UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-Q  [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2011  [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ___ to ___  Exact name of registrant as specified in its charterState or other jurisdiction or incorporation of organizationCommission File Number(I.R.S. Employer
Identification No.)Questar CorporationUtah001-0879687-0407509Questar Pipeline CompanyUtah000-1414787-0307414Questar Gas CompanyUtah333-6921087-0155877  180 East 100 South Street, P.O. Box 45433 Salt Lake City, Utah 84145-0433 (Address of principal executive offices)  Registrants telephone number, including area code (801) 324-5000 Web sitehttp://www.questar.com  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.  Questar CorporationYes [X]   No [   ]Questar Pipeline CompanyYes [X]   No [   ]Questar Gas CompanyYes [X]   No [   ]  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Questar CorporationYes [X]   No [   ]Questar Pipeline CompanyYes [   ]   No [   ]Questar Gas CompanyYes [   ]   No [   ]  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Do not check non-accelerated filer if a smaller reporting company (Check one):  Questar CorporationLarge accelerated filer [X]Accelerated filer [   ]Non-accelerated filer [   ]Smaller reporting company [   ]Questar Pipeline CompanyLarge accelerated filer [   ]Accelerated filer [   ]Non-accelerated filer [X]Smaller reporting company [   ]Questar Gas CompanyLarge accelerated filer [   ]Accelerated filer [   ]Non-accelerated filer [X]Smaller reporting company [   ]  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Questar CorporationYes [   ]   No [X]Questar Pipeline CompanyYes [   ]   No [X]Questar Gas CompanyYes [   ]   No [X]   Indicate the number of shares outstanding of each of the issuers classes of common stock, as of April 30, 2011:  Questar Corporationwithout par value177,482,251Questar Pipeline Company$1.00 per share par value6,550,843Questar Gas Company$2.50 per share par value9,189,626  Questar Pipeline Company and Questar Gas Company, as wholly-owned subsidiaries of a reporting company, meet the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format.


Questar Corporation Questar Pipeline Company Questar Gas Company Form 10-Q For the Quarterly Period Ended March 31, 2011   TABLE OF CONTENTS   Page  PART I. FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS (Unaudited) 3  Questar Corporation Consolidated Statements of Income 3 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Cash Flows 5 Questar Pipeline Company Consolidated Statements of Income 6 Condensed Consolidated Balance Sheets 7 Condensed Consolidated Statements of Cash Flows 8 Questar Gas Company Statements of Income 9 Condensed Balance Sheets 10 Condensed Statements of Cash Flows 11  Notes Accompanying the Financial Statements 12  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 19  ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 25  ITEM 4. CONTROLS AND PROCEDURES 26  PART II. OTHER INFORMATION  ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 27  ITEM 6. EXHIBITS 27  SIGNATURES 28  FILING FORMAT This Quarterly Report on Form 10-Q is a combined report being filed by three separate registrants: Questar Corporation, Questar Pipeline Company and Questar Gas Company. Questar Pipeline Company and Questar Gas Company are wholly-owned subsidiaries of Questar Corporation. Separate financial statements for Wexpro Company have not been included since Wexpro is not a registrant. See Note 8 to the Accompanying Financial Statements for a summary of operations by line of business.  Part I - Financial information in this Quarterly Report on Form 10-Q includes separate financial statements (i.e. balance sheets, statements of income and statements of cash flows) for Questar Corporation, Questar Pipeline Company and Questar Gas Company. The Notes Accompanying the Financial Statements are presented on a combined basis for all three registrants. Managements Discussion and Analysis of Financial Condition and Results of Operations included under Item 2 is presented by line of business. Only Questar of the three registrants named herein is required to attach XBRL exhibits.    Questar 2011 Form 10-Q 2  PART I. FINANCIAL INFORMATION   ITEM 1.  FINANCIAL STATEMENTS.  QUESTAR CORPORATION  CONSOLIDATED STATEMENTS OF INCOME (Unaudited) 3 Months Ended
