QUESTAR GAS CO - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM______ TO_____

Commission File No. 1-935
QUESTAR GAS COMPANY
(Exact name of registrant as specified in its charter)

STATE OF UTAH 87-0155877
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

180 East 100 South, P.O. Box 45360, Salt Lake City, Utah 84145-0360
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (801) 324-5555

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933:

Notes: Medium Term Notes, 6.30% to 8.43%,
due 2007 to 2024

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. Yes /x/ No / /

State the aggregate market value of the voting stock held by nonaffiliates of
the registrant as of March 1, 2002: $0.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of March 1, 2002: 9,189,626 shares of Common Stock, $2.50 par
value. (All shares are owned by Questar Regulated Services Company.)

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

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TABLE OF CONTENTS

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FORM 10-K

ANNUAL REPORT, 2001

PART I

ITEMS 1. AND 2. BUSINESS AND PROPERTIES.

GENERAL

Questar Gas Company (the "Company" or "Questar Gas") distributes
natural gas to 731,900 sales and transportation customers in Utah and
southwestern Wyoming. It is part of the Regulated Services group within Questar
Corporation ("Questar"), which is a publicly-owned and diversified energy
company.

The Company, through a predecessor, began distributing natural gas in
1929 when a pipeline was built to transport natural gas from southwestern
Wyoming to Salt Lake City, Utah. Between 1929 and the present time, Questar Gas
expanded its system to include over 90 percent of Utah's population and to
capture a market share of over 90 percent for furnaces and water heaters within
its service area. During 2001, the Company completed the acquisition/merger of
Utah Gas Service Company ("Utah Gas"), making it the only natural gas public
utility in the state of Utah.

The Company has traditionally capitalized on two competitive
advantages--owning natural gas reserves and offering natural gas services to
customers at reasonable prices. Questar Gas intends to maintain a competitive
position in its traditional service area.

GAS DISTRIBUTION

As of December 31, 2001, Questar Gas was serving 731,900 residential,
commercial, and industrial customers, a 3.9 percent increase from the 704,629
customers served as of the end of 2000. (Customers are defined in terms of
active meters.) The Company distributes gas to customers in the major populated
area of Utah, commonly referred to as the Wasatch Front, in which the Salt Lake
metropolitan area, Provo, Ogden, and Logan are located. It also serves customers
in eastern, central, and southwestern Utah with Price, Roosevelt, Fillmore,
Richfield, Cedar City, and St. George as the primary cities. Over 96 percent of
the Company's customers are in Utah. Questar Gas serves the communities of Rock
Springs, Green River, and Evanston in southwestern Wyoming and the community of
Preston in southeastern Idaho. The Utah Gas merger added customers in the cities
of Vernal, Moab, and Monticello, which are all located in eastern Utah. The
concurrent acquisition and merger of Wyoming Industrial Gas Company ("Wyoming
Industrial") added the Wyoming communities of Kemmerer and Diamondville.

Questar Gas added 27,271 customers in 2001, compared to 18,312
customers in 2000. These customer additions include 10,500 customers from Utah
Gas and Wyoming Industrial. The population of the Company's service area in Utah
continues to grow faster than the national average, although the rate of
increase is slowing down.

Questar Gas has been granted the necessary regulatory approvals by the
Public Service Commission of Utah ("PSCU"), the Public Service Commission of
Wyoming ("PSCW"), and the Public Utilities Commission of Idaho ("PUCI") to serve
these areas. It also has long-term franchises granted by communities and
counties within its service area.

The Company's sales to residential and commercial customers are
seasonal, with a substantial portion of such sales made during the heating
season. The typical residential customer in Utah (defined as a customer using
115 decatherms ("Dth") per year) uses more than 75 percent of total gas
requirements in the coldest six months of the year. (A Dth is an amount of heat
energy equal to 10 therms or 1 million Btu.) The Company's revenue forecasts
used to set rates are based on normal temperatures. Historically, revenues and
resulting net income have been affected by temperature patterns that are below
or above normal. As measured in degree days, temperatures in the Company's
service area were two percent warmer than normal in 2001, which was the eighth
consecutive year in which temperatures have been warmer than normal.

The Company's sensitivity to weather and temperature conditions,
however, has been ameliorated by adopting a weather-normalization mechanism for
its general service customers in Utah and Wyoming. The mechanism, which has been
in effect since 1997, adjusts the non-gas cost portion of a customer's monthly
bill as the actual degree days in the billing cycle are warmer or colder than
normal. This mechanism reduces the sometimes dramatic fluctuations in any given
customer's monthly bill from year to year due to weather variations.

During 2001, Questar Gas sold 83.7 million decatherms ("MMDth") of
natural gas to residential and commercial customers compared to the 83.4 MMDth
in 2000. General service sales to residential and commercial customers were
responsible for 87.8 percent of the Company's total revenues in 2001. The modest
increase in sales volumes reflects colder weather and customer additions.
Customers are continuing to decrease their usage on a temperature-adjusted basis
as they make a transition to more efficient gas-burning appliances and respond
to higher commodity prices with conservation measures.

Questar Gas has designed its distribution system and annual gas supply
plan to handle design- day demand requirements. The Company periodically updates
its design-day demand, which is the volume of gas that firm customers could use
during extremely cold weather. For the 2001-02 heating season, the Company used
a design-day demand of 1.036 billion cubic feet ("Bcf") for firm sales
customers. Questar Gas is also obligated to have capacity, but not gas supply,
for firm transportation customers. The Company's management believes that the
distribution system is adequate to meet the demands of its firm customers.

The Company's tariff permits industrial customers to make annual
elections for interruptible sales or transportation service. The Company's total
industrial deliveries, including both sales and transportation, were basically
flat between 2000 (65.2 MMDth) and 2001 (65.3 MMDth). The Company's largest
transportation customers, as measured by revenue contributions in 2001, are the
Geneva Steel plant in Orem, Utah; the Gadsby plant owned by Scottish Power
(electric utility) in Salt Lake City; the mineral extraction operations of
Magnesium Corporation of America in Tooele County, west of Salt Lake; and the
Kennecott copper processing operations, located in Salt Lake County.

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Questar Gas owns and operates distribution systems throughout its Utah,
Wyoming and Idaho service areas and has a total of 22,805 miles of street mains,
service lines, and interconnecting pipelines. The Company has consolidated many
of its activities in its operations center located in Salt Lake City, Utah.
Questar Gas continues to own field offices and service center facilities in
other parts of its service area. It has fee title to the properties on which its
operation and service centers are constructed. The mains and service lines are
constructed pursuant to franchise agreements or rights-of-way.

GAS SUPPLY

Questar Gas owns natural gas producing properties in Wyoming, Utah and
Colorado that are operated by Wexpro Company ("Wexpro") and uses the gas
produced from these properties for part of its base-load demand. Questar Gas is
unique among local distribution companies because it does own gas reserves.
During the last half of 2000 and the first several months of 2001 as spot prices
escalated significantly, the Company relied on its cost-of-service gas to keep
its increases attributable to gas costs lower than other distribution utilities.

The Company's investment in these properties is included in its utility
rate base. Questar Gas has regulatory approval to use this "cost-of-service" gas
for firm sales customers. During 2001, approximately 44 percent of the Company's
firm sales requirement was satisfied with cost-of-service gas produced from over
700 wells in more than 35 fields. (As defined, cost-of-service gas includes
related royalty gas.) The volumes produced from such properties are transported
for the Company by Questar Pipeline Company ("Questar Pipeline"). SEE
"Relationships with Affiliates." During 2001, 42.2 MMDth of gas were delivered
from such properties, compared to 48.0 MMDth in 2000.

The Company estimates that it had reserves of 427.8 equivalent billion
cubic feet ("Bcfe") of natural gas and hydrocarbon liquids as of year-end 2001
compared to 399.7 Bcfe as of year-end 2000. (These reserve numbers do not
include gas attributed to royalty interest owners but they do include crude oil
reserves. Reserve numbers are typically reported in volumetric units, such as
Bcf, that don't reflect heating values.) The increased reserves were
attributable to revisions and extensions as a result of Wexpro's drilling
activities, which more than offset the production associated with such
properties.

Some of the wells on the Company's producing properties qualify for
special tax credits, commonly referred to as "Section 29" or "tight sands" tax
credits. During 2001, Questar Gas, as the party with the economic interest in
the gas produced from such wells, claimed $1.8 million in Section 29 tax
credits. To qualify for the special tax credits, production must flow from wells
that meet specified tight sands criteria and that commenced drilling prior to
January 1, 1993. Under current tax law, 2002 is the last year for which Section
29 tax credits are available.

Questar Gas stores up to 13.4 Bcf of gas at Clay Basin, a base-load
storage facility owned and operated by Questar Pipeline, to provide flexibility
for handling gas volumes produced from cost-of-service properties. Gas volumes,
as a general rule, are injected into the Clay Basin storage reservoir during the
summer and withdrawn during the heating season.

