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        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 16pt; FONT-FAMILY: Times New Roman, serif">UNITED
STATES</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 16pt; FONT-FAMILY: Times New Roman, serif">SECURITIES
AND EXCHANGE COMMISSION</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman">Washington,
D.C.&#160;20549</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 16pt; FONT-FAMILY: Times New Roman, serif">FORM&#160;10-Q</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman, serif"><font style="DISPLAY: inline;" face="Wingdings">x</font> QUARTERLY REPORT
PURSUANT TO SECTION&#160;13 OR 15(d)&#160;OF THE</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman, serif">SECURITIES
EXCHANGE ACT OF 1934</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">FOR
THE QUARTERLY PERIOD ENDED DECEMBER 31, 2008</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">OR</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Wingdings">o</font> TRANSITION REPORT
PURSUANT TO SECTION&#160;13 OR 15(d) OF THE</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
EXCHANGE ACT OF 1934</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">FOR
THE TRANSITION PERIOD FROM
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
TO&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Commission
file number 1-8359</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 16pt; FONT-FAMILY: Times New Roman, serif">NEW
JERSEY RESOURCES CORPORATION</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
name of registrant as specified in its charter)</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">New
      Jersey</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="38%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22-2376465</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(State
      or other jurisdiction of</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">incorporation
      or organization)</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="38%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(I.R.S.
      Employer</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Identification
      Number)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1415
      Wyckoff Road, Wall, New Jersey&#160;07719</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="38%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">732-938-1480</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(Address
      of principal</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">executive
      offices)</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="38%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(Registrant&#8217;s
      telephone number,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">including
      area code)</font></div>
                </td>
              </tr>
              <tr>
                <td colspan="3" valign="top" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td colspan="3" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Securities
      registered pursuant to Section&#160;12 (b)&#160;of the
  Act:</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      Stock - $2.50 Par Value</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="38%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">New
      York Stock Exchange</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(Title
      of each class)</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="38%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(Name
      of each exchange on which
registered)</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">Indicate
by check mark whether the registrant (1)&#160;has filed all reports required to
be filed by Section&#160;13 or 15 (d)&#160;of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2)&#160;has been subject to
such filing requirements for the past 90 days.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;&#160;&#160;&#160; Yes:&#160;<font style="DISPLAY: inline;" face="Wingdings">x</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;No:&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated, or a smaller reporting company. See
definition of &#8220;large accelerated filer&#8221;, &#8220;accelerated filer&#8221; and &#8220;smaller
reporting company&#8221; in Rule&#160;12b-2 of the Exchange Act. (Check
one):</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">Large
accelerated filer:&#160;<font style="DISPLAY: inline;" face="Wingdings">x</font>&#160;&#160;&#160;&#160;&#160;Accelerated
filer:&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;Non-accelerated
filer:&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;Smaller
reporting company:&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font></font></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="82%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 232pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(Do
      not check if a smaller</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 232pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">reporting
      company)</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160; Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act)</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;Yes:&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;No:&#160;<font style="DISPLAY: inline;" face="Wingdings">x</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160; The number
of shares outstanding of $2.50 par value Common Stock as of February 4, 2009
<font style="DISPLAY: inline; FONT-SIZE: 8pt">was
42,318,558.</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div>
          <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="1">
          <hr style="MARGIN-TOP: -13px; COLOR: #000000" noshade size="4">
        </div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
            </div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
          <div>&#160;</div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman, serif"><a name="toc">TAB</a>LE OF CONTENTS</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
          <div>
            <table cellpadding="0" cellspacing="0" width="100%">
                <tr>
                  <td align="right" colspan="6" valign="top" width="79%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline">Page</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" colspan="5" valign="top" width="74%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#fwdstmt">Information Concerning Forward-Looking
      Statements&#160;&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="5" valign="top" width="74%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td valign="top" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                </tr>
                <tr>
                  <td align="left" colspan="5" valign="top" width="74%" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#fininfo">PART&#160;I &#8211; FINANCIAL INFORMATION</a></font></div>
                  </td>
                  <td valign="top" width="4%" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      2</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#fininfo">ITEM 1.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#fininfo">Financial
      Statements&#160;&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="2" valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="left" colspan="3" valign="top" width="60%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#notestounaudit">Notes to Unaudited Condensed Consolidated Financial
      Statements</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n1">Note 1</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n1">General</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n2">Note 2</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n2">Regulation</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n3">Note 3</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n3">Derivative Instruments</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n4">Note 4</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n4">Fair Value
      Measurements&#160;&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="bottom" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n5">Note 5</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n5">Investments In Equity Investees and Other</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n6">Note 6</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n6">Earnings Per Share</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n7">Note 7</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n7">Debt</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n8">Note 8</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n8">Capitalized Financing Costs And Deferred
      Interest</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n9">Note 9</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n9">Stock-Based Compensation</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n10">Note 10</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n10">Employee Benefit Plans</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n11">Note 11</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n11">Asset Retirement Obligations</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n12">Note 12</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n12">Income Taxes</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n13">Note 13</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n13">Commitments and Contingent Liabilities</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n14">Note 14</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n14">Business Segment and Other Operations Data</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="3" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="right" valign="bottom" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n15">Note 15</a></font></div>
                  </td>
                  <td align="left" valign="bottom" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 97.5pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#n15">Other</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#i2mda">ITEM 2.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#i2mda">Management&#8217;s Discussion and Analysis of Financial Condition
      and Results of&#160;Operations for the Three Months Ended December 31,
      2008</a></font></div>
                  </td>
                  <td align="right" valign="bottom" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#i3qq">ITEM 3.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#i3qq">Quantitative and Qualitative Disclosures About Market
      Risk&#160;&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">45</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#i4">ITEM 4.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#i4">Controls and
      Procedures&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">48</font></div>
                  </td>
                </tr>
                <tr>
                  <td colspan="5" valign="top" width="74%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td valign="top" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                </tr>
                <tr>
                  <td align="left" colspan="5" valign="top" width="74%" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#pt2">PART&#160;II &#8211; OTHER INFORMATION</a></font></div>
                  </td>
                  <td valign="top" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#legal">ITEM 1.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#legal">Legal
      Proceedings&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="bottom" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#i1arsk">ITEM 1A.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#i1arsk">Risk
      Factors&#160;&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#unreg">ITEM 2.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#unreg">Unregistered Sale of Equity Securities and Use of
      Proceeds&#160;&#160;</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#vote">ITEM 4.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#vote">Submission of Matters to a Vote of Security
      Holders&#160;&#160;&#160;</a></font></div>
                  </td>
                  <td align="right" valign="top" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#itemexh">ITEM 6.</a></font></div>
                  </td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#itemexh">Exhibits&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="bottom" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">52</font></div>
                  </td>
                </tr>
                <tr>
                  <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td align="left" colspan="4" valign="top" width="61%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: -9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#sig">Signatures</a></font></div>
                  </td>
                  <td align="right" valign="bottom" width="4%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">53</font></div>
                  </td>
                </tr>
            </table>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">i</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
              <div>&#160;</div>
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="fwdstmt">INFO</a>RMATION CONCERNING FORWARD-LOOKING
      STATEMENTS</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">Certain
statements contained in this report, including, without limitation, statements
as to management expectations and beliefs presented in Part I, Item 2.
&#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of
Operations,&#8221; Part I, Item 3. &#8220;Quantitative and Qualitative Disclosures about
Market Risk,&#8221; Part II, Item&#160;I. &#8220;Legal Proceedings&#8221; and in the notes to the
financial statements are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements can
also be identified by the use of forward-looking terminology such as &#8220;may,&#8221;
&#8220;intend,&#8221; &#8220;expect,&#8221; &#8220;believe&#8221; or &#8220;continue&#8221; or comparable terminology and are
made based upon management&#8217;s expectations and beliefs concerning future
developments and their potential effect upon New Jersey Resources Corporation
(NJR or the Company). There can be no assurance that future developments will be
in accordance with management&#8217;s expectations or that the effect of future
developments on the Company will be those anticipated by
management.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">The
Company cautions readers that the assumptions that form the basis for
forward-looking statements regarding customer growth, customer usage, financial
condition, results of operations, cash flows, capital requirements, market risk
and other matters for fiscal 2009 and thereafter include many factors that are
beyond the Company&#8217;s ability to control or estimate precisely, such as estimates
of future market conditions, the behavior of other market participants and
changes in the debt and equity capital markets. The factors that could cause
actual results to differ materially from NJR&#8217;s expectations include, but are not
limited to, those discussed in Risk Factors in Item 1A, as well as the
following:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">weather
      and economic conditions;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">demographic
      changes in the New Jersey Natural Gas (NJNG) service
      territory;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      rate of NJNG customer growth;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">volatility
      of natural gas commodity prices and its impact on customer usage, cash
      flow, NJR Energy Services&#8217; (NJRES) operations and on the Company&#8217;s risk
      management efforts;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">changes
      in rating agency requirements and/or credit ratings and their effect on
      availability and cost of capital to the Company;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">continued
      volatility or seizure of the credit markets that would result in the
      decreased availability and access to credit at NJR to fund and support
      physical gas inventory purchases and other working capital needs at NJRES,
      and all other non-regulated subsidiaries, as well as negatively affect
      access to the commercial paper market and other short-term financing
      markets at NJNG to allow it to fund its commodity purchases and meet its
      short-term obligations as they come due;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td align="left" valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      impact to the asset values and funding obligations of NJR&#8217;s pension and
      postemployment benefit plans as a result of a continuing downturn in the
      financial markets;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td align="left" valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">increases
      in borrowing costs associated with variable-rate debt;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">commercial
      and wholesale credit risks, including creditworthiness of customers and
      counterparties;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      ability to obtain governmental approvals and/or financing for the
      construction, development and operation of certain non-regulated energy
      investments;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">risks
      associated with the management of the Company&#8217;s joint ventures and
      partnerships;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      impact of governmental regulation (including the regulation of
      rates);</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">conversion
      activity and other marketing efforts;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">actual
      energy usage of NJNG&#8217;s customers;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      pace of deregulation of retail gas markets;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">access
      to adequate supplies of natural gas;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      regulatory and pricing policies of federal and state regulatory
      agencies;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      ultimate outcome of pending regulatory proceedings, including the possible
      expiration of the Conservation Incentive Program (CIP);</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">changes
      due to legislation at the federal and state level;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      availability of an adequate number of appropriate counterparties in the
      wholesale energy trading market;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">sufficient
      liquidity in the wholesale energy trading market and continued access to
      the capital markets;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      disallowance of recovery of environmental-related expenditures and other
      regulatory changes;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">environmental-related
      and other litigation and other uncertainties;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">the
      effects and impacts of inflation on NJR and its subsidiaries
      operations;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">change
      in accounting pronouncements issued by the appropriate standard setting
      bodies; and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.4pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">terrorist
      attacks or threatened attacks on energy facilities or unrelated energy
      companies.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">While
the Company periodically reassesses material trends and uncertainties affecting
the Company&#8217;s results of operations and financial condition in connection with
its preparation of management&#8217;s discussion and analysis of results of operations
and financial condition contained in its Quarterly and Annual Reports, the
Company does not, by including this statement, assume any obligation to review
or revise any particular forward-looking statement referenced herein in light of
future events.</font></div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">&#160;</div>
          <div>&#160;</div>
          <div>&#160;</div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
1</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div>
          <div style="TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div style="TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
          <div style="TEXT-ALIGN: center">&#160;</div>
          <div style="TEXT-ALIGN: center">&#160;</div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="fininfo">ITEM </a>1. FINANCIAL
STATEMENTS</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="part1">CO</a>NDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)</font></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="75%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="5" valign="bottom" width="20%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Three Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;
      &#160; December&#160;31,</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands,&#160;except&#160;per&#160;share&#160;data)</font></div>
                </td>
                <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;
      &#160; 2008</font></div>
                </td>
                <td colspan="3" valign="bottom" width="13%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;
      2007</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="75%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">OPERATING
      REVENUES</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$801,304</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$811,138</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">OPERATING
      EXPENSES</font></div>
                </td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gas
      purchases</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">698,145</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">684,694</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operation
      and maintenance</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36,408</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32,179</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Regulatory
      rider expenses</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13,561</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,165</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Depreciation
      and amortization</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,361</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,403</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      and other taxes</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23,633</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,160</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      operating expenses</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">779,108</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">756,601</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">OPERATING
      INCOME</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22,196</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">54,537</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      income</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">858</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,528</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
      expense, net</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,547</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,810</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">INCOME
      BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16,507</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">48,255</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Income
      tax provision</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,245</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,494</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Equity
      in earnings of affiliates, net of tax</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">514</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">424</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NET
      INCOME</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$11,776</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      30,185</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">EARNINGS
      PER COMMON SHARE</font></div>
                </td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">BASIC</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.28</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.72</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DILUTED</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.28</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.72</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DIVIDENDS
      PER COMMON SHARE</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.31</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.27</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">WEIGHTED
      AVERAGE SHARES OUTSTANDING</font></div>
                </td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">BASIC</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,170</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41,678</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="75%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DILUTED</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,495</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41,928</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See Notes
to Unaudited Condensed Consolidated Financial Statements</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
2</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font>&#160;</div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      1. FINANCIAL STATEMENTS (Continued)</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div align="left">
            <table cellpadding="0" cellspacing="0" width="98%">
                <tr>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td colspan="6" nowrap valign="bottom">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Three
      Months Ended</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                </tr>
                <tr>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td colspan="6" nowrap valign="bottom">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">December
      31,</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                </tr>
                <tr>
                  <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-STYLE: italic; FONT-FAMILY: times new roman, serif">(Thousands)</font></div>
                  </td>
                  <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">2008</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">2007</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                </tr>
                <tr>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="6" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr>
                  <td align="left" valign="bottom">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">CASH
      FLOWS FROM OPERATING ACTIVITIES</font></div>
                  </td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="2" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="2" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Net
      income</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%">&#160;</td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$
      11,776</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%">&#160;</td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;&#160;
      30,185</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Adjustments
      to reconcile net income to cash flows from operating
      activities:</font></div>
                  </td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Unrealized
      loss on derivative instruments</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">7,086</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">3,080</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Depreciation
      and amortization</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">7,581</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">9,478</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Allowance
      for funds (equity) used during construction</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#8212;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(373
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Deferred
      income taxes</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(4,794
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">8,549</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Manufactured
      gas plant remediation costs</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(5,875
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(4,041
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Equity
      in earnings from investments, net of distributions</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(514
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">1,512</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Cost
      of removal &#8211; asset retirement obligations</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(19
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="left" valign="bottom" width="70%">
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      FLOWS FROM INVESTING ACTIVITIES</font></div>
                  </td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                  <td align="left" valign="bottom" width="70%">
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                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Utility
      plant</font></div>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(18,207
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(13,526
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Real
      estate properties and other</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(145
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(168
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Cost
      of removal</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(1,462
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Investments
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(21,000
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Withdrawal
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                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(1,126
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(11,776
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Net
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Cash
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" valign="bottom" width="70%">
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                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(16,663
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Cash
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(43,369
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" valign="bottom" width="70%">
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(6,541
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" valign="bottom" width="70%">
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">(51,882
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="left" valign="bottom" width="70%">
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">7,299</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">)</font></td>
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                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
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                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">SUPPLEMENTAL
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <tr bgcolor="white">
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                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Cash
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                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$4,185</font></td>
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%">&#160;</td>
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                <tr bgcolor="white">
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                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Income
      taxes</font></div>
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                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
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        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">See
Notes to Unaudited Condensed Consolidated Financial Statements</font></div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">&#160;</div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
3</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
          <div>&#160;</div>
          <div>&#160;</div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      1. FINANCIAL STATEMENTS (Continued)</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ASSETS</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September&#160;30,</font></div>
                </td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom">
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                </td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Utility
      plant, at cost</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,384,312</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
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                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Real
      estate properties and other, at cost</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">29,953</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">29,808</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,414,265</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,396,045</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accumulated
      depreciation and amortization</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(385,879
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(378,759
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 32pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Property,
      plant and equipment, net</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,028,386</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,017,286</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Regulatory
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,080</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gas
      in storage, at average cost</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">370,488</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">478,549</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Materials
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,110</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Prepaid
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,641</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">37,271</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Derivatives,
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                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">224,123</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">208,703</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Broker
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
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              <tr bgcolor="white">
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                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,072,507</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,109,666</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NONCURRENT
      ASSETS</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Investments
      in equity investees and other</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">139,970</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">115,981</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Regulatory
      assets</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">407,014</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">340,670</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Derivatives,
      at fair value</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27,226</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24,497</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Restricted
      cash construction fund</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,200</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,284</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13,092</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 32pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      noncurrent assets</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">586,494</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">498,440</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 56pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      assets</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,687,387</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,625,392</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See Notes
to Unaudited Condensed Consolidated Financial Statements</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
4</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
          <div>&#160;</div><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      1. FINANCIAL STATEMENTS (Continued)</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CAPITALIZATION
AND LIABILITIES</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September&#160;30,</font></div>
                </td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
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                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" valign="bottom" width="70%">
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">272,147</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">315,516</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">43,375</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
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                <td align="left" valign="bottom" width="70%">
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
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                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Deferred
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,090</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Derivatives,
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20,315</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">120,230</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">120,730</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Postemployment
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Regulatory
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
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              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Asset
      retirement obligation</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24,768</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24,416</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,624</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,510</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      noncurrent liabilities</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">571,693</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">549,348</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Commitments
      and contingent liabilities (<font style="DISPLAY: inline; FONT-STYLE: italic">Note
13</font>)</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 32pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      capitalization and liabilities</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,687,387</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,625,392</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See Notes
to Unaudited Condensed Consolidated Financial Statements</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
5</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
          </div><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="notestounaudit">NO</a>TES TO UNAUDITED CONDENSED CONSOLIDATED
      FINANCIAL STATEMENTS</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n1">GE</a>NERAL</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
accompanying unaudited condensed consolidated financial statements have been
prepared by New Jersey Resources Corporation (NJR or the Company) in accordance
with the rules and regulations of the Securities and Exchange Commission (SEC).
The September 30, 2008 balance sheet data is derived from the audited financial
statements of the Company. These unaudited condensed consolidated financial
statements should be read in conjunction with the financial statements and the
notes thereto included in NJR&#8217;s 2008 Annual Report on Form 10-K.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
unaudited condensed consolidated financial statements include the accounts of
NJR and its subsidiaries, New Jersey Natural Gas Company (NJNG), NJR Energy
Services Company (NJRES), NJR Retail Holdings Corporation (Retail Holdings), NJR
Energy Investment Corporation (NJREI) and NJR Service Company (NJR Service).
Intercompany transactions and accounts have been eliminated. NJREI&#8217;s primary
subsidiaries are NJR Energy Corporation (NJR Energy) and NJR Steckman Ridge
Storage Company. NJR Energy invests primarily in energy-related ventures through
its subsidiary, NJNR Pipeline Company (Pipeline), which holds the Company&#8217;s 5.53
percent ownership interest in Iroquois Gas and Transmission System, L.P.
(Iroquois). NJR Steckman Ridge Storage Company holds the Company&#8217;s 50 percent
combined interest in Steckman Ridge GP, LLC and Steckman Ridge, LP
(collectively, Steckman Ridge), a natural gas storage facility that was acquired
and is being developed with a partner in western Pennsylvania. Retail Holdings&#8217;
two principal subsidiaries are NJR Home Services Company (NJRHS) and Commercial
Realty &amp; Resources Corporation (CR&amp;R).</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments&#160;necessary for a fair
presentation of the results of the interim periods presented. These adjustments
are of a normal and recurring nature.&#160;&#160;Because of the seasonal nature
of NJR&#8217;s utility and wholesale energy services operations, in addition to other
factors, the financial results for the interim periods presented are not
indicative of the results that are to be expected for the fiscal year ended
September 30, 2009.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Customer
Accounts Receivable</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Customer
accounts receivable include outstanding billings from the following subsidiaries
as of:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="60%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="16%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="15%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" width="60%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="16%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="15%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="60%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJNG</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      62,824</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24
      </font></td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      21,398</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="60%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">188,135</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">198,902</font></td>
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                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">88</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td valign="bottom" width="60%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRHS
      and other</font></div>
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                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,868</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3</font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,832</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="60%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$258,827</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100
      </font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$227,132</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></td>
              </tr>
          </table>
        </div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounts
receivable related to estimated unbilled revenues and allowance for doubtful
accounts are associated with NJNG only.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Gas
in Storage</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table summarizes Gas in storage by company as of:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="54%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="17%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="16%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="54%" style="PADDING-BOTTOM: 1pt"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="6%" style="PADDING-BOTTOM: 1pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="17%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="16%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="54%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">($
      in thousands)</font></div>
                </td>
                <td valign="bottom" width="6%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="7%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Assets</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Bcf</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Assets</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Bcf</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJNG</font></div>
                </td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$163,808</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19.4</font></td>
                <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$189,828</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22.1</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="54%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">206,680</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30.6</font></td>
                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">288,721</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27.6</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="54%" style="BORDER-BOTTOM: black 1.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$370,488</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50.0</font></td>
                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$478,549</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">49.7</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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6</font></div>
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            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
        </div>
        <div>&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">New
Accounting Standards</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Recently
Adopted</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
October 1, 2008 NJR adopted Statement of Financial Accounting Standards (SFAS)
No. 157, <font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value
Measurements</font> (SFAS 157) for its financial assets and liabilities, with
the exception of its pension assets. NJR will apply the provisions of SFAS 157
to its pension assets and non-financial assets and liabilities that are not
measured at least annually prospectively on October 1, 2009. SFAS 157 defines
fair value as the amount that would be exchanged to sell an asset or transfer a
liability in an orderly transaction between market participants, and establishes
a fair value hierarchy of market and unobservable data that is used to develop
pricing assumptions. The adoption of SFAS 157 did not have a material impact on
NJR&#8217;s financial position or results of operations. See <font style="DISPLAY: inline; FONT-STYLE: italic">Note 4, Fair Value
Measurements</font>, for more information on the adoption of SFAS 157, as well
as the required disclosures.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On April
10, 2007, the FASB issued FASB Staff Position No. FIN 39-1 (FSP FIN 39-1),
Amendment of FASB Interpretation No. 39. FSP FIN 39-1 provides additional
guidance for parties that are subject to master netting arrangements.
Specifically, for transactions that are executed with the same counterparty, it
permits companies to offset the fair values of amounts recognized for
derivatives as well as the related fair value amounts of cash collateral
receivables or payables, when certain conditions apply. FSP FIN 39-1 became
effective for fiscal years beginning after November 15, 2007. As NJR&#8217;s policy
has been to present its derivative positions and any receivables or payables
with the same counterparty on a gross basis, FSP FIN 39-1 had no impact on its
statement of financial position and results of operations.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Other
Recently Issued Standards</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
February 2007, the FASB issued SFAS No. 159, <font style="DISPLAY: inline; FONT-STYLE: italic">The Fair Value Option for Financial
Assets and Financial Liabilities</font> (SFAS 159). SFAS 159 permits entities to
elect to measure eligible items at fair value as an alternative to hedge
accounting and to mitigate volatility in earnings. A company can elect either
the fair value option according to a pre-existing policy, when the asset or
liability is first recognized, or when it enters into an eligible firm
commitment. Changes in the fair value of assets and liabilities, for which the
Company chooses to apply the fair value option, are reported in earnings at each
reporting date. SFAS 159 also provides guidance on disclosures that are intended
to provide comparability to other companies&#8217; assets and liabilities that have
different measurement attributes and to other companies with similar financial
assets and liabilities. SFAS 159 became effective for NJR as of October 1, 2008;
however, since the Company did not elect the fair value option for any items,
the provisions of SFAS 159 do not impact our results of operations or financial
condition.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 4, 2007, the FASB issued SFAS No. 160, <font style="DISPLAY: inline; FONT-STYLE: italic">Non-controlling Interests in
Consolidated Financial Statements</font> (SFAS 160). SFAS 160 is an amendment of
Accounting Research Bulletin (ARB) No. 51 and was issued to improve the
relevance, comparability and transparency of the financial information that a
reporting entity provides in its consolidated financial statements. This
Statement applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations, but will affect only those
entities that have an outstanding non-controlling interest in one or more
subsidiaries. SFAS 160 clarifies that a non-controlling interest in a subsidiary
is an ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements and that a parent company must
recognize a gain or loss in net income when a subsidiary is deconsolidated. SFAS
160 is effective for fiscal years beginning after December 15, 2008, and early
adoption is prohibited. The Company has concluded that this statement will have
no impact on its statement of financial position and results of
operations.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
2008, the FASB issued SFAS No. 161, <font style="DISPLAY: inline; FONT-STYLE: italic">Disclosures about Derivative
Instruments and Hedging Activities</font>, (SFAS 161). SFAS 161 requires
enhanced qualitative and quantitative disclosures on the objectives and
accounting for derivatives and related hedging activities, as well as their
impacts&#160;on the financial statements. SFAS 161 is effective for fiscal years
and interim periods beginning after November 15, 2008. NJR will adopt SFAS 161
during the second quarter of fiscal year 2009 and is evaluating the effect of
adoption on its footnote disclosures.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
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7</font></div>
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            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n2">RE</a>GULATION</font></div>
                </td>
              </tr>
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        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">October
Base Rate Order</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
result of increases in NJNG&#8217;s operation, maintenance and capital costs, on
November 20, 2007, NJNG petitioned the New Jersey Board of Public Utilities
(BPU) to increase base rates for delivery service by approximately $58.4
million, which included a return on NJNG&#8217;s equity component of 11.5 percent.
This request was consistent with NJNG&#8217;s objectives of providing safe and
reliable service to its customers and earning a market-based return on its
regulated investments.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
October 3, 2008, the BPU unanimously approved and made effective the settlement
of NJNG&#8217;s base rate case. As a result, NJNG received a revenue increase in its
base rates of $32.5 million, which is inclusive of an approximate $13 million
impact of a change to the Conservation Incentive Program (CIP) baseline usage
rate, received an allowed return on equity component of 10.3 percent, reduced
its depreciation expense component from 3.0 percent to 2.34 percent and reduced
its annual depreciation expense&#160;by $1.6 million as a result of the
amortization of previously recovered asset retirement obligations.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Conservation
Incentive Program (CIP)</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The CIP
allows NJNG to recover utility gross margin variations related to both weather
and customer usage. Recovery of such utility gross margin variations (filed for
annually and recovered one year following the end of the CIP usage year) is
subject to additional conditions, including an earnings test and an evaluation
of Basic Gas Supply Service (BGSS) related savings.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In May
2008, NJNG filed its Petition for the Annual Review of its CIP Program for
recoverable CIP amounts for fiscal 2008, requesting an additional $6.8 million
and approval to modify its CIP recovery rates effective October 1, 2008. The
additional amount brought the total recovery requested to $22.4 million. On
October 3, 2008, the BPU approved the CIP petition on a provisional basis,
effective the date of the Board Order.&#160;It is anticipated that NJNG will
file a petition in the spring of 2009 to extend its CIP or implement a similar
mechanism on a permanent basis, to be effective October 1, 2009.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
conjunction with the CIP, NJNG incurs costs related to its obligation to fund
programs that promote customer conservation efforts during the three-year term
of the CIP pilot program. As of December 31, 2008, NJNG had a remaining
liability of $662,000 related to these programs.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Basic
Gas Supply Service (BGSS)</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">BGSS is a
BPU approved rate mechanism designed to allow for the recovery of natural gas
commodity costs. NJNG periodically adjusts its periodic BGSS rates for its
residential and small commercial customers to reflect increases or decreases in
the cost of natural gas sold to customers.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In May
2008, NJNG filed for an increase to the periodic BGSS factor to be effective
October 1, 2008, that would increase an average residential heating customer&#8217;s
bill by approximately 18 percent due to an increase in the price of wholesale
natural gas. Subsequent to the time of the filing, wholesale natural gas prices
moderated, and on September 22, 2008, NJNG, the Staff of the BPU and the
Department of the Public Advocate, Division of Rate Counsel (Rate Counsel)
signed an agreement for an increase to the periodic BGSS factor that would
increase an average residential heating customer&#8217;s bill by approximately 8.9
percent. On October 3, 2008, the BPU approved the BGSS increase on a provisional
basis, effective the date of the Board Order.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 17, 2008, NJNG provided notice that it would implement a $30 million
BGSS-related rate credit that will lower sales customers&#8217; bills in January and
February 2009. This rate credit was due primarily to a decline in wholesale
commodity costs subsequent to the October 2008 BGSS price change.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
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8</font></div>
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            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
          <div>&#160;</div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Other
Incentive Programs</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG is
eligible to receive financial incentives for reducing BGSS costs through a
series of utility gross margin-sharing programs that include off-system sales,
capacity release, storage incentive and financial risk management (FRM)
programs. In October 2007, the BPU reduced the sharing percentage of the margin
generated by the FRM program retained by NJNG from 20 percent to 15 percent
effective November 1, 2007. In October 2008, the Board&#8217;s base rate&#160;order
provided for the extension of the incentive programs through October 31, 2011,
along with a moderate expansion of the storage incentive and FRM
programs.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Societal
Benefits Charge (SBC) and Weather Normalization Clause (WNC)</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The SBC
is comprised of three primary components: a Universal Service Fund rider (USF),
a Manufactured Gas Plant (MGP) Remediation Adjustment (RA), and the New Jersey
Clean Energy Program (NJCEP). In February 2008, NJNG filed an application
regarding its SBC proposing no change to the rates previously approved in
October 2007 (February 2008 SBC filing). On January 27, 2009, NJNG filed an
application regarding its SBC to increase its RA factor and its NJCEP factor
while maintaining its effective rate on USF (January 2009 SBC filing). The
January 2009 SBC filing is subject to BPU staff and Rate Counsel review and must
be approved by the BPU prior to implementing the new SBC rates.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">USF</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
the USF, eligible customers receive a credit toward their utility bill. The
credits applied to eligible customers are recovered through the USF rider in the
SBC. NJNG recovers carrying costs on deferred USF balances.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June
2008, the natural gas utilities in the State of New Jersey collectively filed
with the BPU to increase the statewide USF recovery rate effective October 1,
2008. In the BPU&#8217;s October 21, 2008 Order, the USF increase was approved on a
provisional basis, effective October 24, 2008 and it also approved interest on
USF deferred balances at the Treasury Constant Maturity 2-year rate, plus 60
basis points, net of tax, with the rate changing on a monthly basis. NJNG
believes the increase has a negligible impact on customers.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">MGP</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
October 2007, the BPU approved $14.7 million in eligible costs to be recovered
annually for MGP remediation expenditures incurred through June 30, 2006.<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#160;</font>The February
2008 SBC filing included MGP remediation expenditures incurred through June 30,
2007, resulting in an expected annual recovery of $17.7 million. The January
2009 SBC filing included MGP remediation expenditures incurred through June 30,
2008 resulting in an expected annual recovery of $20.7 million.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">New
Jersey Clean Energy Program (NJCEP)</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
October 2008, the BPU released a final Order, updating state utilities&#8217; funding
obligations for NJCEP for the period from January 1, 2009 to December 31, 2012.
NJNG&#8217;s share of the total funding requirement of $1.2 billion is $50.8
million.&#160;Accordingly, as of December 31, 2008 NJNG recorded the obligation
and a corresponding regulatory asset at a present value of $44.3 in the
Unaudited Condensed Consolidated Balance Sheets. NJNG&#8217;s annual obligation
gradually increases from $10.3 million in fiscal 2009 to $15.9 million in fiscal
2012. As of December 31, 2008, NJNG also has a $2.2 million obligation remaining
from the January 1, 2005 to December 31, 2008 period. The January 2009 SBC
filing included an increase to the NJCEP factor. The proposed factor is expected
to recover $12.9 million annually.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">WNC</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, NJNG has a $629,000 unrecovered balance related to gross
margin variations incurred during the fiscal 2006 winter period. On October 3,
2008, the BPU provisionally approved a decrease to NJNG&#8217;s WNC rate, effective
the date of the Board Order, to fully recover its remaining WNC
balance.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
9</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Economic
Stimulus</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
January 20, 2009, NJNG filed two petitions with the BPU seeking approval to
implement programs designed to both stimulate the state and local economy
through infrastructure investments and encourage energy efficiency. If approved,
the Accelerated Infrastructure Investment Program (AIP) will allow NJNG to
accelerate $70.8 million of previously planned infrastructure projects,
maintaining safe and reliable service to NJNG&#8217;s customers while increasing
workforce development. Proposed as a 2-year program, the AIP will be funded
through an annual adjustment to customers&#8217; base rates. The second filing, for an
Energy Efficiency (EE) Program and associated cost recovery mechanism, requests
BPU approval to implement various programs to encourage energy efficiency for
residential and commercial customers. NJNG proposed to recover the EE costs of
approximately $22.9 million over a 4-year period through a clause mechanism
similar to the SBC. Both programs include the recovery of NJNG&#8217;s overall cost of
capital.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Regulatory
Assets&#160;&amp; Liabilities</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company had the following regulatory assets, all related to NJNG, on the
Unaudited Condensed Consolidated Balance Sheets:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td align="left" valign="bottom" width="54%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-STYLE: italic; FONT-FAMILY: times new roman, serif">(Thousands)</font></div>
                </td>
                <td colspan="5" valign="bottom" width="14%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font>
      <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">December
      31,</font> </div>
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">2008</font></div>
                </td>
                <td colspan="3" nowrap valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">September
      30,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">2008</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" colspan="2" nowrap valign="bottom" width="16%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Recovery
      Period</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Regulatory
      assets&#8211;current</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" colspan="2" nowrap valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" colspan="2" nowrap valign="bottom" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Underrecovered
      gas costs</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;
      2,977</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;
      27,994</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" colspan="2" nowrap valign="bottom" width="16%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Less
      than one year <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">WNC</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">629</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">919</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" colspan="2" nowrap valign="bottom" width="16%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Less
      than one year <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic">(2)</font></font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="54%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">CIP</font></div>
                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17,474</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">22,463</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" colspan="2" nowrap valign="bottom" width="16%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Less
      than one year <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic">(3)</font></font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="54%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Total
      current</font></div>
                </td>
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                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Remediation
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Expended,
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                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;</font></td>
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              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Liability
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                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;</font></td>
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              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">CIP</font></div>
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                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,275</font></td>
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                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;</font></td>
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              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Deferred
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                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,624</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">12,726</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" colspan="2" nowrap valign="bottom" width="16%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Various
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                </td>
                <td align="left" nowrap valign="bottom" width="4%">
                  <div style="TEXT-ALIGN: left">&#160;</div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Derivatives
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                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">77,528</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" colspan="3" valign="bottom" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(8</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">)</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="54%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Postemployment
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                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">52,472</font></td>
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                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;</font></td>
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              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="54%" style="BORDER-BOTTOM: black 1pt solid">
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                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" colspan="2" nowrap valign="bottom" width="16%" style="BORDER-BOTTOM: black 1pt solid">
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                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="54%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Total
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                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$407,014</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$340,670</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(1)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable,
      subject to BPU approval, through BGSS, without
interest.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(2)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable
      as a result of BPU approval in October 2008, without interest. This
      balance reflects the net results from winter period of fiscal 2006. No new
      WNC activity has been recorded since October 1, 2006 due to the existence
      of the CIP.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(3)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable
      or refundable, subject to BPU annual approval, without interest. Balance
      includes approximately $6.6 million relating to the weather component of
      the calculation and approximately $10.9 million relating to the customer
      usage component of the calculation. Recovery from customers is designed to
      be one year from date of rate approval by the BPU.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(4)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable,
      subject to BPU approval, with interest over rolling 7-year
      periods.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(5)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Estimated
      future expenditures. Recovery will be requested when actual expenditures
      are incurred (see <font style="DISPLAY: inline; FONT-STYLE: italic">Note
      13. Commitments and Contingent Liabilities &#8211; Legal
      Proceedings).</font></font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(6)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable
      or refundable, subject to BPU annual approval, without interest. Balance
      includes approximately $523,000 relating to the weather component of the
      calculation and approximately $752,000 relating to the customer usage
      component of the calculation.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(7)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable
      without interest, subject to BPU approval.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(8)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable,
      subject to BPU approval, through BGSS, without
interest.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(9)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable
      or refundable, subject to BPU approval, without interest. Includes
      unrecognized service costs recorded in accordance with SFAS No. 158, <font style="DISPLAY: inline; FONT-STYLE: italic">Employers&#8217; Accounting for
      Defined Benefit Pension and Other Postemployment Plans</font> that NJNG
      has determined are recoverable in rates charged to customers (see <font style="DISPLAY: inline; FONT-STYLE: italic">Note 10. Employee Benefit
      Plans).</font></font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(10)</font></div>
                </td>
                <td valign="top" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Recoverable
      with interest, subject to BPU
approval.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If there
are any changes in regulatory positions that indicate the recovery of regulatory
assets is not probable, the related cost would be charged to income in the
period of such determination.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
10</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company had the following regulatory liabilities, all related to NJNG, on the
Unaudited Condensed Consolidated Balance Sheets:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" colspan="2" valign="bottom" width="71%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="2" valign="top" width="15%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,&#160;</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td colspan="2" valign="bottom" width="14%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,&#160;</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" colspan="2" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Regulatory
      liabilities&#8211;noncurrent</font></div>
                </td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" colspan="2" valign="bottom" width="71%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cost
      of removal obligation <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$61,820</font></div>
                </td>
                <td valign="top" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$63,419</font></div>
                </td>
                <td align="left" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" colspan="2" valign="bottom" width="71%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total-noncurrent</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$61,820</font></div>
                </td>
                <td valign="top" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$63,419</font></div>
                </td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(1)</font></div>
                </td>
                <td colspan="5" valign="top" width="97%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">NJNG
      accrues and collects for cost of removal in rates. This liability
      represents collections in excess of actual expenditures. Approximately
      $21.3 million, including accretion of $370,000 for the three months ended
      December 31, 2008, of regulatory assets relating to asset retirement
      obligations have been netted against the cost of removal obligation as of
      December 31, 2008 (see <font style="DISPLAY: inline; FONT-STYLE: italic">Note 11. Asset Retirement
      Obligations).</font></font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n3">DER</a>IVATIVE INSTRUMENTS</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company and its subsidiaries are subject to market risk due to fluctuations in
the price of natural gas. To manage the risk of such fluctuations, the Company
and its subsidiaries enter into financial futures and forward contracts, option
agreements and swap agreements to economically hedge future purchases and sales
of natural gas.&#160;Due to the nature of these arrangements, they qualify as
derivatives in accordance with FAS 133.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
October 1, 2007, the Company changed the treatment of its physical commodity
contracts at NJRES, such that the changes in fair value of new
contracts&#160;are included in earnings, and are not accounted for using the
&#8220;normal purchase normal sales&#8221; (normal) scope exception of SFAS 133. As well,
effective October 1, 2008, due to changes in the Company&#8217;s ability to assert
physical delivery, the Company is no longer treating physical commodity
contracts executed prior to October 1, 2007 as normal. Therefore, all NJRES
physical commodity contracts are accounted for at fair value in the Unaudited
Condensed Consolidated Balance Sheets, with changes in fair value included as a
component of gas purchases in the Unaudited Condensed Consolidated Statements of
Income. All physical commodity contracts at NJNG and NJR Energy continue to be
designated as normal and accounted for under accrual accounting.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All of
the Company&#8217;s financial derivative instruments (financial futures, options or
swaps), are accounted for in accordance with SFAS&#160;133 and recorded at fair
value in the Unaudited Condensed Consolidated Balance Sheets. Changes in fair
value are recorded as a component of Gas purchases or Operating revenues, for
NJRES and NJR Energy, respectively, in the Unaudited Condensed Consolidated
Statements of Income as unrealized gains or losses. Changes in fair value of
NJNG&#8217;s financial derivative instruments are recorded as a component of
Regulatory assets or liabilities in the Unaudited Condensed Consolidated Balance
Sheets, as these amounts will be recovered through future BGSS amounts as an
increase or reduction to the cost of natural gas in NJNG&#8217;s tariff.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company enters into financial derivative instruments as an economic hedge of the
purchase and sale of natural gas. These derivatives are marked at fair value and
recognized in the Unaudited Condensed Consolidated Statements of Income as a
component of Gas purchases, or Operating revenues, as appropriate, in the
current period. However, the change in value of the actual physical natural gas
purchase is recognized in income only when that natural gas has been sold, which
is normally in a future period. Therefore, mismatches between the timing of
recognizing gains or losses on the derivative instruments and the timing of the
actual sale of the natural gas that is being economically hedged creates
volatility in the results of NJR, although the Company&#8217;s true economic results
are unaffected.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Generally,
exchange-traded futures contracts require a deposit of margin cash, the amount
of which is subject to change based on market price movements and in accordance
with exchange rules. The Company maintains broker margin accounts for NJNG and
NJRES. The balances are as follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><br>&#160;</div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="bottom" width="68%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="3" valign="top" width="14%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="3" valign="bottom" width="14%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJNG
      broker margin deposit</font></div>
                </td>
                <td align="right" valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
                </td>
                <td align="right" valign="top" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">74,884</font></div>
                </td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41,277</font></div>
                </td>
                <td align="left" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="68%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES
      broker margin (liability)</font></div>
                </td>
                <td align="right" valign="top" width="5%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
                </td>
                <td align="right" valign="top" width="4%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(10,797</font></div>
                </td>
                <td align="left" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)&#160;</font></div>
                </td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(29,072</font></div>
                </td>
                <td align="left" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div>&#160;</div>
        <div>&#160;</div>
        <div>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
11</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center" align="left">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" colspan="9" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td colspan="9" valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n4">FAIR</a> VALUE MEASUREMENTS</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As noted
in Note 1, <font style="FONT-STYLE: italic">General,</font> NJR adopted SFAS 157
and has applied the provisions to its financial assets and liabilities, which
include financial derivatives, physical commodity contracts qualifying as
derivatives, available for sale securities and other financial assets and
liabilities. SFAS 157 defines and establishes a framework for measuring fair
value. SFAS 157 requires that companies consider assumptions market participants
would make when pricing assets and liabilities that are required to be
recognized at fair value in accordance with previously issued accounting
pronouncements.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SFAS 157
also requires additional disclosures that are intended to convey the reliability
of price inputs used to determine fair value. To facilitate this, SFAS 157
established a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value based on the source of the data used to
develop the price inputs. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities and the
lowest priority to inputs that are based on unobservable market data and include
the following:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Level&#160;1&#160;&#160;</font></div>
                </td>
                <td valign="top" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unadjusted
      quoted prices for identical assets or liabilities in active markets; NJR&#8217;s
      Level 1 assets and liabilities include primarily exchange traded financial
      derivative contracts and listed equities;</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="middle" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="middle" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Level&#160;2&#160;&#160;</font></div>
                </td>
                <td valign="top" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Significant
      price data, other than Level 1 quotes, that is observed either directly or
      indirectly; NJR&#8217;s level 2 assets and liabilities include over-the-counter
      physical forward commodity contracts and swap contracts
      or&#160;derivatives that are initially valued using observable quotes and
      are subsequently adjusted to include time value, credit risk or estimated
      transport pricing components. These additional adjustments are not
      considered to be significant to the ultimate recognized
      values.</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="middle" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="middle" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Level&#160;3&#160;&#160;</font></div>
                </td>
                <td valign="top" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Inputs
      derived from a significant amount of unobservable market data; these
      include NJR&#8217;s best estimate of fair value and are derived primarily
      through the use of internal valuation methodologies. Certain of NJR&#8217;s
      physical commodity contracts that are to be delivered to inactively traded
      points on a pipeline are included in this
  category.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s,
NJRES&#8217; and NJR Energy&#8217;s financial derivatives portfolios can consist of futures,
options and swaps. NJR primarily uses the market approach and its policy is to
use actively quoted market prices when available. The principal market for its
derivative transactions is the natural gas wholesale market, therefore, the
primary source for its price inputs is the New York Mercantile (NYMEX) exchange.
