South Jersey Gas Proposes Innovative Conservation and Usage Tariff; Measure Will Help Customers Save Energy and Lower Heating Bills.

FOLSOM, N.J. -- South Jersey Gas filed a petition today with the New Jersey Board of Public Utilities to implement a conservation and usage tariff. "What we are proposing today is an innovative pilot program that would encourage and reward residential, government and business customers for using natural gas more efficiently," said SJG President and CEO Edward Graham.

Within 30 days of BPU approval SJG will launch a comprehensive set of programs designed to both educate and provide an incentive to customers for conserving natural gas. This pilot program will complement our current efforts to promote existing assistance programs and the State's NJ Clean Energy Program. The potential value of these programs has never been greater as customers cope with high energy prices. Outreach efforts emphasizing conservation measures and energy efficiency will include high efficiency equipment upgrades, direct mail, cable television advertising, internet tools, and customized workshops at targeted business and community events.

In conjunction with the offering of these customer-focused energy reduction programs, SJG proposes to implement a Conservation and Usage Adjustment tariff that will provide protection against the erosion of SJG's recovery of the costs to serve its customers. This approach is mutually beneficial to customers and shareholders. Customers will directly benefit from lower heating bills to the extent that they individually implement conservation measures and reduce their usage. Energy savings are directly tied to a customer's natural gas usage. "Under this pilot program, the existing link between customer usage and cost of service recoveries will be severed. As a result, the company can aggressively and creatively encourage changes in customer behavior that lead to increased conservation without negatively impacting our financial stability," said Graham.

Under its existing rate structure, SJG's profitability is tied to the volume of natural gas that customers use. This presents a strong financial disincentive for natural gas utilities to promote conservation in a meaningful way.

The tariff mechanism proposed by SJG represents an innovative approach that is receiving considerable attention nationwide. The National Association of Regulatory Utility Commissioners has passed resolutions supporting the consideration of such an approach and similar mechanisms have been implemented in other states. Additionally, the Natural Resources Defense Council has also supported similar proposals.

SJG'S proposal also provides important advantages for policy makers as well. In particular, the increased emphasis on conservation and energy efficiency is consistent with State policy objectives and is likely to enhance the level of savings achieved through the New Jersey Clean Energy Program. Lastly, by offering the program on a pilot basis, the BPU will have the opportunity to gain valuable experience with this type of program that is receiving substantial national attention.

South Jersey Gas is the principal subsidiary of South Jersey Industries (NYSE:SJI) and provides natural gas utility service to over 317, 000 residential, commercial and industrial customers in Atlantic, Cape May, Cumberland, Salem, and significant portions of Gloucester, Burlington and Camden counties in New Jersey. SJI is rated as one of the nation's top 20 energy companies by Public Utilities Fortnightly. Visit www.sjindustries.com for more details about the company and its programs.