----

----

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

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

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

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

----

----

----

TABLE 

|       | Page No.                                                                              |
|------------|---------------------------------------------------------------------------------------|
|       |                                                                                  |
| PART I     | FINANCIAL INFORMATION                                                                 |   |
|       |                                                                                  |   |
| Item 1.    | Financial Statements                                                                  |   3 |
|       |                                                                                  |   |
| Item 2.    | Management's Discussion and Analysis of Financial Condition and Results of Operations | 15 |
|       |                                                                                  |   |
| Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                            | 22 |
|       |                                                                                  |   |
| Item 4.    | Controls and Procedures                                                               | 23 |
|       |                                                                                  |   |
| PART II    | OTHER INFORMATION                                                                     |   |
|       |                                                                                  |   |
| Item 1.    | Legal Proceedings                                                                     | 24 |
|       |                                                                                  |   |
| Item 1A.   | Risk Factors                                                                          | 24 |
|       |                                                                                  |   |
| Item 6.    | Exhibits                                                                              | 24 |
|       |                                                                                  |   |
| Signatures | 24                                                                                    |

----

Table of Contents 

PART 

|                                   |   | Three Months Ended |    |
|----------------------------------------|--------|--------------------|---------|
|                                   |   | March 31,          |    |
|                                   |   | 2010               |    |   | 2009 |   |
|                                   |   |               |    |   |   |   |
|                                   |   |               |    |   |   |   |
| Operating Revenues                     |   | $                  | 196,716 |   |   | $ | 243,113 |   |
|                                   |   |               |    |   |   |   |   |   |
| Operating Expenses:                    |   |               |    |   |   |   |   |   |
| Cost of Sales (Excluding depreciation) |   |               | 116,875 |   |   |   | 165,977 |   |
| Operations                             |   |               | 17,807  |   |   |   | 17,360 |   |
| Maintenance                            |   |               | 2,816   |   |   |   | 2,156 |   |
| Depreciation                           |   |               | 7,079   |   |   |   | 6,633 |   |
| Energy and Other Taxes                 |   |               | 4,348   |   |   |   | 4,621 |   |
|                                   |   |               |    |   |   |   |   |   |
| Total Operating Expenses               |   |               | 148,925 |   |   |   | 196,747 |   |
|                                   |   |               |    |   |   |   |   |   |
| Operating Income                       |   |               | 47,791  |   |   |   | 46,366 |   |
|                                   |   |               |    |   |   |   |   |   |
| Other Income and Expense               |   |               | 233     |   |   |   | 324 |   |
|                                   |   |               |    |   |   |   |   |   |
| Interest Charges                       |   |               | (4,015  | ) |   |   | (4,097 | ) |
|                                   |   |               |    |   |   |   |   |   |
| Income Before Income Taxes             |   |               | 44,009  |   |   |   | 42,593 |   |
|                                   |   |               |    |   |   |   |   |   |
| Income Taxes                           |   |               | (18,139 | ) |   |   | (17,615 | ) |
|                                   |   |               |    |   |   |   |   |   |
| Net Income                             |   | $                  | 25,870  |   |   | $ | 24,978 |   |

----

Table of Contents 

|                                                                |   | Three Months Ended |   |
|---------------------------------------------------------------------|--------|--------------------|--------|
|                                                                |   | March 31,          |   |
|                                                                |   | 2010               |   |   | 2009 |   |
|                                                                |   |               |   |   |   |   |
|                                                                |   |               |   |   |   |   |
|                                                                |   |               |   |   |   |   |
| Net Income                                                          |   | $                  | 25,870 |   |   | $ | 24,978 |   |
|                                                                |   |               |   |   |   |   |   |   |
| Other Comprehensive Gain  (Loss)  - Net of Tax: |   |               |   |   |   |   |   |   |
|                                                                |   |               |   |   |   |   |   |   |
| Unrealized Gain (Loss) on Available-for-Sale Securities             |   |               | 144    |   |   |   | (170 | ) |
| Unrealized Gain on Derivatives - Other                              |   |               | 7      |   |   |   | 7 |   |
|                                                                |   |               |   |   |   |   |   |   |
| Other Comprehensive Gain (Loss) - Net of Tax *                      |   |               | 151    |   |   |   | (163 | ) |
|                                                                |   |               |   |   |   |   |   |   |
| Comprehensive Income                                                |   | $                  | 26,021 |   |   | $ | 24,815 |   |

