File No. ______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
____________________________
Form U-3A-2
Statement by Holding Company Claiming Exemption
Under Rule U-2 From the Provisions of the Public
Utility Holding Company Act of 1935
To Be Filed Annually Prior to March 1
QUESTAR REGULATED SERVICES COMPANY
(Name of Company)
hereby files with the Securities and Exchange Commission, pursuant to Rule
2, its statement claiming exemption as a holding company from the
provisions of the Public Utility Holding Company Act of 1935, and submits
the following information:
1. Name, state of organization, location and nature of business of
claimant and every subsidiary thereof, other than any exempt wholesale
generator (EWG) or foreign utility company in which claimant directly or
indirectly holds an interest.
Questar Regulated Services Company ("Regulated Services" or the
"Company") is a Utah corporation with its principal executive office and
principal place of business at 180 East First South Street, P.O. Box 45360,
Salt Lake City, Utah 84145-0360. It is a wholly owned subsidiary of
Questar Corporation (Questar) which claims an exemption as a holding
company under the Public Utility Holding Company Act of 1938 (the "PUHCA").
Regulated Services was created to perform specified administrative services
for Mountain Fuel Supply Company (Mountain Fuel) and Questar Pipeline
Company (Questar Pipeline). Effective January 1, 1997, it will own the
outstanding shares of common stock issued by Mountain Fuel and Questar
Pipeline.
Mountain Fuel is a Utah corporation with the same address noted above
for Regulated Services. It is engaged in the retail distribution of
natural gas in the states of Utah, Wyoming, and Idaho. It is a "gas
utility company" as that term is defined in the PUHCA. Mountain Fuel also
transports natural gas for industrial users in Utah and Wyoming. Mountain
Fuel's activities in Utah and Wyoming are subject to regulation by the
respective Public Service Commissions in those states. Mountain Fuel has a
contract to sell and transport natural gas to one customer in Colorado.
This isolated activity is not subject to the jurisdiction of the Colorado
Public Utilities Commission. Mountain Fuel's customers in Idaho are served
under the provisions of its Utah tariff. Pursuant to a special contract
with the Idaho Public Utilities Commission, Mountain Fuel's Idaho natural
gas service is regulated by the Public Service Commission of Utah.
Questar Pipeline is a Utah corporation with its principal place of
business at 79 South State Street, P. O. Box 11450, Salt Lake City, Utah
84147. It transports and stores natural gas in interstate commerce in the
Rocky Mountain states of Utah, Wyoming, and Colorado. It does not make any
sales of natural gas and is not a gas utility company.
Regulated Services does not own any other companies. It does not
have any interest, direct or indirect, in any exempt wholesale generator or
foreign utility company. As of January 1, 1997, Regulated Services will
have employees that were formerly employees of Mountain Fuel or Questar
Pipeline that perform accounting, human resources, marketing, engineering,
and communication services for such companies.
2. A brief description of the properties of claimant and each of its
subsidiary public utility companies used for the generation, transmission,
and distribution of electric energy for sale, or for the production,
transmission, and distribution of natural or manufactured gas, indicating
the location of principal generating plants, transmission lines, producing
fields, gas manufacturing plants, and electric and gas distribution
facilities, including all such properties which are outside the state in
which claimant and its subsidiaries are organized and all transmission or
pipelines which deliver or receive electric energy or gas at the borders of
such state.
Mountain Fuel was distributing natural gas to 592,738 sales and
transportation customers (defined as active meters) in Utah, southwestern
Wyoming, southeastern Idaho, and western Colorado as of year-end 1995. Of
these customers, 570,512 were located in Utah, 20,969 were located in
southwestern Wyoming, 1,256 were located in southeastern Idaho, and one was
located in western Colorado. Mountain Fuel owns and operates approximately
18,027 miles of street mains, service lines and interconnecting pipelines
in its distribution system, including approximately 17,121 miles in its
Utah distribution system.
