File No. 69-292
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 CORPORATION
(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 Corporation ("Questar" 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 45433, Salt Lake City,
Utah 84145-0433. On October 2, 1984, the Company filed an initial Form
U-3A-2 with the Securities and Exchange Commission following a holding
company reorganization in which Questar Gas Company (formerly Mountain
Fuel Supply Company) ("Questar Gas") became a subsidiary of Questar.
Questar subsequently filed a Form U-3A-2 on March 1, 1985, and on or
before each subsequent March 1 to the present time.
As a parent company, Questar provides certain administrative
services, e.g., personnel, public relations, communications, tax,
financial, and audit, to companies within
the consolidated group. Questar has several direct subsidiaries:
Questar Regulated Services Company, a Utah corporation ("Regulated
Services"); Entrada Industries, Inc., a Utah corporation ("Entrada");
and Questar InfoComm, Inc., a Utah corporation ("Questar InfoComm").
The Company owns 100 percent of the common stock issued by each of these
directly held subsidiaries.
Regulated Services has two subsidiaries: Questar Gas, a Utah
corporation and Questar Pipeline Company, a Utah corporation ("Questar
Pipeline"). Questar Gas is engaged in the retail distribution of
natural gas in the states of Utah, Wyoming, and Idaho. 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 currently transports and stores
natural gas in interstate commerce in the Rocky Mountain states of Utah,
Wyoming, and Colorado.
Questar InfoComm owns data processing, communications, and
electronic gas measurement equipment systems, and performs data
processing, communications, and gas measurement services for other
members of the consolidated group and third parties.
Entrada engages in various businesses not subject to state utility
regulation through several subsidiaries: Wexpro Company ("Wexpro"),
which conducts oil and gas development and production activities on
certain producing properties for the benefit of Questar Gas in the Rocky
Mountain region; Celsius Energy Company ("Celsius"), which engages in
oil and gas exploration and related development and production
activities throughout the western United States and Canada (Canadian
operations are conducted by Celsius Energy Resources Ltd.); Universal
Resources Corporation ("Universal Resources"), which is engaged in oil
and gas exploration and related development and production activities,
primarily in the Midcontinent; Questar Energy Trading Company ("Questar
Energy Trading"), which conducts energy marketing activities; Questar
Gas Management Company ("Questar Gas Management"), which is engaged in
gathering and field processing activities; and Questar Energy Services,
Inc. ("Questar Energy Services"), which provides unregulated
energy-related services. Neither Entrada nor any of its subsidiaries is
a "public utility company," as such term is defined in the Act. All
companies owned by Entrada have their principal offices at 180 East
First South Street, Salt Lake City, Utah.
With the exception of Questar Gas, none of the companies directly
or indirectly owned by Questar is a "public utility company" as that
term is defined in the Public Utility Holding Company Act of 1935, as
amended (the "Act"). Questar's directly held subsidiaries have their
principal executive offices at 180 East First South Street, Salt Lake
City, Utah. Questar does not have any interest, direct or indirect, in
any exempt wholesale generator or foreign utility company.
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, which is a "gas utility company" for purposes of the
Act, 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 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 1997 and is reflected in
Questar Gas's 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. Questar Energy Trading markets natural gas and
electricity, but does not own any distribution facilities in connection
with such activities.
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's
"retail" customers are general service or residential and commercial
customers. The term "wholesale" refers to industrial sales.) Questar
Gas's 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's 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.
Questar Gas is the only public utility company among the Company's
subsidiaries. Questar itself did not make any sales of natural or
manufactured gas during 1997.
(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, it'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 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. Questar itself did not sell at wholesale
any natural gas or 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. Questar itself 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. Neither Questar 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. Questar 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. Questar 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. Questar 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. Questar does not have any interest, direct or indirect, in
any exempt wholesale generator or foreign utility company.
