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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D. C. 20549**

**FORM      10-K**

|   | [X] | ANNUAL                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------|

**December      31, 2005**

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

|   |   | For                the transition period from ____________to                ______________. |
|--------|--------|---------------------------------------------------------------------------------------------|

**000-22211**

**SOUTH      JERSEY GAS COMPANY**

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

**1      South Jersey Plaza, Folsom, New Jersey 08037**

**(609)      561-9000**

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**PART      I**

**Item      1. Business**

**General**

**Financial      Information About Industry Segments**

**Units      of Measurement**

|   | For                Natural Gas: |                                     |
|--------|---------------------------------|------------------------------------------|
|   | 1                Mcf            | =                One thousand cubic feet |
|   | 1                MMcf           | =                One million cubic feet  |
|   | 1                Bcf            | =                One billion cubic feet  |

**Description      of Business**

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**Rates      and Regulation**

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*Electric      Discount and Energy Competition Act*
*unbundling*

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**Raw      Materials**

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**Patents      and Franchises**

**Seasonal      Aspects**

**Working      Capital Practices**

**Customers**

**Backlog**

**Government      Contracts**

**Competition**

**Research**

**Environmental      Matters**

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**Employees**

**Financial      Information About Foreign and Domestic Operations and Export      Sales**

**Item      1A. Risk Factors**

|   | · | **SJG’s                business activities are concentrated in southern New                Jersey.**                Changes in the economies of southern New Jersey and surrounding regions                could negatively impact the growth opportunities available to SJG                and the                financial condition of customers and prospects of                SJG. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | **SJG                may not be able to respond effectively to competition, which may                negatively impact SJG’s financial performance or condition.**Regulatory                initiatives may provide or enhance opportunities for competitors                that                could reduce utility income obtained from existing or prospective                customers. Also, competitors may be able to provide superior or less                costly products or services based upon currently available or newly                developed technologies. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | **Warm                weather or high commodity costs could result in reduced demand for                some of                our energy products and services.**While                SJG has a temperature adjustment clause that protects its revenues                and                gross margin against temperatures that are higher than normal, the                clause                does not protect against changes in the amount of gas that customers                use                at specific temperature levels. Also, customers could reduce gas                consumption in response to high gas costs. Lower customer energy                utilization levels will reduce SJG’s net income. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | **High                natural gas prices could cause more of SJG’s receivables to be                uncollectible.**Higher                levels of uncollectibles from either residential or commercial customers                would negatively impact SJG’s income and could result in higher working                capital requirements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | **SJG’s                net income could decrease if it is required to incur additional costs                to comply with new governmental safety, health or environmental                legislation.**SJG                is subject to extensive and changing federal and state laws and                regulations that impact many aspects of its business; including the                storage, transportation and distribution of natural gas, as well                as the                remediation of environmental contamination at former manufactured                gas                plant facilities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | **Increasing                  interest rates will negatively impact the net income of                  SJG.**                  SJG is capital intensive, resulting in the incurrence of significant                  amounts of debt financing. While all of SJG’s existing long-term debt has                  been issued at fixed rates, new issues of long-term debt and all                  variable                  rate short-term debt is exposed to the impact of rising interest                  rates. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | **The                inability to obtain natural gas would negatively impact the financial                performance of SJG.**                 SJG’s business is based upon the ability to deliver natural gas to                customers. Disruption in the production of natural gas or transportation                of that gas to SJG from its suppliers, could prevent SJG from completing                sales to its customers. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      1B. Unresolved Staff Comments**

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**Item      2. Properties**

**Item      3. Legal Proceedings**

**Item      4. Submission Of Matters To A Vote of Security Holders**

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**PART      II**

**Item      5. Market for the Registrant’s Common Stock and**
** **

**Related      Stockholder Matters**

**Item      6. Selected Financial Data**

|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
|                                                                                                                                                                  |   |   | Year                  Ended December 31, |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                             |   |   | 2005                                     |   |   | 2004      |   |   | 2003      |   |   | 2002      |   |   | 2001      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Operating                  Revenues                                                                                                                              |   | $      | 587,212                                  |   | $      | 508,827   |   | $      | 536,442   |   | $      | 424,027   |   | $      | 481,449   |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Operating                  Income                                                                                                                                |   | $      | 77,676                                   |   | $      | 71,451    |   | $      | 65,420    |   | $      | 60,874    |   | $      | 60,462    |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Income                  before Preferred Dividend                                                                                                                |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Requirement                  and Discontinued Operations                                                                                                         |   | $      | 34,592                                   |   | $      | 31,597    |   | $      | 26,743    |   | $      | 23,357    |   | $      | 21,666    |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Preferred                  Dividend Requirements                                                                                                                 |   |   | (45                                      | )      |   | (135      | )      |   | (135      | )      |   | (135      | )      |   | (139      | )      |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Income                  from Continuing Operations                                                                                                               |   |   | 34,547                                   |   |   | 31,462    |   |   | 26,608    |   |   | 23,222    |   |   | 21,527    |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Loss                  from Discontinued Operations                                                                                                               |   |   | -                                        |   |   | -         |   |   | -         |   |   | (29       | )      |   | (207      | )      |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Net                  Income Applicable to Common Stock                                                                                                           |   | $      | 34,547                                   |   | $      | 31,462    |   | $      | 26,608    |   | $      | 23,193    |   | $      | 21,320    |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Average                  Shares of Common Stock Outstanding                                                                                                      |   |   | 2,339,139                                |   |   | 2,339,139 |   |   | 2,339,139 |   |   | 2,339,139 |   |   | 2,339,139 |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Ratio                  of Earnings to Fixed Charges (1)                                                                                                          |   |   | 4.0x                                     |   |   | 3.9x      |   |   | 3.3x      |   |   | 2.9x      |   |   | 2.6x      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                                  |   |   | As                  of December 31,      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                             |   |   | 2005                                     |   |   | 2004      |   |   | 2003      |   |   | 2002      |   |   | 2001      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Property,                  Plant and Equipment, Net                                                                                                              |   | $      | 788,787                                  |   | $      | 732,781   |   | $      | 684,823   |   | $      | 651,486   |   | $      | 622,115   |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Total                  Assets                                                                                                                                    |   | $      | 1,168,153                                |   | $      | 1,007,733 |   | $      | 956,537   |   | $      | 926,318   |   | $      | 898,604   |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Capitalization:                                                                                                                                                  |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|     Common                  Equity (2)                                                                                                       |   | $      | 344,568                                  |   | $      | 302,827   |   | $      | 266,953   |   | $      | 212,621   |   | $      | 205,982   |   |
|     Preferred                  Stock                  (3)                                                                                    |   |   | -                                        |   |   | 1,690     |   |   | 1,690     |   |   | 1,690     |   |   | 1,690     |   |
|     Long-Term                  Debt                                                                                                          |   |   | 272,235                                  |   |   | 282,008   |   |   | 263,781   |   |   | 235,098   |   |   | 266,329   |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|         Total                                                                                                            |   | $      | 616,803                                  |   | $      | 586,525   |   | $      | 532,324   |   | $      | 449,409   |   | $      | 474,001   |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| (1)                  The ratio of earnings to fixed charges represents, on a pre-tax                  basis, the                  number of times earnings cover |   |   |
| fixed                  charges. Earnings consist of net income, to which has been added                  fixed                  charges and taxes based on       |   |   |                                     |   |
| income                  of the company before discontinued operations. Fixed charges consist                  of                  interest charges and           |   |   |                                     |   |
| preferred                  securities dividend requirements.                                                                                                     |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| (2)                  Included are cash contributions to capital as follows: 2005 - $30.0                  million; 2004 - $15.0 million; 2003 - $20.0 million;   |   |   |                                     |   |
| 2002                  - $2.5 million; 2001 - $7.0 million.                                                                                                       |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
| (3)                  On May 2, 2005, we redeemed all of our 8% Redeemable Cumulative                  Preferred Stock.                                      |   |   |                                     |   |
|                                                                                                                                                                  |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |
|                                                                                                                                                             |   |   |                                     |   |   |      |   |   |      |   |   |      |   |   |      |   |

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| SOUTH                  JERSEY GAS COMPANY COMPARATIVE OPERATING STATISTICS                                                                   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|
|     Comparative                  statistical data related to revenues and gas throughput is as                  follows: |   |   |
|                                                                                                                                         |   | 2005 |   | 2004 |   | 2003 |   | 2002 |   | 2001 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  Revenues (Thousands):                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Firm                  Sales -                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Residential                                                                                                          |   | $ | 252,150 |   | $ | 182,826 |   | $ | 193,725 |   | $ | 174,252 |   | $ | 201,531 |   |
|     Commercial                                                                                                           |   |   | 88,321 |   |   | 57,826 |   |   | 58,749 |   |   | 52,300 |   |   | 76,416 |   |
|     Industrial                                                                                                           |   |   | 4,428 |   |   | 5,223 |   |   | 5,635 |   |   | 4,512 |   |   | 4,250 |   |
|     Cogeneration                  & Electric Generation                                                              |   |   | 17,916 |   |   | 9,496 |   |   | 6,513 |   |   | 9,363 |   |   | 7,405 |   |
| Firm                  Transportation -                                                                                                       |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|     Residential                                                                                                          |   |   | 25,296 |   |   | 42,375 |   |   | 40,067 |   |   | 23,172 |   |   | 11,280 |   |
|     Commercial                                                                                                           |   |   | 14,043 |   |   | 22,142 |   |   | 22,464 |   |   | 15,958 |   |   | 8,423 |   |
|     Industrial                                                                                                           |   |   | 12,999 |   |   | 15,732 |   |   | 11,500 |   |   | 10,065 |   |   | 9,591 |   |
|     Cogeneration                  & Electric Generation                                                              |   |   | 259 |   |   | 323 |   |   | 49 |   |   | 241 |   |   | 271 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                  Firm Revenues                                                         |   |   | 415,412 |   |   | 335,943 |   |   | 338,702 |   |   | 289,863 |   |   | 319,167 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interruptible                                                                                                                                |   |   | 1,498 |   |   | 1,641 |   |   | 1,682 |   |   | 1,142 |   |   | 1,485 |   |
| Interruptible                  Transportation                                                                                                |   |   | 1,898 |   |   | 1,462 |   |   | 1,121 |   |   | 1,567 |   |   | 1,268 |   |
| Off-System                                                                                                                                   |   |   | 153,637 |   |   | 151,161 |   |   | 176,555 |   |   | 115,714 |   |   | 145,530 |   |
| Capacity                  Release & Storage                                                                                              |   |   | 12,808 |   |   | 10,157 |   |   | 6,686 |   |   | 5,365 |   |   | 5,596 |   |
| Appliance                  Service                                                                                                           |   |   | - |   |   | 6,362 |   |   | 9,596 |   |   | 8,386 |   |   | 6,136 |   |
| Other                                                                                                                                        |   |   | 1,959 |   |   | 2,101 |   |   | 2,100 |   |   | 1,990 |   |   | 2,267 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                  Operating Revenues                                                    |   | $ | 587,212 |   | $ | 508,827 |   | $ | 536,442 |   | $ | 424,027 |   | $ | 481,449 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Throughput                  (MMcf):                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Firm                  Sales -                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Residential                                                                                                          |   |   | 18,644 |   |   | 14,723 |   |   | 15,843 |   |   | 15,519 |   |   | 17,390 |   |
|     Commercial                                                                                                           |   |   | 7,287 |   |   | 5,198 |   |   | 5,351 |   |   | 5,273 |   |   | 7,544 |   |
|     Industrial                                                                                                           |   |   | 196 |   |   | 187 |   |   | 212 |   |   | 202 |   |   | 248 |   |
|     Cogeneration                  & Electric Generation                                                              |   |   | 1,669 |   |   | 1,095 |   |   | 777 |   |   | 1,986 |   |   | 1,519 |   |
| Firm                  Transportation -                                                                                                       |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|     Residential                                                                                                          |   |   | 5,512 |   |   | 9,059 |   |   | 8,774 |   |   | 5,174 |   |   | 2,887 |   |
|     Commercial                                                                                                           |   |   | 5,045 |   |   | 7,394 |   |   | 7,639 |   |   | 5,846 |   |   | 3,789 |   |
|     Industrial                                                                                                           |   |   | 15,492 |   |   | 16,441 |   |   | 15,774 |   |   | 15,292 |   |   | 14,795 |   |
|     Cogeneration                  & Electric Generation                                                              |   |   | 335 |   |   | 236 |   |   | 27 |   |   | 158 |   |   | 614 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                  Firm Throughput                                                       |   |   | 54,180 |   |   | 54,333 |   |   | 54,397 |   |   | 49,450 |   |   | 48,786 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interruptible                                                                                                                                |   |   | 114 |   |   | 172 |   |   | 220 |   |   | 198 |   |   | 207 |   |
| Interruptible                  Transportation                                                                                                |   |   | 2,716 |   |   | 2,463 |   |   | 2,247 |   |   | 3,189 |   |   | 2,638 |   |
| Off-System                                                                                                                                   |   |   | 14,411 |   |   | 21,294 |   |   | 27,041 |   |   | 29,980 |   |   | 30,117 |   |
| Capacity                  Release & Storage                                                                                              |   |   | 82,490 |   |   | 54,585 |   |   | 41,119 |   |   | 38,048 |   |   | 27,187 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                  Throughput                                                            |   |   | 153,911 |   |   | 132,847 |   |   | 125,024 |   |   | 120,865 |   |   | 108,935 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Number                  of Customers at Year End:                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Residential                                                                                                          |   |   | 300,652 |   |   | 292,185 |   |   | 283,722 |   |   | 275,979 |   |   | 268,046 |   |
|     Commercial                                                                                                           |   |   | 21,322 |   |   | 20,939 |   |   | 20,405 |   |   | 19,966 |   |   | 19,542 |   |
|     Industrial                                                                                                           |   |   | 450 |   |   | 455 |   |   | 435 |   |   | 429 |   |   | 420 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                  Customers                                                             |   |   | 322,424 |   |   | 313,579 |   |   | 304,562 |   |   | 296,374 |   |   | 288,008 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Maximum                  Daily Sendout (MMcf)                                                                                                |   |   | 424 |   |   | 428 |   |   | 422 |   |   | 344 |   |   | 326 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Annual                  Degree Days                                                                                                          |   |   | 4,777 |   |   | 4,641 |   |   | 4,929 |   |   | 4,380 |   |   | 4,495 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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**Item      7. Management’s Discussion and Analysis of Financial      Condition**