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Questar Gas has a balanced and diversified portfolio of gas supply
contracts with a variety of suppliers located in the Rocky Mountain states of
Wyoming, Colorado, and Utah. During 2001, the Company received regulatory
recognition that price stability should be considered with cost and reliability
as the three key factors to consider when obtaining gas supplies and that costs
associated with hedging activities can be included in its balancing account for
pass-through treatment. Questar Gas's gas acquisition objective is to obtain
reliable, diversified sources of gas supply at competitive prices and to use
different types of contracts. When filing its most recent pass-through
application with the PSCU, the Company reported using a blend of fixed-price
contracts, price-indexed contracts, and price-capped contracts as well as spot
purchases to fulfill its purchased-gas supply contracts. In the latest purchased
gas cost filing, the Company estimated that its 2002 average cost of purchased
gas would be $2.94 per Dth for gas delivered to the upstream pipeline, compared
to the $6.75 price it estimated a year earlier.

COMPETITION AND GROWTH

Questar Gas has historically enjoyed a favorable price comparison with
all energy sources used by residential and commercial customers except coal and
occasionally fuel oil. This historic price advantage, together with the
convenience and handling advantages associated with natural gas, has permitted
the Company to serve over 90 percent of the residential space heating and water
heating market in its service area and to distribute more energy, in terms of
Btu content, than any other energy supplier to residential and commercial
markets in Utah.

The Company continues to focus marketing efforts to develop incremental
load in existing homes and new construction. Almost all households in its
service area connected to Questar Gas's system already use natural gas for space
heating and water heating. Close to 100 percent of the new homes constructed in
its service area that are connected to its system use natural gas for space
heating and water heating. The Company's market share for other secondary
appliances, e.g., ranges and dryers, has historically been less than 30 percent.

Questar Gas believes that it must maintain a competitive price
advantage in order to retain its residential and commercial customers and to
build incremental load by convincing current customers to convert additional
secondary appliances to natural gas.

Historically, the Company's competitive position has been strengthened
as a result of owning natural gas producing properties and satisfying as much as
approximately 40-50 percent of its system requirements with the cost-of-service
gas produced from such properties. Questar Gas develops an annual gas supply
plan that provides for a judicious balance between cost-of-service gas and
purchased gas. The Company believes that it is important to continue owning gas
reserves, producing them in a manner that will serve the best short- and
long-term interests of its customers, and satisfying a significant portion of
its supply requirements with gas produced from such properties.

No other major distributor markets natural gas sales service in direct
competition with the Company in its service area, but marketing firms are
arranging direct purchase contracts between large users in the Company's service
area and producers. These customers have not bypassed Questar Gas, but can take
advantage of the open-access status of either the pipeline systems owned

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by Questar Pipeline Company ("Questar Pipeline") or Kern River Gas Transmission
Company ("Kern River"). The Company's sales rates are competitive when compared
to other energy sources, but can be higher (or lower) than the delivered price
of spot-market gas volumes transported through its system to large customers.

The Kern River pipeline, which was built to transport gas from
southwestern Wyoming to Kern County, California, runs through portions of the
Company's service area and can provide an alternative delivery source to
transportation customers. As of the date of this report, Questar Gas has lost no
industrial load as a result of the Kern River line. The existence of the Kern
River pipeline, however, coupled with the open-access status of Questar
Pipeline's transmission system, has changed the nature of market conditions for
the Company. Large industrial customers in Utah's Wasatch Front area can acquire
taps on Kern River's system or direct taps on Questar Pipeline's system. The
Company itself has taps on the Kern River line that enable it to obtain delivery
of additional peak-day supplies to meet increasing demand. The existence and
location of the Kern River pipeline system also made it possible for Questar Gas
to develop additional sources of supply for its central and southern Utah system
and to take delivery of additional supplies to meet increasing demand in the
Wasatch Front.

Questar Pipeline, an affiliate in the Regulated Services group,
constructed a new line-Main Line 104-which became operational in November of
2001. This line extends from Price, Utah, near the Ferron area of coalbed
methane gas, to the Company's system at Payson, Utah, and the Kern River line
near Elberta, Utah. Questar Gas has firm transportation capacity on the line to
enable it to meet its design-day requirements.

In 1998, the PSCW approved a "supplier choice" program for the
Company's customers in Wyoming. Under the terms of this program, general service
customers have the option of selecting a different supplier of natural gas while
purchasing transportation and related services from Questar Gas. However, no
supplier has yet offered to provide service under the program.

Questar Gas and all local distribution companies are faced with the
challenges and opportunities posed by the unbundling and restructuring of
traditional utility services, which have been complicated by some adverse
experiences for customers and suppliers in deregulated states. At this point, it
is too soon to set or predict a timetable for the Company's unbundling of
services to residential and commercial customers.

The Company has significantly reduced its costs over the last five
years by centralizing key functions, such as call center activities;
cross-training employees to handle different responsibilities; and utilizing
technology, such as automated meter reading. Questar Gas will continue to
examine its costs, take advantage of technological developments and improve its
overall efficiency.

REGULATION

As a public utility, Questar Gas is subject to the jurisdiction of the
PSCU and PSCW. (The Company's customers in Idaho are served under the provisions
of its Utah tariff. Pursuant to a special contract between the PUCI and the
PSCU, the rates for the Company's Idaho customers are regulated by the PSCU.)
The Company's natural gas sales and transportation services are provided

5

under rate schedules approved by the two regulatory commissions. Questar Gas is
authorized to earn a return on equity of 11 percent in Utah and 11.83 percent in
Wyoming.

Questar Gas has consistently endeavored to balance the costs of adding
17,000-20,000 customers each year with the cost savings associated with reducing
labor costs, consolidating activities and utilizing new technology. The PSCU has
generally used historic test year data when reviewing general rate increase
requests to motivate Questar Gas to adopt efficiency measures. The Company's
management is concerned about the costs associated with expanding its customer
base in an environment where the effects of regulatory lag and the use of
historic test years are combined with low authorized returns. Questar Gas did
not earn its weighted average cost of capital in 2001.

Regulatory treatment of processing costs has been an issue of
contention. Questar Gas, in order to ensure customer safety and give its
customers time to adjust the combustion settings in its service area to handle
lower Btu-gas volumes, determined to enhance the Btu of such gas by contracting
to have carbon dioxide removed from it and agreeing to pay the costs associated
with this activity. The PSCU, however, refused to allow the Company to reflect
such costs in its pass- through application.

During 2001, the Company achieved a victory in its efforts to obtain
recognition of carbon dioxide removal costs as proper costs for pass-through
treatment. The Utah Supreme Court, in a decision dated October 23, 2001,
determined that the PSCU was not precluded from considering Questar Gas's
application for pass-through treatment of such costs according to previously
approved balancing account procedures and remanded the case back to the PSCU for
a decision on the merits of the case. The Company, in its most recent
pass-through application, requested regulatory permission to recover $5.8
million of such costs through its balancing account for gas supply costs.

The Company is still fighting another case involving its processing
costs. After the PSCU granted permission for Questar Gas to recover a portion of
such costs on a prospective basis in its 2000 general rate case, a state agency
(the Committee of Consumer Services) filed an appeal from such order with the
Utah Supreme Court. This case has not been briefed or argued.

Both the PSCU and the PSCW have authorized Questar Gas to use a
balancing account procedure for changes in the cost of natural gas, including
supplier non-gas costs, and to reflect changes on at least a semi-annual basis.
During 2001, the Company filed two pass-through applications with both the Utah
and Wyoming commissions to reflect decreased gas costs in its rates. In the last
pass-through applications that became effective January 1, 2002, Questar Gas was
allowed to reflect annualized gas costs of $321,711,555 in its Utah rates and
$13,159,844 in its Wyoming rates (compared to estimated annual costs of
$504,865,533 in Utah and $19,529,523 in Wyoming reflected in January 1, 2001
cases). A typical residential customer in Utah would have an annual bill of
$681.02, using rates in effect as of January 1, 2002, compared to an annual bill
of $905.02, using rates in effect as of January 1, 2001. The PSCW and PSCU have
allowed the Company to collect the decreased gas costs in rates, subject to
refund.

As previously reported, the Company's pass-through application filed
with the PSCU included a request to recover carbon dioxide removal costs from
prior periods. (The PSCW had not contested Questar Gas's inclusion of such costs
in Wyoming filings.) Questar Gas also requested

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the PSCU to allow it to include, on a prospective basis, an allowance for the
commodity and supplier non-gas cost portions of its bad debts in its gas
balancing account. The PSCU has set a date of April 4, 2002, to receive a report
from Questar Gas and other parties concerning the issues raised in the
application.

Questar Gas is not earning its authorized return on equity and will
consider filing a general rate case in Utah during 2002. Under Utah law, tariff
sheets reflecting a general rate increase become effective 240 days after filing
if the PSCU doesn't render a decision concerning the requested increase by such
date.