----

Table of Contents 

|                                             |   | Three Months Ended |    |
|--------------------------------------------------|--------|--------------------|---------|
|                                             |   | March 31,          |    |
|                                             |   | 2010               |    |   | 2009 |   |
|                                             |   |               |    |   |   |   |
|                                             |   |               |    |   |   |   |
| Net Cash Provided by Operating Activities        |   | $                  | 72,204  |   |   | $ | 51,274 |   |
|                                             |   |               |    |   |   |   |   |   |
| Cash Flows from Investing Activities:            |   |               |    |   |   |   |   |   |
| Capital Expenditures                             |   |               | (37,414 | ) |   |   | (15,676 | ) |
| Investment in Long-Term Receivables              |   |               | (910    | ) |   |   | (2,044 | ) |
| Proceeds from Long-Term Receivables              |   |               | 609     |   |   |   | 2,869 |   |
|                                             |   |               |    |   |   |   |   |   |
| Net Cash Used in Investing Activities            |   |               | (37,715 | ) |   |   | (14,851 | ) |
|                                             |   |               |    |   |   |   |   |   |
| Cash Flows from Financing Activities:            |   |               |    |   |   |   |   |   |
| Net Repayments of Lines of Credit                |   |               | (47,400 | ) |   |   | (32,975 | ) |
| Principal Repayments of Long-Term Debt           |   |               | -       |   |   |   | (10 | ) |
| Proceeds from Issuance of Long-Term Debt         |   |               | 15,000  |   |   |   | - |   |
| Payments for Issuance of Long-Term Debt          |   |               | (559    | ) |   |   | - |   |
|                                             |   |               |    |   |   |   |   |   |
| Net Cash Used in Financing Activities            |   |               | (32,959 | ) |   |   | (32,985 | ) |
|                                             |   |               |    |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents        |   |               | 1,530   |   |   |   | 3,438 |   |
| Cash and Cash Equivalents at Beginning of Period |   |               | 1,993   |   |   |   | 2,228 |   |
|                                             |   |               |    |   |   |   |   |   |
| Cash and Cash Equivalents at End of Period       |   | $                  | 3,523   |   |   | $ | 5,666 |   |

----

Table of Contents 

|                                         |   | March 31, |      |   | December 31, |   |
|----------------------------------------------|--------|-----------|-----------|--------|--------------|--------|
|                                         |   | 2010      |      |   | 2009         |   |
| Assets                                       |   |      |      |   |         |   |
|                                         |   |      |      |   |         |   |
| Property, Plant and Equipment:               |   |      |      |   |         |   |
| Utility Plant, at original cost              |   | $         | 1,306,746 |   |         | $      | 1,275,792 |   |
| Accumulated Depreciation                     |   |      | (320,781  | )      |         |   | (314,627 | ) |
|                                         |   |      |      |   |         |   |   |   |
| Property, Plant and Equipment - Net          |   |      | 985,965   |   |         |   | 961,165 |   |
|                                         |   |      |      |   |         |   |   |   |
| Investments:                                 |   |      |      |   |         |   |   |   |
| Available-for-Sale Securities                |   |      | 6,195     |   |         |   | 5,941 |   |
| Restricted Investments                       |   |      | 132       |   |         |   | 132 |   |
|                                         |   |      |      |   |         |   |   |   |
| Total Investments                            |   |      | 6,327     |   |         |   | 6,073 |   |
|                                         |   |      |      |   |         |   |   |   |
| Current Assets:                              |   |      |      |   |         |   |   |   |
| Cash and Cash Equivalents                    |   |      | 3,523     |   |         |   | 1,993 |   |
| Accounts Receivable                          |   |      | 102,729   |   |         |   | 41,392 |   |
| Accounts Receivable - Related Parties        |   |      | 732       |   |         |   | 974 |   |
| Unbilled Revenues                            |   |      | 25,587    |   |         |   | 47,333 |   |
| Provision for Uncollectibles                 |   |      | (3,847    | )      |         |   | (3,915 | ) |
| Natural Gas in Storage, average cost         |   |      | 9,626     |   |         |   | 23,711 |   |
| Materials and Supplies, average cost         |   |      | 2,867     |   |         |   | 4,854 |   |
| Prepaid Taxes                                |   |      | -         |   |         |   | 13,796 |   |
| Derivatives - Energy Related Assets          |   |      | 11        |   |         |   | 797 |   |
| Other Prepayments and Current Assets         |   |      | 2,214     |   |         |   | 2,248 |   |
|                                         |   |      |      |   |         |   |   |   |
| Total Current Assets                         |   |      | 143,442   |   |         |   | 133,183 |   |
|                                         |   |      |      |   |         |   |   |   |
| Regulatory and Other Noncurrent Assets:      |   |      |      |   |         |   |   |   |
| Regulatory Assets                            |   |      | 231,355   |   |         |   | 240,462 |   |
| Unamortized Debt Issuance Costs              |   |      | 6,263     |   |         |   | 5,829 |   |
| Long-Term Receivables                        |   |      | 7,393     |   |         |   | 7,693 |   |
| Derivatives - Energy Related Assets          |   |      | 108       |   |         |   | 333 |   |
| Other                                        |   |      | 2,349     |   |         |   | 2,324 |   |
|                                         |   |      |      |   |         |   |   |   |
| Total Regulatory and Other Noncurrent Assets |   |      | 247,468   |   |         |   | 256,641 |   |
|                                         |   |      |      |   |         |   |   |   |
| Total Assets                                 |   | $         | 1,383,202 |   |         | $      | 1,357,062 |   |

