File No. 69-00401
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
____________________________
Form U-3A-2 for 1998
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 100 South, 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 ("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
has filed Form U-3A-2's on a timely basis since then.
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's 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's 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'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 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.
As of January 1, 1999, Regulated Services owns a third
subsidiary, Questar Energy Services, Inc. Regulated Services 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 663,392 sales and
transportation customers (defined as active meters) in Utah,
southwestern Wyoming, southeastern Idaho, and western Colorado as of
year-end 1998. Of these customers, 640,058 were located in Utah,
21,858 were located in southwestern Wyoming, 1,475 were located in
southeastern Idaho, and one was located in western Colorado. Questar
Gas owns and operates approximately 19,976 miles of street mains,
service lines and interconnecting pipelines in its distribution
system, including approximately 19,034 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's 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's total gas supply in 1998 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 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 1998 calendar year, Questar Gas sold 92,912,000
decatherms ("Dth") of natural gas, including 83,231,000 Dth at retail,
and transported 55,461,000 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 1.04 Dth.) For purposes of this report, Questar Gas's
"retail" customers are general service or residential and commercial
customers. The 9,681,000 Dth difference between the total sales
number and the retail sales number includes sales to industrial
customers that are not involved in resale transactions and sales of
natural gas to refueling stations that are resold for natural gas
vehicles. Questar Gas's total revenues for 1998 were $476,823,000, of
which $441,113,000 were attributable to its operations in Utah,
$19,274,000 were attributable to its operations in Wyoming, $111,000
were attributable to its operations in Colorado, and $989,000 were
attributable to its operations in Idaho. (Questar Gas's total 1998
revenues included $15,336,000 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 1998 calendar year, Questar Gas distributed at retail
3,223,000 Dth of natural gas outside the state of Utah, Questar Gas'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 1998, Questar Gas sold 446,000 Dth of natural gas outside
the state of Utah, or at the state line of such state, to industrial
customers and to natural gas refueling stations. Questar Gas, during
1998, also transported 416,000 Dth of natural gas outside Utah.
Questar Gas did not sell at wholesale any manufactured gas during
1998.
(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 1998 calendar year, Questar Gas purchased 36,140,000
Dth of natural gas or approximately 38 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, 1998.
Exhibit A-2 Consolidated Statements of Common Shareholder's
Equity, Questar Regulated Services Company as of
December 31, 1998.
Exhibit A-3 Consolidating Balance Sheet, Questar Regulated
Services Company as of December 31, 1998.
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 26th day of
February, 1999.
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 100 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, 1998
(Unaudited)
<TABLE>
<CAPTION>
Consolidated
Questar Questar Questar Total Before Questar
Gas Pipeline Regulated Interco. Interco. Regulated
Co. Co. Services TransactionsTransactionsServices Co.
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
From unaffiliated customers $475,754 $37,156 $512,910 $512,910
From affiliated companies 1,069 71,401 99 72,569 $67,627 4,942
TOTAL REVENUES 476,823 108,557 99 585,479 67,627 517,852
OPERATING EXPENSES:
Natural gas purchases 281,004 281,004 67,528 213,476
Operating and maintenance 96,923 38,832 135,755 99 135,656
Depreciation and amortization 33,261 13,927 47,188 47,188
Other taxes 8,185 2,600 10,785 10,785
TOTAL OPERATING EXPENSES 419,373 55,359 474,732 67,627 407,105
OPERATING INCOME 57,450 53,198 99 110,747 110,747
INTEREST AND OTHER INCOME 3,566 78 3,644 3,644
EARNINGS FROM UNCONSOLIDATED
AFFILIATES 4,011 4,011 4,011
DEBT EXPENSE (19,792) (14,456) (34,248) (34,248)
INCOME BEFORE INCOME TAXES 41,224 42,831 99 84,154 84,154
INCOME TAXES 13,816 14,940 8 28,764 28,764
NET INCOME $27,408 $27,891 $91 $55,390 $55,390
</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
1998 net income 55,390
Common stock dividends (43,500)
Balances at December 31, 1998 100 $400,735 $25,310
</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, 1998
(Unaudited)
<TABLE>
<CAPTION>
Interco. Questar Questar
Trans- Regulated Questar Pipeline
Consolidated actions Services Gas Co.
(In Thousands)
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $12,696 $76 $3,326 $9,294
Notes receivable from affiliates 2,500 2,500
Accounts and notes receivable 101,510 ($4,506) 4,200 80,512 21,304
Inventories 24,499 22,296 2,203
Prepaid expenses and deposits 3,851 (701) 2,838 1,714
Purchased gas adjustment 2,067 2,067
TOTAL CURRENT ASSETS 147,123 (4,506) 6,075 111,039 34,515
PROPERTY, PLANT AND EQUIPMENT 1,621,655 2,919 948,280 670,456
Less allowances for depreciation 600,428 2,182 382,657 215,589
NET PROPERTY, PLANT AND
EQUIPMENT 1,021,227 737 565,623 454,867
INVESTMENT IN UNCONSOLIDATED
AFFILIATES 52,912 (424,376) 424,376 52,912
OTHER ASSETS 37,248 889 23,853 12,506
$1,258,510 ($428,882) $432,077 $700,515 $554,800
CURRENT LIABILITIES
Notes payable to affiliates $134,700 $96,700 $38,000
Accounts payable and accrued expense 105,372 ($4,506) $6,752 58,996 44,130
Interest payable 5,566 4,567 999
Federal income taxes payable 2,924 428 2,113 383
Other taxes payable 8,726 75 5,612 3,039
TOTAL CURRENT LIABILITIES 257,288 (4,506) 7,255 167,988 86,551
LONG-TERM DEBT, less current portion 427,991 225,000 202,991
DEFERRED CREDITS 4,876 330 4,546
DEFERRED INVESTMENT TAX CREDITS 6,035 6,011 24
DEFERRED INCOME TAXES 136,275 (1,223) 74,012 63,486
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 25,310 (270,942) 25,310 162,325 108,617
TOTAL COMMON SHAREHOLDER'S
EQUITY 426,045 (424,376) 426,045 227,174 197,202
$1,258,510 ($428,882) $432,077 $700,515 $554,800
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> OPUR3
<LEGEND>
This schedule contains summarized financial information extracted from the
Questar Regulated Services Statements of Income and Balance Sheet for the
period ended December 31, 1998, 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-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 1,258,510
<TOTAL-OPERATING-REVENUES> 517,852
<NET-INCOME> 55,390
</TABLE>
