NOTESTable TOof THE FINANCIAL STATEMENTS Contents

CertainTable reclassifications were made to prior year information to conform to the current year presentation. The Company has adopted Accounting Standards Update 2015-03, Interest - Imputation of Interest (Subtopic 835-30). The Company has retrospectively adjusted prior period debt issuance costs to be reflected in long-term debt. The reclassifications did not affect the Company’s net income, total assets, liabilities, equity or cash flows, except as noted above. Contents

(5)Table Gains and losses on the reacquisition of debt by rate-regulated companies are deferred and amortized as interest expense over the would-be remaining life of the reacquired debt. The reacquired debt costs had a weighted-average life of approximately 6.3 years as of September 30, 2016.Contents

TheTable net expense for specific items in 2016 primarily related to a $11.9 million ($7.7 million after-tax) charge for transaction costs associated with the Dominion Questar Combination. These costs primarily consist of employee related costs allocated to Questar Gas and are included in other operations and maintenance on the Condensed Statements of Income. Contents

•Table Creditof enhancementsContents

SensitivityTable of the fair value measurements to changes in the significant unobservable inputs is as follows: Contents

QuestarTable Gas procures natural gas on behalf of its customers by entering into physical forward natural gas supply contracts, which are considered to be derivative instruments. All derivatives, except those for which an exception applies, are required to be reported in the Condensed Balance Sheets at fair value. Derivative contracts representing unrealized gain positions and purchased options are reported as derivative assets. Derivative contracts representing unrealized losses and options sold are reported as derivative liabilities. Contents

(1)Table Currentof derivative assets are presented in prepaid expenses and other current assets in Questar Gas’ Condensed Balance Sheets.Contents

QuestarTable Gas is involved in various commercial, environmental, and regulatory claims. Litigation and other legal proceedings arise in the ordinary course of business. For current proceedings, management does not believe that liabilities, if any, from such litigation or other legal proceedings arising in the ordinary course of business individually or in the aggregate, will have a material adverse effect on Questar Gas’ financial position, results of operations or cash flows. Contents

RESULTSTable OFof OPERATIONS Contents

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NOTESTable TOof THE FINANCIAL STATEMENTS Contents

Table of Contents

•Table Creditof enhancementsContents

SensitivityTable of the fair value measurements to changes in the significant unobservable inputs is as follows: Contents

(1)Table Currentof derivative assets are presented in prepaid expenses and other current assets in Questar Gas’ Condensed Balance Sheets.Contents

RESULTSTable OFof OPERATIONS Contents

Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30~~March 31, ~~2016~~2017

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

QUESTAR GAS COMPANY


Commission File Number	Exact name of registrants as specified in their charters	I.R.S. Employer Identification Number
333-69210	QUESTAR GAS COMPANY	87-0155877
	333 SOUTH STATE STREET SALT LAKE CITY, UTAH 84145 (801) 324-5000

~~(Exact~~State ~~name~~or other jurisdiction of ~~registrant~~incorporation asor ~~specified~~organization inof ~~its~~the ~~charter)~~registrant: Utah

Commission File Number:		(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
333-69210		Utah		87-0155877

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~333~~Yes ☐ No ☒ ~~South State Street, P.O. Box 45433, Salt Lake City, Utah 84145-0433~~

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (~~Address~~§232.405 of ~~principal~~this ~~executive~~chapter) ~~offices~~during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

~~Registrant’s~~Yes ☒ No ☐ ~~telephone number, including area code (801) 324-5000~~

Indicate by check mark whether the registrant ~~(1)~~is ~~has~~a ~~filed~~large ~~all~~accelerated ~~reports~~filer, ~~required~~an toaccelerated befiler, ~~filed~~a bynon-accelerated ~~Section~~filer 13 or ~~15(d)~~a ofsmaller ~~the~~reporting ~~Securities~~company. ~~Exchange Act of 1934~~See ~~during~~ the ~~preceding~~definitions 12of ~~months~~“large ~~(or~~accelerated ~~for~~filer,” ~~such~~“accelerated ~~shorter~~filer,” ~~period~~“smaller ~~that~~reporting ~~the registrant was required to file such reports)~~company,” and ~~(2)~~“emerging ~~has~~growth ~~been~~company” ~~subject~~in toRule ~~such~~12b-2 ~~filing~~of ~~requirements for~~ the ~~past~~Exchange ~~90 days~~Act. ~~Yes ☒ No ☐~~

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~☐ ~~whether~~Accelerated ~~the~~filer ~~registrant~~☐ ~~has submitted~~Non-accelerated ~~electronically~~filer ~~and~~☒ ~~posted~~(Do onnot ~~its~~check ~~corporate Web site,~~ if ~~any,~~a ~~every~~smaller ~~Interactive~~reporting ~~Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter~~company) ~~during~~Smaller ~~the~~reporting ~~preceding~~company 12☐ ~~months~~Emerging ~~(or~~growth ~~for~~company ~~such shorter period that the registrant was required to submit and post such files). Yes ☒ No~~ ☐

~~Indicate~~If an emerging growth company, indicate by check mark ~~whether~~if the registrant ishas aelected ~~large~~not ~~accelerated~~to ~~filer,~~use anthe ~~accelerated~~extended ~~filer,~~transition ~~a non-accelerated filer, or a smaller reporting company. See~~period ~~definitions~~for ofcomplying ~~“large~~with ~~accelerated~~any ~~filer,”~~new ~~“accelerated~~or ~~filer”~~revised ~~and~~financial ~~“smaller~~accounting ~~reporting~~standards ~~company”~~provided inpursuant ~~Rule~~to ~~12b-2~~Section 13(a) of the Exchange Act. ☐ ~~Do not check non-accelerated filer if a smaller reporting company (Check one).~~

~~Large~~Indicate ~~accelerated~~by ~~filer~~check ☐mark ~~Accelerated~~whether ~~filer~~the ☐registrant ~~Non-accelerated~~is ~~filer~~a ☒shell ~~Smaller~~company ~~reporting~~(as ~~company~~defined ☐by Rule 12b-2 of the Act).

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).~~ Yes ☐ No ☒

~~Indicate~~Questar ~~the~~Gas ~~number~~does ofnot ~~shares~~have ~~outstanding~~any ofvoting ~~each~~or ofnon-voting ~~the issued~~common ~~class~~equity ofheld ~~common~~by ~~stock,~~non-affiliates. asAs of ~~October~~April 1514, ~~2016.~~2017, ~~All~~Questar ~~the~~Gas ~~common~~had ~~stock~~9,189,626 isshares ~~held~~of bycommon stock ~~Dominion Questar Corporation~~outstanding.

~~$2.50~~QUESTAR ~~per~~GAS ~~share~~COMPANY ~~par~~MEETS ~~value~~THE ~~9,189,626~~CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS FILING THIS FORM 10-Q UNDER THE REDUCED DISCLOSURE FORMAT.

Registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

~~QUESTAR~~Questar ~~GAS~~Gas ~~COMPANY~~Company

FORM 10-Q


		Page Number

	Glossary of Terms		3

	PART I. Financial Information

Item 1.	Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 4.	Controls and Procedures		19

	PART II. Other Information

Item 1.	Legal Proceedings		20
Item 1A.	Risk Factors		20
Item 6.	Exhibits		21

~~FOR~~2 ~~THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016~~

TABLE OF CONTENTS

		Page
Glossary of Commonly Used Terms			3
PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)		4
	Condensed Statements of Income		4
	Condensed Balance Sheets		5
	Condensed Statements of Cash Flows		6
	Notes to the Financial Statements		7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		16
ITEM 4.	CONTROLS AND PROCEDURES		18
PART II	OTHER INFORMATION		19
ITEM 1.	LEGAL PROCEEDINGS		19
ITEM 6.	EXHIBITS		19
SIGNATURES			20

Questar Gas 2016 Form 10-Q 2

~~Glossary~~GLOSSARY ofOF ~~Commonly~~TERMS ~~Used Terms~~

Asset Retirement Obligation (ARO)		Asset retirement obligation
Billion Cubic Feet (bcf)		Billion cubic feet.
British Thermal Unit (Btu)		A measure of the amount of energy required to raise the temperature of a one-pound mass of water one degree Fahrenheit at sea level.
Conservation Enabling Tariff (CET)		A rate mechanism in Utah and Wyoming that decouples customer usage of natural gas from the non-gas revenues received by Questar Gas by specifying an allowed monthly revenue per customer. Differences between the allowed CET revenue and actual usage are deferred and recovered from or refunded to customers through future rate changes.
Cubic Feet (cf)		One standard cubic foot equals the volume of gas in one cubic foot measured at standard conditions - a temperature of 60 degrees Fahrenheit and a pressure of 30 inches of mercury (approximately 14.7 pounds per square inch).
Dekatherm (dth)		Ten therms. One dth equals one million Btu or approximately one Mcf.
Dominion		The legal entity, Dominion Resources, Inc., one or more of its consolidated subsidiaries (other than Dominion Questar) or operating segments or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries
Dominion Questar		The legal entity, Dominion Questar Corporation (formerly known as Questar Corporation) is the parent of Questar Gas.
Dominion Questar Combination		Agreement and plan of merger entered on January 31, 2016 between Dominion and Dominion Questar in which Dominion Questar became a wholly-owned subsidiary of Dominion upon closing on September 16, 2016.
Energy-Efficiency Program (EEP)		Costs incurred by Questar Gas to promote energy conservation in the form of rebates and promotions. EEP costs are recovered from customers through periodic rate adjustments.
FERC		Federal Energy Regulatory Commission.
Gas		All references to “gas” in this report refer to natural gas.
Heating Degree Days		A measure of the number of degrees the average daily outside temperature is below 65 degrees Fahrenheit.
M		Thousand.
MM		Million.
Natural Gas Liquids (NGL)		Liquid hydrocarbons that are extracted and separated from the natural gas stream. NGL products include ethane, propane, butane, natural gasoline and heavier hydrocarbons.
PSCU		Public Service Commission of Utah.
PSCW		Wyoming Public Service Commission.
Questar Gas		The legal entity, Questar Gas Company or the Company.
Questar Pipeline		The legal entity, Questar Pipeline, LLC (successor by statutory conversion to and formerly known as Questar Pipeline Company), an affiliate company to Questar Gas, one or more of its consolidated subsidiaries, or the entirety of Questar Pipeline, LLC and its consolidated subsidiaries.
SEC		United States Securities and Exchange Commission.
Wexpro		The legal entity, Wexpro Company, is an affiliate company to Questar Gas that develops and produces natural gas from cost-of-service reserves for Questar Gas customers.
Wexpro Agreement		A long-standing comprehensive agreement with the states of Utah and Wyoming. The agreement was effective August 1, 1981, and sets forth the rights of Questar Gas to receive certain benefits from Wexpro’s operations. The agreement was approved by the PSCU and PSCW in 1981 and affirmed by the Supreme Court of Utah in 1983.
Wexpro II Agreement		An agreement with the states of Utah and Wyoming modeled after the Wexpro Agreement that allows for the addition of properties under the cost-of-service methodology for the benefit of Questar Gas customers. The agreement was approved by the PSCU and PSCW in 2013.

