Related-Party Transactions

9 Months Ended

Sep. 30, 2017

Note 12. Related-Party Transactions

Questar Gas engages in related party-transactions primarily with affiliates Wexpro, for cost-of-service natural gas supply, and Dominion Energy Questar Pipeline, for transportation and storage services. Questar Gas' receivables and payables balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. A discussion of significant related party transactions follows.

Dominion Energy Questar and other affiliates provide accounting, legal, finance and certain administrative and technical services to Questar Gas. These costs are included in other operations and maintenance in the Statements of Income. The administrative charges are generally 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 provides certain services to related parties, including technical services. The billed amounts of these services are allocated based on the specific nature of the charges. Management believes that the allocation methods are reasonable. The amounts of these services follow:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
(millions)
Affiliated operator service fee⁽¹⁾	$	74.8	$	77.7	$	230.4	$	236.4
Transportation and storage services from affiliates⁽¹⁾		17.4		17.4		54.3		53.9
Services provided by related parties		17.1		22.9		39.0		49.0
Services provided to related parties		1.6		0.5		4.5		1.5

(1)	The costs of these services were included in cost of sales in Questar Gas' Statements of Income.

Questar Gas participates in certain Dominion Energy Questar benefit plans as described in Note 15 to the Financial Statements in Questar Gas' Annual Report on Form 10-K for the year ended December 31, 2016. At September 30, 2017 and December 31, 2016, amounts due from Dominion Energy Questar associated with the Dominion Questar Corporation Retirement Plan and included in receivables from affiliates in the Balance Sheets were $101.0 million and $87.8 million, respectively. Questar Gas recorded a pension expense (credit) related to this plan of $(6.6) million and $4.4 million for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017 and December 31, 2016, Questar Gas' amounts due to Dominion Energy Questar associated with the Dominion Questar Corporation Umbrella Health Plan and included in payables to affiliates in the Balance Sheets were $12.0 million and $13.0 million, respectively.

The Dominion Energy Questar Combination resulted in merger and restructuring costs charged from Dominion Energy Questar of $2.5 million and $9.2 million for the three and nine months ended September 30, 2017, respectively, and $9.7 million for both the three and nine months ended September 30, 2016. These costs primarily consist of employee related costs allocated to Questar Gas and are included in other operations and maintenance in Questar Gas' Statements of Income.

Questar Gas had no borrowings under the IRCA with Dominion Energy as of September 30, 2017 and $48.0 million at December 31, 2016. Interest charges related to Questar Gas' total borrowings from Dominion Energy and Dominion Energy Questar were less than $0.1 million for the three months ended September 30, 2017, $0.1 million for the nine months ended September 30, 2017 and $0.3 million and $0.8 million for the three and nine months ended September 30, 2016, respectively.

In March 2017, Questar Gas entered into agreements, at rates and on terms and conditions that are subject to regulation by FERC, with Dominion Energy Questar Pipeline to extend transportation services through 2027. Under these agreements, Questar Gas will pay Dominion Energy Questar Pipeline approximately $55 million annually.

Also in March 2017, Questar Gas extended a storage contract, at rates and on terms and conditions that are subject to regulation by FERC, with Dominion Energy Questar Pipeline through 2022. Under this extension, Questar Gas will pay Dominion Energy Questar Pipeline approximately $2 million annually.

QUESTAR GAS CO 10-Q