NJRES also uses Natural Gas Exchange (NGX) for Canadian delivery points and
Platts and NYMEX ClearPort for certain over the counter physical forward
commodity contracts.&#160;&#160;However, NJRES also engages in transactions
which result in transporting natural gas to delivery points for which there is
no actively quoted market price. In these cases, NJRES&#8217; policy is to use the
best information available to determine fair value based on internal pricing
models, which include estimates extrapolated from broker quotes or pricing
services. As of December 31, 2008, less than 1 percent of total fair value of
NJRES&#8217; derivative assets and liabilities was derived using such
inputs.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR&#160;Energy
uses NYMEX settlement prices to value its long-dated swap contracts. NJR also
has available for sale securities and other financial assets that include listed
equities, mutual funds and money market funds for which there are active
exchange quotes available.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">When NJR
determines fair values, we adjust measurements, as needed, for credit risk
associated with counterparties, as well as our own credit risk. NJR determines
these adjustments by using historical default probabilities that correspond to
the applicable Standard and Poor&#8217;s issuer ratings, while also taking into
consideration&#160;collateral and netting arrangements that serve to mitigate
risk. As of December 31, 2008, NJR further adjusted certain fair values, based
on the change in a market index that tracks the credit default swaps of
investment grade companies, to factor in the current instability in the credit
markets.</font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
12</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
adoption of SFAS 157 did not have a material impact to NJR&#8217;s financial condition
or results of operations. Assets and liabilities measured at fair value on a
recurring basis as of December 31, 2008 are summarized as follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">
            <div align="left">
              <table cellpadding="0" cellspacing="0" width="98%">
                  <tr>
                    <td valign="bottom" width="41%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td colspan="5" valign="bottom" width="18%">
                      <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font>
      <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Quoted
      Prices </font></div>
                      <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">in
      Active </font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Markets
      </font></div>
                      <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">for
      Identical Assets</font></div>
                    </td>
                    <td align="left" colspan="3" nowrap valign="bottom" width="16%">
                      <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font>
      <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Significant
      Other </font></div>
                      <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Observable
      Inputs</font></div>
                    </td>
                    <td colspan="4" valign="bottom" width="15%">
                      <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font>
      <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Significant
      </font></div>
                      <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unobservable&#160;</font></div>
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                    <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td colspan="2" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                  <tr>
                    <td align="left" valign="bottom" width="41%" style="BORDER-BOTTOM: black 0.5pt solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                    </td>
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      <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Level
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                    <td colspan="3" nowrap valign="bottom" width="16%" style="BORDER-BOTTOM: black 0.5pt solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;
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      <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Level
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                    <td colspan="4" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font>
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                  <tr>
                    <td align="left" valign="bottom" width="41%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">ASSETS:</font></font></div>
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                    <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td colspan="2" nowrap valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td colspan="2" nowrap valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td colspan="2" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td colspan="2" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="#cceeff">
                    <td align="left" valign="bottom" width="41%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Physical
      forward commodity contracts</font></div>
                    </td>
                    <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%">&#160;</td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      &#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%">&#160;</td>
                    <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      20,678</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%">&#160;</td>
                    <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$123</font></td>
                    <td align="left" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                    <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20,801</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="white">
                    <td align="left" valign="bottom" width="41%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Financial
      derivative contracts</font></div>
                    </td>
                    <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">148,973</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">81,575</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">230,548</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="#cceeff">
                    <td align="left" valign="bottom" width="41%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Available
      for sale securities <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic">(1)</font></font></div>
                    </td>
                    <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,887</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,887</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="white">
                    <td align="left" valign="bottom" width="41%" style="BORDER-BOTTOM: black 0.5pt solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      assets</font></div>
                    </td>
                    <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,690</font></td>
                    <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,690</font></td>
                    <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="#cceeff">
                    <td align="left" valign="bottom" width="41%" style="BORDER-BOTTOM: black 0.5pt solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      assets at fair value</font></div>
                    </td>
                    <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid">&#160;</td>
                    <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$159,550</font></td>
                    <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid">&#160;</td>
                    <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$102,253</font></td>
                    <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid">&#160;</td>
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                    <td align="left" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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                    <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="white">
                    <td valign="bottom" width="41%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
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                    <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="#cceeff">
                    <td align="left" valign="bottom" width="41%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">LIABILITIES:</font></font></div>
                    </td>
                    <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                  <tr bgcolor="white">
                    <td align="left" valign="bottom" width="41%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Physical
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                    </td>
                    <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%">&#160;</td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%">&#160;</td>
                    <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;
      19,946</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%">&#160;</td>
                    <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      &#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                    <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19,946</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="#cceeff">
                    <td align="left" valign="bottom" width="41%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Financial
      derivative contracts</font></div>
                    </td>
                    <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      166,068</font></div>
                    </td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">38,475</font></td>
                    <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">204,543</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="white">
                    <td align="left" valign="bottom" width="41%" style="BORDER-BOTTOM: black 1px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      liabilities</font></div>
                    </td>
                    <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,690</font></td>
                    <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,690</font></td>
                    <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="#cceeff">
                    <td align="left" valign="bottom" width="41%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      liabilities at fair value</font></div>
                    </td>
                    <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                    <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$167,758</font></td>
                    <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                    <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      58,421</font></td>
                    <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                    <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      &#8212;</font></td>
                    <td align="left" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                    <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">226,179</font></td>
                    <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr bgcolor="white">
                    <td colspan="16" valign="bottom" width="99%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;
      (1)</font> <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Included
      in Investments in equity investees and other in the Unaudited Condensed
      Consolidated Balance Sheets.</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
              </table>
            </div>
          </div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
reconciliation of the beginning and ending balances of NJRES&#8217; derivatives
measured at fair value based on significant unobservable inputs is as
follows:</font></div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="56%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="5" valign="bottom" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fair
      Value Measurements Using</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="56%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="5" valign="bottom" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Significant
      Unobservable Inputs</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="56%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="5" valign="bottom" width="42%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Level
      3)</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="56%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">(Thousands)</font><font style="DISPLAY: inline">&#160;</font></font></div>
                </td>
                <td colspan="2" valign="bottom" width="18%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Derivatives</font></div>
                </td>
                <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other</font></div>
                </td>
                <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;
      Total</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="56%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Beginning
      balance &#8211; October 1, 2008</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$5,342</font></div>
                </td>
                <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.15pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;$
      &#8212;</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$5,342</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="56%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      gains&#160;(losses) realized and unrealized</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">136</font></div>
                </td>
                <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.15pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#160;
      &#160; &#8212;</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">136</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="56%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Purchases,
      sales, other settlements, net</font></div>
                </td>
                <td align="right" valign="top" width="11%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(899</font></div>
                </td>
                <td align="left" valign="top" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="top" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.15pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#160;
      &#160; &#8212;</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(899</font></div>
                </td>
                <td align="right" valign="top" width="1%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 8.1pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="56%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      transfers in and/or out of level 3</font></div>
                </td>
                <td align="right" valign="top" width="11%" style="BORDER-BOTTOM: black 1px solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(4,448</font></div>
                </td>
                <td align="left" valign="top" width="7%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="top" width="13%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.15pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#160;&#160;&#160;
      &#8212;</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 1px solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(4,448</font></div>
                </td>
                <td align="right" valign="top" width="1%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 8.1pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="56%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ending
      balance - December 31, 2008</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;131</font></div>
                </td>
                <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.15pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font><font style="FONT-WEIGHT: bold">&#160;$ &#8212;</font></font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;131</font></div>
                </td>
                <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman"><font style="FONT-WEIGHT: bold">&#160;</font> </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR will
prospectively apply the provisions of SFAS 157 to its pension assets and
non-financial assets and liabilities beginning on October 1, 2009.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I<a name="n5">NV</a>ESTMENTS IN EQUITY INVESTEES AND
  OTHER</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR&#8217;s
Investments in equity investees and other include the following
investments:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="99%">
              <tr>
                <td align="left" valign="bottom" width="74%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="2" valign="top" width="13%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008&#160;</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="74%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Steckman
      Ridge</font></div>
                </td>
                <td align="right" valign="top" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$106,457</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;84,285</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" bgcolor="white"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%" bgcolor="white"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="74%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Iroquois</font></div>
                </td>
                <td align="right" valign="top" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24,497</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23,604</font></div>
                </td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="74%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other</font></div>
                </td>
                <td align="right" valign="top" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,016</font></div>
                </td>
                <td valign="top" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,092</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" bgcolor="white" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%" bgcolor="white"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="74%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="top" width="9%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$139,970</font></div>
                </td>
                <td valign="top" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$115,981</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div>&#160;</div>
        <div>&#160;</div>
        <div>&#160;</div>
        <div>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
13</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center" align="left">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" colspan="7" valign="top" width="80%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td colspan="7" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR&#8217;s
investment in Steckman Ridge increased $22.2 million during the three months
ended December 31, 2008, including cash investments of $21 million and
capitalized costs of $1.2 million.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR uses
the equity method of accounting for its investments in Steckman Ridge and
Iroquois.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other
investments represent investments in equity securities of publicly traded energy
companies, all of which are immaterial on an individual basis, and are accounted
for as available for sale securities, with any change in the value of such
investments recorded as Accumulated other comprehensive income, a component of
Common stock equity.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following is summarized financial information for Iroquois:</font></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="7" nowrap valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="7" nowrap valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="73%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Millions)</font></div>
                </td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="3" nowrap valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="3" nowrap valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      revenues</font></div>
                </td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$41.8</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$38.8</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      income</font></div>
                </td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$21.7</font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$19.3</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="73%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
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                </td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      9.5</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      7.6</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td align="left" valign="bottom" width="75%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Millions)</font></div>
                </td>
                <td colspan="2" nowrap valign="bottom" width="14%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td colspan="3" nowrap valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
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                </td>
                <td align="right" valign="bottom" width="10%">
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                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
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                <td align="right" valign="bottom" width="1%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
                </td>
                <td align="right" valign="bottom" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      64.2</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
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              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Noncurrent
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                </td>
                <td align="right" valign="bottom" width="10%">
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                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="1%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
                </td>
                <td align="right" valign="bottom" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$729.2</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      liabilities</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;49.8</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="1%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
                </td>
                <td align="right" valign="bottom" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;
      39.3</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="75%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Noncurrent
      liabilities</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$334.9</font></div>
                </td>
                <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
                </td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$348.9</font></div>
                </td>
                <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">E<a name="n6">AR</a>NINGS PER SHARE</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table presents the calculation of the Company&#8217;s basic and diluted
earnings per share:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands,
      except per share amounts)</font></div>
                </td>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 1.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      Income, as reported</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$11,776</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid">&#160;</td>
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                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Basic
      earnings per share</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
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                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,170</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41,678</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 1.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Basic
      earnings per common share</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.28</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.72</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Diluted
      earnings per share</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
      average shares of common stock outstanding&#8211;basic</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,170</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41,678</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Incremental
      shares <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">1</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">325</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">250</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
      average shares of common stock outstanding&#8211;diluted</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,495</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41,928</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Diluted
      earnings per common share</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.28</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0.72</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 40pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(1)&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Incremental
      shares consist of stock options, stock awards and performance
      units.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n7">DEB</a>T</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">NJR</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 13, 2007, NJR entered into a $325 million, five-year, revolving,
unsecured credit facility. As of December 31, 2008, NJR had $62 million in
borrowings outstanding under the facility.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, NJR had one letter of credit outstanding for $675,000 on
behalf of CR&amp;R, which will expire on December 3, 2009. The letter of credit
is in place to support development activities.</font></div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
14</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
February 15, 2008, NJR entered into an agreement for a stand-alone letter of
credit that may be drawn upon through February 15, 2009 for up to $15 million.
No amounts have been drawn under this letter of credit as of December 31,
2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">NJNG</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
November 1, 2008, upon maturity, NJNG redeemed&#160;its $30 million, 6.27
percent, Series X First Mortgage bonds.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
October 2007, NJNG entered into an agreement for standby letters of credit that
may be drawn upon through December 15, 2009 for up to $50 million. As of
December 31, 2008, no letters of credit have been issued under this agreement.
These letters of credit would not reduce the amount available to be borrowed
under NJNG&#8217;s credit facility.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, NJNG has a $250 million committed facility with several
banks, with a 5-year term expiring in December 2009. This facility is used to
support NJNG&#8217;s commercial paper program.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG
received $6.3 million and $7.5 million in December 2008 and 2007, respectively,
in connection with the sale-leaseback of its natural gas meters. This
sale-leaseback program is expected to be continued on an annual
basis.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG is
obligated with respect to loan agreements securing six series of variable rate
bonds totaling approximately $97.0 million of variable-rate debt backed by
securities issued by the New Jersey Economic Development Authority (EDA). The
EDA bonds are commonly referred to as auction rate securities (ARS) and have an
interest rate reset every 7 or 35 days, depending upon the applicable
series.&#160;On those dates, an auction is held for the purposes of determining
the interest rate of the securities. The interest rate associated with the NJNG
variable-rate debt is based on the rates on the EDA ARS. For the three months
ended December 31, 2008, all of the auctions</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">surrounding
the EDA ARS have failed, resulting in those bonds bearing interest at their
maximum rates, defined in the EDA ARS as the lesser of (i) 175 percent of 30-day
LIBOR or (ii) 10 to 12 percent per annum, as applicable to such series of ARS.
As of&#160;December 31, 2008, the 30-day LIBOR rate was 0.44 percent. While the
failure of the ARS auctions does not&#160;signify or constitute a default on
NJNG, the EDA ARS does impact NJNG&#8217;s borrowing costs of the variable-rate debt.
As such, NJNG currently has a weighted average interest rate of 0.8 percent as
of December 31, 2008, compared with a weighted average interest rate of 4.6
percent as of September 30, 2008. There can be no assurance that the EDA ARS
will have enough market liquidity to return interest rates below their maximum
rate.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
October 2005, NJNG entered into a loan agreement under which the EDA loaned NJNG
the proceeds from $35.8 million of tax-exempt EDA Bonds. NJNG deposited $15.0
million of the proceeds into a construction fund to finance subsequent
construction in the northern division of NJNG&#8217;s territory. NJNG drew down $10.8
million from the construction fund prior to fiscal year 2008 and drew down the
remaining $4.2 million during the first quarter of fiscal 2009.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Neither
NJNG nor the results of its operations are obligated or pledged to support the
NJR or NJRES credit facilities.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">NJRES</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, NJRES had a 3-year, $30 million committed credit facility
that expires in October 2009 with a multinational financial institution. There
were no borrowings under this facility as of December 31, 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
15</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Consolidated</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
were no issuances or redemptions of long-term debt securities for NJR or NJRES
during the three months ended December 31, 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A summary
of NJR&#8217;s and NJNG&#8217;s long-term debt, committed credit facilities which require
commitment fees on the unused amounts, and NJRES&#8217; committed facility that does
not require a fee, are as follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="bottom" width="14%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td colspan="2" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="51%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="2" valign="bottom" width="14%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td colspan="2" valign="bottom" width="13%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="51%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJR</font></div>
                </td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="51%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Long
      - term debt <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;75,000</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;75,000</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="51%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Bank
      credit facilities</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$325,000</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$325,000</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="51%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      outstanding at end of period</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      &#160;62,000</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;32,700</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="51%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
      average interest rate at end of period</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.78</font></div>
                </td>
                <td align="left" valign="top" width="4%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.46</font></div>
                </td>
                <td align="left" valign="top" width="3%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="51%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJNG</font></div>
                </td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="4%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="51%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Long
      - term debt <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(2)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$349,800</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$379,800</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="51%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Bank
      credit facilities</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$250,000</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$250,000</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="51%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      outstanding at end of period</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$203,550</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$145,500</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="51%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
      average interest rate at end of period</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.19</font></div>
                </td>
                <td align="left" valign="top" width="4%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.31</font></div>
                </td>
                <td align="left" valign="top" width="3%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="51%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES</font></div>
                </td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="4%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="51%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Bank
      credit facilities</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$30,000</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$30,000</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="51%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      outstanding at end of period</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="51%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
      average interest rate at end of period</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="top" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 40pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(1)&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Amounts
      are comprised of $25.0 million issued in March 2004,&#160;maturing in
      March 2009, and $50.0 million issued in September 2007, maturing in
      September 2017.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 40pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(2)&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Long-term
      debt excludes lease obligations of $66.7 million <font style="DISPLAY: inline; FONT-SIZE: 8pt">and $60.4 million </font>at
      December 31, 2008 and September 30, 2008,
  respectively.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n8">CAPI</a>TALIZED FINANCING COSTS AND DEFERRED
    INTEREST</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Allowance
for Funds Used During Construction, (AFUDC) included in Utility plant, and
capitalized interest included in Real estate properties and other and
Investments in equity investees and other on the Unaudited Condensed
Consolidated Balance Sheets, are as follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" rowspan="2" valign="bottom" width="78%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="5" valign="bottom" width="22%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid">
                  <div align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
              </tr>
              <tr>
                <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td colspan="3" valign="bottom" width="12%" style="BORDER-BOTTOM: black 2px solid">
                  <div align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">AFUDC
      &#8211; Utility plant</font></div>
                </td>
                <td align="right" valign="top" width="7%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$258</font></div>
                </td>
                <td colspan="2" valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="7%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$535</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
      average rate</font></div>
                </td>
                <td align="right" valign="top" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -4.1pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      4.00</font></div>
                </td>
                <td align="left" colspan="2" valign="top" width="6%">
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="bottom" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -4.1pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      8.31</font></div>
                </td>
                <td align="left" valign="top" width="2%">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Capitalized
      interest &#8211; Real estate properties and other</font></div>
                </td>
                <td align="right" valign="top" width="7%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#8212;</font></div>
                </td>
                <td colspan="2" valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="7%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$36</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
      average interest rates</font></div>
                </td>
                <td align="right" valign="top" width="7%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td align="left" colspan="2" valign="top" width="6%">
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="top" width="7%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.08</font></div>
                </td>
                <td align="left" valign="top" width="2%">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Capitalized
      interest &#8211; Investments in equity investees and other</font></div>
                </td>
                <td align="right" valign="top" width="7%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$843</font></div>
                </td>
                <td colspan="2" valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="7%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$855</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="78%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
      average interest rates</font></div>
                </td>
                <td align="right" valign="top" width="7%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.50</font></div>
                </td>
                <td align="left" colspan="2" valign="top" width="6%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="top" width="7%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.98</font></div>
                </td>
                <td align="left" valign="top" width="2%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The AFUDC
amounts shown in the table above for the three months ended December 31, 2007
include an equity component based on NJNG&#8217;s prior return on equity rate of 11.5
percent. As a result of the BPU&#8217;s Base Rate Order issued in October 2008, NJNG
implemented certain rate design changes, including a change to its AFUDC
calculation and a return on equity rate of 10.3 percent (see <font style="DISPLAY: inline; FONT-STYLE: italic">Note 2.</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Regulation</font><font style="DISPLAY: inline; FONT-STYLE: italic">)</font>. Effective October 3, 2008,
NJNG is allowed to recover an incremental cost of equity component during
periods when its short-term debt balances are lower than its construction work
in progress. For the three months ended December 31, 2008, AFUDC only includes a
debt component.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
16</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR,
through its CR&amp;R subsidiary, capitalizes interest associated with the
development and construction of its commercial buildings. Interest is also
capitalized associated with the acquisition, development and construction of a
natural gas storage facility through NJR&#8217;s equity investment in Steckman Ridge
(see <font style="DISPLAY: inline; FONT-STYLE: italic">Note 5. Investments in
Equity Investees</font><font style="DISPLAY: inline; FONT-STYLE: italic"> and
other</font>).</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to a BPU order, NJNG is permitted to recover carrying costs on uncollected
balances related to SBC program costs, which include NJCEP, RAC and USF
expenditures. Accordingly, Other income included $563,000 and $738,000 of
deferred interest related to these SBC program costs for period ended December
31, 2008 and 2007, respectively.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 24pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n9">STO</a>CK-BASED
COMPENSATION</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
November 11, 2008, the Company granted 106,730 restricted shares that vested
immediately. On the same date the Company also granted 8,481 shares that vested
immediately and were issued on November 17, 2008. As of December 31, 2008,
2,448,586 and 107,203 shares, respectively, remain available for future awards
to employees and directors.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
the first three months of fiscal 2009, included in operation and maintenance
expense is $711,000 related to stock-based compensation. As of December 31, 2008
there remains $1.9 million of deferred compensation related to unvested shares
and options, which is expected to be recognized over the next 3
years.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 40pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n10">EM</a>PLOYEE BENEFIT PLANS</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Pension
and Other Postemployment Benefit Plans (OPEB)</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
components of the net periodic cost for pension benefits, including NJR&#8217;s
Pension Equalization Plan, and OPEB costs (principally health care and life
insurance) for employees and covered dependents were as follows:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="47%" style="PADDING-BOTTOM: 0.25pt"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%" style="PADDING-BOTTOM: 0.25pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="22%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Pension</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="21%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">OPEB</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" width="47%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="22%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Three Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      December 31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="21%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Three Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      December 31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="47%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid">
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                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" valign="bottom" width="47%">
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                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">821</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="47%">
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                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,188
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                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,183
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                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(647
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                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(583
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                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="47%">
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                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">139</font></td>
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                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">275</font></td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">319</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">262</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="47%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Prior
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                </td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="47%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Special
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                </td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">89</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">89</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="47%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
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                </td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;&#160;
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                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
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      482</font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,371</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,097</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
fiscal 2009, the Company has no minimum pension funding requirements, however,
funding requirements are uncertain and can depend significantly on changes in
actuarial assumptions, returns on plan assets and changes in demographic
factors. It is anticipated that the annual funding level to the OPEB plans will
range from $1.2 million to $1.4 million over the next five years. Additional
contributions may be made based on market conditions and various
assumptions.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
17</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 40pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n11">AS</a>SET RETIREMENT OBLIGATIONS
(ARO)</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR
recognizes AROs related to the costs associated with cutting and capping its
main and service gas distribution pipelines of NJNG, which is required by New
Jersey law when taking such gas distribution pipelines out of
service.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following is an analysis of the change in the ARO liability for the period ended
December 31, 2008:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(Thousands)</font></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr bgcolor="#cceeff">
                <td valign="top" width="56%" style="BORDER-TOP: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance
      at October 1, 2008</font></div>
                </td>
                <td align="right" valign="top" width="21%" style="BORDER-TOP: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$24,416</font></div>
                </td>
                <td valign="bottom" width="1%" style="BORDER-TOP: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="56%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accretion</font></div>
                </td>
                <td align="right" valign="top" width="21%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">371</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="56%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Additions</font></div>
                </td>
                <td align="right" valign="top" width="21%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="56%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retirements</font></div>
                </td>
                <td align="right" valign="top" width="21%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(19</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.3pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="56%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance
      at December 31, 2008</font></div>
                </td>
                <td align="right" valign="top" width="21%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$24,768</font></div>
                </td>
                <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accretion
amounts are not reflected as an expense on NJR&#8217;s Unaudited Condensed
Consolidated Statements of Income, but rather are deferred as a regulatory asset
and netted against NJNG&#8217;s regulatory liabilities, for presentation purposes, on
the Unaudited Condensed Consolidated Balance Sheet.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 40pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n12">INC</a>OME TAXES</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
September 30, 2008 the Company had a FIN 48 (Reserve for Uncertain Tax
Positions) balance of $6.5 million.&#160;During the first quarter of fiscal year
2009, the company settled a tax court case with the State of New Jersey, which
resulted in a decrease to the reserve balance of $2.7 million.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Over the
next twelve months the company expects to finalize the September 30, 2005
Internal Revenue Service (IRS) tax audit, which is expected to result in an
additional reduction to the remaining FIN 48 balance of $3.8 million. The $3.8
million relates to one issue which has been settled favorably and will result in
no changes to the company&#8217;s tax liability related to the issue. As such the FIN
48 reserve is expected to be released during fiscal 2009.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Currently
the company has no reason to believe that there will be any new additions to the
FIN 48 reserve.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 40pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n13">COM</a>MITMENTS AND CONTINGENT
  LIABILITIES</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Cash
Commitments</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG has
entered into long-term contracts, expiring at various dates through 2023, for
the supply, storage and delivery of natural gas. These contracts include current
annual fixed charges of approximately $87.6 million at current contract rates
and volumes, which are recoverable through the BGSS.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
purpose of securing adequate storage and pipeline capacity, NJRES enters into
storage and pipeline capacity contracts, which require the payment of certain
demand charges by NJRES, in order to maintain the ability to access such natural
gas storage or pipeline capacity, during a fixed time period, which generally
range from one to five years. Demand charges are based on established rates as
regulated by the Federal Energy Regulatory Commission (FERC). These demand
charges represent commitments to pay storage providers or pipeline companies for
the right to store and transport natural gas utilizing their respective assets.
As of December 31, 2008, NJRES had contractual obligations for current annual
demand charges related to storage contracts and pipeline capacity contracts of
$27.3 million and $52.2 million, respectively.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
18</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, there were NJR guarantees covering approximately $421 million
of natural gas purchases and demand fee commitments of NJRES and NJNG not yet
reflected in Accounts payable on the Unaudited Condensed Consolidated Balance
Sheet. Commitments as of December 31, 2008 for natural gas purchases and future
demand fees, for the next five fiscal year periods, are as follows:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="25%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-STYLE: italic; FONT-FAMILY: times new roman, serif">(Thousands)</font></div>
                </td>
                <td valign="top" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2009</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2010</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2011</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2012</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2013</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">&#160;&#160;&#160;&#160;&#160;&#160;
      Thereafter</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif"><font style="DISPLAY: inline; TEXT-DECORATION: underline">NJRES</font></font></div>
                </td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Natural
      gas purchases</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$600,177</font></div>
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                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$109,213</font></div>
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                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#8212;</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#8212;</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$
      &#160;&#160;&#160;&#160;&#160;&#160;&#8212;</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$
      &#160;&#160;&#160;&#160;&#160;&#8212;</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Storage
      demand fees</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">27,266</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">18,136</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">12,735</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">9,791</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">2,235</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">1,913</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="25%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Pipeline
      demand fees</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">52,242</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">31,792</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">15,743</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">6,265</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">5,298</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">4,940</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="25%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Sub-total
      NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$679,685</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$159,141</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;&#160;28,478</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$16,056</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;7,533</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;6,853</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif"><font style="DISPLAY: inline; TEXT-DECORATION: underline">NJNG</font></font></div>
                </td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Natural
      gas purchases</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;76,054</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;16,123</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$
      &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#8212;</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#8212;</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#8212;</font></div>
                </td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$
      &#160;&#160;&#160;&#160;&#160;&#160;&#8212;</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Storage
      demand fees</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">21,873</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">18,996</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">10,842</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">7,392</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">7,042</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">2,347</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="25%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Pipeline
      demand fees</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">65,725</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">78,253</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">76,948</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">71,597</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">71,483</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">297,474</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="25%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Sub-total
      NJNG</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$163,652</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$113,372</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$&#160;87,790</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$78,989</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$78,525</font></div>
                </td>
                <td align="right" valign="top" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$299,821</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$843,337</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$272,513</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$116,268</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$95,045</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$86,058</font></div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">$306,674</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Costs for
storage and pipeline demand fees, included as a component of Gas purchases on
the Unaudited Condensed Consolidated Statements of Income, are as
follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="74%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="7" nowrap valign="bottom" width="21%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="74%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="74%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$28.5</font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$27.6</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="74%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJNG</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20.5</font></td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18.7</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="74%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$49.0</font></td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$46.3</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
capital expenditures are estimated at $77.3 million for fiscal 2009, of which
approximately $18.4 million has been committed, and consists primarily of its
construction program to support customer growth, maintenance of its distribution
system, replacement needed under pipeline safety regulations and an automated
meter reading installation project.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company&#8217;s future minimum lease payments under various operating leases are less
than $3.2 million annually for the next five years and $1.6 million in the
aggregate for all years thereafter.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Legal
Proceedings</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Manufactured
Gas Plant Remediation</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG is
responsible for the remedial cleanup of three Manufactured Gas Plant (MGP)
sites, dating back to gas operations in the late 1800s and early 1900s, which
contain contaminated residues from former gas manufacturing operations. NJNG is
currently involved in administrative proceedings with the New Jersey Department
of Environmental Protection (NJDEP), as well as participating in various studies
and investigations by outside consultants to determine the nature and extent of
any such contaminated residues and to develop appropriate programs of remedial
action, where warranted, under Administrative Consent Orders or Memoranda of
Agreement with the NJDEP.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
19</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG may,
subject to BPU approval, recover its remediation expenditures, including
carrying costs, over rolling 7-year periods pursuant to a Remediation Adjustment
(RA) approved by the BPU. In October 2007, the BPU approved $14.7 million in
eligible costs to be recovered annually for MGP remediation expenditures
incurred through June 30, 2006. In February 2008, NJNG filed an application
regarding its SBC which included MGP remediation expenditures incurred through
June 30, 2007, resulting in an expected annual recovery of $17.7 million. On
January 27, 2009, NJNG filed an application regarding its SBC including MGP
remediation expenditures incurred through June 30, 2008 resulting in an expected
annual recovery of $20.7 million. As of December 31, 2008, $91.3 million of
previously incurred remediation costs, net of recoveries from customers and
insurance proceeds, are included in Regulatory assets on the Unaudited Condensed
Consolidated Balance Sheet.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
September 2008, NJNG updated an environmental review of the MGP sites, including
a review of potential liability for investigation and remedial action. NJNG
estimated at the time of the review that total future expenditures to remediate
and monitor the three MGP sites for which it is responsible will range from
approximately $120.2 million to $177.2 million. NJNG&#8217;s estimate of these
liabilities is based upon known facts, existing technology and enacted laws and
regulations in place when the review was completed. However, NJNG expects actual
costs to differ from these estimates. Where it is probable that costs will be
incurred, but the information is sufficient only to establish a range of
possible liability, and no point within the range is more likely than any other,
it is NJNG&#8217;s policy to accrue the lower end of the range. Accordingly, NJNG has
recorded an MGP remediation liability and a corresponding Regulatory asset of
$120.2 million on the Unaudited Condensed Consolidated Balance Sheet. The actual
costs to be incurred by NJNG are dependent upon several factors, including final
determination of remedial action, changing technologies and governmental
regulations, the ultimate ability of other responsible parties to pay and any
insurance recoveries.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG will
continue to seek recovery of MGP-related costs through the RAC. If any future
regulatory position indicates that the recovery of such costs is not probable,
the related cost would be charged to income in the period of such determination.
However, because recovery of such costs is subject to BPU approval, there can be
no assurance as to the ultimate recovery through the RAC or the impact on the
Company&#8217;s results of operations, financial position or cash flows, which could
be material.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">General</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is party to various other claims, legal actions and complaints arising
in the ordinary course of business. In the Company&#8217;s opinion, other than as
disclosed in Part II Item 1 of this Form 10-Q, the ultimate disposition of these
matters will not have a material adverse effect on its financial condition,
results of operations or cash flows.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
20</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
              <div>&#160;</div>
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 40pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n14">BUS</a>INESS SEGMENT AND OTHER OPERATIONS
  DATA</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Information
related to the Company&#8217;s various business segments and other operations,
excluding capital expenditures, which are presented in the Unaudited Condensed
Consolidated Statements of Cash Flows, is detailed below.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Natural Gas Distribution segment consists of regulated energy and off-system,
capacity and storage management operations. The Energy Services segment consists
of unregulated wholesale energy operations. The Retail and Other operations
consist of appliance and installation services, commercial real estate
development, investments and other corporate activities.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">
          <div align="left">
            <table cellpadding="0" cellspacing="0" width="98%">
                <tr>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="6" nowrap valign="bottom">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="6" nowrap valign="bottom">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr>
                  <td valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                  </td>
                  <td valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr>
                  <td align="left" valign="bottom">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      Revenues</font></div>
                  </td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="2" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td colspan="2" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      Gas Distribution</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">340,908</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">284,360</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      Services</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">463,094</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">520,211</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Segment
      Subtotal</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">804,002</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">804,571</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,654
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,631</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Intercompany
      revenues <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(1)</font></font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(44
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(64
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">811,138</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Depreciation
      and Amortization</font></div>
                  </td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
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                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">53</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Segment
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,212</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">149</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">117</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,361</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,403</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      Income (Loss)</font></div>
                  </td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      Gas Distribution</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,186</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,602</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      Services</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(9,378
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22,563</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Segment
      Subtotal</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32,808</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">54,165</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(10,658
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">372</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Intercompany
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                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">46</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22,196</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">54,537</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
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                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
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                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Segment
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                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
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                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">55</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">681</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,364</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
      Expense, net</font></div>
                  </td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      Gas Distribution</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,460</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,119</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      Services</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(24
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">877</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Segment
      Subtotal</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,436</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,996</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">111</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">814</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,810</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Income
      Tax Provision (Benefit)</font></div>
                  </td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      Gas Distribution</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13,336</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,045</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
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                  </td>
                  <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(3,727
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                  <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,666</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Segment
      Subtotal</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,609</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,711</font></td>
                  <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(4,364
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(217
      </font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                </tr>
                <tr bgcolor="#cceeff">
                  <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 2px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                  </td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,245</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,494</font></td>
                  <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
                <tr bgcolor="white">
                  <td colspan="8" nowrap valign="bottom">
                    <div style="MARGIN-LEFT: 40pt; TEXT-INDENT: 24pt"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(1)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 8pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Consists
      of transactions between subsidiaries that are eliminated and reclassified
      in consolidation</font></div>
                    <div style="MARGIN-LEFT: 40pt; TEXT-INDENT: 24pt"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(2)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 8pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Included
      in Other income in the Unaudited Condensed Consolidated Statement of
      Income</font></div>
                  </td>
                  <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;</font></td>
                </tr>
            </table>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
21</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="78%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The chief
operating decision maker of the Company is the Chief Executive Officer (CEO).