**and      Results of Operations **

**Overview**

|   | · | sell                natural gas and pipeline transportation capacity (off-system sales)                on a                wholesale basis to various customers on the interstate pipeline system; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | transport                natural gas purchased directly from producers or suppliers for our                own                sales and for some of our customers; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | serviced                appliances via the sale of appliance service programs, as well as                on a                time and materials basis, through September 1, 2004, at which time                the                business line was transferred into an affiliate by common ownership,                South                Jersey Energy Service Plus, LLC. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Business      Model*

*Customer      Growth*

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*Regulatory      Environment*

*Weather      Conditions*

*Changes      in Natural Gas Prices*

*Changes      in Interest Rates*

*Labor      and Benefit Costs*

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*Balance      Sheet Strength*

**Forward-Looking      Statement & Risk Factors**

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**Critical      Accounting Policies**

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**New      Accounting Pronouncements**

**Temperature      Adjustment Clause**

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**Regulatory      Actions**

**Environmental      Remediation**

**Competition**

**Customer      Choice Legislation **

*Electric      Discount and Energy Competition Act of 1999*

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**Results      of Operations**

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|                                       |   |   | 2005                vs. 2004 |   |   | 2004                vs. 2003 |   |
|---------------------------------------|--------|--------|------------------------------|--------|--------|------------------------------|--------|
|                                  |   |   |                         |   |   |                         |   |
| Operations                            |   | $      | (1,255                       | )      | $      | 3,971                        |   |
| Maintenance                           |   |   | 42                           |   |   | 94                           |   |
| Depreciation                          |   |   | (1,142                       | )      |   | (615                         | )      |
| Energy                and Other Taxes |   |   | 423                          |   |   | (267                         | )      |

----

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**Liquidity      and Capital Resources **

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|                                             |   | As                of December 31, |   |
|--------------------------------------------------|--------|-----------------------------------|--------|
|                                             |   |                              | 2005   |   |   | 2004 |   |
|                                             |   |                              |   |   |   |   |   |
| Common                and Preferred Stock Equity |   |                              | 49     | % |   | 48 | % |
| Long-Term                Debt                    |   |                              | 38     | % |   | 44 | % |
| Short-Term                Debt                   |   |                              | 13     | % |   | 8 | % |
|                                             |   |                              |   |   |   |   |   |
| Total                                            |   |                              | 100    | % |   | 100 | % |

**Capital      Expenditures, Commitments and Contingencies **

----

|                                                         |   |   |    | Up                to  |   | Years                    |   | Years                    |    | More                than |   |
|--------------------------------------------------------------|--------|--------|---------|-----------------------|--------|--------------------------|--------|--------------------------|---------|--------------------------|--------|
| Contractual                Cash Obligations                  |   | Total  |    | 1                Year |   | 2                & 3 |   | 3                & 5 |    | 5                Years   |   |
|                                                         |   |   |    |                  |   |                     |   |                     |    |                     |   |   |   |   |   |   |
| Long-Term                Debt                                |   | $      | 274,508 |                  | $      | 2,273                    |   | $                        | 2,270   |                     | $      | 10,000 |   | $ | 259,965 |   |
| Interest                on Long-Term Debt                    |   |   | 226,203 |                  |   | 16,426                   |   |                     | 32,380  |                     |   | 32,287 |   |   | 145,110 |   |
| Operating                Leases                              |   |   | 480     |                  |   | 273                      |   |                     | 175     |                     |   | 32 |   |   | - |   |
| Construction                Obligations                      |   |   | 6,966   |                  |   | 6,868                    |   |                     | 98      |                     |   | - |   |   | - |   |
| Commodity                Supply                              |   |   |    |                  |   |                     |   |                     |    |                     |   |   |   |   |   |   |
|                     Purchase Obligations |   |   | 239,892 |                  |   | 44,751                   |   |                     | 78,556  |                     |   | 46,013 |   |   | 70,572 |   |
| New                Jersey Clean Energy Program               |   |   |    |                  |   |                     |   |                     |    |                     |   |   |   |   |   |   |
|                     Funding (Note 2)     |   |   | 20,600  |                  |   | 5,600                    |   |                     | 15,000  |                     |   | - |   |   | - |   |
| Other                Purchase Obligations                    |   |   | 5,033   |                  |   | 2,183                    |   |                     | 1,800   |                     |   | 1,050 |   |   | - |   |
|                                                         |   |   |    |                  |   |                     |   |                     |    |                     |   |   |   |   |   |   |
| Total                Contractual Cash Obligations            |   | $      | 773,682 |                  | $      | 78,374                   |   | $                        | 130,279 |                     | $      | 89,382 |   | $ | 475,647 |   |

----

**Market      Risks**

----

| Assets                                |   |                                      |                                | Maturity                  |   | Maturity                                  |   | Beyond                 |                       |   |   |
|---------------------------------------|--------|-------------------------------------------|-------------------------------------|---------------------------|--------|-------------------------------------------|--------|------------------------|----------------------------|--------|--------|
|                                  |   |  Source                of Fair Value |                                | <1                Year |   | 1                -                3 Years |   | 3                Years |                       | Total  |   |
|                                  |   |                                      |                                |                      |   |                                      |   |                   |                       |   |   |
| Prices                Actively Quoted |   |                                      | NYMEX                               |                      | $      | 6,342                                     |   | $                      | 271                        |   | $      | - |   | $ | 6,613 |   |
| Other                External Sources |   |                                      | Basis                               |                      |   | 154                                       |   |                   | -                          |   |   | - |   |   | 154 |   |
| Total                                 |   |                                      |                                |                      | $      | 6,496                                     |   | $                      | 271                        |   | $      | - |   | $ | 6,767 |   |
|                                  |   |                                      |                                |                      |   |                                      |   |                   |                       |   |   |   |   |   |   |   |
| Liabilities                           |   |                                      |                                |                      |   | Maturity                                  |   |                   | Maturity                   |   |   | Beyond |   |   |   |   |
|                                  |   |                                      | Source                of Fair Value |                      |   | <1                Year                 |   |                   | 1                - 3 Years |   |   | 3                Years |   |   | Total |   |
|                                  |   |                                      |                                |                      |   |                                      |   |                   |                       |   |   |   |   |   |   |   |
| Prices                Actively Quoted |   |                                      | NYMEX                               |                      | $      | 2,914                                     |   | $                      | 84                         |   | $      | - |   | $ | 2,998 |   |
| Other                External Sources |   |                                      | Basis                               |                      |   | 3,283                                     |   |                   | -                          |   |   | - |   |   | 3,283 |   |
| Total                                 |   |                                      |                                |                      | $      | 6,197                                     |   | $                      | 84                         |   | $      | - |   | $ | 6,281 |   |

| Net                Derivatives — Energy Related Liability, January 1, 2005                 |   | $      | (527   | )      |
|--------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Contracts                Settled During 2005, Net                                                |   |   | (7,972 | )      |
| Other                Changes in Fair Value from Continuing and New Contracts,                Net |   |   | 8,985  |   |
| Net                Derivatives — Energy Related Asset, December 31, 2005                   |   | $      | 486    |   |

----

**Ratio      of Earnings to Fixed Charges**

|                                 Year                Ended December                31,                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 2004 |   |   | 2003 |   |   | 2002 |   |   | 2001 |   |
| 4.0x                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 3.9x |   |   | 3.3x |   |   | 2.9x |   |   | 2.6x |   |

**Item      7A. Quantitative and Qualitative Disclosures about Market      Risks**

----

**Item      8. Financial Statements and Supplementary Data**

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

----

| **SOUTH                  JERSEY GAS COMPANY**                                                              |   |
|------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **STATEMENTS                  OF INCOME**                                                                  |   |
| (In                  Thousands)                                                                            |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   | Year                  Ended December 31, |   |
|                                                                                                       |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Revenues**                                                                    |   | $ | 587,212 |   | $ | 508,827 |   | $ | 536,442 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses:**                                                                   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of Sales                                                                        |   |   | 414,952 |   |   | 340,860 |   |   | 375,815 |   |
| Operations                                                                                            |   |   | 54,983 |   |   | 56,238 |   |   | 54,141 |   |
| Maintenance                                                                                           |   |   | 5,814 |   |   | 5,772 |   |   | 5,678 |   |
| Depreciation                                                                                          |   |   | 21,906 |   |   | 23,048 |   |   | 23,663 |   |
| Energy                  and Other Taxes                                                               |   |   | 11,881 |   |   | 11,458 |   |   | 11,725 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|  Total                  Operating Expenses                                                            |   |   | 509,536 |   |   | 437,376 |   |   | 471,022 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Income**                                                                      |   |   | 77,676 |   |   | 71,451 |   |   | 65,420 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Other                  Income and Expense**                                                              |   |   | 212 |   |   | 886 |   |   | 111 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Interest                  Charges**                                                                      |   |   | (18,156 | ) |   | (17,906 | ) |   | (19,304 | ) |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Income                  Before Income Taxes**                                                            |   |   | 59,732 |   |   | 54,431 |   |   | 46,227 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Income                  Taxes**                                                                          |   |   | (25,185 | ) |   | (22,969 | ) |   | (19,619 | ) |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Net                  Income Applicable to Common Stock**                                                 |   | $ | 34,547 |   | $ | 31,462 |   | $ | 26,608 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of the financial                  statements. |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |

----

| **SOUTH                  JERSEY GAS COMPANY**                                                              |   |
|------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **STATEMENTS                  OF CASH FLOWS**                                                              |   |
| (In                  Thousands)                                                                            |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   | Year                  Ended December 31, |   |
|                                                                                                       |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Operating Activities:**                                                 |   |   |   |   |   |   |   |   |   |   |
| Net                  Income                                                                                |   | $ | 34,547 |   | $ | 31,462 |   | $ | 26,608 |   |
| Adjustments                  to Reconcile Net Income to Net Cash                                           |   |   |   |   |   |   |   |   |   |   |
| Provided                  by Operating Activities:                                                         |   |   |   |   |   |   |   |   |   |   |
| Depreciation                  and Amortization                                                             |   |   | 24,717 |   |   | 25,831 |   |   | 26,627 |   |
| Provision                  for Losses on Accounts Receivable                                               |   |   | 2,073 |   |   | 816 |   |   | 3,084 |   |
| Revenues                  and Fuel Costs Deferred - Net                                                    |   |   | (34,742 | ) |   | 14,582 |   |   | 29,874 |   |
| Deferred                  and Non-current Income Taxes and Credits - Net                                   |   |   | 25,662 |   |   | 13,982 |   |   | 1,225 |   |
| Environmental                  Remediation Costs - Net                                                     |   |   | (4,069 | ) |   | (2,634 | ) |   | 2,323 |   |
| Additional                  Pension Contributions                                                          |   |   | (1,390 | ) |   | (8,028 | ) |   | (5,200 | ) |
| Gas                  Plant Cost of Removal                                                                 |   |   | (985 | ) |   | (1,107 | ) |   | (925 | ) |
| Changes                  in:                                                                               |   |   |   |   |   |   |   |   |   |   |
| Accounts                  Receivable                                                                  |   |   | (22,761 | ) |   | 7,871 |   |   | 6,854 |   |
| Inventories                                                                                           |   |   | (23,579 | ) |   | (7,713 | ) |   | (18,065 | ) |
| Prepayments                  and Other Current Assets                                                 |   |   | (780 | ) |   | (311 | ) |   | 1,118 |   |
| Prepaid                  and Accrued Taxes - Net                                                      |   |   | (5,934 | ) |   | (11,536 | ) |   | 4,888 |   |
| Accounts                  Payable and Other Accrued Liabilities                                       |   |   | 45,755 |   |   | 10,111 |   |   | (376 | ) |
| Other                  Assets                                                                         |   |   | 2,909 |   |   | 817 |   |   | 462 |   |
| Other                  Liabilities                                                                    |   |   | 1,507 |   |   | 417 |   |   | (993 | ) |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|  Net                  Cash Provided by Operating Activities                                           |   |   | 42,930 |   |   | 74,560 |   |   | 77,504 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Investing Activities:**                                                 |   |   |   |   |   |   |   |   |   |   |
| Return                  of Investment in Affiliate                                                         |   |   | - |   |   | - |   |   | 1,082 |   |
| Capital                  Expenditures                                                                      |   |   | (70,120 | ) |   | (66,308 | ) |   | (52,284 | ) |
| Purchase                  of Available-for-Sale Securities                                                 |   |   | - |   |   | (338 | ) |   | (339 | ) |
| Proceeds                  from Sale of Appliance Service Operations                                        |   |   | - |   |   | 2,668 |   |   | - |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|  Net                  Cash Used in Investing Activities                                               |   |   | (70,120 | ) |   | (63,978 | ) |   | (51,541 | ) |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Financing Activities:**                                                 |   |   |   |   |   |   |   |   |   |   |
| Net                  Borrowing (Repayments) of Lines of Credit                                             |   |   | 34,000 |   |   | (34,200 | ) |   | (66,700 | ) |
| Proceeds                  from Issuance of Long-Term Debt                                                  |   |   | 10,000 |   |   | 40,000 |   |   | 110,000 |   |
| Principal                  Repayments of Long-Term Debt                                                    |   |   | (22,773 | ) |   | (21,773 | ) |   | (86,740 | ) |
| Redemption                  of Preferred Stock                                                             |   |   | (1,690 | ) |   | - |   |   | - |   |
| Dividends                  on Common Stock                                                                 |   |   | (22,502 | ) |   | (9,123 | ) |   | - |   |
| Premium                  for Early Retirement of Debt                                                      |   |   | (184 | ) |   | - |   |   | (1,048 | ) |
| Payments                  for Issuance of Long-Term Debt                                                   |   |   | (420 | ) |   | (386 | ) |   | (1,845 | ) |
| Additional                  Investment by Shareholder                                                      |   |   | 30,000 |   |   | 15,000 |   |   | 20,000 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|  Net                  Cash Provided by (Used in) Financing Activities                                 |   |   | 26,431 |   |   | (10,482 | ) |   | (26,333 | ) |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Net                  Increase (Decrease) in Cash and Cash Equivalents**                                  |   |   | (759 | ) |   | 100 |   |   | (370 | ) |
| **Cash                  and Cash Equivalents at Beginning of Period**                                      |   |   | 3,310 |   |   | 3,210 |   |   | 3,580 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Cash                  and Cash Equivalents at End of Period**                                            |   | $ | 2,551 |   | $ | 3,310 |   | $ | 3,210 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                  Disclosures of Cash Paid During the Period for:**                          |   |   |   |   |   |   |   |   |   |   |
| Interest                  (Net of Amounts Applicable to Gas Cost                                           |   |   |   |   |   |   |   |   |   |   |
| Overcollections                  and Amounts Capitalized)                                             |   | $ | 18,899 |   | $ | 17,467 |   | $ | 19,805 |   |
| Income                  Taxes (Net of Refunds)                                                             |   | $ | 8,434 |   | $ | 14,594 |   | $ | 14,060 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                  Disclosures of Noncash Investing Activities:**                             |   |   |   |   |   |   |   |   |   |   |
| Capital                  property and equipment acquired on                                                |   |   |   |   |   |   |   |   |   |   |
| account                  but not paid at year-end                                                          |   | $ | 8,990 |   | $ | 4,531 |   | $ | 2,207 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of the financial                  statements. |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |

----

| **SOUTH                  JERSEY GAS COMPANY**                                                              |   |
|------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                       |   |   |   |   |   |   |   |
| **BALANCE                  SHEETS**                                                                        |   |
| (In                  Thousands, except share amounts)                                                      |   |
|                                                                                                            |   |   | December                  31, |   |
|                                                                                                       |   |   | 2005 |   |   | 2004 |   |
|                                                                                                       |   |   |   |   |   |   |   |
| **ASSETS**                                                                                                 |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |
| **Property,                  Plant and Equipment:**                                                        |   |   |   |   |   |   |   |
| Utility                  Plant, at original cost                                                           |   | $ | 1,030,029 |   | $ | 957,287 |   |
| Accumulated                  Depreciation and Amortization                                                 |   |   | (241,242 | ) |   | (224,506 | ) |
|                                                                                                       |   |   |   |   |   |   |   |
| Property,                  Plant and Equipment - Net                                                       |   |   | 788,787 |   |   | 732,781 |   |
|                                                                                                       |   |   |   |   |   |   |   |
| **Investments:**                                                                                           |   |   |   |   |   |   |   |
| Available-for-Sale                  Securities                                                             |   |   | 5,628 |   |   | 5,296 |   |
|                                                                                                       |   |   |   |   |   |   |   |
| **Current                  Assets:**                                                                       |   |   |   |   |   |   |   |
| Cash                  and Cash Equivalents                                                                 |   |   | 2,551 |   |   | 3,310 |   |
| Accounts                  Receivable                                                                       |   |   | 42,407 |   |   | 39,916 |   |
| Unbilled                  Revenues                                                                         |   |   | 53,648 |   |   | 34,861 |   |
| Provision                  for Uncollectibles                                                              |   |   | (3,461 | ) |   | (2,871 | ) |
| Natural                  Gas in Storage, average cost                                                      |   |   | 89,957 |   |   | 65,691 |   |
| Materials                  and Supplies, average cost                                                      |   |   | 3,866 |   |   | 4,553 |   |
| Deferred                  Income Taxes - Net                                                               |   |   | - |   |   | 147 |   |
| Prepaid                  Taxes                                                                             |   |   | 12,972 |   |   | 6,104 |   |
| Derivatives                  - Energy Related Assets                                                       |   |   | 6,496 |   |   | 1,273 |   |
| Other                  Prepayments and Current Assets                                                      |   |   | 2,858 |   |   | 2,078 |   |
|                                                                                                       |   |   |   |   |   |   |   |
| Total                  Current Assets                                                                 |   |   | 211,294 |   |   | 155,062 |   |
|                                                                                                       |   |   |   |   |   |   |   |
| **Regulatory                  Assets:**                                                                    |   |   |   |   |   |   |   |
| Environmental                  Remediation Costs:                                                          |   |   |   |   |   |   |   |
| Expended                  - Net                                                                            |   |   | 9,350 |   |   | 5,281 |   |
| Liability                  for Future Expenditures                                                         |   |   | 56,717 |   |   | 51,046 |   |
| Gross                  Receipts and Franchise Taxes                                                        |   |   | 480 |   |   | 924 |   |
| Income                  Taxes - Flowthrough Depreciation                                                   |   |   | 5,663 |   |   | 6,641 |   |
| Asset                  Retirement Obligation Costs                                                         |   |   | 19,986 |   |   | - |   |
| Deferred                  Fuel Costs                                                                       |   |   | 21,237 |   |   | - |   |
| Deferred                  Postretirement Benefit Costs                                                     |   |   | 2,646 |   |   | 3,024 |   |
| Societal                  Benefit Costs                                                                    |   |   | 2,691 |   |   | 4,562 |   |
| Premium                  for Early Retirement of Debt                                                      |   |   | 1,694 |   |   | 1,672 |   |
| Other                  Regulatory Assets                                                                   |   |   | 1,019 |   |   | 1,157 |   |
|                                                                                                       |   |   |   |   |   |   |   |
| Total                  Regulatory Assets                                                              |   |   | 121,483 |   |   | 74,307 |   |
|                                                                                                       |   |   |   |   |   |   |   |
| **Other                  Noncurrent Assets:**                                                              |   |   |   |   |   |   |   |
| Unamortized                  Debt Issuance Costs                                                           |   |   | 6,251 |   |   | 6,285 |   |
|     Prepaid                  Pension                                                   |   |   | 26,202 |   |   | 24,812 |   |
| Accounts                  Receivable - Merchandise                                                         |   |   | 6,472 |   |   | 7,101 |   |
| Derivatives                  - Energy Related Assets                                                       |   |   | 271 |   |   | - |   |
|     Other                                                                              |   |   | 1,765 |   |   | 2,089 |   |
|                                                                                                       |   |   |   |   |   |   |   |
|     Total                  Other Noncurrent Assets                                |   |   | 40,961 |   |   | 40,287 |   |
|                                                                                                       |   |   |   |   |   |   |   |
| Total                  Assets                                                                              |   | $ | 1,168,153 |   | $ | 1,007,733 |   |
|                                                                                                       |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of the financial                  statements. |   |   |   |   |   |   |   |

