PENSION AND OTHER POSTRETIREMENT BENEFITS:

For the three and nine months ended September 30, 2018 and 2017, 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,
	2018			2017			2018			2017
Service Cost	$	1,875		$	1,247		$	4,691		$	3,741
Interest Cost	3,818			2,943			9,642			8,829
Expected Return on Plan Assets	(5,256		)	(3,526		)	(12,908		)	(10,579		)
Amortizations:
Prior Service Cost	26			33			84			98
Actuarial Loss	2,878			2,570			8,642			7,712
Net Periodic Benefit Cost	3,341			3,267			10,151			9,801
Capitalized Benefit Cost	(762		)	(1,143		)	(1,799		)	(3,542		)
Deferred Benefit Cost	(594		)	(95		)	(1,719		)	(395		)
Total Net Periodic Benefit Expense	$	1,985		$	2,029		$	6,633		$	5,864



	Other Postretirement Benefits
	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Service Cost	$	251		$	228		$	692		$	683
Interest Cost	644			604			1,720			1,813
Expected Return on Plan Assets	(1,129		)	(853		)	(3,012		)	(2,558		)
Amortizations:
Prior Service Cost	(74		)	(86		)	(246		)	(258		)
Actuarial Loss	223			310			674			928
Net Periodic Benefit Cost	(85		)	203			(172		)	608
Capitalized Benefit Cost	263			66			258			(35		)
Total Net Periodic Benefit Expense	$	178		$	269		$	86		$	573

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 September 30, 2018 and 2017, and $6.7 million and $7.1 million of the totals presented in the table above for the nine months ended September 30, 2018 and 2017, respectively.

For the three months ended September 30, 2018, and 2017, the Other Postretirement Benefits Net Periodic Benefit Cost incurred by SJG was $(0.5) million and $(0.1) million, respectively, of the totals presented in the table above. For the nine months ended September 30, 2018 and 2017, the Other Postretirement Benefits Net Periodic Benefit Cost incurred by SJG was $(0.5) million and less than $(0.1) million, respectively, of the totals presented in the table above.

Capitalized benefit costs reflected in the table above relate to SJG’s construction program. Effective January 1, 2018, SJI and SJG adopted FASB ASU 2017-07 which stipulates that only the service cost component of net benefit cost is eligible for capitalization. In SJG's rate case settlement in October 2017, The BPU allowed the deferral until the next base rate case of incremental expense associated with the adoption.

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, 2018. SJI and SJG do not expect to make any additional contributions to the pension plans in 2018; 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 $2.4 million in 2018.

As part of the ETG and ELK acquisition, SJI acquired the entities’ existing pension and other post-employment benefit plans. The plans include a qualified defined benefit, trusteed, pension plan covering most eligible employees. The qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Company also provides certain non-qualified defined benefit and defined contribution pension plans for a selected group of the Company's management and highly compensated employees. Benefits under these non-qualified pension plans are funded on a cash basis. In addition, the entities also have a postretirement benefit plan, which provides certain medical care and life insurance benefits for eligible retired employees through a postretirement benefit plan. SJI's Pension and Other Postretirement Benefits Liabilities increased by approximately $7.2 million as a result of the acquired pension and other post-employment benefit plans per the above.

See Note 12 to the Consolidated Financial Statements in Item 8 of SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2017 for additional information related to SJI’s and SJG's pension and other postretirement benefits.