UNDERTAKING
Questar hereby undertakes that it will not issue any shares of its
authorized preferred stock unless, on a pro forma basis giving effect to
such issuance, (1) consolidated earnings of Questar and its subsidiaries
available for interest and dividends for a period of 12 consecutive
calendar months within the 15 calendar months immediately preceding the
issuance of such stock, determined in accordance with generally accepted
accounting principles, would be at least one and one-half times the sum
of the annual interest requirements on consolidated long-term debt of
Questar (including current maturities and excluding interest charges on
indebtedness to be retired by the application of proceeds from the
issuance of such shares or in connection with the transaction in which
such shares are issued) and the annual dividend requirements on shares
of preferred stock of Questar and its subsidiaries; (2) the aggregate
outstanding long-term debt (including current maturities) of Questar and
its subsidiaries on a consolidated basis is less than or equal to 60
percent of the capitalization of Questar and its subsidiaries on a
consolidated basis; and (3) Questar's common stock represents at least
35 percent of the capitalization of Questar and its subsidiaries on a
consolidated basis. For purposes of the foregoing, consolidated
earnings of Questar and its subsidiaries available for interest and
dividends shall be determined on an after-tax basis and shall be the sum
of income before extraordinary items and interest expense; pro forma
income available for interest and dividends and pro forma interest
charges shall include income and interest charges of businesses
acquired, or proposed to be acquired, in conjunction with the issuance
of Questar preferred stock, for the pro forma periods, regardless of
whether the company acquired shall be accounted for on a
pooling-of-interests basis or otherwise, provided that such earnings
available for interest and dividends is determinable for the acquired
business in accordance with generally accepted accounting principles;
and consolidated capitalization shall include long-term debt (including
current maturities), preferred stock and any premium thereon, and the
sum of the common equity accounts of the company, all as prepared in
accordance with generally accepted accounting principles.
Questar has not issued any shares of its authorized preferred
stock and has no current plans to do so.
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 of Questar
Corporation and Subsidiaries as of December 31,
1997.
Exhibit A-2 Consolidated Statements of Common Shareholders'
Equity, Questar Corporation and Subsidiaries.
Exhibit A-3 Consolidating Balance Sheet, Questar Corporation and
Subsidiaries 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.
[corporate seal] QUESTAR CORPORATION
Attest:
/s/Connie C. Holbrook By /s/S. E. Parks
Connie C. Holbrook S. E. Parks
Vice President and Vice President, Treasurer and
Secretary Chief Financial Officer
Name, title and address of officer to whom notices and correspondence
concerning this statement should be addressed:
Connie C. Holbrook
Vice President & Secretary
Questar Corporation
180 East First South, P.O. Box 45433
Salt Lake City, Utah 84145-0433
EXHIBIT A-1
QUESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
UNAUDITED
(In Thousands)
<TABLE>
<CAPTION>
Regulated Services
Market Questar Questar Other Other Intercompany Questar
Resources Gas Pipeline Operations TransactionsConsolidated
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
From unaffiliated customers $448,765 $445,684 $36,343 $2,482 $933,274
From affiliated companies 74,584 2,539 69,094 $135 36,453 $(182,805)
523,349 448,223 105,437 135 38,935 (182,805) 933,274
Operating expenses
Natural gas and other product purchases 293,174 248,933 (142,166) 399,941
Operating and maintenance 75,071 101,719 37,334 29,002 (38,292) 204,834
Depreciation and amortization 73,087 31,160 14,797 4,993 124,037
Other expenses 24,853 8,174 2,816 811 (2,347) 34,307
Total operating expenses 466,185 389,986 54,947 34,806 (182,805) 763,119
Operating income 57,164 58,237 50,490 135 4,129 170,155
Interest and other income 5,849 3,388 5,952 7 19,512 (10,700) 24,008
Debt expense (11,068) (19,119) (13,536) (10,743) 10,700 (43,766)
Income tax expense (10,882) (13,492) (16,338) (64) (4,826) (45,602)
Net income $41,063 $29,014 $26,568 $78 $8,072 $104,795
</TABLE>
<PAGE>
EXHIBIT A-2
QUESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
UNAUDITED
<TABLE>
<CAPTION>
Note Unrealized gain Foreign Currency
Common Stock Retained Receivable (loss) on securities Translation
