Dennis Puma – Manager of Treasury Services Larry Downes – Chairman and Chief Executive Officer Glenn Lockwood – Chief Financial Officer Mark Sperduto – Vice President, Regulatory Affairs Tom Massaro – Vice President, Marketing and Business Intelligence Joe Shields – Executive Vice President and Chief Operating Officer [Unidentified Company Representative]

Daniel Fidell - Brean Murray, Carret & Co. James Lykins - Hilliard Lyons Jay Yannello – Pali Capital Ryan Rosenthal - Sidoti & Co.

Roger Liddell - Ingalls & Snyder Eric Beaumont – Copia Capital Igor Grinman - Zimmer Lucas Partners

Thank you, Sherry, and good afternoon, everybody. Welcome to New Jersey Resources fiscal 2008 year end conference call and webcast.

I'm joined today by Larry Downes, our Chairman and CEO, Glenn Lockwood, our CFO, as well as other members of our senior management team. As you know, certain statements in our news release and in today's call contain estimates and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

We wish to caution readers of our news release and listeners to this call that the assumptions forming the basis for forward-looking statements include many factors that are beyond NJR's ability to control or estimate precisely which could cause results to materially differ from the company's expectations. A list of these items can be found but is not limited to items in the Forward-Looking Statements section of today's news release filed on Form 8K or Form 10-K filed on December 10, 2007 or Form 10-Q filed on May 3, 2008 and our Form 10-K to be filed on or about November 21, 2008.

All these items can be found at SEC.gov. NJR does not by including this statement assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events.

I'd also like to point out that there are slides accompanying today's discussion which are available on our website. That being said, I'd like to turn the call over to our Chairman and CEO, Larry Downes.

Larry?

Thanks, Dennis, and good afternoon, everyone. Thank you for joining us as we review with you our fiscal 2008 results.

The first thing I would like to do is to thank our employees for their dedication, creativity, resilience and absolute commitment. We have very good news to share with you today and it's because of their efforts, and I am grateful for all that they have done.

I want to begin by reiterating something that Dennis said and that's shown on Slide 1 and that is the information regarding our forward-looking statements. That list has expanded and I would encourage you to please read that carefully.

And along with that, on Slide 2 is our disclaimer regarding the use of non-GAAP financial measures. We, as you know, use a number of non-GAAP measures, but I want to stress that those non-GAAP financial measures are in any way intended to replace our GAAP numbers.

But with that, let me begin first of all by giving you some highlights of what was really an extraordinary fiscal 2008 for New Jersey Resources. As you know, we reported net financial earnings of $2.24 per basic share.

That was a 6.2% increase over last year. We announced during the year dividend increases totaling 10.5% and today we announced another 10.7% increase that brings the annual rate to $1.24.

During the year we were able to reach a favorable and balanced settlement of our rate case. We experienced steady margin growth from new customers despite some of the challenges in the marketplace.

And then finally but very importantly, we saw record performance from our Wholesale Energy Services business, NJR Energy Services. Let me start by talking about earnings.

As I said, we announced earnings of $2.24. That was, as I said a 6.2% increase in net financial earnings.

It was driven primarily by the very strong results from NJR Energy Services, although we had very steady results from our subsidiaries. That marked the 17th consecutive year of increases in net financial earnings.

The further good news as I discuss earnings is that we established our guidance for fiscal 2009 for net financial earnings in a range of $2.30 to $2.40 per share. Moving to Slide 5, you can see our dividend history since 2002, the increases, including what we announced today which, as I said, brought the annual rate to $1.24.

And it's really our strong performance that has allowed us to increase the dividend the way we have. We still have, as you look at the second chart there, a relatively low payout ratio, and the importance there - and I think in the environment we're in right now it's really underscored - is that we have continued over the years to maintain a proper balance between the dollars that we were paying out to our shareholders, but also very importantly reinvesting in the company to support future earnings per share growth.

So you can see the very strong record of dividend increases that we've been able to achieve and certainly our action today further supports that record. Now if we move to Slide 6, I know that an issue certainly that is on everyone's mind is in the area of liquidity, and I just want to make a few points.

But I would start with a point that is not on the slide. We have, as you know, for years maintained a strong financial profile.