The CEO uses net financial earnings as a measure of profit or loss in measuring
the results of the Company&#8217;s segments and operations. A reconciliation of Net
financial earnings to consolidated Net Income, for the three months ended
December 31, 2008 and 2007, respectively, is as follows:</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">
              <div align="left">
                <table cellpadding="0" cellspacing="0" width="98%">
                    <tr>
                      <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" nowrap valign="bottom">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" nowrap valign="bottom">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                      </td>
                      <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="bottom">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Reconciliation
      of net financial earnings&#160;to consolidated net income:</font></div>
                      </td>
                      <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="70%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      Gas Distribution</font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%">&#160;</td>
                      <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$23,074</font></td>
                      <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%">&#160;</td>
                      <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$16,670</font></td>
                      <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="70%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      Services</font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,383</font></td>
                      <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19,092</font></td>
                      <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21</font></td>
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                      <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 1.5pt solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 32pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consolidated
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assets for the various business segments and business operations are detailed
below:</font></div>
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          <table cellpadding="0" cellspacing="0" width="99%">
              <tr>
                <td valign="bottom" width="74%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
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              <tr>
                <td align="left" valign="bottom" width="74%" style="BORDER-BOTTOM: black 0.5pt solid">
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                </td>
                <td colspan="4" valign="bottom" width="15%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font>
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                </td>
                <td colspan="4" valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font>
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              </tr>
              <tr>
                <td align="left" valign="bottom" width="74%">
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                <td colspan="2" nowrap valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="74%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      Gas Distribution</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%">&#160;</td>
                <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,868,319</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="74%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
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                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">629,310</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">689,992</font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="74%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Segment
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                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,497,629</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,451,956</font></td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="74%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">232,246</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">231,551</font></td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="74%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Intercompany
      Assets <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(42,488
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                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(58,115
      </font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="74%" style="BORDER-BOTTOM: black 1.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,687,387</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,625,392</font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" colspan="8" nowrap valign="bottom" width="98%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(1)
      Consists of transactions between subsidiaries that are eliminated and
      reclassified in consolidation</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
three months ended December 31, 2008, NJRES had one customer who represented
more than 10 percent of its total revenue. Management believes that the loss of
this customer would not have a material effect on its financial position,
results of operations or cash flows as an adequate number of alternative
counterparties exist.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 40pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="n15">OT</a>HER</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
December 31, 2008, there were 42,256,517 shares of common stock outstanding and
the book value per share was $17.43.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
22</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="i2mda">ITEM 2</a>. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS </font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Management&#8217;s
Overview</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
Jersey Resources Corporation (NJR or the Company) is an energy services holding
company providing retail natural gas service in New Jersey and wholesale natural
gas and related energy services to customers in states from the Gulf Coast and
Mid-Continent regions to the New England region and Canada through its two
principal subsidiaries, New Jersey Natural Gas&#160;Company (NJNG) and NJR
Energy Services&#160;Company (NJRES).</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Comprising
the Natural Gas Distribution segment, NJNG is a natural gas utility that
provides regulated retail natural gas service in central and northern New Jersey
and also participates in the off-system sales and capacity release markets. NJNG
is regulated by the New Jersey Board of Public Utilities (BPU).</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
comprises the Energy Services segment. NJRES maintains and transacts around a
portfolio of physical assets consisting of natural gas storage and
transportation contracts. In addition, NJRES provides wholesale energy services
to non-affiliated utility and energy companies.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
retail and other business operations (Retail and Other) includes NJR Energy
(NJRE), an investor in energy-related ventures, most significantly through NJNR
Pipeline Company, which holds the Company&#8217;s 5.53 percent interest in Iroquois
Gas and Transmission System, LP (Iroquois), a 412-mile natural gas pipeline from
the New York-Canadian border to Long Island, New York, and NJR Steckman Ridge
Storage Company, which has a 50 percent equity ownership interest in Steckman
Ridge GP, LLC and Steckman Ridge, LP (collectively, Steckman Ridge), a planned
17.7 billion cubic foot (Bcf) natural gas storage facility, with up to 12 Bcf
working capacity, which is being jointly developed and constructed with a
partner in western Pennsylvania; NJR Investment Company, which makes
energy-related equity investments; NJR Home Services Company (NJRHS), which
provides service, sales and installation of appliances; Commercial Realty and
Resources Corporation (CR&amp;R), which holds and develops commercial real
estate; and NJR Service Corporation (NJR Service), which provides support
services to the various NJR businesses.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
income and assets by business segment and business operations for the three
months ended December 31, 2008 and 2007, respectively, are as
follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="42%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="8" valign="bottom" width="36%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="42%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="4" valign="bottom" width="19%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2008</font></div>
                </td>
                <td colspan="4" valign="bottom" width="17%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2007</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      Income (Loss)</font></div>
                </td>
                <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      Gas Distribution</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$23,074</font></div>
                </td>
                <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">196</font></div>
                </td>
                <td align="left" valign="top" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="top" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$16,670</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">55</font></div>
                </td>
                <td align="left" valign="bottom" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      Services</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(5,614</font></div>
                </td>
                <td align="left" valign="top" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(48</font></div>
                </td>
                <td align="left" valign="top" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="top" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13,150</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">44</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="42%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 16pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(5,684</font></div>
                </td>
                <td align="left" valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(48</font></div>
                </td>
                <td align="left" valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="top" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">365</font></div>
                </td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1</font></div>
                </td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="42%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$11,776</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="4%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100</font></div>
                </td>
                <td align="left" valign="top" width="2%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$30,185</font></div>
                </td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="42%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="4" valign="bottom" width="19%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      December 31,</font></div>
                </td>
                <td colspan="4" valign="bottom" width="17%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      September&#160;30,</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="42%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="4" valign="bottom" width="19%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2008</font></div>
                </td>
                <td colspan="4" valign="bottom" width="17%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2008</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Assets</font></div>
                </td>
                <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      Gas Distribution</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,868,319</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">70</font></div>
                </td>
                <td align="left" valign="bottom" width="2%">
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,761,964</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.3pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      67</font></div>
                </td>
                <td align="left" valign="bottom" width="2%">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      Services</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">629,310</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">689,992</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.3pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      26</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="42%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
      and Other</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">232,246</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">231,551</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.3pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      9</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="42%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Intercompany
      Assets <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1pt solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(42,488</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid">
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1pt solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(58,115</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.3pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      (2</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="42%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,687,387</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,625,392</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.3pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;
      100</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" colspan="9" valign="bottom" width="78%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -5.35pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(1)
      Consists of transactions between subsidiaries that are eliminated and
      reclassified in consolidation</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES&#160;and
NJR Energy account for certain of their derivative instruments (financial
futures, swaps and options) used to economically hedge the forecasted purchase,
sale and transportation of natural gas at fair value, as required under
Statement of Financial Accounting Standards No. 133, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Derivative
Instruments and Hedging Activities</font> (as amended and interpreted, SFAS
133). Effective October 1, 2007, the Company changed the treatment of its
physical commodity contracts at NJRES, such that the changes in fair
</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
23</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="79%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;value
of new contracts&#160;are included in earnings, and are not accounted for using
the &#8220;normal purchase normal sales&#8221; (normal) scope exception of SFAS 133. In
addition, effective October 1, 2008, due to changes in the Company&#8217;s ability to
assert physical delivery, the Company is no longer treating physical commodity
contracts executed prior to October 1, 2007 as normal. Therefore, all NJRES
physical commodity contracts are accounted for at fair value on the Unaudited
Condensed Consolidated Balance Sheets, with changes in fair value included as a
component of gas purchases on the Unaudited Condensed Consolidated Statements of
Income. All physical commodity contracts at NJNG and NJR Energy continue to be
designated as normal and accounted for under accrual accounting.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
change in fair value of these derivative instruments at NJRES and NJR Energy
over periods of time, referred to as unrealized gains or losses, can result in
substantial volatility in reported net income under generally accepted
accounting principles of the United States of America (GAAP). When a financial
instrument settles the result is the realization of these gains or losses. NJRES
utilizes certain financial instruments to economically hedge natural gas
inventory placed into storage that will be sold at a later date, all of which
were contemplated as part of an entire forecasted transaction. GAAP requires
that when a financial instrument that is economically hedging natural gas that
has been placed into inventory, but not yet sold, has been settled, the realized
gain or loss associated with that settlement must be reflected currently in the
income statement. While NJRES will recognize the same economic impact from the
entire planned transaction, this also leads to additional volatility in NJRES&#8217;
reported earnings.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unrealized
losses and gains at NJRES and NJR Energy are the result of changes in the fair
value of natural gas futures and fixed and basis swaps, as applicable, used to
economically hedge future natural gas purchases,&#160;sales and transportation.
Realized gains and losses at NJRES include the settlement of natural gas futures
instruments used to economically hedge natural gas purchases in inventory that
have not been sold.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Included
in Net income are unrealized gains and (losses) in the Energy Services segment
of $1.6 million and $(2.9) million, after taxes, for the three-month period
ended December 31, 2008 and 2007, respectively. Also included in Net
income&#160;are realized (losses) of $(16.6) million and $(3.0), after taxes,
for the three-month period ended December 31, 2008 and 2007, respectively, which
are related to derivative instruments that have settled and are designed to
economically hedge natural gas that is in storage inventory at December 31, 2008
and 2007, respectively.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Included
in Net income are unrealized (losses) in the Retail and Other business
operations of $(5.7) million and $(180,000), after taxes, for the three-month
period ended December 31, 2008 and 2007, respectively.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Natural
Gas Distribution Segment</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Natural
Gas Distribution operations have been managed with the goal of growing
profitably through several key initiatives including:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Earning
      a reasonable rate of return on the investments in its natural gas
      distribution system, as well as recovery of all prudently incurred costs
      in order to provide safe and reliable service throughout NJNG&#8217;s service
      territory.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Working
      with the BPU and the Department of the Public Advocate, Division of Rate
      Counsel (Rate Counsel), on the implementation and continuing review of the
      Conservation Incentive Program (CIP). The CIP allows NJNG to promote
      conservation programs to its customers while maintaining protection of its
      utility gross margin associated with reduced customer usage. CIP usage
      differences are calculated annually and are recovered one year following
      the end of the CIP usage year;</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Managing
      its new customer growth rate, which is expected to be approximately 1.3
      percent over the next two years. In fiscal 2009 and 2010, NJNG currently
      expects to add, in total, approximately 12,000 to 14,000 new customers.
      The Company believes that this growth would increase utility gross margin
      under its base rates as provided by approximately $3.6 million annually,
      as calculated under NJNG&#8217;s CIP tariff;</font></div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div>&#160;</div>
        <div>&#160;</div>
        <div>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
24</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" colspan="3" valign="top" width="79%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Generating
      earnings from various BPU-authorized gross margin-sharing incentive
      programs; and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Managing
      the volatility of wholesale natural gas prices through a hedging program
      designed to keep customers&#8217; Basic Gas Supply Service (BGSS) rates as
      stable as possible.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
upon increases in NJNG&#8217;s operation, maintenance and capital costs, NJNG
petitioned the BPU, on November 20, 2007, to increase base rates for its natural
gas delivery service. This base rate filing was consistent with NJNG&#8217;s
objectives of providing safe and reliable service to its customers and earning a
market-based return.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
October 3, 2008, the BPU unanimously approved and made effective the settlement
of NJNG&#8217;s base rate case. As a result, NJNG received a revenue increase in its
base rates of $32.5 million, which is inclusive of an approximate $13 million
impact of a change to the CIP baseline usage rate, received an allowed return on
equity component of 10.3 percent, reduced its depreciation expense component
from 3.0 percent to 2.34 percent and reduced its annual depreciation expense of
$1.6 million as a result of the amortization of previously recovered asset
retirement obligations.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The CIP
allows NJNG to recover utility gross margin variations related to both weather
and customer usage. Recovery of such margin variations is subject to additional
conditions including an earnings test, which includes a return on equity
component of 10.3 percent, and an evaluation of Basic Gas Supply Service
(BGSS)-related savings achieved. An annual review of the CIP must be filed in
June&#160;of each year, coincident with NJNG&#8217;s annual BGSS filing. In October
2007, the BPU provisionally approved NJNG&#8217;s initial CIP recovery rates, which
are designed to recover approximately $15.6 million of accrued margin amounts.
In October 2008, the BPU provisionally approved recovery of an additional $6.8
million of accrued margin for the CIP.&#160;It is anticipated that NJNG will
file a petition in the spring of 2009 to extend its CIP or implement a similar
mechanism on a permanent basis, to be effective October 1, 2009</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
conjunction with the CIP, NJNG is required to administer programs that promote
customer conservation efforts. As of December&#160;31, 2008 and
September&#160;30, 2008, the obligation to fund these conservation programs was
recorded at its present value of $662,000 and $864,000, respectively on the
Unaudited Condensed Consolidated Balance Sheets.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
conducting NJNG&#8217;s business, management focuses on factors it believes may have
significant influence on its future financial results. NJNG&#8217;s policy is to work
with all stakeholders, including customers, regulators and policymakers, to
achieve favorable results. These factors include the rate of NJNG&#8217;s customer
growth in its service territory, which can be influenced by general economic
conditions as well as political and regulatory policies that may impact the new
housing market. A portion of NJNG&#8217;s customer growth comes from the conversion
market, which is influenced by the delivered cost of natural gas compared with
competing fuels, interest rates and other economic conditions.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
regulated company, NJNG is required to recognize the impact of regulatory
decisions on its financial statements. As a result, significant costs are
deferred and treated as regulatory assets, pending BPU decisions regarding their
ultimate recovery from customers. The most significant costs incurred that are
subject to this accounting treatment include manufactured gas plant (MGP)
remediation costs and wholesale natural gas costs. Actual remediation costs may
vary from management&#8217;s estimates due to the developing nature of remediation
requirements, regulatory decisions by the New Jersey Department of Environmental
Protection (NJDEP) and related litigation. If there are changes in the
regulatory position on the recovery of these costs, such costs would be charged
to income in the period of such determination.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
the capital-intensive nature of NJNG&#8217;s operations and the seasonal nature of its
working capital requirements, significant changes in interest rates can also
impact NJNG&#8217;s results.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
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            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
25</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="79%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Energy
Services Segment</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
provides unregulated wholesale energy services, including base load natural gas,
peaking and balancing services, utilizing physical assets it controls through
natural gas pipeline transportation and storage contracts, as well as providing
asset management services to customers in states from the Gulf&#160;Coast and
Mid-continent regions to the Appalachian and Northeast regions and
Canada.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
incorporates the following elements to provide for growth, while focusing on
maintaining a low-risk operating and counterparty credit profile:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Providing
      natural gas portfolio management services to nonaffiliated utilities and
      electric generation facilities;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Leveraging
      transactions for the delivery of natural gas to customers by aggregating
      the natural gas commodity costs and transportation costs in order to
      minimize the total cost required to provide and deliver natural gas to
      NJRES&#8217; customers by identifying the lowest cost alternative with the
      natural gas supply, transportation availability and markets to which NJRES
      is able to access through its business footprint and contractual asset
      portfolio;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Identifying
      and benefiting from variations in pricing of natural gas transportation
      and storage assets due to location or timing differences of natural gas
      prices to generate gross margin; and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Managing
      economic hedging programs that are designed to mitigate adverse market
      price fluctuations in natural gas transportation and storage
      commitments.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
views &#8220;financial margin&#8221; as a financial measurement metric. NJRES&#8217; financial
margin, which is a non-GAAP financial measure, represents revenues earned from
the sale of natural gas less costs of natural gas sold, transportation and
storage, and excludes any accounting impact from the change in fair value of
derivative instruments designed to hedge the economic impact of its transactions
that have not been settled, which represent unrealized gains and losses, and
realized gains and losses associated with financial instruments economically
hedging natural gas in storage and not yet sold as part of a planned
transaction. NJRES uses financial margin to gauge operating results against
established benchmarks and earnings targets as it eliminates the impact of
volatility in GAAP earnings that can occur prior to settlement of the physical
commodity portion of the transactions and therefore is more representative of
the overall expected economic result.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES has
built a portfolio of customers including local distribution companies,
industrial companies, electric generators and retail aggregators. Sales to these
customers have allowed NJRES to leverage its transportation and storage capacity
and manage sales to these customers in an aggregate fashion. This strategy
allows NJRES to extract more value from its portfolio of natural gas storage and
pipeline transportation capacity through the arbitrage of pricing differences as
a result of locational differences or over different periods of
time.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
also focuses on creating value from underutilized natural gas assets, which are
typically amassed through contractual rights to natural gas transportation and
storage capacity. NJRES has developed a portfolio of natural gas storage and
transportation capacity in states in the Northeast, Gulf Coast, Mid-continent
and Appalachian regions of the United States and eastern Canada. These assets
become more valuable when prices change between these areas and across time
periods. NJRES seeks to optimize this process on a daily basis as market
conditions change by evaluating all the natural gas supplies, transportation and
opportunities to which it has access, to find the most profitable alternative to
serve its various commitments. This enables NJRES to capture geographic pricing
differences across these various regions as delivered natural gas prices change
as a result of market conditions. NJRES focuses on earning a financial margin on
a single original transaction and then utilizing that transaction, and the
changes in prices across the regions or across time periods, as the basis to
further improve the initial result.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="81%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In a
similar manner, NJRES participates in natural gas storage transactions where it
seeks to identify pricing differences that occur over time, as prices for future
delivery periods at many different delivery points, are readily available. For
example, NJRES generates financial margin by locking in the differential between
purchasing natural gas at a low current or future price and, in a related
transaction, selling that natural gas at a higher current or future price, all
within the constraints of its credit and contracts policies. Through the use of
transportation and storage services, NJRES is able to generate financial margin
through pricing differences that occur over the duration of time the assets are
held.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES&#8217;
portfolio management customers include nonaffiliated utilities and electric
generation plants. Services provided by NJRES include optimization of
underutilized natural gas assets and basic gas supply functions.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
also participates in park-and-loan transactions with pipeline counterparties,
where NJRES will borrow natural gas when there is an opportunity to capture
arbitrage value. In these cases, NJRES evaluates the economics of the
transaction to determine if it can capture pricing differentials in the
marketplace in order to be able to generate&#160;financial margin. In evaluating
these transactions NJRES will compare the fixed fee it will pay and the
resulting spread it can generate when considering the amount it will receive to
sell the borrowed gas to another counterparty in relation to the cost it will
incur to purchase the gas at a later date for return back to the pipeline. When
the transaction allows NJRES to generate a financial margin, NJRES will fix the
financial margin by economically hedging the transaction with natural gas
futures.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
conducting its business, NJRES mitigates risk by following formal risk
management guidelines, including trading limits, approval processes, segregation
of duties, and formal contract and credit review and approval procedures. NJRES
continuously monitors and seeks to reduce the risk associated with various
counterparties credit exposure. The Risk Management Committee (RMC) of NJR,
oversees compliance with these established guidelines.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Retail
and Other Business Operations</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As part
of&#160;the Retail and Other business operations NJR utilizes a subsidiary, NJR
Energy Holdings, to develop its investments in natural gas &#8220;mid-stream&#8221; assets.
Mid-stream assets are natural gas transportation and storage facilities. NJR
believes that acquiring, owning and developing these mid-stream assets, which
operate under a tariff structure that has either a regulated or market-based
rate, can provide a significant growth opportunity for the Company. To that end,
NJR has ownership interests in Iroquois (regulated rate) and Steckman Ridge
(anticipated market-based rate), which is currently under development, and is
actively pursuing other potential opportunities that meet its investment and
development criteria. Other businesses included as part of Retail and Other
include NJRHS, which provides service, sales and installation of appliances to
over 144,000 customers and is focused on growing its installation business and
expanding its service contract customer base, and CR&amp;R, which seeks
additional opportunities to enhance the value of its undeveloped
land.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
financial results of Retail and Other consist primarily of the operating results
of NJRHS and equity in earnings attributable to the Company&#8217;s equity investment
in Iroquois, as well as to investments made by NJR Energy, an investor in other
energy-related ventures through its operating subsidiaries.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
5, 2008, the Federal Energy Regulatory Commission (FERC) issued Steckman Ridge a
certificate of public convenience and necessity authorizing the ownership,
construction and operation of its natural gas storage facility and associated
facilities. NJR anticipates that Steckman Ridge will be placed in service during
the summer of 2009. As of December 31, 2008, NJR has invested $99.7 million in
Steckman Ridge. This amount excludes capitalized interest and other direct
costs. Total project costs related to the development of the storage facility
are currently estimated at approximately $265 million, of which NJR is obligated
to fund 50 percent or approximately $132.5 million. NJR anticipates that
Steckman Ridge will seek non-recourse financing upon completion of
the&#160;construction and development of its facilities, thereby potentially
reducing the final expected recourse obligation of NJR. There can be no
assurances that such non-recourse project financing will be secured or available
for Steckman Ridge.</font></div>
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27</font></div>
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          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
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                <td align="left" valign="top" width="81%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
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        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Critical
Accounting Policies</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A summary
of NJR&#8217;s critical accounting policies is included in <font style="DISPLAY: inline; FONT-STYLE: italic">Item 7. Management&#8217;s Discussion and
Analysis of Financial Condition and Results of Operations</font> of its Annual
Report on Form 10-K for the period ended September 30, 2008. NJR&#8217;s critical
accounting policies have not changed materially from those reported in the 2008
Annual Report on Form 10-K with the exception of the following:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Derivative
Instrument<font style="DISPLAY: inline; FONT-WEIGHT: bold">s</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Derivative
activities are recorded in accordance with SFAS No. 133, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Derivative
Instruments and Hedging Activities</font>, as amended and interpreted, (SFAS
133) under which NJR records the fair value of derivatives held as assets and
liabilities. In addition, NJRES also treats contracts for the purchase or sale
of natural gas as derivatives and, therefore, records them at fair value in the
Unaudited Condensed Consolidated Balance Sheet, with changes in fair value being
recorded as a component of Gas purchases in the Unaudited Condensed Consolidated
Statements of Income.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
previously applied the &#8220;normal purchase normal sale&#8221; (normal) scope exception
for certain physical commodity contracts that were executed prior to October 1,
2007 which otherwise qualified as derivatives. Based on current conditions in
the credit markets and developments within the natural gas industry, NJRES has
determined that the probability of physical delivery with these counterparties
could potentially diminish and, therefore, these contracts meet the
requirements, outlined in SFAS 133, to continue applying the normal scope
exception. As a result, NJRES will no longer recognize these contracts at cost.
Effective October 1, 2008, NJRES will treat these contracts as derivatives and
record them at fair value in the Unaudited Condensed Consolidated Balance Sheet,
with changes in fair value being recorded as a component of Gas purchases in the
Unaudited Condensed Consolidated Statements of Income.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
October 1, 2008, NJR began applying the provisions of SFAS 157<font style="DISPLAY: inline; FONT-STYLE: italic"> Fair Value Measurement</font> (see
<font style="DISPLAY: inline; FONT-STYLE: italic">Note 5, Fair Value
Measurements</font>). As a result of the adoption of SFAS 157, NJR implemented
procedures to evaluate its own credit profile to determine an appropriate
valuation adjustment to the recorded amount of its derivative liabilities. NJR
uses historical default probabilities corresponding to Standard and Poor&#8217;s
issuer ratings and considers conditions in the credit markets to further adjust
the valuation, when deemed appropriate, based on the change in a market index
that tracks the credit default swaps of investment grade companies.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Capitalized
Financing Costs</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG
capitalizes an allowance for funds used during construction (AFUDC) as a
component of Utility plant in the Unaudited Condensed Consolidated Balance
Sheets. Under regulatory rate practices and in accordance with SFAS No. 71,
<font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for the Effects of
Certain Types of Regulation,</font> NJNG fully recovers AFUDC through base
rates. As a result of the BPU&#8217;s Base Rate Order issued in October 2008, NJNG
implemented certain rate design changes, including a change to its AFUDC
calculation.&#160;&#160;Effective October 3, 2008, NJNG is allowed to recover an
incremental&#160;cost of equity component during periods when its short-term
debt balances are lower than its&#160;construction work in progress balance.
This results in a non-cash income statement recognition that will also be
capitalized as a component of Utility plant.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Recently
Issued Accounting Standards</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Refer to
<font style="DISPLAY: inline; FONT-STYLE: italic">Note 1. General</font>, for
discussion of recently issued accounting standards.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
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          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="81%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Results
of Operations</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Consolidated</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
income for the three-month period ended December 31, 2008 decreased by 61
percent to approximately $11.8 million, compared with net income of
approximately $30.2 million for the same period in fiscal 2007. Basic and
diluted earnings per share decreased by 61&#160;percent to $0.28 and $0.28,
compared with $0.72 and $0.72, respectively.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
decrease in net income was due primarily to decreased gross margin at NJRES as a
result of higher realized losses on derivatives&#160;associated with economic
hedges of natural gas in inventory&#160;due primarily to declining NYMEX prices
in the current fiscal period&#160;of $16.6 million, net of tax, partially offset
by increased operating income at NJNG driven by higher utility gross margin as a
result of changes to its base rates approved by the BPU that became effective
October 3, 2008 and higher margins related to its storage incentive
program.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company&#8217;s Operating revenues and Gas purchases are as follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="3" valign="bottom" width="30%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      December 31,</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2008</font></div>
                </td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2007</font></div>
                </td>
                <td valign="top" width="10%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -17pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;%&#160;</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Change</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      revenues</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 9.3pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$801,304</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 9.3pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$811,138</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 9.3pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      (1.2)%</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gas
      purchases</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 9.3pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$698,145</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 9.3pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$684,694</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 9.3pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2.0&#160;&#160;%</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating
revenues decreased $(9.8) million and Gas purchases increased $13.5 million for
the three months ended December 31, 2008, compared with the same period of the
prior fiscal year due primarily to:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease in Operating revenues&#160;of $(57.1) million and Gas purchases
      of $(26.8) million at NJRES due primarily to lower average prices
      partially offset by slightly higher transaction
volumes;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease in Operating revenues&#160;of $(9.3) million at NJR
      Energy&#160;due to greater unrealized losses, which were the result of
      declining market prices within a portfolio of net long financial
      derivative positions; partially offset by</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an&#160;increase
      in Operating revenues&#160;of $56.5 million and Gas purchases of $40.3
      million at NJNG due primarily to BGSS customer refunds issued in fiscal
      2008&#160;that did not recur in fiscal 2009&#160;and weather being 10
      percent colder than the first quarter of the same period of the prior
      fiscal year. In addition, the first quarter operating revenues were
      favorably impacted by the base rate
increase.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Natural
Gas Distribution Segment</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG is a
local natural gas distribution company that provides regulated retail energy
services to approximately 486,000 residential and commercial customers in
central and northern New Jersey and participates in the off-system sales and
capacity release markets.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
business is seasonal by nature, as weather conditions directly influence the
volume of natural gas delivered. Specifically, customer demand substantially
increases during the winter months when natural gas is used for heating
purposes. As a result, NJNG receives most of its gas distribution revenues
during the first and second fiscal quarters and is subject to variations in
earnings and working capital during the year.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
29</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="81%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Electric Discount and Energy Competition Act (EDECA) provides the framework for
New Jersey&#8217;s energy markets, which are open to competition from other energy
suppliers. Currently, NJNG&#8217;s residential markets are open to competition, and
its rates are segregated between BGSS (natural gas commodity) and delivery
(i.e., transportation) components. NJNG earns no utility gross margin on the
commodity portion of its natural gas sales. NJNG earns utility gross margin
through the delivery of natural gas to its customers. Under an existing order
from the BPU, BGSS can be provided by suppliers other than the state&#8217;s natural
gas utilities.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
financial results are summarized as follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="23%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="23%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="71%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Utility
      Gross Margin</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      revenues</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%">&#160;</td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$340,908</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$284,360</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Less:</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gas
      purchases</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">230,452</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">190,148</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      and other taxes</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,587</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16,363</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="71%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 16pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Regulatory
      rider expense</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13,561</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,165</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      Utility Gross Margin</font></div>
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                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">75,308</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">65,684</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operation
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                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24,950</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23,879</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Depreciation
      and amortization</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,161</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,233</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="71%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      taxes not reflected in utility gross margin</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,011</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">970</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      income</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,186</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,602</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      income</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">684</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,232</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
      expense, net</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,460</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,119</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="71%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Income
      tax provision</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13,336</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,045</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      income</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      23,074</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      16,670</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table summarizes Utility Gross Margin and throughput in billion cubic
feet (Bcf) of natural gas by type:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="63%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="14" nowrap valign="bottom" width="31%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" width="63%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="14" nowrap valign="bottom" width="31%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="63%" style="PADDING-BOTTOM: 1pt"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%" style="PADDING-BOTTOM: 1pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="14%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="14%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">($
      in thousands)</font></div>
                </td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="7%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Margin</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" colspan="2" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid">
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                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: black 0.5pt solid">
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                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.8</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
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                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">71,500</font></td>
                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19.5</font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18.3</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="63%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Incentive
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                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,724</font></td>
                <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12.2</font></td>
                <td align="left" nowrap valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,420</font></td>
                <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9.7</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interruptible</font></div>
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                <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.6</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: black 2px solid">
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                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$75,308</font></td>
                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32.6</font></td>
                <td align="left" nowrap valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$65,684</font></td>
                <td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">29.6</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Utility
Gross Margin</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
utility gross margin is defined as natural gas revenues less natural gas
purchases, sales tax, a Transitional Energy Facilities Assessment (TEFA) and
regulatory rider expenses, and may not be comparable to the definition of gross
margin used by others in the natural gas distribution business and other
industries. Utility gross margin is comprised of three major categories which
include utility firm gross margin, incentive programs and utility gross margin
from interruptible customers. Management believes that utility gross margin
provides a more meaningful basis than revenue for evaluating utility operations
since natural gas costs, sales tax, TEFA and regulatory rider expenses are
included in operating revenue and passed through to customers and, therefore,
have no effect on utility gross margin.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
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          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
30</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Natural
gas costs are charged to operating expenses on the basis of therm sales at the
prices in NJNG&#8217;s BGSS tariff approved by the BPU. The BGSS tariff rate includes
projected natural gas costs, net of supplier refunds, the impact of hedging
activities and credits from non-firm sales and transportation activities. Any
underrecoveries or overrecoveries from the projected amounts are deferred and
reflected in the BGSS tariff rate in subsequent years.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TEFA,
which is included in Energy and other taxes on the Unaudited Condensed
Consolidated Statements of Income, is calculated on a per-therm basis and
excludes sales to cogeneration facilities, other utilities and off-system sales.
TEFA represents a regulatory allowed assessment imposed on all energy providers
in the state of New Jersey, as TEFA has replaced the previously used utility
gross receipts tax formula.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regulatory
rider expenses consist of recovery of state-mandated programs and the
remediation adjustment clause costs. These expenses are offset by corresponding
revenues and are calculated on a per-therm basis.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
Operating revenues increased by $56.5 million, or 20 percent, and Gas purchases
increased by $40.3 million, or 21 percent, for the three months ended December
31, 2008, respectively, compared with same period in the prior fiscal year as a
result of:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase in Operating revenue and Gas purchases related to a BGSS customer
      refund in December 2007 that did not recur in the first quarter of fiscal
      2009 in the amount of $32.1 million and $30.0 million, respectively. The
      prior year customer refund was inclusive of sales tax refund of $2.1
      million and was the result of anticipated reductions in cost to acquire
      wholesale natural gas, as compared to the established rate included in
      NJNG&#8217;s BGSS tariff;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase in Operating revenue and Gas purchases related to firm sales in
      the amount of $25.6 million and $18.1 million, respectively, as a result
      an increase in&#160;BGSS rates approved by the BPU;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase in Operating revenue and Gas purchases related to firm sales in
      the amount of $14.5 million and $9.5 million, respectively, due primarily
      to weather being 10 percent colder than the same period of the prior
      fiscal year;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase in Operating revenue in the amount of $4.8 million related to
      fixed revenue as a result of changes approved by the BPU for restructured
      tariffs; partially offset by</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease in Operating revenue and Gas purchases related to off-system
      sales in the amount of $12.8 million and $12.6 million, respectively, as a
      result of lower average sale prices due to the change in the wholesale
      price of natural gas;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease in Operating revenue related to the CIP program in the amount of
      $5.3 million due primarily to a change in the CIP baseline use per
      customer benchmark resulting from the October 3, 2008 base rate
      case;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease in Operating revenue and Gas purchases related to interruptible
      sales in the amount of $2.1 million and $1.8 million, respectively, due to
      a decrease in sales to electric co-generation
customers;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease in Gas purchases related to increased amounts earned through the
      financial risk management (FRM) and capacity release incentive programs of
      $1.8 million in fiscal 2009 as compared to $345,000 in fiscal 2008 due
      primarily to the FRM program&#8217;s increased annual cost and volume
      limitations, which allowed NJNG the ability to capitalize on more hedging
      opportunities; and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease of $1.1 million in Gas purchases related to increased amounts
      received through the storage incentive program due primarily to the timing
      of the incentive margins during the program's April 2008 through October
      2008 injection period as compared to the same period in the prior fiscal
      year.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
31</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sales tax
and TEFA, which are presented as both components of Revenues and Operating
Expenses in the Unaudited Condensed Consolidated Statements of Income, totaled
$21.6 million and $16.4 million for the three months ended December 31, 2008 and
2007, respectively. The increase is due primarily to an increase of $68.8
million in operating revenue from firm sales for the three months ended December
31, 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regulatory
rider expenses are calculated on a per-therm basis and totaled $13.6 million and
$12.2 million for the three months ended December 31, 2008 and 2007,
respectively. The increase is due primarily to an increase in firm throughput of
1.2 Bcf for the three months ended December 31, 2008 as compared with the three
months ended December 31, 2007, as a result of the previously mentioned colder
weather and an increase in the SBC rate.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Utility
gross margin is comprised of three major categories:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Utility
      Firm Gross Margin, which is derived from residential and commercial
      customers who receive natural gas service from NJNG through either sales
      or transportation tariffs;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Incentive
      programs, where margins generated or savings achieved from BPU-approved
      off-system sales, capacity release, Financial Risk Management (defined in
      Incentive Programs, below) or storage incentive programs are shared
      between customers and NJNG; and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Utility
      gross margin from interruptible customers who have the ability to switch
      to alternative fuels.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Utility
Firm Gross Margin</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Utility
firm gross margin is earned from residential and commercial customers who
receive natural gas service from NJNG through either sales or transportation
tariffs.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
result of NJNG&#8217;s implementation of the CIP, utility gross margin is no longer
linked to customer usage. The CIP eliminates the disincentive to promote
conservation and energy efficiency and facilitate normalizing NJNG&#8217;s utility
gross margin recoveries for variances not only in weather but also in other
factors affecting usage, including customer conservation. Recovery of utility
gross margin for the non-weather variance through the CIP is limited to the
amount of certain gas supply cost savings achieved and is subject to an earnings
test, which contains a return on equity component of 10.3 percent.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
total utility gross margin is not negatively affected by customers who use its
transportation service and purchase natural gas from another supplier because
its tariff is designed so that no profit is earned on the commodity portion of
sales to firm customers. All customers who purchase natural gas from another
supplier continue to use NJNG for transportation service.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
utility firm gross margin increased $7.4 million, or 11.5 percent, for the three
months ended December 31, 2008, as compared to the same period in the prior
fiscal year, due primarily to an increase in residential and commercial
transport customer margin as a result of an increase in base rates effective
October 3, 2008 partially offset by a decrease in the amounts accrued through
the CIP program. The changes in customer margin were also favorably impacted by
the increase in firm and transport customers of 2,100 and 3,100, respectively,
over the same period in the prior fiscal year.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Utility
firm gross margin from residential service sales increased to $49.7 million for
the three months ended December 31, 2008, as compared with $45.4 million for the
three months ended December 31, 2007. NJNG transported 13.3 Bcf for its firm
customers in the three months ended December 31, 2008, compared with 12.7 Bcf
for the same period ended December 31, 2007.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Utility
firm gross margin from transportation service increased to $8.4 million for the
three months ended December 31, 2008, as compared to $4.9 million for the three
months ended December 31, 2007. NJNG transported 3.0 Bcf for its firm customers
in the three months ended December 31, 2008, compared with 2.8 Bcf for the same
period ended December 31, 2007.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
32</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
weather for the three months ended December 31, 2008 was 1.8 percent colder than
normal, based on a 20-year average, which resulted in a negative adjustment of
utility gross margin under the weather component of the CIP of $(216,000),
compared with 8.2 percent warmer-than-normal weather for the same period last
fiscal year, which resulted in an accrual of utility gross margin of $2.9
million. Under the provisions of the CIP, accruals related to the weather
portion are dependent on the occurrence of degree days and the magnitude of the
variance in relation to a normal degree day. Customer usage was lower than the
established benchmark during the first quarter of fiscal 2009, which resulted in
an accrual of utility gross margin under the CIP of $1.0 million compared with
$3.2 million in the first quarter of fiscal 2008. The change in the weather and
non-weather components of the CIP include the effect of adjustments, normal
degree days, consumption factors and benchmarks related to the baseline use per
customer, which was amended with NJNG&#8217;s new base rates approved by the BPU
effective October 3, 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG had
12,053 and 9,324 residential customers and 5,214 and 4,889 commercial customers
using its transportation service at December 31, 2008 and 2007, respectively.
The increase in transportation customers for the period ended December 31, 2008
was due primarily to an increase in marketing activity by third party natural
gas service providers in NJNG&#8217;s service territory.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG
added 1,763 and 1,723 new customers during the three months ended December 31,
2008 and 2007, respectively. In addition, NJNG converted 162 and 104 existing
customers to natural gas heat and other services during the same periods for
fiscal 2009 and 2008, respectively. This customer growth represents an estimated
annual increase of approximately 0.53 Bcf in sales to firm customers, assuming
normal weather and usage.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Incentive
Programs</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To reduce
the overall cost of its natural gas supply commitments, NJNG has entered into
contracts to sell natural gas to wholesale customers outside its franchise
territory when the natural gas is not needed for system requirements. These
off-system sales enable NJNG to reduce its overall costs applicable to BGSS
customers. NJNG also participates in the capacity release market on the
interstate pipeline network when the capacity is not needed for its firm system
requirements. NJNG retains 15 percent of the utility gross margin from these
sales, with 85 percent credited to firm customers through the BGSS.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Financial Risk Management (FRM) program is designed to provide price stability
to NJNG&#8217;s natural gas supply portfolio. The FRM program includes an incentive
mechanism designed to encourage the use of financial instruments to economically
hedge NJNG&#8217;s natural gas costs. NJNG retains 15 percent of the utility gross
margin, with 85 percent credited to firm customers through the
BGSS.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
storage incentive program shares gains and losses on an 80 percent and 20
percent basis between customers and NJNG, respectively. This program measures
the difference between the actual cost of natural gas injected into storage and
a benchmark established with the purchase of a portfolio of futures contracts
applicable to the April-through-October natural gas injection
season.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
October 3, 2008, the BPU approved the Rate Order, which extends the incentive
programs through October 31, 2011, and provides changes to certain volume and
cost limitations surrounding these incentive programs.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
incentive programs totaled 12.2 Bcf and generated $3.7 million of utility gross
margin for the three months ended December 31, 2008, compared with 9.7 Bcf and
$1.4 million of utility gross margin during the same period last fiscal year.
