File No. 69-00401
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
____________________________
Form U-3A-2 for 1996
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 owns the outstanding shares
of common stock issued by Mountain Fuel and Questar Pipeline. On December
31, 1996, the Company filed an initial Form U-3A-2 with the Securities and
Exchange Commission.
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. Employees in Regulated Services perform accounting,
human resources, legal, marketing, engineering, and communication services
for Mountain Fuel and Questar Pipeline.
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 618,231 sales and
transportation customers (defined as active meters) in Utah, southwestern
Wyoming, southeastern Idaho, and western Colorado as of year-end 1996. Of
these customers, 595,604 were located in Utah, 21,301 were located in
southwestern Wyoming, 1,325 were located in southeastern Idaho, and one was
located in western Colorado. Mountain Fuel owns and operates approximately
18,685 miles of street mains, service lines and interconnecting pipelines in
its distribution system, including approximately 17,737 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 54 percent
of Mountain Fuel's total gas supply in 1996 and is reflected in Mountain
Fuel's rates at "cost-of-service" prices.
As of September 1, 1993, Mountain Fuel became directly responsible for
all 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 1996 calendar year, Mountain Fuel sold 89,428,000 decatherms
("Dth") of natural gas, including 80,844,000 Dth at retail, and transported
49,499,000 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 1996 were
$371,928,000, of which $336,386,000 were attributable to its operations in
Utah, $15,382,000 were attributable to its operations in Wyoming, $527,000
were attributable to its operations in Colorado, and $745,000 were attributable
to its operations in Idaho. (Mountain Fuel's total 1996 revenues included
$18,888,000 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 1996.
(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 1996 calendar year, Mountain Fuel distributed at retail
3,466,000 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 1996, Mountain Fuel sold at wholesale outside the state of Utah,
or at the state line of such state, 587,000 Dth of natural gas. Mountain
Fuel, during 1996, also transported 1,313,000 Dth of natural gas to customers
in Wyoming. Mountain Fuel did not sell at wholesale any manufactured gas
during 1996. Neither Regulated Services nor Questar Pipeline sold at
wholesale any natural gas or manufactured gas during 1996.
(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 1996 calendar year, Mountain Fuel purchased 21,404,000 Dth
of natural gas or approximately 23 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 and its affiliates do not have 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, Questar Regulated
Services Company as of December 31, 1996.
Exhibit A-2 Pro Forma Consolidated Statements of Common Shareholders'
Equity, Questar Regulated Services Company.
Exhibit A-3 Pro Forma Consolidating Balance Sheet, Questar Regulated
Services Company as of December 31, 1996.
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 27th day of February, 1997.
QUESTAR REGULATED SERVICES COMPANY
Attest:
/Connie C. Holbrook By /S./E./Parks
Connie C. Holbrook S. E. Parks
Secretary Vice President, Treasurer
and Chief Financial 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
Exhibit A-1
QUESTAR REGULATED SERVICES COMPANY
PRO FORMA CONSOLIDATING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Questar Consolidated
Mountain Questar Regulated Total Questar
Fuel Pipeline Services Before Interco. Regulated
Supply Co. Co. Co. Elimin. Trans. Services Co.
<S> <C> <C> <C> <C> <C> <C>
REVENUES $368,905 $38,837 $407,742 $407,742
Intercompany transactions 3,023 65,341 68,364 $61,146 7,218
TOTAL REVENUES 371,928 104,178 476,106 61,146 414,960
OPERATING EXPENSES:
Natural gas purchases 182,400 182,400 61,078 121,322
Operating and maintenance 97,110 39,959 137,069 68 137,001
Depreciation and amortization 28,309 14,206 42,515 42,515
Other taxes 8,071 2,519 10,590 10,590
TOTAL OPERATING EXPENSES 315,890 56,684 372,574 61,146 311,428
OPERATING INCOME 56,038 47,494 103,532 103,532
INTEREST AND OTHER INCOME 3,033 1,798 4,831 4,831
EARNINGS FROM AFFILIATES 182 182 182
DEBT EXPENSE (16,637) (13,416) (30,053) (30,053)
INCOME BEFORE INCOME TAXES 42,434 36,058 78,492 78,492
INCOME TAXES 13,446 13,415 26,861 26,861
INCOME FROM CONTINUING
OPERATIONS 28,988 22,643 51,631 51,631
DISCONTINUED OPERATIONS - Questar
Gas Management Company 1,495 1,495 1,495
NET INCOME $28,988 $24,138 $53,126 $53,126
</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
1996 net income 53,126
Dividends
Preferred stock (391)
Common stock (85,250)
Balances at December 31, 1996 100 $29,525 $123,910 $247,301
</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, 1996
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Consolidated
Questar Questar
Mountain Questar Regulated Regulated
Fuel Pipeline Services Interco. Services
Supply Co. Co. Co. Trans. Co.
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $1,875 $2,550 $4,425
Federal income taxes receivable 1,109 446 1,555
Accounts and notes receivable 62,062 7,783 1 (431) 69,415
Inventories 15,295 2,301 17,596
Prepaid expenses and deposits 4,511 1,938 6,449
Purchased gas adjustment 24,210 24,210
TOTAL CURRENT ASSETS 109,062 15,018 1 (431) 123,650
PROPERTY, PLANT AND EQUIPMENT 825,121 562,711 1,387,832
Less allowances for depreciation 325,821 194,396 520,217
NET PROPERTY, PLANT
AND EQUIPMENT 499,300 368,315 867,615
INVESTMENT IN AND ADVANCES
TO AFFILIATES 14,347 400,735 (400,735) 14,347
OTHER ASSETS 22,707 11,070 33,777
22,707 25,417 400,735 (400,735) 48,124
$631,069 $408,750 $400,736 ($401,166)$1,039,389
CURRENT LIABILITIES
Notes payable to Questar Corp. $76,200 $11,800 $88,000
Accounts payable and
accrued expenses 66,558 14,823 (431) 80,950
TOTAL CURRENT LIABILITIES 142,758 26,623 (431) 168,950
LONG-TERM DEBT 175,000 134,544 309,544
DEFERRED CREDITS 10,930 4,322 15,252
DEFERRED INVESTMENT TAX CREDITS 6,774 36 6,810
DEFERRED INCOME TAXES 74,537 58,732 133,269
CUMULATIVE PREFERRED STOCK 4,828 4,828
COMMON SHAREHOLDER'S EQUITY
Common stock 22,974 6,551 29,525
Additional paid-in capital 41,875 82,034 400,736 (400,735) 123,910
Retained earnings 151,393 95,908 247,301
TOTAL COMMON SHAREHOLDER'S
EQUITY 216,242 184,493 400,736 (400,735) 400,736
$631,069 $408,750 $400,736 ($401,166)$1,039,389
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR3
<LEGEND>
The following schedule contains summarized financial information extracted
from the Questar Regulated Services Commpany Pro Forma Statement of Income
and Balance Sheet for the period ended December 31, 1996, and is qualified
in its entirety by reference to such unaudited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PRO-FORMA
<TOTAL-ASSETS> $1,039,389
<TOTAL-OPERATING-REVENUES> 414,960
<NET-INCOME> 53,126
</TABLE>