In fact, each and every year we emphasize that the strength of our financial profile is really an important part of our strategy. And again, I think, with what we have witnessed in recent weeks and months in the financial markets, the wisdom of that strategy has certainly to be sound.

But just a couple of points. Our commercial paper issuances remain strong.

The market for those issuances is strong. In May we were able to issue $125 million in medium-terms notes at 5.6%.

We used that to pay down short-term debt. We do have any long-term debt issuances currently planned for fiscal 2009, and importantly, our bank facilities remain strong, a committed group of banks.

We have $325 million at New Jersey Resources - that is in place for five years at what we consider to be favorable rates - and another $250 million at New Jersey Natural Gas and we use that to support our commercial paper program. But on balance, our financial profile is strong, as is our access to capital to continue to support our ongoing operations and capital needs.

Now let's move to Slide 7 and I just want to review with you our performance model, which has served us so well. It all begins with our focus on natural gas and clean energy services and our goal of providing consistent financial performance and superior long-term dividend growth.

We, as you know, as an important part of our strategy focus on a wide group of stakeholders, believing that our ability to meet the needs of those stakeholders will ultimately lead to financial success. If we look at new margin opportunities, we still see the opportunity for steady growth in our service territory, and I'll share with you some of the initiatives that we have under way in that regard.

Secondly, as we move to the right in the model, our relationships with our regulators are strong; constructive, I think, is a good word to describe them. We've been able to come up with a very balance approach to a number of important regulatory issues and I think that is manifest in our results.

Profitable regulated capital investments, we do have the opportunity to continue to commit capital as we grow our system and we grow our customer base. Also, the dynamic portfolio of supply, storage and transportation contracts, that has really been the foundation of the success that we have had at NJR Energy Services and the skill set of our leadership team there to take that portfolio and manage that very profitability.

We have, as you know, in recent years spoken of our strategy of expanding midstream investments. We continue to make good progress in that regard.

And then, finally, an emerging area, new clean energy opportunities, there are a number of important policy initiatives that are currently under way here in New Jersey and we continue to evaluate what those initiatives may mean for us in terms of commercial opportunities. But when you look at our model, you can see that it is simple.

It is straightforward. It is transparent.

And I think a good way to describe it is we know what we are, but just as importantly, we know what we're not. So let's move to Slide 8 and I'll talk a little bit about new margin opportunities, starting with our customer growth.

Despite some challenging conditions in the marketplace, our team was able to add 7,175 new customers and have another 728 existing customers heat conversions. The important number there, though, is the amount of annual gross margin that we were able to add, and that came to just about $4 million.

If you look at what that means to our customer account, we are now in excess of 483,000 total customers. But moving up to the right-hand side and we look at the margin contribution, I think one of the positive elements of our marketing results this year is the balance between margin from commercial customers and residential customers.

Although residential customers proportionately contributed a larger number of the total new customers, they were about 53% of the total margin. We saw a lot of strength in the commercial market, which contributed 43%.

And if we look at the breakdown of those new customers, you can see what we consider a very good balance between actual new customers and those representing conversions. But I think the important issue when you consider our customer growth is what is the future market potential, and on Slide 9 we try to give you a sense of where we see the ultimate market potential being for both new customers and conversions.

On the new customer side, we see that total number being in excess of 98,000 new customers, and I would call your attention specifically to the yellow slice of that pie and the number that we see through 2012. On the conversion side, again, we see a very good inventory, in excess of 137,000.

And again, I would call your attention to the yellow slice of the pie. Almost 42,000 potential conversions of nongas customers that are located near our main.

Now we calculate these numbers not only based upon our own internal analysis, but we also reach out to use outside firms. You can see the two noted there - Arthur D.

Little and Harte Hanks. So the important point here is that we believe that the future long-term market potential in our service territory remains strong.

Moving to Slide 10, I talked about the importance of constructive regulatory relations, and this year we were able to come up with a reasonable resolution to our rate filing that, as you may recall, we filed back on November 20, 2007. The new rates were effective October 3 of this year.

Some of the highlights, overall base rate increase, revenue increase, of $32.5 million. That included a rate base of $943 million.

And to put that into context for you, that's roughly double the rate base that was approved in our last base rate filing, which was about 14 years ago. We had an overall rate of return of 7.76%, which included a 10.3% allowed return on equity and a 51.2% equity ratio.