----

Table of Contents 

|                                              |   | March 31, |      |   | December 31, |   |
|---------------------------------------------------|--------|-----------|-----------|--------|--------------|--------|
|                                              |   | 2010      |      |   | 2009         |   |
|                                              |   |      |      |   |         |   |
| 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 |   |      | 200,716   |   |         |   | 200,716 |   |
| Accumulated Other Comprehensive Loss              |   |      | (6,179    | )      |         |   | (6,330 | ) |
| Retained Earnings                                 |   |      | 254,665   |   |         |   | 231,296 |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Common Equity                               |   |      | 455,050   |   |         |   | 431,530 |   |
|                                              |   |      |      |   |         |   |   |   |
| Long-Term Debt                                    |   |      | 265,000   |   |         |   | 250,000 |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Capitalization                              |   |      | 720,050   |   |         |   | 681,530 |   |
|                                              |   |      |      |   |         |   |   |   |
| Current Liabilities:                              |   |      |      |   |         |   |   |   |
| Notes Payable                                     |   |      | 62,000    |   |         |   | 109,400 |   |
| Current Portion of Long-Term Debt                 |   |      | 35,000    |   |         |   | 35,000 |   |
| Accounts Payable - Commodity                      |   |      | 17,418    |   |         |   | 19,630 |   |
| Accounts Payable - Other                          |   |      | 21,948    |   |         |   | 21,947 |   |
| Accounts Payable - Related Parties                |   |      | 11,736    |   |         |   | 12,120 |   |
| Derivatives - Energy Related Liabilities          |   |      | 22,254    |   |         |   | 9,799 |   |
| Deferred Income Taxes - Net                       |   |      | 7,893     |   |         |   | 11,642 |   |
| Customer Deposits and Credit Balances             |   |      | 15,197    |   |         |   | 13,542 |   |
| Environmental Remediation Costs                   |   |      | 25,160    |   |         |   | 22,499 |   |
| Taxes Accrued                                     |   |      | 25,678    |   |         |   | 8,548 |   |
| Pension Benefits                                  |   |      | 1,066     |   |         |   | 1,066 |   |
| Interest Accrued                                  |   |      | 4,467     |   |         |   | 5,979 |   |
| Dividends Declared                                |   |      | 2,501     |   |         |   | - |   |
| Other Current Liabilities                         |   |      | 6,655     |   |         |   | 7,839 |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Current Liabilities                         |   |      | 258,973   |   |         |   | 279,011 |   |
|                                              |   |      |      |   |         |   |   |   |
| Regulatory and Other Noncurrent Liabilities:      |   |      |      |   |         |   |   |   |
| Regulatory Liabilities                            |   |      | 54,824    |   |         |   | 50,193 |   |
| Deferred Income Taxes - Net                       |   |      | 214,020   |   |         |   | 210,925 |   |
| Environmental Remediation Costs                   |   |      | 43,361    |   |         |   | 46,557 |   |
| Asset Retirement Obligations                      |   |      | 23,115    |   |         |   | 22,960 |   |
| Pension and Other Postretirement Benefits         |   |      | 59,078    |   |         |   | 57,699 |   |
| Investment Tax Credits                            |   |      | 1,440     |   |         |   | 1,517 |   |
| Derivatives - Energy Related Liabilities          |   |      | 2,108     |   |         |   | 504 |   |
| Derivatives - Other                               |   |      | 2,017     |   |         |   | 1,956 |   |
| Other                                             |   |      | 4,216     |   |         |   | 4,210 |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Regulatory and Other Noncurrent Liabilities |   |      | 404,179   |   |         |   | 396,521 |   |
|                                              |   |      |      |   |         |   |   |   |
| Commitments and Contingencies (Note 9)            |   |      |      |   |         |   |   |   |
|                                              |   |      |      |   |         |   |   |   |
| Total Capitalization and Liabilities              |   | $         | 1,383,202 |   |         | $      | 1,357,062 |   |

