STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES. 9&3 Update Testimony & Schedules

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1 STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES IN THE MATTER OF THE PETITION OF SOUTH JERSEY GAS COMPANY FOR APPROVAL OF INCREASED BASE TARIFF RATES AND CHARGES FOR GAS SERVICE AND OTHER TARIFF REVISIONS : : : : : DOCKET NO. GR OAL DOCKET NO. PUC N Update Testimony & Schedules June 2017

2 9 & 3 UPDATE TABLE OF CONTENTS A. Direct Testimony of Linda M. Hibbs, Senior Vice President, Customer Experience B. Updated Schedules () a. KJB-1 through KJB-22 b. TSK-12A c. TSK-12B d. TSK-13 e. TSK-13A f. TSK-14 g. TSK-15 h. RFF-1 i. PJZ-1 j. PJZ-2 k. DPY-2 l. DPY-3 m. DPY-4

3 EXHIBIT P-11 STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES In the Matter of the Petition of South Jersey Gas Company for Approval of Increased Tariff Rates and Charges and for Gas Service and Other Tariff Revisions BPU DOCKET NO. GR Direct Testimony of Linda M. Hibbs on Behalf of South Jersey Gas Company June 2017

4 EXHIBIT P Direct Testimony Of Linda M. Hibbs Senior Vice President, Customer Experience South Jersey Gas Company June 2017 I. INTRODUCTION Q. Please state your name, affiliate and business address. A. My name is Linda Hibbs, and I am the Senior Vice President, Customer Experience for South Jersey Gas Company ( South Jersey or SJG or the Company ). My business address is One South Jersey Plaza, Folsom, NJ Q. Please summarize your educational background and industry related experience. A. I joined South Jersey in 2014 as Director of Information Technology. In January, 2015 I was promoted to Vice President, Information Technology. Most recently, in January of 2017, I accepted my current position as Senior Vice President, Customer Experience. I hold an Executive MBA from Villanova. I am a member of the American Gas Association (AGA), the New Jersey Cybersecurity & Communications Integration Cell (NJCCIC), and the ISACA (f/n/a Information Systems Audit and Control Association). Q. What are your current responsibilities as Senior Vice President, Customer Experience? A. In my current role, I oversee the Customer Contact Center and all aspects of the customer experience. This includes all processes associated with managing calls, walk-in centers, training, workforce management, quality assurance, metrics and reporting, voice of the customer, billing and collections. I am also actively involved in the Company s recent and ongoing efforts to improve upon the overall customer experience, including new and updated technology to support these efforts. 1

5 EXHIBIT P II. PURPOSE OF TESTIMONY Q. What is the purpose of your testimony in this proceeding? A. My testimony supports the Company s recently adopted Customer Experience (CX) improvement initiative and the associated payroll adjustments reflected in the Company s update filing ( Update ). These adjustments account for the added customer service personnel necessary to ensure the Company s goal of achieving a best-in-class customer experience for all customers. In addition, by virtue of the added personnel, the Company will realize off-setting savings to its O&M expense by reducing reliance on its outsourced customer call center personnel III. CUSTOMER SERVICE (CX) IMPROVEMENT INITIATIVE Q. Can you please provide a brief overview of the Company s CX improvement initiative? A. The Company commenced a formal CX improvement initiative this past October, Details around the efforts the Company has made to improve the customer experience have been provided in response to numerous data requests in this proceeding. These efforts include, but are not limited to, rolling out a new updated website with mobile capability; engagement of E-Source, an independent consulting firm, to review our customer contact center performance and to make recommendations for overall system/customer service improvements; and completion of the initial design phase for new residential and commercial bills. The CX improvement initiative will be ongoing in the spirit of continuous improvement. 2

6 EXHIBIT P Q. Specific to the Customer Contact Center, what improvements has the Company made? A. The Company is focused on achieving efficiencies and superior customer service through training, quality assurance and coaching its existing personnel, as well as adding personnel to be more responsive to customers needs. In order to carry out this objective, the Company engaged a third-party consultant, E-Source, to evaluate the Company s existing processes and policies and to provide an objective perspective on the Company s overall performance. As a result of this assessment and based on E-Source s specific recommendations, the Company developed new positions within customer service and elsewhere in the Company to implement the CX improvements. The added personnel will ensure that the right people are in the right roles to increase productivity and accountability. In addition, the added personnel will dramatically improve reporting, metrics and statistics, which will enable the Company to make more informed business decisions and improve customer satisfaction. The Company intends to hire additional management and union personnel throughout the remainder of 2017, including a CX Program Manager, Customer Care Representatives, Dispatch Support Agents, and Billing Representatives, to name a few. To reflect these personnel additions, a proforma adjustment of approximately $1.7 million was made to the Company s O&M expense in Schedules KJB-16 and KJB-17 of the Company s Update to reflect the annualized, known and measurable increase in payroll and benefits expense of approximately $1.2 million and $476,524, respectively, for the additional customer care center employees that will be hired by December

7 EXHIBIT P Q. Does the Company anticipate any savings associated with the added personnel relative to its use of outsourced call center representatives? A. Yes. The Company currently uses an outside vendor, Convergent Contact Solutions ( Convergent ) located in Atlanta, Georgia, to assist with customer calls to its customer care center. At this time, Convergent handles approximately 70-75% of all calls to the customer care center. With the added personnel, the Company anticipates that the percent of calls currently handled by Convergent versus internally by the Company will flip, with the Company handling 75% or more of all calls and Convergent managing the overflow. This shift will enable the Company to better manage the quality and performance of its customer care representatives and is projected to result in approximately $1.2 million of annual O&M expense savings for the Company. The projected incremental savings of $1.2 million is reflected in Schedule KJB-14 of the Company s Update as a pro forma adjustment to O&M expense IV. CONCLUSION While the Company will initially incur increased payroll and related expenses associated with its added personnel to carry out its CX improvement initiative now and into the future, a significant savings (approximately $1.2 million) will be realized by the Company s efforts to lessen its reliance on its outside vendor. This is just one of many examples of the Company s ongoing commitment to strengthen and improve the overall customer experience Q. Does this conclude your Direct Testimony? A. Yes, it does. 4

8 9 & 3 UPDATE Schedules of K.J. BARCIA

9 South Jersey Gas Company Summary of Revenue Requirement KJB-1 Line No. REFERENCE 1 2 Rate Base Test Year Ended August 2017 $1,692,759,503 KJB Rate of Return 7.66% 5 6 Required Operating Income 129,665, Net Operating Income Test Year Ended August ,543,315 KJB Income Deficiency 57,122, Revenue Factor 1.85 KJB Revenue Requirement $105,542, Revenue Requirement without Sales and Use Tax $98,753, Revenue Requirement Rolled-In From: 19 Storm Hardening & Reliability Program (SHARP) (3,580,281) 20 Accelerated Infrastructure Replacement Program (AIRP II) (4,583,177) 21 Conservation Incentive Program (CIP) (9,078,930) DPY Requested Additional Operating Revenue $81,510,884

