PENSION AND OTHER POSTRETIREMENT BENEFITS:

For the three and nine months ended September 30, 2017 and 2016, net periodic benefit cost related to the employee and officer pension and other postretirement benefit plans for SJI consisted of the following components (in thousands):



	Pension Benefits
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Service Cost	$	1,247		$	1,210		$	3,741		$	3,632
Interest Cost	2,943			3,031			8,829			9,094
Expected Return on Plan Assets	(3,526		)	(3,377		)	(10,579		)	(10,131		)
Amortizations:
Prior Service Cost	33			53			98			158
Actuarial Loss	2,570			2,349			7,712			7,046
Net Periodic Benefit Cost	3,267			3,266			9,801			9,799
Capitalized Benefit Cost	(1,143		)	(1,251		)	(3,542		)	(3,651		)
Deferred Benefit Cost	(95		)	(161		)	(395		)	(484		)
Total Net Periodic Benefit Expense	$	2,029		$	1,854		$	5,864		$	5,664



	Other Postretirement Benefits
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Service Cost	$	228		$	213		$	683		$	638
Interest Cost	604			654			1,813			1,961
Expected Return on Plan Assets	(853		)	(776		)	(2,558		)	(2,328		)
Amortizations:
Prior Service Cost	(86		)	(86		)	(258		)	(258		)
Actuarial Loss	310			277			928			832
Net Periodic Benefit Cost	203			282			608			845
Capitalized Benefit Cost	66			(73		)	(35		)	(219		)
Total Net Periodic Benefit Expense	$	269		$	209		$	573		$	626

The Pension Benefits Net Periodic Benefit Cost incurred by SJG was approximately $2.3 million and $2.4 million of the totals presented in the table above for the three months ended September 30, 2017 and 2016, respectively, and $7.1 million and $7.2 million of the totals presented in the table above for the nine months ended September 30, 2017 and 2016, respectively.

The Other Postretirement Benefits Net Periodic Benefit Cost incurred by SJG was approximately $(0.1) million and $0.1 million of the totals presented in the table above for the three months ended September 30, 2017 and 2016, respectively, and $0.1 million and $0.4 million of the totals presented in the table above for the nine months ended September 30, 2017 and 2016, respectively.

Capitalized benefit costs reflected in the table above relate to SJG’s construction program. Deferred benefit costs relate to SJG's deferral of incremental expense associated with the adoption of new mortality tables effective December 31, 2014, and subsequent adjustments thereto in both 2015 and 2016. Deferred benefit costs will be recovered through rates as part of SJG's base rate case settlement in October 2017 (see Note 7).

SJI contributed $10.0 million to the pension plans, of which SJG contributed $8.0 million, in January 2017. No contributions were made to the pension plans by either SJI or SJG during the nine months ended September 30, 2016. SJI and SJG do not expect to make any additional contributions to the pension plans in 2017; however, changes in future investment performance and discount rates may ultimately result in a contribution. Payments related to the unfunded supplemental executive retirement plan (SERP) are expected to be approximately $2.5 million in 2017. Prior to the base rate case settlement in October 2017, SJG also had a regulatory obligation to contribute approximately $3.6 million annually to the other postretirement benefit plans’ trusts, less direct costs incurred. The recent rate case settlement (see Note 7) allows SJG to modify the future funding requirement level up to a limit that represents full funding of its obligation and to the maximum tax deduction allowed.

See Note 12 to the Consolidated Financial Statements in Item 8 of SJI’s Annual Report on Form 10-K for the year ended December 31, 2016 for additional information related to SJI’s pension and other postretirement benefits and Note 11 to the Financial Statements in Item 8 of SJG’s Form 10-K for the year ended December 31, 2016 for additional information related to SJG’s pension and other postretirement benefits.