Shares Amount Earnings from ESOP available for sale Adjustment
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1995 40,428,739 $276,555 $401,577 $(24,543)
Issuance of common stock 290,410 7,841
Purchase of common stock (21,335) (620)
1995 net income 83,786
Payment of dividends
Preferred stock (483)
Common stock - $1.16 per share (47,042)
Income tax benefit of
dividends paid to ESOP 446
Collection of note receivable from ESOP 3,305
Unrealized gain on securities available
for sale, net of income taxes $11,853
Balances at December 31, 1995 40,697,814 283,776 438,284 (21,238) 11,853
Issuance of common stock 372,167 10,396
Purchase of common stock (45,094) (1,559)
1996 net income 98,145
Payment of dividends
Preferred stock (391)
Common stock - $1.19 per share (48,589)
Income tax benefit of
dividends paid to ESOP 350
Collection of note receivable from ESOP 5,682
Unrealized gain on securities available
for sale, net of income taxes (4,443)
Foreign currency translation adjustment $(181)
Balances at December 31, 1996 41,024,887 292,613 487,799 (15,556) 7,410 (181)
Issuance of common stock 372,606 11,328
Purchase of common stock (326,451) (12,619)
1997 net income 104,795
Payment of dividends
Preferred stock (192)
Common stock - $1.24 per share (50,943)
Premium paid on retired preferred stock (48)
Income tax benefit of
dividends paid to ESOP 252
Collection of note receivable from ESOP 5,383
Unrealized gain on securities available
for sale, net of income taxes 15,564
Foreign currency translation adjustment 173
Balances at December 31, 1997 41,071,042 $291,322 $541,663 $(10,173) $22,974 $(8)
</TABLE>
<PAGE>
EXHIBIT A-3
QUESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1997
UNAUDITED
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Entrada
Regulated Services Industries
Questar Intercompany Other Questar Questar Other (Market
Consolidated Transactions Operations Gas Pipeline Resources)
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $17,271 $2,299 $6,747 $7,075 $136 $1,014
Notes receivable from affiliates ($236,421) 200,321 2,600 33,500
Accounts and notes receivable 187,014 (28,966) 16,610 86,487 10,851 3,144 98,888
Inventories 29,068 495 20,347 2,303 5,923
Prepaid expenses and deposits 14,420 2,968 4,356 2,035 80 4,981
Purchased gas adjustment 37,251 37,251
TOTAL CURRENT ASSETS 285,024 (265,387) 222,693 155,188 22,264 5,960 144,306
PROPERTY, PLANT AND EQUIPMENT 2,741,937 (179) 100,757 882,936 580,603 2,472 1,175,348
Less allowances for depreciation 1,210,717 34,524 354,761 202,427 1,923 617,082
NET PROPERTY, PLANT AND EQUIPMENT 1,531,220 (179) 66,233 528,175 378,176 549 558,266
INVESTMENT IN UNCONSOLIDATED AFFILIATES 29,952 (1,208,299) 796,189 26,977 412,577 2,508
INVESTMENT IN NEXTEL 55,925 55,925
OTHER ASSETS 42,896 11,523 21,488 10,147 (96) (166)
$1,945,017 ($1,473,865) $1,152,563 $704,851 $437,564 $418,990 $704,914
CURRENT LIABILITIES
Short-term loans $131,200 $131,200
Notes payable to affiliates ($227,900) 52,500 $100,000 $25,800 $49,600
Accounts payable and accrued expenses 134,976 (28,966) 16,415 51,523 17,702 $4,536 73,766
Interest payable 7,994 1,473 4,548 1,076 897
Federal income taxes payable 6,447 (813) 3,112 62 431 3,655
Other taxes payable 19,527 443 5,304 1,229 123 12,428
Current portion of long-term debt 6,068 6,068
TOTAL CURRENT LIABILITIES 306,212 (256,866) 207,286 164,487 45,869 5,090 140,346
LONG-TERM DEBT, less current portion 541,986 (8,521) 57,557 225,000 134,563 133,387
DEFERRED CREDITS 29,801 (179) 8,164 5,989 4,523 237 11,067
DEFERRED INVESTMENT TAX CREDITS 6,422 6,392 30
DEFERRED INCOME TAXES 214,818 14,482 80,717 62,268 (492) 57,843
COMMON SHAREHOLDERS' EQUITY
Common stock 291,322 (34,349) 291,837 22,974 6,551 4,309
Additional paid-in capital (653,600) 12,929 41,875 82,034 400,735 116,027
Retained earnings 541,663 (520,358) 547,515 157,417 101,726 13,420 241,943
Note receivable from ESOP (10,173) (10,173)
Unrealized gain (loss) on securities 22,974 22,974
Foreign currency translation adjustment (8) 8 (8) (8)
TOTAL COMMON SHAREHOLDERS' EQUITY 845,778 (1,208,299) 865,074 222,266 190,311 414,155 362,271
$1,945,017 ($1,473,865) $1,152,563 $704,851 $437,564 $418,990 $704,914
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> OPUR3
<LEGEND>
This schedule contains summarized financial information extracted from the
Questar Corporation Statements of Income and Balance Sheet for the period
ended December 31, 1997, and is qualified in its entirety by reference to
such audited 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> 1,945,017
<TOTAL-OPERATING-REVENUES> 933,274
<NET-INCOME> 104,795
</TABLE>
