Natural Gas Nomination

Residential (RSGFT) and commercial (GSGFT) customers are aggregated into groups. On or by the 25th of each month, South Jersey Gas Company’s Transportation Department will communicate the estimated Daily Delivery Requirement (DDR) for each marketer’s group and communicate it in advance of the following month. The quantity of gas expected for delivery is constant for each day of the month. The DDR for commercial customers is calculated using historical usage information and residential customers using an average therm use per customer. The monthly excess or deficiency of each group is accumulated seasonally and settled seasonally. South Jersey Gas requires Third Party Suppliers to communicate expected delivery of gas supplies intended for their customers on a day-ahead basis. The confirmation of the scheduled delivery of the gas into South Jersey Gas Company’s distribution system is confirmed by Transportation Department personnel on a day-ahead basis, an intra-day basis, a day-after basis and an end-of-month basis. The confirmation is accomplished utilizing the web sites provided by Transcontinental Gas Pipeline (Transco) and Columbia Gas Transmission (TCO). Any variation from the expected quantity is communicated by Transportation Department personnel to the Third Party Supplier. Inquiries are made regarding over or under deliveries, regardless of magnitude. The deadline for communication from Third Party Suppliers to the South Jersey Gas Company Transportation Department regarding next-day city gate delivery quantities and pipeline split is 12:00 noon EST.

All daily nominations should be sent to sjgnom@sjindustries.com.

Industrial customers may also be aggregated into groups. The quantity of gas delivered by a marketer on behalf of the customers within an aggregated group is determined based on the aggregate consumption of the customers. The daily requirements for gas delivery to industrial customers are not dictated by SJG. Instead, marketers are expected to maintain a variance relationship of consumption and delivery to industrial customer groups that does not exceed + / - 7.5%. This imbalance condition is monitored by SJG personnel on a daily basis. In the event that the imbalance exceeds + / - 7.5%, the imbalance is considered an “Imbalance Requiring Action “ (IRA). Upon determining that an IRA exists, SJG Transportation Department personnel notify the third party supplier and a supplemental delivery plan is verbally agreed upon that is intended to result bringing the imbalance to below + / - 7.5%. Failure on the part of the third party supplier to comply with a plan intended to correct an IRA has consequences referenced in the SJG tariff under Balancing Rider “I”. (See Below)

At month-end, marketers with industrial customer groups are charged or compensated for gas imbalances on their aggregated groups. The methodology that results in the rate billed or paid to marketers is referenced in the SJG tariff under Balancing Rider “I”. (See Below). If the month-end imbalances to an industrial group exceeds + / - 7.5%, the rate billed or paid is mathematically impacted so as to penalize a marketer for exceeding the allowable + / - 7.5% margin. This multiplier, referred to as the System Impact Charge (SIC), serves as a disincentive to marketers intentionally creating imbalances on the SJG system.

Each month, the Company shall "cash out" Net Monthly Deficiency Imbalances as follows:

Customers with a Net Monthly Deficiency Imbalance shall be charged on their bills, for service provided during such month, an amount equal to the product of (i) the Net Monthly Imbalance quantity times (ii) one hundred ten percent (110%) of the simple average of daily postings of Transcontinental Gas Pipe Line Corporation's (Transco’s) Zone 6 Daily Midpoint reported each day during the month in which the Deficiency Imbalance occurred, in the Daily Price Survey in the Gas Daily; times (iii) a System Impact Charge ("SIC").

If:

• Monthly gas consumption exceeds monthly receipts by seven and one-half (7.5%) percent of gas consumption or less, the SIC will be one (1)
• Monthly gas consumption exceeds monthly receipts by more than seven and one-half (7.5%) percent but less than fifteen (15%) percent, the SIC will be one and three tenths (1.3)
• Monthly gas consumption exceeds monthly receipts by fifteen (15%) percent or more, the SIC will be two (2)

Each month, the Company shall "cash out" Net Monthly Excess Imbalances as follows:

Customers with a Net Monthly Excess Imbalance shall receive on their bills, for service provided during such month, a credit equal to the product of (i) the Net Monthly Imbalance quantity times (ii) ninety percent (90%) of the simple average of daily postings of Transco’s Zone 6 Daily Midpoint reported each day during the month in which the Excess Imbalance occurred, in the Daily Price Survey in the Gas Daily; less (iii) a capacity charge factor of $.0050 per therm; times (iv) a System Impact Charge (“SIC”).

If:

• Monthly receipts exceed monthly Gas Consumption by seven and one-half (7.5%) percent of Gas Consumption or less, the SIC will be one (1)
• Monthly receipts exceed monthly Gas Consumption by more than seven and one-half (7.5%) percent but less than fifteen (15%) percent, the SIC will be two-thirds (2/3)
• Monthly receipts exceed monthly Gas Consumption by fifteen (15%) percent or more, the SIC will be one-half (1/2)