----

|                                                                                                         |   |   |                          |   |   |      |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------|--------|--------|-----------|--------|
|                                                                                                         |        |   |                          |   |   |      |   |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| **SOUTH                  JERSEY GAS COMPANY**                                                                |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| **BALANCE                  SHEETS**                                                                          |   |
| (In                  Thousands, except share amounts)                                                        |   |
|                                                                                                              |   |   | December                  31, |   |
|                                                                                                         |   |   | 2005                          |   |   | 2004      |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| **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                                           |   |   | 200,317                       |   |   | 170,317   |   |
| Accumulated                  Other Comprehensive Loss                                                        |   |   | (4,337                        | )      |   | (4,033    | )      |
| Retained                  Earnings                                                                           |   |   | 142,740                       |   |   | 130,695   |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| Total                  Common Equity                                                                    |   |   | 344,568                       |   |   | 302,827   |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| **Preferred                  Stock:**                                                                        |   |   |                          |   |   |      |   |
| Redeemable                  Cumulative Preferred 8% Series - Par Value $100 per share;                       |   |   |                          |   |   |      |   |
| Authorized                  41,966 shares; 0 and 16,904 shares outstanding at Dec. 31,                  2005 |   |   |                          |   |   |      |   |
| and                  2004, respectively                                                                      |   |   | -                             |   |   | 1,690     |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| **Long-Term                  Debt**                                                                          |   |   | 272,235                       |   |   | 282,008   |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| Total                  Capitalization                                                                   |   |   | 616,803                       |   |   | 586,525   |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| **Current                  Liabilities:**                                                                    |   |   |                          |   |   |      |   |
| Notes                  Payable                                                                               |   |   | 87,000                        |   |   | 53,000    |   |
| Current                  Maturities of Long-Term Debt                                                        |   |   | 2,273                         |   |   | 5,273     |   |
| Accounts                  Payable - Commodity                                                                |   |   | 87,620                        |   |   | 28,619    |   |
| Accounts                  Payable - Other                                                                    |   |   | 21,452                        |   |   | 30,407    |   |
| Derivatives                  - Energy Related Liabilities                                                    |   |   | 6,197                         |   |   | 1,800     |   |
| Derivatives                  - Other                                                                         |   |   | -                             |   |   | 344       |   |
| Deferred                  Income Taxes - Net                                                                 |   |   | 2,295                         |   |   | -         |   |
| Customer                  Deposits                                                                           |   |   | 9,323                         |   |   | 8,846     |   |
| Environmental                  Remediation Costs                                                             |   |   | 17,873                        |   |   | 13,531    |   |
| Taxes                  Accrued                                                                               |   |   | 2,162                         |   |   | 1,228     |   |
| Interest                  Accrued and Other Current Liabilities                                              |   |   | 12,077                        |   |   | 12,386    |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| Total                  Current Liabilities                                                              |   |   | 248,272                       |   |   | 155,434   |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| **Deferred                  Credits and Other Noncurrent Liabilities:**                                      |   |   |                          |   |   |      |   |
| Deferred                  Income Taxes - Net                                                                 |   |   | 162,542                       |   |   | 138,274   |   |
| Environmental                  Remediation Costs                                                             |   |   | 38,844                        |   |   | 37,515    |   |
| Regulatory                  Liabilities                                                                      |   |   | 54,002                        |   |   | 63,836    |   |
| Asset                  Retirement Obligations                                                                |   |   | 22,505                        |   |   | -         |   |
| Pension                  and Other Postretirement Benefits                                                   |   |   | 16,633                        |   |   | 17,701    |   |
| Investment                  Tax Credits                                                                      |   |   | 2,795                         |   |   | 3,129     |   |
| Derivatives                  - Energy Related Liabilites                                                     |   |   | 84                            |   |   | -         |   |
| Derivatives                  - Other                                                                         |   |   | 306                           |   |   | -         |   |
| Other                                                                                                        |   |   | 5,367                         |   |   | 5,319     |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| Total                  Deferred Credits and Other Noncurrent Liabilities                                |   |   | 303,078                       |   |   | 265,774   |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| Commitments                  and Contingencies (Note 12)                                                     |   |   |                          |   |   |      |   |
|      Total                  Capitalization and Liabilities                          |   | $      | 1,168,153                     |   | $      | 1,007,733 |   |
|                                                                                                         |   |   |                          |   |   |      |   |
|                                                                                                         |   |   |                          |   |   |      |   |
|                                                                                                         |   |   |                          |   |   |      |   |
| The                  accompanying notes are an integral part of the financial                  statements.   |   |   |                          |   |   |      |   |
|                                                                                                         |   |   |                          |   |   |      |   |

----

|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------------------------------|--------|--------|---------------------------------------------------------------|--------|--------|
| **SOUTH                  JERSEY GAS COMPANY**                                                                      |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| **STATEMENTS                  OF CHANGES IN COMMON EQUITY AND COMPREHENSIVE                  INCOME**              |   |
| (In                  Thousands)                                                                                    |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
|                                                                                                                    |   |   | Other                  Paid-in |   |   |                                                  |   |   | Accumulated                                                   |   |   |   |   |   |   |   |
|                                                                                                                    |   |   | Capital                  & |   |   |                                                  |   |   | Other                                                         |   |   |   |   |   |   |   |
|                                                                                                                    |   |   | Common                         |   |   | Premium                  on                           |   |   | Comprehensive                                                 |   |   | Retained |   |   |   |   |
|                                                                                                                    |   |   | Stock                          |   |   | Common                  Stock                         |   |   | (Loss)                  Income                                |   |   | Earnings |   |   | Total |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| **Balance                  at December 31, 2002**                                                                  |   | $      | 5,848                          |   | $      | 135,317                                               |   | $      | (10,292                                                       | )      | $      | 81,748 |   | $ | 212,621 |   |
| Net                  Income Applicable to Common Stock                                                             |   |   |                           |   |   |                                                  |   |   |                                                          |   |   | 26,608 |   |   | 26,608 |   |
| Other                  Comprehensive Income, Net of Tax:*                                                          |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| Minimum                  Pension Liability Adjustment                                                         |   |   |                           |   |   |                                                  |   |   | 7,212                                                         |   |   |   |   |   | 7,212 |   |
| Unrealized                  Gain on Equity Investments                                                        |   |   |                           |   |   |                                                  |   |   | 432                                                           |   |   |   |   |   | 432 |   |
| Unrealized                  Gain on Derivatives                                                               |   |   |                           |   |   |                                                  |   |   | 80                                                            |   |   |   |   |   | 80 |   |
|  Other                  Comprehensive Income, Net of Tax:*                                                    |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   | 7,724 |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| *Comprehensive                  Income*                                                                            |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   | 34,332 |   |
| Additional                  Investment by Shareholder                                                              |   |   |                           |   |   | 20,000                                                |   |   |                                                          |   |   |   |   |   | 20,000 |   |
| Cash                  Dividends Declared - Common Stock                                                            |   |   |                           |   |   |                                                  |   |   |                                                          |   |   | - |   |   | - |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| **Balance                  at December 31, 2003**                                                                  |   |   | 5,848                          |   |   | 155,317                                               |   |   | (2,568                                                        | )      |   | 108,356 |   |   | 266,953 |   |
| Net                  Income Applicable to Common Stock                                                             |   |   |                           |   |   |                                                  |   |   |                                                          |   |   | 31,462 |   |   | 31,462 |   |
| Other                  Comprehensive Loss, Net of Tax:*                                                            |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| Minimum                  Pension Liability Adjustment                                                         |   |   |                           |   |   |                                                  |   |   | (1,074                                                        | )      |   |   |   |   | (1,074 | ) |
| Unrealized                  Loss on Equity Investments                                                        |   |   |                           |   |   |                                                  |   |   | (192                                                          | )      |   |   |   |   | (192 | ) |
| Unrealized                  Loss on Derivatives                                                               |   |   |                           |   |   |                                                  |   |   | (199                                                          | )      |   |   |   |   | (199 | ) |
|  Other                  Comprehensive Loss, Net of Tax:*                                                      |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   | (1,465 | ) |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| *Comprehensive                  Income*                                                                            |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   | 29,997 |   |
| Additional                  Investment by Shareholder                                                              |   |   |                           |   |   | 15,000                                                |   |   |                                                          |   |   |   |   |   | 15,000 |   |
| Cash                  Dividends Declared - Common Stock                                                            |   |   |                           |   |   |                                                  |   |   |                                                          |   |   | (9,123 | ) |   | (9,123 | ) |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| **Balance                  at December 31, 2004**                                                                  |   |   | 5,848                          |   |   | 170,317                                               |   |   | (4,033                                                        | )      |   | 130,695 |   |   | 302,827 |   |
| Net                  Income Applicable to Common Stock                                                             |   |   |                           |   |   |                                                  |   |   |                                                          |   |   | 34,547 |   |   | 34,547 |   |
| Other                  Comprehensive Income (Loss), Net of Tax:*                                                   |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| Minimum                  Pension Liability Adjustment                                                         |   |   |                           |   |   |                                                  |   |   | 423                                                           |   |   |   |   |   | 423 |   |
| Unrealized                  Gain on Equity Investments                                                        |   |   |                           |   |   |                                                  |   |   | 63                                                            |   |   |   |   |   | 63 |   |
| Unrealized                  Loss on Derivatives                                                               |   |   |                           |   |   |                                                  |   |   | (790                                                          | )      |   |   |   |   | (790 | ) |
|  Other                  Comprehensive Loss, Net of Tax:*                                                      |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   | (304 | ) |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| *Comprehensive                  Income*                                                                            |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   | 34,243 |   |
| Additional                  Investment by Shareholder                                                              |   |   |                           |   |   | 30,000                                                |   |   |                                                          |   |   |   |   |   | 30,000 |   |
| Cash                  Dividends Declared - Common Stock                                                            |   |   |                           |   |   |                                                  |   |   |                                                          |   |   | (22,502 | ) |   | (22,502 | ) |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| **Balance                  at December 31, 2005**                                                                  |   | $      | 5,848                          |   | $      | 200,317                                               |   | $      | (4,337                                                        | )      | $      | 142,740 |   | $ | 344,568 |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| Disclosure                  of Changes in Accumulated Other Comprehensive (Loss) Income                  Balances* |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |
| (In                  Thousands)                                                                                    |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
|                                                                                                               |   |   |                           |   |   | Minimum                  Pension Liability Adjustment |   |   | Unrealized                  (Loss) Gain on Equity Investments |   |   | Unrealized                  Gain (Loss) on Derivatives |   |   | Accumulated                  Other Comprehensive (Loss) Income |   |
| Balance                  at December 31, 2002                                                                      |   |   |                           |   | $      | (10,059                                               | )      | $      | (149                                                          | )      | $      | (84 | ) | $ | (10,292 | ) |
| Changes                  During Year                                                                          |   |   |                           |   |   | 7,212                                                 |   |   | 432                                                           |   |   | 80 |   |   | 7,724 |   |
| Balance                  at December 31, 2003                                                                      |   |   |                           |   |   | (2,847                                                | )      |   | 283                                                           |   |   | (4 | ) |   | (2,568 | ) |
| Changes                  During Year                                                                          |   |   |                           |   |   | (1,074                                                | )      |   | (192                                                          | )      |   | (199 | ) |   | (1,465 | ) |
| Balance                  at December 31, 2004                                                                      |   |   |                           |   |   | (3,921                                                | )      |   | 91                                                            |   |   | (203 | ) |   | (4,033 | ) |
| Changes                  During Year                                                                          |   |   |                           |   |   | 423                                                   |   |   | 63                                                            |   |   | (790 | ) |   | (304 | ) |
| Balance                  at December 31, 2005                                                                      |   |   |                           |   | $      | (3,498                                                | )      | $      | 154                                                           |   | $      | (993 | ) | $ | (4,337 | ) |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| *Determined                  using a combined statutory tax rate of 40.85%.                                        |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of the financial                  statements.         |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |
|                                                                                                               |   |   |                           |   |   |                                                  |   |   |                                                          |   |   |   |   |   |   |   |

----

**NOTES      TO FINANCIAL STATEMENTS**

----

|                                         |   |      2005 |      |      2004 |   |
|----------------------------------------------|--------|------------------------------------|-----------|------------------------------------|--------|
| Utility                Plant:                |   |                               |      |                               |   |   |   |
| Production                Plant              |   | $                                  | 302       |                               | $      | 302 |   |
| Storage                Plant                 |   |                               | 11,755    |                               |   | 11,049 |   |
| Transmission                Plant            |   |                               | 134,234   |                               |   | 113,691 |   |
| Distribution                Plant            |   |                               | 831,732   |                               |   | 784,267 |   |
| General                Plant                 |   |                               | 34,563    |                               |   | 33,775 |   |
| Intangible                Plant         |   |                               | 3,394     |                               |   | 1,855 |   |
| Utility                Plant in Service      |   |                               | 1,015,980 |                               |   | 944,939 |   |
| Construction                Work in Progress |   |                               | 14,049    |                               |   | 12,348 |   |
|                                         |   |                               |      |                               |   |   |   |
| Total                Utility Plant           |   | $                                  | 1,030,029 |                               | $      | 957,287 |   |

----

----

*conditional      asset retirement obligation*

----

----

|                                                                     |   | Years                Remaining         |                          |
|--------------------------------------------------------------------------|--------|----------------------------------------|-------------------------------|
| Regulatory                Asset                                          |   | As                of December 31, 2005 |                          |
|                                                                     |   |                                   |                          |
| Environmental                Remediation Costs:  (Notes 2 & 12) |   |                                   |                          |   |
| Expended                - Net                                            |   |                                   | Various                       |   |
| Liability                for Future Expenditures                         |   |                                   | Not                Applicable |   |
| Gross                Receipts and Franchise Taxes (Note 6)               |   |                                   | 1                             |   |
| Income                Taxes - Flowthrough Depreciation (Note 6)          |   |                                   | 6                             |   |
| Deferred                Fuel Costs - Net (Note 2)                        |   |                                   | Various                       |   |
| Deferred                Postretirement Benefit Costs (Note 11)           |   |                                   | 7                             |   |
| Premium                for Early Retirement of Debt                      |   |                                   | Various                       |   |
| Societal                Benefit Costs (Note 2)                           |   |                                   | Various                       |   |

|                                                |   | 2005   |   | 2004   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|
|                                                |   |   |   |   |   |
| Deferred                Gas Revenues - Net (Note 2) |   | $      | -      |   | $      | 12,334 |   |
| Excess                Plant Removal Costs           |   |   | 48,071 |   |   | 47,345 |   |
| Overcollected                State Taxes            |   |   | 4,025  |   |   | 3,871 |   |
| Other                                               |   |   | 1,906  |   |   | 286 |   |
|                                                |   |   |   |   |   |   |   |
| Total                Regulatory Liabilities         |   | $      | 54,002 |   | $      | 63,836 |   |