----

Table of Contents 

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

----

Table of Contents 

| Derivatives not designated as hedging instruments under GAAP       |   | March 31, 2010 |   |   | December 31, 2009 |   |
|--------------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                               |   | Assets         |   |   | Liabilities       |   |   | Assets |   |   | Liabilities |   |
| Energy related commodity contracts:                                |   |           |   |   |              |   |   |   |   |   |   |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |
| Derivatives – Energy Related – Current                 |   | $              | 11     |   |              | $      | 22,254 |   |   | $ | 797 |   |   | $ | 9,799 |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives – Energy Related – Non-Current             |   |           | 108    |   |              |   | 2,108 |   |   |   | 333 |   |   |   | 504 |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate contracts:                                           |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives – Other                                          |   |           | -      |   |              |   | 2,017 |   |   |   | - |   |   |   | 1,956 |   |
|                                                               |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total derivatives not designated as hedging instruments under GAAP |   | $              | 119    |   |              | $      | 26,379 |   |   |   | 1,130 |   |   |   | 12,259 |   |

|                                                     |   | Three months ended March 31, |
|----------------------------------------------------------|--------|------------------------------|
| Derivatives in Cash Flow Hedging Relationships           |   | 2010                         |   |   | 2009 |   |
| Interest Rate Contracts:                                 |   |                         |   |   |   |   |
| Losses reclassified from accumulated OCI into income (a) |   | $                            | (12 | ) |   | $ | (12 | ) |

| Grant Date |   | Shares Outstanding |   |   | Fair Value Per Share |   |   | Expected Volatility |   |   | Risk-Free Interest Rate |   |
|------------|--------|--------------------|--------|--------|----------------------|--------|--------|---------------------|--------|--------|-------------------------|--------|
|       |   |               |   |   |                 |   |   |                |   |   |                    |   |
| Jan. 2008  |   |               | 9,238  |   |                 | $      | 34.030 |                |   |   | 21.7                    | %      |   |   | 2.9 | % |
| Jan. 2009  |   |               | 8,318  |   |                 | $      | 39.350 |                |   |   | 28.6                    | %      |   |   | 1.2 | % |
| Jan. 2010  |   |               | 10,024 |   |                 | $      | 39.020 |                |   |   | 29.0                    | %      |   |   | 1.65 | % |

----

Table of Contents 

|                                          |   | Shares |   |   | Weighted AverageGrant DateFair Value |   |
|-----------------------------------------------|--------|--------|--------|--------|--------------------------------------|--------|
| Nonvested Shares Outstanding, January 1, 2010 |   |   | 17,556 |   |                                 | $      | 36.551 |   |
|                                          |   |   |   |   |                                 |   |   |   |
| Granted                                       |   |   | 10,024 |   |                                 |   | 39.020 |   |
|                                          |   |   |   |   |                                 |   |   |   |
| Nonvested Shares Outstanding, March 31, 2010  |   |   | 27,580 |   |                                 | $      | 37.448 |   |

| 2. | RATES AND REGULATORY ACTIONS: |
|----|-------------------------------|

| 3. | REGULATORY ASSETS AND LIABILITIES: |
|----|------------------------------------|

----

Table of Contents 

|                                                    |   | March 31, |    |   | December 31, |   |
|---------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                                                    |   | 2010      |    |   | 2009         |   |
| Environmental Remediation Costs:                        |   |      |    |   |         |   |   |   |
| Expended - Net                                          |   | $         | 40,788  |   |         | $      | 42,924 |   |
| Liability for Future Expenditures                       |   |      | 68,521  |   |         |   | 69,056 |   |
| Income Taxes - Flowthrough Depreciation                 |   |      | 1,507   |   |         |   | 1,752 |   |
| Deferred Asset Retirement Obligation Costs              |   |      | 22,562  |   |         |   | 22,438 |   |
| Deferred Pension and Other Postretirement Benefit Costs |   |      | 71,098  |   |         |   | 71,192 |   |
| Deferred Gas Costs - Net                                |   |      | 567     |   |         |   | 6,519 |   |
| Conservation Incentive Program Receivable               |   |      | 15,378  |   |         |   | 16,672 |   |
| Societal Benefit Costs Receivable                       |   |      | 2,082   |   |         |   | 1,872 |   |
| Premium for Early Retirement of Debt                    |   |      | 1,005   |   |         |   | 1,046 |   |
| Other Regulatory Assets                                 |   |      | 7,847   |   |         |   | 6,991 |   |
|                                                    |   |      |    |   |         |   |   |   |
| Total Regulatory Assets                                 |   | $         | 231,355 |   |         | $      | 240,462 |   |