Under the terms of a settlement agreement among Mountain Fuel, Wexpro
Company ("Wexpro," an affiliate) and various state parties ending several
years of litigation, Mountain Fuel owns the natural gas produced from gas
reservoirs that were productive as of August 1, 1981. Most of these
productive reservoirs are located in southwestern Wyoming and northwestern
Colorado; most of the gas produced from such reservoirs is distributed to
Mountain Fuel's retail natural gas customers. Gas owned by Mountain Fuel
but produced from reservoirs outside the location of pipelines owned by
Questar Pipeline is generally sold to or exchanged with other companies.
Gas owned by Mountain Fuel (including related royalty gas) constituted
about 64 percent of Mountain Fuel's total gas supply in 1995 and is
reflected in Mountain Fuel's rates at "cost-of-service" prices.
As of September 1, 1993, Mountain Fuel became directly responsible
for gas acquisition activities. Questar Pipeline transports the gas
volumes purchased directly by Mountain Fuel and transports
cost-of-service-gas owned by Mountain Fuel and produced by Wexpro.
Mountain Fuel takes delivery of gas from Questar Pipeline and an
unaffiliated interstate pipeline at various points in Utah and Wyoming.
Mountain Fuel does not currently own any interstate transmission lines or
gas manufacturing plants.
3. The following information for the last calendar year with respect
to claimant and each of its subsidiary public utility companies:
(a) Number of kwh of electric energy sold (at retail or
wholesale) and Mcf of natural or manufactured gas distributed at
retail.
During the 1995 calendar year, Mountain Fuel sold 83,160,000
decatherms ("Dth") of natural gas, including 73,950,000 Dth at retail, and
transported 59,569,000 Dth of natural gas. (Mountain Fuel generally
reports volumes in Dth; a Dth is equal to ten therms or one million Btu's.
In Mountain Fuel's gas system, each Mcf of natural gas contains
approximately 1.07 Dth.) (For purposes of this report, Mountain Fuel's
"retail" customers are general service or residential and commercial
customers. The term "wholesale" refers to industrial sales.) Mountain
Fuel's total revenues for 1995 were $362,769,000, of which $326,857,000
were attributable to its operations in Utah, $16,380,000 were attributable
to its operations in Wyoming, $121,000 were attributable to its operations
in Colorado, and $706,000 were attributable to its operations in Idaho.
(Mountain Fuel's total 1995 revenues included $18,705,000 in addition to
revenues from gas deliveries.) Mountain Fuel did not distribute any
manufactured gas during such calendar year. Neither Regulated Services nor
Questar Pipeline made any retail distribution or sales of natural gas or
manufactured gas during 1995.
(b) Number of kwh of electric energy and Mcf of natural or
manufactured gas distributed at retail outside the state in which
each such company is organized.
During the 1995 calendar year, Mountain Fuel distributed at retail
3,354,000 Dth of natural gas outside the state of Utah, Mountain Fuel's
state of incorporation.
(c) Number of kwh of electric energy and Mcf of natural or
manufactured gas sold at wholesale outside the state in which each
such company is organized, or at the state line.
During 1995, Mountain Fuel sold at wholesale outside the state of
Utah, or at the state line of such state, 302,000 Dth of natural gas.
Mountain Fuel, during 1995, also transported 6,343,000 Dth of natural gas
to customers in Wyoming. Mountain Fuel did not sell at wholesale any
manufactured gas during 1995. Neither Regulated Services nor Questar
Pipeline sold at wholesale any natural gas or manufactured gas during 1995.
(d) Number of kwh of electric energy and Mcf of natural or
manufactured gas purchased outside the state in which each such
company is organized or at the state line.
During the 1995 calendar year, Mountain Fuel purchased 17,279,000 Dth
of natural gas or approximately 21 percent of its total gas supply outside
the state of Utah or at the state line. Regulated Services did not
purchase any gas volumes.
4. The following information for the reporting period with respect
to claimant and each interest it holds directly or indirectly in an EWG or
a foreign utility company, stating monetary amounts in United States
dollars:
(a) Name, location, business address and description of the
facilities used by the EWG or foreign utility company for the
generation, transmission and distribution of electric energy for sale
or for the distribution at retail of natural or manufactured gas.