The following abbreviations or acronyms used in this Form 10-Q are defined below:

Questar Gas 2016 Form 10-Q 3


Abbreviation or Acronym		Definition

ARO		Asset retirement obligation

bcf		Billion cubic feet

CEO		Chief Executive Officer

CERCLA		Comprehensive Environmental Response, Compensation and Liability Act of 1980

CET		Conservation enabling tariff

CFO		Chief Financial Officer

Dominion		The legal entity, Dominion Resources, Inc., one or more of its consolidated subsidiaries (other than Dominion Questar or Questar Gas) or operating segments, or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries

Dominion Gas		The legal entity, Dominion Gas Holdings, LLC, one or more of its consolidated subsidiaries or operating segment, or the entirety of Dominion Gas Holdings, LLC and its consolidated subsidiaries

Dominion Questar		The legal entity, Dominion Questar Corporation, one or more of its consolidated subsidiaries or operating segment, or the entirety of Dominion Questar Corporation and its consolidated subsidiaries

Dominion Questar Combination		Dominion’s acquisition of Dominion Questar completed on September 16, 2016 pursuant to the terms of the agreement and plan of merger entered on January 31, 2016

Dth		Dekatherm

EEP		Energy-efficiency program

EPA		Environmental Protection Agency

FERC		Federal Energy Regulatory Commission

GAAP		U.S. generally accepted accounting principles

GHG		Greenhouse gas

Idaho Commission		Idaho Public Utilities Commission

IRCA		Intercompany revolving credit agreement

MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Questar Gas		The legal entity Questar Gas Company

Questar Pipeline		Questar Pipeline, LLC, one or more of its consolidated subsidiaries, or the entirety of Questar Pipeline, LLC and its consolidated subsidiaries

SEC		Securities and Exchange Commission

Utah Commission		Public Service Commission of Utah

Virginia Power		The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segments, or the entirety of Virginia Power and its consolidated subsidiaries

Wexpro		The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries

Wyoming Commission		Wyoming Public Service Commission

PART I—. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

QUESTAR GAS COMPANY

~~CONDENSED~~ STATEMENTS OF INCOME

(Unaudited)

	3 Months EndedSeptember 30,						9 Months EndedSeptember 30,
	Three Months Ended
	2016			2015			2016			2015
	March 31,
	(in millions)
	2017			2016
REVENUES(1)	$	87.9		$	89.3		$	624.0		$	605.8
(millions)
OPERATING EXPENSES
Operating Revenue(1)	$	396.9		$	407.9
Cost of natural gas sold (excluding operating expenses shown separately)(1)		39.7			44.4			364.4			362.0
Operating Expenses
Other operations and maintenance(1)		47.5			35.3			131.4			119.4
Cost of sales(1)		241.3			256.9
Depreciation and amortization		15.3			13.8			45.0			40.9
Other operations and maintenance(1)		41.7			47.6
Other taxes		5.2			4.7			15.8			14.4
Depreciation and amortization		16.2			14.7
Total Operating Expenses		107.7			98.2			556.6			536.7
Other taxes		5.8			5.3
OPERATING INCOME (LOSS)		(19.8	)		(8.9	)		67.4			69.1
Total Operating Expenses		305.0			324.5
Interest and other income		0.9			1.3			2.8			3.6
Income from operations		91.9			83.4
Interest expense		7.3			7.0			22.5			21.2
Other income		1.0			1.0
INCOME (LOSS) BEFORE INCOME TAXES		(26.2	)		(14.6	)		47.7			51.5
Interest expense(1)		8.5			7.7
Income taxes benefit/(expense)		8.5			5.8			(19.4	)		(19.3	)
Income from operations before income tax expense		84.4			76.7
NET INCOME (LOSS)	$	(17.7	)	$	(8.8	)	$	28.3		$	32.2
Income tax expense		32.2			29.1
Net Income	$	52.2		$	47.6

(1) See Note 911 for amounts attributable to ~~affiliates~~related parties.

~~See~~The accompanying notes ~~accompanying~~are ~~the~~an ~~financial~~integral ~~statements~~part of Questar Gas’ Financial Statements.

~~Questar Gas 2016 Form 10-Q~~ 4

QUESTAR GAS COMPANY

~~CONDENSED~~ BALANCE SHEETS

(Unaudited)

	September 30,2016			December 31,2015(1)
	March 31,2017			December 31,2016(1)
	(in millions)
(millions)
ASSETS
Current Assets
Cash and cash equivalents	$	—10.0		$	107.56
Accounts receivable, net		24.0			112.0
Customer receivables (less allowance for doubtful accounts of $2.6 and $1.7)		136.7			163.7
Unbilled gas accounts receivable		10.1			91.0
Receivable from affiliates		1.4			0.6
Receivable from affiliates		9.2			69.2
Inventories at lower of average cost or market:
Gas stored underground		678.29			4349.93
Materials and supplies		1825.4			1727.16
Regulatory assets		51.9			699.86
Prepaid expenses and other		4.2			3.5
Other		3.0			3.7
Total Current Assets		139.0			417.0
Total current assets		187.3			262.1
Property, Plant and Equipment		~~2,834.0~~			~~2,570.3~~
Accumulated depreciation and amortization		(725.5	)		(812.2	)
Property, plant and equipment		2,879.6			2,883.0
Net Property, Plant and Equipment		2,108.5			1,758.1
Accumulated depreciation and amortization		(721.4	)		(737.6	)
Receivable from affiliates		72.6			—
Total property, plant and equipment, net		2,158.2			2,145.4
Regulatory assets		6.4			11.9
Deferred Charges and Other Assets
Other noncurrent assets		6.8			5.7
Receivable from affiliates		100.3			87.8
TOTAL ASSETS	$	2,333.3		$	2,192.7
Other noncurrent assets		11.2			11.2
LIABILITIES AND COMMON SHAREHOLDER’S EQUITY
Total deferred charges and other assets		111.5			99.0
Current Liabilities
Total assets	$	2,457.0		$	2,506.5
Notes payable to Dominion Questar	$	244.5		$	273.3
Accounts payable and accrued expenses		84.5			122.5
Accounts payable to affiliates		52.0			74.5
Other current liabilities		44.5			38.3
Total Current Liabilities		425.5			508.6
Long-term debt		531.4			531.2
Deferred income taxes		466.3			436.7
Regulatory liabilities		186.4			65.6
Asset retirement obligations		74.6			0.6
Customer contributions in aid of construction		22.9			23.7
Other noncurrent liabilities		0.2			1.6
TOTAL LIABILITIES		1,707.3			1,568.0
Contingencies and commitments - Note 10
COMMON SHAREHOLDER’S EQUITY
Common stock - par value $2.50; 9.2 million shares authorized and outstanding at September 30, 2016 and December 31, 2015		23.0			23.0
Additional paid-in capital		269.8			266.8
Retained earnings		333.2			334.9
Total Common Shareholder’s Equity		626.0			624.7
TOTAL LIABILITIES AND COMMON SHAREHOLDER’S EQUITY	$	2,333.3		$	2,192.7

(1) ~~Derived~~Questar Gas’ Balance Sheet at December 31, 2016 has been derived from ~~2015~~the audited ~~financial~~Balance ~~statements~~Sheet at that date.

~~See~~The ~~notes~~ accompanying ~~the~~notes ~~financial~~are ~~statements~~an integral part of Questar Gas’ Financial Statements.

~~Questar Gas 2016 Form 10-Q~~ 5

QUESTAR GAS COMPANY

~~CONDENSED~~BALANCE ~~STATEMENTS~~SHEETS—(Continued) ~~OF CASH FLOWS~~

(Unaudited)

	9 Months Ended September 30,
	March 31,2017			December 31,2016(1)
	2016			2015
(millions)
	(in millions)
LIABILITIES AND EQUITY
OPERATING ACTIVITIES
Current Liabilities
Net income	$	28.3		$	32.2
Securities due within one year	$	84.5		$	14.5
Adjustments to reconcile net income to net cash provided by operating activities:
Short-term debt		147.0			200.0
Depreciation and amortization		51.8			45.0
Affiliated current borrowings		—			48.0
Deferred income taxes		29.6			18.0
Accounts payable and accrued expenses		70.3			117.2
Other adjustments for non-cash items		2.9			1.0
Accounts payable to affiliates		68.9			43.5
Changes in operating assets and liabilities		133.0			24.1
Customer advances		9.8			27.9
NET CASH PROVIDED BY OPERATING ACTIVITIES		245.6			120.3
Regulatory liabilities		28.7			6.5
INVESTING ACTIVITIES
Other current liabilities		1.7			1.7
Property, plant and equipment purchased		(186.3	)		(153.2	)
Total current liabilities		410.9			459.3
Property, plant and equipment purchased from affiliates		(10.6	)		—
Long-Term Debt		546.4			616.3
Acquisition of gas distribution system		—			(11.4	)
Deferred Credits and Other Liabilities
Cash used in disposition of assets		(3.5	)		(2.3	)
Deferred income taxes		491.4			475.8
Proceeds from disposition of assets		0.4			0.2
Regulatory liabilities		190.8			189.1
NET CASH USED IN INVESTING ACTIVITIES		(200.0	)		(166.7	)
Payables to affiliates		13.1			13.0
FINANCING ACTIVITIES
Other noncurrent liabilities		94.6			95.4
Change in notes payable to Dominion Questar		(28.8	)		60.7
Total deferred credits and other liabilities		789.9			773.3
Checks outstanding in excess of cash balances		2.7			3.4
Total liabilities		1,747.2			1,848.9
Dividends paid to Dominion Questar		(30.0	)		(37.5	)
Commitments and Contingencies (see Note 9)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(56.1	)		26.6
Equity
Change in cash and cash equivalents		(10.5	)		(19.8	)
Common stock - par value $2.50(2)		23.0			23.0
Beginning cash and cash equivalents		10.5			19.8
Additional paid-in capital		272.5			272.5
Ending cash and cash equivalents	$	—		$	—
Retained earnings		414.3			362.1
Total common shareholder’s equity		709.8			657.6
Total liabilities and shareholder’s equity	$	2,457.0		$	2,506.5

~~See~~(1) ~~notes~~Questar ~~accompanying~~Gas’ Balance Sheet at December 31, 2016 has been derived from the ~~financial~~audited ~~statements~~Balance Sheet at that date.

~~Questar~~(2) ~~Gas~~50.0 ~~2016~~million ~~Form~~shares ~~10-Q~~authorized; 69.2 million shares outstanding at March 31, 2017 and December 31, 2016.

~~Table~~The accompanying notes are an integral part of ~~Contents~~Questar Gas’ Financial Statements.

~~QUESTAR~~6 ~~GAS COMPANY~~

~~(Unaudited)~~QUESTAR GAS COMPANY

~~Note~~STATEMENTS 1OF -CASH ~~Nature~~FLOWS ~~of Business~~

~~Questar~~(Unaudited) Gas is a wholly-owned subsidiary of Dominion Questar which, effective September 2016, is a wholly-owned subsidiary of Dominion. The Company provides retail natural gas distribution in Utah, southwestern Wyoming and a small portion of southeastern Idaho. Questar Gas is regulated by the PSCU and the PSCW. The Public Utility Commission of Idaho has contracted with the PSCU for rate oversight of Questar Gas’ Idaho operations.

Note 2 - Basis of Presentation of Interim Financial Statements


	Three Months Ended
	March 31,
	2017			2016
(millions)
Operating Activities
Net income	$	52.2		$	47.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16.2			16.1
Deferred income taxes		15.7			1.7
Other adjustments for non-cash items		0.2			0.4
Changes in operating assets and liabilities		53.8			125.5

Net cash provided by operating activities		138.1			191.3

Investing Activities
Property, plant and equipment purchased		(35.0	)		(59.1	)
Cash used in disposition of assets		—			(0.7	)
Proceeds from disposition of assets		0.3			0.1

Net cash used in investing activities		(34.7	)		(59.7	)

Financing Activities
Repayment of short-term debt, net		(53.0	)		—
Repayment of affiliated current borrowings, net		(48.0	)		(132.8	)
Dividends paid to Dominion Questar		—			(10.0	)
Other		—			0.7

Net cash used in financing activities		(101.0	)		(142.1	)

Increase (decrease) in cash and cash equivalents		2.4			(10.5	)
Cash and cash equivalents at beginning of year		7.6			10.5

Cash and cash equivalents at end of year	$	10.0		$	—

Supplemental Cash Flow Information
Significant noncash investing activities:
Accrued capital expenditures	$	11.5		$	14.7

The ~~interim~~accompanying ~~financial~~notes statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the instructions for Quarterly Reports on Form 10-Q and SEC Regulations S-X and S-K. The financial statements reflect all normal, recurring adjustments and accruals that are, inan ~~the~~integral ~~opinion~~part of ~~management,~~Questar necessary for a fair presentation of its financial position and results of operations for the interim periods presented. Interim financial statements do not include all of the information and notes required by GAAP for audited annual financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the CompanyGas’s ~~Annual~~Financial ~~Report on Form 10-K for the year ended December 31, 2015~~Statements.