|                         |   | March 31, |   |   | December 31, |   |
|------------------------------|--------|-----------|--------|--------|--------------|--------|
|                         |   | 2010      |   |   | 2009         |   |
| Excess Plant Removal Costs   |   | $         | 48,731 |   |         | $      | 48,715 |   |
| Other Regulatory Liabilities |   |      | 6,093  |   |         |   | 1,478 |   |
|                         |   |      |   |   |         |   |   |   |
| Total Regulatory Liabilities |   | $         | 54,824 |   |         | $      | 50,193 |   |

| 4. | RELATED PARTY TRANSACTIONS: |
|----|-----------------------------|

|                                |   | Three Months EndedMarch 31, |   |
|-------------------------------------|--------|-----------------------------|--------|
|                                |   | 2010                        |   |   | 2009 |   |
| Operating Revenues/Affiliates:      |   |                        |   |   |   |   |
| SJRG                                |   | $                           | 563    |   |   | $ | 2,892 |   |
| Other                               |   |                        | 127    |   |   |   | 146 |   |
| Total Operating Revenues/Affiliates |   | $                           | 690    |   |   | $ | 3,038 |   |

----

Table of Contents 

|                                                |   | Three Months EndedMarch 31, |   |
|-----------------------------------------------------|--------|-----------------------------|--------|
|                                                |   | 2010                        |   |   | 2009 |   |
| Costs of Sales/Affiliates (Excluding depreciation): |   |                        |   |   |   |   |
| SJRG                                                |   | $                           | 14,582 |   |   | $ | 26,726 |   |
| Derivative Losses (See Note 1): *                   |   |                        |   |   |   |   |   |   |
| SJRG                                                |   | $                           | 4,047  |   |   | $ | 16,910 |   |

| Operations Expense/Affiliates       |   |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| SJI                                 |   | $      | 1,928  |   |   | $      | 1,772 |   |
| SJIS                                |   |   | 1,503  |   |   |   | 1,283 |   |
| Millennium                          |   |   | 688    |   |   |   | 713 |   |
| Other                               |   |   | (54    | )      |   |   | (74 | ) |
| Total Operations Expense/Affiliates |   | $      | 4,065  |   |   | $      | 3,694 |   |

| 5. | FINANCIAL INSTRUMENTS: |
|----|------------------------|

----

Table of Contents 

| 6. | UNUSED LINES OF CREDIT: |
|----|-------------------------|

|                      |   | Total Facility |    |   | Usage  |   |    | Available Liquidity |   | Expiration Date |
|---------------------------|--------|----------------|---------|--------|--------|--------|---------|---------------------|--------|-----------------|
|                      |   |           |    |   |   |   |    |                |   |            |
| Revolving Credit Facility |   | $              | 100,000 |   |   | $      | 40,000  |                |   | $               | 60,000 |   | August 2011 |
| Line of Credit            |   |           | 40,000  |   |   |   | — |                |   |            | 40,000 |   | December 2010 (A) |
| Uncommitted Bank Lines    |   |           | 55,000  |   |   |   | 22,000  |                |   |            | 33,000 |   | Various |
|                      |   |           |    |   |   |   |    |                |   |            |   |   |   |
| Total                     |   | $              | 195,000 |   |   | $      | 62,000  |                |   | $               | 133,000 |   |   |