I think both of those numbers are competitive and I think that the equity ratio that was approved will certainly give us the access that we will need to the capital markets over the next several years. An important element of the rate case was the extension of our [DGSS] incentives through 2011.

As you know, we have been able to use those incentives for the benefit both of our shareholders and our customers. Our storage incentive was increased to 20 Bcf from 18 Bcf; our depreciation rate was reduced to 2.34% from its prior level of 3%, and the CIP, which has worked so well for our share owners and our customers, remains in place.

This was a key event for New Jersey Natural Gas this year. We think it's a reasonable resolution to the rate case and, again, I want to acknowledge the efforts of the BTU staff and Rate Council because we were able to work together for a balanced outcome that really does balance the need of our investors, our customers, and our company as a whole.

Moving to Slide 11, I want to focus for just a few minutes on our incentives programs because they have been important to our results over the past 10 or so years. As you know, we first got these incentives in place back in 1992 with our off system sales and capacity release.

In 2004 we were able to develop a storage incentive program, and in 1997 we had a financial risk program put in place. The bottom line here is those sharing mechanisms have worked as intended.

We've been able to save our customers, on average, about 5% on their bills while at the same time contributing to our bottom line and helping our shareholders. So it has truly been a win-win as they have, as I said, worked as intended.

Moving to Slide 12, which gives you a sense of our capital investments made this past fiscal year 2008 as well as what we see in 2009, healthy levels in both years, almost $80 last year. You can see a big piece of that related to our ongoing efforts associated with system replacement as well as compliance with pipeline integrity regulations.

Again, the strength of our balance sheet really facilitated our ability to attract the capital that we needed to invest the capital as you see here. In 2009, we see our capital spending right now being at a level of about $77.5 million.

Large numbers still going to our ongoing system replacement program. Customer growth representing about 29%.

And a new slice that you see in the pie there and that is our automated meter reading project, which will unfold over the next year or so. The dollars associated with that are reflected in rates.

But we think that the overall characteristics of our service territory continue to give us the opportunity for additional capital deployment. I want to move to the results of New Jersey Energy Services, which you can see their earnings track record there is shown on Slide 13.

And again, we take this slide back to 2002 and you can see just the absolutely outstanding upward progression in terms of their net financial earnings. And certainly 2008 - fiscal 2008 - was the most successful year in their history.

If you go to Slide 14 you can get a sense of how those results are being achieved. NJR's leadership team has been able to develop really a growing and, I would say, dynamic portfolio of supply, storage and transportation contracts.

But as we have seen, developing a portfolio is one thing and managing it in a way that creates value is something else. And our team has done just an absolutely outstanding job of managing that portfolio in a way that has brought significant financial results to our bottom line.

Going to Slide 15, as you know, in the last several years, as I said earlier, we have been focusing on expanding our midstream investments and doing that in a disciplined way. That is an evolving strategy.

The two investments that are really part of that portfolio right now, first of all, is the Iroquois Pipeline, which goes back to the early 1990s. That has been very successful for us, as you see.

In fiscal 2008 it contributed $1.8 million. And we continue to make good progress with regard to Steckman Ridge, which we announced in 2007.

Our negotiations are continuing with potential customers. We were pleased to receive the FERC certificate in June of 2008.

We continue to make progress on drilling wells. Three are done.

We expect nine more and hopefully we will get to see financial results from that in May of 2009. And then moving to Slide 16, I mentioned briefly what we consider to be perhaps some emerging opportunities in the area of clean energy.

New Jersey, as you know, has established itself as a leader in environmental stewardship. They have done that not only in terms of policy initiatives, but looking for ways to commit capital to support those policy initiatives.

There are three key areas that I would comment on. The first one was the RGGI legislation which, among other things, gave the utilities the opportunity to offer and invest in energy efficiency projects with their customers.

We are looking through a number of potential strategies to take advantage of that and work together with the state right now. We also, through the RGGI legislation, have the ability to request treatment to address disincentives that may arise, and that includes decoupling rate design and other incentives.

The second area I would comment on is the Energy Master Plan. A final report was issued in October.

We are in the process right now of reviewing that plan and seeing what opportunities might be available for us. And one that I have not noted on the slide but I would call your attention to and that is Governor Corzine's recently announced economic stimulus proposal.