10 South Jersey Gas Company Statement of Rate Base At August 31, 2017 KJB-2 Rate Base Reference To Rate Base Test Year Pro Forma Adjusted Ratemaking Line No. 5/31/2017 Adjustment 8/31/2017 Adjustment Rate Base Adjustments 1 Utility Plant In Service $ 2,403,363,547 27,137,227 $ 2,430,500,774 $85,031,401 $ 2,515,532,175 TSK-13 2 Accumulated Depreciation & (467,921,219) (5,032,500) (472,953,719) 10,607,709 (462,346,010) Amortization TSK-13 3 Non-Legal ARO (26,966,459) 265,033 (26,701,426) 0 (26,701,426) 4 5 Net Utility Plant 1,908,475,869 22,369,760 1,930,845,629 95,639,110 2,026,484, Materials & Supplies 930, , ,510 9 Gas Inventory: 10 Natural Gas Stored 7,038,739 1,877,224 8,915, ,915,963 KJB-2 WP1 11 LNG Stored 2,611,002 (132,092) 2,478, ,478,910 KJB-2 WP2 12 Cash Working Capital 62,448, ,448,391 50,000, ,449, Customer Deposits (7,469,707) 17,445 (7,452,262) (109,295) (7,561,557) KJB Unclaimed Customer Deposits (298,829) 0 (298,829) 0 (298,829) 15 Customer Advances (1,562,230) 0 (1,562,230) 0 (1,562,230) 16 Deferred Income Taxes: 17 Excess Protected ADIT (1,287,020) 0 (1,287,020) 0 (1,287,020) 18 Federal Income Tax (375,766,599) (3,886,061) (379,652,660) (4,077,884) (383,730,544) TSK-12A 19 NJ CBT (54,820,525) (9,175,983) (63,996,508) (62,999) (64,059,507) TSK-12B Total Rate Base $1,540,299,601 $11,070,292 $1,551,369,893 $141,389,610 $1,692,759,503

11 SOUTH JERSEY GAS COMPANY ADJUSTED TEST YEAR INCOME STATEMENT TWELVE MONTHS ENDED AUGUST 31, 2017 KJB-3 9 MONTHS 3 MONTHS TEST YEAR ADJUSTED REFERENCE TO ACTUAL PROJECTED ENDED PRO FORMA TEST YEAR PRO FORMA Line No. DATA DATA 8/31/2017 ADJUSTMENTS 8/31/2017 ADJUSTMENTS 1 Operating Revenues: 2 3 Gas Sales Revenues $362,349,400 $48,121,400 $410,470,800 ($19,221,854) $391,248,946 KJB-5 4 Other Utility Revenues $58,690,400 $12,846,000 $71,536,400 $71,536, Total Operating Revenues $421,039,800 $60,967,400 $482,007,200 ($19,221,854) $462,785, Operating Expenses: 9 10 Purchased Gas $163,471,000 $22,307,300 $185,778,300 ($3,891,580) $181,886,720 KJB Oper. & Maint. Exps. $88,446,200 $28,439,800 $116,886,000 $188,540 $117,074,540 KJB Depreciation $37,309,100 $13,157,500 $50,466,600 $5,927,291 $56,393,891 TSK Taxes Other Than Income Taxes $3,363,200 $826,900 $4,190,100 $97,085 $4,287,185 KJB-20, KJB Federal Income Taxes & NJ CBT $43,794,100 ($3,542,400) $40,251,700 ($9,682,251) $30,569,449 TSK Investment Tax Cr. - Net $0 $0 $0 $0 $ Total Operating Expenses $336,383,600 $61,189,100 $397,572,700 ($7,360,915) $390,211, Net Operating Income $84,656,200 ($221,700) $84,434,500 ($11,860,939) $72,573, Ratemaking Adjustment: 27 Interest on Customer Deposit $16,196 $7,517 $23,713 $6,534 $30,246 KJB Adjusted Net Operating Income $84,640,004 ($229,217) $84,410,787 ($11,867,472) $72,543,315

12 Line No. 1 Components: South Jersey Gas Company Derivation of Revenue Factor KJB Sales and Use Tax (SUT) 6.875% 4 5 Public Utility Assessment Tax (PUA) % 6 7 Bad Debt Provision (Bad Debt) % 8 9 Federal Income Tax (FIT) % CBT % Operating Revenue Revenue Factor Calculation: * * * = [(.65*.09)+.35] 21 22

13 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME SUMMARY OF PRO FORMA REVENUE ADJUSTMENTS KJB-5 Line Dt Revenue Cost of Gas No. Adjustments Adjustments Adjustments Reference 1 AIRP Revenue Adjustment N/A $1,888,864 N/A KJB-6 2 SHARP Revenue Adjustment N/A $103,396 N/A KJB-6 3 EET Revenue Adjustment N/A ($5,399,600) N/A KJB-7 4 Interruptible, Off-System Sales & SIM Adjustmen N/A ($12,557,716) ($6,435,924) KJB-8 5 Customer Annualization 120,269 $1,595,201 $632,766 KJB-9 6 Sales from Post Test Year Plant Additions 382,019 $4,473,332 $1,926,151 KJB-11 7 Contract Changes 3,057,510 ($246,400) ($14,573) KJB-13 8 CIP Revenue Adjustment (4,799,904) ($9,078,930) N/A DPY-3 9 Total Firm Revenue Adjustments (1,240,106) (19,221,854) (3,891,580) Note: Cost of Gas adjustments include the applicable clauses

14 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME SHARP & AIRP REVENUE ADJUSTMENT KJB Line Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected No. September October November December January February March April May June July August TOTAL 1 SHARP Roll In Revenue $ 103,396 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 103,396 2 AIRP Roll In Revenue $ 290,538 $ 522,767 $ 1,075,559 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 1,888,864 3 Total Revenue Adjustment $ 393,934 $ 522,767 $ 1,075,559 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 1,992,260

15 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME ENERGY EFFICIENCY TRACKER KJB Line Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected No. September October November December January February March April May June July August TOTAL 1 EET Revenue Adjustment $ 455,900 $ 552,500 $ 469,000 $ 534,800 $ 433,500 $ 454,600 $ 417,900 $ 393,500 $ 395,900 $ 436,500 $ 438,500 $ 417,000 $ 5,399,600 2 EET O&M Expenses Adjustment $ 69,300 $ 163,500 $ 86,500 $ 145,300 $ 48,900 $ 80,800 $ 54,300 $ 53,100 $ 56,300 $ 87,300 $ 88,100 $ 69,400 $ 1,002,800 3 EET Amortization Adjustment $ 75,800 $ 80,500 $ 78,400 $ 78,300 $ 77,800 $ 64,200 $ 58,600 $ 34,900 $ 34,900 $ 33,200 $ 33,200 $ 32,100 $ 681,900