Utility gross margin from incentive programs comprised 4.9 percent of total
utility gross margin for the three months ended December 31, 2008 and 2.2
percent of total utility gross margin for the same period in fiscal 2008,
respectively. The increase in utility gross margin was due primarily
to&#160;increased amounts received through the FRM program of $1.2 million in
the first quarter of fiscal 2009 as compared with $230,000 in the first quarter
of fiscal 2008 and $1.1 million in the first quarter of fiscal 2009 from
increased amounts received through the storage incentive program&#160;as
discussed above.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
33</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
              <div>&#160;</div>
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Interruptible
Revenues</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, NJNG serves 45 customers through interruptible transportation
and sales services. Interruptible customers are those customers whose service
can be temporarily halted as they have the ability to utilize an alternate fuel
source. Although therms transported and sold to interruptible customers
represented 0.9 Bcf, or 2.8 percent, of total throughput for the three months
ended December 31, 2008, and 1.6 Bcf, or 5.4 percent, of the total throughput
during the same period in the prior fiscal year, they accounted for less than 1
percent of the total utility gross margin in each year.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Operation
and Maintenance Expense</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operation
and maintenance expense increased $1.1 million, or 4.5 percent, during the three
months ended December 31, 2008, as compared with the same period in the last
fiscal year, due primarily to:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase in the bad debt expense of $325,000 as a result of an increase in
      operating revenue;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase of $180,000 in pipeline access clearing
    maintenance;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">higher
      pipeline integrity costs of $130,000;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">increased&#160;postemployment
      benefit costs in the amount of $121,000; and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">increased
      reserve for unused earned vacation of
$119,000.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Operating
Income</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating
income increased $10.6 million, or 33.5 percent, for the three months ended
December 31, 2008 as compared with the same period in the last fiscal year, due
primarily to:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase in total Utility gross margin of $9.6 million, as discussed
      above;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease in depreciation expense of $2.1 million, due to a rate reduction
      from 3 percent to 2.34 percent and amortization of previously recovered
      asset retirement obligations, both of which were part of the settlement of
      the base rate case; partially offset by</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase in Operations and maintenance expense in the amount of $1.1
      million, as discussed above.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Interest
Expense</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Interest
expense increased $341,000 for the three months ended December 31, 2008 compared
with the same period in the last fiscal year, due primarily to:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">an
      increase of $1.8 million in long-term interest due to the new long-term
      fixed rate debt issuance of $125 million in May 2008; partially offset
      by</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease of $1.4 million in short-term interest due to lower average
      interest rates and short-term borrowings of commercial paper and other
      variable-rate debt.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Net
Income</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
income increased $6.4 million, or 38.4 percent, to $23.1 million from $16.7
million in the three months ended December 31, 2008 and 2007, respectively, due
primarily to an increase in Operating income of approximately $10.6 million as
discussed above, partially offset by higher income tax expense of $3.3 million
as a result of the higher Operating income.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
34</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Energy
Services Segment</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES is
a non-regulated natural gas marketer and provides for the physical delivery of
natural gas to its customers, while managing its exposure to the price risk
associated with its natural gas commodity supply through the use of financial
derivative contracts. In order to best serve its customers, which include other
natural gas marketers, local distribution companies, industrial companies,
electric generators and retail aggregators, and to manage the continuous changes
in supply and demand that it faces in the market areas in which it participates,
so that it can maximize its margins, NJRES has physical storage and
transportation capacity contracts with natural gas storage facilities and
pipelines. NJRES purchases natural gas predominately in the eastern United
States and Canada, and transports that natural gas, through the use of its
pipeline contracts to which it has reserved capacity through the payment of a
fixed demand charge, to either storage facilities that it has reserved,
primarily in the Appalachian, Mid-Continent and Gulf regions of the United
States and eastern Canada or directly to customers in various market areas
including the Northeastern region of the United States and eastern
Canada.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">When
NJRES enters into contracts for the future delivery of physical natural gas, it
simultaneously enters into financial derivative contracts at market prices to
establish an initial financial margin for each of its forecasted physical
commodity transactions.&#160;The financial derivative contracts also serve to
protect the cash flows of the transaction from volatility in commodity prices as
NJRES locks in pricing and can include futures, options, and swap contracts,
which are all predominantly actively quoted on the NYMEX.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
the use of its contracts for natural gas storage and pipeline capacity, NJRES is
able to take advantage of pricing differences between geographic locations,
commonly referred to as &#8220;locational spreads,&#8221; as well as over different time
periods, for the delivery of natural gas to its customers, thereby improving the
initially established financial margin result. NJRES utilizes financial futures,
forwards and swap contracts to establish economic hedges that fix and protect
the cash flows surrounding these transactions.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accordingly,
NJRES utilizes these contractual assets to optimize its opportunities to
increase its financial margin by capitalizing on changes or events in the
marketplace that impact natural gas demand levels. NJRES generates financial
margin through three primary channels:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td colspan="2" valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Storage:</font>&#160;NJRES
      attempts to take advantage of differences in market prices occurring over
      different time periods (time spreads) as follows:</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
                </td>
                <td valign="top" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES
      can purchase gas to inject into storage and concurrently lock in gross
      margin with a contract to sell the natural gas at a higher price at a
      future date; and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
                </td>
                <td valign="top" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES
      can purchase a future contract with an early delivery date at a lower
      price and simultaneously sell another future contract with a later
      delivery date having a higher price.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td colspan="2" valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Transportation
      (Basis):</font>&#160;Similarly, NJRES benefits from pricing differences
      between various receipt and delivery points along a natural gas pipeline
      as follows:</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
                </td>
                <td valign="top" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES
      can utilize its pipeline capacity by purchasing natural gas at a lower
      price location and transporting to a higher value location. NJRES can
      enter into a basis swap contract, a financial commodity
      derivative&#160;based on the price of natural gas at two different
      locations, when it will lead to positive cash flows and financial margin
      for NJRES.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="top" width="73%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td colspan="2" valign="top" width="73%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Daily Sales
      Optimization:</font>&#160; Consists of buying and selling flowing gas on a
      daily basis while optimizing existing transport positions during
      short-term market price movements to benefit from locational
      spreads:</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
                </td>
                <td valign="top" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.3pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Involves
      increasing the financial margin on established transportation hedges by
      capitalizing on price movements between specific
  locations.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
35</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Typically,
periods of greater price volatility provide NJRES with additional opportunities
to generate financial margin by optimizing its storage and transport capacity
assets, and capturing their respective time or locational spreads. The
combination of strategically positioned natural gas storage and transportation
capacities provides NJRES with a significant amount of arbitrage opportunities
that are typically more prevalent during periods of high price
volatility.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Predominantly
all of NJRES&#8217; purchases and sales of natural gas result in the physical delivery
of natural gas. NJRES has elected not to use the normal purchase normal sale
scope exception of SFAS 133,<font style="DISPLAY: inline; FONT-STYLE: italic">
Accounting for Derivative Instruments and Hedging Activities,</font> under which
related liabilities incurred and assets acquired under these contracts are
recorded when title to the underlying commodity passes. Therefore, all NJRES
physical commodity contracts are recorded at fair value on the Unaudited
Condensed Consolidated Balance Sheets with any changes in fair value recognized
as a component of Gas purchases in the Unaudited Condensed Consolidated
Statements of Income.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
changes in fair value of NJRES&#8217; financial derivative instruments, which are
financial futures, swaps and option contracts are also recognized in the
Unaudited Condensed Consolidated Statements of Income, as a component of Gas
purchases.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES&#8217;
financial and physical contracts will result, over time, in earning a gross
margin on the entire transaction. For financial reporting purposes under GAAP,
the change in fair value associated with derivative instruments used to
economically hedge these transactions are recorded as a component of Gas
purchases in the Unaudited Condensed Consolidated Statements of Income during
the duration of the financial instrument or commodity contract. These changes in
fair value are referred to as unrealized gains and losses. In other instances,
certain financial contracts designed to economically fix or hedge the price of
natural gas that is purchased and placed into storage, to be sold at a later
date, settle and result in realized gains, which are also recorded as a
component of Gas purchases in the Unaudited Condensed Consolidated Statements of
Income.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
unrealized gains or losses from the change in fair value of unsettled financial
instruments and physical commodity contracts, or realized gains or losses
related to financial instruments that economically hedge natural gas inventory
that has not been sold as part of a planned transaction, cause large variations
in the reported gross margin and earnings of NJRES. NJRES will continue to earn
the gross margin established at inception of the transaction over the duration
of the forecasted transaction and may be able to capitalize on events in the
marketplace that enable it to increase the initial margin; however, gross margin
or earnings during periods prior to the delivery of the natural gas will not
reflect the underlying economic result.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
expenses its demand charges, which represent the right to use natural gas
pipeline and storage capacity assets of a third-party for a fixed period of
time. These demand charges are expensed over the term of the related natural gas
pipeline or storage contract. The term of these contracts vary from less than
one year to five years.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES&#8217;
financial results are summarized as follows:</font></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="75%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="8" valign="bottom" width="25%">
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      Months Ended</font> </div>
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
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                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      revenues</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$463,094</font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$520,211</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gas
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                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">467,732</font></td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">494,546</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gross
      (loss) margin</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(4,638
      </font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25,665</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operation
      and maintenance expense</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,360</font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,840</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Depreciation
      and amortization</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">53</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="75%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      taxes</font></div>
                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">329</font></td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">209</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      (loss) income</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(9,378
      </font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22,563</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      income</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13</font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">130</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="75%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
      expense, net</font></div>
                </td>
                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(24
      </font></td>
                <td align="left" nowrap valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">877</font></td>
                <td align="left" nowrap valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="75%" style="BORDER-BOTTOM: black 0.25pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Income
      tax (benefit) provision</font></div>
                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(3,727
      </font></td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,666</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="75%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      (loss) income</font></div>
                </td>
                <td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
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      (5,614 </font></td>
                <td align="left" nowrap valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      13,150</font></td>
                <td align="left" nowrap valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div>&#160;</div>
        <div>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
36</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" colspan="6" valign="top" width="77%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
                <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross
margin for the three months ended December 31, 2008 decreased by $30.3 million,
as compared with the same period in the last fiscal year, due primarily to a
decrease of $14.5 million in overall values on its financial and physical
commodity contracts and lower Gross margin of $15.8 million.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The lower
fair values on financial instruments resulted primarily from a $22.0 million
increase in realized losses associated with economic hedges of natural gas in
inventory. The realized losses pertain to financial derivative instruments that
are designed to economically hedge natural gas storage injections, and as part
of a planned transaction, are awaiting subsequent sale. The lower valuation on
these financial instruments was due primarily to declining NYMEX prices in the
current fiscal period. Partially offsetting the realized losses were higher
unrealized gains of $7.5 million that resulted primarily from higher valuations
on financial instruments with short positions in the current fiscal
period.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The lower
operating results were due primarily to the expiration of a favorable physical
transport capacity asset servicing the Northeast United States market region
that was no longer available for asset optimization in the current fiscal
period, as further discussed in the Financial Margin section.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
management of the Company uses non-GAAP measures when viewing the results of
NJRES to monitor the operational results without the impact of unsettled and
certain settled derivative instruments. These non-GAAP measures are &#8220;financial
margin&#8221; and &#8220;net financial earnings.&#8221;</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table is a computation of Financial margin of NJRES:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="22%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" width="72%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      revenues</font></div>
                </td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$463,094</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$520,211</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gas
      purchases</font></div>
                </td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">467,732</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">494,546</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Add:</font></div>
                </td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unrealized
      (gain) loss on derivative instruments</font></div>
                </td>
                <td align="right" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,597
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,922</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="bottom" width="72%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Realized
      loss from derivative instruments related to natural gas
      inventory</font></div>
                </td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27,194</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,163</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="72%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Financial
      margin</font></div>
                </td>
                <td align="right" valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      19,959</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      35,750</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
reconciliation of Operating income, the closest GAAP financial
measurement,&#160;to the Financial margin of NJRES&#160;is as
follows:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="21%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" width="72%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" colspan="2" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      income</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(9,378
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$22,563</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Add:</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operation
      and maintenance expense</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,360</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,840</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Depreciation
      and amortization</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">53</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="72%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      taxes</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">329</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">209</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Subtotal
      &#8211; Gross margin</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(4,638
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25,665</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Add:</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="72%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unrealized
      (gain) loss on derivative instruments</font></div>
                </td>
                <td align="right" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,597
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,922</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="72%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Realized
      loss from derivative instruments related to natural gas
      inventory</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27,194</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,163</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="72%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Financial
      margin</font></div>
                </td>
                <td align="right" valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$19,959</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$35,750</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
37</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
reconciliation of Net (loss) income to Net financial earnings is as
follows:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      (loss)&#160;income</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(5,614
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$13,150</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <td valign="bottom" width="70%">
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                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1,583
      </font></td>
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                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,900</font></td>
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                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.25pt solid">
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      loss from derivative instruments related to natural gas inventory,
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      of taxes</font></div>
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                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">16,580</font></font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,042</font></td>
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              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      financial earnings</font></div>
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                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
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      9,383</font></td>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Financial
margin for the three months ended December 31, 2008 and 2007 was $20.0 million
and $35.8 million, respectively. The decrease of $15.8 million is due primarily
to the expiration of a highly favorable physical transport capacity contract
servicing the Northeast market region that was no longer available for asset
optimization in the current fiscal period, along with lower hedged values for
transportation and higher transportation expenses. NJRES&#8217; total firm
transportation capacity decreased by 185,400 dth/day, to 677,000 dth/day at
December 31, 2008, from 862,400 dth/day at December 31, 2007. As a result, the
combined operating results of the basis and cash book portfolios in the current
fiscal period decreased by $11.4 million, as compared with the same period in
the last fiscal year. The storage book portfolio also decreased by $4.4 million
from the prior fiscal period, due primarily to lower average spreads on storage
positions in the current fiscal period, and less firm storage capacity, which
decreased to 25.1 Bcf in the current fiscal period from 26.9 Bcf in the prior
fiscal period.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES&#8217;
operation and maintenance expense increased $1.5 million during the three months
ended December 31, 2008, compared with the same period in the last fiscal year,
due primarily to adjustments in fiscal 2008 related to fiscal 2007 performance
incentives, in addition to increased audit fees in fiscal 2009.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Future
results are subject to NJRES&#8217; ability to maintain and expand its wholesale
marketing activities and are contingent upon many other factors, including an
adequate number of appropriate counterparties, volatility in the natural gas
market, sufficient liquidity in the energy trading market and continued access
to the capital markets.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Retail
and Other Operations</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
consolidated financial results of Retail and Other are summarized as
follows:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      revenues</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(2,654
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$6,631</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operation
      and maintenance expense</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;7,150</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$5,460</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Equity
      in earnings, net of tax</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;&#160;
      514</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1pt solid">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;
      424</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net&#160;
      (loss) income</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(5,684
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;
      365</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating
revenue for the three months ended December 31, 2008 decreased $9.3 million
compared to the same period in the prior fiscal year, due primarily to greater
unrealized losses at NJR Energy, which were the result of declining market
prices within a portfolio of net long financial derivative
positions.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operation
and maintenance expense for the three months ended December 31, 2008 increased
$1.7 million&#160;compared to the same period in the prior fiscal year, due
primarily to a combination of higher labor cost, increased rent and utilities
expenses and higher health care premium costs at NJRHS during the three months
ended December 31, 2008 and the fiscal 2008 true-up of fiscal 2007&#8217;s short term
incentive compensation costs at NJR in the first quarter of fiscal
2008.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
38</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
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        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Taxes
netted in Equity in earnings from Iroquois are $339,000 and $282,000 and are
included in the Unaudited Condensed Consolidated Statements of Income for the
three months ended December 31, 2008 and 2007, respectively. Equity in earnings
from Iroquois is driven by the underlying performance of natural gas
transportation through its existing pipeline, which is based on FERC regulated
tariffs.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
income for the three months ended December 31, 2008 decreased $6.0 million
compared to the same period in fiscal 2008 due primarily to the decreased
operating revenue at NJR Energy, partially offset by lower income tax expense as
a result of the lower Operating income.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR
Energy has an economic hedge associated with a long-term fixed-price contract to
sell gas to a counterparty. Unrealized losses or gains at NJR Energy are the
result of the change in value associated with financial derivative instruments
(futures contracts) designed to economically hedge the long-term fixed-price
contract.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Income statement impact represents unrealized losses associated with these
derivative instruments of $9.7 million and $305,000 for the three months ended
December 31, 2008 and 2007, respectively, which are recorded, pre-tax, as a
component of Operating revenues.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
management of the Company uses the non-GAAP measure net financial earnings, when
viewing the results of NJR Energy to monitor the operational results without the
impact of unsettled derivative instruments.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
reconciliation of Net (loss) income to Net financial earnings, a non-GAAP
measure, is as follows:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
          <table cellpadding="0" cellspacing="0" width="98%">
              <tr>
                <td valign="bottom" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="6" nowrap valign="bottom" width="21%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
      Months Ended</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.3pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2008</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td colspan="2" nowrap valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.65pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2007</font></div>
                </td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      (loss)&#160;income</font></div>
                </td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(5,684
      </font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$365</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Add:</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 8pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unrealized
      loss on derivative instruments, net of taxes</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,705</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">180</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="bottom" width="70%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      financial earnings</font></div>
                </td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;&#160;&#160;&#160;
      21</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double">&#160;</td>
                <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$545</font></td>
                <td align="left" nowrap valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
financial earnings for the three months ended December 31, 2008,&#160;decreased
$500,000&#160;compared to the same period in the prior fiscal year, due
primarily to increased Operation and maintenance expense as&#160;discussed
above, partially offset by lower Interest expense for NJR due to lower average
interest rates and short-term borrowings.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Liquidity
and Capital Resources</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR&#8217;s
objective is to maintain a consolidated capital structure that reflects the
different characteristics of each business segment and provides adequate
financial flexibility for accessing capital markets as required.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR&#8217;s
consolidated capital structure was as follows:</font></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="bottom" width="18%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                </td>
                <td colspan="2" valign="bottom" width="14%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 1.3pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                </td>
              </tr>
              <tr>
                <td valign="bottom" width="68%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="bottom" width="18%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td colspan="2" valign="bottom" width="14%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      stock equity</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">49</font></div>
                </td>
                <td align="left" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></div>
                </td>
                <td align="left" valign="bottom" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Long-term
      debt</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31</font></div>
                </td>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="68%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Short-term
      debt</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20</font></div>
                </td>
                <td valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="68%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100</font></div>
                </td>
                <td align="left" valign="bottom" width="8%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100</font></div>
                </td>
                <td align="left" valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
39</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Common
stock equity</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR
satisfies its external common equity requirements, if any, through issuances of
its common stock, including the proceeds from stock issuances under its
Automatic Dividend Reinvestment Plan (DRP) and proceeds from the exercise of
options issued under the Company&#8217;s long-term incentive program. The DRP allows
NJR, at its option, to use shares purchased on the open market or newly issued
shares.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has a share repurchase program that provides for the repurchase of up to
6.8 million shares. As of December 31, 2008, the Company repurchased
approximately 5.4 million of those shares and has the ability to repurchase
approximately 1.4 million additional shares under the approved
program.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Debt</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR and
its unregulated subsidiaries rely on cash flows generated from operating
activities and utilization of committed credit facilities to provide liquidity
to meet working capital and external debt-financing requirements.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, NJR, NJRES and NJNG had committed credit facilities of $605
million with approximately $339 million available under these facilities (see
<font style="DISPLAY: inline; FONT-STYLE: italic">Note 7.
Debt).</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR
believes that as of December 31, 2008, NJR, NJNG and NJRES were, and currently
are, in compliance with all debt covenants.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR
believes that existing borrowing availability, its current cash balances and its
cash flow from operations will be sufficient to satisfy it and its subsidiaries&#8217;
working capital, capital expenditure and dividend requirements for the
foreseeable future. NJR, NJNG and NJRES currently anticipate that its financing
requirements for the next twelve months will be met through the issuance of
short-term debt, meter sale lease-backs and proceeds from the Company&#8217;s
DRP.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">NJR</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 13, 2007, NJR entered into a $325 million, five-year, revolving,
unsecured credit facility, which permits the borrowing of revolving loans and
swing loans, as well as the issuance of letters of credit. Swing loans are loans
made available on a same-day basis for an aggregate principal amount of up to
$50 million and repayable in full within a maximum of seven days of borrowing.
It also permits an increase to the facility, from time to time, with the
existing or new lenders, in a minimum of $5 million increments up to a maximum
$100 million at the lending banks discretion. Borrowings under the new facility
are conditional upon compliance with a maximum leverage ratio, as defined in the
new credit facility, of not more than 0.65 to 1.00 at any time. NJR used the
initial borrowings under the new credit facility to refinance its prior credit
facility. In addition, certain of NJR&#8217;s non-regulated subsidiaries have
guaranteed to the lenders all of NJR&#8217;s obligations under the new credit
facility. Depending on borrowing levels and credit ratings, NJR&#8217;s interest rate
can either be, at its discretion, the London inter-bank offered rate (&#8220;LIBOR&#8221;)
or the Federal Funds Open Rate plus an applicable spread and facility fee. As of
December 31, 2008, NJR&#8217;s effective rate was 0.8 percent on outstanding
borrowings of $62 million under this credit facility.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, borrowings under NJR&#8217;s credit facility are conditioned upon compliance
with a maximum leverage ratio, as defined in the credit facility, of not more
than 0.65 to 1.00 at any time.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR uses
its short term borrowings primarily to finance its share repurchases, to satisfy
NJRES&#8217; short term liquidity needs and to finance, on an initial basis,
unregulated investments. NJRES&#8217; use of high-injection, high-withdrawal storage
facilities and anticipated pipeline park-and-loan arrangements, combined with
related economic hedging activities in the volatile wholesale natural gas
market, create significant short-term cash requirements.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
40</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">NJNG</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
November 1, 2008, upon maturity, NJNG redeemed its $30 million,&#160;6.27
percent, Series X First Mortgage bonds.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG
satisfies its debt needs by issuing short- and long-term debt based upon its own
financial profile. The seasonal nature of NJNG&#8217;s operations creates large
short-term cash requirements, primarily to finance natural gas purchases and
customer accounts receivable. NJNG obtains working capital for these
requirements, and for the temporary financing of construction and MGP
remediation expenditures and energy tax payments, through the issuance of
commercial paper and short-term bank loans.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
support the issuance of commercial paper, NJNG has a $250 million committed
credit facility with several banks, with a 5-year term, expiring in December
2009. NJNG had $203.6 million of commercial paper borrowings supported by the
credit facility as of December 31, 2008.&#160;In addition, borrowings under
NJNG&#8217;s credit facility are conditioned upon compliance with a maximum leverage
ratio, as defined in the credit facility, of not more than 0.65 to 1.00 at any
time and a minimum interest coverage ratio, as defined in the credit facility,
of less than 2.50 to 1.00.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Neither
NJNG nor its assets are obligated or pledged to support the NJR or NJRES
facilities.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">NJRES</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES has
a 3-year $30 million committed credit facility with a multinational financial
institution. Borrowings under this facility are guaranteed by NJR. There were no
borrowings under this facility as of December 31, 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Contractual
Obligations</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table is a summary of NJR, NJNG and NJRES contractual cash obligations
and financial commitments and their applicable payment due dates as of December
31, 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td colspan="2" valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="13%">&#160;</td>
                <td valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Up&#160;to</font></div>
                </td>
                <td valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      &#160;2-3</font></div>
                </td>
                <td valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      4-5</font></div>
                </td>
                <td valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      After</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" colspan="2" valign="bottom" width="45%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Total</font></div>
                </td>
                <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      1&#160;Year</font></div>
                </td>
                <td valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Years</font></div>
                </td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Years</font></div>
                </td>
                <td valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      5&#160;Years</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Long-term
      debt <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;638,908</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;44,057</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;56,006</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;34,975</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$503,870</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Capital
      lease obligations <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">91,513</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,748</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23,086</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16,391</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,288</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
      leases <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11,735</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,251</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,301</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,570</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,613</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Short-term
      debt</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">265,550</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">265,550</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">New
      Jersey Clean Energy Program <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(1)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">53,077</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,514</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24,667</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15,896</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Construction
      obligations</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,635</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,635</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Remediation
      expenditures <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-STYLE: italic">(2)</font></font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">120,230</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,530</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">35,900</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22,200</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">43,600</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      gas supply purchase obligations&#8211;NJNG</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">92,177</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">76,054</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16,123</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Demand
      fee commitments&#8211;NJNG</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">729,972</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">87,598</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">185,039</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">157,514</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">299,821</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" colspan="2" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Natural
      gas supply purchase obligations&#8211;NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">709,390</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">600,177</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">109,213</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" colspan="2" valign="bottom" width="45%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Demand
      fee commitments&#8211;NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">188,356</font></div>
                </td>
                <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">79,508</font></div>
                </td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">78,406</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23,589</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,853</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" colspan="2" valign="bottom" width="45%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
      contractual cash obligations</font></div>
                </td>
                <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$2,903,543</font></div>
                </td>
                <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,199,622</font></div>
                </td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$532,741</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$273,135</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$898,045</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(1)</font></div>
                </td>
                <td colspan="6" valign="top" width="96%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">These
      obligations include an interest component, as defined under the related
      governing agreements or in accordance with the applicable tax
      statute.</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(2)</font></div>
                </td>
                <td colspan="6" valign="top" width="96%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Expenditures
      are estimated</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
fiscal 2009, the Company has no minimum pension funding requirements, however,
funding requirements are uncertain and can depend significantly on changes in
actuarial assumptions, returns on plan assets and changes in demographic
factors. It is anticipated that the annual funding level to the OPEB plans will
range from $1.2 million to $1.4 million over the next five years. Additional
contributions may be made based on market conditions and various
assumptions.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
41</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, there were NJR guarantees covering approximately $421 million
of natural gas purchases and demand fee commitments of NJRES and NJNG, included
in natural gas supply purchase obligations above, not yet reflected in Accounts
payable on the Unaudited Condensed Consolidated Balance Sheet.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is obligated to fund up to $132.5 million associated with the
construction and development of Steckman Ridge. Currently, NJR anticipates that
Steckman Ridge will seek non-recourse project financing for a portion of the
facility once construction activities are completed, therefore potentially
reducing the aggregate recourse amount funded by NJR. There can be no assurances
that Steckman Ridge will eventually secure such non-recourse project
financing.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
capital expenditures for fiscal 2009 are estimated at $77.3 million, including
expenditures of $18.4 million incurred during the three months ended December
31, 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Off-Balance-Sheet
Arrangements</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company does not have any off-balance-sheet financing arrangements.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Cash
Flow</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Operating
Activities</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
presented in the Unaudited Condensed Consolidated Statements of Cash Flows, cash
flow used in operating activities totaled $37.0 million for the three months
ended December 31, 2008, compared with cash flow used in operations of $6.5
million for the same period in fiscal 2008. Cash used in operating activities
was lower for the three month period ended December 31, 2008 as compared with
the same period in fiscal 2008, largely as a result of lower net income during
the current fiscal period, which was driven by less favorable operating results
at NJRES. NJR employs the indirect method when preparing its Unaudited Condensed
Consolidated Statement of Cash Flows. Net income is adjusted for any non-cash
items, such as accruals and certain amortization amounts that impact earnings
during the period. In addition, operating cash flows are affected by variations
in working capital and the related changes in the beginning and period end
balances, which can be impacted by the following:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">seasonality
      of NJR&#8217;s business;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">fluctuations
      in wholesale natural gas prices;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">timing
      of storage injections and withdrawals;</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">management
      of the deferral and recovery of gas costs,</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">changes
      in contractual assets utilized to optimize margins related to natural gas
      transactions; and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">timing
      of the collections of receivables and payments of current
      liabilities.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
42</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJR
needed less cash for its working capital requirements during the three months
ended December 31, 2008 as compared with the same period in fiscal 2008. During
the current fiscal period, NJR used $41.2 million to satisfy liquidity needs
compared with $57.8 million during the prior fiscal quarter. The underlying
factors that contributed to the decrease in cash used to support working capital
requirements are as follows:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -2.65pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="71%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      decrease in average natural gas costs at NJRES resulting in a reduction in
      the value of its gas in storage;</font></div>
                </td>
              </tr>
              <tr>
                <td colspan="2" valign="top" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -2.65pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="71%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">comparatively
      lower sales volumes at NJRES stemming from a reduction in transportation
      capacity resulting in a decrease in its receivable
    balances;</font></div>
                </td>
              </tr>
              <tr>
                <td colspan="2" valign="top" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -2.65pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="71%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      reduction in NJNG&#8217;s underrecovered gas costs during the current quarter as
      a result of gas costs falling below the commodity component of NJNG&#8217;s BGSS
      rate billed to its customers compared with the prior year when cash flows
      were primarily impacted by a credit of $32 million issued to NJNG&#8217;s
      customers in anticipation of the lower commodity costs; partially offset
      by</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">lower
      NYMEX prices during the current fiscal quarter which resulted in increased
      broker margin deposits for NJNG&#8217;s financial derivatives;
    and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                </td>
                <td valign="top" width="72%">
                  <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Lower
      payable balances at the end of the current fiscal quarter compared to
      higher balances the previous year related to gas purchases at
      NJRES.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
MGP expenditures are currently expected to total $17.6 million in fiscal 2009
(see <font style="DISPLAY: inline; FONT-STYLE: italic">Note 13. Commitments and
Contingent Liabilities).</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Investing
Activities</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash flow
used in investing activities totaled $36.6 million for the three months ended
December 31, 2008, compared with $17.9 million in the same period in fiscal
2008. The increase in cash used was due primarily to an increase in the cash
invested in Steckman Ridge and higher NJNG utility plant expenditures offset by
the drawdown from the restricted cash construction fund.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
5, 2008, the Federal Energy Regulatory Commission (FERC) issued Steckman Ridge a
certificate of public convenience and necessity authorizing the ownership,
construction and operation of its natural gas storage facility and associated
facilities. NJR anticipates that Steckman Ridge will be placed in service during
the summer of 2009. As of December 31, 2008, NJR has invested $99.7 million in
Steckman Ridge. This amount excludes capitalized interest and other direct
costs. Total project costs related to the development of the storage facility
are currently estimated at approximately $265 million, of which NJR is obligated
to fund 50 percent or approximately $132.5 million. NJR anticipates that
Steckman Ridge will seek non-recourse financing upon completion of
the&#160;construction and development of its facilities, thereby potentially
reducing the final expected recourse obligation of NJR. There can be no
assurances that such non-recourse project financing will be secured or available
for Steckman Ridge.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Retail
and Other capital expenditures each year have been made primarily in connection
with investments made to preserve the value of real estate holdings. At December
31, 2008, CR&amp;R owned 83 acres of undeveloped land and a 56,400-square-foot
building on 5 acres of land.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJRES
does not currently anticipate any significant capital expenditures in fiscal
2009.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
43</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 40pt; TEXT-INDENT: -40pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Financing
Activities</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash flow
from financing activities totaled $56.9 million for the three months ended
December 31, 2008, compared with $23.1 million for the same period in the prior
fiscal year. During the current fiscal quarter, NJNG redeemed its $30
million,&#160;6.27 percent, Series X Mortgage bonds, which was offset by an
increase in short-term borrowings compared with the prior fiscal quarter. This
increase in short term debt was used to fund working capital requirements, as
well as utility plant and other investments</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG
provides funding for certain of its infrastructure projects through tax exempt,
variable-rate debt, which has been issued to back six series of auction rate
securities (ARS) through the Economic Development Authority of New Jersey (EDA),
and are based on the borrowing costs of the ARS. During periods of reduced
liquidity for ARS, NJNG&#8217;s rate on its variable rate debt could default to a
maximum rate of the lesser of (i) 175 percent of the 30-day LIBOR or (ii) 10 to
12 percent, as applicable to a particular series of ARS. NJNG is currently
reviewing alternatives that include the refinancing of these bonds to eliminate
any increase in interest rate risk.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG
received $6.3 million and $7.5 million in December 2008 and 2007, respectively,
in connection with the sale-leaseback of its natural gas meters. This
sale-leaseback program is expected to be continued on an annual
basis.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Credit
Ratings</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The table
below summarizes NJNG&#8217;s current credit ratings issued by two rating entities,
Standard and Poor&#8217;s (S&amp;P) and Moody&#8217;s Investors Service, Inc.
(Moody&#8217;s):</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="bottom" width="47%" style="BORDER-BOTTOM: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="17%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Standard
      and Poor&#8217;s</font></div>
                </td>
                <td valign="bottom" width="14%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moody&#8217;s</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="47%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Corporate&#160;Rating</font></div>
                </td>
                <td valign="bottom" width="17%" style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A</font></div>
                </td>
                <td valign="bottom" width="14%" style="BORDER-LEFT: #000000 0.25pt solid; BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">N/A</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="47%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Commercial
      Paper</font></div>
                </td>
                <td valign="bottom" width="17%" style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A-1</font></div>
                </td>
                <td valign="bottom" width="14%" style="BORDER-LEFT: #000000 0.25pt solid; BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">P-1</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="47%" style="BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Senior
      Secured</font></div>
                </td>
                <td valign="bottom" width="17%" style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A+</font></div>
                </td>
                <td valign="bottom" width="14%" style="BORDER-LEFT: #000000 0.25pt solid; BORDER-BOTTOM: black 1pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Aa3</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="47%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ratings
      Outlook</font></div>
                </td>
                <td valign="bottom" width="17%" style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Negative</font></div>
                </td>
                <td valign="bottom" width="14%" style="BORDER-LEFT: #000000 0.25pt solid; BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Negative</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 12, 2008, Moody&#8217;s adjusted NJNG&#8217;s credit ratings outlook from stable to
negative.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
S&amp;P and Moody&#8217;s ratings are investment-grade ratings. S&amp;P and Moody&#8217;s
give NJNG&#8217;s commercial paper the highest rating within the Commercial Paper
investment-grade category. NJR is not a rated entity.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG is
not party to any lending agreements that would accelerate the maturity date of
any obligation caused by a failure to maintain any specific credit rating. If
such ratings are downgraded below investment grade, borrowing costs could
increase, as will the costs of maintaining certain contractual relationships and
for future financing. Even if ratings are downgraded without falling below
investment grade, NJR and NJNG may still face increased borrowing costs under
their respective credit facilities. A rating set forth above is not a
recommendation to buy, sell or hold the Company&#8217;s or NJNG&#8217;s securities and may
be subject to revision or withdrawal at any time. Each rating set forth above
should be evaluated independently of any other rating.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
timing and mix of any external financings will target a common equity ratio that
is consistent with maintaining the Company&#8217;s current short- and long-term credit
ratings.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
44</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">I<a name="i3qq">TEM </a>3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Financial
Risk Management</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Commodity
Market Risks</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Natural
gas is a nationally traded commodity, and its prices are determined effectively
by the New&#160;York Mercantile Exchange (NYMEX) and over-the-counter markets.
The prices on the NYMEX and over-the-counter markets generally reflect the
notional balance of natural gas supply and demand, but are also influenced
significantly from time to time by other events.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
regulated and unregulated natural gas businesses of the Company and its
subsidiaries are subject to market risk due to fluctuations, in the price of
natural gas. To economically hedge against such fluctuations, the Company and
its subsidiaries have entered into futures contracts, options agreements and
swap agreements. To manage these derivative instruments, the Company has
well-defined risk management policies and procedures that include daily
monitoring of volumetric limits and monetary guidelines. The Company&#8217;s natural
gas businesses are conducted through three of its operating subsidiaries. First,
NJNG is a regulated utility that uses futures, options and swaps to economically
hedge against price fluctuations and its recovery of natural gas costs is
governed by the BPU. Second, NJRES uses futures, options and swaps to
economically hedge purchases and sales of natural gas. Finally, NJR Energy has
entered into two swap transactions related to an 18-year fixed-price contract,
expiring in October 2010 to sell remaining volumes of approximately 4.3 Bcf of
natural gas (Gas Sales Contract) to an energy marketing
company.&#160;</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table reflects the changes in the fair market value of financial
derivatives related to natural gas purchases and sales from September 30, 2008
to December 31, 2008:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="bottom" width="37%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">&#160;(Thousands)</font></div>
                </td>
                <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td colspan="2" valign="bottom" width="18%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Decrease)
      in Fair</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Market&#160;Value</font></div>
                </td>
                <td colspan="2" valign="bottom" width="15%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Less</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amounts</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Settled</font></div>
                </td>
                <td colspan="2" valign="bottom" width="14%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="37%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJNG</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(49,610</font></div>
                </td>
                <td align="left" valign="bottom" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(32,499</font></div>
                </td>
                <td align="left" valign="bottom" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      (4,581</font></div>
                </td>
                <td align="left" valign="bottom" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(77,528</font></div>
                </td>
                <td align="left" valign="bottom" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="37%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">89,571</font></div>
                </td>
                <td valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51,366</font></div>
                </td>
                <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">47,909</font></div>
                </td>
                <td valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">93,028</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="37%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJR
      Energy</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20,190</font></div>
                </td>
                <td valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(8,883</font></div>
                </td>
                <td align="left" valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">800</font></div>
                </td>
                <td valign="bottom" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,507</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="37%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      60,151</font></div>
                </td>
                <td valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;&#160;9,984</font></div>
                </td>
                <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$44,128</font></div>
                </td>
                <td valign="bottom" width="6%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$26,007</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
were no changes in methods of valuations during the year ended December 31,
2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following is a summary of fair market value of financial derivatives related to
natural gas purchases and sales at December 31, 2008, by method of valuation and
by maturity for each fiscal year period:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="38%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -11.6pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      2009</font></div>
                </td>
                <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2010</font></div>
                </td>
                <td align="right" colspan="2" valign="bottom" width="13%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2011-2013</font></div>
                </td>
                <td colspan="2" valign="bottom" width="12%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">After</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2013</font></div>
                </td>
                <td colspan="2" valign="bottom" width="14%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fair&#160;Value</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="38%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Price
      based on NYMEX</font></div>
                </td>
                <td align="right" valign="bottom" width="13%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$22,474</font></div>
                </td>
                <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;29</font></div>
                </td>
                <td align="right" valign="bottom" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(1,657</font></div>
                </td>
                <td align="left" valign="top" width="1%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$20,846</font></div>
                </td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="38%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Price
      based on other external data</font></div>
                </td>
                <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,442</font></div>
                </td>
                <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">719</font></div>
                </td>
                <td align="right" valign="bottom" width="12%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="top" width="1%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,161</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="38%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$26,916</font></div>
                </td>
                <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$748</font></div>
                </td>
                <td align="right" valign="bottom" width="12%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(1,657</font></div>
                </td>
                <td align="left" valign="top" width="1%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$26,007</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
45</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following is a summary of financial derivatives by type as of December 31,
2008:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="37%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Volume</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Bcf)</font></div>
                </td>
                <td valign="bottom" width="20%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Price
      per</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Mmbtu</font></div>
                </td>
                <td colspan="2" valign="bottom" width="18%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amounts
      included</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">in
      Derivatives </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="37%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJNG</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.35pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Futures</font></div>
                </td>
                <td align="right" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21.0</font></div>
                </td>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="top" width="20%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;5.64
      - $&#160;&#160;9.16</font></div>
                </td>
                <td align="right" valign="bottom" width="14%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$(51,076</font></div>
                </td>
                <td align="left" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.35pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Swaps</font></div>
                </td>
                <td align="right" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(5.8</font></div>
                </td>
                <td align="left" valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="left" valign="top" width="20%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;4.39
      - $13.95</font></div>
                </td>
                <td align="right" valign="bottom" width="14%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(28,277</font></div>
                </td>
                <td align="left" valign="bottom" width="4%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.35pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Options</font></div>
                </td>
                <td align="right" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12.4</font></div>
                </td>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="top" width="20%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;5.98
      - $&#160;&#160;9.47</font></div>
                </td>
                <td align="right" valign="bottom" width="14%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,825</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="37%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.35pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Futures</font></div>
                </td>
                <td align="right" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(10.7</font></div>
                </td>
                <td align="left" valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="left" valign="top" width="20%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;5.20
      - $14.36</font></div>
                </td>
                <td align="right" valign="bottom" width="14%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17,648</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.35pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Swaps</font></div>
                </td>
                <td align="right" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(64.7</font></div>
                </td>
                <td align="left" valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></div>
                </td>
                <td align="left" valign="top" width="20%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;4.71
      - $14.41</font></div>
                </td>
                <td align="right" valign="bottom" width="14%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">72,660</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.35pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Options</font></div>
                </td>
                <td align="right" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="top" width="20%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$10.22
      - $13.21</font></div>
                </td>
                <td align="right" valign="bottom" width="14%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,720</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="37%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJR
      Energy</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.35pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Swaps</font></div>
                </td>
                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4.7</font></div>
                </td>
                <td valign="top" width="6%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="left" valign="top" width="20%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 24pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$&#160;&#160;3.37
      - $&#160;&#160;4.39</font></div>
                </td>
                <td align="right" valign="bottom" width="14%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,507</font></div>
                </td>
                <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="37%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td valign="bottom" width="11%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="8%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="6%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="20%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="14%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      26,007</font></div>
                </td>
                <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table reflects the changes in the fair market value of physical
commodity contracts from September 30, 2008 to December 31, 2008:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="bottom" width="29%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="2" valign="bottom" width="12%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">September
      30,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
                <td colspan="2" valign="bottom" width="14%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Decrease)
      in Fair</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -0.7pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Market&#160;Value</font></div>
                </td>
                <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Less</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amounts</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Settled</font></div>
                </td>
                <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="29%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">NJRES</font></div>
                </td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,714</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$
      13,193</font></div>
                </td>
                <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$14,052</font></div>
                </td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$855</font></div>
                </td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company uses a value-at-risk (VaR) model to assess the market risk of its net
futures, options and swap positions. VaR represents the potential loss in value
of NJRES&#8217; trading portfolio due to adverse market movements over a defined time
horizon (NJRES utilizes holding periods of 1 day and 10 days) with a specified
confidence level (NJRES utilizes either a 95 percent or 99 percent confidence
level). As an example, utilizing a 1 day holding period with a 95 percent
confidence level would indicate that there is a 5 percent chance that the
liquidation value of the NJRES portfolio would fall below the expected trading
value by an amount at least as large as the calculated VaR.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The VaR
at December 31, 2008, using the variance-covariance method with a 95 percent
confidence level and a 1-day holding period, was $1.0 million. The VaR with a 99
percent confidence level and a 10-day holding period was $4.5 million. The
calculated VaR represents an estimate of the potential change in the value of
the net positions. These estimates may not be indicative of actual results
because actual market fluctuations may differ from forecasted
fluctuations.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Wholesale
Credit Risk</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG,
NJRES and NJR Energy engage in wholesale marketing activities. NJR monitors and
manages the credit risk of its wholesale marketing operations through credit
policies and procedures that management believes reduce overall credit risk.
