File No. 69-292
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 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 100 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 ("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 three direct subsidiaries: Questar Regulated Services
Company, a Utah corporation ("Regulated Services"); Questar Market
Resources, Inc., a Utah corporation ("Market Resources"); 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 three subsidiaries: Questar Gas, a Utah
corporation; Questar Pipeline Company, a Utah corporation ("Questar
Pipeline"); and, as of January 1, 1999, Questar Energy Services, Inc.
("QES"). 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. QES
performs energy management, appliance financing, and other activities.
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.
Market Resources 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; and Questar Gas Management Company ("Questar Gas
Management"), which is engaged in gathering and field processing
activities. Neither Market Resources nor any of its subsidiaries is a
"public utility company," as such term is defined in the Act. All
companies owned by Market Resources have their principal offices at
180 East 100 South, 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 100 South, 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 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 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 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 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. 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 1998.
(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, 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 1998, Questar Gas 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 to customers outside
Utah. Questar Gas did not sell at wholesale any manufactured gas
during 1998. Questar itself did not sell at wholesale any natural gas
or 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. 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,
1998.
Exhibit A-2 Consolidated Statements of Common Shareholders'
Equity, Questar Corporation and Subsidiaries as of
December 31, 1998.
Exhibit A-3 Consolidating Balance Sheet, Questar Corporation and
Subsidiaries 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.
[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 100 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, 1998
UNAUDITED
(In Thousands)
<TABLE>
<CAPTION>
Regulated Services
Market Questar Questar Other 1/ Other Intercompany Questar
Resources Gas Pipeline Operations Transactions Consolidated
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
From unaffiliated customers $382,791 $475,754 $37,156 $2,355 $8,200 $906,256
From affiliated companies 77,323 1,069 71,401 99 39,707 $(189,599)
460,114 476,823 108,557 2,454 47,907 (189,599) 906,256
Operating expenses
Natural gas and other product purchases 232,135 281,004 (147,971) 365,168
Operating and maintenance 75,032 96,923 38,832 3,518 38,628 (40,575) 212,358
Depreciation and amortization 71,377 33,261 13,927 17 6,575 125,157
Write-down of oil and gas properties 34,000 34,000
Other expenses 26,041 8,185 2,600 1,019 (1,053) 36,792
Total operating expenses 438,585 419,373 55,359 3,535 46,222 (189,599) 773,475
Operating income 21,529 57,450 53,198 (1,081) 1,685 132,781
Interest and other income 3,638 3,566 78 655 22,756 (12,491) 18,202
Earnings (loss) from affiliates (930) 4,011 (164) 2,917
Debt expense (12,631) (19,792) (14,456) (385) (13,198) 12,491 (47,971)
Income tax (expense) credit 2,131 (13,816) (14,940) 339 (2,744) (29,030)
Net income $13,737 $27,408 $27,891 ($472) $8,335 $76,899
1/ Includes Questar Energy Services.
</TABLE>
EXHIBIT A-2
QUESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
UNAUDITED
<TABLE>
<CAPTION>
Note Other Compre-
Common Stock Retained Receivable Comprehensive hensive
Shares Amount Earnings from ESOP Income Income
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1996 81,395,628 $283,776 $438,284 ($21,238) $11,853
Issuance of common stock 744,334 10,396
Purchase of common stock (90,188) (1,559)
1996 net income 98,145 $98,145
Payment of dividends
Preferred stock (391)
Common stock of $.595 per share (48,589)