16 KJB-8 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME TEST YEAR INTERRUPTIBLE AND OFF-SYSTEM SALES, AND STORAGE INCENTIVE MECHANISM Test Year Line Ending Pro Forma Revenue Amounts No. 8/31/2017 Adjustment in Test Year Deferred 1 Revenues $83,718,109 ($12,557,716) $71,160,393 ($71,160,393) 2 Cost of Gas $51,153,985 ($6,435,924) $44,718,061 ($44,718,061) 3 PUA Tax $2,583 ($387) $2,195 ($2,195)

17 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME CUSTOMER ANNUALIZATION KJB-9 Line No. 1 Residential (RSG) Annualized Dt Revenue Cost of Gas 2 Heating Sales Service (480.11) 180,155 $2,126,735 $877,637 3 Non-Heating Sales Service (480.12) 1,131 $15,971 $4,991 4 Sub-Total 181,286 $2,142,706 $882,628 5 General Service (GSG) 6 Commercial Non-Heating Sales Service (481.21) 4,977 $53,098 $23,348 7 Commercial Heating Sales Service (481.31) (54,844) ($531,021) ($255,538) 8 Industrial Heating Sales Service (481.32) (708) ($6,392) ($3,315) 9 Transportation Commercial Non-Heating ( ) 1,700 $10,681 $2, Transportation Commercial Heating ( ) (14,079) ($85,366) ($19,337) 11 Transportation Industrial Heating ( ) 1,937 $11,495 $2, Sub-Total (61,017) ($547,505) ($249,862) 13 Total Adjustment 120,269 $1,595,201 $632,766

18 SOUTH JERSEY GAS COMPANY CUSTOMER COUNTS SEPTEMBER AUGUST 2017 KJB-10 Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug RES SERV SALES - HSE HTG RSG Heat 311, , , , , , , , , , , , RES SERV SALES W/O HSE HTG RSG Non-Heat 10,975 10,932 10,910 10,900 10,933 10,945 10,965 10,923 10,948 10,998 11,004 10, RTS HSE HTG RSG Trans Heat 26,445 26,263 25,932 25,876 24,691 24,167 23,849 23,538 23,138 23,138 23,138 23, RTS W/O HSE HTG RSG Trans Non-Heat 1,031 1,023 1,014 1, BLDG HTG & COOL COMMERCIAL Commercial Heat 16,343 16,457 16,642 16,881 17,081 17,148 17,251 17,239 17,116 16,958 16,842 16, GEN SERV SALES COMMERCIAL Commercial Non-Heat 1,462 1,432 1,412 1,398 1,403 1,399 1,416 1,427 1,457 1,462 1,460 1, BLDG HTG & COOL INDUSTRIAL Industrial Heat GEN SERV SALES INDUSTRIAL Industrial Non-Heat COMM BLDG HTG & COOL Commercial Trans Heat 5,842 5,849 5,847 5,865 5,881 5,871 5,853 5,838 5,833 5,833 5,833 5, COMM GEN SERV Commercial Trans Non-Heat IND BLDG HTG & COOL Industrial Trans Heat IND GEN SERV Industrial Trans Non-Heat GSG-LV COMMERCIAL HEAT Commercial LV Heat GSG-LV COMMERCIAL Commercial LV Non-Heat GSG-LV INDUSTRIAL HEAT Industrial LV Heat GSG-LV INDUSTRIAL Industrial LV Non-Heat GSG-LV FT COMMERCIAL HEAT Comm LV Trans Heat GSG-LV FT COMMERCIAL Comm LV Trans Non-Heat GSG-LV FT INDUSTRIAL HEAT Ind LV Trans Heat GSG-LV FT INDUSTRIAL Ind LV Trans Non-Heat

19 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME SALES FROM POST TEST YEAR UTILITY PLANT ADDITIONS KJB-11 Line No. Dt Revenue Cost of Gas 1 Residential Heat (480.11) 261,537.0 $3,187,299 $1,330,784 2 Residential Non-Heat (480.12) 3,894.6 $59,921 $18,129 3 Gen. Serv. Comm Heat (481.31) 116,587.6 $1,226,111 $577,239 4 Pro-Forma Adjustment 382,019.1 $4,473,332 $1,926,151

20 SOUTH JERSEY GAS COMPANY REVENUE PRODUCING UTILITY PLANT SEPTEMBER FEBRUARY 2018 KJB-12 Projected Post Test Year Gross Customer Additions Months Sept Oct Nov Dec Jan Feb Total Dts Per Customer Annualized Dts Residential Heat , ,537.0 Residential Non-Heat ,894.6 General Service Gas ,587.6

21 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME CONTRACT CHANGES KJB-13 Annual Dt Sales Annual Revenue After After Cost of Line Contract Contract Gas No. Customer I.D. Test Year Change Adjustment Test Year Change Adjustment Adjustment 1 CTS Customers 2 Customer A 1,672 0 (1,672) $33,685 $0 ($33,685) ($730) 3 Customer B 13,354 0 (13,354) $44,343 $0 ($44,343) ($5,832) 4 Customer C 43,312 37,778 (5,535) $80,543 $78,393 ($2,149) ($6,903) 5 Customer D 172, ,888 16,834 $410,422 $361,186 ($49,236) $6,783 6 Customer F 71, ,999 98,726 $140,532 $325,837 $185,306 $40,929 7 Customer G 23,805 94,444 70,639 $46,293 $184,441 $138,148 $30,495 8 LVS-FT Customers 9 Customer E 146,040 0 (146,040) $231,369 $0 ($231,369) ($59,782) 10 Customer H 1,336,873 1,012,174 (324,699) $1,808,182 $1,586,385 ($221,797) ($140,499) 11 EGS-LV-FT Customers 12 Customer I 2,304,014 5,666,625 3,362,611 $1,093,715 $1,106,442 $12,727 $120, Pro Forma Adjustment 3,057,510 ($246,400) ($14,573)

22 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME SUMMARY OF PRO FORMA O&M ADJUSTMENTS KJB-14 Line No. Amount Reference 1 EET Expense $ (1,002,800) Schedule KJB-7 2 EET Amortization Expense $ (681,900) Schedule KJB-7 3 PIM Expense & Carrying Cost $ 1,712,779 Schedule KJB-15 4 Payroll Adjustment $ 3,279,229 Schedule KJB-16 5 Employee Benefit Adjustment $ 916,570 Schedule KJB-17 6 Amortization Expense Adjustment $ (3,638,701) Schedule KJB-18 7 Mortality Table Amortization $ 154,315 Schedule TSK-15 8 Pension Expense $ 649,049 Schedule TSK-15 9 Convergent Savings $ (1,200,000) Exhibit P Total O&M Adjustments $ 188,540

23 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME OPERATION AND MAINTENANCE EXPENSE - INTEGRITY MANAGEMENT KJB-15 Line No. Expense 1 Pipeline Integrity Management Deferred Balance at August 31, 2017 $ 5,138,336 2 Pro-Forma Adjustment - Three Year Amortization of Deferred Expense $ 1,712,779