These policies include a review and evaluation of prospective counterparties&#8217;
financial statements and/or credit ratings, daily monitoring of counterparties&#8217;
credit limits, daily communication with traders regarding credit status and the
use of credit mitigation measures, such as minimum margin requirements,
collateral requirements and netting agreements. Examples of collateral include
letters of credit and cash received for either prepayment or margin
deposit.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company&#8217;s Risk Management Committee (RMC) continuously monitors NJR&#8217;s credit
risk management policies and procedures. The RMC is comprised of individuals
from NJR-affiliated companies that meet twice a month and, among other things,
evaluates the effectiveness of existing credit policies and procedures, reviews
material transactions and discusses emerging issues.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
46</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following is a summary of gross and net credit exposures, grouped by investment
and noninvestment grade counterparties, as of December 31, 2008. Gross credit
exposure is defined as the unrealized fair value of derivative&#160;and energy
trading contracts plus any outstanding receivable for the value of natural gas
delivered for which payment has not yet been received. Net credit exposure is
defined as gross credit exposure reduced by collateral received from
counterparties and/or payables, where netting agreements exist. The amounts
presented below exclude accounts receivable for retail natural gas sales and
services.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unregulated
counterparty credit exposure as of December 31, 2008, is as
follows:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="68%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gross&#160;Credit</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exposure</font></div>
                </td>
                <td valign="top" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="bottom" width="14%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net&#160;Credit</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exposure</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Investment
      grade</font></div>
                </td>
                <td align="right" valign="top" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$229,046</font></div>
                </td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$150,020</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Noninvestment
      grade</font></div>
                </td>
                <td align="right" valign="top" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,169</font></div>
                </td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Internally
      rated investment grade</font></div>
                </td>
                <td align="right" valign="top" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27,639</font></div>
                </td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16,564</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="68%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Internally
      rated noninvestment grade</font></div>
                </td>
                <td align="right" valign="top" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,531</font></div>
                </td>
                <td valign="top" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="68%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="top" width="11%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$261,385</font></div>
                </td>
                <td valign="top" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="2%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$166,584</font></div>
                </td>
                <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NJNG&#8217;s
counterparty credit exposure as of December 31, 2008, is as
follows:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="68%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">(Thousands)</font></div>
                </td>
                <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gross&#160;Credit</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exposure</font></div>
                </td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="bottom" width="13%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net&#160;Credit</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exposure</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Investment
      grade</font></div>
                </td>
                <td align="right" valign="top" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$22,743</font></div>
                </td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$17,471</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Noninvestment
      grade</font></div>
                </td>
                <td align="right" valign="top" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,700</font></div>
                </td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Internally
      rated investment grade</font></div>
                </td>
                <td align="right" valign="top" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">189</font></div>
                </td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="68%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Internally
      rated noninvestment grade</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="top" width="5%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></div>
                </td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td valign="top" width="68%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="top" width="11%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$24,632</font></div>
                </td>
                <td valign="top" width="5%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 1.5pt double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$17,475</font></div>
                </td>
                <td valign="bottom" width="3%" style="BORDER-BOTTOM: black 1.5pt double"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
the inherent volatility in the prices of natural gas commodities and
derivatives, the market value of contractual positions with individual
counterparties could exceed established credit limits or collateral provided by
those counterparties. If a counterparty failed to perform the obligations under
its contract (for example, failed to deliver or pay for natural gas), then the
Company could sustain a loss. This loss would comprise the loss on natural gas
delivered but not paid for and/or the cost of replacing natural gas not
delivered at a price higher than the price in the original contract. Any such
loss could have a material impact on the Company&#8217;s financial condition, results
of operations or cash flows.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Interest
Rate Risk&#8211;Long-Term Debt</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
December 31, 2008, the Company (excluding NJNG) had no variable-rate long-term
debt.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008 NJNG is obligated with respect to loan agreements securing six
series of auction rate bonds totaling approximately $97.0 million of
variable-rate debt backed by securities issued by the EDA. The EDA bonds are ARS
and have an interest rate reset every 7 or 35 days, depending upon the
applicable series, when an auction is held for the purposes of determining the
interest rate pricing of the securities. The interest rate associated with the
NJNG variable-rate debt is based on the rates the EDA receives from its ARS. As
of December 31, 2008, all of the auctions surrounding the EDA ARS have failed,
resulting in the securities bearing interest at their maximum rates, as defined
in the ARS, as the lesser of (i) 175 percent of 30-day LIBOR or (ii) 10 to 12
percent per annum, as applicable to such series of ARS. While the failure of the
ARS auctions has no default impact on NJNG&#8217;s variable-rate debt, it does impact
its borrowing costs of the variable-rate debt. As such, NJNG currently has a
weighted average interest rate of 0.8 percent as of December 31, 2008. There can
be no assurance that the ARS securities of the EDA will have enough market
liquidity to return interest rates below their maximum rate.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
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            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Effects
of Inflation</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
inflation rates have been relatively low to moderate in recent years, any change
in price levels has an effect on operating results due to the capital-intensive
and regulated nature of the Company&#8217;s utility subsidiary. The Company attempts
to minimize the effects of inflation through cost control, productivity
improvements and regulatory actions where appropriate.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">I<a name="i4">TEM</a> 4. CONTROLS AND PROCEDURES</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Disclosure
Controls and Procedures</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">As discussed in
"Part&#160;II. Item&#160;9A. Controls and Procedures" in our Form&#160;10-K for
the fiscal year ended September&#160;30, 2008, i</font>n connection with the
Company&#8217;s preparation of its consolidated financial statements for the fiscal
year ended September 30, 2008, the Company identified an immaterial error in the
recording of certain physical natural gas transactions, which were not recorded
at the appropriate fair value during the interim quarters ended March 31, 2008
and June 30, 2008, as they were valued at an incorrect price.&#160;Controls were
not designed properly or operating effectively to prevent or detect these
pricing errors. Natural gas prices are volatile and it is reasonably possible
that the volume of these transactions could have been larger during any interim
period or for the fiscal year ended September 30, 2008. The Company concluded
that it was reasonably possible that this control weakness could have resulted
in a material error in its Consolidated Financial Statements had the volume of
these transactions been larger.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 32pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2008, under the supervision and with the participation of the
Company&#8217;s management, including the principal executive officer and principal
financial officer, the Company conducted an evaluation of the effectiveness of
the design and operation of its disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act, as of the end of the
period covered by this report. Based on this evaluation, since the material
weakness discussed above is not completely remediated, the Company&#8217;s principal
executive officer and principal financial officer concluded that, as of end of
the period covered by this report, the Company&#8217;s disclosure controls and
procedures were not effective to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act, is recorded, processed, summarized and reported, within the time
periods specified in the SEC&#8217;s rules and forms, and that such information is
accumulated and communicated to the Company&#8217;s management, including its
principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 32pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
result of this conclusion, the financial statements for the period covered by
this report were prepared with particular attention to the material
weakness.&#160;&#160;Accordingly, management believes that the condensed
consolidated financial statements included in this Quarterly Report fairly
present, in all material respects, our financial condition, results of
operations and cash flows as of and for the periods presented.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company continually reviews its disclosure controls and procedures and makes
changes, as necessary, to ensure the quality of its financial reporting. As
detailed below, the Company has implemented certain additional controls that it
believes will significantly reduce the potential for similar issues to arise in
the future.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changes
in Internal Control over Financial Reporting</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
and the Board of Directors are committed to the remediation of the material
weakness set forth above as well as the continued improvement of the Company&#8217;s
overall system of internal control over financial reporting.&#160;Management is
in the process of actively addressing and remediating the material weakness in
internal control over financial reporting described above. Subsequent to the
quarter and fiscal year ended September 30, 2008, in connection with the
material weakness in internal control over financial reporting detailed above,
the Company has implemented or will implement the following controls designed to
substantially reduce the risk of a similar material weakness occurring in the
future:</font></div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">
            <div>
              <table cellpadding="0" cellspacing="0" width="100%">
                  <tr>
                    <td valign="top" width="2%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                    </td>
                    <td valign="top" width="72%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">expand
      training, education and accounting reviews for all relevant personnel
      involved in the accounting treatment and disclosures for the Company&#8217;s
      commodity transacting;</font></div>
                    </td>
                  </tr>
                  <tr>
                    <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="2%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                    </td>
                    <td valign="top" width="72%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">invest
      in additional resources with appropriate accounting technical
      expertise;</font></div>
                    </td>
                  </tr>
              </table>
            </div><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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48</font></div>
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          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
I</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      4. CONTROLS AND PROCEDURES (Continued)</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">
            <div>
              <table cellpadding="0" cellspacing="0" width="100%">
                  <tr>
                    <td valign="top" width="2%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                    </td>
                    <td valign="top" width="72%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">expand
      the review of the design of the internal control over financial reporting
      related to the accounting of commodity transacting, which will incorporate
      an analysis of the current staffing levels, job assignments and the design
      of all internal control processes for the accounting for commodity
      transacting and implement new and improved processes and controls, if
      warranted; and</font></div>
                    </td>
                  </tr>
                  <tr>
                    <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="72%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="2%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#376;</font></div>
                    </td>
                    <td valign="top" width="72%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">increase
      the level of review and discussion of significant accounting matters and
      supporting documentation with senior finance
  management.</font></div>
                    </td>
                  </tr>
              </table>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As part
of the Company&#8217;s fiscal 2009 assessment of internal control over financial
reporting, management will conduct sufficient testing and evaluation of the
controls to be implemented as part of this remediation plan to ascertain that
they are designed and are operating effectively. The effectiveness of
remediation efforts will not be known until the Company can test those controls
in connection with the management tests of internal control over financial
reporting that the Company will perform during fiscal 2009. Management believes,
however, these measures will fully remediate the above identified material
weakness in internal control over financial reporting.</font></div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">These were the only
changes in the Company&#8217;s internal control over financial reporting (as such term
is defined in Exchange Act Rule 13a-15(f)) that occurred during the quarter
ended December 31, 2008, that have materially affected, or are reasonably likely
to materially affect, internal control over financial reporting.
</font>Subsequent to the end of the first fiscal quarter, the Company&#8217;s
Corporate Controller position was vacated. The Company has temporarily delegated
the responsibilities of the function to other senior accounting managers while
it conducts an employment search for a new Controller. These employees are
qualified and capable of managing the additional responsibilities in the interim
and will be doing so under the direction of the principal financial
officer.</font></div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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              <div id="GLHDR" style="WIDTH: 100%; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div style="TEXT-ALIGN: center">
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
            <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
II</font></div>
            <div>&#160;</div>
          </div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="legal">ITEM</a> 1. LEGAL PROCEEDINGS</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="pt2">Info</a>rmation regarding reportable legal proceedings is contained in
Part I, "Item 3. Legal Proceedings" in NJR&#8217;s Annual Report on Form 10-K for the
year ended September 30, 2008, and is set forth in <font style="DISPLAY: inline; FONT-STYLE: italic">Part I, Item 1, Note
12,</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Commitment and
Contingent Liabilities&#8212;Legal Proceedings </font>in the Unaudited Condensed
Consolidated Financial Statements. No legal proceedings became reportable during
the quarter December 31, 2008 and there have been no material developments
during such quarter regarding any previously reported legal proceedings, which
have not been previously disclosed.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 56pt; TEXT-INDENT: -57pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">I<a name="i1arsk">TE</a>M 1A. RISK FACTORS</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">While NJR
attempts to identify, manage and mitigate risks and uncertainties associated
with its business to the extent practical, under the circumstances, some level
of risk and uncertainty will always be present. Part I, Item 1A, "Risk Factors,"
of NJR&#8217;s 2008 Annual Report on Form 10-K includes a detailed discussion of NJR&#8217;s
risk factors. These risks and uncertainties have the potential to materially
affect NJR&#8217;s financial condition and results of operations. There have not been
any material changes from the risk factors as previously disclosed by NJR in the
2008 Annual Report on Form 10-K.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div>
            <table cellpadding="0" cellspacing="0" width="100%">
                <tr>
                  <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ITEM
      2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS</font></div>
                    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 1996,
the NJR&#8217;s Board of Directors (&#8220;Board&#8221;) authorized the Company to implement a
share repurchase program, which has been expanded several times since the
inception of the program. On November 14, 2007, the Board authorized an increase
to the plan to permit the repurchase, in the open market or in privately
negotiated transactions, of 1.5 million shares, bringing the total permitted
repurchases to 6.8 million shares as of that date. As of December 31, 2008, the
Company has 1.4 million shares of its common stock still available for
repurchase.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table sets forth NJR&#8217;s repurchase activity for the quarter ended
December 31, 2008:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="33%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: times new roman, serif">Period</font></div>
                </td>
                <td valign="bottom" width="12%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Total
      Number </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">of
      Shares</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(or
      Units) </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Purchased</font></div>
                </td>
                <td valign="bottom" width="12%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Average
      Price </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Paid
      per Share </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(or
      Unit)</font></div>
                </td>
                <td valign="bottom" width="19%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Total
      Number of Shares </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">(or
      Units) Purchased </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">as
      Part of Publicly </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Announced
      Plans </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">or
      Programs</font></div>
                </td>
                <td valign="bottom" width="24%" style="BORDER-BOTTOM: black 1px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Maximum
      Number (or Approximate </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Dollar
      Value) of Shares (or Units) </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">That
      May Yet be Purchased </font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Under
      the Plans or Programs</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="33%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10/01/08
      &#8211; 10/31/08</font></div>
                </td>
                <td align="right" valign="bottom" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">40,000</font></div>
                </td>
                <td align="right" valign="bottom" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 17.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">$28.15</font></div>
                </td>
                <td align="right" valign="bottom" width="19%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 35.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">40,000</font></div>
                </td>
                <td align="right" valign="top" width="24%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 30.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">1,369,171</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="33%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11/01/08
      &#8211; 11/30/08</font></div>
                </td>
                <td align="right" valign="top" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 24.7pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">&#8212;</font></div>
                </td>
                <td align="right" valign="top" width="12%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">&#8212;</font></div>
                </td>
                <td align="right" valign="top" width="19%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 39.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">&#8212;</font></div>
                </td>
                <td align="right" valign="top" width="24%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 30.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">1,369,171</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td align="left" valign="top" width="33%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12/01/08
      &#8211; 12/31/08</font></div>
                </td>
                <td align="right" valign="top" width="12%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 24.7pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">&#8212;</font></div>
                </td>
                <td align="right" valign="top" width="12%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">&#8212;</font></div>
                </td>
                <td align="right" valign="top" width="19%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 39.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">&#8212;</font></div>
                </td>
                <td align="right" valign="top" width="24%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 30.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">1,369,171</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="33%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                </td>
                <td align="right" valign="top" width="12%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 21.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">40,000</font></div>
                </td>
                <td align="right" valign="top" width="12%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 17.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">$28.15</font></div>
                </td>
                <td align="right" valign="top" width="19%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 35.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">40,000</font></div>
                </td>
                <td align="right" valign="top" width="24%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 30.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman, serif">1,369,171</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
50</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
II</font></div><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">I<a name="vote">TEM</a> 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(a)</font></div>
                </td>
                <td colspan="2" valign="top" width="74%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">An
      annual meeting of shareholders was held on January 21,
    2009.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(b)</font></div>
                </td>
                <td colspan="2" valign="top" width="74%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
      shareholders voted upon the following matters at the January&#160;21, 2009
      annual shareholders meeting:</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td colspan="2" valign="top" width="74%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(i)</font></div>
                </td>
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
      election of four directors to the Board of Directors for terms expiring in
      2012. The results of the voting were as
follows:</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="14%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="31%" style="PADDING-BOTTOM: 2px">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">DIRECTORS UNTIL
      2012</font></font></div>
                </td>
                <td align="left" valign="top" width="26%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">FOR</font></font></div>
                </td>
                <td align="left" valign="top" width="29%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">WITHHELD</font></font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="top" width="31%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="29%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="31%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Donald
      L. Correll</font></div>
                </td>
                <td align="left" valign="top" width="26%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34,374,623</font></div>
                </td>
                <td align="left" valign="top" width="29%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;607,318</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="31%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">M.
      William Howard, Jr.</font></div>
                </td>
                <td align="left" valign="top" width="26%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34,462,959</font></div>
                </td>
                <td align="left" valign="top" width="29%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;518,982</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="31%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">J.
      Terry Strange</font></div>
                </td>
                <td align="left" valign="top" width="26%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32,542,250</font></div>
                </td>
                <td align="left" valign="top" width="29%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,439,691</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="31%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">George
      R. Zoffinger</font></div>
                </td>
                <td align="left" valign="top" width="26%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34,152,002</font></div>
                </td>
                <td align="left" valign="top" width="29%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;829,939</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition to the directors elected at the annual meeting, the terms of the
following members of NJR&#8217;s Board of Directors continued after the
meeting:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="86%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Nina
      Aversano</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="86%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Lawrence
      R. Codey</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="86%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Laurence
      M. Downes</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="86%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Jane
      M. Kenny</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="86%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Alfred
      C. Koeppe</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="86%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">David
      A. Trice</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="86%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -1.05pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">William
      H. Turner</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="6%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(ii)</font></div>
                </td>
                <td valign="top" width="68%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Approval
      of the action of the Audit Committee in retaining Deloitte &amp; Touche
      LLP as NJR&#8217;s independent registered public accounting firm. The results of
      the voting were as follows:</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="31%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">FOR</font></font></div>
                </td>
                <td align="left" valign="top" width="26%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">AGAINST</font></font></div>
                </td>
                <td align="left" valign="top" width="29%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">ABSTAIN</font></font></div>
                </td>
              </tr>
              <tr>
                <td colspan="2" valign="top" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="29%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="31%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34,305,957</font></div>
                </td>
                <td align="left" valign="top" width="26%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">566,008</font></div>
                </td>
                <td align="left" valign="top" width="29%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">109,976</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
were no broker non-votes in either of the matters voted upon by our
shareholders.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
51</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Part
II</font></div><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="80%" style="BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="itemexh">ITEM</a> 6. EXHIBITS</font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="TEXT-DECORATION: underline">Exhibit <font style="DISPLAY: inline; TEXT-DECORATION: underline">Number</font></font></font></div>
                </td>
                <td align="left" valign="bottom" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit
      Name</font></font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.4</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amended
      and Restated Supplemental Executive Retirement Plan Agreement between the
      Company and Laurence M. Downes dated December 31, 2008.</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.4(a)</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Schedule
      of Supplemental Executive Retirement Plan Agreements</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.4(b)</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
      of Amendment of Supplemental Executive Retirement Plan Agreement between
      the Company and Named Executive Officer (for future
use)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.12</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Employment
      Continuation Agreement between the Company and Laurence M. Downes dated
      December 31, 2008</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.12(a)</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Schedule
      of Employment Continuation Agreements</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.17</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
      Company&#8217;s 2007 Stock Award and Incentive Plan (as amended and restated
      January 1, 2009)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.18</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007
      Stock Award and Incentive Plan Form of Stock Option
    Agreement</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.19</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007
      Stock Award and Incentive Plan Form of Performance Units
      Agreement</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.20</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007
      Stock Award and Incentive Plan Form of Restricted Stock
      Agreement</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.21</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007
      Stock Award and Incentive Plan Form of Performance Share
      Agreement</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.25</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">New
      Jersey Resources Corporation Directors&#8217; Deferred Compensation
      Plan</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.26</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">New
      Jersey Resources Corporation Officers&#8217; Deferred Compensation
      Plan</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.27</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">New
      Jersey Resources Corporation Savings Equalization Plan</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.28</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">New
      Jersey Resources Corporation Pension Equalization Plan</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31.1</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certification
      of the Chief Executive Officer pursuant to section 302 of the
      Sarbanes-Oxley Act</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31.2</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certification
      of the Chief Financial Officer pursuant to section 302 of the
      Sarbanes-Oxley Act</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32.1</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certification
      of the Chief Executive Officer pursuant to section 906 of the
      Sarbanes-Oxley Act*</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="71%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32.2</font></div>
                </td>
                <td align="left" valign="top" width="71%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certification
      of the Chief Financial Officer pursuant to section 906 of the
      Sarbanes-Oxley Act*</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*This
certificate accompanies this report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by NJR for purposes of
Section 18 or any other provision of the Securities Exchange Act of 1934, as
amended.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
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            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page
52</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="1">
              <div>&#160;</div>
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#toc">Table of Contents</a></font></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify">
          <div><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NEW
JERSEY RESOURCES CORPORATION</font></div>
          <div>&#160;</div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="sig">SIG</a>NATURES</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the requirements of Section&#160;13 or 15(d)&#160;of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline">NEW
      JERSEY RESOURCES CORPORATION</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Registrant)</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date:
      February 5, 2009</font></div>
                </td>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              </tr>
              <tr>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By<font style="DISPLAY: inline; TEXT-DECORATION: underline">:/s/ Glenn C.
      Lockwood</font></font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Glenn
      C. Lockwood</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Senior
      Vice President and</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                <td valign="top" width="39%">
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      Financial Officer</font></div>
                </td>
              </tr>
          </table>
        </div>
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        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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form10q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
x
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
FOR
THE QUARTERLY PERIOD ENDED DECEMBER 31, 2008
OR
o
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
FOR
THE TRANSITION PERIOD FROM
             
TO
Commission
file number 1-8359
NEW
JERSEY RESOURCES CORPORATION
(Exact
name of registrant as specified in its charter)
New
      Jersey
22-2376465
(State
      or other jurisdiction of
incorporation
      or organization)
(I.R.S.
      Employer
Identification
      Number)
1415
      Wyckoff Road, Wall, New Jersey 07719
732-938-1480
(Address
      of principal
executive
      offices)
(Registrant's
      telephone number,
including
      area code)
Securities
      registered pursuant to Section 12 (b) of the
  Act:
Common
      Stock - $2.50 Par Value
New
      York Stock Exchange
(Title
      of each class)
(Name
      of each exchange on which
registered)
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes:
x
No:
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated, or a smaller reporting company. See
definition of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer:
x
Accelerated
filer:
o
Non-accelerated
filer:
o
Smaller
reporting company:
o
(Do
      not check if a smaller
reporting
      company)
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act)
Yes:
o
No:
x
The number
of shares outstanding of $2.50 par value Common Stock as of February 4, 2009
was
42,318,558.
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
TAB
LE OF CONTENTS
Page
Information Concerning Forward-Looking
      Statements
1
PART I – FINANCIAL INFORMATION
2
ITEM 1.
Financial
      Statements
2
Notes to Unaudited Condensed Consolidated Financial
      Statements
6
Note 1
General
6
Note 2
Regulation
8
Note 3
Derivative Instruments
11
Note 4
Fair Value
      Measurements
12
Note 5
Investments In Equity Investees and Other
13
Note 6
Earnings Per Share
14
Note 7
Debt
14
Note 8
Capitalized Financing Costs And Deferred
      Interest
16
Note 9
Stock-Based Compensation
17
Note 10
Employee Benefit Plans
17
Note 11
Asset Retirement Obligations
18
Note 12
Income Taxes
18
Note 13
Commitments and Contingent Liabilities
18
Note 14
Business Segment and Other Operations Data
21
Note 15
Other
22
ITEM 2.
Management's Discussion and Analysis of Financial Condition
      and Results of Operations for the Three Months Ended December 31,
      2008
23
ITEM 3.
Quantitative and Qualitative Disclosures About Market
      Risk
45
ITEM 4.
Controls and
      Procedures
48
PART II – OTHER INFORMATION
ITEM 1.
Legal
      Proceedings
50
ITEM 1A.
Risk
      Factors
50
ITEM 2.
Unregistered Sale of Equity Securities and Use of
      Proceeds
50
ITEM 4.
Submission of Matters to a Vote of Security
      Holders
51
ITEM 6.
Exhibits
52
Signatures
53
i
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
INFO
RMATION CONCERNING FORWARD-LOOKING
      STATEMENTS
Certain
statements contained in this report, including, without limitation, statements
as to management expectations and beliefs presented in Part I, Item 2.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," Part I, Item 3. "Quantitative and Qualitative Disclosures about
Market Risk," Part II, Item I. "Legal Proceedings" and in the notes to the
financial statements are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements can
also be identified by the use of forward-looking terminology such as "may,"
"intend," "expect," "believe" or "continue" or comparable terminology and are
made based upon management's expectations and beliefs concerning future
developments and their potential effect upon New Jersey Resources Corporation
(NJR or the Company). There can be no assurance that future developments will be
in accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by
management.
The
Company cautions readers that the assumptions that form the basis for
forward-looking statements regarding customer growth, customer usage, financial
condition, results of operations, cash flows, capital requirements, market risk
and other matters for fiscal 2009 and thereafter include many factors that are
beyond the Company's ability to control or estimate precisely, such as estimates
of future market conditions, the behavior of other market participants and
changes in the debt and equity capital markets. The factors that could cause
actual results to differ materially from NJR's expectations include, but are not
limited to, those discussed in Risk Factors in Item 1A, as well as the
following:
Ÿ
weather
      and economic conditions;
Ÿ
demographic
      changes in the New Jersey Natural Gas (NJNG) service
      territory;
Ÿ
the
      rate of NJNG customer growth;
Ÿ
volatility
      of natural gas commodity prices and its impact on customer usage, cash
      flow, NJR Energy Services' (NJRES) operations and on the Company's risk
      management efforts;
Ÿ
changes
      in rating agency requirements and/or credit ratings and their effect on
      availability and cost of capital to the Company;
Ÿ
continued
      volatility or seizure of the credit markets that would result in the
      decreased availability and access to credit at NJR to fund and support
      physical gas inventory purchases and other working capital needs at NJRES,
      and all other non-regulated subsidiaries, as well as negatively affect
      access to the commercial paper market and other short-term financing
      markets at NJNG to allow it to fund its commodity purchases and meet its
      short-term obligations as they come due;
Ÿ
the
      impact to the asset values and funding obligations of NJR's pension and
      postemployment benefit plans as a result of a continuing downturn in the
      financial markets;
Ÿ
increases
      in borrowing costs associated with variable-rate debt;
Ÿ
commercial
      and wholesale credit risks, including creditworthiness of customers and
      counterparties;
Ÿ
the
      ability to obtain governmental approvals and/or financing for the
      construction, development and operation of certain non-regulated energy
      investments;
Ÿ
risks
      associated with the management of the Company's joint ventures and
      partnerships;
Ÿ
the
      impact of governmental regulation (including the regulation of
      rates);
Ÿ
conversion
      activity and other marketing efforts;
Ÿ
actual
      energy usage of NJNG's customers;
Ÿ
the
      pace of deregulation of retail gas markets;
Ÿ
access
      to adequate supplies of natural gas;
Ÿ
the
      regulatory and pricing policies of federal and state regulatory
      agencies;
Ÿ
the
      ultimate outcome of pending regulatory proceedings, including the possible
      expiration of the Conservation Incentive Program (CIP);
Ÿ
changes
      due to legislation at the federal and state level;
Ÿ
the
      availability of an adequate number of appropriate counterparties in the
      wholesale energy trading market;
Ÿ
sufficient
      liquidity in the wholesale energy trading market and continued access to
      the capital markets;
Ÿ
the
      disallowance of recovery of environmental-related expenditures and other
      regulatory changes;
Ÿ
environmental-related
      and other litigation and other uncertainties;
Ÿ
the
      effects and impacts of inflation on NJR and its subsidiaries
      operations;
Ÿ
change
      in accounting pronouncements issued by the appropriate standard setting
      bodies; and
Ÿ
terrorist
      attacks or threatened attacks on energy facilities or unrelated energy
      companies.
While
the Company periodically reassesses material trends and uncertainties affecting
the Company's results of operations and financial condition in connection with
its preparation of management's discussion and analysis of results of operations
and financial condition contained in its Quarterly and Annual Reports, the
Company does not, by including this statement, assume any obligation to review
or revise any particular forward-looking statement referenced herein in light of
future events.
Page
1
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
ITEM
1. FINANCIAL
STATEMENTS
CO
NDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
December 31,
(Thousands, except per share data)
2008
2007
OPERATING
      REVENUES
$801,304
$811,138
OPERATING
      EXPENSES
Gas
      purchases
698,145
684,694
Operation
      and maintenance
36,408
32,179
Regulatory
      rider expenses
13,561
12,165
Depreciation
      and amortization
7,361
9,403
Energy
      and other taxes
23,633
18,160
Total
      operating expenses
779,108
756,601
OPERATING
      INCOME
22,196
54,537
Other
      income
858
1,528
Interest
      expense, net
6,547
7,810
INCOME
      BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES
16,507
48,255
Income
      tax provision
5,245
18,494
Equity
      in earnings of affiliates, net of tax
514
424
NET
      INCOME
$11,776
$
      30,185
EARNINGS
      PER COMMON SHARE
BASIC
$0.28
$0.72
DILUTED
$0.28
$0.72
DIVIDENDS
      PER COMMON SHARE
$0.31
$0.27
WEIGHTED
      AVERAGE SHARES OUTSTANDING
BASIC
42,170
41,678
DILUTED
42,495
41,928
See Notes
to Unaudited Condensed Consolidated Financial Statements
Page
2
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
ITEM
      1. FINANCIAL STATEMENTS (Continued)
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
CASH
      FLOWS FROM OPERATING ACTIVITIES
Net
      income
$
      11,776
$  
      30,185
Adjustments
      to reconcile net income to cash flows from operating
      activities:
Unrealized
      loss on derivative instruments
7,086
3,080
Depreciation
      and amortization
7,581
9,478
Allowance
      for funds (equity) used during construction
—
(373
)
Deferred
      income taxes
(4,794
)
8,549
Manufactured
      gas plant remediation costs
(5,875
)
(4,041
)
Equity
      in earnings from investments, net of distributions
(514
)
1,512
Cost
      of removal – asset retirement obligations
(19
)
(177
)
Contributions
      to employee benefit plans
(182
)
(150
)
Changes
      in:
Components
      of working capital
(41,153
)
(57,844
)
Other
      noncurrent assets
(38,448
)
2,423
Other
      noncurrent liabilities
27,582
833
Cash
      flows used in operating activities
(36,960
)
(6,525
)
CASH
      FLOWS FROM INVESTING ACTIVITIES
Expenditures
      for
Utility
      plant
(18,207
)
(13,526
)
Real
      estate properties and other
(145
)
(168
)
Cost
      of removal
(1,462
)
(1,208
)
Investments
      in equity investees and other
(21,000
)
(2,998
)
Withdrawal
      from restricted cash construction fund
4,200
—
Cash
      flows used in investing activities
(36,614
)
(17,900
)
CASH
      FLOWS FROM FINANCING ACTIVITIES
Proceeds
      from issuance of common stock
6,196
4,192
Tax
      benefit from stock options exercised
972
547
Proceeds
      from sale-leaseback transaction
6,268
7,485
Payments
      of long-term debt
(30,973
)
(937
)
Purchases
      of treasury stock
(1,126
)
(10,071
)
Payments
      of common stock dividends
(11,776
)
(10,633
)
Net
      proceeds from short-term debt
87,350
32,547
Cash
      flows from financing activities
56,911
23,130
Change
      in cash and temporary investments
(16,663
)
(1,295
)
Cash
      and temporary investments at beginning of period
42,626
5,140
Cash
      and temporary investments at end of period
$
      25,963
$    
      3,845
CHANGES
      IN COMPONENTS OF WORKING CAPITAL
Receivables
$(96,726
)
$(194,958
)
Inventories
108,055
33,940
Underrecovered
      gas costs
25,017
(18,883
)
Gas
      purchases payable
(43,369
)
96,217
Prepaid
      and accrued taxes, net
43,830
31,043
Accounts
      payable and other
(6,541
)
(1,017
)
Restricted
      broker margin accounts
(51,882
)
(881
)
Customers'
      credit balances and deposits
(24,957
)
7,299
Other
      current assets
5,420
(10,604
)
Total
$(41,153
)
$ 
      (57,844
)
SUPPLEMENTAL
      DISCLOSURES OF CASH FLOWS INFORMATION
Cash
      paid for
Interest
      (net of amounts capitalized)
$4,185
$6,434
Income
      taxes
$1,427
$2,661
See
Notes to Unaudited Condensed Consolidated Financial Statements
Page
3
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
ITEM
      1. FINANCIAL STATEMENTS (Continued)
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS
December
      31,
September 30,
(Thousands)
2008
2008
PROPERTY,
      PLANT AND EQUIPMENT
Utility
      plant, at cost
$1,384,312
$1,366,237
Real
      estate properties and other, at cost
29,953
29,808
1,414,265
1,396,045
Accumulated
      depreciation and amortization
(385,879
)
(378,759
)
Property,
      plant and equipment, net
1,028,386
1,017,286
CURRENT
      ASSETS
Cash
      and temporary investments
25,963
42,626
Customer
      accounts receivable
Billed
258,827
227,132
Unbilled
      revenues
75,008
9,417
Allowance
      for doubtful accounts
(5,140
)
(4,580
)
Regulatory
      assets
21,080
51,376
Gas
      in storage, at average cost
370,488
478,549
Materials
      and supplies, at average cost
5,116
5,110
Prepaid
      state taxes
9,641
37,271
Derivatives,
      at fair value
224,123
208,703
Broker
      margin account
74,884
41,277
Other
12,517
12,785
Total
      current assets
1,072,507
1,109,666
NONCURRENT
      ASSETS
Investments
      in equity investees and other
139,970
115,981
Regulatory
      assets
407,014
340,670
Derivatives,
      at fair value
27,226
24,497
Restricted
      cash construction fund
—
4,200
Other
12,284
13,092
Total
      noncurrent assets
586,494
498,440
Total
      assets
$2,687,387
$2,625,392
See Notes
to Unaudited Condensed Consolidated Financial Statements
Page
4
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
ITEM
      1. FINANCIAL STATEMENTS (Continued)
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
CAPITALIZATION
AND LIABILITIES
December
      31,
September 30,
(Thousands)
2008
2008
CAPITALIZATION
Common
      stock equity
$  
      736,496
$  
       726,958
Long-term
      debt
460,708
455,117
Total
      capitalization
1,197,204
1,182,075
CURRENT
      LIABILITIES
Current
      maturities of long-term debt
30,844
60,119
Short-term
      debt
265,550
178,200
Gas
      purchases payable
272,147
315,516
Accounts
      payable and other
43,375
61,735
Dividends
      payable
13,099
11,776
Deferred
      and accrued taxes
27,491
24,720
New
      Jersey clean energy program
12,513
3,056
Derivatives,
      at fair value
204,174
146,320
Broker
      margin account
10,797
29,072
Customers'
      credit balances and deposits
38,500
63,455
Total
      current liabilities
918,490
893,969
NONCURRENT
      LIABILITIES
Deferred
      income taxes
232,038
239,703
Deferred
      investment tax credits
7,112
7,192
Deferred
      revenue
8,910
9,090
Derivatives,
      at fair value
20,315
25,016
Manufactured
      gas plant remediation
120,230
120,730
Postemployment
      employee benefit liability
53,846
52,272
Regulatory
      liabilities
61,820
63,419
New
      Jersey clean energy program
34,030
—
Asset
      retirement obligation
24,768
24,416
Other
8,624
7,510
Total
      noncurrent liabilities
571,693
549,348
Commitments
      and contingent liabilities (
Note
13
)
Total
      capitalization and liabilities
$2,687,387
$2,625,392
See Notes
to Unaudited Condensed Consolidated Financial Statements
Page
5
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
NO
TES TO UNAUDITED CONDENSED CONSOLIDATED
      FINANCIAL STATEMENTS
1.
GE
NERAL
The
accompanying unaudited condensed consolidated financial statements have been
prepared by New Jersey Resources Corporation (NJR or the Company) in accordance
with the rules and regulations of the Securities and Exchange Commission (SEC).
The September 30, 2008 balance sheet data is derived from the audited financial
statements of the Company. These unaudited condensed consolidated financial
statements should be read in conjunction with the financial statements and the
notes thereto included in NJR's 2008 Annual Report on Form 10-K.
The
unaudited condensed consolidated financial statements include the accounts of
NJR and its subsidiaries, New Jersey Natural Gas Company (NJNG), NJR Energy
Services Company (NJRES), NJR Retail Holdings Corporation (Retail Holdings), NJR
Energy Investment Corporation (NJREI) and NJR Service Company (NJR Service).
Intercompany transactions and accounts have been eliminated. NJREI's primary
subsidiaries are NJR Energy Corporation (NJR Energy) and NJR Steckman Ridge
Storage Company. NJR Energy invests primarily in energy-related ventures through
its subsidiary, NJNR Pipeline Company (Pipeline), which holds the Company's 5.53
percent ownership interest in Iroquois Gas and Transmission System, L.P.
(Iroquois). NJR Steckman Ridge Storage Company holds the Company's 50 percent
combined interest in Steckman Ridge GP, LLC and Steckman Ridge, LP
(collectively, Steckman Ridge), a natural gas storage facility that was acquired
and is being developed with a partner in western Pennsylvania. Retail Holdings'
two principal subsidiaries are NJR Home Services Company (NJRHS) and Commercial
Realty & Resources Corporation (CR&R).
In the
opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments necessary for a fair
presentation of the results of the interim periods presented. These adjustments
are of a normal and recurring nature.  Because of the seasonal nature
of NJR's utility and wholesale energy services operations, in addition to other
factors, the financial results for the interim periods presented are not
indicative of the results that are to be expected for the fiscal year ended
September 30, 2009.
Customer
Accounts Receivable
Customer
accounts receivable include outstanding billings from the following subsidiaries
as of:
December
      31,
September
      30,
(Thousands)
2008
2008
NJNG
$ 
      62,824
24
%
$ 
      21,398
9
%
NJRES
188,135
73
198,902
88
NJRHS
      and other
7,868
3
6,832
3
Total
$258,827
100
%
$227,132
100
%
Accounts
receivable related to estimated unbilled revenues and allowance for doubtful
accounts are associated with NJNG only.
Gas
in Storage
The
following table summarizes Gas in storage by company as of:
December
      31,
September
      30,
2008
2008
($
      in thousands)
Assets
Bcf
Assets
Bcf
NJNG
$163,808
19.4
$189,828
22.1
NJRES
206,680
30.6
288,721
27.6
Total
$370,488
50.0
$478,549
49.7
Page
6
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
New
Accounting Standards
Recently
Adopted
Effective
October 1, 2008 NJR adopted Statement of Financial Accounting Standards (SFAS)
No. 157,
Fair Value
Measurements
(SFAS 157) for its financial assets and liabilities, with
the exception of its pension assets. NJR will apply the provisions of SFAS 157
to its pension assets and non-financial assets and liabilities that are not
measured at least annually prospectively on October 1, 2009. SFAS 157 defines
fair value as the amount that would be exchanged to sell an asset or transfer a
liability in an orderly transaction between market participants, and establishes
a fair value hierarchy of market and unobservable data that is used to develop
pricing assumptions. The adoption of SFAS 157 did not have a material impact on
NJR's financial position or results of operations. See
Note 4, Fair Value
Measurements
, for more information on the adoption of SFAS 157, as well
as the required disclosures.
On April
10, 2007, the FASB issued FASB Staff Position No. FIN 39-1 (FSP FIN 39-1),
Amendment of FASB Interpretation No. 39. FSP FIN 39-1 provides additional
guidance for parties that are subject to master netting arrangements.
Specifically, for transactions that are executed with the same counterparty, it
permits companies to offset the fair values of amounts recognized for
derivatives as well as the related fair value amounts of cash collateral
receivables or payables, when certain conditions apply. FSP FIN 39-1 became
effective for fiscal years beginning after November 15, 2007. As NJR's policy
has been to present its derivative positions and any receivables or payables
with the same counterparty on a gross basis, FSP FIN 39-1 had no impact on its
statement of financial position and results of operations.
Other
Recently Issued Standards
In
February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial
Assets and Financial Liabilities
(SFAS 159). SFAS 159 permits entities to
elect to measure eligible items at fair value as an alternative to hedge
accounting and to mitigate volatility in earnings. A company can elect either
the fair value option according to a pre-existing policy, when the asset or
liability is first recognized, or when it enters into an eligible firm
commitment. Changes in the fair value of assets and liabilities, for which the
Company chooses to apply the fair value option, are reported in earnings at each
reporting date. SFAS 159 also provides guidance on disclosures that are intended
to provide comparability to other companies' assets and liabilities that have
different measurement attributes and to other companies with similar financial
assets and liabilities. SFAS 159 became effective for NJR as of October 1, 2008;
however, since the Company did not elect the fair value option for any items,
the provisions of SFAS 159 do not impact our results of operations or financial
condition.
On
December 4, 2007, the FASB issued SFAS No. 160,
Non-controlling Interests in
Consolidated Financial Statements
(SFAS 160). SFAS 160 is an amendment of
Accounting Research Bulletin (ARB) No. 51 and was issued to improve the
relevance, comparability and transparency of the financial information that a
reporting entity provides in its consolidated financial statements. This
Statement applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations, but will affect only those
entities that have an outstanding non-controlling interest in one or more
subsidiaries. SFAS 160 clarifies that a non-controlling interest in a subsidiary
is an ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements and that a parent company must
recognize a gain or loss in net income when a subsidiary is deconsolidated. SFAS
160 is effective for fiscal years beginning after December 15, 2008, and early
adoption is prohibited. The Company has concluded that this statement will have
no impact on its statement of financial position and results of
operations.
In March
2008, the FASB issued SFAS No. 161,
Disclosures about Derivative
Instruments and Hedging Activities
, (SFAS 161). SFAS 161 requires
enhanced qualitative and quantitative disclosures on the objectives and
accounting for derivatives and related hedging activities, as well as their
impacts on the financial statements. SFAS 161 is effective for fiscal years
and interim periods beginning after November 15, 2008. NJR will adopt SFAS 161
during the second quarter of fiscal year 2009 and is evaluating the effect of
adoption on its footnote disclosures.
Page
7
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
2.
RE
GULATION
October
Base Rate Order
As a
result of increases in NJNG's operation, maintenance and capital costs, on
November 20, 2007, NJNG petitioned the New Jersey Board of Public Utilities
(BPU) to increase base rates for delivery service by approximately $58.4
million, which included a return on NJNG's equity component of 11.5 percent.
This request was consistent with NJNG's objectives of providing safe and
reliable service to its customers and earning a market-based return on its
regulated investments.
On
October 3, 2008, the BPU unanimously approved and made effective the settlement
of NJNG's base rate case. As a result, NJNG received a revenue increase in its
base rates of $32.5 million, which is inclusive of an approximate $13 million
impact of a change to the Conservation Incentive Program (CIP) baseline usage
rate, received an allowed return on equity component of 10.3 percent, reduced
its depreciation expense component from 3.0 percent to 2.34 percent and reduced
its annual depreciation expense by $1.6 million as a result of the
amortization of previously recovered asset retirement obligations.
Conservation
Incentive Program (CIP)
The CIP
allows NJNG to recover utility gross margin variations related to both weather
and customer usage. Recovery of such utility gross margin variations (filed for
annually and recovered one year following the end of the CIP usage year) is
subject to additional conditions, including an earnings test and an evaluation
of Basic Gas Supply Service (BGSS) related savings.
In May
2008, NJNG filed its Petition for the Annual Review of its CIP Program for
recoverable CIP amounts for fiscal 2008, requesting an additional $6.8 million
and approval to modify its CIP recovery rates effective October 1, 2008. The
additional amount brought the total recovery requested to $22.4 million. On
October 3, 2008, the BPU approved the CIP petition on a provisional basis,
effective the date of the Board Order. It is anticipated that NJNG will
file a petition in the spring of 2009 to extend its CIP or implement a similar
mechanism on a permanent basis, to be effective October 1, 2009.
In
conjunction with the CIP, NJNG incurs costs related to its obligation to fund
programs that promote customer conservation efforts during the three-year term
of the CIP pilot program. As of December 31, 2008, NJNG had a remaining
liability of $662,000 related to these programs.