None. Regulated Services nor any of its affiliates has any interest,
direct or indirect, in any exempt wholesale generator or foreign utility
company.
(b) Name of each system company that holds an interest in such
EWG or foreign utility company; and description of the interest held.
None. Regulated Services and its affiliates do not have any
interest, direct or indirect, in any exempt wholesale generator or foreign
utility company.
(c) Type and amount of capital invested, directly or
indirectly, by the holding company claiming exemption; any direct or
indirect guarantee of the security of the EWG or foreign utility
company by the holding company claiming exemption; and any debt or
other financial obligation for which there is recourse, directly or
indirectly, to the holding company claiming exemption or another
system company, other than the EWG or foreign utility company.
None. Regulated Services does not have any interest, direct or
indirect, in any exempt wholesale generator or foreign utility company.
(d) Capitalization and earnings of the EWG or foreign utility
company during the reporting period.
None. Regulated Services does not have any interest, direct or
indirect, in any exempt wholesale generator or foreign utility company.
(e) Identify any service, sales or construction contract(s)
between the EWG or foreign utility company and a system company, and
describe the services to be rendered or goods sold and fees or
revenues under such agreements(s).
None. Regulated Services does not have any interest, direct or
indirect, in any exempt wholesale generator or foreign utility company.
EXHIBIT A
A consolidating statement of income and surplus of the claimant and
its subsidiary companies as of the close of such calendar year, together
with a consolidating balance sheet of claimant and its subsidiary companies
as of the close of such calendar year.
The following exhibits are attached to and made a part of this
filing:
Exhibit A-1 Pro Forma Consolidating Statement of Income of Questar
Regulated Services Company as of December 31, 1995.
Exhibit A-2 Pro Forma Statement of Common Shareholder's Equity,
Questar Regulated Services Company.
Exhibit A-3 Pro Forma Consolidating Balance Sheet of Questar
Regulated Services Company as of December 31, 1995.
EXHIBIT B
If, at the time a report on this form is filed, the registrant is
required to submit this report and any amendments thereto electronically,
the registrant shall furnish a Financial Data Schedule.
The requested Financial Data Schedule information has been submitted.
EXHIBIT C
An organization chart showing the relationship of each EWG or foreign
utility company to associate companies in the holding-company system.
None.
The above-named Claimant has caused this statement to be duly executed
on its behalf by its authorized officer on this 31st day of December, 1996.
QUESTAR REGULATED SERVICES COMPANY
Attest:
/S/ Connie C. Holbrook By /S/ D. N. Rose
Connie C. Holbrook D. N. Rose
Secretary President and Chief Executive Officer
Name, title and address of officer to whom notices and correspondence
concerning this statement should be addressed:
Connie C. Holbrook
Secretary
Questar Regulated Services Company
180 East First South, P.O. Box 45360
Salt Lake City, Utah 84145-0360
<PAGE>
Exhibit A-1
QUESTAR REGULATED SERVICES COMPANY
PRO FORMA CONSOLIDATING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Questar Total Inter- Consolidated
Mountain Questar Regulated Before company Questar
Fuel Pipeline Services Elimi- Trans- Regulated
Supply Co. Co. Co. -nations actions Services Co.
<S> <C> <C> <C> <C> <C> <C>
REVENUES $358,758 $36,780 $395,538 $395,538
Intercompany transactions 4,011 57,992 62,003 $54,117 7,886
TOTAL REVENUES 362,769 94,772 457,541 54,117 403,424
OPERATING EXPENSES:
Natural gas purchases 190,606 190,606 54,082 136,524
Operating and maintenance 93,384 34,003 127,387 35 127,352
Depreciation and amortization 25,469 12,911 38,380 38,380
Other taxes 9,588 3,370 12,958 12,958
TOTAL OPERATING EXPENSES 319,047 50,284 369,331 54,117 315,214
OPERATING INCOME 43,722 44,488 88,210 88,210
INTEREST AND OTHER INCOME 4,232 524 4,756 4,756
EARNINGS FROM AFFILIATES 1,220 1,220 1,220
DEBT EXPENSE (16,580) (13,472) (30,052) (30,052)
INCOME BEFORE INCOME TAXES 31,374 32,760 64,134 64,134
INCOME TAXES 7,706 11,492 19,198 19,198
INCOME FROM CONTINUING
OPERATIONS 23,668 21,268 44,936 44,936
DISCONTINUED OPERATIONS - Questar
Gas Management Company 3,380 3,380 3,380
NET INCOME $23,668 $24,648 $48,316 $48,316
</TABLE>
<PAGE>
Exhibit A-2
QUESTAR REGULATED SERVICES COMPANY
PRO FORMA STATEMENT OF COMMON SHAREHOLDER'S EQUITY
(Unaudited)
(Dollars In Thousands)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings
<S> <C> <C> <C> <C>
Balances at January 1, 1995 $29,525 $123,909 $270,984
Issuance of common stock (1) 100 1
1995 net income 48,316
Dividends
Preferred stock (483)
Common stock (39,000)
Redemption cost (1)
Balances at December 31, 1995 100 $29,525 $123,910 $279,816
</TABLE>
(1) Questar Regulated Services Co. has 1 million shares of
$.01 par value stock authorized and issued 100 shares November
22, 1996.
<PAGE>
Exhibit A-3
QUESTAR REGULATED SERVICES COMPANY
PRO FORMA CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1995
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Questar Inter- Consolidated
Mountain Questar Regulated company Questar
Fuel Pipeline Services Trans- Regulated
Supply Co. Co. Co. actions Services Co.
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $1,466 $1,013 $2,479
Notes receivable from Questar Gas
Management Co. 16,692 16,692
Federal income taxes receivable 3,971 (353) 3,618
Accounts and notes receivable 63,671 13,706 1 (4,061) 73,317
Inventories 20,915 2,310 23,225
Prepaid expenses and deposits 3,843 2,157 6,000
TOTAL CURRENT ASSETS 93,866 35,525 1 (4,061) 125,331
PROPERTY, PLANT AND EQUIPMENT 784,466 547,831 1,332,297
Less allowances for depreciation 302,619 183,840 486,459
NET PROPERTY, PLANT
AND EQUIPMENT 481,847 363,991 845,838
INVESTMENT IN DISCONTINUED
OPERATIONS 27,755 27,755
INVESTMENT IN AND ADVANCES
TO AFFILIATES 9,084 433,250 (433,250) 9,084
OTHER ASSETS 24,548 11,903 36,451
24,548 48,742 433,250 (433,250) 73,290
$600,261 $448,258 $433,251 ($437,311) $1,044,459
CURRENT LIABILITIES
Notes payable to Questar Corp. $56,100 $15,200 $71,300
Accounts payable and accrued
expenses 61,800 12,433 (4,061) 70,172
Purchased-gas adjustments 9,182 9,182
TOTAL CURRENT LIABILITIES 127,082 27,633 (4,061) 150,654
LONG-TERM DEBT 175,000 134,525 309,525
DEFERRED CREDITS 16,029 5,346 21,375
DEFERRED INVESTMENT TAX CREDITS 7,157 114 7,271
DEFERRED INCOME TAXES 61,391 56,035 117,426
CUMULATIVE PREFERRED STOCK 4,957 4,957
COMMON SHAREHOLDER'S EQUITY
Common stock 22,974 6,551 29,525
Additional paid-in capital 41,875 82,034 433,251 (433,250) 123,910
Retained earnings 143,796 136,020 279,816
TOTAL COMMON SHAREHOLDER'S
EQUITY 208,645 224,605 433,251 (433,250) 433,251
$600,261 $448,258 $433,251 ($437,311) $1,044,459
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR3
<LEGEND>
The schedule contains summarized financial information extracted from the
Pro forma Questar Regulated Services Company income statement and balance
sheet for the period ended December 31, 1995, and is qualified in its entirety
by reference to such unaudited financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PRO-FORMA
<TOTAL-ASSETS> 1,044,459
<TOTAL-OPERATING-REVENUES> 403,424
<NET-INCOME> 48,316
</TABLE>