24 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME PAYROLL EXPENSE KJB-16 Line No. 1 Payroll Expenses: 2 3 Annualized Payroll Expenses $32,764,534 4 Less: Test Year Payroll Expenses $29,718, Pro Forma Payroll Adjustment $ 3,046, FICA Adjustment 233, Total Pro Forma Payroll Adjustment $ 3,279,229

25 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME OPERATION & MAINTENANCE EXPENSE - PAYROLL INCREASE KJB-16A Line Annualized No. Month Base Wages Additions Separations Net Wages Wages 1 September Actual $2,333,786 $385,861 (60,783) $2,658,864 $2,738,630 2 October - Actual $2,233,807 $364,307 (62,889) $2,535,225 $2,611,282 3 November - Actual $2,350,924 $286,962 (54,588) $2,583,299 $2,660,798 4 December Actual $3,595,564 $306,679 (53,810) $3,848,432 $3,963,885 5 January Actual $2,356,946 $270,317 (40,392) $2,586,871 $2,596,337 6 February - Actual $2,169,245 $227,945 (33,097) $2,364,093 $2,373,559 7 March - Actual $2,700,142 $242,972 (36,083) $2,907,031 $2,916,498 8 April - Actual $2,150,299 $235,265 (30,395) $2,355,169 $2,364,635 9 May - Actual $2,428,100 $220,124 (14,374) $2,633,851 $2,643, June - Projected $2,464,137 $207,352 (7,778) $2,663,710 $2,673, July - Projected $2,432,425 $205,763 0 $2,638,188 $2,648, August - Projected $2,502,965 $61,124 0 $2,564,089 $2,573, Totals $29,718,339 $3,014,671 (394,190) $32,338,821 $32,764,534

26 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME EMPLOYEE BENEFITS EXPENSE KJB-17 Line No. 1 Employee Benefits Expenses: 2 3 Annualized Benefit Expenses $6,083,811 4 Less: Test Year Health Ins Expenses $5,167, Pro Forma Benefits Adjustment $ 916,570

27 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME OPERATION AND MAINTENANCE EXPENSE - AMORTIZATIONS KJB-18 Line No. Category Expense 1 Rate Case Expense Amortization Rate Case $ (206,627) 2 Hurricane Sandy Amortization Rate Case $ (245,593) 3 Management Audit Exp Amortization Rate Case $ (208,333) 4 PIM Expense & Carrying Cost Rate Case $ (1,055,992) 5 AIRP Equity Tax Loss Amortization Rate Case $ (1,296,334) 6 Total 2013 Rate Case Amortizations $ (3,012,880) 7 AIRP Equity Tax Loss Amortization Roll-In $ (774,238) Rate Case Expense Amortization $ 148,417 9 Pro Forma Adjustment $ (3,638,701)

28 Line No. SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENTS TO OPERATING INCOME AND RATE BASE CUSTOMER DEPOSITS KJB-19 1 Test Year Interest Calculation 2 3 Number of Percentage of Average Rate Base Current 4 Actual and Number of Customers Customers Deposit for Customer Interest Monthly 5 Month Projected Data Customers with Deposits with Deposits Per Customer Deposits Rate Interest 6 7 Sep-16 Actual 374,506 37, % $233 $8,667, % $847 8 Oct-16 Actual 375,051 36, % $228 $8,214, % $762 9 Nov-16 Actual 376,013 35, % $226 $8,021, % $ Dec-16 Actual 377,494 35, % $225 $7,995, % $ Jan-17 Actual 379,136 35, % $219 $7,722, % $2, Feb-17 Actual 379,897 35, % $218 $7,738, % $2, Mar-17 Actual 380,715 35, % $215 $7,691, % $2, Apr-17 Actual 380,694 35, % $212 $7,574, % $2, May-17 Actual 380,546 35, % $209 $7,469, % $2, Jun-17 Projected 380,293 35, % $209 $7,460, % $2, Jul-17 Projected 379,948 35, % $209 $7,454, % $2, Aug-17 Projected 379,857 35, % $209 $7,452, % $2, Total Test Year (Sept - Aug) Interest $23, Post-Test Year Annualization of Interest Feb-18 Projected 385,428 36, % $209 $7,561, % $30, Rate Base Test Year Adjustment Rate Base PTY Pro-Forma Adjustment Income Statement Interest Pro-Forma Deposits at May 31, 2017 $7,469,707 Deposits at August 31, 2017 $7,452,262 Test Year Interest $23, Deposits at August 31, 2017 $7,452,262 Deposits at February 28, 2018 $7,561,557 Annualization of Interest $30, Test Year Adjustment ($17,445) Pro-Forma Adjustment $109,295 Pro-Forma Adjustment $6,534

29 Line No. KJB-20 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME OTHER EXPENSES - REVENUE TAXES 1 PUA Adjustments 2 CIP Revenue Adjustment (KJB-5) ($9,078,930) 3 Customer Annualization (KJB-5) $1,595,201 4 Sales from Post Test Year Plant Additions (KJB-5) $4,473,332 5 Contract Changes (KJB-5) ($246,400) 6 Interruptible Sales Revenue Adjustment ($59,638) 7 EET Revenue Adjustment (KJB-5) ($5,399,600) 8 Total Revenue Adjustments ($8,716,035) 9 PUA Tax Rate Pro Forma Adjustment to PUA Taxes ($21,834)

30 KJB-21 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME OTHER EXPENSES - BPU & PUBLIC ADVOCATE ASSESSMENT ($000) Line BPU Public Advocate No. Assessment Assessment Total 1 Year 2016 Intrastate Revenues $ 397,616 $ 397,616 2 Estimated Assessment Rate $ $ $ Estimated Assessment $ 809 $ 187 $ Less: Assessment included in Test Year 6 Operating Expenses $ 718 $ 159 $ Pro Forma Adjustment to PUA Taxes $ 91 $ 28 $ 119