~~The preparation~~7 of the condensed financial statements and notes in conformity with GAAP requires that management make estimates and assumptions that affect the amounts of revenues, expenses, assets and liabilities, and disclosure of contingent assets and liabilities. Actual results could differ from estimates. The results of operations for the three and nine months ended September 30, 2016, are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

~~Questar~~NOTES ~~Gas~~TO ~~obtains~~FINANCIAL ~~the~~STATEMENTS majority of its gas supply from Wexpro’s cost-of-service production and pays Wexpro an operator service fee based on the terms of the Wexpro Agreement and the Wexpro II Agreement (Wexpro Agreements). Questar Gas also obtains transportation and storage services from Questar Pipeline. During the second and third quarters of the year, a significant portion of the natural gas from Wexpro production is injected into underground storage. This gas is withdrawn from storage as needed during the heating season in the first and fourth quarters. The cost of natural gas sold is credited with the value of natural gas as it is injected into storage and debited as it is withdrawn from storage.

~~Questar~~(Unaudited) ~~Gas 2016 Form 10-Q 7~~

~~Table~~Note 1. Nature of Operations ~~Contents~~

~~The~~Questar ~~details~~Gas is a wholly-owned subsidiary of Dominion Questar ~~Gas’~~which, ~~consolidated~~effective ~~cost~~September of2016, ~~sales~~is ~~are~~a aswholly-owned ~~follows:~~subsidiary of Dominion.

	3 Months EndedSeptember 30,						9 Months EndedSeptember 30,
	2016			2015			2016			2015
	(in millions)
Gas purchases	$	2.0		$	0.3		$	51.1		$	43.5
Operator service fee(1)		77.7			80.7			236.4			241.0
Transportation and storage(1)		17.8			18.1			57.5			58.4
Gathering		6.0			5.7			17.4			16.7
Royalties		5.7			7.6			16.0			26.4
Storage (injection), net		(44.2	)		(42.8	)		(23.4	)		(28.6	)
Purchased-gas account adjustment		(26.6	)		(26.4	)		5.5			0.9
Other		1.3			1.2			3.9			3.7
Total cost of natural gas sold	$	39.7		$	44.4		$	364.4		$	362.0

Questar Gas distributes natural gas as a public utility in Utah, southwestern Wyoming and a small portion of southeastern Idaho. The Utah, Wyoming and Idaho Commissions have granted Questar Gas the necessary regulatory approvals to serve these areas. Questar Gas also has long-term franchises granted by communities and counties within its service area.

~~(1)~~Revenue ~~See~~generated ~~Note~~by 9Questar Gas is based primarily on rates established by the Utah and Wyoming Commissions. The Idaho Commission has contracted with the Utah Commission for ~~amounts~~rate ~~attributable~~oversight toof ~~affiliates~~Questar Gas operations in Idaho.

~~Note~~Wexpro, 3an -affiliate, ~~Operating~~provides ~~Revenue~~the majority of Questar Gas’ natural gas supply and Questar Pipeline, an affiliate, provides the majority of Questar Gas’ transportation and storage services.

~~Questar~~Note ~~Gas’ operating~~2. Significant ~~revenue~~Accounting ~~consists~~Policies ~~of the following:~~

	3 Months EndedSeptember 30,				9 Months EndedSeptember 30,
	2016		2015		2016		2015
	(in millions)
Residential and commercial sales	$	72.1	$	73.8	$	576.7	$	554.9
Industrial sales		3.5		4.5		13.0		16.9
Transportation for industrial customers		6.3		5.5		18.0		15.5
Service		1.0		1.0		3.8		3.7
Other		5.0		4.5		12.5		14.8
Total operating revenue	$	87.9	$	89.3	$	624.0	$	605.8

As permitted by the rules and regulations of the SEC, Questar Gas’ accompanying unaudited Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited financial statements prepared in accordance with GAAP. These unaudited Financial Statements should be read in conjunction with the Financial Statements and Notes in Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2016.

~~Note~~In 4the -opinion ~~Rate~~of ~~Regulation~~management, the accompanying unaudited Financial Statements contain all adjustments necessary to present fairly its financial position as of March 31, 2017, its results of operations for the three months ended March 31, 2017 and 2016 and its cash flows for the three months ended March 31, 2017 and 2016. Such adjustments are normal and recurring in nature unless otherwise noted.

Questar Gas makes ~~records~~certain ~~regulatory~~estimates ~~assets~~ and ~~liabilities~~assumptions in preparing its Financial Statements in accordance with ~~orders~~GAAP. These estimates and ~~guidance~~assumptions ~~per~~affect the ~~PSCU~~reported ~~and~~amounts ~~PSCW.~~of ~~The~~assets ~~Company~~and ~~recovers~~liabilities, the ~~costs~~disclosure of contingent assets ~~but~~ ~~does~~and ~~not~~liabilities ~~generally~~at ~~receive~~the date aof ~~return~~the onfinancial ~~these~~statements ~~assets.~~and ~~The~~the ~~current~~reported ~~portion~~amounts of ~~regulatory~~revenues, ~~liabilities~~expenses ~~are~~and ~~included~~cash inflows ~~other~~for ~~current~~the ~~liabilities~~periods onpresented. ~~the~~Actual ~~Condensed~~results ~~Balance~~may ~~Sheets~~differ from those estimates.

~~Questar~~The ~~Gas~~results ~~2016~~of ~~Form~~operations ~~10-Q~~for 8interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, purchased gas expenses and other factors.

~~Table~~Questar ofGas ~~Contents~~reports certain contracts and instruments at fair value. See Note 4 for further information on fair value measurements.

~~The~~Certain ~~following~~amounts ~~table~~in ~~details~~the ~~regulatory~~2016 ~~assets~~Financial Statements and Notes have been reclassified to conform to the 2017 presentation for comparative purposes. The reclassifications did not affect Questar Gas’ net income, total assets, liabilities:, equity or cash flows.

	September 30, 2016				December 31, 2015
	Current		Noncurrent		Current		Noncurrent
	(in millions)
Regulatory assets:
Purchased-gas adjustment(1)	$	—	$	—	$	18.9	$	—
Energy-efficiency program(2)		1.3		—		1.1		—
Contract withholding(3)		1.7		—		20.3		—
Deferred cost-of-service gas charges(4)		—		—		19.5		8.1
Cost of reacquired debt(5)		—		3.3		—		3.8
Pipeline integrity costs(6)		1.9		3.1		6.3		—
Conservation Enabling Tariff(7)		0.4		—		3.6		—
Other		0.6		—		0.1		—
Total regulatory assets	$	5.9	$	6.4	$	69.8	$	11.9
Regulatory liabilities:
Purchased-gas adjustment(1)	$	2.6	$	—	$	—	$	—
Cost of plant removal and AROs(8)		8.3		185.1		3.7		65.5
Income taxes refundable to customers(9)		—		0.1		—		0.1
Other		0.7		1.2		0.3		—
Total regulatory liabilities	$	11.6	$	186.4	$	4.0	$	65.6

Note 3. Operating Revenue

~~(1)~~Questar ~~Purchased-gas~~Gas’ operating ~~costs~~revenue ~~that~~consists ~~are~~of ~~different~~the ~~from~~following: ~~those provided for in present rates are accumulated and recovered or credited through future rate changes.~~

(2) The energy-efficiency program relates to funds expended for promoting the conservation of natural gas through advertising, rebates for efficient homes and appliances and home energy audits. Costs are recovered from customers through periodic rate adjustments. Costs incurred in excess of recoveries result in an asset; recoveries in excess of costs incurred result in a liability.


	Three Months Ended
	March 31,
	2017		2016
(millions)
Residential and commercial gas sales	$	378.5	$	391.7
Industrial gas sales		3.2		5.0
Gas transportation		6.9		6.0
Other⁽¹⁾		8.3		5.2

Total operating revenue	$	396.9	$	407.9

(31) InSee ~~2016,~~Note ~~Questar~~11 ~~Gas recorded a regulatory asset of $1.7 million~~ for aamounts ~~disputed~~attributable ~~amount withheld from a supplier of storage services. The amount withheld will be recovered from customers if it is determined that Questar Gas is required~~ to ~~pay~~related ~~the supplier~~parties. The $20.3 million withheld from a supplier of gathering services as of year-end, per the dispute settlement agreement, was resolved and reversed in March 2016. For further details, see Note 11 in the Company’s first quarter 2016 Form 10-Q filing.

~~(4)~~8 Operating and maintenance, depreciation, depletion and amortization, production taxes and royalties on cost-of-service gas production and future expenses related to abandonment of Wexpro-operated gas and oil wells. Noncurrent cost-of-service gas charges also include amounts for production imbalances that will be recovered from customers at the end of the related gas wells’ useful lives. These costs were transferred to Wexpro in September 2016.

~~(6)~~Note ~~The costs of complying with pipeline-integrity regulations are recovered in rates subject to a PSCU order~~4. Fair ~~Questar~~Value ~~Gas~~Measurements ~~is allowed to recover $7.0 million per year. Costs incurred in excess of this amount will be recovered in future rate changes.~~

~~(7)~~Questar ~~The~~Gas’ ~~CET~~fair ~~asset~~value ~~represents~~measurements ~~actual~~are ~~revenues~~made ~~received~~in ~~that~~accordance ~~are~~with ~~less~~the ~~than~~policies discussed in Note 5 to the ~~allowed~~Financial ~~revenues~~Statements in Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2016. ~~Any~~See ~~deficiency~~Note 5 in ~~amounts~~this ~~collected~~report ~~are~~for ~~recovered~~further ~~through~~information ~~periodic~~about ~~rate~~Questar ~~adjustments~~Gas’ derivatives and hedge accounting activities.

~~(8)~~Questar ~~Cost~~Gas ofenters ~~plant~~into ~~removal~~certain physical forwards, which are considered Level 3 as they have one or more inputs that are not observable and ~~AROs~~are ~~represent~~significant ~~amounts~~to the ~~recovered~~valuation. ~~from~~The ~~customers~~discounted cash flow method is used to value Level 3 physical forward contracts. The discounted cash flow model for ~~costs~~forwards calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of ~~future~~return, ~~activities~~and tocredit ~~remove~~spreads. ~~assets~~For ~~that~~Level 3 fair value measurements, forward market prices are ~~expected~~considered unobservable. The unobservable inputs are developed and substantiated using historical information, available market data, third-party data, and statistical analysis. Periodically, inputs to bevaluation ~~incurred~~models atare ~~the~~reviewed ~~time~~and ofrevised ~~retirement~~as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third-party pricing sources.

~~(9)~~The ~~Income~~following ~~taxes~~table ~~refundable~~presents toQuestar ~~customers~~Gas’ ~~arise~~quantitative ~~from~~information ~~adjustments~~about toLevel ~~deferred~~3 ~~taxes~~fair value measurements at March 31, ~~refunded~~2017. The ~~over~~range ~~the~~and ~~life~~weighted ofaverage ~~the~~are ~~related~~presented ~~property,~~in ~~plant~~dollars ~~and~~for ~~equipment~~market price inputs.

Rate Case Filings

Fair Value
(millions)

Valuation Techniques

Unobservable Input

Range

Weighted
Average⁽¹⁾

Liabilities

Physical and financial forwards and futures:

Natural gas⁽²⁾

1.3

Discounted cash flow

Market price (per Dth)⁽³⁾

2.2 - 3.6

2.8

Total liabilities

1.3

~~On July~~ (1,) ~~2016,~~Averages ~~Questar~~weighted Gas filed a general rate case with the PSCU. However, as part of the Settlement Stipulation Agreement approved on August 22, 2016 relating to the Dominion Questar Combination, Questar Gas agreed to withdraw the general rate case and not file a new general rate case to adjust its base distribution non-gas rates until July 1, 2019, unless otherwise ordered by ~~the PSCU~~volume. A Settlement Stipulation Agreement was also approved by the PSCW on September 14, 2016, relating to the Dominion Questar Combination, in which Questar Gas agreed to not file a general rate case application with a requested rate effective date earlier than January 1, 2020. Information regarding the Dominion Questar Combination was also provided to the Idaho Public Utilities Commission, who acknowledged the Dominion Questar Combination in October 2016 and directed Dominion Questar to notify the Idaho Public Utilities Commission when it makes filings with the PSCU.