Responsibility for gas acquisition activities involves inherent risks
of regulatory scrutiny. The Company has been periodically involved in regulatory
proceedings in which the prudence of its gas supply activities and gas
processing costs have been challenged. The PSCU and PSCW have jurisdiction to
examine the Company's relationships with its affiliates and the costs paid by
the Company for services rendered by or goods purchased from its affiliates. A
1981 settlement agreement involving cost-of-service gas and defining certain
contractual obligations between the Company and Wexpro continues to be monitored
by the Utah Division of Public Utilities and its agents.

Under Utah law, Questar Gas must report dividends paid on its common
stock to the PSCU and must allow at least 30 days between declaring and paying
dividends. The PSCU can investigate any dividend declared by the Company to
determine if payment of such dividend would impair its capital or service
obligations. The PSCW and the PUCI, but not the PSCU, have jurisdiction to
review the issuance of long-term securities by Questar Gas.

The PSCU and PSCW have adopted regulations or issued orders that affect
the Company's business practices in such areas as main extensions, credit and
collection activities, and termination of service standards.

RELATIONSHIPS WITH AFFILIATES

The Company has significant business relationships with affiliated
companies. The following diagram shows the corporate structure of the Company
and its primary affiliates:

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Questar
Corporation
|
------------------------------------|--------------------------------
| | |
Questar Questar Questar
Market Regulated InfoComm,
Resources, Services Inc.
Inc. Company
| |
| ----------------------|---------------------
| | | |
| Questar QUESTAR Questar
| Pipeline GAS Energy
| Company COMPANY Services, Inc.
----------------------------|-----------------------------
| | |
Wexpro Other QMR Entities (Questar Questar Gas
Company Exploration and Production Management
Company, Questar Energy Trading Company
Company, Shenandoah Energy,
Inc.)

The Company's relationships with its primary affiliates are described
below.

QUESTAR REGULATED SERVICES COMPANY. The Company's direct parent,
Questar Regulated Services Company ("QRS"), is a subholding company that was
created to link Questar Gas and Questar Pipeline. The same group of officers
manages all entities within the group. QRS provides various
services--administrative, accounting, engineering, regulatory, legal--for all
entities within it. The creation of the Regulated Services group allowed its
members to lower administrative costs.

QUESTAR PIPELINE COMPANY. Questar Pipeline owns a two-pronged
transmission system running from southwestern Wyoming and western Colorado into
the Company's Utah service area. Questar Gas has reserved capacity of about
849,000 Dth per day or about 60 percent of reserved capacity and reserves
another 50,000 Dth per day during the months of December, January and February.

Questar Gas transports both cost-of-service gas and purchased gas on
Questar Pipeline's transmission system. (The Company also transports gas volumes
on the transmission systems owned by The Williams Companies, Inc. and Colorado
Interstate Gas Company. Questar Gas purchases "city gate" gas supplies from
transportation customers on Kern River's system.) The Company releases its firm
transportation capacity, pursuant to capacity release procedures adopted by the
Federal Energy Regulatory Commission ("FERC"), when it does not need such
service for its sales customers. Because Questar Gas has sufficient capacity on
the system to meet peak-demand periods, it has unused capacity for the balance
of the year.

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During 2001, Questar Pipeline transported 110.3 MMDth of gas for
Questar Gas, compared to 108.2 MMDth in 2000. Under Questar Pipeline's "straight
fixed-variable" rate schedules, Questar Gas is obligated to pay demand charges
for firm capacity, regardless of the volumes actually transported. The Company,
in 2001, paid approximately $52.1 million in demand charges to Questar Pipeline
for firm transportation capacity and "no notice" transportation. Questar Gas's
primary transportation agreement with Questar Pipeline was recently extended and
expires on June 30, 2017.

Questar Gas purchases storage capacity at Clay Basin, a large base-load
storage facility operated by Questar Pipeline, and also has peaking storage
capacity at three additional storage reservoirs owned by Questar Pipeline. The
Company paid Questar Pipeline $7.3 million during 2001 in connection with firm
storage services at Clay Basin.

A subsidiary of Questar Pipeline also operates a processing plant near
Price, Utah, that removes the carbon dioxide from gas volumes delivered to
Questar Gas's system. During 2001, the Company paid $7.7 million for services
provided at the plant.

The Company combined some operation activities with Questar Pipeline
after a 2000-early retirement program. In some areas, Questar Gas and Questar
Pipeline share service centers and operations employees are cross-trained to
handle responsibilities for both entities.

QUESTAR GAS MANAGEMENT COMPANY. Questar Gas Management Company ("QGM")
owns the gathering facilities that were originally built to gather production
from the Company's cost-of-service properties. During 2001, QGM gathered 37.2
MMDth of natural gas for Questar Gas, compared to 36.8 MMDth in 2000. Under the
terms of the gathering agreement between the parties, QGM will gather gas
volumes produced from cost-of-service properties for the life of such properties
and charge cost-of- service rates.

WEXPRO COMPANY. Wexpro, another company within Questar's Market
Resources segment, operates certain properties owned by Questar Gas. Under the
terms of a 1981 settlement agreement, which was approved by the PSCU and PSCW
and upheld by the Utah Supreme Court, the Company owns gas produced from
specified properties that were productive as of August 1, 1981 (the effective
date of the settlement agreement). Such gas is reflected in rates at
cost-of-service prices based on rates of return established by the settlement
agreement. In addition, Wexpro produces gas from specified properties for
Questar Gas and is reimbursed for its costs plus a current rate of return in
2001 that averaged 19.7 percent (adjusted annually using a specified formula) on
its net investment in such properties, adjusted for working capital and deferred
taxes. At year-end 2001, Wexpro's investment (net of deferred taxes) in
cost-of-service operations was $161.3 million compared to $124.8 million at
year-end 2000. Under the terms of the settlement agreement, the costs of
unsuccessful wells are borne by Wexpro. The settlement agreement also permits
Questar Gas to share income from hydrocarbon liquids produced from certain
properties operated by Wexpro after Wexpro recovers its expenses and a specified
rate of return. The income received by Questar Gas from Wexpro is used to reduce
natural gas costs reflected in the Company's rates.

QUESTAR INFOCOMM, INC. The Company receives data processing and
telecommunication services from its affiliate, Questar InfoComm. Questar Gas
utilizes a customer information system and related software systems that are
maintained by Questar InfoComm.

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OTHER AFFILIATES. Questar Energy Services, Inc. ("QES"), another member
of the Regulated Services group, offers a variety of non-regulated products and
services. The Company does not have a significant business relationship with
QES. In addition to QGM and Wexpro, the Market Resources segment of Questar
includes Questar Energy Trading Company, Questar Exploration and Production
Company, and Shenandoah Energy Inc. Questar Gas does not have significant
business relationships with these entities.

Questar, the Company's ultimate parent, provides certain administrative
services, e.g., public and government relations, financial, and audit, to the
Company and other members of the consolidated group. Questar also sponsors the
qualified and welfare benefit plans in which the Company's employees
participate. Questar Gas is responsible for a proportionate share of the costs
associated with these services and benefit plans.

EMPLOYEES

As of December 31, 2001, the Company had 789 employees, compared to 741
at year-end 2000. Regulated Services, the Company's parent, has 361 employees,
compared to 358 at year-end 2000, who perform specified services, e.g.,
administrative, engineering, legal, accounting, budget, for Questar Gas, Questar
Pipeline and QES. The Company's employees are nonunion employees who are not
represented under collective bargaining agreements. Employee relations are
generally deemed to be satisfactory.

ENVIRONMENTAL MATTERS

The Company is subject to the National Environmental Policy Act and
other federal and state legislation regulating the environmental aspects of its
operations. Although Questar Gas does not believe that environmental protection
laws and regulations will have any material effect on its competitive position,
it does believe that such provisions have added and will continue to add to the
Company's expenditures and annual maintenance and operating expenses.

Questar Gas has an obligation to treat waste water and monitor the
effectiveness of an underground slurry wall that was constructed in 1988 at its
operations center in Salt Lake City, Utah. The slurry wall was built to contain
contaminants from an abandoned coal gasification plant that operated on the site
from 1908 to 1929.

Questar Gas emphasizes the environmental advantages of natural gas. The
Company's marketing campaigns have featured the clean-burning characteristics of
natural gas fireplaces. Natural gas vehicles are also being encouraged on the
basis of environmental considerations.

RESEARCH AND DEVELOPMENT

The Company conducts limited studies of gas conversion equipment, gas
piping, and engines using natural gas and has funded demonstration projects
using such equipment. The total dollar amount spent by the Company on research
activities is not material.

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ITEM 3. LEGAL PROCEEDINGS.

Questar Gas is involved in various legal and regulatory proceedings.
While it is currently impossible to predict or determine the outcome of these
proceedings, management believes that the outcome will not have a material
adverse effect on the Company's financial position or liquidity.