31 SOUTH JERSEY GAS COMPANY Income Statement by Month Test Year SEPTEMBER AUGUST 2017 (Thousands Where Applicable) KJB September October November December January February March April May June July August Test Year Description Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected Total Operating Revenues Gas Sales Revenues 16,625 21,452 41,397 59,397 70,227 50,651 50,606 29,628 22,367 16,438 16,052 15, ,471 Other Gas Revenues 3,744 4,104 6,624 9,528 8,884 7,187 9,259 4,738 4,622 4,329 3,810 4,707 71,536 Total Oper Revenues 20,369 25,556 48,021 68,925 79,112 57,838 59,865 34,366 26,989 20,767 19,863 20, ,007 Operating Expenses Purchased Gas 8,029 8,758 20,840 29,098 31,986 15,909 24,529 13,045 11,277 7,260 7,198 7, ,778 Oper and Maint Exps Production , ,271 Transmission ,341 Distribution 1,515 1,673 1,704 2,172 1,567 1,313 1,917 1,424 1,483 1,693 1,497 1,530 19,486 Customer Accounting 3,476 1,693 1,197 2,793 1,167 1,125 2,191 1,273 1,839 1,221 1,599 1,599 21,173 Conservation Program ,590 Sales ,791 Customer Services EET Programs ,685 Adm & General 3,136 2,868 3,516 6,844 3,696 3,447 5,207 3,798 3,997 4,173 3,657 3,878 48,217 Total Oper & Maint Exps 9,931 8,034 8,500 14,481 9,128 8,321 12,038 8,736 9,278 9,859 9,227 9, ,886 Depreciation 3,929 3,952 3,978 4,204 4,224 4,239 4,252 4,262 4,271 4,340 4,404 4,414 50,467 Taxes other than Income Taxes ,190 Fed Inc Taxes - Curr (4,539) (3,546) (202) (4,646) 5,216 3,735 3,640 (1,722) (3,588) (4,282) (4,385) (4,470) (18,787) - Def. 3,615 4,551 4,295 10,962 4,833 4,833 1,467 3,688 3,688 3,442 3,442 3,442 52,258 New Jersey Corp. Business Tax (229) ,508 2,137 1, (212) (247) (274) 6,781 Investment Tax Cr.-Net Total Oper Expenses 21,032 22,328 38,555 54,853 58,349 39,537 47,679 28,874 25,177 20,695 19,901 20, ,573 Net Operating Expense (662) 3,228 9,466 14,071 20,763 18,300 12,186 5,491 1, (39) (255) 84,434 Ratemaking Adjustment: Interest on Customer Deposit Adjusted Net Operating Income (663) 3,228 9,465 14,071 20,760 18,298 12,183 5,489 1, (41) (258) 84,411

32 9 & 3 UPDATE Schedules of T.S. KAVANAUGH

33 SOUTH JERSEY GAS COMPANY CALCULATION OF ADJUSTED TEST YEAR DEFERRED FEDERAL INCOME TAX INCLUDED IN RATE BASE TSK-12A Line ADDED TAX DEFERRED TAX DFIT IN No. PTY ADDITIONS DEPRECIATION ADJUSTMENT RATE BASE 1 Projected DFIT Rate Base Balance 8/31/17 (379,652,660) 2 Annualized Book Depreciation* 1,158,047 3 Normalization on PTY Additions 9/17-2/18: 4 Book Depreciation* 1,330,641 5 Tax Depreciation-Federal** (39,694,646) 6 Federal Tax Depreciation Over Book (38,364,005) 7 Total Added Tax Depreciation (37,205,958) 9 Deferred FIT (@ effective FIT rate of 35%) (13,022,085) 10 PTY Federal Net Operating Loss - Deferred Tax Asset 8,944, Pro Forma Adjustment to Rate Base (4,077,884) 12 Projected Adjusted DFIT Rate Balance 8/31/17 (383,730,544) * Sourced from TSK-13 Depreciation of Utility Plant in Service ** Includes Bonus Depreciation and First Year MACRS tax depreciation rate - 20 year life using half year convention

34 SOUTH JERSEY GAS COMPANY CALCULATION OF ADJUSTED TEST YEAR DEFERRED NJ CORPORATE BUSINESS TAX INCLUDED IN RATE BASE TSK-12B Line ADDED TAX DCBT IN No. PTY ADDITIONS DEPRECIATION RATE BASE 1 Projected Rate Base Balance 8/31/17 (63,996,508) 2 Annualized Book Depreciation* 1,158,047 3 Normalization on Additions 9/17-2/18: 4 Book Depreciation* 1,330,641 5 Tax 3.75%** (3,188,678) 6 State Tax Depreciation Over Book (1,858,036) 7 Added Tax Depreciation (699,989) 8 Pro Forma Adjustment - Deferred NJ 9.00% (62,999) 9 Adjusted Rate 8/31/17 (64,059,507) * Sourced from TSK-13 Depreciation of Utility Plant in Service ** First Year MACRS tax depreciation rate - 20 year life using half year convention

35 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 OPERATING INCOME AND RATE BASE DEPRECIATION EXPENSE AND ACCUMULATED DEPRECIATION TSK-13 PTY PTY Summary Line Utility Plant Depreciation Depreciation Expense No. in Service Expense Adjustments 1 Depreciation Expense: 2 3 Adjustment due to Annualization of Depreciable Plant Additions $ 1,158, Adjustment due to Increase in Proposed Annual Net Negative Salvage Allowance $ 3,140, Adjustment due to Decrease in Non-Legal Asset Retirement Obligation (ARO) Credit $ 297, Adjustment due to Post-Test Year Additions (PJZ-2) $ 51,421,013 $ 1,007,852 $ 1,007, Retirements After August 31, 2017 (PJZ-2) $ (16,535,000) $ (324,086) $ (324,086) Adjustment due to Major Construction Projects (RFF-1) $ 50,145,388 $ 646,876 $ 646, Total Pro Forma Adjustment to Depreciation Expense $ 85,031,401 $ 1,330,641 $ 5,927, Accumulated Depreciation: Pro Forma Depreciation Expense $ (5,927,291) Less: Retirements After August 31, 2017 $ 16,535, Total Pro Forma Adjustment to Accumulated Depreciation in Rate Base $ 10,607,709

36 South Jersey Gas Company Non-Legal Asset Retirement Obligation Amortization TSK - 13A (a) (b) (c) (d) (e) Net Net Line Start COR Salvage Salvage End No. Reserve Amort. Allowance Incurred Reserve 1 Jul-14 $ 38,429,700 (101,387) 118,068 (346,909) $ 38,099,472 2 Aug-14 $ 38,099,472 (101,387) 118,068 (201,092) $ 37,915,061 3 Sep-14 $ 37,915,061 (101,387) 118,068 (526,751) $ 37,404,990 4 Oct-14 $ 37,404,990 (88,344) 199,181 (788,777) $ 36,727,050 5 Nov-14 $ 36,727,050 (88,344) 199,181 (424,275) $ 36,413,611 6 Dec-14 $ 36,413,611 (88,344) 199,181 (584,414) $ 35,940, $ 35,940,033 (1,060,130) 2,390,167 (4,625,823) $ 32,644, $ 32,644,247 (1,060,130) 2,390,167 (5,745,619) $ 28,228,665 9 Jan to Aug 2017 $ 28,228,665 (706,753) 1,593,445 (3,897,057) $ 25,218,300 New Shortfall (net col's c & d) (9,815,193) 10 Projected Balance Available to be Returned to Customer as of Aug 31, 2017 $ 25,218, Number of Years Remaining from the Original 40-Year Amortization Period 33 1/12 12 Projected Annual Amortization of Regulatory Liability $ 762, Current Annual Amortization of Regulatory Liability included in Rates (BPU Docket No. GR $ 1,060, Proposed Decrease in Annual Amortization of Regulatory Liability $ (297,864) 15 Proposed Provision for Annual Net Negative Salvage (3-year average) $ 5,530, Current Provision for Annual Net Negative Salvage $ 2,390, Proposed Change in Annual Net Negative Salvage $ 3,140,739