Part of that calls for greater investment in the area of energy efficiency. So we're seeing what might be available there as well.

So what we have, as I said earlier, is a number of evolving policy initiatives and we're looking to see are there any appropriate commercial opportunities that are available for us. Now, how does all this translate into shareholder value?

And I would start my comments on that by looking at Slide 17, and you can see what I believe are the investment highlights of New Jersey Resources. It starts with our focus on our demonstrated record of quality performance.

We have sustained core market growth. We've been able to work very, very well with our regulators in a way that benefits all of our stakeholders.

We have had a great deal of success in NJR Energy Services and we have done that by following a very disciplined strategy. Our financial profile remains strong.

I think that is one of the company's truly attractive attributes in the challenging market environment that we're in right now. And again, consistency.

I think we have shown that our strategy works and is able to adapt whatever the challenges in the macro environment might be. If you go to Slide 18, we've given you two comparisons here because we think that our performance really reflects our fundamentals, even during a period of unprecedented market turmoil.

If you look at our total return in September of 2008, you can see where we were 11.95% compared with our peers of 6.9% and the S&P 500, down almost 22%. But what we did in addition to that is we went back to the last official recession, which you have to go back to March 30, 2001 to November 30, 2001, and we looked at how did we perform during that time period.

And you can see during that time period and basically the elements of our strategy, the basic elements were pretty much the same. You can see where our performance of more than 24% outperformed both the Dow utilities and the S&P 500.

So it's our belief that in this environment [inaudible] earnings growth, potential dividend growth, supported by a strong financial profile to facilitate access to capital with a stable customer base, those are the companies that will prosper. And we think that against those metrics, we stack up very well.

So again, I thank you for joining us this afternoon, and we'd be delighted to take any questions that you might have. I have a number of members of my leadership team with me here today, so we look forward to your comments.

Thank you.

Sherry, we'll open the line up to questions now.

I'm just wondering if you could give us a little bit more color on some of your assumptions for 2009 earnings guidance, sort of what's built into those numbers in terms of maybe on the utility and non-utility side, and maybe a little bit on the cost side, as well, bad debt assumptions and pension funding, those kinds of issues.

Like you said, a couple of questions there, but included in the press release with the guidance, we also gave guidance on the expectation of the contribution from our marketing business, Energy Services, of 30% to 40% of overall earnings coming from that business segment. That includes obviously the current status of our portfolio of contracts and what we see currently as the market, if you will, spreads, etc., in those contracts.

Obviously, the timing of the rate case impacting New Jersey Natural Gas is a major factor in the utilities year that we foresee. Larry talked about the customer growth.

Over the next two years we're still expecting to see anywhere between 14,000 and 16,000 customer hookups, again, with about that annual margin of about $4 million being generated from that. On the bad debt expense side, we're watching that closely.

The good news for us is revenues, based on what's gone on with wholesale gas prices, if anything are coming down from what we would have predicted just a few months ago, so even if there is an uptick in the rate of bad debt, we think the absolute dollars involved are very manageable and so we don't, on a net basis, don't see a big shift yet in any bad debt experience. And interest rates, as Larry talked about, with our liquidity and our strong commercial paper program, they remain very manageable for us.

Another major, I guess, I item out there that I know is on a lot of people's mind is what's gone on with the equity markets, the impact on pension and post-retirement medical expenses. In our case and other September 30 year end company's case, the good news offsetting some market declines on the asset side are much higher discount rates needed to value your pension liability.

So the combination of bad news on asset returns we see being pretty much offset by higher discount rates needed. So obviously all of those assumptions are included in our overall disclosure today of the $2.30 to $2.40 next year, with, again, about 30% to 40% of that coming from Energy Services.

In fiscal 2008 the marketing side that contributed just over 50%, I think, of total earnings you're guiding to 30% to 40% contribution next year, I'm assuming, from the benefits of the rate case coming through [inaudible] utility. And then as Steckman Ridge comes on, I'm assuming that number will probably pull in a little bit more to 20% to 30% marketing to total earnings.

Is that about the right business mix that you see for marketing? I know you mentioned that you're interested in other potential opportunities that are either more midstream or these clean energy opportunities.

Just from a broader perspective, what is the right or rather do you have an optimal business mix you're sort of looking at for NJR overall?