The Company is a named defendant in two cases that have been filed by
Jack Grynberg, an independent producer that has sued Questar Gas and its
affiliates a number of times during the last ten years. The most active case
involves claims brought by Mr. Grynberg under the Federal False Claims Act and
is substantially similar to cases filed by Grynberg against pipelines and their
affiliates that have been consolidated for discovery and pre-trial discovery
motions in Wyoming's federal district court. The cases involve allegations of
industry-wide mismeasurement and undervaluation of gas volumes on which royalty
payments are due the federal government. The complaint seeks treble damages and
imposition of civil penalties. The federal district judge denied the motions
filed by the defendants to dismiss the lawsuits, but has not set a date for a
scheduling conference.

Another Grynberg case was filed against Questar Gas and several
affiliates in 1997. This case involves claims of fraud and antitrust violations
in addition to some take-or-pay, breach of contract, and intentional
interference with a contract claims. The case was stayed pending Grynberg's
appeal of another case involving the Company to the Tenth Circuit Court of
Appeals. The judge, in June of 2001, entered an order granting the motion for
partial summary judgment filed by the Questar defendants that dismissed the
antitrust claims from the case, but has not yet ruled on other motions for
summary judgment dealing with "ratable take" and fraud.

Questar Gas and several affiliates are among the numerous named
defendants in WILL PRICE V. GAS PIPELINES (formerly known as QUINQUE OPERATING
COMPANY V. GAS PIPELINES), that has been filed against the pipeline industry.
Pending in a Kansas state district court, this case is similar to the cases
filed by Grynberg, but the allegations of a conspiracy by the pipeline industry
to set standards that result in the systematic mismeasurement of natural gas
volumes and resulting underpayment of royalties are made on behalf of private
and state lessors, rather than on behalf of the federal government. The
defendants, including the Questar defendants, have filed motions to dismiss for
lack of personal jurisdiction.

See "Regulation" for a review of significant regulatory proceedings and
an important appellate court decision.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Company did not submit any matters to a vote of its stockholder
during the last quarter of 2001.

11

Part II

ITEM 5. MARKET FOR REGISTRANT'S EQUITY AND RELATED STOCKHOLDER MATTERS.

All of the Company's outstanding shares of common stock, $2.50 par
value, are owned by Regulated Services. Information concerning the dividends
paid on such stock and the ability to pay dividends is reported in the
Statements of Common Shareholder's Equity and the Notes to Financial Statements
included in Item 8.

ITEM 6. SELECTED FINANCIAL DATA.

The Company, as the wholly owned subsidiary of a reporting company
under the Securities Exchange Act of 1934 ("the Act"), is entitled to omit the
information requested in this Item.

12

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Questar Gas conducts natural gas distribution operations. Following is a summary
of financial results and operating information:

13

MARGIN (REVENUES LESS NATURAL GAS PURCHASES)
Questar Gas's margin was 1% higher in 2001 when compared with 2000 and 5% higher
in 2000 when compared with 1999. The higher margins were primarily the result of
a $13.5 million annualized general rate increase in Utah, effective August 11,
2000, and a 3.9% larger customer base. An acquisition of two small distribution
systems accounted for 10,500 of the 27,271 increase in customers.

Usage per residential customer has been steadily declining for the past several
years in large part as a result of higher energy prices and more
energy-efficient appliances and home construction. Usage, calculated on a
temperature adjusted basis, has decreased by 4%, 2% and 1% in 2001, 2000 and
1999, respectively. Temperatures in 2001 were near normal; however, temperatures
have been warmer than normal for nine of the last ten years. The financial
impact of actual weather variations from normal are minimized by a
weather-normalization adjustment in rates.

Industrial deliveries were flat in 2001 and 6% higher in 2000. An increase in
natural gas volumes used to generate electricity offset lower deliveries to a
steel producer. In 2002, the steel producer announced plans to reorganize under
protection of bankruptcy laws. Margins from gas delivered to industrial
customers are substantially lower than margins from gas delivered to residential
and commercial customers.

A significant increase in purchased gas costs in the second half of 2000 and the
first quarter of 2001 resulted in higher charges to customers but did not
directly affect the margin. The recovery of gas costs is authorized through rate
regulation in Utah and Wyoming. Gas costs in Utah rates, which peaked at $4.67
per dth in a January 1, 2001 filing, have subsided to $2.68 per dth in a January
1, 2002 gas-cost filing. In 2001, 44% of Questar Gas's supplies came from
company-owned reserves, which cost less than gas purchased from third-party
suppliers.

OPERATING EXPENSES
Operating and maintenance (O & M) expenses were 2% higher in 2001 due largely to
a $3.7 million increase in bad debt expenses that more than offset labor savings
from a fourth-quarter 2000 early retirement program. An economic recession,
increased number of bankruptcies and higher energy costs resulted in more
frequent collection problems. O & M expenses were 2% lower in 2000 when compared
with 1999 due to lower legal costs and reduced information-technology related
expenses. Depreciation expense increased 2% in 2001 due to capital spending.
Depreciation expense was $2.8 million lower in 2000 due to investments in
several information systems being fully depreciated. In 2000, other taxes
increased when compared with 1999 because of a $1.4 million adjustment of
prior-year taxes.

ACQUISITION OF DISTRIBUTION SYSTEMS
Questar Gas completed the purchase of 100% of the stock of Utah Gas Service
Company and Wyoming Industrial Gas in exchange for 390,000 shares of Questar
common stock on July 12, 2001. As a result of the acquisition, Questar Gas will
add service to about 10,500 customers in Moab, Monticello and Vernal, Utah and
Kemmerer and Diamondville, Wyoming. The acquisition cost $10.9 million,
including $6 million of goodwill, and was accounted for as a purchase.

INTEREST AND OTHER INCOME
Interest and other income increased $3.5 million in 2001 compared with 2000 due
to the return from larger gas-storage volumes, interest earned on higher
purchased-gas balances and larger gains from the disposition of property. In
2000, there was a decrease of $1.3 million compared with 1999 due to smaller
gains from the disposition of property in 2000.

14

DEBT EXPENSE
Interest expense increased 13% in 2001 compared with 2000 primarily from higher
debt borrowings which more than offset lower short-term debt rates in 2001.
Questar Gas added $60 million of medium-term notes with a 6.3% interest rate in
the fourth quarter of 2001.

INCOME TAXES
The effective combined federal and state rate was 34.9% in 2001, 34.8% in 2000
and 31.9% in 1999. The effective income tax rate was below the combined federal
and state statutory rate of about 38% primarily due to noncoventional fuel
credits related to production of gas from certain properties. These credits
amounted to $1.8 million in 2001, $1.8 million in 2000 and $1.9 million in 1999.

RETURN ON ASSETS
Questar Gas's return on assets for 2001 was 7.64%, which is near its weighted
average cost of capital. Management is concerned about Questar Gas's future
ability to earn a competitive return and will likely be addressing its concerns
through a general rate case filing in 2002.

LIQUIDITY AND CAPITAL RESOURCES
Operating Activities

Net cash provided from operating activities decreased in 2001 compared with 2000
due primarily to the higher amounts paid to purchase gas, which were partially
offset by the collection of customer accounts receivable and purchased-gas costs
under collected through customer rates at December 31, 2000. The decrease in
2000 compared with 1999 is due primarily to an increase in customer account
receivables and under collection of purchased-gas costs in customer rates.

Investing Activities

Following is a summary of capital expenditures for 2001 and 2000, and a forecast
of 2002 expenditures.

The distribution system was extended by 1,145 miles of main, feeder and service
lines to accommodate the addition of 27,271 customers. This includes $10.9
million for the acquisition of two small distribution systems.

15

Financing Activities

Questar Gas generated sufficient net cash provided from operating activities to
fund 54% of its 2001 capital expenditures. Questar Gas issued $60 million of
long-term debt and received a $40 million equity investment and used the
proceeds to repay a portion of short-term debt and capital expenditures.
Forecasted 2002 capital expenditures are expected to be financed with net cash
provided from operations and borrowing from Questar.

On October 9, 2001, Questar Gas sold $60 million of 11-year medium-term notes
with a 6.3% coupon rate. In the fourth quarter of 2001, the Company received a
$40 million equity investment from Questar.

Questar makes loans to Questar Gas under a short-term borrowing arrangement.
Short-term notes payable to Questar totaled $66.6 million at December 31, 2001
with an interest rate of 2.31% and $105.6 million at December 31, 2000 with
an interest rate of 6.91%.

The Company typically has negative net working capital at December 31 because of
short-term borrowing. The borrowing is seasonal and generally peaks at the end
of the year because of cold-weather gas purchases.

Questar Gas's capital structure at December 31, 2001, was composed of 48%
long-term debt and 52% common equity. Moody's and Standard and Poor's have rated
the Company's long-term debt A1 and A+, respectively.

Critical Accounting Policies

RATE REGULATION
Rate regulatory agencies establish rates for the sale of natural gas. The
regulatory agencies also regulate, among other things, the extension and
enlargement or abandonment of jurisdictional natural gas facilities. Regulation
is intended to permit the recovery, through rates, of the cost of service,
including a return on investment. The financial statements of rate-regulated
businesses are presented in accordance with regulatory requirements. Methods of
allocating costs to time periods, in order to match revenues and expenses, may
differ from those of other businesses because of cost-allocation methods used in
establishing rates.