37 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME INCOME TAXES TSK - 14 Line No. 1 Pre-Tax Adjustments (KJB-3) $ (21,549,723) 2 3 Interest Synchronization: 4 5 Rate Base (KJB-2) $ 1,692,759, Total Weighted Cost of Long Term Debt (PRM-1 PG 1) 1.69% 8 9 Annualized Interest Expense $ 28,607, Less: Test Year Interest Expense $ (26,476,400) Net Interest Expense $ (2,131,236) Total Pre-Tax Adjustments $ (23,680,959) Income Tax Rate 40.85% Decrease to test year income taxes $ (9,673,672) AIRP II AFUDC Tax Adjustment $ (8,579) Total Decrease to test year income taxes $ (9,682,251)

38 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 OPERATING INCOME MORTALITY TABLE CHANGE IMPACT - PENSION EXPENSE TSK-15 Line Year Salaried/Management Bargaining Expense Incremental No. Plan Plan Total Ratio Expense Basis $ 742,516 $ 1,354,525 $ 2,097, % $ 1,006,580 Actual , ,827 1,338, % 669,146 Actual , ,000 1,278, % 639,000 Estimate 4 Total $ 1,637,981 $ 3,075,352 $ 4,713,333 $ 2,314, Pojected Amortization Period 15 Years 7 8 Pro-Forma Adjustment - Annual Amortization $ 154, Test Year Expenses September - December 2016 $ 223, January - August 2017 $ 426, Pro-Forma Adjustment - Pension Expense $ 649,049

39 9 & 3 UPDATE Schedules of R.F. FATZINGER

40 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENTS TO AUGUST 31, 2017 MAJOR CONSTRUCTION PROJECTS RFF-1 Line Actuals as of Projection Projection Projection Projected No. Project Name 5/31/17 6/1/17-8/31/17 Post-Test Year Total In Service Date 1 Pedricktown Distribution Regulator Station $0 $122,200 $262,900 $385,100 October Pedricktown Distribution Main $31 $34,100 $119,000 $153,131 October Echelon Mall Stations $0 $38,700 $110,900 $149,600 October Replace Mexichem Station $0 $66,600 $150,100 $216,700 November Reconstruct Mannington Mills Station $0 $66,600 $148,500 $215,100 September District Regulator Station Surveillance $24,179 $89,700 $118,400 $232,279 October Rebuild Distribution Regulator Stations $715,970 $139,300 $184,700 $1,039,970 October District Regulator Station Security $45,106 $59,100 $50,900 $155,106 December Purchase Volume Correcting Instruments $92,398 $1,500 $107,400 $201,298 December Additional SCADA Monitoring Points $3,820 $73,900 $99,400 $177,120 December LNG Tank Valve Control Panel Replacement $0 $61,200 $61,100 $122,300 October Replace Harmony Road Line Heater $0 $278,600 $532,600 $811,200 November Farm Tap Elimination $193,807 $1,759,600 $229,700 $2,183,107 December Deepwater Lateral Uprating $20,465 $1,528,600 $412,500 $1,961,565 October Lawnside Pipeline Refurbishment Project $2,186,674 $6,446,200 $19,367,126 $28,000,000 February Woodbury Line Modifications $1,843,061 $332,500 $233,000 $2,408,561 October Install Pipeline RCVs $268,892 $34,800 $9,100 $312,792 December Unidirectional SCADA Gateway $151,822 $59,400 $79,000 $290,222 December Install Station Flow Control $118,501 $158,300 $26,900 $303,701 December Rebuild Salem Scrubber Station $39,899 $600 $209,800 $250,299 October Replace John Mansville Station $3,762 $161,500 $5,500 $170,762 September CNG Station - Gold Medal Deptford $1,254,500 $21,000 $795,300 $2,070,800 December CNG Station - Pennsville Hook Rd $1,522,457 $24,900 $24,900 $1,572,257 December CNG Station - Chesilhurst US30 $1,590,870 $1,025,400 $330,000 $2,946,270 October CNG Station - Riggins Malaga $521,614 $564,700 $6,200 $1,092,514 December CNG Station - SJG Swainton Yard $482,438 $504,300 $55,000 $1,041,738 September Evesham Road Pipeline $794,828 $213,400 $551,500 $1,559,728 December New SCADA Bldg Cape May $60,767 $43,200 $18,200 $122,167 November Total Pro Forma Adjustment $11,935,862 $13,909,900 $24,299,626 $50,145,388

41 9 & 3 UPDATE Schedules of P.J. ZUCCARINO

42 SOUTH JERSEY GAS CAPITAL PJZ-1 ADJUSTMENT TO AUGUST 31, 2017 RATE BASE September October November December January February March April May June July August Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected Test Year Total New Business 1.0 Mains 1,302,749 1,138,032 1,339,196 1,034,453 1,260,604 1,089,686 1,661,115 1,152,599 1,562,759 2,624,000 2,040,500 2,083,400 18,289, Services 1,628,219 2,092,528 2,092,978 2,122,380 1,779,295 1,290,361 2,747,874 1,629,053 1,874,184 1,557,800 1,169,000 1,232,500 21,216, Meters 645, , , , ,778 1,100, , , , , , ,300 7,201, Regulators 168,493 86,985 55,547 69,635 76, , ,850 65, ,010 52,000 51,400 48,000 1,014,678 Total New Business 3,744,534 3,838,813 3,897,761 3,712,211 3,279,329 3,605,327 5,001,878 3,285,902 4,148,343 4,943,400 3,966,500 4,297,200 47,721, Improvement Mains 340, , ,015 1,219, , , , , ,117 20,700 20,300 20,300 5,131,746 Replacements 3.0 Replacement Mains 2,119,345 3,549,919 1,687,369 2,820,400 2,937,857 1,038,995 3,011,231 2,454, ,447 1,134, , ,900 22,850, Replacement Mains - AIRP II 32, , ,038 1,376,370 2,218,100 3,877,633 7,325,765 6,946,568 4,998,182 3,034, ,901, Replacement Mains - SHARP 1,746,789 2,379,148 3,839,374 2,530,443 2,693,527 1,589,774 1,019,810 1,551, , , ,743, Replacement Services 1,600,467 2,361,366 1,381, ,340 1,207, ,295 1,377,867 1,129,544 1,935,012 1,891, , ,400 16,274, Replacement Services - AIRP II - 2, , , ,509 1,741,042 3,012,445 3,670,133 4,408,120 2,828, ,073, Replacement Services - SHARP 1,539,306 1,300,680 2,120,799 1,365,972 1,021, ,631 3,048, ,811 71, , ,462, Leak Clamping 662, , , , , , , , , , , ,400 6,443, Replacement Meters 7, ,182 80,542 39,031 40,359 25,024 46,365 30,283 41,638 5,100 5,000 4, , Replacement Regulators 1,095, , , , , ,431 1,327, , , , , ,100 9,092,446 Total Replacements 8,804,279 11,502,454 11,315,935 10,490,570 12,476,497 10,366,544 20,983,713 18,014,034 13,909,428 11,204,927 2,700,400 2,522, ,290, Land & Buildings Automotive Equipment 57, , , ,454 36, , , , , , , ,200 3,456, Production Equipment 1,220, ,916 1,792, , , , , ,460 44,621 3,200 18,200 3,300 4,483, Transmission Equipment (83,642) 5, ,577 (152,992) 7,607 3,812 20, ,660 15,124 11,200 11,200 7, , Distribution Equipment 82,431 93,482 (6,169) (1,163,767) 7,914 49, ,648 (221,297) 84, , , , , Office Furniture & Equipment (22,696) 25,308-22,305 9,338 33,550 23,041 (15,632) 24,508 16,700 16,700 16, , Building Improvements (49,622) 100,267 96,891 (7,857) 64,694 30, ,334 25,681 48, , , , Cathodic Protection 164, , , , , , ,755 76, , , , ,100 1,822, Communications Equipment Information Technology 405, , , ,298 (43,879) 417, , , , , ,700 1,296,900 6,246,655 TOTAL SJG Capex 14,664,030 17,462,006 18,417,423 15,832,199 17,002,706 15,301,429 28,395,746 23,120,775 19,034,495 17,967,127 8,431,600 8,863, ,493,037 Retirements: Blankets 1,157, , ,158 1,139, ,367 2,182,051 8,783,585 2,324,610 3,551,530 2,700,000 2,700,000 2,700,000 29,840,120 Specials 21, , , ,709 Total Retirements 1,179, , ,158 1,237, ,367 2,182,051 8,783,585 2,324,610 3,551,530 2,725,000 2,700,000 2,700,000 29,983,829 Total 13,484,942 16,584,783 17,470,265 14,594,983 16,226,339 13,119,378 19,612,162 20,796,165 15,482,965 15,242,127 5,731,600 6,163, ,509,209