Well, I think obviously we needed to improve the percentage of earnings coming from utility, which you saw this year was just the normal cycle for a utility that was in a rate case. And getting a balanced settlement, as we did, you will see an increase not only in their absolute level of earnings but the level as far as a percentage of the total.

So, I mean, the main goal is to make sure that the regulated earnings are continuing to contribute the largest percentage. I would segregate, though, as you look at the company going forward between the earnings coming from NJR Energy Services and those that will come from our storage investment.

So to answer it in general terms, Dan, I think the goal - which has always been the goal - is to make sure that New Jersey Natural is contributing the majority and complemented and supported by the other activities. But Glenn, I'm sure you want to add something.

Yes, I just want to clarify, Dan and everybody else, our public disclosure on Steckman Ridge, although we expect injection into the field to start in fiscal 2009, we have publicly said we don't expect any meaningful earnings contribution until fiscal 2010. I just wanted to clarify that's more of a fiscal 2010 issue for us.

And our current expectation is as we get closer to that, we would actually segregate for public consumption those midstream asset contributions from marketing and from the utility so that you can see that percentage for yourselves and publicly broken out for you.

To follow up on Dan's question, with Energy Services should we be taking a more conservative approach into how we model that or, with that percentage coming down, are you just looking at and especially with Steckman Ridge coming online - a greater contribution from some other areas.

Well, a couple of things. Again, Steckman Ridge, we don't - in effect, we're saying Steckman Ridge, we don't have any internal expectations of contribution in fiscal 2009 and today's announcement is just with regard to fiscal 2009.

And basically yes, what we're saying, obviously, is that, especially with the rate case resolved, we're seeing, if you compare fiscal 2009 projections versus what we just announced for 2008, an increased contribution from the utility side as opposed to the marketing side.

I also wanted to ask you about O&M. It was up close to 13% this quarter.

Could you just give us a feel for what's happening there, what drove that increase?

Again, with the good year we had some higher compensation costs. We had the flexibility to make some discretionary donations and contributions and items like that, again being driven by the extra margin and revenue we wound up having this year.

I think you can see that our final number, even with those extra costs, wound up being slightly higher than our last forecast, so we took that opportunity to obviously deal with compensation issues and be able to handle some discretionary investments, if you will.

And can you also tell us what the impact, if there was one, this quarter from the CIP and if that is now permanent or if that'll have to be included in one of your rate filings going forward?

I'll give you the overall numbers, and then Mark will give you the status going forward. Overall and this is an approximate number for the year - we had about a $22 million overall accrual to margin from the CIP program.

Approximately $13 million of that was related to nonweather factors and the balance of $9 million was weather related. I'll turn it over to Mark to talk about going forward how the program lays out.

Right now in the process, as you probably remember, this is a three-year pilot that began in October of 2006. Part of the agreement settling that case was that after two years we would conduct an evaluation of the program.

We just began that process and, in fact, we have a meeting set up with the state regulatory agencies involved over the course of the next several weeks. That evaluation process would also lead to filing early in 2009 for a determination on what the future of the pilot program will be.

Can you give us a little more flavor on this new clean energy opportunity stuff? Any kind of idea of what you possibly could offer?

Yes, absolutely. In fact, what I'll do is I'll as Tom Massaro just to brief you on some of the things that are in the legislation.

The one we're focused on right now is the RGGI legislation. There are some elements that relate to the governor's economic stimulus package.

But Tom, you want to do that?

Sure. From the regulated side, we're taking a look at investments we can make in the efficiency and conservation arena, as well as the renewables side.

And in the legislation that Larry was referencing back in January as part of the RGGI legislation, it allows for a return on those investments and also recovery of the cost for those. So we're looking at some different programs there on the regulated side.

And then also with the Energy Master Plan recently being released, we're taking a look at the efficiency opportunities that are there as well as other opportunities around the power side, the generation side, [CHP] and other opportunities that may be available through that Energy Master Plan. There's specific goals that the state is looking to achieve by 2020 that we're trying to see if there's any commercial opportunities there.

Can you be more specific on any of these efficiency things or the renewables?

Jay, let me say - and again, I was very deliberate in using the word evolving when I described this there's a good structure out there from my perspective. If you look at a filing that PS made earlier this year, which basically came up with a loan structure to support these investments.