Income tax benefit of dividends paid to ESOP 350
Collection of note receivable from ESOP 5,682
Other comprehensive income
Unrealized loss on securities available for sale,
net of income tax benefits of $2,752,000 (4,443) (4,443)
Foreign currency translation adjustment
net of income tax benefits of $97,000 (181) (181)
Balances at December 31, 1996 82,049,774 292,613 487,799 (15,556) 7,229 $93,521
Issuance of common stock 745,212 11,328
Purchase of common stock (652,902) (12,619)
1997 net income 104,795 $104,795
Payment of dividends
Preferred stock (192)
Common stock of $.62 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
Other comprehensive income
Unrealized gain on securities available for sale,
net of income taxes of $9,642,000 15,564 15,564
Foreign currency translation adjustment,
net of income taxes of $98,000 173 173
Balances at December 31, 1997 82,142,084 291,322 541,663 (10,173) 22,966 $120,532
Issuance of common stock 521,879 8,243
Purchase of common stock (31,885) (677)
1998 net income 76,899 $76,899
Payment of common stock dividends
of $.6525 per share (53,747)
Income tax benefit of dividends paid to ESOP 143
Collection of note receivable from ESOP 6,218
Other comprehensive income
Unrealized loss on securities available for sale,
net of income tax benefit of $3,086,000 (4,992) (4,992)
Foreign currency translation adjustment,
net of income taxes of $53,000 93 93
Balances at December 31, 1998 82,632,078 $298,888 $564,958 ($3,955) $18,067 $72,000
</TABLE>
<PAGE>
EXHIBIT A-3
QUESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
UNAUDITED
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Regulated Services
Questar Intercompany Other Questar Questar Other 1/ Market
Consolidated Transactions Operations Gas Pipeline Resources
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $16,793 $2,106 $3,326 $9,294 $173 $1,894
Notes receivable from affiliates ($327,746) 300,146 2,500 25,100
Accounts and notes receivable 177,630 (29,276) 20,794 80,512 21,304 11,104 73,192
Inventories 37,817 2,402 22,296 2,203 131 10,785
Prepaid expenses and deposits 11,864 3,659 2,838 1,714 (716) 4,369
Purchased gas adjustment 2,067 2,067
TOTAL CURRENT ASSETS 246,171 (357,022) 329,107 111,039 34,515 13,192 115,340
PROPERTY, PLANT AND EQUIPMENT 3,104,522 (179) 70,258 948,280 670,456 3,066 1,412,641
Less allowances for depreciation 1,356,881 39,290 382,657 215,589 2,216 717,129
NET PROPERTY, PLANT AND EQUIPMENT 1,747,641 (179) 30,968 565,623 454,867 850 695,512
INVESTMENT IN UNCONSOLIDATED AFFILIATES 56,838 (1,231,228) 809,010 52,912 422,471 3,673
INVESTMENT IN SECURITIES AVAILABLE FOR SALE 56,910 56,910
OTHER ASSETS 51,225 13,349 23,853 12,506 889 628
$2,158,785 ($1,588,429)$1,239,344 $700,515 $554,800 $437,402 $815,153
CURRENT LIABILITIES
Short-term loans $221,100 $221,100
Notes payable to affiliates ($318,300) 53,400 $96,700 $38,000 $8,400 $121,800
Accounts payable and accrued expenses 168,174 (29,276) 21,175 58,996 44,130 7,463 65,686
Interest payable 7,676 1,066 4,567 999 1,044
Federal income taxes payable 8,698 (375) 2,113 383 472 6,105
Other taxes payable 22,712 348 5,612 3,039 52 13,661
Current portion of long-term debt 6,006 6,006
TOTAL CURRENT LIABILITIES 434,366 (347,576) 302,720 167,988 86,551 16,387 208,296
LONG-TERM DEBT, less current portion 615,770 (9,446) 15,601 225,000 202,991 181,624
DEFERRED CREDITS 27,450 (179) 11,166 330 4,546 10 11,577
DEFERRED INVESTMENT TAX CREDITS 6,035 6,011 24
DEFERRED INCOME TAXES 197,206 8,825 74,012 63,486 (1,230) 52,113
COMMON SHAREHOLDERS' EQUITY
Common stock 298,888 (34,350) 299,403 22,974 6,551 1 4,309
Additional paid-in capital (653,601) 12,930 41,875 82,034 400,735 116,027
Retained earnings 564,958 (543,063) 574,458 162,325 108,617 21,499 241,122
Note receivable from ESOP (3,955) (3,955)
Other comprehensive income 18,067 (214) 18,196 85
TOTAL COMMON SHAREHOLDERS' EQUITY 877,958 (1,231,228) 901,032 227,174 197,202 422,235 361,543
$2,158,785 ($1,588,429)$1,239,344 $700,515 $554,800 $437,402 $815,153
1/ Includes Questar Energy Services.
</TABLE>
<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, 1998, 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-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 2158785
<TOTAL-OPERATING-REVENUES> 906256
<NET-INCOME> 76899
</TABLE>