PURCHASED-GAS ADJUSTMENTS
Questar Gas accounts for purchased-gas costs in accordance with procedures
authorized by the PSCU and PSCW under which purchased-gas costs that are
different from those provided for in present rates are accumulated and recovered
or credited through future rate changes. Questar Gas will continue to pursue
hedging activities to mitigate energy-price fluctuations for gas-distribution
customers. The PSCU has agreed that the benefits and the costs of hedging are to
be included in the purchased-gas adjustment account. The stipulation allows
Questar Gas to record mark-to-market adjustments for hedging contracts in the
purchased-gas adjustment account. The PSCW also allows the inclusion of hedging
activities in the purchase-gas adjustment account.

16

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

QUESTAR GAS ENERGY-PRICE RISK MANAGEMENT
Questar Gas will continue to pursue hedging activities to mitigate energy-price
fluctuations for gas-distribution customers. The PSCU has agreed that the
benefits and the costs of hedging are to be included in the purchased-gas
adjustment account. The stipulation allows Questar Gas to record mark-to-market
adjustments for hedging contracts in the purchased-gas adjustment account. The
PSCW also allows the inclusion of hedging activities in the purchase-gas
adjustment account.

All of the Company's long-term debt is borrowed at fixed rates. As the need
arises, the Company borrows funds on a short-term basis, which bear variable
interest rates.

Forward-Looking Statements

This report includes "forward-looking statements" within the meaning of Section
27(a) of the Securities Act of 1933, as amended, and Section 21(e) of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included or incorporated by reference in this
report, including, without limitation, statements regarding the Company's future
financial position, business strategy, budgets, projected costs and plans and
objectives of management for future operations, are forward-looking statements.
In addition, forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may", "will", "could", "expect",
"intend", "project", "estimate", "anticipate", "believe", "forecast", or
"continue" or the negative thereof or variations thereon or similar terminology.
Although these statements are made in good faith and are reasonable
representations of the Company's expected performance at the time, actual
results may vary from management's stated expectations and projections due to a
variety of factors.

Important assumptions and other significant factors that could cause actual
results to differ materially from those expressed or implied in forward-looking
statements include changes in general economic conditions, gas and oil prices
and supplies, competition, rate-regulatory issues and other factors beyond the
control of the Company. These other factors include the rate of inflation,
quoted prices of securities available for sale, the weather and other natural
phenomena, the effect of accounting policies issued periodically by accounting
standard-setting bodies, and adverse changes in the business or financial
condition of the Company.

17

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Company's financial statements are included in Part IV, Item 14,
herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

Questar Gas has not changed its independent auditors or had any
disagreements with them concerning accounting matters and financial statement
disclosures within the last 24 months.

PART III

The Company, as the wholly owned subsidiary of a reporting company
under the Act, is entitled to omit all information requested in PART III
(Items 10- 13).

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1)(2) Financial Statements and Financial Statement Schedules. The
financial statements and schedule identified in the List of Financial Statements
are filed as part of this Report.

(3) Exhibits. The following is a list of exhibits required to be filed
as a part of this Report in Item 14(c).

EXHIBIT NO. DESCRIPTION

3.1.* Restated Consolidated Articles of Incorporation dated August 15,
1980. (Exhibit No. 4(a) to Registration Statement No. 2-70087,
filed December 1, 1980.)

3.2.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated May 13, 1982. (Exhibit No. 3(b) to Form 10-K
Annual Report for 1982.)

3.3.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated May 10, 1983. (Included in Exhibit No. 4.1.
to Registration Statement No. 2-84713, filed June 23, 1983.)

3.4.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated August 16, 1983. (Exhibit No. 3(a) to Form 8
Report amending the Company's Form 10-Q Report for Quarter Ended
September 30, 1983.)

3.5.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated October 26, 1984. (Exhibit No. 3.5. to Form
10-K Annual Report for 1984.)

18

3.6.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated May 13, 1985. (Exhibit No. 3.1. to Form 10-Q
Report for Quarter Ended June 30, 1985.)

3.7.* Articles of Amendment to Restated Consolidated Articles of
Incorporation dated February 10, 1988. (Exhibit No. 3.7. to Form
10-K Annual Report for 1987.)

3.8.* Articles of Amendment to Restated Consolidated Articles of
Incorporation dated December 31, 1997. (Exhibit No. 3.7. to Form
8-K Current Report for December 31, 1997.)

3.9.* Bylaws (as amended effective February 13, 2001) (Exhibit No. 3.9.
to Form 10-K Annual Report for 2000.)

4.*1 Indenture dated as of May 1, 1992, between the Company and
Citibank, as trustee, for the Company's Debt Securities. (Exhibit
No. 4. to Form 10-Q Report for Quarter Ended June 30, 1992.)

10.1.*(2) Stipulations and Agreement, dated October 14, 1981, executed by
the Company; Wexpro Company; the Utah Department of Business
Regulations, Division of Public Utilities; the Utah Committee of
Consumer Services; and the staff of the Public Service Commission
of Wyoming. (Exhibit No. 10(a) to Form 10-K Annual Report for
1981.)

10.2*(2) Gas Gathering Agreement between the Company and Questar Pipeline
Company effective September 1, 1993. (This agreement has been
transferred from Questar Pipeline to Questar Gas Management
Company.) (Exhibit No. 10.11. To Form 10-K Annual Report for
1994.)

10.3.*(2) Amendment to Gas Gathering Agreement between the Company and
Questar Gas Management Company effective September 1, 1997.

12. Ratio of earnings to fixed charges.

23. Consent of Independent Auditors.

24. Power of Attorney.

*Exhibits so marked have been filed with the Securities and Exchange
Commission as part of the referenced filing and are incorporated herein by
reference.

(1)Wells Fargo Bank Northwest, N.A. serves as the successor trustee.

(2)This document has not been formally amended to refer to the
Company's current name.

(b) Questar Gas Company did not file any Current Reports on Form 8-K
during the last quarter of 2001.

19

ANNUAL REPORT ON FORM 10-K

ITEM 8, ITEM 14(a) (1) and (2), and (d)

LIST OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

YEAR ENDED DECEMBER 31, 2001

QUESTAR GAS COMPANY

SALT LAKE CITY, UTAH

FORM 10-K -- ITEM 14 (a) (1) AND (2)

QUESTAR GAS COMPANY

LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES

The following financial statements of Questar Gas Company are included in Item
8:

Statements of income, Years ended December 31, 2001, 2000 and 1999

Balance sheets, December 31, 2001 and 2000

Statements of common shareholder's equity, Years ended December 31,
2001, 2000 and 1999

Statements of cash flows, Years ended December 31, 2001, 2000 and 1999

Notes to financial statements

The following financial statement schedule is included in Item 8:

Schedule: Valuation and Qualifying Accounts

All other financial statement schedules, for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission, are
not required under the related instructions or are inapplicable, and therefore
have been omitted.

20

Report of Independent Auditors

Board of Directors
Questar Gas Company

We have audited the accompanying balance sheets of Questar Gas Company as of
December 31, 2001 and 2000, and the related statements of income, common
shareholder's equity and cash flows for each of the three years in the period
ended December 31, 2001. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Questar Gas Company at December
31, 2001 and 2000, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

/s/ Ernst & Young LLP
-----------------------------
Ernst & Young LLP

Salt Lake City, Utah
February 8, 2002

21

QUESTAR GAS COMPANY
STATEMENTS OF INCOME

See notes to financial statements.

22

QUESTAR GAS COMPANY
BALANCE SHEETS

ASSETS

23

LIABILITIES AND SHAREHOLDER'S EQUITY

See notes to financial statements.

24

QUESTAR GAS COMPANY
STATEMENTS OF COMMON SHAREHOLDER'S EQUITY

See notes to financial statements.

25

QUESTAR GAS COMPANY
STATEMENTS OF CASH FLOWS

See notes to financial statements.

26

QUESTAR GAS COMPANY
NOTES TO FINANCIAL STATEMENTS

Note 1 - Summary of Accounting Policies

Questar Gas Company (the Company or Questar Gas), is a wholly owned subsidiary
of Questar Regulated Services Company (Regulated Services). Regulated Services
is a holding company and a wholly owned subsidiary of Questar Corporation
(Questar). Regulated Services was organized in 1996 and provides administrative,
accounting, engineering, legal and regulatory functions for its three
subsidiaries, Questar Gas, Questar Pipeline Company (Questar Pipeline) and
Questar Energy Services. Significant accounting policies are presented below.

BUSINESS AND REGULATION: Questar Gas distributes natural gas to residential,
commercial and industrial customers in Utah, Southwestern Wyoming and
Southeastern Idaho. The Company is regulated by the Public Service Commission of
Utah (PSCU) and the Public Service Commission of Wyoming (PSCW). While Questar
Gas also serves a small area of southeastern Idaho, the Public Utilities
Commission of Idaho has deferred to the PSCU for rate oversight of this area.
These regulatory agencies establish rates for the sale and transportation of
natural gas. The regulatory agencies also regulate, among other things, the
extension of natural gas facilities. Regulation is intended to permit the
recovery, through rates, of the cost of service including a return on
investment.