So we're seeing if that structure has any applicability here. I think the good news is that the state very wisely recognizes that in order to achieve what is clearly an aspirational plan in the area of energy efficiency that capital is going to be required to make that happen.

But it's an area that is really in flux right now.

But you could possibly be getting into some types of power generation, as an example?

I think right now we're focusing more on the energy efficiency side. The state has established very aggressive goals in the area of carbon reduction and, when you really drill down on that, you know, fixing equipment is one thing, but it's really got to come from weatherization.

So what we're trying to figure out is what is the best vehicle for providing capital to achieve that objective. We have not really gotten anywhere on looking at power generation.

That is not something that's high on the screen right now. The more immediate opportunity is in the area of energy efficiency.

I know we haven't had that many degree days, but has there been any evidence that people have been able to just not turn their furnaces on for the most part so far this year? Have you seen any notable elasticity so far?

No.

And I also noticed -

Jay, one quick point though. It's probably a little early for that, though.

I agree, but we've definitely needed some heat here and there. I'm just wondering if you saw anything pop up.

I also noticed on my block you added three houses that, believe it or not, didn't have natural gas service when the rest of it did. Is that more of like a PR decision or is that an economic decision.

It wasn't me, by the way. I've had it.

I'm just curious. I mean, is that an economic decision or is that more like of a courtesy.

I didn't mean to make a joke of this.

No, it definitely was not a courtesy installation. We did see a very strong year as far as conversions in the marketplace because of the differential between oil, electric and propane, the competing fuels to natural gas.

We had a very strong year on the conversion marketplace and the commercial marketplace.

I realize that, but is it economic to convert a couple of homes? I mean, what's the payoff.

How long does it take to pay off?

In the tariff there's a regulatory economic formula you go through that the economics make sense to extend the gas main and then run the services to those premises over a set period of time. It's definitely an economic, you know, worthiness to connect new customers to the system.

How many years roughly to get a payback.

In the tariff, it's over a 10-year period that the costs can be placed against on the revenue side.

Each situation is individual. If there's a main already running down your street, the only investment we're making is in the servicing meter.

Well, no, that's why I bring up - because you had to extend the main, you had to dig up, you had to - it was a lot of work and I said to myself, "Gee, what is the payback on doing all this," because you had to extend the main and everything for three homes. That's why I bring it up.

I think what Tom is pointing out is that there are these tests or tariffs that would govern it. But obviously we wouldn't do that just as a courtesy.

I noticed in the release that the retail and other segments generated a 16% increase in year-over-year net financial earnings. I was looking for you to comment perhaps on what led to the strong performance for that segment and, going forward, what we can expect in terms of growth for these kind of operations going forward.

What's in that segment in our investment in Iroquois was the majority of that growth. And while we don't internally forecast that particular piece of it growing quite as fast in the future, the overall percentage of that - retail and other - to the total will be about the same.

And then just regarding the fourth quarter results, can you also discuss what led to the significant year-over-year increase in the incentive program earnings for the utility and then, once again, discuss longer-term the implications of the rate case, how that may impact earnings from this part of the business as well?

Some of the uplift came from the financial risk management program for commodity hedging, which is a program that's been in place for awhile. The other part of it came from the storage incentive program and the [inaudible] system has increased.

So those three, a combination of those.

I'm just trying to understand the mechanics of that and, you know, year-over-year, were there conditions with volatility in commodity prices that led to the stronger results?

On the financial risk management, yes, it's a price that's set by independent benchmarks. That allows us to get some [stability] into our DGSS [inaudible] cost so that, when the volatility is there, it does give us some opportunity.

Regarding the conversion opportunities, I assume that because of the recent decline in propane and oil that there may be less of a backlog than you may have had previously. Are you seeing an indication of that yet?

No, we have not. There's still a fair price differential between natural gas and the competing fuels.

[Inaudible] environmental baskets relative to oil.

My question involves the CIP and how an earlier question was answered. Your studying the pilot program here in year three, having completed the two years, and the answer earlier from one of you spoke of investigating or looking at the future of the pilot program.

I take it that answer was not intended to have a pejorative note; rather, it should be viewed as evolving rather than whether it should proceed in anything like this form?

I think in the original CIP agreement, what we were following through on are the basic parameters that it was a pilot basis, that there would be a review done on an ongoing basis. We think - and we've made the numbers public - that it has worked as intended.