~~Questar~~(2) ~~Gas~~Includes ~~2016 Form 10-Q 9~~basis.

~~Table~~(3) ofRepresents ~~Contents~~market prices beyond defined terms for Levels 1 and 2.

OnSensitivity ~~October~~of 1,the ~~2016,~~fair ~~Questar~~value ~~Gas~~measurements to ~~filed~~changes ~~for~~in ~~an $8.6 million gas cost increase. The PSCU approved~~ the ~~rate~~significant ~~filing effective~~unobservable ~~November~~inputs 1,is ~~2016,~~as ~~reflecting~~follows: ~~a forecasted increase in commodity costs.~~

~~Note~~Significant 5Unobservable -Inputs ~~Asset~~Position ~~Retirement~~Change ~~Obligations~~to Input Impact on Fair ValueMeasurement Market price Buy Increase (decrease) Gain (loss) Market price Sell Increase (decrease) Loss (gain)

~~Questar~~Recurring ~~Gas~~Fair ~~records~~Value anMeasurements ARO along with an increase to the carrying value of the related property, plant and equipment when there is a legal obligation associated with the retirement of a tangible long-lived asset. The fair value of retirement costs is estimated by the Company based on abandonment costs of similar properties and depreciated over the life of the related assets. Revisions to estimates result from material changes in the expected timing or amount of cash flows associated with AROs. As a result of a change in the estimated timing of cash flows for the interim retirement of natural gas pipeline components, Questar Gas recorded an increase of $75.1 million to AROs in the third quarter of 2016. Income or expense resulting from the settlement of ARO liabilities sold is included in other operations and maintenance on the Condensed Statements of Income. The current portion of the ARO balance is $1.5 million and is included in other current liabilities on the Condensed Balance Sheets. The ARO liability is adjusted to present value each period through an accretion calculation using a credit-adjusted risk-free interest rate. Changes in Questar Gas’ AROs from the Condensed Balance Sheets were as follows:

	9 Months EndedSeptember 30,
	2016			2015
	(in millions)
AROs at beginning of year	$	0.6		$	0.6
Accretion		0.7			—
Revisions in estimated cash flows		75.1			—
Liabilities settled		(0.3	)		—
AROs at end of period	$	76.1		$	0.6

The following table presents Questar Gas’ liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions. Derivative assets at March 31, 2017 were immaterial.

Note 6 - Operating Segments


	Level 1		Level 2		Level 3		Total
(millions)
At March 31, 2017
Liabilities:
Derivatives:
Commodity	$	—	$	—	$	1.3	$	1.3

Total liabilities	$	—	$	—	$	1.3	$	1.3

At December 31, 2016
Assets:
Derivatives:
Commodity	$	—	$	0.1	$	—	$	0.1

Total assets	$	—	$	0.1	$	—	$	0.1

Liabilities:
Derivatives:
Commodity	$	—	$	0.1	$	—	$	0.1

Total liabilities	$	—	$	0.1	$	—	$	0.1

~~The~~9 Corporate and Other Segment primarily includes specific items attributable to Questar Gas’ operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.

The following table presents the net change in Questar Gas’ ~~2016~~assets ~~Form~~and ~~10-Q~~liabilities 10measured at fair value on a recurring basis and included in the Level 3 fair value category.


	Three Months Ended March 31,
	2017			2016
(millions)
Beginning balance	$	—		$	—
Total realized and unrealized gains (losses):
Included in earnings⁽¹⁾		(0.1	)		—
Included in regulatory assets/liabilities		(1.3	)		—
Settlements		0.1			—

Ending balance	$	(1.3	)	$	—

(1) The ~~following~~gains ~~table~~and ~~presents~~losses ~~segment~~included ~~information~~in ~~pertaining~~earnings towere ~~Questar~~classified ~~Gas’~~in ~~operations:~~cost of sales.

	Questar Gas			Corporateand Other			ConsolidatedTotal
	(in millions)
Three Months Ended September 30, 2016
Operating revenue	$	87.9		$	—		$	87.9
Net loss		(10.0	)		(7.7	)		(17.7	)
Three Months Ended September 30, 2015
Operating revenue	$	89.3		$	—		$	89.3
Net loss		(8.8	)		—			(8.8	)
Nine Months Ended September 30, 2016
Operating revenue	$	624.0		$	—		$	624.0
Net income (loss)		36.0			(7.7	)		28.3
Nine Months Ended September 30, 2015
Operating revenue	$	605.8		$	—		$	605.8
Net income		32.2			—			32.2

There were no unrealized gains or losses included in earnings in the Level 3 fair value category relating to assets/liabilities still held at the reporting date for the three months ended March 31, 2017.

~~Note 7 -~~ Fair Value ~~Measurements~~of Financial Instruments

Substantially all of Questar Gas’ ~~fair~~financial ~~value~~instruments ~~measurements~~ are ~~made~~recorded inat ~~accordance~~fair value, with the ~~policies~~exception ~~discussed~~of inthe ~~Note~~instruments 6described tobelow, ~~the~~which ~~Consolidated~~are ~~Financial~~reported ~~Statements~~at inhistorical ~~the~~cost. Estimated fair values have been determined using available market information and ~~Company’s~~valuation ~~Annual~~methodologies ~~Report~~considered onappropriate ~~Form~~by 10management. The carrying amount of cash and cash equivalents, customer receivables, receivable from affiliates, short-Kterm ~~for~~debt, ~~the~~account ~~year~~payable ~~ended~~to ~~December 31~~affiliates, ~~2015.~~affiliated ~~See~~current ~~Note~~borrowings, 8and accounts inpayable ~~this~~are ~~report~~representative ~~for~~of ~~further~~fair ~~information~~value ~~about~~because of the short-term nature of these instruments. For Questar Gas’ ~~derivatives~~financial instruments that are not recorded at fair value, the carrying amounts and ~~hedge~~estimated ~~accounting~~fair ~~activities.~~values are as follows:

Questar Gas’ commodity derivative valuations are prepared by Dominion’s Enterprise Risk Management (ERM) department. The ERM department creates mark-to-market valuations for Questar Gas’ derivative transactions using computer-based statistical models. The inputs that go into the market valuations are transactional information stored in the systems of record and market pricing information that resides in data warehouse databases. The majority of forward prices are automatically uploaded into the data warehouse databases from various third-party sources. Inputs obtained from third-party sources are evaluated for reliability considering the reputation, independence, market presence, and methodology used by the third-party. If forward prices are not available from third-party sources, then the ERM department models the forward prices based on other available market data. A team consisting of risk management and risk quantitative analysts meets and assesses the validity of market prices and mark-to-market valuations. Changes in mark-to-market valuations from period to period are examined and qualified against historical expectations. If any discrepancies are identified during this process, the mark-to-market valuations or the market pricing information is evaluated further and adjusted, if necessary.

March 31, 2017

December 31, 2016

Carrying
Amount

Estimated Fair
Value⁽¹⁾

Carrying
Amount

Estimated Fair
Value⁽¹⁾

(millions)

Long-term debt, including securities due within one year⁽²⁾

630.9

675.0

630.8

672.6

~~For~~(1) ~~options~~Fair ~~where~~value ~~observable~~is ~~pricing~~estimated ~~information~~using ismarket ~~not~~prices, where available, ~~from~~and ~~external~~interest ~~sources,~~rates ~~Questar~~currently ~~Gas~~available ~~generally~~for ~~uses~~issuance aof ~~modified~~debt ~~Black-Scholes~~with ~~Model~~similar orterms ~~other option~~and ~~model~~remaining maturities. The fair value measurements are classified as Level 2.

~~The~~(2) ~~inputs~~Carrying ~~and~~amount ~~assumptions~~includes ~~used~~amounts inwhich ~~measuring~~represent ~~fair~~the ~~value~~unamortized ~~for~~debt ~~commodity~~issuance ~~derivative~~costs, ~~contracts~~discount ~~include~~or ~~the following:~~ premium.

•Note ~~Forward~~5. Derivatives ~~commodity~~and ~~prices~~Hedge Accounting Activities

•Questar ~~Transaction~~Gas’ ~~prices~~accounting policies, objectives and strategies for using derivative instruments are discussed in Note 2 to the Financial Statements in the Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2016. See Note 4 in this report for further information about fair value measurements and associated valuation methods for derivatives.

•Derivative ~~Price~~assets ~~correlation~~and liabilities are presented gross on Questar Gas’ Balance Sheets. Questar Gas’ derivative contracts include over-the-counter transactions, which are bilateral contracts that are transacted directly with a counterparty. At March 31, 2017, substantially all of Questar Gas’ derivative assets and liabilities were not subject to a master netting or similar arrangement.

• Volumes

•The ~~Commodity~~following ~~location~~table presents the volume of Questar Gas’ derivative activity at March 31, 2017. These volumes are based on open derivative positions and represent the combined absolute value of its long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.

• Interest rates


	Current		Noncurrent
Natural Gas (bcf):
Basis		7.7		26.4

•10 ~~Credit quality of counterparties and Questar Gas~~

•Fair ~~Time~~Value ~~value~~and Gains and Losses on Derivative Instruments

~~For~~The ~~derivative~~following ~~contracts,~~table ~~Questar~~presents ~~Gas~~the ~~recognizes transfers among Level 1, Level 2 and Level 3 based on~~ fair values as of ~~the~~Questar ~~first~~Gas’ ~~day~~derivatives ~~of the month in which the transfer occurs. Transfers out of Level 3 represent assets~~ and ~~liabilities~~where ~~that~~they ~~were~~are ~~previously~~presented ~~classified as Level 3 for which the inputs became observable for classification~~ in ~~either~~its ~~Level 1~~Balance ~~or Level 2~~Sheets. Because the activity and liquidity of commodity markets vary substantially between regions and time periods, the availability of observable inputs for substantially the full term and value of Questar Gas’ over-the-counter derivative contracts is subject to change.

Questar Gas 2016 Form 10-Q 11


	Fair Value - Derivatives not under Hedge Accounting		Total Fair Value
(millions)
At March 31, 2017
LIABILITIES
Current Liabilities
Commodity	$	0.1	$	0.1

Total current derivative liabilities⁽²⁾		0.1		0.1

Noncurrent Liabilities
Commodity		1.2		1.2

Total noncurrent derivative liabilities⁽³⁾		1.2		1.2

Total derivative liabilities	$	1.3	$	1.3

At December 31, 2016
ASSETS
Current Assets
Commodity	$	0.1	$	0.1

Total current derivative assets⁽¹⁾		0.1		0.1

Total derivative assets	$	0.1	$	0.1

LIABILITIES
Current Liabilities
Commodity	$	0.1	$	0.1

Total current derivative liabilities⁽²⁾		0.1		0.1

Total derivative liabilities	$	0.1	$	0.1

~~Table~~(1) ofCurrent ~~Contents~~derivative assets are presented in other current assets in Questar Gas’ Balance Sheets.

~~Level~~(2) 3Current ~~Valuations~~derivative liabilities are presented in other current liabilities in Questar Gas’ Balance Sheets.

~~Fair value measurements are categorized as Level~~ (3) ~~when~~Noncurrent ~~price~~derivative orliabilities ~~other inputs that~~ are ~~considered~~presented toin beother ~~unobservable~~noncurrent ~~are~~liabilities ~~significant~~in toQuestar ~~their~~Gas’ ~~valuations. Long-dated~~Balance ~~commodity derivatives are generally based on unobservable inputs due to the length of time to settlement and the absence of market activity and are therefore categorized as Level 3~~Sheets.