43 SOUTH JERSEY GAS COMPANY PRO FORMA ADJUSTMENT TO AUGUST 31, 2017 RATE BASE PJZ-2 September October November December January February Total Post Test Year Forecast Forecast Forecast Forecast Forecast Forecast Forecast New Business 1.0 Mains 2,731,300 1,113,400 1,330,300 1,502,100 1,260,604 1,089,686 9,027, Services 1,647,100 1,185,400 1,282,500 2,080,800 1,779,295 1,290,361 9,265, Meters 759, , , , ,778 1,100,734 4,086, Regulators 51,400 52,000 52,000 51,400 76, , ,998 Total New Business 5,189,500 3,068,400 3,320,300 4,324,100 3,279,329 3,605,327 22,786, Improvement Mains 68,700 65,200 67,700 67, , ,259 1,101,736 Replacements 3.0 Replacement Mains 690, , , ,500 2,937,857 1,038,995 6,739, Replacement Mains - AIRP II Replacement Mains - SHARP Replacement Services 1,247,500 1,100,800 1,035,600 1,121,800 1,207, ,295 6,329, Replacement Services - AIRP II Replacement Services - SHARP Leak Clamping 587, , , , , ,720 3,198, Replacement Meters 5,000 5,100 5,100 5,000 40,359 25,024 85, Replacement Regulators 425, , , , , ,431 2,777,044 Total Replacements 2,956,100 2,805,600 2,597,400 2,943,800 5,548,655 2,278,464 19,130, Land & Buildings Automotive Equipment 307, ,800 60,200 22,000 36, ,740 1,191, Production Equipment 3,300 3,300 3,300 3, , , , Transmission Equipment 7,700 7,700 7,700-7,607 3,812 34, Distribution Equipment 23,400 23,400 23,400 38,500 7,914 49, , Office Furniture & Equipment 16,700 16,700 16,700 16,700 9,338 33, , Building Improvements 212, , , ,400 64,694 30, , Cathodic Protection 177, , , , , ,988 1,083, Communications Equipment Information Technology 1,268, , , ,100 (43,879) 417,999 4,282,020 TOTAL SJG Capex 10,231,200 7,859,300 7,356,300 8,686,000 10,074,865 7,213,349 51,421,013 Retirements: Blankets 2,700,000 2,700,000 2,700,000 2,700,000 2,700,000 2,700,000 16,200,000 Specials 335, ,000 Total Retirements 3,035,000 2,700,000 2,700,000 2,700,000 2,700,000 2,700,000 16,535,000

44 9 & 3 UPDATE Schedules of D.P. YARDLEY

45 DPY-2 Page 1 of 5 South Jersey Gas Company Base and Total Revenues at Present and Proposed Rates Update Exsting Rates Adjusted for Projected October 1, 2017 Present Rates SHARP and AIRP II Roll-In Proposed Rates Component Amount Units Rate Revenue Rate Revenue Rate Revenue Increase Residential Service RSG RSG RSG Customer Charge 4,323,016 Bills $ 9.00 $ 38,907,144 $ 9.00 $ 38,907,144 $ $ 52,956,946 Distribution Charge 260,191,521 Therms ,407, ,190, ,169,148 CIP Revenues 6,243,554 6,243,554 - Total Base Revenues $ 187,557,941 $ 193,340,957 $ 251,126, % Rider Revenues $ 117,072,904 $ 117,072,904 $ 117,072,904 Total Class Revenues $ 304,630,845 $ 310,413,861 $ 368,198, % General Service (0-100,000 Annual Therms) GSG GSG GSG Customer Charge 303,139 Bills $ $ 8,260,538 $ $ 8,260,538 $ $ 9,776,233 Distribution Charge 94,774,883 Therms ,266, ,893, ,901,013 CIP Revenues 3,259,950 3,259,950 - Total Base Revenues $ 52,786,514 $ 54,414,083 $ 70,677, % Rider Revenues $ 33,198,252 $ 33,198,252 $ 33,198,252 Total Class Revenues $ 85,984,766 $ 87,612,335 $ 103,875, %

46 DPY-2 Page 2 of 5 South Jersey Gas Company Base and Total Revenues at Present and Proposed Rates Update Exsting Rates Adjusted for Projected October 1, 2017 Present Rates SHARP and AIRP II Roll-In Proposed Rates Component Amount Units Rate Revenue Rate Revenue Rate Revenue Increase General Service Large Volume (100,000 + Annual Therms) GSG-LV GSG-LV GSG-LV Customer Charge 2,180 Bills $ $ 327,000 $ $ 327,000 $ $ 327,000 Demand Charge 212,320 Mcf ,910, ,910, ,600,920 Distribution Charge 34,730,706 Therms ,280, ,592, ,587,343 CIRT Revenues (424,573) (424,573) - Total Base Revenues $ 10,094,115 $ 10,405,336 $ 13,515, % Rider Revenues $ 5,293,282 $ 5,293,282 $ 5,293,282 Total Class Revenues $ 15,387,397 $ 15,698,619 $ 18,808, % Comprehensive Firm Transportation Service CTS CTS CTS Customer Charge 550 Bills $ $ 330,000 $ $ 330,000 $ $ 330,000 Demand Charge 129,450 Mcf ,549, ,549, ,012,950 Distribution Charge 21,846,208 Therms ,040, ,191, ,244,239 Total Base Revenues $ 4,919,742 $ 5,071,442 $ 6,587, % Rider Revenues $ 1,238,787 $ 1,238,787 $ 1,238,787 Total Class Revenues $ 6,158,529 $ 6,310,229 $ 7,825, %