----

**-      **

**      - **

----

**      - **

----

|   | · | South                Jersey Energy Company (SJE) - a third party energy marketer supplying                natural gas to customers within our                territory. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | South                Jersey Resources Group (SJRG) - a wholesale gas and risk management                business that supplies natural gas to retail marketers, utility businesses                and electricity generators in the mid-Atlantic and southern                regions. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marina                Energy LLC (Marina) - an owner and operator of energy production                facilities for the commercial and industrial                markets. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | South                Jersey Energy Service Plus (SJESP) - an appliance service and installation                company. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

----

|                                               |   | 2005   |   | 2004   |   | 2003   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                               |   |   |   |   |   |   |   |
| *Sales                and Services Provided to:*   |   |   |        |   |   |        |   |   |  |   |
| SJI                                                |   | $      | 1,234  |   | $      | 820    |   | $ | 867 |   |
| SJE                                                |   |   | 635    |   |   | 8,427  |   |   | 26,129 |   |
| SJRG                                               |   |   | 10,680 |   |   | 6,173  |   |   | 12,853 |   |
| Marina                                             |   |   | 266    |   |   | 222    |   |   | 102 |   |
| SJESP                                              |   |   | 893    |   |   | 282    |   |   | - |   |
|                                               |   |   |        |   |   |        |   |   |  |   |
| *Sales                and Services Received from:* |   |   |   |   |   |   |   |   |   |   |
| SJRG                                               |   | $      | 13,140 |   | $      | 22,120 |   | $ | 20,694 |   |
| SJI                                                |   |   | 5,811  |   |   | 4,222  |   |   | 3,602 |   |
|                                               |   |   |   |   |   |        |   |   |  |   |

|                               |   | 2005   |   | 2004   |   |
|------------------------------------|--------|--------|--------|--------|--------|
|                               |   |   |   |   |   |
| *Amounts                due to:*   |   |   |        |   |   |  |   |
| SJI                                |   | $      | 699    |   | $      | 741 |   |
| SJE                                |   |   | 1,270  |   |   | 622 |   |
| SJESP                              |   |   | 993    |   |   | 1,808 |   |
| SJRG                               |   |   | 2,293  |   |   | - |   |
|                               |   |   |   |   |   |   |   |
| *Amounts                due from:* |   |   |   |   |   |   |   |
| SJI                                |   | $      | 507    |   | $      | 49 |   |
| SJE                                |   |   | 32     |   |   | 79 |   |
| SJRG                               |   |   | -      |   |   | 641 |   |
| Marina                             |   |   | 25     |   |   | 24 |   |
| SJESP                              |   |   | 69     |   |   | 83 |   |

|                                        |   |   | 2005       |   |   | 2004       |   |   | 2003   |   |
|---------------------------------------------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                                        |   |   |       |   |   |       |   |   |   |   |
| Meter                  Reading Service Fees |   | $      | 2,626      |   | $      | 2,600      |   | $      | 2,438  |   |
|                                        |   |   |       |   |   |       |   |   |   |   |
|                                        |   |   |       |   |   |       |   |   |   |   |
|                                        |   |   | 2005  |   |   | 2004  |   |   |   |   |
|                                        |   |   |       |   |   |       |   |   |   |   |
| Amounts                  due to Millennium  |   | $      | 220        |   | $      | 440        |   |   |   |   |

----

|                                                                                                                                                  |   |   | 2005  |   |   | 2004   |   |   | 2003                      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|-------------|--------|--------|--------------------------------|--------|
| Tax                  at Statutory Rate                                                                                                           |   | $      | 20,906     |   | $      | 19,051      |   | $      | 16,319                         |   |
| Increase                  (Decrease) Resulting from:                                                                                             |   |   |       |   |   |        |   |   |                           |   |
| State                  Income Taxes                                                                                                              |   |   | 4,035      |   |   | 3,738       |   |   | 3,137                          |   |
| Amortization                  of Investment                                                                                                      |   |   |       |   |   |        |   |   |                           |   |
| Tax                  Credits (Note 6)                                                                                                            |   |   | (334       | )      |   | (342        | )      |   | (347                           | )      |
| Amortization                  of Flowthrough                                                                                                     |   |   |       |   |   |        |   |   |                           |   |
| Depreciation                  (Note 6)                                                                                                      |   |   | 664        |   |   | 664         |   |   | 664                            |   |
| Other                  - Net                                                                                                                |   |   | (86        | )      |   | (142        | )      |   | (154                           | )      |
| Net                  Income Taxes                                                                                                           |   | $      | 25,185     |   | $      | 22,969      |   | $      | 19,619                         |   |
|                                                                                                                                             |   |   |       |   |   |        |   |   |                           |   |
| The                  provision for Income                  Taxes                  is                  comprised of the following (in thousands): |   |   |       |
|                                                                                                                                             |   |   | 2005       |   |   | 2004        |   |   | 2003                           |   |
| Current:                                                                                                                                         |   |   |       |   |   |        |   |   |                           |   |
| Federal                                                                                                                                          |   | $      | (1,819     | )      | $      | 4,078       |   | $      | 12,143                         |   |
| State                                                                                                                                       |   |   | 1,342      |   |   | 4,632       |   |   | 6,251                          |   |
| Total                  Current                                                                                                              |   |   | (477       | )      |   | 8,710  |   |   | 18,394                    |   |
| Deferred:                                                                                                                                        |   |   |       |   |   |        |   |   |                           |   |
| Federal:                                                                                                                                         |   |   |       |   |   |        |   |   |                           |   |
| Excess                  of Tax Depreciation Over                                                                                                 |   |   |       |   |   |        |   |   |                           |   |
| Book                  Depreciation - Net                                                                                                         |   |   | 4,832      |   |   | 14,323      |   |   | 10,396                         |   |
| Deferred                  Fuel Costs - Net                                                                                                       |   |   | 17,567     |   |   | (3,229      | )      |   | (9,506                         | )      |
| Environmental                  Costs - Net                                                                                                       |   |   | 970        |   |   | 752         |   |   | (167                           | )      |
| Alternative                  Minimum Tax                                                                                                         |   |   | -          |   |   | -           |   |   | 1,332                          |   |
| Prepaid                  Pension                                                                                                                 |   |   | 346        |   |   | 2,289       |   |   | 1,361                          |   |
| Deferred                  Regulatory Costs                                                                                                       |   |   | (1,156     | )      |   | (804        | )      |   | 683                            |   |
| Other                  - Net                                                                                                                     |   |   | (1,429     | )      |   | 151         |   |   | (1,102                         | )      |
|       State                                                                                                   |   |   | 4,866      |   |   | 1,119       |   |   | (1,425                         | )      |
| Total                  Deferred                                                                                                             |   |   | 25,996     |   |   | 14,601      |   |   | 1,572                          |   |
| Investment                  Tax Credits                                                                                                          |   |   | (334       | )      |   | (342        | )      |   | (347                           | )      |
| Net                  Income Taxes                                                                                                           |   | $      | 25,185     |   | $      | 22,969      |   | $      | 19,619                         |   |

----

|                                                              |   | 2005   |    | 2004   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|
| Current:                                                          |   |   |    |   |   |   |   |
| Deferred                Fuel Costs - Net                          |   | $      | 4,098   |   | $      | - |   |
| Uncollectibles                                                    |   |   | (1,194  | )      |   | (935 | ) |
| Other                                                        |   |   | (609    | )      |   | 788 |   |
| Current                Deferred Tax Liability (Asset) - Net  |   | $      | 2,295   |   | $      | (147 | ) |
| Noncurrent:                                                       |   |   |    |   |   |   |   |
|                                                              |   |   |    |   |   |   |   |
| Book                Versus Tax Basis of Property                  |   | $      | 132,236 |   | $      | 124,630 |   |
| Deferred                Fuel Costs - Net                          |   |   | 22,891  |   |   | 2,774 |   |
| Prepaid                Pension                                    |   |   | 11,959  |   |   | 11,570 |   |
| Environmental                                                     |   |   | 4,018   |   |   | 2,680 |   |
| Deferred                Regulatory Costs                          |   |   | 1,644   |   |   | 3,241 |   |
| Deferred                State Tax                                 |   |   | (4,761  | )      |   | (2,502 | ) |
| Minimum                Pension Liability                          |   |   | (2,602  | )      |   | (2,917 | ) |
| Investment                Tax Credit Basis Gross-Up               |   |   | (1,440  | )      |   | (1,612 | ) |
| Other                                                             |   |   | (1,403  | )      |   | 410 |   |
| Noncurrent                Deferred Tax Liability - Net       |   | $      | 162,542 |   | $      | 138,274 |   |

| 6. | FEDERAL                AND OTHER REGULATORY TAX ASSETS AND DEFERRED CREDITS: |
|----|------------------------------------------------------------------------------|

----

|                                                   |   |                               |   | Principal                Outstanding |                        |
|--------------------------------------------------------|--------|------------------------------------|--------|--------------------------------------|-----------------------------|
|                                                        |   |                               |   |                                 | December                31, |
|                                                   |   |                               |   | 2005                                 |                        |   | 2004 |   |
| First                Mortgage Bonds: (B)               |   |                               |   |                                 |                        |   |
| 8.19%                                                  |   | Series                due 2007     | $      | 4,543                                |                        | $ | 6,816 |   |
| 6.12%                                                  |   | Series                due 2010     |   | 10,000                               |                        |   | 10,000 |   |
| 6.74%                                                  |   | Series                due 2011     |   | 10,000                               |                        |   | 10,000 |   |
| 6.57%                                                  |   | Series                due 2011     |   | 15,000                               |                        |   | 15,000 |   |
| 4.46%                                                  |   | Series                due 2013     |   | 10,500                               |                        |   | 10,500 |   |
| 5.027%                                                 |   | Series                due 2013     |   | 14,500                               |                        |   | 14,500 |   |
| 4.52%                                                  |   | Series                due 2014     |   | 11,000                               |                        |   | 11,000 |   |
| 5.115%                                                 |   | Series                due 2014     |   | 10,000                               |                        |   | 10,000 |   |
| 6.50%                                                  |   | Series                due 2016     |   | 9,965                                |                        |   | 9,965 |   |
| 4.60%                                                  |   | Series                due 2016     |   | 17,000                               |                        |   | 17,000 |   |
| 4.657%                                                 |   | Series                due 2017     |   | 15,000                               |                        |   | 15,000 |   |
| 7.97%                                                  |   | Series                due 2018     |   | 10,000                               |                        |   | 10,000 |   |
| 7.125%                                                 |   | Series                due 2018     |   | 20,000                               |                        |   | 20,000 |   |
| 7.7%                                                   |   | Series                due 2027     |   | 35,000                               |                        |   | 35,000 |   |
| 7.9%                                                   |   | Series                due 2030 (C) |   | -                                    |                        |   | 10,000 |   |
| 5.55%                                                  |   | Series                due 2033     |   | 32,000                               |                        |   | 32,000 |   |
| 5.387%                                                 |   | Series                due 2015     |   | 10,000                               |                        |   | 10,000 |   |
| 5.437%                                                 |   | Series                due 2016     |   | 10,000                               |                        |   | 10,000 |   |
| 5.587%                                                 |   | Series                due 2019     |   | 10,000                               |                        |   | 10,000 |   |
| 6.213%                                                 |   | Series                due 2034     |   | 10,000                               |                        |   | 10,000 |   |
| 5.45%                                                  |   | Series                due 2035 (D) |   | 10,000                               |                        |   | - |   |
|                                                   |   |                               |   |                                 |                        |   |   |   |
| Unsecured                Notes:                        |   |                               |   |                                 |                        |   |   |   |
| Debenture                Notes, 8.6% due 2010 (E)      |   | -                                  |   |                                 | 10,500                      |   |
|                                                   |   |                               |   |                                 |                        |   |   |   |
| Total                Long-Term Debt Outstanding   |   | 274,508                            |   |                                 | 287,281                     |   |
| Less                Current Maturities            |   | (2,273                             | )      |                                 | (5,273                      | ) |
| Long-Term                Debt                          |   |                               | $      | 272,235                              |                        | $ | 282,008 |   |