Basic
Gas Supply Service (BGSS)
BGSS is a
BPU approved rate mechanism designed to allow for the recovery of natural gas
commodity costs. NJNG periodically adjusts its periodic BGSS rates for its
residential and small commercial customers to reflect increases or decreases in
the cost of natural gas sold to customers.
In May
2008, NJNG filed for an increase to the periodic BGSS factor to be effective
October 1, 2008, that would increase an average residential heating customer's
bill by approximately 18 percent due to an increase in the price of wholesale
natural gas. Subsequent to the time of the filing, wholesale natural gas prices
moderated, and on September 22, 2008, NJNG, the Staff of the BPU and the
Department of the Public Advocate, Division of Rate Counsel (Rate Counsel)
signed an agreement for an increase to the periodic BGSS factor that would
increase an average residential heating customer's bill by approximately 8.9
percent. On October 3, 2008, the BPU approved the BGSS increase on a provisional
basis, effective the date of the Board Order.
On
December 17, 2008, NJNG provided notice that it would implement a $30 million
BGSS-related rate credit that will lower sales customers' bills in January and
February 2009. This rate credit was due primarily to a decline in wholesale
commodity costs subsequent to the October 2008 BGSS price change.
Page
8
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
Other
Incentive Programs
NJNG is
eligible to receive financial incentives for reducing BGSS costs through a
series of utility gross margin-sharing programs that include off-system sales,
capacity release, storage incentive and financial risk management (FRM)
programs. In October 2007, the BPU reduced the sharing percentage of the margin
generated by the FRM program retained by NJNG from 20 percent to 15 percent
effective November 1, 2007. In October 2008, the Board's base rate order
provided for the extension of the incentive programs through October 31, 2011,
along with a moderate expansion of the storage incentive and FRM
programs.
Societal
Benefits Charge (SBC) and Weather Normalization Clause (WNC)
The SBC
is comprised of three primary components: a Universal Service Fund rider (USF),
a Manufactured Gas Plant (MGP) Remediation Adjustment (RA), and the New Jersey
Clean Energy Program (NJCEP). In February 2008, NJNG filed an application
regarding its SBC proposing no change to the rates previously approved in
October 2007 (February 2008 SBC filing). On January 27, 2009, NJNG filed an
application regarding its SBC to increase its RA factor and its NJCEP factor
while maintaining its effective rate on USF (January 2009 SBC filing). The
January 2009 SBC filing is subject to BPU staff and Rate Counsel review and must
be approved by the BPU prior to implementing the new SBC rates.
USF
Through
the USF, eligible customers receive a credit toward their utility bill. The
credits applied to eligible customers are recovered through the USF rider in the
SBC. NJNG recovers carrying costs on deferred USF balances.
In June
2008, the natural gas utilities in the State of New Jersey collectively filed
with the BPU to increase the statewide USF recovery rate effective October 1,
2008. In the BPU's October 21, 2008 Order, the USF increase was approved on a
provisional basis, effective October 24, 2008 and it also approved interest on
USF deferred balances at the Treasury Constant Maturity 2-year rate, plus 60
basis points, net of tax, with the rate changing on a monthly basis. NJNG
believes the increase has a negligible impact on customers.
MGP
In
October 2007, the BPU approved $14.7 million in eligible costs to be recovered
annually for MGP remediation expenditures incurred through June 30, 2006.
The February
2008 SBC filing included MGP remediation expenditures incurred through June 30,
2007, resulting in an expected annual recovery of $17.7 million. The January
2009 SBC filing included MGP remediation expenditures incurred through June 30,
2008 resulting in an expected annual recovery of $20.7 million.
New
Jersey Clean Energy Program (NJCEP)
In
October 2008, the BPU released a final Order, updating state utilities' funding
obligations for NJCEP for the period from January 1, 2009 to December 31, 2012.
NJNG's share of the total funding requirement of $1.2 billion is $50.8
million. Accordingly, as of December 31, 2008 NJNG recorded the obligation
and a corresponding regulatory asset at a present value of $44.3 in the
Unaudited Condensed Consolidated Balance Sheets. NJNG's annual obligation
gradually increases from $10.3 million in fiscal 2009 to $15.9 million in fiscal
2012. As of December 31, 2008, NJNG also has a $2.2 million obligation remaining
from the January 1, 2005 to December 31, 2008 period. The January 2009 SBC
filing included an increase to the NJCEP factor. The proposed factor is expected
to recover $12.9 million annually.
WNC
As of
December 31, 2008, NJNG has a $629,000 unrecovered balance related to gross
margin variations incurred during the fiscal 2006 winter period. On October 3,
2008, the BPU provisionally approved a decrease to NJNG's WNC rate, effective
the date of the Board Order, to fully recover its remaining WNC
balance.
Page
9
Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
Economic
Stimulus
On
January 20, 2009, NJNG filed two petitions with the BPU seeking approval to
implement programs designed to both stimulate the state and local economy
through infrastructure investments and encourage energy efficiency. If approved,
the Accelerated Infrastructure Investment Program (AIP) will allow NJNG to
accelerate $70.8 million of previously planned infrastructure projects,
maintaining safe and reliable service to NJNG's customers while increasing
workforce development. Proposed as a 2-year program, the AIP will be funded
through an annual adjustment to customers' base rates. The second filing, for an
Energy Efficiency (EE) Program and associated cost recovery mechanism, requests
BPU approval to implement various programs to encourage energy efficiency for
residential and commercial customers. NJNG proposed to recover the EE costs of
approximately $22.9 million over a 4-year period through a clause mechanism
similar to the SBC. Both programs include the recovery of NJNG's overall cost of
capital.
Regulatory
Assets & Liabilities
The
Company had the following regulatory assets, all related to NJNG, on the
Unaudited Condensed Consolidated Balance Sheets:
(Thousands)
December
      31,
2008
September
      30,
2008
Recovery
      Period
Regulatory
      assets–current
Underrecovered
      gas costs
$  
      2,977
$ 
      27,994
Less
      than one year
(1)
WNC
629
919
Less
      than one year
(2)
CIP
17,474
22,463
Less
      than one year
(3)
Total
      current
$
      21,080
$ 
      51,376
Regulatory
      assets–noncurrent
Remediation
      costs (Notes 2 and 13)
Expended,
      net of recoveries
$
      91,346
$ 
      92,164
(4
)
Liability
      for future expenditures
120,230
120,730
(5
)
CIP
1,275
2,397
(6
)
Deferred
      income and other taxes
12,624
12,726
Various
(7)
Derivatives
      (Note 3)
77,528
49,610
(8
)
Postemployment
      benefit costs (Note 10)
52,472
52,519
(9
)
SBC/Clean
      Energy
51,539
10,524
Various
(10)
Total
      noncurrent
$407,014
$340,670
(1)
Recoverable,
      subject to BPU approval, through BGSS, without
interest.
(2)
Recoverable
      as a result of BPU approval in October 2008, without interest. This
      balance reflects the net results from winter period of fiscal 2006. No new
      WNC activity has been recorded since October 1, 2006 due to the existence
      of the CIP.
(3)
Recoverable
      or refundable, subject to BPU annual approval, without interest. Balance
      includes approximately $6.6 million relating to the weather component of
      the calculation and approximately $10.9 million relating to the customer
      usage component of the calculation. Recovery from customers is designed to
      be one year from date of rate approval by the BPU.
(4)
Recoverable,
      subject to BPU approval, with interest over rolling 7-year
      periods.
(5)
Estimated
      future expenditures. Recovery will be requested when actual expenditures
      are incurred (see
Note
      13. Commitments and Contingent Liabilities – Legal
      Proceedings).
(6)
Recoverable
      or refundable, subject to BPU annual approval, without interest. Balance
      includes approximately $523,000 relating to the weather component of the
      calculation and approximately $752,000 relating to the customer usage
      component of the calculation.
(7)
Recoverable
      without interest, subject to BPU approval.
(8)
Recoverable,
      subject to BPU approval, through BGSS, without
interest.
(9)
Recoverable
      or refundable, subject to BPU approval, without interest. Includes
      unrecognized service costs recorded in accordance with SFAS No. 158,
Employers' Accounting for
      Defined Benefit Pension and Other Postemployment Plans
that NJNG
      has determined are recoverable in rates charged to customers (see
Note 10. Employee Benefit
      Plans).
(10)
Recoverable
      with interest, subject to BPU
approval.
If there
are any changes in regulatory positions that indicate the recovery of regulatory
assets is not probable, the related cost would be charged to income in the
period of such determination.
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JERSEY RESOURCES CORPORATION
Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
The
Company had the following regulatory liabilities, all related to NJNG, on the
Unaudited Condensed Consolidated Balance Sheets:
(Thousands)
December
      31,
2008
September
      30,
2008
Regulatory
      liabilities–noncurrent
Cost
      of removal obligation
(1)
$61,820
$63,419
Total-noncurrent
$61,820
$63,419
(1)
NJNG
      accrues and collects for cost of removal in rates. This liability
      represents collections in excess of actual expenditures. Approximately
      $21.3 million, including accretion of $370,000 for the three months ended
      December 31, 2008, of regulatory assets relating to asset retirement
      obligations have been netted against the cost of removal obligation as of
      December 31, 2008 (see
Note 11. Asset Retirement
      Obligations).
3.
DER
IVATIVE INSTRUMENTS
The
Company and its subsidiaries are subject to market risk due to fluctuations in
the price of natural gas. To manage the risk of such fluctuations, the Company
and its subsidiaries enter into financial futures and forward contracts, option
agreements and swap agreements to economically hedge future purchases and sales
of natural gas. Due to the nature of these arrangements, they qualify as
derivatives in accordance with FAS 133.
Effective
October 1, 2007, the Company changed the treatment of its physical commodity
contracts at NJRES, such that the changes in fair value of new
contracts are included in earnings, and are not accounted for using the
"normal purchase normal sales" (normal) scope exception of SFAS 133. As well,
effective October 1, 2008, due to changes in the Company's ability to assert
physical delivery, the Company is no longer treating physical commodity
contracts executed prior to October 1, 2007 as normal. Therefore, all NJRES
physical commodity contracts are accounted for at fair value in the Unaudited
Condensed Consolidated Balance Sheets, with changes in fair value included as a
component of gas purchases in the Unaudited Condensed Consolidated Statements of
Income. All physical commodity contracts at NJNG and NJR Energy continue to be
designated as normal and accounted for under accrual accounting.
All of
the Company's financial derivative instruments (financial futures, options or
swaps), are accounted for in accordance with SFAS 133 and recorded at fair
value in the Unaudited Condensed Consolidated Balance Sheets. Changes in fair
value are recorded as a component of Gas purchases or Operating revenues, for
NJRES and NJR Energy, respectively, in the Unaudited Condensed Consolidated
Statements of Income as unrealized gains or losses. Changes in fair value of
NJNG's financial derivative instruments are recorded as a component of
Regulatory assets or liabilities in the Unaudited Condensed Consolidated Balance
Sheets, as these amounts will be recovered through future BGSS amounts as an
increase or reduction to the cost of natural gas in NJNG's tariff.
The
Company enters into financial derivative instruments as an economic hedge of the
purchase and sale of natural gas. These derivatives are marked at fair value and
recognized in the Unaudited Condensed Consolidated Statements of Income as a
component of Gas purchases, or Operating revenues, as appropriate, in the
current period. However, the change in value of the actual physical natural gas
purchase is recognized in income only when that natural gas has been sold, which
is normally in a future period. Therefore, mismatches between the timing of
recognizing gains or losses on the derivative instruments and the timing of the
actual sale of the natural gas that is being economically hedged creates
volatility in the results of NJR, although the Company's true economic results
are unaffected.
Generally,
exchange-traded futures contracts require a deposit of margin cash, the amount
of which is subject to change based on market price movements and in accordance
with exchange rules. The Company maintains broker margin accounts for NJNG and
NJRES. The balances are as follows:
(Thousands)
December
      31,
2008
September
      30,
2008
NJNG
      broker margin deposit
$
74,884
$
41,277
NJRES
      broker margin (liability)
$
(10,797
)
$
(29,072
)
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JERSEY RESOURCES CORPORATION
Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
4.
FAIR
VALUE MEASUREMENTS
As noted
in Note 1,
General,
NJR adopted SFAS 157
and has applied the provisions to its financial assets and liabilities, which
include financial derivatives, physical commodity contracts qualifying as
derivatives, available for sale securities and other financial assets and
liabilities. SFAS 157 defines and establishes a framework for measuring fair
value. SFAS 157 requires that companies consider assumptions market participants
would make when pricing assets and liabilities that are required to be
recognized at fair value in accordance with previously issued accounting
pronouncements.
SFAS 157
also requires additional disclosures that are intended to convey the reliability
of price inputs used to determine fair value. To facilitate this, SFAS 157
established a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value based on the source of the data used to
develop the price inputs. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities and the
lowest priority to inputs that are based on unobservable market data and include
the following:
Level 1
Unadjusted
      quoted prices for identical assets or liabilities in active markets; NJR's
      Level 1 assets and liabilities include primarily exchange traded financial
      derivative contracts and listed equities;
Level 2
Significant
      price data, other than Level 1 quotes, that is observed either directly or
      indirectly; NJR's level 2 assets and liabilities include over-the-counter
      physical forward commodity contracts and swap contracts
      or derivatives that are initially valued using observable quotes and
      are subsequently adjusted to include time value, credit risk or estimated
      transport pricing components. These additional adjustments are not
      considered to be significant to the ultimate recognized
      values.
Level 3
Inputs
      derived from a significant amount of unobservable market data; these
      include NJR's best estimate of fair value and are derived primarily
      through the use of internal valuation methodologies. Certain of NJR's
      physical commodity contracts that are to be delivered to inactively traded
      points on a pipeline are included in this
  category.
NJNG's,
NJRES' and NJR Energy's financial derivatives portfolios can consist of futures,
options and swaps. NJR primarily uses the market approach and its policy is to
use actively quoted market prices when available. The principal market for its
derivative transactions is the natural gas wholesale market, therefore, the
primary source for its price inputs is the New York Mercantile (NYMEX) exchange.
NJRES also uses Natural Gas Exchange (NGX) for Canadian delivery points and
Platts and NYMEX ClearPort for certain over the counter physical forward
commodity contracts.  However, NJRES also engages in transactions
which result in transporting natural gas to delivery points for which there is
no actively quoted market price. In these cases, NJRES' policy is to use the
best information available to determine fair value based on internal pricing
models, which include estimates extrapolated from broker quotes or pricing
services. As of December 31, 2008, less than 1 percent of total fair value of
NJRES' derivative assets and liabilities was derived using such
inputs.
NJR Energy
uses NYMEX settlement prices to value its long-dated swap contracts. NJR also
has available for sale securities and other financial assets that include listed
equities, mutual funds and money market funds for which there are active
exchange quotes available.
When NJR
determines fair values, we adjust measurements, as needed, for credit risk
associated with counterparties, as well as our own credit risk. NJR determines
these adjustments by using historical default probabilities that correspond to
the applicable Standard and Poor's issuer ratings, while also taking into
consideration collateral and netting arrangements that serve to mitigate
risk. As of December 31, 2008, NJR further adjusted certain fair values, based
on the change in a market index that tracks the credit default swaps of
investment grade companies, to factor in the current instability in the credit
markets.
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JERSEY RESOURCES CORPORATION
Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
The
adoption of SFAS 157 did not have a material impact to NJR's financial condition
or results of operations. Assets and liabilities measured at fair value on a
recurring basis as of December 31, 2008 are summarized as follows:
Quoted
      Prices
in
      Active
Markets
for
      Identical Assets
Significant
      Other
Observable
      Inputs
Significant
Unobservable
Inputs
(Thousands)
(Level
      1)
(Level 2)
(Level
      3)
Total
ASSETS:
Physical
      forward commodity contracts
$         
      —
$ 
      20,678
$123
$
20,801
Financial
      derivative contracts
148,973
81,575
—
230,548
Available
      for sale securities
(1)
8,887
—
—
8,887
Other
      assets
1,690
—
—
1,690
Total
      assets at fair value
$159,550
$102,253
$123
$
261,926
LIABILITIES:
Physical
      forward commodity contracts
—
$  
      19,946
$ 
      —
$
19,946
Financial
      derivative contracts
$ 
      166,068
38,475
—
204,543
Other
      liabilities
1,690
—
—
1,690
Total
      liabilities at fair value
$167,758
$ 
      58,421
$ 
      —
$
226,179
(1)
Included
      in Investments in equity investees and other in the Unaudited Condensed
      Consolidated Balance Sheets.
A
reconciliation of the beginning and ending balances of NJRES' derivatives
measured at fair value based on significant unobservable inputs is as
follows:
Fair
      Value Measurements Using
Significant
      Unobservable Inputs
(Level
      3)
(Thousands)
Derivatives
Other
Total
Beginning
      balance – October 1, 2008
$5,342
$
      —
$5,342
Total
      gains (losses) realized and unrealized
136
—
136
Purchases,
      sales, other settlements, net
(899
)
—
(899
)
Net
      transfers in and/or out of level 3
(4,448
)
—
(4,448
)
Ending
      balance - December 31, 2008
$ 131
$ —
$ 131
NJR will
prospectively apply the provisions of SFAS 157 to its pension assets and
non-financial assets and liabilities beginning on October 1, 2009.
5.
I
NV
ESTMENTS IN EQUITY INVESTEES AND
  OTHER
NJR's
Investments in equity investees and other include the following
investments:
(Thousands)
December
      31,
2008
September
      30,
2008
Steckman
      Ridge
$106,457
$  84,285
Iroquois
24,497
23,604
Other
9,016
8,092
Total
$139,970
$115,981
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JERSEY RESOURCES CORPORATION
Part
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NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
NJR's
investment in Steckman Ridge increased $22.2 million during the three months
ended December 31, 2008, including cash investments of $21 million and
capitalized costs of $1.2 million.
NJR uses
the equity method of accounting for its investments in Steckman Ridge and
Iroquois.
Other
investments represent investments in equity securities of publicly traded energy
companies, all of which are immaterial on an individual basis, and are accounted
for as available for sale securities, with any change in the value of such
investments recorded as Accumulated other comprehensive income, a component of
Common stock equity.
The
following is summarized financial information for Iroquois:
Three
      Months Ended
December
      31,
(Millions)
2008
2007
Operating
      revenues
$41.8
$38.8
Operating
      income
$21.7
$19.3
Net
      income
$ 
      9.5
$ 
      7.6
(Millions)
December
      31,
2008
September
      30,
2008
Current
      assets
$  52.6
$ 
      64.2
Noncurrent
      assets
$753.4
$729.2
Current
      liabilities
$  49.8
$ 
      39.3
Noncurrent
      liabilities
$334.9
$348.9
6.
E
AR
NINGS PER SHARE
The
following table presents the calculation of the Company's basic and diluted
earnings per share:
Three
      Months Ended
December
      31,
(Thousands,
      except per share amounts)
2008
2007
Net
      Income, as reported
$11,776
$30,185
Basic
      earnings per share
Weighted
      average shares of common stock outstanding–basic
42,170
41,678
Basic
      earnings per common share
$0.28
$0.72
Diluted
      earnings per share
Weighted
      average shares of common stock outstanding–basic
42,170
41,678
Incremental
      shares
(
1
)
325
250
Weighted
      average shares of common stock outstanding–diluted
42,495
41,928
Diluted
      earnings per common share
$0.28
$0.72
(1)
Incremental
      shares consist of stock options, stock awards and performance
      units.
7.
DEB
T
NJR
On
December 13, 2007, NJR entered into a $325 million, five-year, revolving,
unsecured credit facility. As of December 31, 2008, NJR had $62 million in
borrowings outstanding under the facility.
As of
December 31, 2008, NJR had one letter of credit outstanding for $675,000 on
behalf of CR&R, which will expire on December 3, 2009. The letter of credit
is in place to support development activities.
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JERSEY RESOURCES CORPORATION
Part
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NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
On
February 15, 2008, NJR entered into an agreement for a stand-alone letter of
credit that may be drawn upon through February 15, 2009 for up to $15 million.
No amounts have been drawn under this letter of credit as of December 31,
2008.
NJNG
On
November 1, 2008, upon maturity, NJNG redeemed its $30 million, 6.27
percent, Series X First Mortgage bonds.
In
October 2007, NJNG entered into an agreement for standby letters of credit that
may be drawn upon through December 15, 2009 for up to $50 million. As of
December 31, 2008, no letters of credit have been issued under this agreement.
These letters of credit would not reduce the amount available to be borrowed
under NJNG's credit facility.
As of
December 31, 2008, NJNG has a $250 million committed facility with several
banks, with a 5-year term expiring in December 2009. This facility is used to
support NJNG's commercial paper program.
NJNG
received $6.3 million and $7.5 million in December 2008 and 2007, respectively,
in connection with the sale-leaseback of its natural gas meters. This
sale-leaseback program is expected to be continued on an annual
basis.
NJNG is
obligated with respect to loan agreements securing six series of variable rate
bonds totaling approximately $97.0 million of variable-rate debt backed by
securities issued by the New Jersey Economic Development Authority (EDA). The
EDA bonds are commonly referred to as auction rate securities (ARS) and have an
interest rate reset every 7 or 35 days, depending upon the applicable
series. On those dates, an auction is held for the purposes of determining
the interest rate of the securities. The interest rate associated with the NJNG
variable-rate debt is based on the rates on the EDA ARS. For the three months
ended December 31, 2008, all of the auctions
surrounding
the EDA ARS have failed, resulting in those bonds bearing interest at their
maximum rates, defined in the EDA ARS as the lesser of (i) 175 percent of 30-day
LIBOR or (ii) 10 to 12 percent per annum, as applicable to such series of ARS.
As of December 31, 2008, the 30-day LIBOR rate was 0.44 percent. While the
failure of the ARS auctions does not signify or constitute a default on
NJNG, the EDA ARS does impact NJNG's borrowing costs of the variable-rate debt.
As such, NJNG currently has a weighted average interest rate of 0.8 percent as
of December 31, 2008, compared with a weighted average interest rate of 4.6
percent as of September 30, 2008. There can be no assurance that the EDA ARS
will have enough market liquidity to return interest rates below their maximum
rate.
In
October 2005, NJNG entered into a loan agreement under which the EDA loaned NJNG
the proceeds from $35.8 million of tax-exempt EDA Bonds. NJNG deposited $15.0
million of the proceeds into a construction fund to finance subsequent
construction in the northern division of NJNG's territory. NJNG drew down $10.8
million from the construction fund prior to fiscal year 2008 and drew down the
remaining $4.2 million during the first quarter of fiscal 2009.
Neither
NJNG nor the results of its operations are obligated or pledged to support the
NJR or NJRES credit facilities.
NJRES
As of
December 31, 2008, NJRES had a 3-year, $30 million committed credit facility
that expires in October 2009 with a multinational financial institution. There
were no borrowings under this facility as of December 31, 2008.
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JERSEY RESOURCES CORPORATION
Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
Consolidated
There
were no issuances or redemptions of long-term debt securities for NJR or NJRES
during the three months ended December 31, 2008.
A summary
of NJR's and NJNG's long-term debt, committed credit facilities which require
commitment fees on the unused amounts, and NJRES' committed facility that does
not require a fee, are as follows:
December
      31,
September
      30,
(Thousands)
2008
2008
NJR
Long
      - term debt
(1)
$  75,000
$  75,000
Bank
      credit facilities
$325,000
$325,000
Amount
      outstanding at end of period
$
       62,000
$  32,700
Weighted
      average interest rate at end of period
0.78
%
2.46
%
NJNG
Long
      - term debt
(2)
$349,800
$379,800
Bank
      credit facilities
$250,000
$250,000
Amount
      outstanding at end of period
$203,550
$145,500
Weighted
      average interest rate at end of period
1.19
%
2.31
%
NJRES
Bank
      credit facilities
$30,000
$30,000
Amount
      outstanding at end of period
—
—
Weighted
      average interest rate at end of period
—
—
(1)
Amounts
      are comprised of $25.0 million issued in March 2004, maturing in
      March 2009, and $50.0 million issued in September 2007, maturing in
      September 2017.
(2)
Long-term
      debt excludes lease obligations of $66.7 million
and $60.4 million
at
      December 31, 2008 and September 30, 2008,
  respectively.
8.
CAPI
TALIZED FINANCING COSTS AND DEFERRED
    INTEREST
Allowance
for Funds Used During Construction, (AFUDC) included in Utility plant, and
capitalized interest included in Real estate properties and other and
Investments in equity investees and other on the Unaudited Condensed
Consolidated Balance Sheets, are as follows:
(Thousands)
Three
      Months Ended
December
      31,
2008
2007
AFUDC
      – Utility plant
$258
$535
Weighted
      average rate
4.00
%
8.31
%
Capitalized
      interest – Real estate properties and other
$—
$36
Weighted
      average interest rates
—
%
5.08
%
Capitalized
      interest – Investments in equity investees and other
$843
$855
Weighted
      average interest rates
5.50
%
5.98
%
The AFUDC
amounts shown in the table above for the three months ended December 31, 2007
include an equity component based on NJNG's prior return on equity rate of 11.5
percent. As a result of the BPU's Base Rate Order issued in October 2008, NJNG
implemented certain rate design changes, including a change to its AFUDC
calculation and a return on equity rate of 10.3 percent (see
Note 2.
Regulation
)
. Effective October 3, 2008,
NJNG is allowed to recover an incremental cost of equity component during
periods when its short-term debt balances are lower than its construction work
in progress. For the three months ended December 31, 2008, AFUDC only includes a
debt component.
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JERSEY RESOURCES CORPORATION
Part
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NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
NJR,
through its CR&R subsidiary, capitalizes interest associated with the
development and construction of its commercial buildings. Interest is also
capitalized associated with the acquisition, development and construction of a
natural gas storage facility through NJR's equity investment in Steckman Ridge
(see
Note 5. Investments in
Equity Investees
and
other
).
Pursuant
to a BPU order, NJNG is permitted to recover carrying costs on uncollected
balances related to SBC program costs, which include NJCEP, RAC and USF
expenditures. Accordingly, Other income included $563,000 and $738,000 of
deferred interest related to these SBC program costs for period ended December
31, 2008 and 2007, respectively.
9.
STO
CK-BASED
COMPENSATION
On
November 11, 2008, the Company granted 106,730 restricted shares that vested
immediately. On the same date the Company also granted 8,481 shares that vested
immediately and were issued on November 17, 2008. As of December 31, 2008,
2,448,586 and 107,203 shares, respectively, remain available for future awards
to employees and directors.
During
the first three months of fiscal 2009, included in operation and maintenance
expense is $711,000 related to stock-based compensation. As of December 31, 2008
there remains $1.9 million of deferred compensation related to unvested shares
and options, which is expected to be recognized over the next 3
years.
10.
EM
PLOYEE BENEFIT PLANS
Pension
and Other Postemployment Benefit Plans (OPEB)
The
components of the net periodic cost for pension benefits, including NJR's
Pension Equalization Plan, and OPEB costs (principally health care and life
insurance) for employees and covered dependents were as follows:
Pension
OPEB
Three Months Ended
December 31,
Three Months Ended
December 31,
(Thousands)
2008
2007
2008
2007
Service
      cost
$   
      678
$   
      728
$  
      584
$ 
       488
Interest
      cost
1,937
1,648
1,006
821
Expected
      return on plan assets
(2,188
)
(2,183
)
(647
)
(583
)
Recognized
      actuarial loss
139
275
319
262
Prior
      service cost amortization
14
14
20
20
Special
      termination benefit
—
—
89
89
Net
      periodic cost
$   
      580
$   
      482
$1,371
$1,097
For
fiscal 2009, the Company has no minimum pension funding requirements, however,
funding requirements are uncertain and can depend significantly on changes in
actuarial assumptions, returns on plan assets and changes in demographic
factors. It is anticipated that the annual funding level to the OPEB plans will
range from $1.2 million to $1.4 million over the next five years. Additional
contributions may be made based on market conditions and various
assumptions.
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JERSEY RESOURCES CORPORATION
Part
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NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
11.
AS
SET RETIREMENT OBLIGATIONS
(ARO)
NJR
recognizes AROs related to the costs associated with cutting and capping its
main and service gas distribution pipelines of NJNG, which is required by New
Jersey law when taking such gas distribution pipelines out of
service.
The
following is an analysis of the change in the ARO liability for the period ended
December 31, 2008:
(Thousands)
Balance
      at October 1, 2008
$24,416
Accretion
371
Additions
—
Retirements
(19
)
Balance
      at December 31, 2008
$24,768
Accretion
amounts are not reflected as an expense on NJR's Unaudited Condensed
Consolidated Statements of Income, but rather are deferred as a regulatory asset
and netted against NJNG's regulatory liabilities, for presentation purposes, on
the Unaudited Condensed Consolidated Balance Sheet.
12.
INC
OME TAXES
As of
September 30, 2008 the Company had a FIN 48 (Reserve for Uncertain Tax
Positions) balance of $6.5 million. During the first quarter of fiscal year
2009, the company settled a tax court case with the State of New Jersey, which
resulted in a decrease to the reserve balance of $2.7 million.
Over the
next twelve months the company expects to finalize the September 30, 2005
Internal Revenue Service (IRS) tax audit, which is expected to result in an
additional reduction to the remaining FIN 48 balance of $3.8 million. The $3.8
million relates to one issue which has been settled favorably and will result in
no changes to the company's tax liability related to the issue. As such the FIN
48 reserve is expected to be released during fiscal 2009.
Currently
the company has no reason to believe that there will be any new additions to the
FIN 48 reserve.
13.
COM
MITMENTS AND CONTINGENT
  LIABILITIES
Cash
Commitments
NJNG has
entered into long-term contracts, expiring at various dates through 2023, for
the supply, storage and delivery of natural gas. These contracts include current
annual fixed charges of approximately $87.6 million at current contract rates
and volumes, which are recoverable through the BGSS.
For the
purpose of securing adequate storage and pipeline capacity, NJRES enters into
storage and pipeline capacity contracts, which require the payment of certain
demand charges by NJRES, in order to maintain the ability to access such natural
gas storage or pipeline capacity, during a fixed time period, which generally
range from one to five years. Demand charges are based on established rates as
regulated by the Federal Energy Regulatory Commission (FERC). These demand
charges represent commitments to pay storage providers or pipeline companies for
the right to store and transport natural gas utilizing their respective assets.
As of December 31, 2008, NJRES had contractual obligations for current annual
demand charges related to storage contracts and pipeline capacity contracts of
$27.3 million and $52.2 million, respectively.
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Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
As of
December 31, 2008, there were NJR guarantees covering approximately $421 million
of natural gas purchases and demand fee commitments of NJRES and NJNG not yet
reflected in Accounts payable on the Unaudited Condensed Consolidated Balance
Sheet. Commitments as of December 31, 2008 for natural gas purchases and future
demand fees, for the next five fiscal year periods, are as follows:
(Thousands)
2009
2010
2011
2012
2013
Thereafter
NJRES
Natural
      gas purchases
$600,177
$109,213
$        —
$       —
$
            —
$
           —
Storage
      demand fees
27,266
18,136
12,735
9,791
2,235
1,913
Pipeline
      demand fees
52,242
31,792
15,743
6,265
5,298
4,940
Sub-total
      NJRES
$679,685
$159,141
$  28,478
$16,056
$ 7,533
$ 6,853
NJNG
Natural
      gas purchases
$ 76,054
$ 16,123
$
             —
$       —
$       —
$
            —
Storage
      demand fees
21,873
18,996
10,842
7,392
7,042
2,347
Pipeline
      demand fees
65,725
78,253
76,948
71,597
71,483
297,474
Sub-total
      NJNG
$163,652
$113,372
$ 87,790
$78,989
$78,525
$299,821
Total
$843,337
$272,513
$116,268
$95,045
$86,058
$306,674
Costs for
storage and pipeline demand fees, included as a component of Gas purchases on
the Unaudited Condensed Consolidated Statements of Income, are as
follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
NJRES
$28.5
$27.6
NJNG
20.5
18.7
Total
$49.0
$46.3
NJNG's
capital expenditures are estimated at $77.3 million for fiscal 2009, of which
approximately $18.4 million has been committed, and consists primarily of its
construction program to support customer growth, maintenance of its distribution
system, replacement needed under pipeline safety regulations and an automated
meter reading installation project.
The
Company's future minimum lease payments under various operating leases are less
than $3.2 million annually for the next five years and $1.6 million in the
aggregate for all years thereafter.
Legal
Proceedings
Manufactured
Gas Plant Remediation
NJNG is
responsible for the remedial cleanup of three Manufactured Gas Plant (MGP)
sites, dating back to gas operations in the late 1800s and early 1900s, which
contain contaminated residues from former gas manufacturing operations. NJNG is
currently involved in administrative proceedings with the New Jersey Department
of Environmental Protection (NJDEP), as well as participating in various studies
and investigations by outside consultants to determine the nature and extent of
any such contaminated residues and to develop appropriate programs of remedial
action, where warranted, under Administrative Consent Orders or Memoranda of
Agreement with the NJDEP.
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Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
NJNG may,
subject to BPU approval, recover its remediation expenditures, including
carrying costs, over rolling 7-year periods pursuant to a Remediation Adjustment
(RA) approved by the BPU. In October 2007, the BPU approved $14.7 million in
eligible costs to be recovered annually for MGP remediation expenditures
incurred through June 30, 2006. In February 2008, NJNG filed an application
regarding its SBC which included MGP remediation expenditures incurred through
June 30, 2007, resulting in an expected annual recovery of $17.7 million. On
January 27, 2009, NJNG filed an application regarding its SBC including MGP
remediation expenditures incurred through June 30, 2008 resulting in an expected
annual recovery of $20.7 million. As of December 31, 2008, $91.3 million of
previously incurred remediation costs, net of recoveries from customers and
insurance proceeds, are included in Regulatory assets on the Unaudited Condensed
Consolidated Balance Sheet.
In
September 2008, NJNG updated an environmental review of the MGP sites, including
a review of potential liability for investigation and remedial action. NJNG
estimated at the time of the review that total future expenditures to remediate
and monitor the three MGP sites for which it is responsible will range from
approximately $120.2 million to $177.2 million. NJNG's estimate of these
liabilities is based upon known facts, existing technology and enacted laws and
regulations in place when the review was completed. However, NJNG expects actual
costs to differ from these estimates. Where it is probable that costs will be
incurred, but the information is sufficient only to establish a range of
possible liability, and no point within the range is more likely than any other,
it is NJNG's policy to accrue the lower end of the range. Accordingly, NJNG has
recorded an MGP remediation liability and a corresponding Regulatory asset of
$120.2 million on the Unaudited Condensed Consolidated Balance Sheet. The actual
costs to be incurred by NJNG are dependent upon several factors, including final
determination of remedial action, changing technologies and governmental
regulations, the ultimate ability of other responsible parties to pay and any
insurance recoveries.
NJNG will
continue to seek recovery of MGP-related costs through the RAC. If any future
regulatory position indicates that the recovery of such costs is not probable,
the related cost would be charged to income in the period of such determination.
However, because recovery of such costs is subject to BPU approval, there can be
no assurance as to the ultimate recovery through the RAC or the impact on the
Company's results of operations, financial position or cash flows, which could
be material.
General
The
Company is party to various other claims, legal actions and complaints arising
in the ordinary course of business. In the Company's opinion, other than as
disclosed in Part II Item 1 of this Form 10-Q, the ultimate disposition of these
matters will not have a material adverse effect on its financial condition,
results of operations or cash flows.
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Part
I
NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
14.
BUS
INESS SEGMENT AND OTHER OPERATIONS
  DATA
Information
related to the Company's various business segments and other operations,
excluding capital expenditures, which are presented in the Unaudited Condensed
Consolidated Statements of Cash Flows, is detailed below.
The
Natural Gas Distribution segment consists of regulated energy and off-system,
capacity and storage management operations. The Energy Services segment consists
of unregulated wholesale energy operations. The Retail and Other operations
consist of appliance and installation services, commercial real estate
development, investments and other corporate activities.
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Operating
      Revenues
Natural
      Gas Distribution
$
340,908
$
284,360
Energy
      Services
463,094
520,211
Segment
      Subtotal
804,002
804,571
Retail
      and Other
(2,654
)
6,631
Intercompany
      revenues
(1)
(44
)
(64
)
Total
$
801,304
$
811,138
Depreciation
      and Amortization
Natural
      Gas Distribution
$
7,161
$
9,233
Energy
      Services
51
53
Segment
      Subtotal
7,212
9,286
Retail
      and Other
149
117
Total
$
7,361
$
9,403
Operating
      Income (Loss)
Natural
      Gas Distribution
$
42,186
$
31,602
Energy
      Services
(9,378
)
22,563
Segment
      Subtotal
32,808
54,165
Retail
      and Other
(10,658
)
372
Intercompany
      expenses
(1)
46
—
Total
$
22,196
$
54,537
Interest
      Income
(
2
)
Natural
      Gas Distribution
$
658
$
1,202
Energy
      Services
17
107
Segment
      Subtotal
675
1,309
Retail
      and Other
6
55
Total
$
681
$
1,364
Interest
      Expense, net
Natural
      Gas Distribution
$
6,460
$
6,119
Energy
      Services
(24
)
877
Segment
      Subtotal
6,436
6,996
Retail
      and Other
111
814
Total
$
6,547
$
7,810
Income
      Tax Provision (Benefit)
Natural
      Gas Distribution
$
13,336
$
10,045
Energy
      Services
(3,727
)
8,666
Segment
      Subtotal
9,609
18,711
Retail
      and Other
(4,364
)
(217
)
Total
$
5,245
$
18,494
(1)
Consists
      of transactions between subsidiaries that are eliminated and reclassified
      in consolidation
(2)
Included
      in Other income in the Unaudited Condensed Consolidated Statement of
      Income
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NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)
The chief
operating decision maker of the Company is the Chief Executive Officer (CEO).
The CEO uses net financial earnings as a measure of profit or loss in measuring
the results of the Company's segments and operations. A reconciliation of Net
financial earnings to consolidated Net Income, for the three months ended
December 31, 2008 and 2007, respectively, is as follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Reconciliation
      of net financial earnings to consolidated net income:
Natural
      Gas Distribution
$23,074
$16,670
Energy
      Services
9,383
19,092
Retail
      and Other
21
545
Consolidated
      Net Financial Earnings
32,478
36,307
Less:
Unrealized
      loss from derivative instruments, net of taxes
4,122
3,080
Realized
      loss from derivative instruments related to natural gas inventory, net of
      taxes
16,580
3,042
Consolidated
      Net Income
$11,776
$30,185
The Company's
assets for the various business segments and business operations are detailed
below:
December
      31,
September 30,
(Thousands)
2008
2008
Assets
      at end of period:
Natural
      Gas Distribution
$1,868,319
$1,761,964
Energy
      Services
629,310
689,992
Segment
      Subtotal
2,497,629
2,451,956
Retail
      and Other
232,246
231,551
Intercompany
      Assets
(1)
(42,488
)
(58,115
)
Total
$2,687,387
$2,625,392
(1)
      Consists of transactions between subsidiaries that are eliminated and
      reclassified in consolidation
For the
three months ended December 31, 2008, NJRES had one customer who represented
more than 10 percent of its total revenue. Management believes that the loss of
this customer would not have a material effect on its financial position,
results of operations or cash flows as an adequate number of alternative
counterparties exist.
15.
OT
HER
At
December 31, 2008, there were 42,256,517 shares of common stock outstanding and
the book value per share was $17.43.
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Part
I
ITEM 2
. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
Management's
Overview
New
Jersey Resources Corporation (NJR or the Company) is an energy services holding
company providing retail natural gas service in New Jersey and wholesale natural
gas and related energy services to customers in states from the Gulf Coast and
Mid-Continent regions to the New England region and Canada through its two
principal subsidiaries, New Jersey Natural Gas Company (NJNG) and NJR
Energy Services Company (NJRES).
Comprising
the Natural Gas Distribution segment, NJNG is a natural gas utility that
provides regulated retail natural gas service in central and northern New Jersey
and also participates in the off-system sales and capacity release markets. NJNG
is regulated by the New Jersey Board of Public Utilities (BPU).
NJRES
comprises the Energy Services segment. NJRES maintains and transacts around a
portfolio of physical assets consisting of natural gas storage and
transportation contracts. In addition, NJRES provides wholesale energy services
to non-affiliated utility and energy companies.
The
retail and other business operations (Retail and Other) includes NJR Energy
(NJRE), an investor in energy-related ventures, most significantly through NJNR
Pipeline Company, which holds the Company's 5.53 percent interest in Iroquois
Gas and Transmission System, LP (Iroquois), a 412-mile natural gas pipeline from
the New York-Canadian border to Long Island, New York, and NJR Steckman Ridge
Storage Company, which has a 50 percent equity ownership interest in Steckman
Ridge GP, LLC and Steckman Ridge, LP (collectively, Steckman Ridge), a planned
17.7 billion cubic foot (Bcf) natural gas storage facility, with up to 12 Bcf
working capacity, which is being jointly developed and constructed with a
partner in western Pennsylvania; NJR Investment Company, which makes
energy-related equity investments; NJR Home Services Company (NJRHS), which
provides service, sales and installation of appliances; Commercial Realty and
Resources Corporation (CR&R), which holds and develops commercial real
estate; and NJR Service Corporation (NJR Service), which provides support
services to the various NJR businesses.