~~Questar~~The ~~Gas~~following ~~enters~~table ~~into~~presents ~~certain~~the ~~physical~~gains ~~forwards,~~and ~~which~~losses ~~are~~on ~~considered~~Questar ~~Level~~Gas’ 3derivatives, as ~~they~~well ~~have~~as ~~one~~where ~~or more inputs that are not observable and are significant to~~ the ~~valuation.~~associated ~~The~~activity ~~discounted cash flow method~~ is ~~used~~presented toin ~~value~~its ~~Level~~Statements ~~3 physical forward contracts. The discounted cash flow model for forwards calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate~~ of return, and credit spreads. For Level 3 fair value measurements, forward market prices are considered unobservable. The unobservable inputs are developed and substantiated using historical information, available market ~~data, third-party data, and statistical analysis~~Income. Periodically, inputs to valuation models are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third-party pricing sources.

The following table presents Questar Gas’ quantitative information about Level 3 fair value measurements at September 30, 2016. The range and weighted average are presented in dollars for market price inputs.


	Amount of Gain (Loss) Recognized in Income on Derivatives ⁽¹⁾
	Three months ended March 31,
Derivatives not designated as hedging instruments	2017			2016
(millions)
Derivative Type and Location of Gains (Losses)
Commodity⁽²⁾	$	(0.5	)	$	—

Total	$	(0.5	)	$	—

Fair Value(millions)

Valuation Techniques

Unobservable Input

Range

WeightedAverage(1)

Assets

Physical and financial forwards and futures:

Natural gas

1.6

Discounted cash flow

Market price (per Dth)(2)

2.6 - 3.6

3.1

Total assets

1.6

(1)	Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Questar Gas’ Statements of Income.

(12) ~~Averages~~Amounts ~~weighted~~recorded byin ~~volume~~Questar Gas’ Statements of Income are classified in cost of sales.

~~(2)~~11 ~~Represents market prices beyond defined terms for Levels 1 and 2.~~

~~Significant~~Note ~~Unobservable~~6. Regulatory ~~Inputs~~Assets ~~Position~~and ~~Change~~Liabilities ~~to Input Impact on Fair Value Measurement Market price Buy Increase (decrease) Gain (loss) Market price Sell Increase (decrease) Loss (gain)~~

~~Recurring~~Regulatory ~~Fair~~assets ~~Value~~and ~~Measurements~~liabilities include the following:

The following table presents Questar Gas’ assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions. Questar Gas did not have any such items at December 31, 2015.


	March 31, 2017		December 31, 2016
(millions)
Regulatory assets:
Purchased-gas adjustment⁽¹⁾	$	—	$	3.4
EEP⁽²⁾		—		1.1
Contract withholding⁽³⁾		—		2.6
Pipeline integrity costs⁽⁴⁾		1.9		1.9
Other		—		0.6

Regulatory assets-current		1.9		9.6

Derivatives⁽⁵⁾		1.2		—
Pipeline integrity costs⁽⁴⁾		1.4		2.3
Cost of reacquired debt⁽⁶⁾		3.1		3.2

Regulatory assets-noncurrent⁽⁷⁾		5.7		5.5

Total regulatory assets	$	7.6	$	15.1

Regulatory liabilities:
Purchased-gas adjustment⁽¹⁾	$	20.1	$	—
EEP⁽²⁾		2.0		—
CET⁽⁸⁾		2.0		2.9
Cost of plant removal and AROs⁽⁹⁾		4.5		3.5
Other		0.1		0.1

Regulatory liabilities-current		28.7		6.5

Cost of plant removal and AROs⁽⁹⁾		190.8		189.1

Regulatory liabilities-noncurrent		190.8		189.1

Total regulatory liabilities	$	219.5	$	195.6

	September 30, 2016
	Level 1		Level 2		Level 3		Total
	(millions)
Assets
Derivatives:
Commodity	$	—	$	—	$	1.6	$	1.6
Total assets	$	—	$	—	$	1.6	$	1.6
Liabilities
Derivatives:
Commodity	$	—	$	0.1	$	—	$	0.1
Total liabilities	$	—	$	0.1	$	—	$	0.1

(1)	Purchased-gas costs that are different from those provided for in present rates are accumulated and recovered or credited through future rate changes.

~~Questar~~(2) ~~Gas~~The ~~2016~~EEP ~~Form~~relates ~~10-Q~~to 12funds expended for promoting the conservation of natural gas through advertising, rebates for efficient homes and appliances and home energy audits. Costs are recovered from customers through periodic rate adjustments. Costs incurred in excess of recoveries result in an asset; recoveries in excess of costs incurred result in a liability.

~~Table~~(3) Represents a disputed amount withheld from a supplier of ~~Contents~~storage services. The dispute was settled in March 2017 and the amount reversed, which resulted in no material impact to Questar Gas’ results of operations, financial position or cash flows.

(4) The ~~following~~costs ~~table~~of ~~presents~~complying ~~the~~with ~~net~~pipeline-integrity ~~change~~regulations are recovered in rates subject to a Utah Commission order. Questar Gas’ ~~assets~~is ~~and~~allowed ~~liabilities~~to ~~measured~~recover at$7.0 ~~fair~~million ~~value~~per ~~on a~~year. ~~recurring~~Costs ~~basis~~incurred ~~and~~in ~~included~~excess inof ~~the~~this ~~Level~~amount 3will ~~fair~~be ~~value~~recovered ~~category:~~in future rate changes.

	3 Months Ended September 30,				9 Months Ended September 30,
	2016		2015		2016		2015
	(millions)
Beginning balance	$	—	$	—	$	—	$	—
Total realized and unrealized gains (losses):
Included in regulatory assets/liabilities		1.6		—		1.6		—
Ending balance	$	1.6	$	—	$	1.6	$	—

(5)	Changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers.

~~There~~(6) ~~were~~Gains noand ~~unrealized~~losses ~~gains~~on orthe ~~losses~~reacquisition ~~included~~of indebt ~~earnings~~by inrate-regulated ~~the~~companies ~~Level~~are 3deferred ~~fair~~and ~~value~~amortized ~~category~~as ~~relating~~interest ~~to assets/liabilities~~expense ~~still~~over ~~held~~the atwould-be remaining life of the ~~reporting~~reacquired ~~date~~debt. ~~for~~The ~~the~~reacquired ~~three~~debt ~~and~~costs ~~nine~~had ~~months~~a ~~ended~~weighted-average ~~September 30,~~life ~~2016~~of ~~and~~approximately ~~2015~~5.8 years as of March 31, 2017.

~~Fair~~(7) ~~Value~~Noncurrent ofregulatory ~~Financial Instruments~~assets are presented in other noncurrent assets in the Balance Sheets.

~~Substantially~~(8) ~~all~~Represents ~~of Questar Gas’ financial instruments are recorded at fair value, with~~ the ~~exception~~difference ofbetween ~~the~~actual ~~instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information~~ and ~~valuation~~allowed ~~methodologies considered appropriate by management~~revenues. ~~The~~Any ~~carrying~~deficiency ~~amount~~in ofamounts ~~cash~~collected ~~and cash equivalents, accounts receivables, unbilled gas receivables, receivables from affiliates, payables to affiliates, notes payable to Dominion Questar, and accounts payable~~ are ~~representative~~recovered ofthrough ~~fair~~periodic ~~value~~rate ~~because of the short-term nature of these instruments~~adjustments. ~~For Questar Gas’ financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:~~

	September 30, 2016				December 31, 2015
	CarryingAmount		Estimated FairValue(1)		CarryingAmount		Estimated FairValue(2)
	(millions)
Long-term debt(3)	$	531.4	$	607.2	$	531.2	$	568.4

(9)	Cost of plant removal and AROs represent amounts recovered from customers for costs of future activities to remove assets that are expected to be incurred at the time of retirement.

~~(1)~~Note ~~Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities~~7. Regulatory ~~The~~Matters ~~fair value measurements are classified as Level 2.~~

~~(2)~~As ~~Fair~~a ~~value~~public utility, Questar Gas is ~~estimated~~subject ~~using~~to the ~~discounted~~jurisdiction ~~present~~of ~~value~~the ofUtah ~~cash~~Commission ~~flows~~and ~~using~~the ~~Questar~~Wyoming ~~Gas’~~Commission. ~~current~~Natural ~~credit~~gas ~~risk-adjusted~~sales ~~borrowing~~and ~~rates.~~transportation ~~The~~services ~~fair~~are ~~value~~provided ~~measurements~~under ~~are~~rate ~~classified~~schedules asapproved ~~Level~~by 2the two regulatory commissions.

~~(3)~~There ~~Carrying~~have ~~amount~~been ~~includes~~no ~~amounts~~significant ~~which~~developments ~~represent~~regarding the ~~unamortized~~pending ~~debt~~regulatory ~~issuance~~matters ~~costs,~~disclosed ~~discount~~in ~~and/or~~Note ~~premium~~10 to the Financial Statements in Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2016.

~~Note~~12 ~~8 - Derivatives and Hedge Accounting Activities~~

~~All~~Note ~~income statement activity related to derivative instruments, including amounts realized upon settlement, is presented in operating expenses based on the nature of the underlying risk~~8. Significant InFinancing ~~Questar~~Transactions Gas’ regulated operations, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities for jurisdictions subject to cost-based rate regulation. Realized gains or losses on the derivative instruments are generally recognized when the related transactions impact earnings. See Note 7 for further information about fair value measurements and associated valuation methods for derivatives.

~~Derivative~~Questar ~~assets~~Gas ~~and~~uses ~~liabilities~~short-term ~~are~~debt ~~presented~~to ~~gross~~fund onworking ~~Questar~~capital ~~Gas’~~requirements ~~Condensed~~and ~~Balance~~as ~~Sheets.~~a ~~Questar~~bridge ~~Gas’~~to ~~derivative contracts include over~~long-~~the-counter~~term ~~transactions,~~debt ~~which~~financings. ~~are~~The ~~bilateral~~levels ~~contracts~~of ~~that~~borrowing ~~are~~may ~~transacted~~vary significantly ~~directly~~during ~~with~~the acourse ~~counterparty.~~of Atthe ~~September 30~~year, ~~2016,~~depending ~~substantially~~upon ~~all~~the oftiming ~~Questar~~and ~~Gas’~~amount ~~derivative~~of ~~assets~~cash ~~and~~requirements ~~liabilities were~~ not ~~subject~~satisfied toby acash ~~master~~from ~~netting or similar arrangement~~operations.

Questar Gas’ short-term financing is supported by the two joint revolving credit facilities with Dominion, Virginia Power and Dominion Gas. ~~2016~~These ~~Form~~credit ~~10-Q~~facilities 13can be used for working capital, as support for the combined commercial paper programs of Dominion, Virginia Power, Dominion Gas and Questar Gas and for other general corporate purposes.

~~Table~~At March 31, 2017, Questar Gas’ commercial paper and letters of ~~Contents~~credit outstanding under its joint credit facilities with Dominion, Virginia Power and Dominion Gas, were as follows:

Volumes

Facility
Limit⁽¹⁾

Outstanding
Commercial
Paper

Outstanding
Letters of
Credit

(millions)

Joint revolving credit facility⁽¹⁾

500.0

147.0

—

Joint revolving credit facility⁽¹⁾

500.0

—

Total

1,000.0

147.0

—

~~The~~(1) ~~following~~A ~~table~~maximum ~~presents~~of ~~the~~a ~~volume~~combined $1.0 billion of the facilities is available to Questar Gas’, ~~derivative~~assuming ~~activity~~adequate atcapacity ~~September 30~~is available after giving effect to uses by co-borrowers Dominion, ~~2016~~Virginia Power and Dominion Gas. ~~These~~Sub-limits ~~volumes~~for Questar Gas are ~~based~~set onwithin ~~open~~the ~~derivative positions~~facility ~~and~~limit ~~represent~~but ~~the~~can ~~combined~~be ~~absolute~~changed ~~value~~at the option of ~~their~~the ~~long~~borrowers ~~and~~multiple ~~short~~times ~~positions,~~per ~~except~~year. inAt March 31, 2017, the ~~case~~sub-limit for Questar Gas was an aggregate $250 million. If Questar Gas has liquidity needs in excess of ~~offsetting~~its ~~transactions~~sub-limit, the sub-limit may be changed or such needs may be satisfied through short-term intercompany borrowings from Dominion. The maturity date for ~~which~~these ~~they~~facilities ~~represent~~is ~~the~~April ~~absolute~~2020. ~~value~~These ofcredit ~~the~~facilities ~~net~~can ~~volume~~be ofused ~~their~~to ~~long~~support bank borrowings and ~~short~~the ~~positions~~issuance of commercial paper, as well as to support up to $1.0 billion (or the sub-limit, whichever is less) of letters of credit.