The financial statements are presented in accordance with regulatory
requirements. Methods of allocating costs to time periods, in order to match
revenues and expenses, may differ from those of non-regulated businesses because
of cost-allocation methods used in establishing rates.

USE OF ESTIMATES: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts of assets
and liabilities and disclosure of contingent liabilities reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.

REVENUE RECOGNITION: Revenues are recognized in the period that services are
provided or products are delivered. Questar Gas accrues gas-distribution
revenues for gas delivered to residential and commercial customers but not
billed at the end of the accounting period.

PURCHASED-GAS ADJUSTMENTS: Questar Gas accounts for purchased-gas costs in
accordance with procedures authorized by the PSCU and PSCW under which
purchased-gas costs that are different from those provided for in present rates
are accumulated and recovered or credited through future rate changes. Questar
Gas will continue to pursue hedging activities to mitigate energy-price
fluctuations for gas-distribution customers. The PSCU has agreed that the
benefits and the costs of hedging are to be included in the purchased-gas
adjustment account. The stipulation allows Questar Gas to record mark-to-market
adjustments for hedging contracts in the purchased-gas adjustment account. The
PSCW also allows the inclusion of hedging activities in the purchase-gas
adjustment account.

OTHER REGULATORY ASSETS AND LIABILITIES: Gains and losses on the reacquisition
of debt are deferred and amortized as debt expense over the life of the
replacement debt in order to match regulatory treatment. The cost of the early
retirement windows offered to employees of Questar Gas is capitalized and
amortized over a five-year period in accordance with regulatory treatment.
Questar Gas records cumulative increases in deferred taxes as income taxes
recoverable from customers.

27

CASH AND CASH EQUIVALENTS: Cash equivalents consist principally of repurchase
agreements with maturities of three months or less. In almost all cases, the
repurchase agreements are highly liquid investments in overnight securities made
through commercial bank accounts that result in available funds the next
business day.

PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at cost.
The provision for depreciation and amortization is based upon rates that will
systematically charge the costs of assets over their estimated useful lives. The
costs of natural gas distribution property, plant and equipment, excluding gas
wells, are amortized using the straight-line method ranging from 3% to 33% per
year. The average depreciation and amortization rates used for the twelve months
ended December 31, were as follows:

TEST FOR IMPAIRMENT OF LONG-LIVED ASSETS
The potential for property impairment is evaluated on a specific asset basis or
in groups of similar assets, as applicable. An impairment is indicated when a
triggering event occurs and the estimated undiscounted future net cash flows of
an evaluated asset are less than its carrying value.

ACQUISITION OF DISTRIBUTION SYSTEMS
Questar Gas completed the purchase of 100% of the stock of Utah Gas Service
Company and Wyoming Industrial Gas in exchange for 390,000 shares of Questar
common stock on July 12, 2001. As a result of the acquisition, Questar Gas added
service to about 10,500 customers in Moab, Monticello and Vernal, Utah and
Kemmerer and Diamondville, Wyoming. The acquisition cost $10.9 million,
including $6 million of goodwill, and was accounted for as a purchase.

GOODWILL: Goodwill accounting rules changed July 1, 2001. Statement of Financial
Accounting Standard (SFAS) 142, "Goodwill and Other Intangible Assets"
eliminates the requirement to amortize acquired goodwill; instead, such goodwill
shall be reviewed at least yearly for impairment or sooner if a specific event
occurs. Goodwill acquired after July 1, 2001 is exempt from amortization. The
Company acquired $6 million of goodwill in a purchase combination completed July
12, 2001. Refer to the "New Accounting Standards" discussion following.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION: The Company capitalizes the cost
of capital during the construction period of plant and equipment using a method
required by regulatory authorities. Capitalized financing costs, called
allowance for funds used during construction (AFUDC), consist of debt and equity
portions. The debt portion of AFUDC is recorded as a reduction of interest
expense and the equity portion is recorded in other income. The debt expense was
reduced by $.5 million in 2001, $.9 million in 2000 and $.4 million in 1999. No
amounts of equity AFUDC were recorded in the three years ended December 31,
2001.

CREDIT RISK: The Company's primary market area is the Rocky Mountain region of
the United States. Exposure to credit risk may be impacted by the concentration
of customers in this region due to changes in economic or other conditions.
Customers include individuals and numerous industries that may be affected
differently by changing conditions. Management believes that its credit-review
procedures, loss reserves, customer deposits and collection procedures have
adequately provided for usual and customary credit-related losses. Loss reserves
are periodically reviewed for adequacy and may be established on a

28

specific case basis. Bad debt expense amounted to $6.5 million, $2.8 million and
$2.5 million for the years ended December 31, 2001, 2000 and 1999, respectively.
The allowance for bad debt expenses was $2.2 million and $1.2 million at
December 31, 2001 and 2000 respectively.

INCOME TAXES: The Company accounts for income tax expense on a separate return
basis. Pursuant to the Internal Revenue Code and associated regulations, the
Company's operations are consolidated with those of Questar and its subsidiaries
for income tax reporting purposes. Questar Gas records tax benefits as they are
generated. The Company receives payments from Questar for such tax benefits as
they are utilized on the consolidated return. The Company records increases in
deferred taxes as income taxes recoverable from customers. The Company has
adopted procedures with its regulatory commissions to include under-provided
deferred taxes in customer rates on a systematic basis. Questar Gas uses the
deferral method to account for investment tax credits as required by regulatory
commissions.

ENERGY-PRICE FINANCIAL INSTRUMENTS: On January 1, 2001, the Company adopted the
accounting provisions of SFAS 133, as amended, "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 addresses the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts. Under the standard, entities are required to carry all
derivative instruments in the balance sheet at fair value. The accounting for
changes in fair value, which result in gains or losses, of a derivative
instrument would be reported in the purchased-gas adjustment account. The
Company has identified a number of contracts that are derivative instruments as
defined by SFAS 133, but are specifically excluded from the provisions of SFAS
133 on the basis of normal sales and purchase transactions.

NEW ACCOUNTING STANDARDS: In June 2001, the Financial Accounting Standards Board
(FASB) issued SFAS 141, "Business Combinations," which addresses financial
accounting and reporting for business combinations. SFAS 141 is effective for
all business combinations initiated after June 30, 2001 and for all business
combinations accounted for under the pooling method initiated before but
completed after June 30, 2001. The Company applied the purchase method of
accounting when recording an acquisition completed in the third quarter of 2001.

In June 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible Assets,"
which addresses, among other things, the financial accounting and reporting for
goodwill subsequent to an acquisition. The new standard eliminates the
requirement to amortize acquired goodwill; instead, such goodwill shall be
reviewed at least yearly for impairment or sooner if a specific triggering event
occurs. Goodwill acquired after July 1, 2001, is exempt from amortization. At
December 31, 2001, the Company's balance of goodwill amounted to $6 million all
of which was acquired after July 1, 2001. The Company will adopt SFAS 142 as of
January 1, 2002 and has up to six months to perform an initial goodwill
impairment test. However, if impairment is indicated in the initial test, the
impairment must be recorded retroactive to January 1, 2002 as a cumulative
effect of a change in accounting method. Subsequent impairments will be charged
to operating results. An initial test under the new accounting rules indicates
that the Company had no impairment.

In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations," which addresses, among other things, the financial accounting and
reporting of the fair value of legal obligations associated with the retirement
of tangible long-lived assets. The new standard requires that retirement costs
be estimated at fair value, capitalized and depreciated over the life of the
assets. The new standard may affect the cost basis of rate-regulated assets.
SFAS 143 is effective for 2003. The Company has not evaluated the impact of SFAS
143.

In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The new standard addresses financial accounting
and reporting for the impairment or disposal of

29

long-lived assets, specifically, for a segment of a business accounted for as a
discontinued operation and modifies the provisions of SFAS 121. SFAS 144 is
effective for 2002. The Company has not evaluated the impact of SFAS 144.

RECLASSIFICATIONS: Certain reclassifications were made to the 2000 and 1999
financial statements to conform with the 2001 presentation.

Note 2 - Debt

Questar makes loans to Questar Gas under a short-term borrowing arrangement.
Short-term notes payable to Questar totaled $66.6 million at December 31, 2001
with an interest rate of 2.31% and $105.6 million at December 31, 2000 with an
interest rate of 6.91%.

Questar Gas's long-term debt consists of medium-term notes with interest rates
ranging from 6.3% to 8.43%, due 2007 to 2024. There are no maturities of
long-term debt for the five years following December 31, 2001 and no long-term
debt provisions restricting the payment of dividends.

During the third quarter of 2001, Questar Gas filed a Form S-3 with the
Securities and Exchange Commission to issue up to $100 million of medium-term
notes, series D, with maturities of nine months to 30 years. On October 9, 2001,
Questar Gas issued $60 million of 11-year notes with a 6.3% coupon rate.