| 7. | RETAINED EARNINGS: |
|----|--------------------|

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

|                               | Pension Benefits | Other Postretirement Benefits |   |
|------------------------------------|------------------|-------------------------------|--------|
|                               |             | Three Months EndedMarch 31,   |   |   | Three Months EndedMarch 31, |   |
|                               |             | 2010                          |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Service Cost                       |             | $                             | 662    |   |   | $ | 692 |   |   | $ | 199 |   |   | $ | 210 |   |
| Interest Cost                      |             |                          | 1,744  |   |   |   | 1,707 |   |   |   | 686 |   |   |   | 599 |   |
| Expected Return on Plan Assets     |             |                          | (1,498 | ) |   |   | (1,508 | ) |   |   | (338 | ) |   |   | (304 | ) |
| Amortizations:                     |             |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prior Service Cost (Credits)       |             |                          | 47     |   |   |   | 55 |   |   |   | (74 | ) |   |   | (69 | ) |
| Actuarial Loss                     |             |                          | 1,062  |   |   |   | 1,079 |   |   |   | 382 |   |   |   | 356 |   |
| Net Periodic Benefit Cost          |             |                          | 2,017  |   |   |   | 2,025 |   |   |   | 855 |   |   |   | 792 |   |
| Capitalized Benefit Costs          |             |                          | (988   | ) |   |   | (992 | ) |   |   | (419 | ) |   |   | (388 | ) |
| Total Net Periodic Benefit Expense |             | $                             | 1,029  |   |   | $ | 1,033 |   |   | $ | 436 |   |   | $ | 404 |   |

----

Table of Contents 

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

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

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

|   | · | Level 2:  Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3:  Unobservable inputs that reflect the reporting entity’s own assumptions. |
|--------|--------|----------------------------------------------------------------------------------------------------|

----

Table of Contents 

|                                               |   | Total  |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|----------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Assets -                                           |   |   |   |   |    |   |   |    |   |   |    |   |
|                                               |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Available-for-Sale Securities (A)                  |   | $      | 6,195  |   |    | $      | 6,195  |    |   | $      | -       |   |   | $ | - |   |
| Derivatives – Energy Related Assets (B)      |   |   | 119    |   |    |   | 70     |    |   |   | 49      |   |   |   | - |   |
|                                               |   | $      | 6,314  |   |    | $      | 6,265  |    |   | $      | 49      |   |   | $ | - |   |
|                                               |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Liabilities -                                      |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
|                                               |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Derivatives – Energy Related Liabilities (B) |   | $      | 24,362 |   |    | $      | 21,005 |    |   | $      | 3,357   |   |   | $ | - |   |
| Derivatives – Other (C)                      |   |   | 2,017  |   |    |   | -      |    |   |   | 2,017   |   |   |   | - |   |
|                                               |   | $      | 26,379 |   |    | $      | 21,005 |    |   | $      | 5,374   |   |   | $ | - |   |

Item 

----

Table of Contents 

----

Table of Contents 

|                                   |   | Three Months Ended |   |
|----------------------------------------|--------|--------------------|--------|
|                                   |   | March 31,          |   |
|                                   |   | 2010               |   |   | 2009 |   |
| Throughput – dth:                |   |               |   |   |   |   |
| Firm Sales -                           |   |               |   |   |   |   |
| Residential                            |   |               | 11,431 |   |   |   | 11,517 |   |
| Commercial                             |   |               | 2,694  |   |   |   | 2,877 |   |
| Industrial                             |   |               | 148    |   |   |   | 149 |   |
| Cogeneration & Electric Generation |   |               | 44     |   |   |   | 14 |   |
| Firm Transportation -                  |   |               |   |   |   |   |   |   |
| Residential                            |   |               | 982    |   |   |   | 1,007 |   |
| Commercial                             |   |               | 2,641  |   |   |   | 2,571 |   |
| Industrial                             |   |               | 3,089  |   |   |   | 3,052 |   |
| Cogeneration & Electric Generation |   |               | 2,193  |   |   |   | 433 |   |
| Total Firm Throughput                  |   |               | 23,222 |   |   |   | 21,620 |   |
|                                   |   |               |   |   |   |   |   |   |
| Interruptible Sales                    |   |               | 3      |   |   |   | 2 |   |
| Interruptible Transportation           |   |               | 586    |   |   |   | 636 |   |
| Off-System                             |   |               | 1,116  |   |   |   | 2,694 |   |
| Capacity Release                       |   |               | 10,189 |   |   |   | 8,449 |   |
| Total Throughput                       |   |               | 35,116 |   |   |   | 33,451 |   |