Net
income and assets by business segment and business operations for the three
months ended December 31, 2008 and 2007, respectively, are as
follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Net
      Income (Loss)
Natural
      Gas Distribution
$23,074
196
%
$16,670
55
%
Energy
      Services
(5,614
)
(48
)
13,150
44
Retail
      and Other
(5,684
)
(48
)
365
1
Total
$11,776
100
%
$30,185
100
%
December 31,
September 30,
(Thousands)
2008
2008
Assets
Natural
      Gas Distribution
$1,868,319
70
%
$1,761,964
67
%
Energy
      Services
629,310
23
689,992
26
Retail
      and Other
232,246
9
231,551
9
Intercompany
      Assets
(1)
(42,488
)
(2
)
(58,115
)
(2
)
Total
$2,687,387
100
%
$2,625,392
100
%
(1)
      Consists of transactions between subsidiaries that are eliminated and
      reclassified in consolidation
NJRES and
NJR Energy account for certain of their derivative instruments (financial
futures, swaps and options) used to economically hedge the forecasted purchase,
sale and transportation of natural gas at fair value, as required under
Statement of Financial Accounting Standards No. 133,
Accounting for Derivative
Instruments and Hedging Activities
(as amended and interpreted, SFAS
133). Effective October 1, 2007, the Company changed the treatment of its
physical commodity contracts at NJRES, such that the changes in fair
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Part
I
ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
value
of new contracts are included in earnings, and are not accounted for using
the "normal purchase normal sales" (normal) scope exception of SFAS 133. In
addition, effective October 1, 2008, due to changes in the Company's ability to
assert physical delivery, the Company is no longer treating physical commodity
contracts executed prior to October 1, 2007 as normal. Therefore, all NJRES
physical commodity contracts are accounted for at fair value on the Unaudited
Condensed Consolidated Balance Sheets, with changes in fair value included as a
component of gas purchases on the Unaudited Condensed Consolidated Statements of
Income. All physical commodity contracts at NJNG and NJR Energy continue to be
designated as normal and accounted for under accrual accounting.
The
change in fair value of these derivative instruments at NJRES and NJR Energy
over periods of time, referred to as unrealized gains or losses, can result in
substantial volatility in reported net income under generally accepted
accounting principles of the United States of America (GAAP). When a financial
instrument settles the result is the realization of these gains or losses. NJRES
utilizes certain financial instruments to economically hedge natural gas
inventory placed into storage that will be sold at a later date, all of which
were contemplated as part of an entire forecasted transaction. GAAP requires
that when a financial instrument that is economically hedging natural gas that
has been placed into inventory, but not yet sold, has been settled, the realized
gain or loss associated with that settlement must be reflected currently in the
income statement. While NJRES will recognize the same economic impact from the
entire planned transaction, this also leads to additional volatility in NJRES'
reported earnings.
Unrealized
losses and gains at NJRES and NJR Energy are the result of changes in the fair
value of natural gas futures and fixed and basis swaps, as applicable, used to
economically hedge future natural gas purchases, sales and transportation.
Realized gains and losses at NJRES include the settlement of natural gas futures
instruments used to economically hedge natural gas purchases in inventory that
have not been sold.
Included
in Net income are unrealized gains and (losses) in the Energy Services segment
of $1.6 million and $(2.9) million, after taxes, for the three-month period
ended December 31, 2008 and 2007, respectively. Also included in Net
income are realized (losses) of $(16.6) million and $(3.0), after taxes,
for the three-month period ended December 31, 2008 and 2007, respectively, which
are related to derivative instruments that have settled and are designed to
economically hedge natural gas that is in storage inventory at December 31, 2008
and 2007, respectively.
Included
in Net income are unrealized (losses) in the Retail and Other business
operations of $(5.7) million and $(180,000), after taxes, for the three-month
period ended December 31, 2008 and 2007, respectively.
Natural
Gas Distribution Segment
Natural
Gas Distribution operations have been managed with the goal of growing
profitably through several key initiatives including:
Ÿ
Earning
      a reasonable rate of return on the investments in its natural gas
      distribution system, as well as recovery of all prudently incurred costs
      in order to provide safe and reliable service throughout NJNG's service
      territory.
Ÿ
Working
      with the BPU and the Department of the Public Advocate, Division of Rate
      Counsel (Rate Counsel), on the implementation and continuing review of the
      Conservation Incentive Program (CIP). The CIP allows NJNG to promote
      conservation programs to its customers while maintaining protection of its
      utility gross margin associated with reduced customer usage. CIP usage
      differences are calculated annually and are recovered one year following
      the end of the CIP usage year;
Ÿ
Managing
      its new customer growth rate, which is expected to be approximately 1.3
      percent over the next two years. In fiscal 2009 and 2010, NJNG currently
      expects to add, in total, approximately 12,000 to 14,000 new customers.
      The Company believes that this growth would increase utility gross margin
      under its base rates as provided by approximately $3.6 million annually,
      as calculated under NJNG's CIP tariff;
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Part
I
ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Ÿ
Generating
      earnings from various BPU-authorized gross margin-sharing incentive
      programs; and
Ÿ
Managing
      the volatility of wholesale natural gas prices through a hedging program
      designed to keep customers' Basic Gas Supply Service (BGSS) rates as
      stable as possible.
Based
upon increases in NJNG's operation, maintenance and capital costs, NJNG
petitioned the BPU, on November 20, 2007, to increase base rates for its natural
gas delivery service. This base rate filing was consistent with NJNG's
objectives of providing safe and reliable service to its customers and earning a
market-based return.
On
October 3, 2008, the BPU unanimously approved and made effective the settlement
of NJNG's base rate case. As a result, NJNG received a revenue increase in its
base rates of $32.5 million, which is inclusive of an approximate $13 million
impact of a change to the CIP baseline usage rate, received an allowed return on
equity component of 10.3 percent, reduced its depreciation expense component
from 3.0 percent to 2.34 percent and reduced its annual depreciation expense of
$1.6 million as a result of the amortization of previously recovered asset
retirement obligations.
The CIP
allows NJNG to recover utility gross margin variations related to both weather
and customer usage. Recovery of such margin variations is subject to additional
conditions including an earnings test, which includes a return on equity
component of 10.3 percent, and an evaluation of Basic Gas Supply Service
(BGSS)-related savings achieved. An annual review of the CIP must be filed in
June of each year, coincident with NJNG's annual BGSS filing. In October
2007, the BPU provisionally approved NJNG's initial CIP recovery rates, which
are designed to recover approximately $15.6 million of accrued margin amounts.
In October 2008, the BPU provisionally approved recovery of an additional $6.8
million of accrued margin for the CIP. It is anticipated that NJNG will
file a petition in the spring of 2009 to extend its CIP or implement a similar
mechanism on a permanent basis, to be effective October 1, 2009
In
conjunction with the CIP, NJNG is required to administer programs that promote
customer conservation efforts. As of December 31, 2008 and
September 30, 2008, the obligation to fund these conservation programs was
recorded at its present value of $662,000 and $864,000, respectively on the
Unaudited Condensed Consolidated Balance Sheets.
In
conducting NJNG's business, management focuses on factors it believes may have
significant influence on its future financial results. NJNG's policy is to work
with all stakeholders, including customers, regulators and policymakers, to
achieve favorable results. These factors include the rate of NJNG's customer
growth in its service territory, which can be influenced by general economic
conditions as well as political and regulatory policies that may impact the new
housing market. A portion of NJNG's customer growth comes from the conversion
market, which is influenced by the delivered cost of natural gas compared with
competing fuels, interest rates and other economic conditions.
As a
regulated company, NJNG is required to recognize the impact of regulatory
decisions on its financial statements. As a result, significant costs are
deferred and treated as regulatory assets, pending BPU decisions regarding their
ultimate recovery from customers. The most significant costs incurred that are
subject to this accounting treatment include manufactured gas plant (MGP)
remediation costs and wholesale natural gas costs. Actual remediation costs may
vary from management's estimates due to the developing nature of remediation
requirements, regulatory decisions by the New Jersey Department of Environmental
Protection (NJDEP) and related litigation. If there are changes in the
regulatory position on the recovery of these costs, such costs would be charged
to income in the period of such determination.
Due to
the capital-intensive nature of NJNG's operations and the seasonal nature of its
working capital requirements, significant changes in interest rates can also
impact NJNG's results.
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Part
I
ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Energy
Services Segment
NJRES
provides unregulated wholesale energy services, including base load natural gas,
peaking and balancing services, utilizing physical assets it controls through
natural gas pipeline transportation and storage contracts, as well as providing
asset management services to customers in states from the Gulf Coast and
Mid-continent regions to the Appalachian and Northeast regions and
Canada.
NJRES
incorporates the following elements to provide for growth, while focusing on
maintaining a low-risk operating and counterparty credit profile:
Ÿ
Providing
      natural gas portfolio management services to nonaffiliated utilities and
      electric generation facilities;
Ÿ
Leveraging
      transactions for the delivery of natural gas to customers by aggregating
      the natural gas commodity costs and transportation costs in order to
      minimize the total cost required to provide and deliver natural gas to
      NJRES' customers by identifying the lowest cost alternative with the
      natural gas supply, transportation availability and markets to which NJRES
      is able to access through its business footprint and contractual asset
      portfolio;
Ÿ
Identifying
      and benefiting from variations in pricing of natural gas transportation
      and storage assets due to location or timing differences of natural gas
      prices to generate gross margin; and
Ÿ
Managing
      economic hedging programs that are designed to mitigate adverse market
      price fluctuations in natural gas transportation and storage
      commitments.
NJRES
views "financial margin" as a financial measurement metric. NJRES' financial
margin, which is a non-GAAP financial measure, represents revenues earned from
the sale of natural gas less costs of natural gas sold, transportation and
storage, and excludes any accounting impact from the change in fair value of
derivative instruments designed to hedge the economic impact of its transactions
that have not been settled, which represent unrealized gains and losses, and
realized gains and losses associated with financial instruments economically
hedging natural gas in storage and not yet sold as part of a planned
transaction. NJRES uses financial margin to gauge operating results against
established benchmarks and earnings targets as it eliminates the impact of
volatility in GAAP earnings that can occur prior to settlement of the physical
commodity portion of the transactions and therefore is more representative of
the overall expected economic result.
NJRES has
built a portfolio of customers including local distribution companies,
industrial companies, electric generators and retail aggregators. Sales to these
customers have allowed NJRES to leverage its transportation and storage capacity
and manage sales to these customers in an aggregate fashion. This strategy
allows NJRES to extract more value from its portfolio of natural gas storage and
pipeline transportation capacity through the arbitrage of pricing differences as
a result of locational differences or over different periods of
time.
NJRES
also focuses on creating value from underutilized natural gas assets, which are
typically amassed through contractual rights to natural gas transportation and
storage capacity. NJRES has developed a portfolio of natural gas storage and
transportation capacity in states in the Northeast, Gulf Coast, Mid-continent
and Appalachian regions of the United States and eastern Canada. These assets
become more valuable when prices change between these areas and across time
periods. NJRES seeks to optimize this process on a daily basis as market
conditions change by evaluating all the natural gas supplies, transportation and
opportunities to which it has access, to find the most profitable alternative to
serve its various commitments. This enables NJRES to capture geographic pricing
differences across these various regions as delivered natural gas prices change
as a result of market conditions. NJRES focuses on earning a financial margin on
a single original transaction and then utilizing that transaction, and the
changes in prices across the regions or across time periods, as the basis to
further improve the initial result.
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Part
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ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
In a
similar manner, NJRES participates in natural gas storage transactions where it
seeks to identify pricing differences that occur over time, as prices for future
delivery periods at many different delivery points, are readily available. For
example, NJRES generates financial margin by locking in the differential between
purchasing natural gas at a low current or future price and, in a related
transaction, selling that natural gas at a higher current or future price, all
within the constraints of its credit and contracts policies. Through the use of
transportation and storage services, NJRES is able to generate financial margin
through pricing differences that occur over the duration of time the assets are
held.
NJRES'
portfolio management customers include nonaffiliated utilities and electric
generation plants. Services provided by NJRES include optimization of
underutilized natural gas assets and basic gas supply functions.
NJRES
also participates in park-and-loan transactions with pipeline counterparties,
where NJRES will borrow natural gas when there is an opportunity to capture
arbitrage value. In these cases, NJRES evaluates the economics of the
transaction to determine if it can capture pricing differentials in the
marketplace in order to be able to generate financial margin. In evaluating
these transactions NJRES will compare the fixed fee it will pay and the
resulting spread it can generate when considering the amount it will receive to
sell the borrowed gas to another counterparty in relation to the cost it will
incur to purchase the gas at a later date for return back to the pipeline. When
the transaction allows NJRES to generate a financial margin, NJRES will fix the
financial margin by economically hedging the transaction with natural gas
futures.
In
conducting its business, NJRES mitigates risk by following formal risk
management guidelines, including trading limits, approval processes, segregation
of duties, and formal contract and credit review and approval procedures. NJRES
continuously monitors and seeks to reduce the risk associated with various
counterparties credit exposure. The Risk Management Committee (RMC) of NJR,
oversees compliance with these established guidelines.
Retail
and Other Business Operations
As part
of the Retail and Other business operations NJR utilizes a subsidiary, NJR
Energy Holdings, to develop its investments in natural gas "mid-stream" assets.
Mid-stream assets are natural gas transportation and storage facilities. NJR
believes that acquiring, owning and developing these mid-stream assets, which
operate under a tariff structure that has either a regulated or market-based
rate, can provide a significant growth opportunity for the Company. To that end,
NJR has ownership interests in Iroquois (regulated rate) and Steckman Ridge
(anticipated market-based rate), which is currently under development, and is
actively pursuing other potential opportunities that meet its investment and
development criteria. Other businesses included as part of Retail and Other
include NJRHS, which provides service, sales and installation of appliances to
over 144,000 customers and is focused on growing its installation business and
expanding its service contract customer base, and CR&R, which seeks
additional opportunities to enhance the value of its undeveloped
land.
The
financial results of Retail and Other consist primarily of the operating results
of NJRHS and equity in earnings attributable to the Company's equity investment
in Iroquois, as well as to investments made by NJR Energy, an investor in other
energy-related ventures through its operating subsidiaries.
On June
5, 2008, the Federal Energy Regulatory Commission (FERC) issued Steckman Ridge a
certificate of public convenience and necessity authorizing the ownership,
construction and operation of its natural gas storage facility and associated
facilities. NJR anticipates that Steckman Ridge will be placed in service during
the summer of 2009. As of December 31, 2008, NJR has invested $99.7 million in
Steckman Ridge. This amount excludes capitalized interest and other direct
costs. Total project costs related to the development of the storage facility
are currently estimated at approximately $265 million, of which NJR is obligated
to fund 50 percent or approximately $132.5 million. NJR anticipates that
Steckman Ridge will seek non-recourse financing upon completion of
the construction and development of its facilities, thereby potentially
reducing the final expected recourse obligation of NJR. There can be no
assurances that such non-recourse project financing will be secured or available
for Steckman Ridge.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Critical
Accounting Policies
A summary
of NJR's critical accounting policies is included in
Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations
of its Annual
Report on Form 10-K for the period ended September 30, 2008. NJR's critical
accounting policies have not changed materially from those reported in the 2008
Annual Report on Form 10-K with the exception of the following:
Derivative
Instrument
s
Derivative
activities are recorded in accordance with SFAS No. 133,
Accounting for Derivative
Instruments and Hedging Activities
, as amended and interpreted, (SFAS
133) under which NJR records the fair value of derivatives held as assets and
liabilities. In addition, NJRES also treats contracts for the purchase or sale
of natural gas as derivatives and, therefore, records them at fair value in the
Unaudited Condensed Consolidated Balance Sheet, with changes in fair value being
recorded as a component of Gas purchases in the Unaudited Condensed Consolidated
Statements of Income.
NJRES
previously applied the "normal purchase normal sale" (normal) scope exception
for certain physical commodity contracts that were executed prior to October 1,
2007 which otherwise qualified as derivatives. Based on current conditions in
the credit markets and developments within the natural gas industry, NJRES has
determined that the probability of physical delivery with these counterparties
could potentially diminish and, therefore, these contracts meet the
requirements, outlined in SFAS 133, to continue applying the normal scope
exception. As a result, NJRES will no longer recognize these contracts at cost.
Effective October 1, 2008, NJRES will treat these contracts as derivatives and
record them at fair value in the Unaudited Condensed Consolidated Balance Sheet,
with changes in fair value being recorded as a component of Gas purchases in the
Unaudited Condensed Consolidated Statements of Income.
Effective
October 1, 2008, NJR began applying the provisions of SFAS 157
Fair Value Measurement
(see
Note 5, Fair Value
Measurements
). As a result of the adoption of SFAS 157, NJR implemented
procedures to evaluate its own credit profile to determine an appropriate
valuation adjustment to the recorded amount of its derivative liabilities. NJR
uses historical default probabilities corresponding to Standard and Poor's
issuer ratings and considers conditions in the credit markets to further adjust
the valuation, when deemed appropriate, based on the change in a market index
that tracks the credit default swaps of investment grade companies.
Capitalized
Financing Costs
NJNG
capitalizes an allowance for funds used during construction (AFUDC) as a
component of Utility plant in the Unaudited Condensed Consolidated Balance
Sheets. Under regulatory rate practices and in accordance with SFAS No. 71,
Accounting for the Effects of
Certain Types of Regulation,
NJNG fully recovers AFUDC through base
rates. As a result of the BPU's Base Rate Order issued in October 2008, NJNG
implemented certain rate design changes, including a change to its AFUDC
calculation.  Effective October 3, 2008, NJNG is allowed to recover an
incremental cost of equity component during periods when its short-term
debt balances are lower than its construction work in progress balance.
This results in a non-cash income statement recognition that will also be
capitalized as a component of Utility plant.
Recently
Issued Accounting Standards
Refer to
Note 1. General
, for
discussion of recently issued accounting standards.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Results
of Operations
Consolidated
Net
income for the three-month period ended December 31, 2008 decreased by 61
percent to approximately $11.8 million, compared with net income of
approximately $30.2 million for the same period in fiscal 2007. Basic and
diluted earnings per share decreased by 61 percent to $0.28 and $0.28,
compared with $0.72 and $0.72, respectively.
The
decrease in net income was due primarily to decreased gross margin at NJRES as a
result of higher realized losses on derivatives associated with economic
hedges of natural gas in inventory due primarily to declining NYMEX prices
in the current fiscal period of $16.6 million, net of tax, partially offset
by increased operating income at NJNG driven by higher utility gross margin as a
result of changes to its base rates approved by the BPU that became effective
October 3, 2008 and higher margins related to its storage incentive
program.
The
Company's Operating revenues and Gas purchases are as follows:
Three
      Months Ended
December 31,
(Thousands)
2008
2007
%
Change
Operating
      revenues
$801,304
$811,138
(1.2)%
Gas
      purchases
$698,145
$684,694
2.0  %
Operating
revenues decreased $(9.8) million and Gas purchases increased $13.5 million for
the three months ended December 31, 2008, compared with the same period of the
prior fiscal year due primarily to:
Ÿ
a
      decrease in Operating revenues of $(57.1) million and Gas purchases
      of $(26.8) million at NJRES due primarily to lower average prices
      partially offset by slightly higher transaction
volumes;
Ÿ
a
      decrease in Operating revenues of $(9.3) million at NJR
      Energy due to greater unrealized losses, which were the result of
      declining market prices within a portfolio of net long financial
      derivative positions; partially offset by
Ÿ
an increase
      in Operating revenues of $56.5 million and Gas purchases of $40.3
      million at NJNG due primarily to BGSS customer refunds issued in fiscal
      2008 that did not recur in fiscal 2009 and weather being 10
      percent colder than the first quarter of the same period of the prior
      fiscal year. In addition, the first quarter operating revenues were
      favorably impacted by the base rate
increase.
Natural
Gas Distribution Segment
NJNG is a
local natural gas distribution company that provides regulated retail energy
services to approximately 486,000 residential and commercial customers in
central and northern New Jersey and participates in the off-system sales and
capacity release markets.
NJNG's
business is seasonal by nature, as weather conditions directly influence the
volume of natural gas delivered. Specifically, customer demand substantially
increases during the winter months when natural gas is used for heating
purposes. As a result, NJNG receives most of its gas distribution revenues
during the first and second fiscal quarters and is subject to variations in
earnings and working capital during the year.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
The
Electric Discount and Energy Competition Act (EDECA) provides the framework for
New Jersey's energy markets, which are open to competition from other energy
suppliers. Currently, NJNG's residential markets are open to competition, and
its rates are segregated between BGSS (natural gas commodity) and delivery
(i.e., transportation) components. NJNG earns no utility gross margin on the
commodity portion of its natural gas sales. NJNG earns utility gross margin
through the delivery of natural gas to its customers. Under an existing order
from the BPU, BGSS can be provided by suppliers other than the state's natural
gas utilities.
NJNG's
financial results are summarized as follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Utility
      Gross Margin
Operating
      revenues
$340,908
$284,360
Less:
Gas
      purchases
230,452
190,148
Energy
      and other taxes
21,587
16,363
Regulatory
      rider expense
13,561
12,165
Total
      Utility Gross Margin
75,308
65,684
Operation
      and maintenance expense
24,950
23,879
Depreciation
      and amortization
7,161
9,233
Other
      taxes not reflected in utility gross margin
1,011
970
Operating
      income
42,186
31,602
Other
      income
684
1,232
Interest
      expense, net
6,460
6,119
Income
      tax provision
13,336
10,045
Net
      income
$
      23,074
$
      16,670
The
following table summarizes Utility Gross Margin and throughput in billion cubic
feet (Bcf) of natural gas by type:
Three
      Months Ended
December
      31,
2008
2007
($
      in thousands)
Margin
Bcf
Margin
Bcf
Residential
$49,687
13.3
$45,400
12.7
Commercial,
      Industrial & Other
13,381
3.2
13,796
2.8
Transportation
8,432
3.0
4,934
2.8
Total
      Firm
71,500
19.5
64,130
18.3
Incentive
      programs
3,724
12.2
1,420
9.7
Interruptible
84
0.9
134
1.6
Total
      Utility Gross Margin/throughput
$75,308
32.6
$65,684
29.6
Utility
Gross Margin
NJNG's
utility gross margin is defined as natural gas revenues less natural gas
purchases, sales tax, a Transitional Energy Facilities Assessment (TEFA) and
regulatory rider expenses, and may not be comparable to the definition of gross
margin used by others in the natural gas distribution business and other
industries. Utility gross margin is comprised of three major categories which
include utility firm gross margin, incentive programs and utility gross margin
from interruptible customers. Management believes that utility gross margin
provides a more meaningful basis than revenue for evaluating utility operations
since natural gas costs, sales tax, TEFA and regulatory rider expenses are
included in operating revenue and passed through to customers and, therefore,
have no effect on utility gross margin.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Natural
gas costs are charged to operating expenses on the basis of therm sales at the
prices in NJNG's BGSS tariff approved by the BPU. The BGSS tariff rate includes
projected natural gas costs, net of supplier refunds, the impact of hedging
activities and credits from non-firm sales and transportation activities. Any
underrecoveries or overrecoveries from the projected amounts are deferred and
reflected in the BGSS tariff rate in subsequent years.
TEFA,
which is included in Energy and other taxes on the Unaudited Condensed
Consolidated Statements of Income, is calculated on a per-therm basis and
excludes sales to cogeneration facilities, other utilities and off-system sales.
TEFA represents a regulatory allowed assessment imposed on all energy providers
in the state of New Jersey, as TEFA has replaced the previously used utility
gross receipts tax formula.
Regulatory
rider expenses consist of recovery of state-mandated programs and the
remediation adjustment clause costs. These expenses are offset by corresponding
revenues and are calculated on a per-therm basis.
NJNG's
Operating revenues increased by $56.5 million, or 20 percent, and Gas purchases
increased by $40.3 million, or 21 percent, for the three months ended December
31, 2008, respectively, compared with same period in the prior fiscal year as a
result of:
Ÿ
an
      increase in Operating revenue and Gas purchases related to a BGSS customer
      refund in December 2007 that did not recur in the first quarter of fiscal
      2009 in the amount of $32.1 million and $30.0 million, respectively. The
      prior year customer refund was inclusive of sales tax refund of $2.1
      million and was the result of anticipated reductions in cost to acquire
      wholesale natural gas, as compared to the established rate included in
      NJNG's BGSS tariff;
Ÿ
an
      increase in Operating revenue and Gas purchases related to firm sales in
      the amount of $25.6 million and $18.1 million, respectively, as a result
      an increase in BGSS rates approved by the BPU;
Ÿ
an
      increase in Operating revenue and Gas purchases related to firm sales in
      the amount of $14.5 million and $9.5 million, respectively, due primarily
      to weather being 10 percent colder than the same period of the prior
      fiscal year;
Ÿ
an
      increase in Operating revenue in the amount of $4.8 million related to
      fixed revenue as a result of changes approved by the BPU for restructured
      tariffs; partially offset by
Ÿ
a
      decrease in Operating revenue and Gas purchases related to off-system
      sales in the amount of $12.8 million and $12.6 million, respectively, as a
      result of lower average sale prices due to the change in the wholesale
      price of natural gas;
Ÿ
a
      decrease in Operating revenue related to the CIP program in the amount of
      $5.3 million due primarily to a change in the CIP baseline use per
      customer benchmark resulting from the October 3, 2008 base rate
      case;
Ÿ
a
      decrease in Operating revenue and Gas purchases related to interruptible
      sales in the amount of $2.1 million and $1.8 million, respectively, due to
      a decrease in sales to electric co-generation
customers;
Ÿ
a
      decrease in Gas purchases related to increased amounts earned through the
      financial risk management (FRM) and capacity release incentive programs of
      $1.8 million in fiscal 2009 as compared to $345,000 in fiscal 2008 due
      primarily to the FRM program's increased annual cost and volume
      limitations, which allowed NJNG the ability to capitalize on more hedging
      opportunities; and
Ÿ
a
      decrease of $1.1 million in Gas purchases related to increased amounts
      received through the storage incentive program due primarily to the timing
      of the incentive margins during the program's April 2008 through October
      2008 injection period as compared to the same period in the prior fiscal
      year.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Sales tax
and TEFA, which are presented as both components of Revenues and Operating
Expenses in the Unaudited Condensed Consolidated Statements of Income, totaled
$21.6 million and $16.4 million for the three months ended December 31, 2008 and
2007, respectively. The increase is due primarily to an increase of $68.8
million in operating revenue from firm sales for the three months ended December
31, 2008.
Regulatory
rider expenses are calculated on a per-therm basis and totaled $13.6 million and
$12.2 million for the three months ended December 31, 2008 and 2007,
respectively. The increase is due primarily to an increase in firm throughput of
1.2 Bcf for the three months ended December 31, 2008 as compared with the three
months ended December 31, 2007, as a result of the previously mentioned colder
weather and an increase in the SBC rate.
Utility
gross margin is comprised of three major categories:
Ÿ
Utility
      Firm Gross Margin, which is derived from residential and commercial
      customers who receive natural gas service from NJNG through either sales
      or transportation tariffs;
Ÿ
Incentive
      programs, where margins generated or savings achieved from BPU-approved
      off-system sales, capacity release, Financial Risk Management (defined in
      Incentive Programs, below) or storage incentive programs are shared
      between customers and NJNG; and
Ÿ
Utility
      gross margin from interruptible customers who have the ability to switch
      to alternative fuels.
Utility
Firm Gross Margin
Utility
firm gross margin is earned from residential and commercial customers who
receive natural gas service from NJNG through either sales or transportation
tariffs.
As a
result of NJNG's implementation of the CIP, utility gross margin is no longer
linked to customer usage. The CIP eliminates the disincentive to promote
conservation and energy efficiency and facilitate normalizing NJNG's utility
gross margin recoveries for variances not only in weather but also in other
factors affecting usage, including customer conservation. Recovery of utility
gross margin for the non-weather variance through the CIP is limited to the
amount of certain gas supply cost savings achieved and is subject to an earnings
test, which contains a return on equity component of 10.3 percent.
NJNG's
total utility gross margin is not negatively affected by customers who use its
transportation service and purchase natural gas from another supplier because
its tariff is designed so that no profit is earned on the commodity portion of
sales to firm customers. All customers who purchase natural gas from another
supplier continue to use NJNG for transportation service.
Total
utility firm gross margin increased $7.4 million, or 11.5 percent, for the three
months ended December 31, 2008, as compared to the same period in the prior
fiscal year, due primarily to an increase in residential and commercial
transport customer margin as a result of an increase in base rates effective
October 3, 2008 partially offset by a decrease in the amounts accrued through
the CIP program. The changes in customer margin were also favorably impacted by
the increase in firm and transport customers of 2,100 and 3,100, respectively,
over the same period in the prior fiscal year.
Utility
firm gross margin from residential service sales increased to $49.7 million for
the three months ended December 31, 2008, as compared with $45.4 million for the
three months ended December 31, 2007. NJNG transported 13.3 Bcf for its firm
customers in the three months ended December 31, 2008, compared with 12.7 Bcf
for the same period ended December 31, 2007.
Utility
firm gross margin from transportation service increased to $8.4 million for the
three months ended December 31, 2008, as compared to $4.9 million for the three
months ended December 31, 2007. NJNG transported 3.0 Bcf for its firm customers
in the three months ended December 31, 2008, compared with 2.8 Bcf for the same
period ended December 31, 2007.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
The
weather for the three months ended December 31, 2008 was 1.8 percent colder than
normal, based on a 20-year average, which resulted in a negative adjustment of
utility gross margin under the weather component of the CIP of $(216,000),
compared with 8.2 percent warmer-than-normal weather for the same period last
fiscal year, which resulted in an accrual of utility gross margin of $2.9
million. Under the provisions of the CIP, accruals related to the weather
portion are dependent on the occurrence of degree days and the magnitude of the
variance in relation to a normal degree day. Customer usage was lower than the
established benchmark during the first quarter of fiscal 2009, which resulted in
an accrual of utility gross margin under the CIP of $1.0 million compared with
$3.2 million in the first quarter of fiscal 2008. The change in the weather and
non-weather components of the CIP include the effect of adjustments, normal
degree days, consumption factors and benchmarks related to the baseline use per
customer, which was amended with NJNG's new base rates approved by the BPU
effective October 3, 2008.
NJNG had
12,053 and 9,324 residential customers and 5,214 and 4,889 commercial customers
using its transportation service at December 31, 2008 and 2007, respectively.
The increase in transportation customers for the period ended December 31, 2008
was due primarily to an increase in marketing activity by third party natural
gas service providers in NJNG's service territory.
NJNG
added 1,763 and 1,723 new customers during the three months ended December 31,
2008 and 2007, respectively. In addition, NJNG converted 162 and 104 existing
customers to natural gas heat and other services during the same periods for
fiscal 2009 and 2008, respectively. This customer growth represents an estimated
annual increase of approximately 0.53 Bcf in sales to firm customers, assuming
normal weather and usage.
Incentive
Programs
To reduce
the overall cost of its natural gas supply commitments, NJNG has entered into
contracts to sell natural gas to wholesale customers outside its franchise
territory when the natural gas is not needed for system requirements. These
off-system sales enable NJNG to reduce its overall costs applicable to BGSS
customers. NJNG also participates in the capacity release market on the
interstate pipeline network when the capacity is not needed for its firm system
requirements. NJNG retains 15 percent of the utility gross margin from these
sales, with 85 percent credited to firm customers through the BGSS.
The
Financial Risk Management (FRM) program is designed to provide price stability
to NJNG's natural gas supply portfolio. The FRM program includes an incentive
mechanism designed to encourage the use of financial instruments to economically
hedge NJNG's natural gas costs. NJNG retains 15 percent of the utility gross
margin, with 85 percent credited to firm customers through the
BGSS.
The
storage incentive program shares gains and losses on an 80 percent and 20
percent basis between customers and NJNG, respectively. This program measures
the difference between the actual cost of natural gas injected into storage and
a benchmark established with the purchase of a portfolio of futures contracts
applicable to the April-through-October natural gas injection
season.
On
October 3, 2008, the BPU approved the Rate Order, which extends the incentive
programs through October 31, 2011, and provides changes to certain volume and
cost limitations surrounding these incentive programs.
NJNG's
incentive programs totaled 12.2 Bcf and generated $3.7 million of utility gross
margin for the three months ended December 31, 2008, compared with 9.7 Bcf and
$1.4 million of utility gross margin during the same period last fiscal year.
Utility gross margin from incentive programs comprised 4.9 percent of total
utility gross margin for the three months ended December 31, 2008 and 2.2
percent of total utility gross margin for the same period in fiscal 2008,
respectively. The increase in utility gross margin was due primarily
to increased amounts received through the FRM program of $1.2 million in
the first quarter of fiscal 2009 as compared with $230,000 in the first quarter
of fiscal 2008 and $1.1 million in the first quarter of fiscal 2009 from
increased amounts received through the storage incentive program as
discussed above.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Interruptible
Revenues
As of
December 31, 2008, NJNG serves 45 customers through interruptible transportation
and sales services. Interruptible customers are those customers whose service
can be temporarily halted as they have the ability to utilize an alternate fuel
source. Although therms transported and sold to interruptible customers
represented 0.9 Bcf, or 2.8 percent, of total throughput for the three months
ended December 31, 2008, and 1.6 Bcf, or 5.4 percent, of the total throughput
during the same period in the prior fiscal year, they accounted for less than 1
percent of the total utility gross margin in each year.
Operation
and Maintenance Expense
Operation
and maintenance expense increased $1.1 million, or 4.5 percent, during the three
months ended December 31, 2008, as compared with the same period in the last
fiscal year, due primarily to:
Ÿ
an
      increase in the bad debt expense of $325,000 as a result of an increase in
      operating revenue;
Ÿ
an
      increase of $180,000 in pipeline access clearing
    maintenance;
Ÿ
higher
      pipeline integrity costs of $130,000;
Ÿ
increased postemployment
      benefit costs in the amount of $121,000; and
Ÿ
increased
      reserve for unused earned vacation of
$119,000.
Operating
Income
Operating
income increased $10.6 million, or 33.5 percent, for the three months ended
December 31, 2008 as compared with the same period in the last fiscal year, due
primarily to:
Ÿ
an
      increase in total Utility gross margin of $9.6 million, as discussed
      above;
Ÿ
a
      decrease in depreciation expense of $2.1 million, due to a rate reduction
      from 3 percent to 2.34 percent and amortization of previously recovered
      asset retirement obligations, both of which were part of the settlement of
      the base rate case; partially offset by
Ÿ
an
      increase in Operations and maintenance expense in the amount of $1.1
      million, as discussed above.
Interest
Expense
Interest
expense increased $341,000 for the three months ended December 31, 2008 compared
with the same period in the last fiscal year, due primarily to:
Ÿ
an
      increase of $1.8 million in long-term interest due to the new long-term
      fixed rate debt issuance of $125 million in May 2008; partially offset
      by
Ÿ
a
      decrease of $1.4 million in short-term interest due to lower average
      interest rates and short-term borrowings of commercial paper and other
      variable-rate debt.
Net
Income
Net
income increased $6.4 million, or 38.4 percent, to $23.1 million from $16.7
million in the three months ended December 31, 2008 and 2007, respectively, due
primarily to an increase in Operating income of approximately $10.6 million as
discussed above, partially offset by higher income tax expense of $3.3 million
as a result of the higher Operating income.
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      OF OPERATIONS (Continued)
Energy
Services Segment
NJRES is
a non-regulated natural gas marketer and provides for the physical delivery of
natural gas to its customers, while managing its exposure to the price risk
associated with its natural gas commodity supply through the use of financial
derivative contracts. In order to best serve its customers, which include other
natural gas marketers, local distribution companies, industrial companies,
electric generators and retail aggregators, and to manage the continuous changes
in supply and demand that it faces in the market areas in which it participates,
so that it can maximize its margins, NJRES has physical storage and
transportation capacity contracts with natural gas storage facilities and
pipelines. NJRES purchases natural gas predominately in the eastern United
States and Canada, and transports that natural gas, through the use of its
pipeline contracts to which it has reserved capacity through the payment of a
fixed demand charge, to either storage facilities that it has reserved,
primarily in the Appalachian, Mid-Continent and Gulf regions of the United
States and eastern Canada or directly to customers in various market areas
including the Northeastern region of the United States and eastern
Canada.
When
NJRES enters into contracts for the future delivery of physical natural gas, it
simultaneously enters into financial derivative contracts at market prices to
establish an initial financial margin for each of its forecasted physical
commodity transactions. The financial derivative contracts also serve to
protect the cash flows of the transaction from volatility in commodity prices as
NJRES locks in pricing and can include futures, options, and swap contracts,
which are all predominantly actively quoted on the NYMEX.
Through
the use of its contracts for natural gas storage and pipeline capacity, NJRES is
able to take advantage of pricing differences between geographic locations,
commonly referred to as "locational spreads," as well as over different time
periods, for the delivery of natural gas to its customers, thereby improving the
initially established financial margin result. NJRES utilizes financial futures,
forwards and swap contracts to establish economic hedges that fix and protect
the cash flows surrounding these transactions.
Accordingly,
NJRES utilizes these contractual assets to optimize its opportunities to
increase its financial margin by capitalizing on changes or events in the
marketplace that impact natural gas demand levels. NJRES generates financial
margin through three primary channels:
Ÿ
Storage:
NJRES
      attempts to take advantage of differences in market prices occurring over
      different time periods (time spreads) as follows:
*
NJRES
      can purchase gas to inject into storage and concurrently lock in gross
      margin with a contract to sell the natural gas at a higher price at a
      future date; and
*
NJRES
      can purchase a future contract with an early delivery date at a lower
      price and simultaneously sell another future contract with a later
      delivery date having a higher price.
Ÿ
Transportation
      (Basis):
Similarly, NJRES benefits from pricing differences
      between various receipt and delivery points along a natural gas pipeline
      as follows:
*
NJRES
      can utilize its pipeline capacity by purchasing natural gas at a lower
      price location and transporting to a higher value location. NJRES can
      enter into a basis swap contract, a financial commodity
      derivative based on the price of natural gas at two different
      locations, when it will lead to positive cash flows and financial margin
      for NJRES.
Ÿ
Daily Sales
      Optimization:
Consists of buying and selling flowing gas on a
      daily basis while optimizing existing transport positions during
      short-term market price movements to benefit from locational
      spreads:
*
Involves
      increasing the financial margin on established transportation hedges by
      capitalizing on price movements between specific
  locations.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Typically,
periods of greater price volatility provide NJRES with additional opportunities
to generate financial margin by optimizing its storage and transport capacity
assets, and capturing their respective time or locational spreads. The
combination of strategically positioned natural gas storage and transportation
capacities provides NJRES with a significant amount of arbitrage opportunities
that are typically more prevalent during periods of high price
volatility.
Predominantly
all of NJRES' purchases and sales of natural gas result in the physical delivery
of natural gas. NJRES has elected not to use the normal purchase normal sale
scope exception of SFAS 133,
Accounting for Derivative Instruments and Hedging Activities,
under which
related liabilities incurred and assets acquired under these contracts are
recorded when title to the underlying commodity passes. Therefore, all NJRES
physical commodity contracts are recorded at fair value on the Unaudited
Condensed Consolidated Balance Sheets with any changes in fair value recognized
as a component of Gas purchases in the Unaudited Condensed Consolidated
Statements of Income.
The
changes in fair value of NJRES' financial derivative instruments, which are
financial futures, swaps and option contracts are also recognized in the
Unaudited Condensed Consolidated Statements of Income, as a component of Gas
purchases.
NJRES'
financial and physical contracts will result, over time, in earning a gross
margin on the entire transaction. For financial reporting purposes under GAAP,
the change in fair value associated with derivative instruments used to
economically hedge these transactions are recorded as a component of Gas
purchases in the Unaudited Condensed Consolidated Statements of Income during
the duration of the financial instrument or commodity contract. These changes in
fair value are referred to as unrealized gains and losses. In other instances,
certain financial contracts designed to economically fix or hedge the price of
natural gas that is purchased and placed into storage, to be sold at a later
date, settle and result in realized gains, which are also recorded as a
component of Gas purchases in the Unaudited Condensed Consolidated Statements of
Income.