March 31,12 Months Ended
March 31,2011201020112010(in millions, except per share amounts)REVENUESQuestar Gas$  413.9$360.7$  955.0$  873.9Questar Pipeline48.347.7197.8179.6Wexpro7.86.226.221.6Total Revenues470.0414.61,179.01,075.1OPERATING EXPENSESCost of sales (excluding operating expenses shown separately)209.9158.3332.5273.7Operating and maintenance51.451.8175.4172.9General and administrative33.026.2115.397.2Separation costs--11.5-Production and other taxes13.614.649.644.4Depreciation, depletion and amortization39.438.9153.9149.4Total Operating Expenses347.3289.8838.2737.6Net gain from asset sales0.1-0.50.1OPERATING INCOME122.8124.8341.3337.6Interest and other income2.92.811.812.5Income from unconsolidated affiliate0.91.03.73.8Interest expense(16.0)(14.3)(58.8)(57.8)INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES110.6114.3298.0296.1Income taxes(40.7)(42.1)(108.0)(108.7)INCOME FROM CONTINUING OPERATIONS69.972.2190.0187.4Discontinued operations, net of income taxes-78.769.5291.7Discontinued operations, noncontrolling interest-(0.6)(0.7)(2.7)Total Discontinued Operations, Net Of Income Taxes-78.168.8289.0NET INCOME ATTRIBUTABLE TO QUESTAR$    69.9$150.3$  258.8$  476.4Earnings Per Common Share Attributable To QuestarBasic from continuing operations$    0.40$  0.41$    1.08$    1.06Basic from discontinued operations-0.450.391.67Basic total$    0.40$  0.86$    1.47$    2.73Diluted from continuing operations$    0.39$  0.41$    1.06$    1.06Diluted from discontinued operations-0.440.391.64Diluted total$    0.39$  0.85$    1.45$    2.70Weighted-average common shares outstandingUsed in basic calculation177.0174.9176.2174.4Used in diluted calculation178.5177.2178.5176.6Dividends per common share$0.1525$  0.13$0.5625$    0.51   See notes accompanying the financial statements  Questar 2011 Form 10-Q 3  QUESTAR CORPORATION   CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)  March 31, 2011March 31, 2010Dec. 31, 2010(in millions)ASSETSCurrent AssetsCash and cash equivalents$           -$           -$     21.8Notes receivable-53.0-Federal income taxes receivable--37.1Accounts receivable, net132.3127.7122.1Unbilled gas accounts receivable62.557.681.6Gas stored underground11.311.643.7Materials and supplies21.221.419.0Current regulatory assets33.438.153.5Prepaid expenses and other6.56.39.0Deferred income taxes  current14.814.311.8Current assets of discontinued operations-684.6-Total Current Assets282.01,014.6399.6Property, Plant and Equipment4,694.44,379.54,642.8Accumulated depreciation, depletion and amortization(1,796.6)(1,657.3)(1,758.2)Net property, plant and equipment of discontinued operations-5,222.0-Net Property, Plant and Equipment2,897.87,944.22,884.6Investment in unconsolidated affiliate27.828.327.9Noncurrent regulatory assets20.622.421.7Other noncurrent assets39.335.339.8Noncurrent assets of discontinued operations-282.9-TOTAL ASSETS$3,267.5$9,327.7$3,373.6LIABILITIES AND EQUITYCurrent LiabilitiesChecks outstanding in excess of cash balances$1.6$0.8$-Short-term debt86.0134.5242.0Notes payable-27.9-Accounts payable and accrued expenses165.1207.4225.1Current regulatory liabilities38.510.66.0Current portion of long-term debt182.0-182.0Current liabilities of discontinued operations-750.4-Total Current Liabilities473.21,131.6655.1Long-term debt, less current portion898.5831.2898.5Deferred income taxes509.0379.3474.7Asset retirement obligations64.257.560.9Defined benefit pension plan and other postretirement benefits149.3210.6169.5Customer contributions-in-aid-of-construction45.750.945.5Other long-term liabilities37.937.333.3Noncurrent liabilities of discontinued operations-2,749.6-EQUITYCommon stock503.7462.5493.0Retained earnings690.03,205.2647.1Accumulated other comprehensive income (loss)(104.0)157.7(104.0)TOTAL COMMON SHAREHOLDERS' EQUITY1,089.73,825.41,036.1Noncontrolling interest of discontinued operations-54.3-Total Equity1,089.73,879.71,036.1TOTAL LIABILITIES AND EQUITY$3,267.5$9,327.7$3,373.6 See notes accompanying the financial statements   Questar 2011 Form 10-Q 4  QUESTAR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)  3 Months Ended March 31,20112010(in millions)OPERATING ACTIVITIESNet income$  69.9$150.9Discontinued operations, net of income taxes-(78.7)Adjustments to reconcile net income to net cash