We have seen some change in customer behavior. We have seen lowering of commodity prices, and we think that the review that we do will bring those attributes of the program out very clearly.

And then on the issue of electric generation, it was answered clearly a moment ago that that's not on your front burner, but what is your stance on customers interested in putting a combined heat and power project and whether you would participate in any fashion in the investment, even though you would not be operating it?

Roger, the point that I was trying to make was - and perhaps I misunderstood the context of the question - I was thinking of it more in, you know, the kind of large-scale generation. That's not something that we're interested in.

What we are looking for is what is the outcome of the Energy Master Plan with regard to smaller potential applications at the customer site that would utilize natural gas. That would be very good for our business model.

It would help our load factor in utility. As those rules, again, become clearer, that is something that we will have a very keen interest in.

I think of your program as one of the most advanced and most effective in the country, but I'm not really clear, can you name any other programs that you would feel are on a par with yours or are you in the middle of a pack for the industry?

I think you're alluding to the CIP?

Yes, I am.

We look at the others and I think they have different elements, depending upon their individual circumstances. We look at them, quite honestly, to see what we can learn from them and potentially enhance our own program, but we don't really go through a process of ranking them.

I think here in New Jersey we were able to come up with this agreement with our regulators after a lot of negotiation and discussion about the needs of all of the stakeholders here, including customers and share owners. But don't really rank them; we look at them to try and learn from them.

And there's been some real success stories out there, as you know.

Real quick - I hate to ask because I feel like I ask every year - but you [continuously] talk about getting, you know, the utility grows and the [inaudible] stays the same. And if I just look at the numbers and do the math on your 32% - 40% on the range you give, it looks like kind of the midpoint in there would put Energy Services below where it was even in '07.

Granted, '07 and '08 were phenomenonal years but, you know, is there something I need to be thinking about? Is it a conservative view on the opportunity set that you see going forward?

Are some of the contracts coming off? Can you help me - it looks like the midpoints down a little over 20% from where you were this year on a financial earnings basis.

I agree with the math you did. We did mention based on where the market currently is and the spreads are now versus what we enjoyed in '07 and '08.

'07 and '08 also benefited from extreme weather events and physical disruptions in the market that we do not count on when coming up with our [inaudible] plan. So those are the major reasons why the numbers are working the way you just went through.

And again, like I said, overall we do see the growth, but a bigger chunk coming from the utility side.

Again, Eric, I think it's important to look at it holistically, as Glenn said, and to look at, you know, the steps that we have taken to improve the financial performance of New Jersey Natural Gas. If you look back into 2008, we had increased our guidance as the performance continued to as NJR's performance continued to improve and exceed our expectations during the year.

But it's actually both, and I think what we're doing is we're getting back to a more normal distribution of the earnings with the majority coming from the utilities because of the rate case.

No, I agree, and that's been the point you've been trying to make the last couple of years. I'm just trying to make sure I understand where the [inaudible] I see, like if we see the huge [inaudible] spreads in February, you know, generally you see the - is it historically true that you've seen the kind of weather-driven anomalies in your Q2 and then your spread opportunities have been more lacking as you track summer/winter spread and, as far as transportation opportunities, just throughout the year?

So the weather opportunities are more key to your [inaudible] spreads you see throughout the year and optimize around? Is that fair?

Okay, I'm going to ask Steve [inaudible]. He's with [inaudible].

Steve?

Eric, I think I'm hearing you correctly; you're asking essentially, you know, what would drive our earnings through this coming year and what you could actually use to predict, and a lot of that is going to be dependent on what our [inaudible] positions are, how we're able to trade in and around those, and if the volatility hits in the regions where we have our assets, then we should see something else left in our book. Like Glenn said, we usually take an average approach and we look forward and say if we get average weather and you get average conditions, then this is what we should produce over the course of the year.

And, again, just as far as thinking about it, you're really not in the habit of giving us any guidance with respect to how we would expect those earnings from resources to flow quarter to quarter or a breakdown, you know, we expect so much, 20% in Q1, 40% in Q2, you know, nothing along those lines?

No, we did say it would be with the annual guidance.

And each quarter we will update the annual guidance.

Okay.

Thank you very much.

See you next quarter. Thank you.