Cash paid for interest was $22.7 million in 2001, $21.2 million 2000 and $19.9
million in 1999.

Note 3 - Financial Instruments and Risk Management

The carrying amounts and estimated fair values of the Company's financial
instruments were as follows:

The Company used the following methods and assumptions in estimating fair
values: (1) Cash and cash equivalents, and short-term loans - book value
approximates fair value; (2) Long-term debt - the fair value of the medium-term
notes is based on the discounted present value of cash flows using the Company's
current borrowing rates. Fair value is calculated at a point in time and does
not represent what the Company would pay to retire the debt securities.

30

Note 4 - Income Taxes

The components of income taxes were as follows:

The difference between the statutory federal income tax rate and the Company's
effective income tax rate is explained as follows:

31

Significant components of the Company's deferred income taxes were as follows:

Cash paid for income taxes was $18.5 million in 2001, $7.6 million in 2000 and
$2.1 million in 1999.

Note 5 - Rate Regulation and Other Matters

STATE RATE REGULATION
Questar Gas routinely files periodic applications with the PSCU and the PSCW
requesting permission to reflect annualized gas cost increases or decreases
depending on gas prices. These requests for gas cost increases or decreases are
passed on to customers on a dollar-for-dollar basis with no markup. The impact
of the gas cost increase on customers was lessened by the fact that
approximately 40% to 50% of the Company's annual supply comes from its own wells
and is priced to customers at cost-of-service prices rather than market prices.

Effective January 1, 2001, the PSCU approved on an interim basis a $167 million
increase in its Utah natural gas rates that resulted in a 29% increase for the
typical residential Utah customer. The increase was based on significant
increases in natural gas prices at the wellhead and was part of Questar Gas's
purchased gas-cost adjustment or "pass-through" filings. Also, effective January
1, 2001, the PSCW approved a $7 million pass-through filing for Wyoming natural
gas rates.

On August 30, 2001, the Company filed a pass-on request with the PSCW seeking a
$4.6 million reduction of future gas costs collected in rates. The PSCW approved
the request. On September 17, 2001, Questar Gas filed a pass-through request
with the PSCU that reduced gas costs in Utah rates by $110.9 million over the 12
months following an October 1, 2001 effective date. The PSCU approved the
request.

On November 30, 2001, the Company filed a pass-on request with the PSCW asking
to reduce future gas costs collected in rates by $2.9 million. The request was
approved effective January 1, 2002. In a similar request, the Company filed a
pass-through rate request with the PSCU asking for a $66.9 million reduction of
future gas costs. The PSCU granted the request effective January 1, 2002. In
total, pass-through reductions filed between August 2001 and January 2002,
resulted in a 25% decrease for a typical Utah residential customer.

32

On October 23, 2001, the Utah Supreme Court unanimously reversed a PSCU decision
and agreed with Questar Gas's position that certain gas processing costs should
have been considered for recovery through usual pass-through proceedings. In
December 1999, PSCU denied the Company's request to recover certain costs of
processing gas to remove carbon dioxide. In denying the Company's request, the
PSCU provided guidance to seek recovery of future processing fees through other
rate making procedures. The Company filed a general rate case that, when settled
in August 2000, provided $5 million yearly toward processing costs. The Company
appealed to the Utah Supreme Court, maintaining that the purchase-gas adjustment
account and pass-through proceedings were the proper mechanisms for recovering
those processing costs. The court's decision sends the case back to the PSCU
allowing the opportunity for the Company to seek recovery of incurred costs.

FEDERAL RATE REGULATION
On September 27, 2001, the Federal Energy Regulatory Commission (FERC) issued a
Notice of Proposed Rule making on Standards of Conduct for Transmission
Providers (NOPR) that would significantly broaden the scope of the FERC's
affiliate regulations for pipelines. The NOPR would require all transmission
providers to comply with standards of conduct dealing with affiliated energy
companies. Those standards include the separation of functions and
non-discriminatory treatment of transmission customers. The NOPR would
essentially diminish operational efficiencies and increase costs by mandating a
complete separation of operations. Questar Regulated Services supplies
administrative, technical, accounting, legal and regulatory support for both
Questar Pipeline and Questar Gas.

Questar Gas, Questar Pipeline, industry associations and other companies have
filed written and verbal comments with the FERC about the problems this NOPR
would create for the industry and its customers and asked the FERC to reconsider
its proposal.

Note 6 - Litigation and Commitments

GRYNBERG LAWSUITS
Questar Gas and several affiliates are named defendants in a lawsuit filed by
independent gas producer Jack J. Grynberg under the Federal False Claims Act.
This case and all substantially similar cases filed by Grynberg against
pipelines and their affiliates have been consolidated for discovery and
pre-trial rulings in Wyoming federal district court. The cases involve
allegations of industry wide mismeasurement and undervaluation of gas on which
royalty payments are due the federal government. The complaint seeks treble
damages and imposition of civil penalties. The Wyoming district court judge
denied the defendants' initial motion to dismiss. No motions are currently
pending.

It is too early to estimate the outcome of the cases filed by Grynberg against
Questar affiliates.

WILL PRICE V. GAS PIPELINES ET AL. (FORMERLY QUINQUE OPERATING CO. V. GAS
PIPELINES):
Questar Gas and a number of affiliates are named defendants in a
purported nationwide class action alleging mismeasurement of volumes and heating
content of gas produced from private and state lands. The plaintiffs are
alleging a conspiracy among the defendants to set industry standards that
undermeasure gas. The defendants have filed motions to dismiss the pending
actions for lack of personal jurisdiction and for failure to state a claim. The
producer's complaint does not include a request for any specific monetary
damages.

OTHER LEGAL PROCEEDINGS
There are various other legal proceedings against Questar Gas. While it is not
currently possible to predict

33

or determine the outcomes of these proceedings, it is the opinion of management
that the outcomes will not have a material adverse effect on the Company's
results of operations, financial position or liquidity.

COMMITMENTS
Historically, 40% to 50% of Questar Gas's gas-supply portfolio has been provided
from company-owned gas reserves at the cost of service. The remainder of the gas
supply has been purchased from various suppliers under agreements with a
duration of one year or less and index-based pricing. Generally, at the
conclusion of the heating season and after a bid process, new agreements for the
upcoming heating season are put into place. Questar Gas bought significant
quantities of natural gas under purchase agreements amounting to $261 million,
$184 million and $93 million in 2001, 2000 and 1999, respectively. In addition,
Questar Gas makes use of various storage arrangements to meet peak-gas demand
during certain times of the heating season.

Note 7 - Employee Benefits

PENSION PLAN: Substantially all of Questar Gas's employees are covered by
Questar's defined benefit pension plan. Benefits are generally based on the
employee's age at retirement, years of service and highest earnings in a
consecutive 72 pay-period interval during the ten years preceding retirement.
The Company's policy is to make contributions to the plan at least sufficient to
meet the minimum funding requirements of the Internal Revenue Code. Plan assets
consist principally of equity securities and corporate and U.S. government debt
obligations. The Company relies on a third-party consultant to calculate the
pension plan projected benefit obligation.

Questar Gas's portion of plan assets and benefit obligations is not determinable
because the plan assets are not segregated or restricted to meet the Company's
pension obligations. If the Company were to withdraw from the pension plan, the
pension obligation for the Company's employees would be retained by the pension
plan. At December 31, 2001, Questar's accumulated benefit obligation exceeded
the fair value of plan assets.

Regulated Services offered early retirement windows to eligible employees in
2000 with a total of 276 employees and recipients of long-term disability from
Questar Gas, Questar Pipeline and Questar Regulated Services electing to retire
effective October 31, 2000. The $14.4 million cost of the early retirement
window is being amortized over a five-year period in accordance with regulatory
treatment. Pension expense was $5.8 million in 2001, $2.1 million in 2000 and
$1.7 million in 1999.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: Postretirement health-care benefits
and life insurance are provided only to employees hired before January 1, 1997.
The Company pays a portion of the costs of health-care benefits, as determined
by an employee's years of service, and limited to 170% of the 1992 contribution.
The Company's policy is to fund amounts allowable for tax deduction under the
Internal Revenue Code. Plan assets consist of equity securities and corporate
and U.S. government debt obligations. The Company is amortizing its transition
obligation over a 20-year period, which began in 1992. The Company relies on a
third-party consultant to calculate the projected benefit obligation. The cost
of postretirement benefits other than pensions was $1.5 million in 2001, $1.1
million in 2000 and $1.2 million in 1999.

The Company's portion of plan assets and benefit obligations related to
postretirement medical and life insurance benefits is not determinable because
the plan assets are not segregated or restricted to meet the Company's
obligations. At December 31, 2001, Questar's accumulated benefit obligation
exceeded the fair value of plan assets.