provided by operating activities by continuing operations:Depreciation, depletion and amortization41.840.6Deferred income taxes31.31.6Share-based compensation3.52.8Net (gain) from asset sales(0.1)-(Income) from unconsolidated affiliate(0.9)(1.0)Distribution from unconsolidated affiliate1.00.8Changes in operating assets and liabilities82.326.5Net Cash Provided By Operating Activities By Continuing Operations228.8143.5--INVESTING ACTIVITIESProperty, plant and equipment(76.0)(60.9)Cash used in disposition of assets(0.5)(0.2)Change in notes receivable-(13.7)Net Cash Used In Investing Activities By Continuing Operations(76.5)(74.8)--FINANCING ACTIVITIESCommon stock issued5.65.9Common stock repurchased(2.3)(5.9)Change in short-term debt(156.0)(34.5)Change in notes payable-(25.0)Checks outstanding in excess of cash balances1.60.8Dividends paid(27.0)(22.8)Tax benefits from share-based compensation4.01.3Net Cash Used In Financing Activities By Continuing Operations(174.1)(80.2)CASH USED IN CONTINUING OPERATIONS(21.8)(11.5)Cash provided by operating activities of discontinued operations-222.0Cash used in investing activities of discontinued operations-(263.4)Cash provided by financing activities of discontinued operations-22.1Effect of change in cash and cash equivalents of discontinued operations-19.3Change in cash and cash equivalents(21.8)(11.5)Beginning cash and cash equivalents21.811.5Ending cash and cash equivalents$       -$       -  See notes accompanying the financial statements  Questar 2011 Form 10-Q 5   QUESTAR PIPELINE COMPANYCONSOLIDATED STATEMENTS OF INCOME(Unaudited)3 Months Ended
March 31,12 Months Ended
March 31,2011201020112010(in millions)REVENUESFrom unaffiliated customers$48.3$47.7$197.8$179.6From affiliated companies18.618.873.872.5Total Revenues66.966.5271.6252.1--OPERATING EXPENSESOperating and maintenance8.67.842.239.8General and administrative13.110.643.538.1Depreciation and amortization12.311.847.945.3Other taxes3.12.49.78.7Cost of goods sold (excluding operating expenses shown separately)0.60.52.51.3Total Operating Expenses37.733.1145.8133.2Net gain from asset sales0.10.10.80.5OPERATING INCOME29.333.5126.6119.4Interest and other income0.90.11.22.3Income from unconsolidated affiliate0.91.03.73.8Interest expense(7.1)(7.4)(28.5)(29.5)INCOME BEFORE INCOME TAXES24.027.2103.096.0Income taxes(8.7)(10.0)(37.5)(35.3)NET INCOME$15.3$17.2$  65.5$  60.7   See notes accompanying the financial statements   Questar 2011 Form 10-Q 6   QUESTAR PIPELINE COMPANYCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)March 31, 2011March 31, 2010Dec. 31, 2010(in millions)ASSETSCurrent AssetsCash and cash equivalents$       0.9$         -$       5.3Notes receivable from Questar40.769.630.3Accounts receivable, net25.518.020.2Accounts receivable from affiliates19.415.016.2Materials and supplies8.16.37.2Prepaid expenses and other3.93.65.2Deferred income taxes  current1.20.71.2Total Current Assets99.7113.285.6Property, Plant and Equipment1,721.01,606.81,711.1Accumulated depreciation and amortization(557.4)(514.0)(545.0)Net Property, Plant and Equipment1,163.61,092.81,166.1Investment in unconsolidated affiliate27.828.327.9Goodwill4.24.24.2Regulatory and other noncurrent assets9.111.09.6TOTAL ASSETS$1,304.4$1,249.5$1,293.4--LIABILITIES AND COMMON SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable and accrued expenses$     32.4$     48.3$     45.6Accounts payable to affiliates4.73.84.7Current portion of long-term debt180.0-180.0Total Current