Note 6. Derivatives and Hedge Accounting Activities

Questar Gas’ accounting policies, objectives and strategies for using derivative instruments are discussed in Note 2 to the Financial Statements in the Questar Gas’ Annual Report on Form 10-K for the year ended December 31, 2017. See Note 5 in this report for further information about fair value measurements and associated valuation methods for derivatives.

Derivative assets and liabilities are presented gross on Questar Gas’ Balance Sheets. Questar Gas’ derivative contracts include over-the-counter transactions, which are bilateral contracts that are transacted directly with a counterparty. At September 30, 2018, 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, 2018. 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):
Basis		7.3		19.1

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 Balance Sheets.

	Fair Value - Derivatives not under Hedge Accounting		Total Fair Value
(millions)
At September 30, 2018
ASSETS
Current Assets
Commodity	$	2.4	$	2.4
Total current derivative assets⁽¹⁾		2.4		2.4
Noncurrent Assets
Commodity		4.5		4.5
Total noncurrent derivative assets⁽²⁾		4.5		4.5
Total derivative assets	$	6.9	$	6.9
At December 31, 2017
ASSETS
Current Assets
Commodity	$	0.4	$	0.4
Total current derivative assets⁽¹⁾		0.4		0.4
Noncurrent Assets
Commodity		2.0		2.0
Total noncurrent derivative assets⁽²⁾		2.0		2.0
Total derivative assets	$	2.4	$	2.4

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

(2)	Noncurrent derivative assets are presented in other deferred charges and other assets in Questar Gas’ Balance Sheets.

The following table presents the gains and losses on Questar Gas’ derivatives, as well as where the associated activity is presented in its Statements of Income.

	Amount of Gain (Loss) Recognized in Income on Derivatives ⁽¹⁾
	Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives not designated as hedging instruments	2018		2017		2018		2017
(millions)
Derivative Type and Location of Gains (Losses)
Commodity⁽²⁾	$	—	$	—	$	0.1	$	(0.5	)
Total	$	—	$	—	$	0.1	$	(0.5	)

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

(2)	Amounts recorded in Questar Gas’ Statements of Income are classified in purchased gas.