	Current		Noncurrent
Natural Gas (bcf):
Fixed price(1)		7.7		34.1

Note 9. Commitments and Contingencies

As a result of issues generated in the ordinary course of business, Questar Gas is involved in legal proceedings before various courts and is periodically subject to governmental examinations (1including by regulatory authorities), ~~Includes~~inquiries ~~options~~and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for Questar Gas to estimate a range of possible loss. For such matters for which Questar Gas cannot estimate a range of possible loss, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that Questar Gas is able to estimate a range of possible loss. For legal proceedings and governmental examinations for which Questar Gas is able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent Questar Gas’ maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the financial position, liquidity or results of operations of the Questar Gas.

~~Fair~~The ~~Value~~CERCLA, as amended, provides for immediate response and ~~Gains~~removal actions coordinated by the EPA in the event of threatened releases of hazardous substances into the environment and ~~Losses~~authorizes the U.S. government either to clean up sites at which hazardous substances have created actual or potential onenvironmental ~~Derivative~~hazards ~~Instruments~~or to order persons responsible for the situation to do so. Under the CERCLA, as amended, generators and transporters of hazardous substances, as well as past and present owners and operators of contaminated sites, can be jointly, severally and strictly liable for the cost of cleanup. These potentially responsible parties can be ordered to perform a cleanup, be sued for costs associated with an EPA-directed cleanup, voluntarily settle with the U.S. government concerning their liability for cleanup costs, or voluntarily begin a site investigation and site remediation under state oversight.

~~The~~Questar ~~following~~Gas ~~table~~has determined ~~presents~~that ~~the~~it ~~fair~~is ~~values~~associated with two former manufactured gas plant sites that contain coal tar and other potentially harmful materials. None of the former sites with which Questar Gas’ ~~derivatives~~is ~~and~~associated ~~where~~is ~~they~~under ~~are~~investigation ~~presented~~by inany ~~its Condensed~~state ~~Balance~~or ~~Sheets~~federal environmental agency. Due to the uncertainty surrounding the sites, Questar Gas ~~did~~is ~~not~~unable ~~have~~to ~~any~~make ~~derivative~~an ~~balances~~estimate atof ~~December 31,~~the ~~2015~~potential financial statement impacts.

	Fair Value -Derivatives not underHedgeAccounting		Total Fair Value
At September 30, 2016	(millions)
ASSETS
Current Assets
Commodity	$	0.4	$	0.4
Total current derivative assets(1)		0.4		0.4
Noncurrent Assets
Commodity		1.2		1.2
Total noncurrent derivative assets(2)		1.2		1.2
Total derivative assets	$	1.6	$	1.6
LIABILITIES
Current Liabilities
Commodity	$	0.1	$	0.1
Total current derivative liabilities(3)		0.1		0.1
Total derivative liabilities	$	0.1	$	0.1

~~(2)~~Note ~~Noncurrent~~10. Credit ~~derivative~~Risk ~~assets are presented in other noncurrent assets in Questar Gas’ Condensed Balance Sheets.~~

~~(3)~~Questar ~~Current~~Gas’ ~~derivative~~accounting ~~liabilities~~policies for credit risk are ~~presented~~discussed in ~~other~~Note ~~current~~17 ~~liabilities~~to the Financial Statements in Questar Gas’ ~~Condensed~~Annual ~~Balance~~Report ~~Sheets~~on Form 10-K for the year ended December 31, 2016.

Questar Gas ~~did~~maintains ~~not~~a ~~recognize~~provision ~~any~~for ~~gains~~credit or losses based on ~~derivatives~~factors ~~for~~surrounding ~~both~~ the ~~three~~credit risk of its customers, historical trends and ~~nine~~other ~~months~~information. ~~ended~~Management ~~September 30~~believes, ~~2016~~based on credit policies and ~~2015~~the March 31, 2017 provision for credit losses, that it is unlikely that a material adverse effect on financial position, results of operations or cash flows would occur as a result of counterparty nonperformance.

Note ~~9 -~~ 11. Related-Party Transactions

Questar Gas ~~provided technical~~engages ~~services~~in torelated ~~its~~party-transactions ~~affiliates~~primarily atwith ~~its~~affiliates ~~cost~~Wexpro, ~~and charged $4.5 million~~ for ~~the~~cost-of-service ~~first~~natural ~~nine~~gas ~~months of 2016~~supply, ~~compared~~and toQuestar ~~$4.8~~Pipeline, ~~million~~ for transportation ~~the same period of 2015,~~ and ~~charged~~storage $1services.3 ~~million~~Questar ~~for~~Gas’ ~~the~~receivables ~~third~~and ~~quarter~~payables ofbalances ~~2016~~with ~~compared~~affiliates toare ~~$1.1~~settled ~~million~~based ~~for the~~on ~~third~~contractual ~~quarter~~terms ofor ~~2015.~~on ~~The~~a ~~majority~~monthly ofbasis, ~~these~~depending ~~costs are allocated. The allocation methods are based~~ on the ~~specific~~ nature of the ~~charges~~underlying transactions. ~~Management~~A ~~believes~~discussion ~~that~~of significant ~~the~~related ~~allocation~~party ~~methods~~transactions ~~are reasonable~~follows.

~~Questar~~Dominion ~~Gas has reserved transportation capacity on~~ Questar ~~Pipeline’s~~and ~~system~~other ~~for~~affiliates ~~956~~provide ~~Mdth~~accounting, ~~per~~legal, ~~day~~finance ~~during~~and ~~the~~certain ~~heating~~administrative ~~season~~ and technical ~~841~~services ~~Mdth~~to ~~per~~Questar ~~day during off-peak months~~Gas. ~~Questar~~These ~~Gas~~costs ~~periodically~~are ~~releases~~included ~~excess~~in ~~capacity~~other operations and ~~receives~~maintenance ain ~~credit~~the ~~from~~Statements ~~Questar~~of ~~Pipeline~~Income. ~~for~~The ~~the~~administrative ~~released~~charges ~~capacity~~are ~~revenues~~generally ~~and~~allocated abased ~~portion~~on ofeach ~~Questar~~affiliated ~~Pipeline~~company’s ~~interruptible~~proportional ~~transportation~~share ~~revenues.~~of ~~Questar Gas’~~revenues ~~payment~~less ~~for~~product ~~transportation~~costs; property, ~~storage~~plant and ~~processing~~equipment; ~~services~~and ~~provided~~labor bycosts. ~~Questar~~Management ~~Pipeline~~believes ~~were~~that ~~$17.3~~the ~~million~~allocation ~~and~~method ~~$53~~is reasonable.9 ~~million~~Questar ~~for~~Gas ~~the~~provides ~~three~~certain ~~and~~services ~~nine~~to ~~months~~related ~~ended September 30~~parties, ~~2016,~~including ~~respectively,~~technical ~~compared to $17~~services.5 ~~million~~The ~~and~~billed ~~$54.3~~amounts ~~million~~of ~~for~~these ~~the~~services ~~three~~are ~~and~~allocated ~~nine~~based ~~months~~on ~~ended~~the ~~September 30,~~specific ~~2015~~nature of the charges. ~~The~~Management ~~costs~~believes ofthat ~~these~~the ~~services~~allocation ~~were~~methods ~~included~~are inreasonable. ~~the~~The ~~cost~~amounts of ~~natural~~these ~~gas~~services ~~sold.~~follow:

Questar Gas 2016 Form 10-Q 14


	Three Months Ended
	March 31,
	2017		2016
(millions)
Affiliated operator service fee⁽¹⁾	$	75.9	$	79.8
Transportation and storage services from affiliates⁽¹⁾		19.6		19.2
Services provided by related parties		10.8		13.5
Services provided to related parties		1.5		0.5

~~Table~~(1) The costs of ~~Contents~~these services were included in cost of sales in Questar Gas’ Statements of Income.

~~The~~Questar Gas ~~amounts~~participates ~~that~~in certain Dominion Questar ~~Gas~~benefit ~~paid~~plans ~~Wexpro~~as ~~for~~described in Note 15 to the ~~operation~~Financial ofStatements ~~cost-of-service~~in ~~gas~~Questar ~~properties~~Gas’ ~~were~~Annual ~~$236.4~~Report ~~million and~~on ~~$241.0~~Form ~~million~~10-K for the ~~nine~~year ~~months~~ ended December 31, 2016. ~~and~~At ~~2015~~March 31, ~~respectively~~2017 and December 31, 2016, amounts due from Dominion Questar associated with the Dominion Questar Corporation Retirement Plan and included in receivables from affiliates in the Balance Sheets were $77100.73 million and $8087.78 million, ~~for~~respectively. ~~the~~At ~~three~~March 31, ~~months~~2017 and ~~ended September~~December 3031, 2016, ~~and~~Questar ~~2015,~~Gas’ ~~respectively.~~amounts due to Dominion Questar ~~Gas~~associated ~~reports~~with ~~these~~the ~~amounts~~Dominion Questar Corporation Umbrella Health Plan and included in payables to affiliates in the ~~cost~~Balance ofSheets ~~natural~~were ~~gas~~$13.1 million and $13.0 million, ~~sold~~respectively.

~~Affiliated~~The ~~companies~~Dominion ~~charged~~ Questar ~~Gas~~Combination ~~for~~resulted ~~certain~~in ~~administrative~~merger and ~~communication~~restructuring ~~functions~~costs ~~amounting~~of to $220.73 million ~~and~~charged ~~$41.0~~from ~~million~~Dominion Questar for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016,~~2017. ~~respectively,~~There ~~compared~~were tono ~~$13.8~~merger ~~million~~ and ~~$42.9~~restructuring ~~million~~costs for the same prior year periods. These costs ~~are~~primarily ~~included~~consist inof ~~other~~employee ~~operations~~related ~~and~~costs ~~maintenance. The administrative charges are generally~~ allocated ~~based~~to onQuestar ~~each~~Gas ~~affiliated~~and ~~company’s~~are ~~proportional~~included ~~share~~in ofother ~~revenues~~operations ~~less product costs; property, plant~~ and ~~equipment;~~maintenance ~~and~~in Questar ~~labor~~Gas’ ~~costs.~~Statements ~~Management~~of ~~believes that the allocation method is reasonable~~Income.

~~The~~Questar ~~Dominion~~Gas ~~Questar~~had ~~Combination~~no ~~resulted~~balance inunder ~~merger~~the ~~and~~IRCA ~~restructuring~~with ~~costs~~Dominion as of March 31, 2017 and a $948.70 million ~~charged~~balance ~~from~~at December 31, ~~Dominion~~2016. ~~Questar~~The weighted-average interest rate for ~~both~~these ~~the~~borrowing ~~three~~was ~~and~~1.04% ~~nine~~as ~~months ended~~of ~~September~~December 3031, 2016. ~~There~~Interest ~~were~~charges norelated ~~merger~~to ~~and~~Questar ~~restructuring~~Gas’ ~~costs~~total ~~for~~borrowings ~~the~~from ~~same~~Dominion ~~prior~~and ~~year~~Dominion ~~periods.~~Questar ~~These~~were ~~costs~~immaterial ~~primarily~~for ~~consist~~the ofthree months ~~employee~~ended ~~related~~March 31, ~~costs~~2017 ~~allocated~~and to$0.3 ~~Questar~~million ~~Gas~~for ~~and~~the ~~are~~three ~~included~~months inended ~~other~~March 31, ~~operations and maintenance~~2016.

