Rate Regulation

Questar Gas records regulatory assets and liabilities in accordance with orders and guidance per the PSCU and PSCW. The Company recovers the costs of assets but does not generally receive a return on these assets. The current portion of regulatory liabilities are included in other current liabilities on the Condensed Balance Sheets.

The following table details regulatory assets and liabilities:



	September 30, 2016				December 31, 2015
	Current		Noncurrent		Current		Noncurrent
	(in millions)
Regulatory assets:
Purchased-gas adjustment⁽¹⁾	$	—	$	—	$	18.9	$	—
Energy-efficiency program⁽²⁾	1.3		—		1.1		—
Contract withholding⁽³⁾	1.7		—		20.3		—
Deferred cost-of-service gas charges⁽⁴⁾	—		—		19.5		8.1
Cost of reacquired debt⁽⁵⁾	—		3.3		—		3.8
Pipeline integrity costs⁽⁶⁾	1.9		3.1		6.3		—
Conservation Enabling Tariff⁽⁷⁾	0.4		—		3.6		—
Other	0.6		—		0.1		—
Total regulatory assets	$	5.9	$	6.4	$	69.8	$	11.9

Regulatory liabilities:
Purchased-gas adjustment⁽¹⁾	$	2.6	$	—	$	—	$	—
Cost of plant removal and AROs⁽⁸⁾	8.3		185.1		3.7		65.5
Income taxes refundable to customers⁽⁹⁾	—		0.1		—		0.1
Other	0.7		1.2		0.3		—
Total regulatory liabilities	$	11.6	$	186.4	$	4.0	$	65.6

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

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

⁽³⁾ In 2016, Questar Gas recorded a regulatory asset of $1.7 million for a disputed amount withheld from a supplier of storage services. The amount withheld will be recovered from customers if it is determined that Questar Gas is required to pay the supplier. The $20.3 million withheld from a supplier of gathering services as of year-end, per the dispute settlement agreement, was resolved and reversed in March 2016. For further details, see Note 11 in the Company's first quarter 2016 Form 10-Q filing.

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

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

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

⁽⁷⁾ The CET asset represents actual revenues received that are less than the allowed revenues. Any deficiency in amounts collected are recovered through periodic rate adjustments.

⁽⁸⁾ Cost of plant removal and AROs represent amounts recovered from customers for costs of future activities to remove assets that are expected to be incurred at the time of retirement.

⁽⁹⁾ Income taxes refundable to customers arise from adjustments to deferred taxes, refunded over the life of the related property, plant and equipment.

Rate Case Filings

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

On October 1, 2016, Questar Gas filed for an $8.6 million gas cost increase. The PSCU approved the rate filing effective November 1, 2016, reflecting a forecasted increase in commodity costs.