|                                   |   | Three Months Ended |    |
|----------------------------------------|--------|--------------------|---------|
|                                   |   | March 31,          |    |
|                                   |   | 2010               |    |   | 2009 |   |
| Utility Operating Revenues:            |   |               |    |   |   |   |
| Firm Sales -                           |   |               |    |   |   |   |
| Residential                            |   | $                  | 137,515 |   |   | $ | 168,638 |   |
| Commercial                             |   |               | 29,623  |   |   |   | 36,526 |   |
| Industrial                             |   |               | 1,795   |   |   |   | 1,811 |   |
| Cogeneration & Electric Generation |   |               | 411     |   |   |   | 273 |   |
| Firm Transportation -                  |   |               |    |   |   |   |   |   |
| Residential                            |   |               | 4,454   |   |   |   | 4,695 |   |
| Commercial                             |   |               | 8,599   |   |   |   | 7,914 |   |
| Industrial                             |   |               | 3,976   |   |   |   | 3,587 |   |
| Cogeneration & Electric Generation |   |               | 2,009   |   |   |   | 459 |   |
| Total Firm Revenues                    |   |               | 188,382 |   |   |   | 223,903 |   |
|                                   |   |               |    |   |   |   |   |   |
| Interruptible Sales                    |   |               | 48      |   |   |   | 40 |   |
| Interruptible Transportation           |   |               | 607     |   |   |   | 557 |   |
| Off-System                             |   |               | 6,924   |   |   |   | 16,902 |   |
| Capacity Release                       |   |               | 518     |   |   |   | 1,440 |   |
| Other                                  |   |               | 237     |   |   |   | 271 |   |
| Total Utility Operating Revenues       |   |               | 196,716 |   |   |   | 243,113 |   |
|                                   |   |               |    |   |   |   |   |   |
| Less:                                  |   |               |    |   |   |   |   |   |
| Cost of Sales                          |   |               | 116,875 |   |   |   | 165,977 |   |
| Conservation Recoveries*               |   |               | 3,119   |   |   |   | 3,265 |   |
| RAC Recoveries*                        |   |               | 1,741   |   |   |   | 1,209 |   |
| EET Recoveries*                        |   |               | 179     |   |   |   | - |   |
| Revenue Taxes                          |   |               | 3,752   |   |   |   | 4,071 |   |
| Utility Margin                         |   | $                  | 71,050  |   |   | $ | 68,591 |   |

----

Table of Contents 

| Margin:                                              |   |   |   |   |   |   |   |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Residential                                          |   | $      | 45,300 |   |   | $      | 45,590 |   |
| Commercial and Industrial                            |   |   | 14,958 |   |   |   | 15,429 |   |
| Cogeneration and Electric Generation                 |   |   | 709    |   |   |   | 340    |   |
| Interruptible                                        |   |   | 38     |   |   |   | 46     |   |
| Off-system & Capacity Release                    |   |   | 309    |   |   |   | 702    |   |
| Other Revenues                                       |   |   | 236    |   |   |   | 270    |   |
| Margin Before Weather Normalization & Decoupling |   |   | 61,550 |   |   |   | 62,377 |   |
| CIRT Mechanism                                       |   |   | 2,024  |   |   |   | -      |   |
| CIP Mechanism                                        |   |   | 7,442  |   |   |   | 6,214  |   |
| EET Mechanism                                        |   |   | 34     |   |   |   | -      |   |
| Utility Margin                                       |   | $      | 71,050 |   |   | $      | 68,591 |   |
|                                                 |   |   |   |   |   |   |   |   |
| Degree Days:                                         |   |   | 2,433  |   |   |   | 2,518  |   |

|                                |   | Three Months EndedMarch 31, |   |
|-------------------------------------|--------|-----------------------------|--------|
|                                |   | 2010                        |   |   | 2009 |   |
| Net Income Benefit:                 |   |                        |   |   |   |   |
| CIP – Weather Related         |   | $                           | 0.4    |   |   | $ | (0.6 | ) |
| CIP – Usage Related           |   |                        | 4.0    |   |   |   | 4.3 |   |
| Total Net Income Benefit            |   | $                           | 4.4    |   |   | $ | 3.7 |   |
|                                |   |                        |   |   |   |   |   |   |
| Weather Compared to 20-Year Average |   | 0.2% colder                 |   |   | 3.7% colder |   |
| Weather Compared to Prior Year      |   | 3.4% warmer                 |   |   | 11.2% colder |   |

----

Table of Contents 

|                   |   | Three MonthsEnded March 31, |   |
|------------------------|--------|-----------------------------|--------|
|                   |   | 2010 vs. 2009               |   |
|                   |   |                        |   |
| Operations             |   | $                           | 447    |   |
| Maintenance            |   |                        | 660    |   |
| Depreciation           |   |                        | 446    |   |
| Energy and Other Taxes |   |                        | (273   |  ) |