|   | (A) | Long-term                debt maturities and sinking funds requirements for the succeeding                five                years are as follows (in thousands): 2006, $2,273; 2007, $2,270;                2008,                $-0-; 2009, $-0-; and 2010, $10,000.  Our long-term debt agreements                contain no financial covenants. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (B) | Our                First Mortgage date October 1, 1947, as supplemented, securing the                First                Mortgage Bonds constitutes a direct first mortgage lien on substantially                all utility plant. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (C) | On                  July 15, 2005, we retired our 7.9% Medium Term Notes at par. |
|--------|-----|----------------------------------------------------------------------------------|

|   | (D) | On                September 13, 2005, we issued $10.0 million of debt under our $150                million                Medium Term Note (MTN) Program established in 2005. As of December                31,                2005, $140 million remains available under this MTN program. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (E) | On                February 1, 2005, we retired the remaining $7.5 million of our 8.6%                Unsecured Debenture Notes due 2010 with a call premium of $184,500.                We                have deferred this premium and will seek BPU approval to amortize                and                recover it from ratepayers. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                        |   |                            |                                   |   |   |   |   |   |   |                          Other |   |   |   |
|---------------------------------------------------------------------------------------------|--------|---------------------------------|----------------------------------------|--------|--------|--------|--------|--------|--------|-----------------------------------------------------------------------------|--------|--------|--------|
|                                                                                        |   | Pension                Benefits | Postretirement                Benefits |
|                                                                                             |   |                            | 2005                                   |   |   | 2004   |   |   | 2003   |                                                                        |   | 2005   |   |   | 2004 |   |   | 2003 |   |
| Service                Cost                                                                 |   | $                               | 2,704                                  |   | $      | 2,545  |   | $      | 2,462  |                                                                        | $      | 732    |   | $ | 1,160 |   | $ | 1,421 |   |
| Interest                Cost                                                                |   |                            | 5,970                                  |   |   | 5,246  |   |   | 5,320  |                                                                        |   | 1,963  |   |   | 2,173 |   |   | 2,448 |   |
|                                                                                        |   |                            |                                   |   |   |   |   |   |   |                                                                        |   |   |   |   |   |   |   |   |   |
| Expected                Return on Plan Assets                                               |   |                            | (7,494                                 | )      |   | (5,793 | )      |   | (4,996 | )                                                                           |   | 1,482  | )      |   | (1,302 | ) |   | (1,078 | ) |
| Amortization                of Transition Obligation                                        |   |                            | -                                      |   |   | -      |   |   | 87     |                                                                        |   | -      |   |   | 592 |   |   | 756 |   |
| Amortization                of Loss and Other                                               |   |                            | 2,871                                  |   |   | 2,066  |   |   | 1,978  |                                                                        |   | 209    |   |   | 130 |   |   | 373 |   |
| Net                Periodic      Benefit                Cost  |   |                            | 4,051                                  |   |   | 4,064  |   |   | 4,851  |                                                                        |   | 1,422  |   |   | 2,753 |   |   | 3,920 |   |
|     ERIP                Cost                                       |   |                            | 459                                    |   |   | 711    |   |   | -      |                                                                        |   | 1,187  |   |   | 134 |   |   | - |   |
|                  Capitalized Benefit Costs                                        |   |                            | (1,823                                 | )      |   | (1,474 | )      |   | (1,615 | )                                                                           |   | (640   | )      |   | (991 | ) |   | (1,294 | ) |
| Total                Net Periodic Benefit Expense                                      |   | $                               | 2,687                                  |   | $      | 3,301  |   | $      | 3,236  |                                                                        | $      | 1,969  |   | $ | 1,896 |   | $ | 2,626 |   |

|                                                          |   |                            |                                   |   |   | Other   |   |
|---------------------------------------------------------------|--------|---------------------------------|----------------------------------------|--------|--------|---------|--------|
|                                                               |   | Pension                Benefits | Postretirement                Benefits |
|                                                          |   |                            | 2005                                   |   |   | 2004    |   |   | 2005 |   |   | 2004 |   |
| **Change                in Benefit Obligations**:             |   |                            |                                   |   |   |    |   |   |   |   |   |   |   |
| Benefit                Obligation at Beginning of Year        |   | $                               | 105,668                                |   | $      | 93,632  |   | $ | 34,966 |   | $ | 43,109 |   |
| Transferred                to Affiliate (Note 2)              |   |                            | -                                      |   |   | (4,024  | )      |   | - |   |   | (2,804 | ) |
| Service                Cost                                   |   |                            | 2,704                                  |   |   | 2,545   |   |   | 732 |   |   | 1,160 |   |
| Interest                Cost                                  |   |                            | 5,971                                  |   |   | 5,246   |   |   | 1,963 |   |   | 2,172 |   |
| Plan                Amendments                                |   |                            | -                                      |   |   | 434     |   |   | - |   |   | (8,643 | ) |
| Actuarial                Loss and Other                       |   |                            | 2,297                                  |   |   | 11,856  |   |   | 3,538 |   |   | 1,723 |   |
| Retiree                Contributions                          |   |                            | -                                      |   |   | -       |   |   | 300 |   |   | - |   |
| Benefits                Paid                             |   |                            | (4,873                                 | )      |   | (4,025  | )      |   | (2,437 | ) |   | (1,751 | ) |
| Benefit                Obligation at End of Year         |   | $                               | 111,767                                |   | $      | 105,666 |   | $  | 39,062  |   | $ | 34,966 |   |
|                                                          |   |                            |                                   |   |   |    |   |   |   |   |   |   |   |
| **Change                in Plan Assets:**                     |   |                            |                                   |   |   |    |   |   |   |   |   |   |   |
| Fair                Value of Plan Assets at Beginning of Year |   | $                               | 87,887                                 |   | $      | 76,626  |   | $ | 20,711 |   | $ | 19,096 |   |
| Transferred                to Affiliate (Note 2)              |   |                            | -                                      |   |   | (3,585  | )      |   | - |   |   | (1,392 | ) |
| Actual                Return on Plan Assets                   |   |                            | 6,219                                  |   |   | 7,643   |   |   | 1,196 |   |   | 1,533 |   |
| Employer                Contributions                         |   |                            | 5,078                                  |   |   | 11,227  |   |   | 3,603 |   |   | 3,225 |   |
| Retiree                Contributions                          |   |                            | -                                      |   |   | -       |   |   | 300 |   |   | - |   |
| Benefits                Paid                             |   |                            | (4,873                                 | )      |   | (4,024  | )      |   | (2,437 | ) |   | (1,751 | ) |
| Fair                Value of Plan Assets at End of Year       |   | $                               | 94,311                                 |   | $      | 87,887  |   | $ | 23,373 |   | $ | 20,711 |   |

----

|                                                             |   |   |    |   |   |    |   |   |    |
|------------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|
| **Funded                Status**:                                |   | $      | (17,456 | )      | $      | (17,781 | )      | $      | (15,688 | ) | $ | (14,255 | ) |
| Unrecognized                Prior Service Cost                   |   |   | 2,401   |   |   | 2,922   |   |   | (2,898  | ) |   | (3,260 | ) |
| Unrecognized                Net Loss and Other                   |   |   | 35,815  |   |   | 35,056  |   |   | 13,435  |   |   | 11,368 |   |
| Prepaid                (Accrued) Net Benefit Cost at End of Year |   | $      | 20,760  |   | $      | 20,197  |   | $      | (5,151  | ) | $ | (6,147 | ) |
|                                                             |   |   |    |   |   |    |   |   |    |   |   |   |   |
| **Amounts                Recognized in the Statement**           |   |   |    |   |   |    |   |   |    |   |   |   |   |
| **of                Financial Position Consist of:**        |   |   |    |   |   |    |   |   |    |   |   |   |   |
| Prepaid                (Accrued) Benefit Liability               |   | $      | 14,720  |   | $      | 13,258  |   | $      | (5,151  | ) | $ | (6,147 | ) |
| Intangible                Asset                                  |   |   | 127     |   |   | 310     |   |   | -       |   |   | - |   |
| Accumulated                Other Comprehensive Income            |   |   | 5,913   |   |   | 6,629   |   |   | -       |   |   | - |   |
| Net                Amount Recognized at End of Year              |   | $      | 20,760  |   | $      | 20,197  |   | $      | (5,151  | ) | $ | (6,147 | ) |

|                                         |   |                            |                                   |   |   | Other  |   |
|----------------------------------------------|--------|---------------------------------|----------------------------------------|--------|--------|--------|--------|
|                                         |   | Pension                Benefits | Postretirement                Benefits |
|                                         |   |                            | 2005                                   |   |   | 2004   |   |   | 2005 |   |   | 2004 |   |
|                                         |   |                            |                                   |   |   |   |   |   |   |   |   |   |   |
| Discount                Rate                 |   |                            | 5.84                                   | %      |   | 5.75   | %      |   | 5.84 | % |   | 5.75 | % |
| Rate                of Compensation Increase |   |                            | 3.60                                   | %      |   | 3.60   | %      |   | - |   |   | - |   |

|                                                    |   |                            |                                   |   |   |   |   | Other  |   |
|---------------------------------------------------------|--------|---------------------------------|----------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                    |   | Pension                Benefits | Postretirement                Benefits |
|                                                    |   |                            | 2005                                   |   |   | 2004   |   |   | 2003   |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                    |   |                            |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount                Rate                            |   |                            | 5.75                                   | %      |   | 6.25   | %      |   | 6.75   | % |   | 5.75 | % |   | 6.25 | % |   | 6.75 | % |
| Expected                Long-Term Return on Plan Assets |   |                            | 8.75                                   | %      |   | 8.75   | %      |   | 9.00   | % |   | 7.25 | % |   | 7.25 | % |   | 7.50 | % |
| Rate                of Compensation Increase            |   |                            | 3.60                                   | %      |   | 3.60   | %      |   | 3.60   | % |   | - |   |   | - |   |   | - |   |

----

|                                                                      |   |   | 2005   |   |   | 2004   |   |
|---------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                      |   |   |   |   |   |   |   |
| Post-65                Medical Care Cost Trend Rate Assumed for Next Year |   |   | 7.5    | %      |   | 6.5    | %      |
| Pre-65                Medical Care Cost Trend Rate Assumed for Next Year  |   |   | 11.0   | %      |   | 11.0   | %      |
| Dental                Care Cost Trend Rate Assumed for Next Year          |   |   | 7.5    | %      |   | 6.5    | %      |
| Rate                to which Cost Trend Rates are Assumed to Decline      |   |   |   |   |   |   |   |
| (the                Ultimate Trend Rate)                                  |   |   | 5.0    | %      |   | 5.0    | %      |
| Year                that the Rate Reaches the Ultimate Trend Rate         |   |   | 2013   |   |   | 2016   |   |

|                                                            |   | 1-Percentage- |                          | 1-Percentage- |   |
|-----------------------------------------------------------------|--------|---------------|-------------------------------|---------------|--------|
|                                                            |   |          | Point                Increase |          |   | Point                Decrease |   |
|                                                            |   |          |                          |          |   |   |   |
| Effect                on the Total of Service and Interest Cost |   | $             | 111                           |          | $      | (99 | ) |
| Effect                on Postretirement Benefit Obligation      |   |          | 1,855                         |          |   | (1,686 | ) |

|                                           |   |                            |                                   |   |   | Other  |   |
|------------------------------------------------|--------|---------------------------------|----------------------------------------|--------|--------|--------|--------|
|                                                |   | Pension                Benefits | Postretirement                Benefits |
|                                           |   |                            | 2005                                   |   |   | 2004   |   |   | 2005 |   |   | 2004 |   |
| Asset                Category                  |   |                            |                                   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Equity Securities          |   |                            | 50                                     | %      |   | 52     | %      |   | 48 | % |   | 48 | % |
| International                Equity Securities |   |                            | 15                                     |   |   | 16     |   |   | 16 |   |   | 16 |   |
| Fixed                Income                    |   |                            | 35                                     |   |   | 32     |   |   | 36 |   |   | 36 |   |
|                                           |   |                            |                                   |   |   |   |   |   |   |   |   |   |   |
| Total                                          |   |                            | 100                                    | %      |   | 100    | %      |   | 100 | % |   | 100 | % |