Liabilities217.152.1230.3Long-term debt, less current portion280.9461.2280.9Deferred income taxes196.1164.0180.1Regulatory and other noncurrent liabilities15.414.915.3--COMMON SHAREHOLDERS EQUITYCommon stock6.66.66.6Additional paid-in capital344.5343.0344.0Retained earnings243.8207.7236.2Total Common Shareholders Equity594.9557.3586.8TOTAL LIABILITIES AND COMMON SHAREHOLDERS EQUITY$1,304.4$1,249.5$1,293.4   See notes accompanying the financial statements  Questar 2011 Form 10-Q 7   QUESTAR PIPELINE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)3 Months Ended March 31,20112010(in millions)OPERATING ACTIVITIESNet income$15.3$17.2Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization13.112.4Deferred income taxes16.01.6Share-based compensation0.50.3Net (gain) from asset sales(0.1)(0.1)(Income) from unconsolidated affiliate(0.9)(1.0)Distribution from unconsolidated affiliate1.00.8Changes in operating assets and liabilities(5.5)16.8Net Cash Provided By Operating Activities39.448.0--INVESTING ACTIVITIESProperty, plant and equipment(25.7)(17.3)Cash used in disposition of assets-(0.1)Net Cash Used In Investing Activities(25.7)(17.4)--FINANCING ACTIVITIESChange in notes receivable from Questar(10.4)(26.9)Dividends paid(7.7)(7.3)Change in notes payable to Questar-(0.2)Net Cash Used In Financing Activities(18.1)(34.4)Change in cash and cash equivalents(4.4)(3.8)Beginning cash and cash equivalents5.33.8Ending cash and cash equivalents$     0.9$     -   See notes accompanying the financial statements  Questar 2011 Form 10-Q 8   QUESTAR GAS COMPANYSTATEMENTS OF INCOME(Unaudited)3 Months Ended
March 31,12 Months Ended
March 31,2011201020112010(in millions)REVENUESFrom unaffiliated customers$413.9$360.7$955.0$873.9From affiliated company0.80.31.61.3Total Revenues414.7361.0956.6875.2--OPERATING EXPENSESCost of natural gas sold (excluding operating expenses shown separately)288.7237.0643.9570.5Operating and maintenance37.439.0112.8114.4General and administrative14.611.353.244.4Depreciation and amortization10.911.143.544.1Other taxes4.34.014.413.5Total Operating Expenses355.9302.4867.8786.9OPERATING INCOME58.858.688.888.3Interest and other income1.61.56.87.3Interest expense(6.6)(6.8)(26.0)(27.5)INCOME BEFORE INCOME TAXES53.853.369.668.1Income taxes(20.4)(20.2)(25.4)(25.2)NET INCOME$  33.4$  33.1$  44.2$  42.9   See notes accompanying the financial statements  Questar 2011 Form 10-Q 9   QUESTAR GAS COMPANYCONDENSED BALANCE SHEETS(Unaudited)March 31, 2011March 31, 2010Dec. 31, 2010(in millions)ASSETSCurrent AssetsCash and cash equivalents$       0.4$       1.5$       4.7Accounts receivable, net95.985.993.0Unbilled gas accounts receivable62.457.581.5Accounts receivable from affiliates4.32.94.5Gas stored underground10.610.743.3Materials and supplies9.011.97.9Current regulatory assets32.937.952.7Prepaid expenses and other1.91.72.9Deferred income taxes  current4.33.61.3Total Current Assets221.7213.6291.8Property, Plant and Equipment1,833.51,734.91,817.6Accumulated depreciation and amortization(731.9)(695.6)(721.3)Net Property, Plant and Equipment1,101.61,039.31,096.3Noncurrent regulatory assets14.415.415.0Goodwill5.65.65.6Other noncurrent assets2.56.92.6TOTAL ASSETS$1,345.8$1,280.8$1,411.3--LIABILITIES AND COMMON SHAREHOLDERS EQUITYCurrent LiabilitiesNotes payable to Questar$     64.1$     63.4$   153.6Accounts payable and accrued expenses98.9109.6108.3Accounts payable to affiliates37.452.953.6Customer advances8.09.426.2Current regulatory liabilities35.36.22.8Current portion of long-term debt2.0-2.0Total Current Liabilities245.7241.5346.5Long-term debt, less current portion368.0370.0368.0Deferred income taxes239.3186.8230.3Customer contributions-in-aid-of-construction45.750.945.5Regulatory and other noncurrent liabilities5.56.35.5--COMMON SHAREHOLDERS EQUITYCommon stock23.023.023.0Additional paid-in capital150.6149.3150.3Retained earnings268.0253.0242.2Total Common Shareholders Equity441.6425.3415.5TOTAL LIABILITIES AND COMMON SHAREHOLDERS EQUITY$1,345.8$1,280.8$1,411.3   See notes accompanying the