Profile: South Jersey Industries, Inc. (SJI)

South Jersey Industries, Inc. (SJI) is an energy services holding company that provides a variety of energy related products and services through its five wholly owned subsidiaries: South Jersey Gas Company (SJG), South Jersey Energy Company (SJE), South Jersey Resources Group, LLC (SJRG), Marina Energy, LLC (Marina) and South Jersey Energy Service Plus, LLC (SJESP). SJI operates in several operating segments. Gas Utility Operations (SJG) consists primarily of natural gas distribution to residential, commercial and industrial customers. Wholesale Gas Operations include SJRG’s activities. SJE is involved in both retail gas and retail electric activities. Retail Gas and Other Operations include natural gas acquisition and transportation service business lines. Retail Electric Operations consist of electricity acquisition and transportation to commercial and industrial customers. On-Site Energy Production consists of Marina’s thermal energy facility and other energy-related projects. Appliance Service Operations includes SJESP’s servicing of appliances via the sale of appliance service programs, as well as on a time and materials basis, and the installation of residential and small commercial heating, ventilation and air conditioning (HVAC) systems.

South Jersey Gas Company

SJG is an operating public utility company engaged in the purchase, transmission and sale of natural gas for residential, commercial and industrial use. SJG also sells natural gas and pipeline transportation capacity (off-system sales) on a wholesale basis to various customers on the interstate pipeline system, and transports natural gas purchased directly from producers or suppliers to their customers. SJG contributed approximately 51.3% of SJI’s net income during the year ended December 31, 2008. SJG’s service territory covers approximately 2,500 square miles in the southern part of New Jersey. It includes 112 municipalities throughout Atlantic, Cape May, Cumberland and Salem Counties, and portions of Burlington, Camden and Gloucester Counties. As of December 31, 2008, SJG served approximately 65% of households within its territory with natural gas. SJG also serves southern New Jersey’s diversified industrial base that includes processors of petroleum and agricultural products; chemical, glass and consumer goods manufacturer, and technology industrial parks.

As of December 31, 2008, SJG served a total of 340,136 residential, commercial and industrial customers in southern New Jersey. Gas sales, transportation and capacity release amounted to 144.3 million decatherms (MMDth) in 2008, of which 51.2 MMDth were firm sales and transportation, 2.8 MMDth were interruptible sales and transportation and 90.3 MMDth were off-system sales and capacity release. The breakdown of firm sales and transportation includes 45.9% residential, 23% commercial, 25.1% industrial, and 6% cogeneration and electric generation. As of December 31, 2008, SJG served 317,026 residential customers, 22,636 commercial customers and 474 industrial customers. SJG makes wholesale gas sales for resale to gas marketers for ultimate delivery to end users. During 2008, off-system sales amounted to 9.6 MMdth and capacity release amounted to 80.7 MMdth.

SJG has direct connections to two interstate pipeline companies: Transcontinental Gas Pipeline Corporation (Transco) and Columbia Gas Transmission Corporation (Columbia). During 2008, SJG purchased and had delivered approximately 37 MMdth of natural gas for distribution to both on-system and off-system customers. Of this total, 25.3 MMdth was transported on the Transco pipeline system and 11.7 MMdth was transported on the Columbia pipeline system. SJG also secures firm transportation and other long-term services from three additional pipelines upstream of the Transco and Columbia systems. They include Columbia Gulf Transmission Company (Columbia Gulf) and Dominion Transmission Inc. (Dominion). Services provided by these upstream pipelines are utilized to deliver gas into either the Transco or Columbia systems for ultimate delivery to SJG. Transco is SJG’s largest supplier of long-term gas transmission services which includes both year-round and seasonal firm transportation (FT) service arrangements. SJG had two firm transportation services with Dominion, which delivered gas to Transco’s Leidy Line for ultimate delivery to SJG city gate stations. SJG has two firm transportation agreements with Columbia. SJG has one firm transportation agreement with Columbia Gulf.

South Jersey Energy Solutions, LLC

SJRG markets natural gas storage, commodity and transportation assets on a wholesale basis. Customers include energy marketers, electric and gas utilities, and natural gas producers. SJRG’s marketing activities occur mainly in the mid-Atlantic and southern regions of the country. SJRG also conducts price risk management activities by entering into a variety of physical and financial transactions, including forward contracts, swap agreements, option contracts and futures contracts. In 2008, SJRG transacted 110.1 billion cubic feet (Bcf) of natural gas. SJRG contributed approximately 38.7% of SJI’s net income in 2008.

Marina develops and operates energy-related projects. Marina's project provides cooling, heating and emergency power to the Borgata Hotel Casino & Spa in Atlantic City, New Jersey. Marina added service to Borgata’s expanded facilities in July 2006 and service to a new hotel tower in June of 2008. Marina has a 50% equity interest in LVE Energy Partners, LLC, which has entered into a contract to design, build, own and operate a district energy system and central energy center for a planned resort in Las Vegas, Nevada.

Marina’s other projects include 51% equity interest in AC Landfill Energy, LLC (ACLE), 51% equity interest in WC Landfill Energy, LLC (WCLE), 50% equity interest in a partnership that leases and operates a 7,200 kilowatt landfill gas-fired electricity production facility in Burlington County, New Jersey and 50% equity interest in a partnership that will own and operates a 1,900 kilowatt landfill gas-fired electricity production facility in Salem County, New Jersey. Marina contributed approximately 4.2% of SJI’s consolidated net income in 2008.

SJE provides services for the acquisition and transportation of natural gas and electricity for retail end users and markets total energy management services. As of December 31, 2008, SJE marketed natural gas and electricity to approximately 12,500 customers, which consist of approximately 85% residential gas customers and 15% commercial/industrial customers. Customers served by SJE are located within southern New Jersey and northwestern Pennsylvania. In 2008, SJE contributed approximately 3.7% of SJI’s consolidated net income. SJE provides services for the acquisition and transportation of natural gas and electricity for retail end users, markets. As of December 31, 2008, SJE marketed natural gas and electricity to approximately 12,500 customers, which consist of approximately 85% residential customers and 15% commercial/industrial customers.

SJESP installs and services residential and commercial HVAC systems, provides plumbing services, and services appliances via the sale of appliance service programs, as well as on a time and materials basis. SJESP serves southern New Jersey. As of December 31, 2008, SJESP had approximately 70,000 service contract customers, representing approximately 180,000 service contracts for the repair and maintenance of appliances, such as house heaters, water heaters, gas ranges, and electric central air conditioning units. SJESP contributed approximately 1.7% of SJI’s consolidated net income in 2008.

SJI Services, LLC provides services, such as information technology, human resources, government relations, corporate communications, materials purchasing, fleet management and insurance to SJI and its other subsidiaries. Energy & Minerals, Inc. (EMI) principally manages liabilities associated with discontinued operations of non-utility subsidiaries. SJI also has a 50% joint venture investment with Conectiv Solutions, LLC in Millennium Account Services, LLC (Millennium). Millennium provides meter reading services to SJG and Atlantic City Electric Company in southern New Jersey.