----

Table of Contents 

|                      |   | Total Facility |    |   | Usage  |   |    | Available Liquidity |   | Expiration Date |
|---------------------------|--------|----------------|---------|--------|--------|--------|---------|---------------------|--------|-----------------|
|                      |   |           |    |   |   |   |    |                |   |            |
| Revolving Credit Facility |   | $              | 100,000 |   |   | $      | 40,000  |                |   | $               | 60,000 |   | August 2011 |
| Line of Credit            |   |           | 40,000  |   |   |   | — |                |   |            | 40,000 |   | December 2010 (A) |
| Uncommitted Bank Lines    |   |           | 55,000  |   |   |   | 22,000  |                |   |            | 33,000 |   | Various |
|                      |   |           |    |   |   |   |    |                |   |            |   |   |   |
| Total                     |   | $              | 195,000 |   |   | $      | 62,000  |                |   | $               | 133,000 |   |   |

----

Table of Contents 

|            |   | As ofMarch 31,2010 |   |   | As ofDecember 31,2009 |   |
|-----------------|--------|--------------------|--------|--------|-----------------------|--------|
|            |   |               |   |   |                  |   |
| Common Equity   |   |               | 55.7   | %      |                  |   | 52.2 | % |
| Long-Term Debt  |   |               | 36.7   |   |                  |   | 30.3 |   |
| Short-Term Debt |   |               | 7.6    |   |                  |   | 17.5 |   |
|            |   |               |   |   |                  |   |   |   |
| Total           |   |               | 100.0  | %      |                  |   | 100.0 | % |

----

Table of Contents 

| Twelve MonthsEnded Mar. 31, |   |   | Year Ended December 31, |   |
|-----------------------------|--------|--------|-------------------------|--------|
| 2010                        |   |   | 2009                    |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                        |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        | 5.1x   |   |                    |   | 4.9x |   |   |   | 4.4x |   |   |   | 4.1x |   |   |   | 3.7x |   |   |   | 4.0x |   |

Item 

| Assets                         |   |                |   |   |                |   |   |   |   |
|--------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|--------|--------|
| Source of Fair Value           |   | Maturity< 1 Year |   |   | Maturity1 - 3 Years |   |   | Total  |   |
|                           |   |                |   |   |                |   |   |   |   |
| Prices Actively Quoted (NYMEX) |   | $                   | -      |   |                | $      | 70     |   |   | $ | 70 |   |
|                           |   |                |   |   |                |   |   |   |   |   |   |   |
| Prices Provided by Other       |   |                | 11     |   |                |   | 38     |   |   |   | 49 |   |
|                           |   |                |   |   |                |   |   |   |   |   |   |   |
| Total                          |   | $                   | 11     |   |                | $      | 108    |   |   | $ | 119 |   |

| Liabilities                                       |   |        |   |   |        |   |   |   |   |
|---------------------------------------------------|--------|-------------|--------|--------|-------------|--------|--------|--------|--------|
|                                              |   | Maturity    |   |   | Maturity    |   |   |   |   |
| Source of Fair Value                              |   | < 1 Year |   |   | 1 - 3 Years |   |   | Total  |   |
|                                              |   |        |   |   |        |   |   |   |   |
| Prices Actively Quoted (NYMEX)                    |   | $           | 19,063 |   |        | $      | 1,942  |   |   | $ | 21,005 |   |
|                                              |   |        |   |   |        |   |   |   |   |   |   |   |
| Prices Provided by Other External Sources (Basis) |   |        | 3,191  |   |        |   | 166    |   |   |   | 3,357 |   |
|                                              |   |        |   |   |        |   |   |   |   |   |   |   |
| Total                                             |   | $           | 22,254 |   |        | $      | 2,108  |   |   | $ | 24,362 |   |

----

Table of Contents 

| Net Derivatives — Energy Related Liability, January 1, 2010   |   |  $ | (9,173  | )      |
|---------------------------------------------------------------------|--------|---------|---------|--------|
| Contracts Settled During the Three Months ended March 31, 2010, Net |   |    | 8,949   |   |
| Other Changes in Fair Value from Continuing and New Contracts, Net  |   |    | (24,019 | )      |
| Net Derivatives — Energy Related Liability, March 31, 2010    |   | $       | (24,243 | )      |

| 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 |

Item 

----

Table of Contents 

PART 

Item 

Item 

| 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). |

SIGNATURES

| Dated: May 7, 2010 | By:    | /s/ Edward J. Graham                                |
|--------------------|--------|-----------------------------------------------------|
|               |   | Edward J. Graham                                    |
|               |   | President & Chief Executive Officer             |
|               |   |                                                |
|               |   |                                                |
| Dated: May 7, 2010 | By:    | /s/ David A. Kindlick                               |
|               |   | David A. Kindlick                                   |
|               |   | Senior Vice President & Chief Financial Officer |

----