----

|      |   |   |                            | Other  |   |
|-----------|--------|--------|---------------------------------|--------|--------|
|      |   |   | Pension                Benefits |   |   | Postretirement                Benefits |   |
|      |   |   |                            |   |   |   |   |
| 2006      |   | $      | 5,436                           |   | $      | 2,147 |   |
| 2007      |   |   | 5,503                           |   |   | 2,361 |   |
| 2008      |   |   | 5,561                           |   |   | 2,474 |   |
| 2009      |   |   | 5,635                           |   |   | 2,549 |   |
| 2010      |   |   | 5,707                           |   |   | 2,688 |   |
| 2011-2015 |   |   | 31,384                          |   |   | 13,318 |   |

|                                                    |   |   |    | Up                to |   | Years                 |   | Years  |                     | More                than |   |
|---------------------------------------------------------|--------|--------|---------|----------------------|--------|-----------------------|--------|--------|--------------------------|--------------------------|--------|
| Contractual                Cash Obligations             |   |   | Total   |                 |   | 1                Year |   |   | 2                & 3 |                     |   | 4                & 5 |   |   | 5                Years |   |
|                                                    |   |   |    |                 |   |                  |   |   |                     |                     |   |   |   |   |   |   |
| Long-Term                Debt                           |   | $      | 274,508 |                 | $      | 2,273                 |   | $      | 2,270                    |                     | $      | 10,000 |   | $ | 259,965 |   |
| Interest                on Long-Term Debt               |   |   | 226,203 |                 |   | 16,426                |   |   | 32,380                   |                     |   | 32,287 |   |   | 145,110 |   |
| Operating                Leases                         |   |   | 480     |                 |   | 273                   |   |   | 175                      |                     |   | 32 |   |   | - |   |
| Construction                Obligations                 |   |   | 6,966   |                 |   | 6,868                 |   |   | 98                       |                     |   | - |   |   | - |   |
| Commodity                Supply Purchase Obligations    |   |   | 239,892 |                 |   | 44,751                |   |   | 78,556                   |                     |   | 46,013 |   |   | 70,572 |   |
| New                Jersey Clean Energy Program (Note 2) |   |   | 20,600  |                 |   | 5,600                 |   |   | 15,000                   |                     |   | - |   |   | - |   |
| Other                Purchase Obligations               |   |   | 5,033   |                 |   | 2,183                 |   |   | 1,800                    |                     |   | 1,050 |   |   | - |   |
|                                                    |   |   |    |                 |   |                  |   |   |                     |                     |   |   |   |   |   |   |
| Total                Contractual                        |   |   |    |                 |   |                  |   |   |                     |                     |   |   |   |   |   |   |
| Cash                Obligations                         |   | $      | 773,682 |                 | $      | 78,374                |   | $      | 130,279                  |                     | $      | 89,382 |   | $ | 475,647 |   |

----

|                                 |   |   | 2005   |   |   | 2004   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |   |   |   |   |   |
| Beginning                    of Year |   | $      | 51,046 |   | $      | 50,983 |   |
|     Accruals     |   |   | 11,710 |   |   | 5,282  |   |
|     Expenditures |   |   | (6,039 | )      |   | (5,219 | )      |
|                                 |   |   |   |   |   |   |   |
| End                    of Year       |   | $      | 56,717 |   | $      | 51,046 |   |

----

----

|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |    |   |                     |   |   |                      |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------------|--------|--------|-------------------------------------|--------|--------|---------------------------|--------------|--------|--------------------------|--------|--------|---------------------------|--------|--------|
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| SOUTH                  JERSEY GAS COMPANY QUARTERLY FINANCIAL DATA (Unaudited)                                                                                                                 |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Summarized                  quarterly results of SJG's operations (in thousands):                                                                                                              |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |  2005                  Quarter Ended |   |   | 2004                  Quarter Ended |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                |   |   | March                  31                 |   |   | June                  30            |   |   | Sept.                  30 |         |   | Dec.                  31 |   |   | March                  31 |   |   | June                  30 |   |   | Sept.                  30 |   |   | Dec.                  31 |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Operating                  Revenues                                                                                                                                                            |   | $      | 214,537                                   |   | $      | 86,083                              |   | $      | 89,702                    |         | $      | 196,890                  |   | $      | 202,260                   |   | $      | 75,970 |   | $ | 73,480 |   | $ | 157,117 |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                                                                                                                      |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Cost                  of Sales                                                                                                                                                                 |   |   | 144,345                                   |   |   | 55,111                              |   |   | 67,076                    |         |   | 148,420                  |   |   | 137,096                   |   |   | 47,066 |   |   | 50,184 |   |   | 106,514 |   |
| Operation                  and Maintenance                                                                                                                                                     |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Including                  Fixed Charges                                                                                                                                                       |   |   | 26,580                                    |   |   | 23,080                              |   |   | 22,162                    |         |   | 28,923                   |   |   | 25,614                    |   |   | 25,260 |   |   | 23,314 |   |   | 28,776 |   |
| Income                  Taxes (Benefit)                                                                                                                                                        |   |   | 16,125                                    |   |   | 2,577                               |   |   | (334                      | )            |   | 6,817                    |   |   | 14,683                    |   |   | 830 |   |   | (519 | ) |   | 7,975 |   |
| Energy                  and Other Taxes                                                                                                                                                        |   |   | 4,893                                     |   |   | 1,952                               |   |   | 1,580                     |         |   | 3,456                    |   |   | 4,728                     |   |   | 1,983 |   |   | 1,653 |   |   | 3,094 |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Total                  Expenses                                                                                                                                                                |   |   | 191,943                                   |   |   | 82,720                              |   |   | 90,484                    |         |   | 187,616                  |   |   | 182,121                   |   |   | 75,139 |   |   | 74,632 |   |   | 146,359 |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Other                  Income and Expense                                                                                                                                                      |   |   | (30                                       | )      |   | (9                                  | )      |   | 11                        |         |   | 126                      |   |   | 567                       |   |   | (8 | ) |   | 72 |   |   | 255 |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| Net                  Income (Loss) Applicable                                                                                                                                                  |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| to                  Common Stock                                                                                                                                                               |   | $      | 22,564                                    |   | $      | 3,354                               |   | $      | (771                      | )            | $      | 9,400                    |   | $      | 20,706                    |   | $      | 823 |   | $ | (1,080 | ) | $ | 11,013 |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |
| NOTE:                  Because of the seasonal nature of the business, statements for                  the 3-month                  periods are not indicative of the results for a full year. |   |   |                                      |   |
|                                                                                                                                                                                           |   |   |                                      |   |   |                                |   |   |                      |         |   |                     |   |   |                      |   |   |   |   |   |   |   |   |   |   |

----

**Item      9. Changes in and Disagreements with Accountants on**

**Accounting      and Financial Disclosure**

**Item      9A. Controls and Procedures**

**Evaluation      of Disclosure Controls and Procedures**

**Item      9B. Other Information**

**PART      III**

**Item      10. Directors and Executive Officers of the Registrant**

**Item      11. Executive Compensation**

**Item      12. Security Ownership of Certain Beneficial Owners and      Management**

**Item      13. Certain Relationships and Related Transactions**

----

**Item      14. Principal Accounting Fees and Services**

*Audit      Fees*

*Audit-Related      Fees*

*Tax      Fees*

*All      Other Fees*

----

**PART      IV**

**Item      15. Exhibits and Financial Statement Schedule**

**(a)**

**(b)**

| ExhibitNumber      | Description                                                                                                                                   | Reference                                                                                                                      |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|
|  (3)(a)       |  Certificate                of Incorporation of South Jersey Gas Company.                                                                |  Incorporated                by reference from Exhibit (3)(a) of Form 10-K filed March 7,                1997.            |
|  (3)(b)       |  Bylaws                of South Jersey Gas Company, as amended and restated through April                29, 2004 (filed herewith). |                                                                                                                           |
|  (4)(a)       |  Form                of Stock Certified for Common Stock.                                                                                |  Incorporated                by reference from Exhibit (4)(a) of Form 10 filed March 7,                1997.              |
|  (4)(b)(i)    |  First                Mortgage Indenture dated October 1, 1947.                                                                          |  Incorporated                by reference from Exhibit (4)(b)(i) of Form 10-K of SJI for 1987                (1-6364).    |
|  (4)(b)(iv)   |  Twelfth                Supplemental Indenture dated as of June 1, 1980.                                                                 |  Incorporated                by reference from Exhibit 5(b) of Form S-7 of SJI                (2-68038).                  |
|  (4)(b)(xv)   |  Seventeenth                Supplemental Indenture dated as of May 1, 1989.                                                              |  Incorporated                by reference from Exhibit (4)(b)(xv) of Form 10-K of SJI for 1989                (1-6364).   |
|  (4)(b)(xvii) |  Nineteenth                Supplemental Indenture dated as of April 1, 1992.                                                             |  Incorporated                by reference from Exhibit (4)(b)(xvii) of Form 10-K of SJI for 1992                (1-6364). |

----

| ExhibitNumber                                                                    | Description                                                                                                                                                 | Reference                                                                                                                          |
|----------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|
|  (4)(b)(xx)                                                                 |  Twenty-Second                Supplemental Indenture dated as of October 1, 1998.                                                                      |  Incorporated                by reference from Exhibit (4)(b)(ix) of Form S-3                (333-62019).                     |
|  (4)(b)(xxi)                                                                |  Twenty-Third                Supplemental Indenture dated as of September 1, 2002.                                                                     |  Incorporated                by reference from Exhibit (4)(b)(x) of Form S-3                (333-98411)                       |
|                                       (4)(b)(xxii) |                                       Twenty-Fourth Supplemental Indenture dated as of September 1,                2005.      |                     Incorporated by reference from Exhibit (4)(b)(vi) of Form S-3                (333-126822). |
|  (4)(c)                                                                     |  Indenture                dated as of January 31, 1995; 8.60% Debenture Notes due February                1,                2010.                      |  Incorporated                by reference from Exhibit (4)(c) of Form 10-K of SJI for 1994                (1-6364).           |
|  (4)(e)                                                                     |  Medium                Term Note Indenture of Trust dated October 1, 1998.                                                                             |  Incorporated                by reference from Exhibit (4)(e) of Form S-3                (333-62019).                         |
|  (4)(f)                                                                     |  Medium                Term Note Indenture of Trust, as amended, dated December 16,                2002.                                               |  Incorporated                by reference from Exhibit 4(e) of Form S-3 (333-98411).                                          |
|  (10)(a)                                                                    |  Gas                storage agreement (GSS) between South Jersey Gas Company and Transco                dated                October 1, 1993.          |  Incorporated                by reference from Exhibit (10)(d) of Form 10-K of SJI for 1993                (1-6364).          |
|  (10)(b)                                                                    |  Gas                storage agreement (S-2) between South Jersey Gas Company and Transco                dated                December 16, 1953.        |  Incorporated                by reference from Exhibit (5)(h) of Form S-7 of SJI                (2-56223).                    |
|  (10)(c)                                                                    |  Gas                storage agreement (LG-A) between South Jersey Gas Company and Transco                dated June 3, 1974.                           |  Incorporated                by reference from Exhibit (5)(f) of Form S-7 of SJI                (2-56223).                    |
|  (10)(d)                                                                    |  Gas                storage agreement (WSS) between South Jersey Gas Company and Transco                dated                August 1, 1991.           |  Incorporated                by reference from Exhibit (10)(h) of Form 10-K of SJI for                1991(1-6364).           |
|  (10)(e)(i)                                                                 |  Gas                storage agreement (LSS) between South Jersey Gas Company and Transco                dated                October 1, 1993.          |  Incorporated                by reference from Exhibit (10)(i) of Form 10-K of SJI for 1993                (1-6364).          |
|  (10)(e)(ii)                                                                |  Gas                storage agreement (SS-1) between South Jersey Gas Company and Transco                dated May 10, 1987 (effective April 1, 1988). |  Incorporated                by reference from Exhibit (10)(i)(a) of Form 10-K of SJI for 1988                (1-6364).       |
|  (10)(e)(iv)                                                                |  Gas                transportation service agreement between South Jersey Gas Company                and                Transco dated April 1, 1986.   |  Incorporated                by reference from Exhibit (10)(i)(c) of Form 10-K of SJI for 1989                (1-6364).       |
|  (10)(e)(vi)                                                                |  Service                agreement (FT) between South Jersey Gas Company and Transco dated                February                1, 1992.              |  Incorporated                by reference from Exhibit (10)(i)(f) of Form 10-K of SJI for                1991(1-6364).        |