financial statements  Questar 2011 Form 10-Q 10   QUESTAR GAS COMPANYCONDENSED STATEMENTS OF CASH FLOWS(Unaudited)3 Months Ended March 31,20112010(in millions)OPERATING ACTIVITIESNet income$  33.4$  33.1Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization12.012.1Deferred income taxes6.0(2.2)Share-based compensation0.30.4Changes in operating assets and liabilities67.57.9Net Cash Provided By Operating Activities119.251.3--INVESTING ACTIVITIESProperty, plant and equipment(25.9)(26.1)Cash used in disposition of assets(0.5)(0.1)Net Cash Used In Investing Activities(26.4)(26.2)--FINANCING ACTIVITIESChange in notes payable to Questar(89.5)(23.6)Dividends paid(7.6)(7.2)Net Cash Used In Financing Activities(97.1)(30.8)Change in cash and cash equivalents(4.3)(5.7)Beginning cash and cash equivalents4.77.2Ending cash and cash equivalents$    0.4$    1.5   See notes accompanying the financial statements  Questar 2011 Form 10-Q 11  QUESTAR CORPORATION QUESTAR PIPELINE COMPANY QUESTAR GAS COMPANY NOTES ACCOMPANYING THE FINANCIAL STATEMENTS   Note 1 - Nature of Business  Questar Corporation (Questar or the Company) is a Rockies-based integrated natural gas company with three complementary and wholly owned lines of business:  -Wexpro Company (Wexpro) develops and produces natural gas from cost-of-service reserves for Questar Gas. -Questar Pipeline Company (Questar Pipeline) operates interstate natural gas pipelines and storage facilities in the western United States and provides other energy services. -Questar Gas Company (Questar Gas) provides retail natural gas distribution in Utah, Wyoming and Idaho.  Questar is headquartered in Salt Lake City, Utah. Shares of Questar common stock trade on the New York Stock Exchange (NYSE:STR).  Note 2 - Basis of Presentation of Interim Financial Statements   The interim financial statements contain the accounts of Questar and its majority-owned or controlled subsidiaries. The financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the instructions for Quarterly Reports on Form 10-Q and Regulations S-X and S-K. All significant intercompany accounts and transactions have been eliminated in consolidation.  The financial statements reflect all normal, recurring adjustments and accruals that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations for the interim periods presented. Interim financial statements do not include all of the information and notes required by GAAP for audited annual financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.  The preparation of the financial statements and notes in conformity with GAAP requires that management make estimates and assumptions that affect the amounts of revenues, expenses, assets and liabilities, and disclosure of contingent assets and liabilities. Actual results could differ from estimates. The results of operations for the three and 12 months ended March 31, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.  Questar uses the equity method to account for its investment in an unconsolidated affiliate where it does not have control, but has significant influence. White River Hub, LLC is a limited liability company and FERC-regulated transporter of natural gas. Questar Pipeline owns 50% of White River Hub, LLC and is the operator. Generally, the investment in White River Hub, LLC on the Companys balance sheets equals the Companys proportionate share of equity reported by White River Hub, LLC. The investment is assessed for possible impairment when events indicate that the fair value of the investment may be below the Companys carrying value. When such a condition is deemed to be other than temporary, the carrying value of the investment is written down to its fair value, and the amount of the write-down is included in the determination of net income.  The 2010 financial information in this Quarterly Report on Form 10-Q has been recast due to the Spinoff of QEP Resources (QEP) so that the basis of presentation is consistent with that of the first quarter 2011 financial information. This recast reflects the financial condition and results of operations of QEP as discontinued operations for all periods presented. For a summary of discontinued operations see Note 10.  