
| Other      Changes in Fair Value from Continuing and New Contracts,    Net     |   |    | (14,020 | )  |
| Net      Derivatives — Energy Related Liability, September 30, 2008      |   | $       | (13,907 | )  |

| 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 |

----

| 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:      November 10, 2008 | By:      /s/ Edward J. Graham                                                            |
|-------------------------------|------------------------------------------------------------------------------------------|
|                          |            Edward J. Graham                                     |
|                          |            President & Chief Executive Officer              |
|                          |                                                                                     |
|                          |                                                                                     |
|                          |                                                                                     |
| Dated:      November 10, 2008 | By:      /s/ David A. Kindlick                                                           |
|                          |            David A. Kindlick                                    |
|                          |            Senior Vice President & Chief Financial  Officer |

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