~~Questar~~In ~~Gas~~March ~~participates~~2017, ~~in certain Dominion~~ Questar ~~benefit~~Gas ~~plans.~~entered ~~Amounts~~into ~~due~~agreements, ~~from~~at rates ~~Dominion~~and ~~Questar~~on ~~associated~~terms ~~with these benefit plans were $72.6 million~~ and ~~$67.5~~conditions ~~million~~that atare ~~September 30,~~subject ~~2016~~to ~~and~~regulation ~~December 31,~~by ~~2015~~FERC, ~~respectively.~~with ~~These~~Questar ~~amounts~~Pipeline ~~are~~to ~~included~~extend intransportation ~~noncurrent~~services ~~receivable~~through ~~from~~2027. ~~affiliates~~Under ~~and~~these ~~current~~agreements, ~~receivable~~Questar ~~from~~Gas ~~affiliates,~~will ~~respectively,~~pay on Questar ~~Gas’~~Pipeline ~~Condensed~~approximately ~~Balance Sheets~~$55 million annually.

~~Note~~14 ~~10 - Contingencies and Commitments~~

AAlso ~~liability~~in isMarch ~~recorded~~2017, ~~for~~Questar agas ~~loss~~extended ~~contingency~~a ~~when~~storage ~~its~~contract, ~~occurrence~~at ~~is probable~~rates and ~~its~~on ~~amount~~terms ~~can~~and beconditions ~~reasonably~~that ~~estimated.~~are subject ~~If some amount within a range of possible outcomes appears~~ to beregulation aby ~~better estimate than any other amount within the range~~FERC, ~~that~~with ~~amount~~Questar isPipeline ~~recorded.~~through ~~Otherwise, the minimum amount in the range is recorded~~2022. ~~Disclosures~~Under ~~are~~this ~~provided for contingencies reasonably likely to occur~~extension, ~~which would have a material adverse effect on~~ Questar Gas’ ~~financial~~will ~~position,~~pay ~~results~~Questar ofPipeline ~~operations~~approximately or$2 ~~cash~~million ~~flows~~annually. Some of the claims involve highly complex issues relating to liability, damages and other matters subject to substantial uncertainties and, therefore, the probability of liability or an estimate of loss cannot be reasonably determined.

~~Commitments~~Note 12. Operating Segment

InThe ~~August~~Corporate ~~2016, Questar Gas committed to~~and ~~borrow~~Other ~~under~~Segment aprimarily ~~30-year,~~includes ~~$50~~specific ~~million~~items ~~private~~attributable ~~placement~~to ~~senior~~Questar ~~note~~Gas’ atoperating ~~3.62%~~segment ~~and~~that ~~a 35-year, $50~~are ~~million~~not ~~private~~included ~~placement~~in ~~senior~~profit ~~note~~measures atevaluated ~~3.67%.~~by ~~Both~~executive ~~notes~~management ~~are~~in ~~expected~~assessing tothe besegment’s ~~funded~~performance or in ~~December 2016.~~allocating resources.

The net expense for specific items in 2017 primarily related to a $0.3 million ($0.2 million after-tax) charge for transaction costs associated with the Dominion Questar Combination. These costs primarily consist of employee related costs allocated to Questar Gas ~~2016~~and ~~Form~~are ~~10-Q~~included 15in other operations and maintenance in Questar Gas’ Statements of Income.

~~Table~~The offollowing ~~Contents~~table presents segment information pertaining to Questar Gas’ operations:

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


	Questar Gas		Corporate and Other		Consolidated Total
(millions)
Three Months Ended March 31, 2017
Operating revenue	$	396.9	$	—	$	396.9
Net income (loss)		52.4		(0.2)		52.2

Three Months Ended March 31, 2016
Operating revenue	$	407.9	$	—	$	407.9
Net income		47.6		—		47.6

~~The~~15 following information updates the discussion of Questar Gas’ financial condition provided in the Company’s 2015 Form 10-K and analyzes the changes in the results of operations between the three and nine months ended September 30, 2016 and 2015. For definitions of commonly used terms found in this Quarterly Report, please refer to the “Glossary of Commonly Used Terms” included as part of this Form 10-Q.

~~Questar~~ITEM Gas reported a net loss of $17.7 million in the third quarter of 2016 compared to net loss of $8.8 million in the third quarter of 2015. Questar Gas net income was $28.3 million in the first nine months of 2016 compared to $32.2 ~~million in the first nine months of 2015~~. ~~Questar~~MANAGEMENT’S ~~Gas,~~DISCUSSION ~~because~~AND ~~of the seasonal nature of its business, typically reports income in the first and fourth quarters of the year and losses in the second and third quarters of the year.~~ ANALYSIS

~~Following~~OF isFINANCIAL aCONDITION ~~summary~~AND ofRESULTS ~~Questar~~OF ~~Gas~~OPERATIONS ~~financial and operating results:~~

	3 Months Ended September 30,									9 Months Ended September 30,
	2016			2015			Change			2016			2015			Change
	(in millions)
Net Income (Loss)
Revenues		87.9			89.3			(1.4	)		624.0			605.8			18.2
Cost of natural gas sold		39.7			44.4			(4.7	)		364.4			362.0			2.4
Margin		48.2			44.9			3.3			259.6			243.8			15.8
Other Operating Expenses
Other operations and maintenance		47.5			35.3			12.2			131.4			119.4			12.0
Depreciation and amortization		15.3			13.8			1.5			45.0			40.9			4.1
Other taxes		5.2			4.7			0.5			15.8			14.4			1.4
Total Other Operating Expenses		68.0			53.8			14.2			192.2			174.7			17.5
OPERATING INCOME (LOSS)		(19.8	)		(8.9	)		(10.9	)		67.4			69.1			(1.7	)
Interest and other income		0.9			1.3			(0.4	)		2.8			3.6			(0.8	)
Interest expense		7.3			7.0			0.3			22.5			21.2			1.3
Income taxes benefit/(expense)		8.5			5.8			2.7			(19.4	)		(19.3	)		(0.1	)
NET INCOME (LOSS)	$	(17.7	)	$	(8.8	)	$	(8.9	)	$	28.3		$	32.2		$	(3.9	)

MD&A discusses Questar Gas’ results of operations and general financial condition. MD&A should be read in conjunction with Questar Gas’ Financial Statements. Questar Gas meets the conditions to file under the reduced disclosure format, and therefore has omitted certain sections of MD&A.

~~Questar~~Contents ~~Gas~~of ~~2016~~MD&A ~~Form 10-Q 16~~

~~Table~~MD&A consists of ~~Contents~~the following information:

	3 Months Ended September 30,									9 Months Ended September 30,
	2016			2015			Change			2016			2015			Change
Operating Statistics
Natural gas volumes (MMdth)
Residential and commercial sales		7.6			7.4			0.2			67.6			58.4			9.2
Industrial sales		0.6			0.8			(0.2	)		2.0			2.6			(0.6	)
Transportation for industrial customers		22.1			20.4			1.7			67.6			56.8			10.8
Total industrial		22.7			21.2			1.5			69.6			59.4			10.2
Total deliveries		30.3			28.6			1.7			137.2			117.8			19.4
Natural gas revenue (per dth)
Residential and commercial sales	$	9.52		$	9.87		$	(0.35	)	$	8.53		$	9.49		$	(0.96	)
Industrial sales		6.49			6.13			0.36			6.68			6.66			0.02
Transportation for industrial customers		0.29			0.27			0.02			0.27			0.27			—
(Warmer) than normal temperatures		(39	%)		(60	%)		21	%		(15	%)		(23	%)		8	%
Temperature-adjusted usage per customer (dth)		7.2			7.2			—			71.8			67.2			4.6
Customers at September 30, (in thousands)		1,003			981			22

•

Forward-Looking Statements

~~Margin~~• ~~Analysis~~Results of Operations

~~Questar~~• ~~Gas~~Analysis ~~margin (revenues minus gas costs) increased $3.3 million in the third quarter~~ of 2016 compared to the third quarter of 2015 and increased $15.8 million in the first nine months of 2016 compared to the first nine months of 2015. Following is a summary of major changes in Questar Gas margin: Operations

	3 Months2016 vs. 2015			9 Months2016 vs. 2015
	Increase/(decrease)
	(in millions)
Customer growth	$	0.7		$	4.9
Transportation		0.6			1.8
Infrastructure-replacement cost recovery		0.5			5.4
Energy-efficiency program cost recovery		(0.1	)		1.8
Other		1.6			1.9
Increase	$	3.3		$	15.8

Forward-Looking Statements

~~Cost~~This ofreport ~~Natural~~contains statements concerning Questar Gas’ ~~Sold~~expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.

~~Cost~~Questar ofGas ~~natural~~makes ~~gas~~forward-looking ~~sold~~statements ~~decreased~~with ~~11%~~full inknowledge ~~the~~that ~~third~~risks ~~quarter of 2016~~ and ~~remained~~uncertainties ~~relatively~~exist ~~flat~~that inmay ~~the~~cause ~~first~~actual ~~nine~~results ~~months of 2016 compared~~ to ~~the~~differ ~~same 2015~~materially ~~periods.~~from ~~The~~predicted ~~decrease~~results. inFactors ~~the~~that ~~three~~may ~~months~~cause ~~ended~~actual ~~September 30,~~results ~~2016 was primarily due~~ to ~~lower~~differ ~~purchased~~are ~~gas~~often ~~prices.~~presented ~~Questar~~with ~~Gas~~the ~~accounts for purchased~~forward-~~gas~~looking ~~costs~~statements inthemselves. ~~accordance~~Additionally, ~~with~~other ~~procedures~~factors ~~authorized~~may bycause ~~the~~actual ~~PSCU~~results ~~and~~to ~~the~~differ ~~PSCW.~~materially ~~Purchased-gas costs that are different~~ from those ~~provided~~indicated ~~for~~ in ~~present~~any forward-looking ~~rates are accumulated and recovered or credited through future rate changes~~statement. AsThese offactors ~~September 30,~~include ~~2016,~~but ~~Questar~~are ~~Gas~~not ~~had~~limited ato: ~~$2.6 million over-collected balance in the purchased-gas adjustment account representing amounts recovered from customers in excess of costs incurred.~~

~~Other~~• ~~Expenses~~Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;

~~Merger~~• ~~and~~Extreme ~~restructuring~~weather ~~charges,~~events ~~included~~and ~~within~~ other ~~operations~~natural ~~and~~disasters, ~~maintenance~~including, ~~are~~but ~~related~~not limited to, ~~transaction~~severe ~~costs~~storms, ~~associated~~earthquakes ~~with the Dominion Questar Combination~~ and ~~totaled~~flooding ~~$11.9~~that ~~million~~can ~~for~~cause ~~both~~system ~~the~~disruptions ~~third quarter of 2016~~ and ~~the~~property ~~first~~damage ~~nine months of 2016. These costs primarily consist of employee related costs allocated~~ to ~~Questar Gas.~~ facilities;

~~Depreciation~~• ~~and~~Federal, ~~amortization~~state ~~expense~~and ~~increased~~local ~~11%~~legislative inand ~~the~~regulatory ~~third~~developments, ~~quarter~~including ofchanges ~~2016 and 10%~~ in ~~the~~federal ~~first~~and ~~nine~~state ~~months~~tax oflaws ~~2016 compared to the 2015 periods. The higher expense was caused by plant additions driven by customer growth~~ and ~~infrastructure replacements.~~ regulations;

~~Questar~~• ~~Gas~~Changes ~~2016~~to ~~Form~~federal, ~~10-Q~~state 17and local environmental laws and regulations, including those related to climate change, the tightening of emission or discharge limits for GHGs and other emissions, more extensive permitting requirements and the regulation of additional substances;

~~Table~~• Cost of ~~Contents~~environmental compliance, including those costs related to climate change;

~~Other~~• ~~taxes~~Changes ~~were 11% higher~~ in ~~the~~implementation ~~third quarter of 2016~~ and ~~10%~~enforcement ~~higher~~practices ~~in the first nine months~~ of ~~2016~~regulators ~~compared~~ relating to ~~year-earlier~~environmental ~~periods.~~standards ~~The~~and ~~increases~~litigation ~~were~~exposure ~~primarily~~for ~~due~~remedial ~~to higher property taxes.~~ activities;