47 DPY-2 Page 3 of 5 South Jersey Gas Company Base and Total Revenues at Present and Proposed Rates Update Exsting Rates Adjusted for Projected October 1, 2017 Present Rates SHARP and AIRP II Roll-In Proposed Rates Component Amount Units Rate Revenue Rate Revenue Rate Revenue Increase Large Volume Service LVS LVS LVS Customer Charge 324 Bills $ $ 291,600 $ $ 291,600 $ $ 291,600 Demand Charge 352,790 Mcf ,250, ,250, ,350,220 Distribution Charge 57,868,395 Therms ,331, ,573, ,900,388 Total Base Revenues $ 7,873,652 $ 8,116,410 $ 10,542, % Rider Revenues $ 4,474,496 $ 4,474,496 $ 4,474,496 Total Class Revenues $ 12,348,147 $ 12,590,905 $ 15,016, % Electric Generation Service EGS EGS EGS Customer Charge 106 Bills $ $ 2,650 $ $ 2,650 $ $ 7,950 Demand Charge 9,294 Mcf , , ,676 Distribution Charge (Nov - Mar.) 152,113 Therms , , ,175 Distribution Charge (Apr - Oct.) 862,498 Therms , , ,199 Total Base Revenues $ 164,311 $ 169,377 $ 220, % Rider Revenues $ 45,289 $ 45,289 $ 45,289 Total Class Revenues $ 209,600 $ 214,666 $ 265, %

48 DPY-2 Page 4 of 5 South Jersey Gas Company Base and Total Revenues at Present and Proposed Rates Update Exsting Rates Adjusted for Projected October 1, 2017 Present Rates SHARP and AIRP II Roll-In Proposed Rates Component Amount Units Rate Revenue Rate Revenue Rate Revenue Increase Electric Generation Service - Large Volume EGS-LV EGS-LV EGS-LV Customer Charge 72 Bills $ ,960 $ $ 12,960 $ $ 64,800 Demand Charge 45,200 Mcf , , ,205,969 Total Base Revenues $ 949,096 $ 978,360 $ 1,270, % Rider Revenues $ 274,504 $ 274,504 $ 274,504 Total Class Revenues $ 1,223,600 $ 1,252,863 $ 1,545, % Natural Gas Vehicle Service NGV NGV NGV Cust. Charge CFH 12 Bills $ $ 450 $ $ 450 $ $ 450 Cust. Charge 1,000-4,999 CFH - Bills Cust. Charge 5,000-24,999 CFH 12 Bills , , ,400 Cust. Charge 25,000+ CFH 100 Bills , , ,000 Distribution Charge 2,125,090 Therms , , ,300 Subtotal Distribution $ 411,518 $ 424,207 $ 464,150 Compression Charge 840,876 Therms , , ,097 Total Base Revenues $ 867,919 $ 880,608 $ 946, % Rider Revenues $ 238,881 $ 238,881 $ 238,881 Total Class Revenues $ 1,106,800 $ 1,119,489 $ 1,185, %

49 DPY-2 Page 5 of 5 South Jersey Gas Company Base and Total Revenues at Present and Proposed Rates Update Exsting Rates Adjusted for Projected October 1, 2017 Present Rates SHARP and AIRP II Roll-In Proposed Rates Component Amount Units Rate Revenue Rate Revenue Rate Revenue Increase Gas Lights Service GLS GLS GLS Yard Lights 48 Mantles $ $ 4,449 $ $ 4,586 $ $ 5,956 Street Lights 36 Mantles $ ,597 $ ,708 $ ,816 Total Base Revenues $ 8,045 $ 8,294 $ 10, % Rider Revenues $ 11,655 $ 11,655 $ 11,655 Total Class Revenues $ 19,700 $ 19,948 $ 22, % TOTAL SYSTEM BASE DISTRIBUTION REVENUES $ 265,221,334 $ 273,384,866 $ 354,895, % Other Revenues Rider Revenues $ 161,848,050 $ 161,848,050 $ 161,848,050 Special Contracts 4,451,923 4,451,923 4,451,923 Service Charges 1,732,500 1,732,500 1,732,500 Total Other Revenues $ 168,032,473 $ 168,032,473 $ 168,032,473 TOTAL SYSTEM INCLUDING OTHER REVENUES $ 433,253,807 $ 441,417,339 $ 522,928, % Increase $ 81,510,921 Target 81,510,884 Difference $37

50 SOUTH JERSEY GAS COMPANY Pro Forma Adjustment to August 31, 2017 Summary of CIP Revenue Adjustment DPY-3 Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected Test Year Description September October November December January February March April May June July August Total CIP Revenue Adjustment CIP Group 1 - RSG non-heat ($9,778) ($23,715) $24,102 $65,783 $41,445 $48,759 ($23,536) ($22,719) ($20,334) ($10,961) ($11,424) ($7,894) $49,727 CIP Group 2 - RSG Heat ($174,461) ($3,081,892) ($1,794,864) $125,336 ($4,933,352) ($7,183,203) $1,081,513 ($2,360,012) ($1,091,795) $200,975 $221,486 $467,335 ($18,522,935) CIP Group 3 - GSG ($10,560) ($1,230,641) ($1,496,257) ($580,292) ($863,932) ($2,276,420) $125,738 ($643,158) ($15,625) $362,267 $258,373 $650,202 ($5,720,305) CIP Group 4 - GSG-LV ($67,567) ($119,647) $1,395 ($69,111) ($17,085) ($205,066) $229,832 ($213,680) ($16,187) $39,892 ($74,506) $457,544 ($54,186) Total Revenue ($262,366) ($4,455,896) ($3,265,624) ($458,284) ($5,772,924) ($9,615,930) $1,413,547 ($3,239,570) ($1,143,941) $592,173 $393,929 $1,567,187 ($24,247,698) Weather Related Dollars $0 ($116,847) ($1,358,045) $398,837 ($4,986,043) ($7,671,661) $1,766,438 ($3,490,117) $288,670 $0 $0 $0 ($15,168,768) Total Non-Weather Related Dollars ($262,366) ($4,339,049) ($1,907,579) ($857,121) ($786,881) ($1,944,269) ($352,891) $250,547 ($1,432,611) $592,173 $393,929 $1,567,187 ($9,078,930)