PENSION AND OTHER POSTRETIREMENT BENEFITS:

For the three and six months ended June 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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Service Cost	$	1,112		$	1,106		$	2,494		$	2,421
Interest Cost	2,931			3,062			5,886			6,062
Expected Return on Plan Assets	(3,529		)	(3,374		)	(7,053		)	(6,754		)
Amortizations:
Prior Service Cost	33			53			66			106
Actuarial Loss	2,528			2,388			5,141			4,697
Net Periodic Benefit Cost	3,075			3,235			6,534			6,532
Capitalized Benefit Cost	(1,129		)	(1,213		)	(2,400		)	(2,400		)
Deferred Benefit Cost	(139		)	(161		)	(300		)	(322		)
Total Net Periodic Benefit Expense	$	1,807		$	1,861		$	3,834		$	3,810



	Other Postretirement Benefits
	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Service Cost	$	208		$	195		$	455		$	425
Interest Cost	609			654			1,209			1,307
Expected Return on Plan Assets	(853		)	(776		)	(1,705		)	(1,552		)
Amortizations:
Prior Service Cost	(86		)	(86		)	(172		)	(172		)
Actuarial Loss	307			261			619			555
Net Periodic Benefit Cost	185			248			406			563
Capitalized Benefit Cost	(46		)	(45		)	(101		)	(146		)
Total Net Periodic Benefit Expense	$	139		$	203		$	305		$	417

The Pension Benefits Net Periodic Benefit Cost incurred by SJG was approximately $2.3 million of the totals presented in the table above for both the three months ended June 30, 2017 and 2016, and $4.8 million of the totals presented in the table above for both the six months ended June 30, 2017 and 2016.

The Other Postretirement Benefits Net Periodic Benefit Cost incurred by SJG was approximately $0.1 million of the totals presented in the table above for both the three months ended June 30, 2017 and 2016, and $0.2 million and $0.3 million of the totals presented in the table above for the six months ended June 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 are expected to be recovered through rates as part of SJG's next base rate case.

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 six months ended June 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. SJG also has a regulatory obligation to contribute approximately $3.6 million annually to the other postretirement benefit plans’ trusts, less direct costs incurred.

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.