~~ITEM~~• 4.Difficulty ~~CONTROLS~~in ~~AND~~anticipating ~~PROCEDURES.~~mitigation requirements associated with environmental and other regulatory approvals and/or associated appeals;

~~Evaluation~~• ofFluctuations ~~Disclosure~~in ~~Controls~~energy-related commodity prices and ~~Procedures.~~the effect these could have on Questar Gas’ earnings, liquidity position and the underlying value of its assets;

~~Senior~~• ~~management~~Unplanned ofsystem ~~Questar~~disruptions ~~Gas,~~at including the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2016. Based on such evaluation, such officers have concluded that, as of September 30, 2016, Questar Gas’ ~~disclosure controls and procedures are effective.~~ facilities;

~~Changes~~• inCounterparty ~~Internal~~credit ~~Controls.~~and performance risk;

~~There~~• ~~were~~Global nocapital ~~changes~~market inconditions, ~~Questar~~including ~~Gas’~~the ~~internal~~availability ~~controls~~of ~~over~~credit ~~financial~~and ~~reporting that occurred during~~ the ~~quarter~~ability ~~ended September 30, 2016, that have materially affected, or are reasonably likely~~ to ~~materially~~obtain ~~affect,~~financing ~~Questar~~on ~~Gas’~~reasonable ~~internal control over financial reporting.~~ terms;

~~Questar~~• ~~Gas~~Fluctuations ~~2016~~in ~~Form~~interest ~~10-Q 18~~rates;

~~Table~~• Changes in rating agency requirements or credit ratings and their effect on availability and cost of ~~Contents~~capital;

~~PART~~• ~~II—OTHER~~Changes ~~INFORMATION~~in financial or regulatory accounting principles or policies imposed by governing bodies;

~~ITEM~~• 1.Employee ~~LEGAL~~workforce ~~PROCEEDINGS.~~factors;

~~Information~~• ~~regarding~~Risks ~~reportable~~of ~~legal~~operating ~~proceedings~~businesses ~~is contained~~ in ~~Note~~regulated 4industries ~~and~~that ~~Note 10~~are subject to ~~the~~changing ~~financial~~regulatory ~~statements included in Item 1 of Part I of this Quarterly Report.~~ structures;

~~ITEM~~• 6.Political ~~EXHIBITS.~~and economic conditions, including inflation and deflation;

~~The~~• ~~exhibits~~Domestic ~~filed~~terrorism asand ~~part~~other ofthreats ~~this~~to ~~report~~Questar ~~are~~Gas’ ~~listed~~physical ~~below.~~and intangible assets, as well as threats to cybersecurity;

ExhibitNo.		Description
EXHIBIT 3 ARTICLES OF INCORPORATION AND BYLAWS
3.1		Amended and Restated Consolidated Articles of Incorporation of Questar Gas Company (Exhibit No. 3.1, Form 8-K filed May 15, 2012, File No. 333-69210).
3.2		Bylaws of Questar Gas Company, effective as of October 17, 2016 (filed herewith).
EXHIBIT 10 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
10.1		Utah Stipulation Agreement dated August 15, 2016 (Exhibit No. 10.1, Current Report on Form 8-K filed August 26, 2016, File No. 333-69210).
10.2		Wyoming Stipulation Agreement dated August 1, 2016 (Exhibit No. 10.1, Current Report on Form 8-K filed September 14, 2016, File No. 333-69210).
EXHIBIT 31 - SECTION 302 CERTIFICATIONS
31.a		Certification by Chief Executive Officer of Questar Gas Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.b		Certification by Chief Financial Officer of Questar Gas Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
EXHIBIT 32 - SECTION 906 CERTIFICATIONS
32.a		Questar Gas Chief Executive Officer and Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
EXHIBIT 101 - INTERACTIVE DATA FILE
101		The following financial statements from Questar Gas Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed on November 9, 2016, formatted in XBRL: (i) Condensed Statements of Income; (ii) Condensed Balance Sheets; (iii) Condensed Statements of Cash Flows; and (iv) Notes to the Financial Statements.

•

Changes in demand for Questar Gas’ services, including industrial, commercial and residential growth or decline in Questar Gas’ service areas, failure to maintain or replace customer contracts on favorable terms, changes in customer growth or usage patterns, including as a result of energy conservation programs and the availability of energy efficient devices;

~~Questar~~• ~~Gas~~Changes ~~2016~~to ~~Form~~regulated ~~10-Q~~gas 19distribution and transportation rates collected by Questar Gas;

~~Table~~• ofChanges ~~Contents~~in operating, maintenance and construction costs;

~~SIGNATURES~~• Timing and receipt of regulatory approvals necessary for planned projects and compliance with conditions associated with such regulatory approvals;

~~Pursuant~~16 ~~to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.~~

~~Questar~~• ~~Gas~~The ~~2016~~inability ~~Form~~to ~~10-Q~~complete 20planned projects within the terms and time frames initially anticipated;

~~Table~~• ofAdverse ~~Contents~~outcomes in litigation matters or regulatory proceedings; and

~~Exhibit~~• ~~Index~~The impact of operational hazards, including adverse developments with respect to pipeline safety or integrity, equipment loss, malfunction or failure, operator error, and other catastrophic events.

ExhibitNo.		Description
EXHIBIT 3 ARTICLES OF INCORPORATION AND BYLAWS
3.1		Amended and Restated Consolidated Articles of Incorporation of Questar Gas Company (Exhibit No. 3.1, Form 8-K filed May 15, 2012, File No. 333-69210).
3.2		Bylaws of Questar Gas Company, effective as of October 17, 2016 (filed herewith).
EXHIBIT 10 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
10.1		Utah Stipulation Agreement dated August 15, 2016 (Exhibit No. 10.1, Current Report on Form 8-K filed August 26, 2016, File No. 333-69210).
10.2		Wyoming Stipulation Agreement dated August 1, 2016 (Exhibit No. 10.1, Current Report on Form 8-K filed September 14, 2016, File No. 333-69210).
EXHIBIT 31 - SECTION 302 CERTIFICATIONS
31.a		Certification by Chief Executive Officer of Questar Gas Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.b		Certification by Chief Financial Officer of Questar Gas Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
EXHIBIT 32 - SECTION 906 CERTIFICATIONS
32.a		Questar Gas Chief Executive Officer and Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
EXHIBIT 101 - INTERACTIVE DATA FILE
101		The following financial statements from Questar Gas Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed on November 9, 2016, formatted in XBRL: (i) Condensed Statements of Income; (ii) Condensed Balance Sheets; (iii) Condensed Statements of Cash Flows; and (iv) Notes to the Financial Statements.

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Item 1A. Risk Factors in Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2016.

Questar Gas’ ~~2016~~forward-looking ~~Form~~statements 10are based on beliefs and assumptions using information available at the time the statements are made. Questar Gas cautions the reader not to place undue reliance on its forward-Qlooking 21statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Questar Gas undertakes no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Results of Operations

Presented below is a summary of Questar Gas’ results:


	First Quarter
	2017		2016		$ Change
(millions)
Net income	$	52.2	$	47.6	$	4.6

Overview

First Quarter 2017 vs. 2016

Net income increased 10%, primarily due to customer growth, higher infrastructure-replacement cost recovery and lower employee related costs.

Analysis of Operations

Presented below are selected amounts related to Questar Gas’ results of operations:


	First Quarter
	2017		2016		$ Change
(millions)
Operating revenue	$	396.9	$	407.9	$	(11.0	)
Cost of sales		241.3		256.9		(15.6	)

Net revenue		155.6		151.0		4.6

Other operations and maintenance		41.7		47.6		(5.9	)
Depreciation and amortization		16.2		14.7		1.5
Other taxes		5.8		5.3		0.5
Other income		1.0		1.0		—
Interest expense		8.5		7.7		0.8
Income tax expense		32.2		29.1		3.1

An analysis of Questar Gas’ results of operations follows:

First Quarter 2017 vs. 2016

Net revenue increased 3%, primarily reflecting a $3.6 million increase in infrastructure-replacement cost recovery, a $2.5 million increase from customer growth, and a $1.4 million increase in revenues from affiliates; partially offset by a $2.6 million decrease in EEP cost recovery.

Other operations and maintenance decreased 12%, primarily reflecting lower employee related costs ($4.9 million) and lower EEP costs ($2.6 million); partially offset by merger and restructuring costs ($0.3 million).

Depreciation and amortization increased 10%, primarily due to plant additions driven by customer growth and feeder-line replacements.

Interest expense increased 10%, primarily due to interest on debt issued in the fourth quarter of 2016 ($1.2 million), partially offset by lower interest expense on affiliated borrowings ($0.3 million).

Income tax expense increased 11%, primarily due to higher pre-tax income.

ITEM 4. CONTROLS AND PROCEDURES

Senior management of Questar Gas, including Questar Gas’ CEO and CFO, evaluated the effectiveness of Questar Gas’ disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, Questar Gas’ CEO and CFO have concluded that Questar Gas’ disclosure controls and procedures are effective.

There were no changes in Questar Gas’ internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, Questar Gas’ internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, Questar Gas is alleged to be in violation or in default under orders, statutes, rules or regulations relating to the environment, compliance plans imposed upon or agreed to by Questar Gas, or permits issued by various local, state and/or federal agencies for the construction or operation of facilities. Administrative proceedings may also be pending on these matters. In addition, in the ordinary course of business, Questar Gas is involved in various legal proceedings.

See the following for discussions on various environmental and other regulatory proceedings to which Questar Gas is a party, which information is incorporated herein by reference:

•

Notes 10 and 16 to the Financial Statements in the Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2016.

•

Notes 7 and 9 to the Financial Statements in this report.

ITEM 1A. RISK FACTORS

Questar Gas’ business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond Questar Gas’ control. A number of these factors have been identified in Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2016, which should be taken into consideration when reviewing the information contained in this report. There have been no material changes with regard to the risk factors previously disclosed in Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2016. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement or projection contained in this report, see Forward-Looking Statements in MD&A in this report.

ITEM 6. EXHIBITS


Exhibit Number		Description

3.1		Amended and Restated Consolidated Articles of Incorporation of Questar Gas Company (Exhibit 3.1, Form 8-K filed May 14, 2012, File No. 333-69210).

3.2		Bylaws of Questar Gas Company, effective as of October 17, 2016 (Exhibit 3.2, Form 10-Q for the quarter ended September 30, 2016 filed November 9, 2016, File No. 333-69210).

31.a		Certification by Chief Executive Officer of Questar Gas Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.b		Certification by Chief Financial Officer of Questar Gas Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32		Certification to the Securities and Exchange Commission by Chief Executive of Officer and Chief Financial Officer of Questar Gas Company as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101		The following financial statements from Questar Gas Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed on May 4, 2017, formatted in XBRL: (i) Statements of Income, (ii) Balance Sheets, (iii) Statements of Cash Flows, and (iv) the Notes to Financial Statements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		QUESTAR GAS COMPANY (Registrant)

May 4, 2017		/s/ Michele L. Cardiff Michele L. Cardiff Vice President, Controller and Chief Accounting Officer

EXHIBIT INDEX


Exhibit Number		Description

3.1		Amended and Restated Consolidated Articles of Incorporation of Questar Gas Company (Exhibit 3.1, Form 8-K filed May 14, 2012, File No. 333-69210).

3.2		Bylaws of Questar Gas Company, effective as of October 17, 2016 (Exhibit 3.2, Form 10-Q for the quarter ended September 30, 2016 filed November 9, 2016, File No. 333-69210).

31.a		Certification by Chief Executive Officer of Questar Gas Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.b		Certification by Chief Financial Officer of Questar Gas Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32		Certification to the Securities and Exchange Commission by Chief Executive of Officer and Chief Financial Officer of Questar Gas Company as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101		The following financial statements from Questar Gas Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed on May 4, 2017, formatted in XBRL: (i) Statements of Income, (ii) Balance Sheets, (iii) Statements of Cash Flows, and (iv) the Notes to Financial Statements.

QUESTAR GAS COMPANY (Registrant)

November 9, 2016

/s/ Michele L. Cardiff

Michele L. Cardiff

Vice President, Controller and Chief Accounting Officer

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