Derivatives and Hedge Accounting Activities

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedge Accounting Activities

Derivatives and Hedge Accounting Activities

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

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

Derivative assets and liabilities are presented gross on Questar Gas' Condensed Balance Sheets. Questar Gas' derivative contracts include over-the-counter transactions, which are bilateral contracts that are transacted directly with a counterparty. At September 30, 2016, substantially all of Questar Gas' derivative assets and liabilities were not subject to a master netting or similar arrangement.

Volumes

The following table presents the volume of Questar Gas' derivative activity at September 30, 2016. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of their long and short positions.

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

⁽¹⁾Includes options.

Fair Value and Gains and Losses on Derivative Instruments

The following table presents the fair values of Questar Gas' derivatives and where they are presented in its Condensed Balance Sheets. Questar Gas did not have any derivative balances at December 31, 2015. 

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

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

⁽²⁾ Noncurrent derivative assets are presented in other noncurrent assets in Questar Gas’ Condensed Balance Sheets.

⁽³⁾ Current derivative liabilities are presented in other current liabilities in Questar Gas’ Condensed Balance Sheets.

Questar Gas did not recognize any gains or losses on derivatives for both the three and nine months ended September 30, 2016 and 2015.