These
unrealized gains or losses from the change in fair value of unsettled financial
instruments and physical commodity contracts, or realized gains or losses
related to financial instruments that economically hedge natural gas inventory
that has not been sold as part of a planned transaction, cause large variations
in the reported gross margin and earnings of NJRES. NJRES will continue to earn
the gross margin established at inception of the transaction over the duration
of the forecasted transaction and may be able to capitalize on events in the
marketplace that enable it to increase the initial margin; however, gross margin
or earnings during periods prior to the delivery of the natural gas will not
reflect the underlying economic result.
NJRES
expenses its demand charges, which represent the right to use natural gas
pipeline and storage capacity assets of a third-party for a fixed period of
time. These demand charges are expensed over the term of the related natural gas
pipeline or storage contract. The term of these contracts vary from less than
one year to five years.
NJRES'
financial results are summarized as follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Operating
      revenues
$463,094
$520,211
Gas
      purchases
467,732
494,546
Gross
      (loss) margin
(4,638
)
25,665
Operation
      and maintenance expense
4,360
2,840
Depreciation
      and amortization
51
53
Other
      taxes
329
209
Operating
      (loss) income
(9,378
)
22,563
Other
      income
13
130
Interest
      expense, net
(24
)
877
Income
      tax (benefit) provision
(3,727
)
8,666
Net
      (loss) income
$ 
      (5,614
)
$
      13,150
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Gross
margin for the three months ended December 31, 2008 decreased by $30.3 million,
as compared with the same period in the last fiscal year, due primarily to a
decrease of $14.5 million in overall values on its financial and physical
commodity contracts and lower Gross margin of $15.8 million.
The lower
fair values on financial instruments resulted primarily from a $22.0 million
increase in realized losses associated with economic hedges of natural gas in
inventory. The realized losses pertain to financial derivative instruments that
are designed to economically hedge natural gas storage injections, and as part
of a planned transaction, are awaiting subsequent sale. The lower valuation on
these financial instruments was due primarily to declining NYMEX prices in the
current fiscal period. Partially offsetting the realized losses were higher
unrealized gains of $7.5 million that resulted primarily from higher valuations
on financial instruments with short positions in the current fiscal
period.
The lower
operating results were due primarily to the expiration of a favorable physical
transport capacity asset servicing the Northeast United States market region
that was no longer available for asset optimization in the current fiscal
period, as further discussed in the Financial Margin section.
Additionally,
management of the Company uses non-GAAP measures when viewing the results of
NJRES to monitor the operational results without the impact of unsettled and
certain settled derivative instruments. These non-GAAP measures are "financial
margin" and "net financial earnings."
The
following table is a computation of Financial margin of NJRES:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Operating
      revenues
$463,094
$520,211
Gas
      purchases
467,732
494,546
Add:
Unrealized
      (gain) loss on derivative instruments
(2,597
)
4,922
Realized
      loss from derivative instruments related to natural gas
      inventory
27,194
5,163
Financial
      margin
$
      19,959
$
      35,750
A
reconciliation of Operating income, the closest GAAP financial
measurement, to the Financial margin of NJRES is as
follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Operating
      income
$(9,378
)
$22,563
Add:
Operation
      and maintenance expense
4,360
2,840
Depreciation
      and amortization
51
53
Other
      taxes
329
209
Subtotal
      – Gross margin
(4,638
)
25,665
Add:
Unrealized
      (gain) loss on derivative instruments
(2,597
)
4,922
Realized
      loss from derivative instruments related to natural gas
      inventory
27,194
5,163
Financial
      margin
$19,959
$35,750
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
A
reconciliation of Net (loss) income to Net financial earnings is as
follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Net
      (loss) income
$(5,614
)
$13,150
Add:
Unrealized
      (gain) loss on derivative instruments, net of taxes
(1,583
)
2,900
Realized
      loss from derivative instruments related to natural gas inventory,
net
      of taxes
16,580
3,042
Net
      financial earnings
$
      9,383
$19,092
Financial
margin for the three months ended December 31, 2008 and 2007 was $20.0 million
and $35.8 million, respectively. The decrease of $15.8 million is due primarily
to the expiration of a highly favorable physical transport capacity contract
servicing the Northeast market region that was no longer available for asset
optimization in the current fiscal period, along with lower hedged values for
transportation and higher transportation expenses. NJRES' total firm
transportation capacity decreased by 185,400 dth/day, to 677,000 dth/day at
December 31, 2008, from 862,400 dth/day at December 31, 2007. As a result, the
combined operating results of the basis and cash book portfolios in the current
fiscal period decreased by $11.4 million, as compared with the same period in
the last fiscal year. The storage book portfolio also decreased by $4.4 million
from the prior fiscal period, due primarily to lower average spreads on storage
positions in the current fiscal period, and less firm storage capacity, which
decreased to 25.1 Bcf in the current fiscal period from 26.9 Bcf in the prior
fiscal period.
NJRES'
operation and maintenance expense increased $1.5 million during the three months
ended December 31, 2008, compared with the same period in the last fiscal year,
due primarily to adjustments in fiscal 2008 related to fiscal 2007 performance
incentives, in addition to increased audit fees in fiscal 2009.
Future
results are subject to NJRES' ability to maintain and expand its wholesale
marketing activities and are contingent upon many other factors, including an
adequate number of appropriate counterparties, volatility in the natural gas
market, sufficient liquidity in the energy trading market and continued access
to the capital markets.
Retail
and Other Operations
The
consolidated financial results of Retail and Other are summarized as
follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Operating
      revenues
$(2,654
)
$6,631
Operation
      and maintenance expense
$ 7,150
$5,460
Equity
      in earnings, net of tax
$   
      514
$  
      424
Net 
      (loss) income
$(5,684
)
$  
      365
Operating
revenue for the three months ended December 31, 2008 decreased $9.3 million
compared to the same period in the prior fiscal year, due primarily to greater
unrealized losses at NJR Energy, which were the result of declining market
prices within a portfolio of net long financial derivative
positions.
Operation
and maintenance expense for the three months ended December 31, 2008 increased
$1.7 million compared to the same period in the prior fiscal year, due
primarily to a combination of higher labor cost, increased rent and utilities
expenses and higher health care premium costs at NJRHS during the three months
ended December 31, 2008 and the fiscal 2008 true-up of fiscal 2007's short term
incentive compensation costs at NJR in the first quarter of fiscal
2008.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Taxes
netted in Equity in earnings from Iroquois are $339,000 and $282,000 and are
included in the Unaudited Condensed Consolidated Statements of Income for the
three months ended December 31, 2008 and 2007, respectively. Equity in earnings
from Iroquois is driven by the underlying performance of natural gas
transportation through its existing pipeline, which is based on FERC regulated
tariffs.
Net
income for the three months ended December 31, 2008 decreased $6.0 million
compared to the same period in fiscal 2008 due primarily to the decreased
operating revenue at NJR Energy, partially offset by lower income tax expense as
a result of the lower Operating income.
NJR
Energy has an economic hedge associated with a long-term fixed-price contract to
sell gas to a counterparty. Unrealized losses or gains at NJR Energy are the
result of the change in value associated with financial derivative instruments
(futures contracts) designed to economically hedge the long-term fixed-price
contract.
The
Income statement impact represents unrealized losses associated with these
derivative instruments of $9.7 million and $305,000 for the three months ended
December 31, 2008 and 2007, respectively, which are recorded, pre-tax, as a
component of Operating revenues.
Additionally,
management of the Company uses the non-GAAP measure net financial earnings, when
viewing the results of NJR Energy to monitor the operational results without the
impact of unsettled derivative instruments.
A
reconciliation of Net (loss) income to Net financial earnings, a non-GAAP
measure, is as follows:
Three
      Months Ended
December
      31,
(Thousands)
2008
2007
Net
      (loss) income
$(5,684
)
$365
Add:
Unrealized
      loss on derivative instruments, net of taxes
5,705
180
Net
      financial earnings
$     
      21
$545
Net
financial earnings for the three months ended December 31, 2008, decreased
$500,000 compared to the same period in the prior fiscal year, due
primarily to increased Operation and maintenance expense as discussed
above, partially offset by lower Interest expense for NJR due to lower average
interest rates and short-term borrowings.
Liquidity
and Capital Resources
NJR's
objective is to maintain a consolidated capital structure that reflects the
different characteristics of each business segment and provides adequate
financial flexibility for accessing capital markets as required.
NJR's
consolidated capital structure was as follows:
December
      31,
September
      30,
2008
2008
Common
      stock equity
49
%
51
%
Long-term
      debt
31
32
Short-term
      debt
20
17
Total
100
%
100
%
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      OF OPERATIONS (Continued)
Common
stock equity
NJR
satisfies its external common equity requirements, if any, through issuances of
its common stock, including the proceeds from stock issuances under its
Automatic Dividend Reinvestment Plan (DRP) and proceeds from the exercise of
options issued under the Company's long-term incentive program. The DRP allows
NJR, at its option, to use shares purchased on the open market or newly issued
shares.
The
Company has a share repurchase program that provides for the repurchase of up to
6.8 million shares. As of December 31, 2008, the Company repurchased
approximately 5.4 million of those shares and has the ability to repurchase
approximately 1.4 million additional shares under the approved
program.
Debt
NJR and
its unregulated subsidiaries rely on cash flows generated from operating
activities and utilization of committed credit facilities to provide liquidity
to meet working capital and external debt-financing requirements.
As of
December 31, 2008, NJR, NJRES and NJNG had committed credit facilities of $605
million with approximately $339 million available under these facilities (see
Note 7.
Debt).
NJR
believes that as of December 31, 2008, NJR, NJNG and NJRES were, and currently
are, in compliance with all debt covenants.
NJR
believes that existing borrowing availability, its current cash balances and its
cash flow from operations will be sufficient to satisfy it and its subsidiaries'
working capital, capital expenditure and dividend requirements for the
foreseeable future. NJR, NJNG and NJRES currently anticipate that its financing
requirements for the next twelve months will be met through the issuance of
short-term debt, meter sale lease-backs and proceeds from the Company's
DRP.
NJR
On
December 13, 2007, NJR entered into a $325 million, five-year, revolving,
unsecured credit facility, which permits the borrowing of revolving loans and
swing loans, as well as the issuance of letters of credit. Swing loans are loans
made available on a same-day basis for an aggregate principal amount of up to
$50 million and repayable in full within a maximum of seven days of borrowing.
It also permits an increase to the facility, from time to time, with the
existing or new lenders, in a minimum of $5 million increments up to a maximum
$100 million at the lending banks discretion. Borrowings under the new facility
are conditional upon compliance with a maximum leverage ratio, as defined in the
new credit facility, of not more than 0.65 to 1.00 at any time. NJR used the
initial borrowings under the new credit facility to refinance its prior credit
facility. In addition, certain of NJR's non-regulated subsidiaries have
guaranteed to the lenders all of NJR's obligations under the new credit
facility. Depending on borrowing levels and credit ratings, NJR's interest rate
can either be, at its discretion, the London inter-bank offered rate ("LIBOR")
or the Federal Funds Open Rate plus an applicable spread and facility fee. As of
December 31, 2008, NJR's effective rate was 0.8 percent on outstanding
borrowings of $62 million under this credit facility.
In
addition, borrowings under NJR's credit facility are conditioned upon compliance
with a maximum leverage ratio, as defined in the credit facility, of not more
than 0.65 to 1.00 at any time.
NJR uses
its short term borrowings primarily to finance its share repurchases, to satisfy
NJRES' short term liquidity needs and to finance, on an initial basis,
unregulated investments. NJRES' use of high-injection, high-withdrawal storage
facilities and anticipated pipeline park-and-loan arrangements, combined with
related economic hedging activities in the volatile wholesale natural gas
market, create significant short-term cash requirements.
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      OF OPERATIONS (Continued)
NJNG
On
November 1, 2008, upon maturity, NJNG redeemed its $30 million, 6.27
percent, Series X First Mortgage bonds.
NJNG
satisfies its debt needs by issuing short- and long-term debt based upon its own
financial profile. The seasonal nature of NJNG's operations creates large
short-term cash requirements, primarily to finance natural gas purchases and
customer accounts receivable. NJNG obtains working capital for these
requirements, and for the temporary financing of construction and MGP
remediation expenditures and energy tax payments, through the issuance of
commercial paper and short-term bank loans.
To
support the issuance of commercial paper, NJNG has a $250 million committed
credit facility with several banks, with a 5-year term, expiring in December
2009. NJNG had $203.6 million of commercial paper borrowings supported by the
credit facility as of December 31, 2008. In addition, borrowings under
NJNG's credit facility are conditioned upon compliance with a maximum leverage
ratio, as defined in the credit facility, of not more than 0.65 to 1.00 at any
time and a minimum interest coverage ratio, as defined in the credit facility,
of less than 2.50 to 1.00.
Neither
NJNG nor its assets are obligated or pledged to support the NJR or NJRES
facilities.
NJRES
NJRES has
a 3-year $30 million committed credit facility with a multinational financial
institution. Borrowings under this facility are guaranteed by NJR. There were no
borrowings under this facility as of December 31, 2008.
Contractual
Obligations
The
following table is a summary of NJR, NJNG and NJRES contractual cash obligations
and financial commitments and their applicable payment due dates as of December
31, 2008.
Up to
2-3
4-5
After
(Thousands)
Total
1 Year
Years
Years
5 Years
Long-term
      debt
(1)
$ 638,908
$ 44,057
$ 56,006
$ 34,975
$503,870
Capital
      lease obligations
(1)
91,513
9,748
23,086
16,391
42,288
Operating
      leases
(1)
11,735
3,251
4,301
2,570
1,613
Short-term
      debt
265,550
265,550
—
—
—
New
      Jersey Clean Energy Program
(1)
53,077
12,514
24,667
15,896
—
Construction
      obligations
2,635
2,635
—
—
—
Remediation
      expenditures
(2)
120,230
18,530
35,900
22,200
43,600
Natural
      gas supply purchase obligations–NJNG
92,177
76,054
16,123
—
—
Demand
      fee commitments–NJNG
729,972
87,598
185,039
157,514
299,821
Natural
      gas supply purchase obligations–NJRES
709,390
600,177
109,213
—
—
Demand
      fee commitments–NJRES
188,356
79,508
78,406
23,589
6,853
Total
      contractual cash obligations
$2,903,543
$1,199,622
$532,741
$273,135
$898,045
(1)
These
      obligations include an interest component, as defined under the related
      governing agreements or in accordance with the applicable tax
      statute.
(2)
Expenditures
      are estimated
For
fiscal 2009, the Company has no minimum pension funding requirements, however,
funding requirements are uncertain and can depend significantly on changes in
actuarial assumptions, returns on plan assets and changes in demographic
factors. It is anticipated that the annual funding level to the OPEB plans will
range from $1.2 million to $1.4 million over the next five years. Additional
contributions may be made based on market conditions and various
assumptions.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
As of
December 31, 2008, there were NJR guarantees covering approximately $421 million
of natural gas purchases and demand fee commitments of NJRES and NJNG, included
in natural gas supply purchase obligations above, not yet reflected in Accounts
payable on the Unaudited Condensed Consolidated Balance Sheet.
The
Company is obligated to fund up to $132.5 million associated with the
construction and development of Steckman Ridge. Currently, NJR anticipates that
Steckman Ridge will seek non-recourse project financing for a portion of the
facility once construction activities are completed, therefore potentially
reducing the aggregate recourse amount funded by NJR. There can be no assurances
that Steckman Ridge will eventually secure such non-recourse project
financing.
Total
capital expenditures for fiscal 2009 are estimated at $77.3 million, including
expenditures of $18.4 million incurred during the three months ended December
31, 2008.
Off-Balance-Sheet
Arrangements
The
Company does not have any off-balance-sheet financing arrangements.
Cash
Flow
Operating
Activities
As
presented in the Unaudited Condensed Consolidated Statements of Cash Flows, cash
flow used in operating activities totaled $37.0 million for the three months
ended December 31, 2008, compared with cash flow used in operations of $6.5
million for the same period in fiscal 2008. Cash used in operating activities
was lower for the three month period ended December 31, 2008 as compared with
the same period in fiscal 2008, largely as a result of lower net income during
the current fiscal period, which was driven by less favorable operating results
at NJRES. NJR employs the indirect method when preparing its Unaudited Condensed
Consolidated Statement of Cash Flows. Net income is adjusted for any non-cash
items, such as accruals and certain amortization amounts that impact earnings
during the period. In addition, operating cash flows are affected by variations
in working capital and the related changes in the beginning and period end
balances, which can be impacted by the following:
Ÿ
seasonality
      of NJR's business;
Ÿ
fluctuations
      in wholesale natural gas prices;
Ÿ
timing
      of storage injections and withdrawals;
Ÿ
management
      of the deferral and recovery of gas costs,
Ÿ
changes
      in contractual assets utilized to optimize margins related to natural gas
      transactions; and
Ÿ
timing
      of the collections of receivables and payments of current
      liabilities.
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      OF OPERATIONS (Continued)
NJR
needed less cash for its working capital requirements during the three months
ended December 31, 2008 as compared with the same period in fiscal 2008. During
the current fiscal period, NJR used $41.2 million to satisfy liquidity needs
compared with $57.8 million during the prior fiscal quarter. The underlying
factors that contributed to the decrease in cash used to support working capital
requirements are as follows:
Ÿ
a
      decrease in average natural gas costs at NJRES resulting in a reduction in
      the value of its gas in storage;
Ÿ
comparatively
      lower sales volumes at NJRES stemming from a reduction in transportation
      capacity resulting in a decrease in its receivable
    balances;
Ÿ
a
      reduction in NJNG's underrecovered gas costs during the current quarter as
      a result of gas costs falling below the commodity component of NJNG's BGSS
      rate billed to its customers compared with the prior year when cash flows
      were primarily impacted by a credit of $32 million issued to NJNG's
      customers in anticipation of the lower commodity costs; partially offset
      by
Ÿ
lower
      NYMEX prices during the current fiscal quarter which resulted in increased
      broker margin deposits for NJNG's financial derivatives;
    and
Ÿ
Lower
      payable balances at the end of the current fiscal quarter compared to
      higher balances the previous year related to gas purchases at
      NJRES.
NJNG's
MGP expenditures are currently expected to total $17.6 million in fiscal 2009
(see
Note 13. Commitments and
Contingent Liabilities).
Investing
Activities
Cash flow
used in investing activities totaled $36.6 million for the three months ended
December 31, 2008, compared with $17.9 million in the same period in fiscal
2008. The increase in cash used was due primarily to an increase in the cash
invested in Steckman Ridge and higher NJNG utility plant expenditures offset by
the drawdown from the restricted cash construction fund.
On June
5, 2008, the Federal Energy Regulatory Commission (FERC) issued Steckman Ridge a
certificate of public convenience and necessity authorizing the ownership,
construction and operation of its natural gas storage facility and associated
facilities. NJR anticipates that Steckman Ridge will be placed in service during
the summer of 2009. As of December 31, 2008, NJR has invested $99.7 million in
Steckman Ridge. This amount excludes capitalized interest and other direct
costs. Total project costs related to the development of the storage facility
are currently estimated at approximately $265 million, of which NJR is obligated
to fund 50 percent or approximately $132.5 million. NJR anticipates that
Steckman Ridge will seek non-recourse financing upon completion of
the construction and development of its facilities, thereby potentially
reducing the final expected recourse obligation of NJR. There can be no
assurances that such non-recourse project financing will be secured or available
for Steckman Ridge.
Retail
and Other capital expenditures each year have been made primarily in connection
with investments made to preserve the value of real estate holdings. At December
31, 2008, CR&R owned 83 acres of undeveloped land and a 56,400-square-foot
building on 5 acres of land.
NJRES
does not currently anticipate any significant capital expenditures in fiscal
2009.
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      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS (Continued)
Financing
Activities
Cash flow
from financing activities totaled $56.9 million for the three months ended
December 31, 2008, compared with $23.1 million for the same period in the prior
fiscal year. During the current fiscal quarter, NJNG redeemed its $30
million, 6.27 percent, Series X Mortgage bonds, which was offset by an
increase in short-term borrowings compared with the prior fiscal quarter. This
increase in short term debt was used to fund working capital requirements, as
well as utility plant and other investments
NJNG
provides funding for certain of its infrastructure projects through tax exempt,
variable-rate debt, which has been issued to back six series of auction rate
securities (ARS) through the Economic Development Authority of New Jersey (EDA),
and are based on the borrowing costs of the ARS. During periods of reduced
liquidity for ARS, NJNG's rate on its variable rate debt could default to a
maximum rate of the lesser of (i) 175 percent of the 30-day LIBOR or (ii) 10 to
12 percent, as applicable to a particular series of ARS. NJNG is currently
reviewing alternatives that include the refinancing of these bonds to eliminate
any increase in interest rate risk.
NJNG
received $6.3 million and $7.5 million in December 2008 and 2007, respectively,
in connection with the sale-leaseback of its natural gas meters. This
sale-leaseback program is expected to be continued on an annual
basis.
Credit
Ratings
The table
below summarizes NJNG's current credit ratings issued by two rating entities,
Standard and Poor's (S&P) and Moody's Investors Service, Inc.
(Moody's):
Standard
      and Poor's
Moody's
Corporate Rating
A
N/A
Commercial
      Paper
A-1
P-1
Senior
      Secured
A+
Aa3
Ratings
      Outlook
Negative
Negative
On
December 12, 2008, Moody's adjusted NJNG's credit ratings outlook from stable to
negative.
NJNG's
S&P and Moody's ratings are investment-grade ratings. S&P and Moody's
give NJNG's commercial paper the highest rating within the Commercial Paper
investment-grade category. NJR is not a rated entity.
NJNG is
not party to any lending agreements that would accelerate the maturity date of
any obligation caused by a failure to maintain any specific credit rating. If
such ratings are downgraded below investment grade, borrowing costs could
increase, as will the costs of maintaining certain contractual relationships and
for future financing. Even if ratings are downgraded without falling below
investment grade, NJR and NJNG may still face increased borrowing costs under
their respective credit facilities. A rating set forth above is not a
recommendation to buy, sell or hold the Company's or NJNG's securities and may
be subject to revision or withdrawal at any time. Each rating set forth above
should be evaluated independently of any other rating.
The
timing and mix of any external financings will target a common equity ratio that
is consistent with maintaining the Company's current short- and long-term credit
ratings.
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NEW
JERSEY RESOURCES CORPORATION
Part
I
I
TEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
Financial
Risk Management
Commodity
Market Risks
Natural
gas is a nationally traded commodity, and its prices are determined effectively
by the New York Mercantile Exchange (NYMEX) and over-the-counter markets.
The prices on the NYMEX and over-the-counter markets generally reflect the
notional balance of natural gas supply and demand, but are also influenced
significantly from time to time by other events.
The
regulated and unregulated natural gas businesses of the Company and its
subsidiaries are subject to market risk due to fluctuations, in the price of
natural gas. To economically hedge against such fluctuations, the Company and
its subsidiaries have entered into futures contracts, options agreements and
swap agreements. To manage these derivative instruments, the Company has
well-defined risk management policies and procedures that include daily
monitoring of volumetric limits and monetary guidelines. The Company's natural
gas businesses are conducted through three of its operating subsidiaries. First,
NJNG is a regulated utility that uses futures, options and swaps to economically
hedge against price fluctuations and its recovery of natural gas costs is
governed by the BPU. Second, NJRES uses futures, options and swaps to
economically hedge purchases and sales of natural gas. Finally, NJR Energy has
entered into two swap transactions related to an 18-year fixed-price contract,
expiring in October 2010 to sell remaining volumes of approximately 4.3 Bcf of
natural gas (Gas Sales Contract) to an energy marketing
company.
The
following table reflects the changes in the fair market value of financial
derivatives related to natural gas purchases and sales from September 30, 2008
to December 31, 2008:
(Thousands)
Balance
September
      30,
2008
Increase
(Decrease)
      in Fair
Market Value
Less
Amounts
Settled
Balance
December
      31,
2008
NJNG
$(49,610
)
$(32,499
)
$
      (4,581
)
$(77,528
)
NJRES
89,571
51,366
47,909
93,028
NJR
      Energy
20,190
(8,883
)
800
10,507
Total
$
      60,151
$   9,984
$44,128
$26,007
There
were no changes in methods of valuations during the year ended December 31,
2008.
The
following is a summary of fair market value of financial derivatives related to
natural gas purchases and sales at December 31, 2008, by method of valuation and
by maturity for each fiscal year period:
(Thousands)
2009
2010
2011-2013
After
2013
Total
Fair Value
Price
      based on NYMEX
$22,474
$  29
$(1,657
)
—
$20,846
Price
      based on other external data
4,442
719
—
—
5,161
Total
$26,916
$748
$(1,657
)
—
$26,007
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Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      (Continued)
The
following is a summary of financial derivatives by type as of December 31,
2008:
Volume
(Bcf)
Price
      per
Mmbtu
Amounts
      included
in
      Derivatives
(Thousands)
NJNG
Futures
21.0
$  5.64
      - $  9.16
$(51,076
)
Swaps
(5.8
)
$  4.39
      - $13.95
(28,277
)
Options
12.4
$  5.98
      - $  9.47
1,825
NJRES
Futures
(10.7
)
$  5.20
      - $14.36
17,648
Swaps
(64.7
)
$  4.71
      - $14.41
72,660
Options
—
$10.22
      - $13.21
2,720
NJR
      Energy
Swaps
4.7
$  3.37
      - $  4.39
10,507
Total
$
      26,007
The
following table reflects the changes in the fair market value of physical
commodity contracts from September 30, 2008 to December 31, 2008:
(Thousands)
Balance
September
      30,
2008
Increase
(Decrease)
      in Fair
Market Value
Less
Amounts
Settled
Balance
December
      31,
2008
NJRES
$1,714
$
      13,193
$14,052
$855
The
Company uses a value-at-risk (VaR) model to assess the market risk of its net
futures, options and swap positions. VaR represents the potential loss in value
of NJRES' trading portfolio due to adverse market movements over a defined time
horizon (NJRES utilizes holding periods of 1 day and 10 days) with a specified
confidence level (NJRES utilizes either a 95 percent or 99 percent confidence
level). As an example, utilizing a 1 day holding period with a 95 percent
confidence level would indicate that there is a 5 percent chance that the
liquidation value of the NJRES portfolio would fall below the expected trading
value by an amount at least as large as the calculated VaR.
The VaR
at December 31, 2008, using the variance-covariance method with a 95 percent
confidence level and a 1-day holding period, was $1.0 million. The VaR with a 99
percent confidence level and a 10-day holding period was $4.5 million. The
calculated VaR represents an estimate of the potential change in the value of
the net positions. These estimates may not be indicative of actual results
because actual market fluctuations may differ from forecasted
fluctuations.
Wholesale
Credit Risk
NJNG,
NJRES and NJR Energy engage in wholesale marketing activities. NJR monitors and
manages the credit risk of its wholesale marketing operations through credit
policies and procedures that management believes reduce overall credit risk.
These policies include a review and evaluation of prospective counterparties'
financial statements and/or credit ratings, daily monitoring of counterparties'
credit limits, daily communication with traders regarding credit status and the
use of credit mitigation measures, such as minimum margin requirements,
collateral requirements and netting agreements. Examples of collateral include
letters of credit and cash received for either prepayment or margin
deposit.
The
Company's Risk Management Committee (RMC) continuously monitors NJR's credit
risk management policies and procedures. The RMC is comprised of individuals
from NJR-affiliated companies that meet twice a month and, among other things,
evaluates the effectiveness of existing credit policies and procedures, reviews
material transactions and discusses emerging issues.
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Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      (Continued)
The
following is a summary of gross and net credit exposures, grouped by investment
and noninvestment grade counterparties, as of December 31, 2008. Gross credit
exposure is defined as the unrealized fair value of derivative and energy
trading contracts plus any outstanding receivable for the value of natural gas
delivered for which payment has not yet been received. Net credit exposure is
defined as gross credit exposure reduced by collateral received from
counterparties and/or payables, where netting agreements exist. The amounts
presented below exclude accounts receivable for retail natural gas sales and
services.
Unregulated
counterparty credit exposure as of December 31, 2008, is as
follows:
(Thousands)
Gross Credit
Exposure
Net Credit
Exposure
Investment
      grade
$229,046
$150,020
Noninvestment
      grade
3,169
—
Internally
      rated investment grade
27,639
16,564
Internally
      rated noninvestment grade
1,531
—
Total
$261,385
$166,584
NJNG's
counterparty credit exposure as of December 31, 2008, is as
follows:
(Thousands)
Gross Credit
Exposure
Net Credit
Exposure
Investment
      grade
$22,743
$17,471
Noninvestment
      grade
1,700
4
Internally
      rated investment grade
189
—
Internally
      rated noninvestment grade
—
—
Total
$24,632
$17,475
Due to
the inherent volatility in the prices of natural gas commodities and
derivatives, the market value of contractual positions with individual
counterparties could exceed established credit limits or collateral provided by
those counterparties. If a counterparty failed to perform the obligations under
its contract (for example, failed to deliver or pay for natural gas), then the
Company could sustain a loss. This loss would comprise the loss on natural gas
delivered but not paid for and/or the cost of replacing natural gas not
delivered at a price higher than the price in the original contract. Any such
loss could have a material impact on the Company's financial condition, results
of operations or cash flows.
Interest
Rate Risk–Long-Term Debt
At
December 31, 2008, the Company (excluding NJNG) had no variable-rate long-term
debt.
As of
December 31, 2008 NJNG is obligated with respect to loan agreements securing six
series of auction rate bonds totaling approximately $97.0 million of
variable-rate debt backed by securities issued by the EDA. The EDA bonds are ARS
and have an interest rate reset every 7 or 35 days, depending upon the
applicable series, when an auction is held for the purposes of determining the
interest rate pricing of the securities. The interest rate associated with the
NJNG variable-rate debt is based on the rates the EDA receives from its ARS. As
of December 31, 2008, all of the auctions surrounding the EDA ARS have failed,
resulting in the securities bearing interest at their maximum rates, as defined
in the ARS, as the lesser of (i) 175 percent of 30-day LIBOR or (ii) 10 to 12
percent per annum, as applicable to such series of ARS. While the failure of the
ARS auctions has no default impact on NJNG's variable-rate debt, it does impact
its borrowing costs of the variable-rate debt. As such, NJNG currently has a
weighted average interest rate of 0.8 percent as of December 31, 2008. There can
be no assurance that the ARS securities of the EDA will have enough market
liquidity to return interest rates below their maximum rate.
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Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
I
ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      (Continued)
Effects
of Inflation
Although
inflation rates have been relatively low to moderate in recent years, any change
in price levels has an effect on operating results due to the capital-intensive
and regulated nature of the Company's utility subsidiary. The Company attempts
to minimize the effects of inflation through cost control, productivity
improvements and regulatory actions where appropriate.
I
TEM
4. CONTROLS AND PROCEDURES
Disclosure
Controls and Procedures
As discussed in
"Part II. Item 9A. Controls and Procedures" in our Form 10-K for
the fiscal year ended September 30, 2008, i
n connection with the
Company's preparation of its consolidated financial statements for the fiscal
year ended September 30, 2008, the Company identified an immaterial error in the
recording of certain physical natural gas transactions, which were not recorded
at the appropriate fair value during the interim quarters ended March 31, 2008
and June 30, 2008, as they were valued at an incorrect price. Controls were
not designed properly or operating effectively to prevent or detect these
pricing errors. Natural gas prices are volatile and it is reasonably possible
that the volume of these transactions could have been larger during any interim
period or for the fiscal year ended September 30, 2008. The Company concluded
that it was reasonably possible that this control weakness could have resulted
in a material error in its Consolidated Financial Statements had the volume of
these transactions been larger.
As of
December 31, 2008, under the supervision and with the participation of the
Company's management, including the principal executive officer and principal
financial officer, the Company conducted an evaluation of the effectiveness of
the design and operation of its disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act, as of the end of the
period covered by this report. Based on this evaluation, since the material
weakness discussed above is not completely remediated, the Company's principal
executive officer and principal financial officer concluded that, as of end of
the period covered by this report, the Company's disclosure controls and
procedures were not effective to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act, is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure.
As a
result of this conclusion, the financial statements for the period covered by
this report were prepared with particular attention to the material
weakness.  Accordingly, management believes that the condensed
consolidated financial statements included in this Quarterly Report fairly
present, in all material respects, our financial condition, results of
operations and cash flows as of and for the periods presented.
The
Company continually reviews its disclosure controls and procedures and makes
changes, as necessary, to ensure the quality of its financial reporting. As
detailed below, the Company has implemented certain additional controls that it
believes will significantly reduce the potential for similar issues to arise in
the future.
Changes
in Internal Control over Financial Reporting
Management
and the Board of Directors are committed to the remediation of the material
weakness set forth above as well as the continued improvement of the Company's
overall system of internal control over financial reporting. Management is
in the process of actively addressing and remediating the material weakness in
internal control over financial reporting described above. Subsequent to the
quarter and fiscal year ended September 30, 2008, in connection with the
material weakness in internal control over financial reporting detailed above,
the Company has implemented or will implement the following controls designed to
substantially reduce the risk of a similar material weakness occurring in the
future:
Ÿ
expand
      training, education and accounting reviews for all relevant personnel
      involved in the accounting treatment and disclosures for the Company's
      commodity transacting;
Ÿ
invest
      in additional resources with appropriate accounting technical
      expertise;
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NEW
JERSEY RESOURCES CORPORATION
Part
I
ITEM
      4. CONTROLS AND PROCEDURES (Continued)
Ÿ
expand
      the review of the design of the internal control over financial reporting
      related to the accounting of commodity transacting, which will incorporate
      an analysis of the current staffing levels, job assignments and the design
      of all internal control processes for the accounting for commodity
      transacting and implement new and improved processes and controls, if
      warranted; and
Ÿ
increase
      the level of review and discussion of significant accounting matters and
      supporting documentation with senior finance
  management.
As part
of the Company's fiscal 2009 assessment of internal control over financial
reporting, management will conduct sufficient testing and evaluation of the
controls to be implemented as part of this remediation plan to ascertain that
they are designed and are operating effectively. The effectiveness of
remediation efforts will not be known until the Company can test those controls
in connection with the management tests of internal control over financial
reporting that the Company will perform during fiscal 2009. Management believes,
however, these measures will fully remediate the above identified material
weakness in internal control over financial reporting.
These were the only
changes in the Company's internal control over financial reporting (as such term
is defined in Exchange Act Rule 13a-15(f)) that occurred during the quarter
ended December 31, 2008, that have materially affected, or are reasonably likely
to materially affect, internal control over financial reporting.
Subsequent to the end of the first fiscal quarter, the Company's
Corporate Controller position was vacated. The Company has temporarily delegated
the responsibilities of the function to other senior accounting managers while
it conducts an employment search for a new Controller. These employees are
qualified and capable of managing the additional responsibilities in the interim
and will be doing so under the direction of the principal financial
officer.
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Table of Contents
NEW
JERSEY RESOURCES CORPORATION
Part
II
ITEM
1. LEGAL PROCEEDINGS
Info
rmation regarding reportable legal proceedings is contained in
Part I, "Item 3. Legal Proceedings" in NJR's Annual Report on Form 10-K for the
year ended September 30, 2008, and is set forth in
Part I, Item 1, Note
12,
Commitment and
Contingent Liabilities—Legal Proceedings
in the Unaudited Condensed
Consolidated Financial Statements. No legal proceedings became reportable during
the quarter December 31, 2008 and there have been no material developments
during such quarter regarding any previously reported legal proceedings, which
have not been previously disclosed.
I
TE
M 1A. RISK FACTORS
While NJR
attempts to identify, manage and mitigate risks and uncertainties associated
with its business to the extent practical, under the circumstances, some level
of risk and uncertainty will always be present. Part I, Item 1A, "Risk Factors,"
of NJR's 2008 Annual Report on Form 10-K includes a detailed discussion of NJR's
risk factors. These risks and uncertainties have the potential to materially
affect NJR's financial condition and results of operations. There have not been
any material changes from the risk factors as previously disclosed by NJR in the
2008 Annual Report on Form 10-K.
ITEM
      2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
In 1996,
the NJR's Board of Directors ("Board") authorized the Company to implement a
share repurchase program, which has been expanded several times since the
inception of the program. On November 14, 2007, the Board authorized an increase
to the plan to permit the repurchase, in the open market or in privately
negotiated transactions, of 1.5 million shares, bringing the total permitted
repurchases to 6.8 million shares as of that date. As of December 31, 2008, the
Company has 1.4 million shares of its common stock still available for
repurchase.
The
following table sets forth NJR's repurchase activity for the quarter ended
December 31, 2008:
Period
Total
      Number
of
      Shares
(or
      Units)
Purchased
Average
      Price
Paid
      per Share
(or
      Unit)
Total
      Number of Shares
(or
      Units) Purchased
as
      Part of Publicly
Announced
      Plans
or
      Programs
Maximum
      Number (or Approximate
Dollar
      Value) of Shares (or Units)
That
      May Yet be Purchased
Under
      the Plans or Programs
10/01/08
      – 10/31/08
40,000
$28.15
40,000
1,369,171
11/01/08
      – 11/30/08
—
—
—
1,369,171
12/01/08
      – 12/31/08
—
—
—
1,369,171
Total
40,000
$28.15
40,000
1,369,171
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NEW
JERSEY RESOURCES CORPORATION
Part
II
I
TEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
(a)
An
      annual meeting of shareholders was held on January 21,
    2009.
(b)
The
      shareholders voted upon the following matters at the January 21, 2009
      annual shareholders meeting:
(i)
The
      election of four directors to the Board of Directors for terms expiring in
      2012. The results of the voting were as
follows:
DIRECTORS UNTIL
      2012
FOR
WITHHELD
Donald
      L. Correll
34,374,623
607,318
M.
      William Howard, Jr.
34,462,959
518,982
J.
      Terry Strange
32,542,250
2,439,691
George
      R. Zoffinger
34,152,002
829,939
In
addition to the directors elected at the annual meeting, the terms of the
following members of NJR's Board of Directors continued after the
meeting:
Nina
      Aversano
Lawrence
      R. Codey
Laurence
      M. Downes
Jane
      M. Kenny
Alfred
      C. Koeppe
David
      A. Trice
William
      H. Turner
(ii)
Approval
      of the action of the Audit Committee in retaining Deloitte & Touche
      LLP as NJR's independent registered public accounting firm. The results of
      the voting were as follows:
FOR
AGAINST
ABSTAIN
34,305,957
566,008
109,976
There
were no broker non-votes in either of the matters voted upon by our
shareholders.
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NEW
JERSEY RESOURCES CORPORATION
Part
II
ITEM
6. EXHIBITS
Exhibit
Number
Exhibit
      Name
10.4
Amended
      and Restated Supplemental Executive Retirement Plan Agreement between the
      Company and Laurence M. Downes dated December 31, 2008.
10.4(a)
Schedule
      of Supplemental Executive Retirement Plan Agreements
10.4(b)
Form
      of Amendment of Supplemental Executive Retirement Plan Agreement between
      the Company and Named Executive Officer (for future
use)
10.12
Employment
      Continuation Agreement between the Company and Laurence M. Downes dated
      December 31, 2008
10.12(a)
Schedule
      of Employment Continuation Agreements
10.17
The
      Company's 2007 Stock Award and Incentive Plan (as amended and restated
      January 1, 2009)
10.18
2007
      Stock Award and Incentive Plan Form of Stock Option
    Agreement
10.19
2007
      Stock Award and Incentive Plan Form of Performance Units
      Agreement
10.20
2007
      Stock Award and Incentive Plan Form of Restricted Stock
      Agreement
10.21
2007
      Stock Award and Incentive Plan Form of Performance Share
      Agreement
10.25
New
      Jersey Resources Corporation Directors' Deferred Compensation
      Plan
10.26
New
      Jersey Resources Corporation Officers' Deferred Compensation
      Plan
10.27
New
      Jersey Resources Corporation Savings Equalization Plan
10.28
New
      Jersey Resources Corporation Pension Equalization Plan
31.1
Certification
      of the Chief Executive Officer pursuant to section 302 of the
      Sarbanes-Oxley Act
31.2
Certification
      of the Chief Financial Officer pursuant to section 302 of the
      Sarbanes-Oxley Act
32.1
Certification
      of the Chief Executive Officer pursuant to section 906 of the
      Sarbanes-Oxley Act*
32.2
Certification
      of the Chief Financial Officer pursuant to section 906 of the
      Sarbanes-Oxley Act*
*This
certificate accompanies this report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by NJR for purposes of
Section 18 or any other provision of the Securities Exchange Act of 1934, as
amended.
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NEW
JERSEY RESOURCES CORPORATION
SIG
NATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NEW
      JERSEY RESOURCES CORPORATION
(Registrant)
Date:
      February 5, 2009
By
:/s/ Glenn C.
      Lockwood
Glenn
      C. Lockwood
Senior
      Vice President and
Chief
      Financial Officer
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53