34

POSTEMPLOYMENT BENEFITS: The Company recognizes the net present value of the
liability for postemployment benefits, such as long-term disability benefits and
health-care and life-insurance costs, when employees become eligible for such
benefits. Postemployment benefits are paid to former employees after employment
has been terminated but before retirement benefits are paid. The Company accrues
both current and future costs. In 2000, certain recipients of postemployment
benefits accepted early retirement benefits in connection with Questar Regulated
Services' early retirement program. Questar Gas's postemployment liability at
December 31 was $.2 million in 2001, $.3 million in 2000 and $1.1 million in
1999.

EMPLOYEE INVESTMENT PLAN: Questar Gas participates in Questar's Employee
Investment Plan (Plan), which allows eligible employees to purchase shares of
Questar Corporation common stock or other investments through payroll deduction.
The Company matches 80% of employees' pretax purchases up to a maximum of 6% of
their qualifying earnings. The Company's expense equals its matching
contribution. The Company's expense of the Plan amounted to $1.4 million, $1.7
million and $1.6 million for the years ended December 31, 2001, 2000 and 1999,
respectively.

Note 8 - Related Party Transactions

Regulated Services provides administrative, technical, legal and accounting
support to Questar Gas. The cost of this support was $35.4 million in 2001, $34
million in 2000 and $37.5 million in 1999. The majority of these costs are
allocated and included in operating and maintenance expenses. The allocation
methods are based on several methods dictated by the nature of the charges.
Management believes that the allocation methods are reasonable.

Questar Gas has reserved transportation capacity on Questar Pipeline's system of
approximately 899,000 dth per day as of December 31, 2001 and paid an annual
demand charge of approximately $52.1 million for this reservation in 2001.
Questar Gas releases excess capacity to its industrial transportation or other
customers and receives a credit from Questar Pipeline for the released-capacity
revenues and a portion of Questar Pipeline's interruptible-transportation
revenues. Questar Gas paid for transportation, storage and processing services
provided by Questar Pipeline and a subsidiary amounting to $72.9 million in
2001, $73.7 million in 2000 and $71.6 million in 1999, which included demand
charges. The costs of these services were included in natural gas purchases.

Wexpro, an affiliated company, manages and develops certain properties owned by
Questar Gas under the terms of the Wexpro settlement agreement. The Company
receives a portion of Wexpro's income from oil operations after recovery of
Wexpro's operating expenses and a return on investment. This amount, which is
included in revenues and reduces amounts billed to gas distribution customers,
was $2.9 million in 2001, $4.8 million in 2000 and $2.3 million in 1999. The
amounts that Questar Gas paid Wexpro for the operation of gas properties owned
by Questar Gas were $88.8 million in 2001, $73.7 million in 2000 and $62.3
million in 1999. Questar Gas reports these costs in natural gas purchases.

Also included in natural gas purchases are amounts paid to Questar Gas
Management, an affiliate, for gathering of Company-owned gas and purchased gas.
These costs amounted to $8.2 million in 2001, $8.5 million in 2000 and $9
million in 1999. Questar Gas purchased various other field-related services from
Questar Gas Management amounting to $.5 million in 2001, $.9 million in 2000 and
$.8 million in 1999.

Questar Gas purchased gas from Questar Energy Trading amounting to $2.1 million
in 2001, $9.3 million in 2000 and $7.2 million in 1999.

35

Questar Gas has a 10-year lease with an option to renew with an affiliate for
some space in an office building located in Salt Lake City, Utah. Rent expense
was $1.3 million in 2001, $1.3 million in 2000 and $1.2 million in 1999. The
annual lease payment for each of the next five years following 2001 is $1.4
million.

Questar InfoComm Inc. is an affiliated company that provides data processing and
communication services to Questar Gas. Direct charges paid by the Company to
Questar InfoComm were $12.8 million in 2001, $15.4 million in 2000 and $13.7
million in 1999.

Questar charged Questar Gas for certain administrative functions amounting to
$5.4 million in 2001, $6.2 million in 2000 and $5 million in 1999. These costs
are included in operating and maintenance expenses and are allocated based on
each affiliated company's proportional share of revenues less product costs;
property, plant and equipment; and labor costs. Management believes that the
allocation method is reasonable.

Questar Gas borrowed cash from Questar and incurred debt expense of $5 million
in 2001, $3.5 million in 2000 and $1.9 million in 1999.

Note 9 - Supplemental Gas and Oil Information (Unaudited)

The following information discusses the Company's gas and oil producing
activities. All of the properties are cost-of-service properties with the return
on investment established by state regulatory agencies. Questar Gas has not
incurred any costs for gas and oil producing activities for the three years
ended December 31, 2001. See Note 8 for the amounts paid by Questar Gas to
Wexpro.

Estimated Quantities of Proved Gas and Oil Reserves: The following estimates
were made by Questar's reservoir engineers. Reserve estimates are based on a
complex and highly interpretive process which is subject to continuous revision
as additional production and development drilling information becomes available.
The quantities are based on existing economic and operating conditions using
current prices and operating costs. All gas and oil reserves reported are
located in the United States. Questar Gas does not have any long-term supply
contracts with foreign governments or reserves of equity investees. Generally no
estimates are available for proved undeveloped reserves that may exist.

36

37

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on the 26th day of
March, 2002.

QUESTAR GAS COMPANY
(Registrant)

By /s/ D. N. Rose
--------------------------------
D. N. Rose
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

/s/ D. N. Rose President and Chief Executive
- ---------------------------- Officer; Director (Principal
D. N. Rose Executive Officer)

/s/ S. E. Parks Vice President, Treasurer and Chief
- ---------------------------- Financial Officer (Principal Financial Officer)
S. E. Parks

/s/ D. M. Curtis Controller
- ---------------------------- (Principal Accounting Officer)
D. M. Curtis

*R. D. Cash Chairman of the Board
*W. Whitley Hawkins Director
*Robert E. Kadlec Director
*Dixie L. Leavitt Director
*Gary G. Michael Director
*K. O. Rattie Director
*D. N. Rose Director
*Harris H. Simmons Director

MARCH 26, 2002 *By /s/ D. N. Rose
Date -----------------------------------
D. N. Rose, Attorney in Fact

38

QUESTAR GAS COMPANY
Schedule of Valuation and Qualifying Accounts
December 31, 2001
(In Thousands)

EXHIBIT INDEX

Exhibit
Number Description

3.1.* Restated Consolidated Articles of Incorporation dated August 15,
1980. (Exhibit No. 4(a) to Registration Statement No. 2-70087,
filed December 1, 1980.)

3.2.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated May 13, 1982. (Exhibit No. 3(b) to Form 10-K
Annual Report for 1982.)

3.3.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated May 10, 1983. (Included in Exhibit No. 4.1. to
Registration Statement No. 2-84713, filed June 23, 1983.)

3.4.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated August 16, 1983. (Exhibit No. 3(a) to Form 8
Report amending the Company's Form 10-Q Report for Quarter Ended
September 30, 1983.)

3.5.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated October 26, 1984. (Exhibit No. 3.5. to Form
10-K Annual Report for 1984.)

3.6.* Certificate of Amendment to Restated Consolidated Articles of
Incorporation dated May 13, 1985. (Exhibit No. 3.1. to Form 10-Q
Report for Quarter Ended June 30, 1985.)

3.7.* Articles of Amendment to Restated Consolidated Articles of
Incorporation dated February 10, 1988. (Exhibit No. 3.7. to Form
10-K Annual Report for 1987.)

3.8.* Articles of Amendment to Restated Consolidated Articles of
Incorporation dated December 31, 1997. (Exhibit No. 3.7. to Form
8-K Current Report for December 31, 1997.)

3.9.* Bylaws (as amended effective February 13, 2001) (Exhibit No. 3.9.
to Form 10-K Annual Report for 2000.)

4.*(1) Indenture dated as of May 1, 1992, between the Company and
Citibank, as trustee, for the Company's Debt Securities. (Exhibit
No. 4. to Form 10-Q Report for Quarter Ended June 30, 1992.)

10.1.*(2) Stipulations and Agreement, dated October 14, 1981, executed by
the Company; Wexpro Company; the Utah Department of Business
Regulations, Division of Public Utilities; the Utah Committee of
Consumer Services; and the staff of the Public Service Commission
of Wyoming. (Exhibit No. 10(a) to Form 10-K Annual Report for
1981.)

10.2*(2) Gas Gathering Agreement between the Company and Questar Pipeline
Company effective September 1, 1993. (This agreement has been
transferred from Questar Pipeline to Questar Gas Management
Company.) (Exhibit No. 10.11. To Form 10-K Annual Report for
1994.)

10.3.*(2) Amendment to Gas Gathering Agreement between the Company and
Questar Gas Management Company effective September 1, 1997.

12. Ratio of earnings to fixed charges.

23. Consent of Independent Auditors.

24. Power of Attorney.

- ------------------------------

*Exhibits so marked have been filed with the Securities and Exchange
Commission as part of the referenced filing and are incorporated herein by
reference.

(1)Wells Fargo Bank Northwest, N.A. serves as the successor trustee.

(2)This document has not been formally amended to refer to the
Company's current name.

(b) Questar Gas Company did not file any Current Reports on Form 8-K
during the last quarter of 2001.