----

| ExhibitNumber       | Description                                                                                                                                                                                                                | Reference                                                                                                                    |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|
|  (10)(e)(viii) |  Gas                storage agreement (SS-2) between South Jersey Gas Company and Transco                dated July 25, 1990.                                                                                         |  Incorporated                by reference from Exhibit (10)(i)(i) of Form 10-K of SJI for 1991                (1-6364). |
|  (10)(e)(ix)   |  Gas                transportation service agreement between South Jersey Gas Company                and                Transco dated December 20, 1991.                                                              |  Incorporated                by reference from Exhibit (10)(i)(j) of Form 10-K of SJI for 1993                (1-6364). |
|  (10)(e)(x)    |  Amendment                to gas transportation agreement dated December 20, 1991 between South                Jersey Gas Company and Transco dated October 5, 1993.                                                  |  Incorporated                by reference from Exhibit (10)(i)(k) of Form 10-K of SJI for                1993(1-6364).  |
|  (10)(e)(xi)   |  CNJEP                Service agreement between South Jersey Gas Company and Transco dated                June                27, 2005 (filed herewith).                                                              |                                                                                                                         |
|  (10)(g)(i)    |  Gas                transportation service agreement (TF) between South Jersey Gas Company                and                CNG Transmission Corporation dated October 1, 1993.                                      |  Incorporated                by reference from Exhibit (10)(k)(h) of Form 10-K of SJI for 1993                (1-6364). |
|  (10)(g)(iii)  |  Gas                transportation service agreement (FTS-1) between South Jersey Gas                Company                and Columbia Gulf Transmission Company dated November 1,                1993.             |  Incorporated                by reference from Exhibit (10)(k)(k) of Form 10-K of SJI for 1993                (1-6364). |
|  (10)(g)(iv)   |  Assignment                agreement capacity and service rights (FTS-2) between South Jersey                Gas                Company and Columbia Gulf Transmission Company dated November 1,                1993. |  Incorporated                by reference from Exhibit (10)(k)(i) of Form 10-K of SJI for                1993(1-6364).  |
|  (10)(g)(v)    |  FTS                Service Agreement No. 39556 between South Jersey Gas Company and                Columbia                Gas Transmission Corporation dated November 1, 1993.                                      |  Incorporated                by reference from Exhibit (10)(k)(m) of Form 10-K of SJI for                1993(1-6364).  |
|  (10)(g)(vi)   |  FTS                Service Agreement No. 38099 between South Jersey Gas Company and                Columbia                Gas Transmission Corporation dated November 1, 1993.                                      |  Incorporated                by reference from Exhibit (10)(k)(n) of Form 10-K of SJI for 1993                (1-6364). |
|  (10)(g)(vii)  |  NTS                Service Agreement No. 39305 between South Jersey Gas Company and                Columbia                Gas Transmission Corporation dated November 1, 1993.                                      |  Incorporated                by reference from Exhibit (10)(k)(o) of Form 10-K of SJI for 1993                (1-6364). |
|  (10)(g)(viii) |  FSS                Service Agreement No. 38130 between South Jersey Gas Company and                Columbia                Gas Transmission Corporation dated November 1, 1993.                                      |  Incorporated                by reference from Exhibit (10)(k)(p) of Form 10-K of SJI for 1993                (1-6364). |

----

| ExhibitNumber                               | Description                                                                                                                                                                                                                                                                                                 | Reference                                                                                                                                                                                                                                       |
|---------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  (10)(g)(ix)                           |  SST                Service Agreement No. 38086 between South Jersey Gas Company and                Columbia                Gas Transmission Corporation dated November 1, 1993.                                                                                                                       |  Incorporated                by reference from Exhibit (10)(k)(q) of Form 10-K of SJI for 1993                (1-6364).                                                                                                                    |
|  (10)(h)(i)*                           |  Deferred                Payment Plan for Directors of South Jersey Industries, Inc., South                Jersey                Gas Company, Energy & Minerals, Inc., R&T Group, Inc. and South                Jersey Energy Company as amended and restated October 21,                1994. |  Incorporated                by reference from Exhibit (10)(l) of Form 10-K of SJI for 1994                (1-6364).                                                                                                                       |
|  (10)(h)(ii)*                          |  Form                of Deferred Compensation Agreement between South Jersey Industries,                Inc.                and/or a subsidiary and seven of its officers.                                                                                                                             |  Incorporated                by reference from Exhibit (10)(j)(a) of Form 10-K of SJI for 1980                (1-6364).                                                                                                                    |
|  (10)(h)(iii)*                         |  Schedule                of Deferred Compensation Agreements.                                                                                                                                                                                                                                          |  Incorporated                by reference from Exhibit (10)(l)(b) of Form 10-K of SJI for 1997                (1-6364).                                                                                                                    |
|  (10)(h)(iv)*                          |  Supplemental                Executive Retirement Program, as amended and restated effective July                1,                1997, and Form of Agreement between certain South Jersey Industries,                Inc.                or subsidiary Company officers.                             |  Incorporated                by reference from Exhibit (10)(l)(i) of Form 10-K of SJI for 1997                (1-6364).                                                                                                                    |
|  (10)(h)(v)*                           |  Form                of Officer Employment Agreement between certain officers and either                South                Jersey Industries, Inc. or its subsidiaries.                                                                                                                              |  Incorporated                by reference from Exhibit (10)(l)(d) of Form 10-K of SJI for 1994                (1-6364).                                                                                                                    |
|  (10)(h)(vi)*  (10)(h)(vii)* |  Schedule                of Officer Employment Agreements.  Officer                Severance Benefit Program for all officers.                                                                                                                                                               |  Incorporated                by reference from Exhibit (10)(h)(vi) of Form 10-K of SJI for                2003. Incorporated                by reference from Exhibit (10)(l)(g) of Form 10-K of SJI for                1985(1-6364). |
|  (10)(h)(viii)*                        |  Discretionary                Incentive Bonus Program for all officers and management                employees.                                                                                                                                                                                        |  Incorporated                by reference from Exhibit (10)(l)(h) of Form 10-K of SJI for 1985                (1-6364).                                                                                                                    |
|  (10)(i)(i)                            |  Three-year                Revolving Credit Agreement for SJG                                                                                                                                                                                                                                          |  Incorporated                by reference from Exhibit 10 of Form 10-Q of SJG as filed on November                14,                2003 (000-22211).                                                                                     |
|  (10)(i)(ii)                           |  First                Amendment to Three-year Revolving Credit Agreement.                                                                                                                                                                                                                              |  Incorporated                by reference from Exhibit 10.1 of Form 10-Q of SJG as filed on November                15, 2004 (000-22211).                                                                                                  |

----

| ExhibitNumber | Description                                                                                                                                              | Reference                                                                                                               |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|
|  (12)    |  Calculation                of Ratio of Earnings to Fixed Charges (Before Federal Income Taxes)                (filed                herewith).     |                                                                                                                    |
|  (18)    |  Preferability                Letter from Independent Auditors’ Re: Pension Measurement                Date.                                  |  Incorporated                by reference from Exhibit 18 of Form 10-K of SJG for 2002                (000-22211). |
|  (21)    |  Subsidiaries                of the Registrant (filed herewith).                                                                                    |                                                                                                                    |
|  (23)    |  Independent                Registered Public Accounting Firm’s Consent (filed                herewith).                                      |                                                                                                                    |
|  (31.1)  |  Certification                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002 (filed herewith). |                                                                                                                    |
|  (31.2)  |  Certification                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002 (filed herewith). |                                                                                                                    |
|  (32.1)  |  Certification                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley                Act of 2002 (filed herewith). |                                                                                                                    |
|  (32.2)  |  Certification                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley                Act of 2002 (filed herewith). |                                                                                                                    |

----

**SIGNATURES**

**SOUTH      JERSEY GAS COMPANY**

| Signature                                                                                                                                                                                                                                           |   | Title                                                                         | Date                         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|------------------------------|
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
| /s/                Edward J.                Graham                                  |   | Chairman                of the Board, President & Chief Executive Officer | March                7, 2006 |
|  (Edward J.              Graham)                                                                                                                                                                                                               |   | (Principal                Executive Officer)                                  |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
| /s/                David A.                Kindlick                                 |   | Senior                Vice President & Chief Financial Officer            | March                7, 2006 |
| (David                A. Kindlick)                                                                                                                                                                                                                  |   | (Principal              Financial and Accounting Officer)                     |                         |
|                                                                                                                                                                                                                                                |   |                                                                               |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
| /s/                Richard H. Walker,                Jr.                                                          |   | Senior                Vice President, General Counsel & Secretary    | March                7, 2006 |
|  (Richard              H. Walker, Jr.)                                                                                                                                                                                                         |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
| /s/                Shirli M.                Billings                                     |   | Director                                                                      | March                7, 2006 |
| (Shirli                M. Billings)                                                                                                                                                                                                                 |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |
| /s/                Charles                Biscieglia                                     |   | Director                                                                      | March                7, 2006 |
| (Charles                Biscieglia)                                                                                                                                                                                                                 |   |                                                                          |                         |
|                                                                                                                                                                                                                                                |   |                                                                          |                         |

----

| Signature                                                                                                                                                                                                                                                 |   | Title    | Date                         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------------------------|
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
| /s/                Sheila                Hartnett-Devlin                                                      |   | Director | March                7, 2006 |
| (Sheila                Hartnett-Devlin)                                                                                                                                                                                                                   |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
| /s/                William J.                Hughes                                  |   | Director | March                7, 2006 |
| (William                J. Hughes)                                                                                                                                                                                                                        |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
| /s/                Frederick R.                Raring                                               |   | Director | March                7, 2006 |
| (Frederick                R. Raring)                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |
|                                                                                                                                                                                                                                                      |   |     |                         |

----

| **SOUTH                  JERSEY GAS COMPANY**                                                              |
|------------------------------------------------------------------------------------------------------------|
| **SCHEDULE                  II - VALUATION AND QUALIFYING ACCOUNTS**                                       |   |
| **(In                  Thousands)**                                                                        |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Col.                  A                                                                                    |   |   | Col.                  B |   |   | Col.                  C |   |   | Col.                  D |   |   | Col.                  E |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   | Additions |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   | Balance                  at |   |   | Charged                  to |   |   | Charged                  to |   |   |   |   |   | Balance                  at |   |
|                                                                                                            |   |   | Beginning |   |   | Costs                  and |   |   | Other                  Accounts - |   |   | Deductions                  - |   |   | End |   |
| Classification                                                                                             |   |   | of                  Period |   |   | Expenses |   |   | Describe                  (a) |   |   | Describe                  (b) |   |   | of                  Period |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                  for Uncollectible                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                  for the Year Ended                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **December                  31, 2005**                                                                     |   | $ | 2,871 |   | $ | 2,073 |   | $ | 85 |   | $ | 1,568 |   | $ | 3,461 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                  for Uncollectible                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                  for the Year Ended                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **December                  31, 2004**                                                                     |   | $ | 3,263 |   | $ | 816 |   | $ | 1,716 |   | $ | 2,924 |   | $ | 2,871 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                  for Uncollectible                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                  for the Year Ended                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **December                  31, 2003**                                                                     |   | $ | 3,258 |   | $ | 3,084 |   | $ | 806 |   | $ | 3,885 |   | $ | 3,263 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)                  Recoveries of accounts previously written off and minor                  adjustments. |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (b)                  Uncollectible accounts written off.                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |