File No. 69-00401
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
____________________________
Form U-3A-2 for 1997
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 Questar Gas Company, formerly Mountain Fuel
Supply Company, ("Questar Gas") and Questar Pipeline Company ("Questar
Pipeline"). Effective January 1, 1997, it owns the outstanding shares
of common stock issued by Questar Gas and Questar Pipeline. On December
31, 1996, the Company filed an initial Form U-3A-2 with the Securities
and Exchange Commission and filed a subsequent Form U-3A-2 before March
1, 1997.
Questar Gas 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. Questar Gas also
transports natural gas for industrial users in Utah and Wyoming.
Questar Gas' activities in Utah and Wyoming are subject to regulation by
the respective Public Service Commissions in those states. Questar Gas
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. Questar Gas' customers in
Idaho are served under the provisions of its Utah tariff. Pursuant to a
special contract with the Idaho Public Utilities Commission, Questar
Gas' 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 180 East First South, P. O. Box 45360, Salt Lake City, Utah
84145-0360. 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 Questar Gas 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.
Questar Gas was distributing natural gas to 641,696 sales and
transportation customers (defined as active meters) in Utah,
southwestern Wyoming, southeastern Idaho, and western Colorado as of
year-end 1997. Of these customers, 618,679 were located in Utah, 21,632
were located in southwestern Wyoming, 1,384 were located in southeastern
Idaho, and one was located in western Colorado. Questar Gas owns and
operates approximately 19,256 miles of street mains, service lines and
interconnecting pipelines in its distribution system, including
approximately 18,324 miles in its Utah distribution system.
Under the terms of a settlement agreement among Questar Gas,
Wexpro Company ("Wexpro," an affiliate) and various state parties ending
several years of litigation, Questar Gas 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 Questar Gas' retail natural gas customers. Gas owned by
Questar Gas 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 Questar Gas (including related
royalty gas) constituted 45 percent of Questar Gas' total gas supply in
1997 and is reflected in its rates at "cost-of-service" prices.
As of September 1, 1993, Questar Gas became directly responsible
for all gas acquisition activities. Questar Pipeline transports the gas
volumes purchased directly by Questar Gas and transports cost-of-service
gas owned by Questar Gas and produced by Wexpro. Questar Gas takes
delivery of gas from Questar Pipeline and an unaffiliated interstate
pipeline at various points in Utah, Wyoming and Colorado. Questar Gas
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 1997 calendar year, Questar Gas sold 95,270,000
decatherms ("Dth") of natural gas, including 85,747,000 Dth at retail,
and transported 51,313,000 Dth of natural gas. (Questar Gas generally
reports volumes in Dth; a Dth is equal to ten therms or one million
Btu's. In Questar Gas's gas system, each Mcf of natural gas contains
approximately 1.07 Dth.) (For purposes of this report, Questar Gas'
"retail" customers are general service or residential and commercial
customers. The term "wholesale" refers to industrial sales.) Questar
Gas' total revenues for 1997 were $448,223,000, of which $410,783,000
were attributable to its operations in Utah, $17,985,000 were
attributable to its operations in Wyoming, $481,000 were attributable to
its operations in Colorado, and $875,000 were attributable to its
operations in Idaho. (Questar Gas' total 1997 revenues included
$18,099,000 in addition to revenues from gas deliveries.) Questar Gas
did not distribute any manufactured gas during such calendar year.
(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 1997 calendar year, Questar Gas distributed at retail
3,590,000 Dth of natural gas outside the state of Utah, Questar Gas'
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 1997, Questar Gas sold at wholesale outside the state of
Utah, or at the state line of such state, 696,000 Dth of natural gas.
Questar Gas, during 1997, also transported 330,000 Dth of natural gas to
customers in Wyoming. Questar Gas did not sell at wholesale any
manufactured gas during 1997.
(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 1997 calendar year, Questar Gas purchased 34,064,000
Dth of natural gas or approximately 35 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 Consolidating Statement of Income, Questar Regulated
Services Company as of December 31, 1997.
Exhibit A-2 Consolidated Statements of Common Shareholder's
Equity, Questar Regulated Services Company.
Exhibit A-3 Consolidating Balance Sheet, Questar Regulated
Services Company as of December 31, 1997.
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.
Not applicable. The Company does not have an interest in any
exempt wholesale generator or foreign utility company.
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, 1998.
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
Exhibit A-1
QUESTAR REGULATED SERVICES COMPANY
CONSOLIDATING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(Unaudited)
<TABLE>
<CAPTION> Consolidated
Questar Questar Questar Total Questar
Gas Pipeline Regulated Before Interco. Regulated
Co. Co. Services Elimin. Trans. Services Co.
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
From unaffiliated customers $445,684 $36,343 $482,027 $482,027
From affiliated companies 2,539 69,094 135 71,768 $65,059 6,709
TOTAL REVENUES 448,223 105,437 135 553,795 65,059 488,736
OPERATING EXPENSES:
Natural gas purchases 248,933 248,933 64,924 184,009
Operating and maintenance 101,719 37,334 139,053 135 138,918
Depreciation and amortization 31,160 14,797 45,957 45,957
Other taxes 8,174 2,816 10,990 10,990
TOTAL OPERATING EXPENSES 389,986 54,947 444,933 65,059 379,874
OPERATING INCOME 58,237 50,490 135 108,862 108,862
INTEREST AND OTHER INCOME 3,388 1,323 7 4,718 4,718
EARNINGS FROM UNCONSOLIDATED
AFFILIATES 4,629 4,629 4,629
DEBT EXPENSE (19,119) (13,536) (32,655) (32,655)
INCOME BEFORE INCOME TAXES 42,506 42,906 142 85,554 85,554
INCOME TAXES 13,492 16,338 64 29,894 29,894
NET INCOME $29,014 $26,568 $78 $55,660 $55,660
</TABLE>
<PAGE>
Exhibit A-2
QUESTAR REGULATED SERVICES COMPANY
STATEMENT OF COMMON SHAREHOLDER'S EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Balances at January 1, 1997
Issuance of common stock (1) 100 400,735
1997 net income 55,660
Dividends
Preferred stock (192)
Common stock (42,000)
Premium paid to redeem
preferred stock (48)
Balances at December 31, 1997 100 $400,735 $13,420
</TABLE>
(1) Questar Regulated Services Co. has 1 million shares of $.01 par
value stock authorized and issued 100 shares November 22, 1996 to its
parent company, Questar Corporation.
<PAGE>
Exhibit A-3
QUESTAR REGULATED SERVICES COMPANY
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Questar Questar
Interco. Regulated Questar Pipeline
Consolidated Elimin. Services Gas Co.
(In Thousands)
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $13,958 $136 $6,747 $7,075
Notes receivable from affiliates 2,600 2,600
Accounts and notes receivable 95,225 ($5,257) 3,144 86,487 10,851
Inventories 22,650 20,347 2,303
Prepaid expenses and deposits 6,471 80 4,356 2,035
Purchased gas adjustment 37,251 37,251
TOTAL CURRENT ASSETS 178,155 (5,257) 5,960 155,188 22,264
PROPERTY, PLANT AND EQUIPMENT 1,466,011 2,472 882,936 580,603
Less allowances for depreciation 559,111 1,923 354,761 202,427
NET PROPERTY, PLANT AND
EQUIPMENT 906,900 549 528,175 378,176
INVESTMENT IN UNCONSOLIDATED
AFFILIATES 26,977 (412,577) 412,577 26,977
OTHER ASSETS 31,539 (96) 21,488 10,147
$1,143,571 ($417,834) $418,990 $704,851 $437,564
CURRENT LIABILITIES
Notes payable to affiliates $125,800 $100,000 $25,800
Accounts payable and accrued
expenses 68,504 ($5,257) $4,536 51,523 17,702
Interest payable 5,624 4,548 1,076
Federal income taxes payable 3,605 431 3,112 62
Other taxes payable 6,656 123 5,304 1,229
TOTAL CURRENT LIABILITIES 210,189 (5,257) 5,090 164,487 45,869
LONG-TERM DEBT, less current portion 359,563 225,000 134,563
DEFERRED CREDITS 10,749 237 5,989 4,523
DEFERRED INVESTMENT TAX CREDITS 6,422 6,392 30
DEFERRED INCOME TAXES 142,493 (492) 80,717 62,268
COMMON SHAREHOLDER'S EQUITY
Common stock (29,525) 22,974 6,551
Additional paid-in capital 400,735 (123,909) 400,735 41,875 82,034
Retained earnings 13,420 (259,143) 13,420 157,417 101,726
TOTAL COMMON SHAREHOLDER'S
EQUITY 414,155 (412,577) 414,155 222,266 190,311
$1,143,571 ($417,834) $418,990 $704,851 $437,564
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR3
<LEGEND>
The following schedule contains summarized financial information extracted
from the Questar Regulated Services Consolidated Statement of Income and
Balance Sheet as of December 31, 1997, 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-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 1,143,571
<TOTAL-OPERATING-REVENUES> 488,736
<NET-INCOME> 55,660
</TABLE>
