4.	REGULATORY ASSETS AND LIABILITIES:

There have been no significant changes to the nature of SJG's regulatory assets and liabilities since December 31, 2010, which are described in Notes 3 and 4 to the Financial Statements in Item 8 of SJG's Form 10-K as of December 31, 2010.

Regulatory Assets consisted of the following items (in thousands):

	June 30, 2011		December 31, 2010
Environmental Remediation Costs:
Expended - Net	$	43,817	$	39,056
Liability for Future Expenditures		82,249		87,393
Income Taxes - Flowthrough Depreciation		285		774
Deferred Asset Retirement Obligation Costs		24,550		24,247
Deferred Pension and Other Postretirement Benefit Costs		68,828		69,017
Conservation Incentive Program Receivable		2,846		12,291
Societal Benefit Costs Receivable		5,987		4,216
Premium for Early Retirement of Debt		618		699
Other Regulatory Assets		12,574		10,720

Total Regulatory Assets	$	241,754	$	248,413

Regulatory Liabilities consisted of the following items (in thousands):

	June 30, 2011		December 31, 2010
Excess Plant Removal Costs	$	47,843	$	48,409
Deferred Revenues - Net		4,605		20,179
Other Regulatory Liabilities		3,621		660

Total Regulatory Liabilities	$	56,069	$	69,248

DEFERRED REVENUES – NET – Over/under collections of gas costs are monitored through SJG's BGSS clause. Net undercollected gas costs are classified as a regulatory asset and net overcollected gas costs are classified as a regulatory liability. Derivative contracts used to hedge natural gas purchases are also included in the BGSS, subject to BPU approval. The BGSS decreased from a $20.2 million regulatory liability at December 31, 2010 to a $4.6 million regulatory liability at June 30, 2011 primarily due to the BGSS refund to customers discussed above in Note 3, partially offset by gas costs recovered from customers exceeding the actual cost of the commodity incurred during the first six months of 2011 as a result of natural gas prices remaining at very low levels.