June 25, 2010

Dear South Jersey Industries Shareholder:

Thank you for your continued investment in and support of South Jersey Industries. We value the trust you have placed in us and appreciate the fact that you have chosen South Jersey Industries as one of your investments.

We wanted to take the opportunity to provide some background on the current tax treatment associated with your dividend payments. In 2003, the federal tax rate on corporate dividends paid to individual taxpayers was reduced to a maximum rate of 15 percent. This reduction is effective through December 31, 2010.

As you are aware, dividends are taxed twice, once at the corporate level and then again at the individual taxpayer level. Dividend-paying companies and their shareholders are, therefore, penalized in relation to many other types of investments. Reducing the tax on dividends was intended in part to address this inequitable double taxation.

If the reduced dividend tax rate expires in 2010 as currently scheduled, shareholders receiving dividend payments will likely be subject to higher tax rates, negatively impacting their investment returns. In fact, according to the non-partisan Tax Foundation, should the current reasonable tax rates expire, the resulting combination of increased taxes at the corporate and individual investor levels and the new Medicare taxes on investment income will result in a top effective tax rate of 68 percent – highest among all industrialized countries. As a nation, we are just beginning to recover from one of the worse economic periods since the Great Depression – higher taxes will only discourage investment.

South Jersey Industries continues to work actively with the American Gas Association and other interested organizations to support necessary extension legislation. Currently, it is not known what, if any, legislation will be advanced that would make the 15 percent maximum tax rate on dividends permanent. As this deadline rapidly approaches, we encourage you to become engaged in the political process, either by individually contacting your federal elected officials or by joining other shareholders or shareholder associations. Let your members of Congress know that the double taxation of dividends is unfair and encourage them to support the 15 percent tax rate. Please look below for a sample letter that you can tailor and send to your local Congressmen. You may also go the website http://www.defendmydividend.org to get the latest news on this issue and join the effort to stop the impending tax increase.

We will continue to advocate for the permanent reduction in the dividend tax rate and communicate with you on the progress that is being made in this important area and how you can help. Thank you again for your investment in South Jersey Industries.

Sincerely,

Edward J. Graham
Chairman, President and CEO

David A. Kindlick
Chief Financial Officer