Note 3  Comprehensive Income  Comprehensive income (loss) attributable to Questar is the sum of net income attributable to Questar as reported in the Consolidated Statements of Income and net other comprehensive income (loss). Net other comprehensive income (loss) includes recognition of the under-funded position of the defined benefit pension plan and other postretirement benefits (employee benefits), changes in the market value of long-term investment and commodity-based derivative instruments and income taxes. These transactions are not the culmination of the earnings process but result from periodically adjusting historical balances to fair value. Income or loss is recognized when the pension or other postretirement benefit costs are accrued and the long-term investment is sold or otherwise realized. Comprehensive income (loss) attributable to Questar is shown below:  Questar 2011 Form 10-Q 12   3 Months Ended
March 31,12 Months Ended
March 31,2011201020112010(in millions)Net income$69.9$150.9$259.5$479.1Other comprehensive income (loss)Employee benefits--21.547.8Long-term investment-0.1-0.1Discontinued operationsChange in unrealized fair value of derivatives
held by QEP-299.2(437.9)(195.5)Income taxes-(111.3)154.754.4Net other comprehensive income (loss)-188.0(261.7)(93.2)Comprehensive income (loss)69.9338.9(2.2)385.9Discontinued operations, noncontrolling interest-(0.6)(0.7)(2.7)Comprehensive income (loss) attributable to Questar$69.9$338.3($2.9)$383.2  The components of Accumulated Other Comprehensive Income (Loss), net of income taxes, shown on the Condensed Consolidated Balance Sheets are as follows: Mar. 31, 2011Mar. 31, 2010Dec. 31, 2010(in millions)Employee benefits($104.1)($117.4)($104.1)Long-term investment0.10.10.1Discontinued operations, unrealized fair value of derivatives-275.0-Accumulated Other Comprehensive Income (Loss)($104.0)$157.7($104.0)  Note 4 - Earnings Per Share  Basic earnings per share (EPS) is computed by dividing net income attributable to Questar by the weighted-average number of common shares outstanding during the reporting period. Diluted EPS includes the potential increase in the number of outstanding shares that could result from the exercise of in-the-money stock options that are part of the Companys Long-Term Stock Incentive Plan (LTSIP). A reconciliation of the components of basic and diluted shares used in the EPS calculation follows:  3 Months Ended
March 31,12 Months Ended
March 31,2011201020112010(in millions)Weighted-average basic common shares outstanding177.0174.9176.2174.4Potential number of shares issuable under the Companys LTSIP1.52.32.32.2Weighted average diluted common shares outstanding178.5177.2178.5176.6  Note 5 - Asset Retirement Obligations  Questar records asset retirement obligations (ARO) when there are legal obligations associated with the retirement of tangible long-lived assets. At Questar, ARO apply primarily to abandonment costs associated with gas and oil wells, production facilities and certain other properties. The Company has not capitalized future abandonment costs on a majority of its long-lived transportation and distribution assets because the Company does not have a legal obligation to restore the area surrounding abandoned assets. The fair value of retirement costs are estimated by Company personnel based on abandonment costs of similar properties available to field operations and depreciated over the life of the related assets. Revisions to ARO estimates result from changes in expected cash flows or material changes in estimated retirement costs. Income or expense resulting from the settlement of ARO liabilities is included in net gain (loss) from asset sales on the Consolidated Statements of Income. The ARO liability is adjusted to present value each period through an accretion calculation using a credit-adjusted risk-free interest rate. Changes in Questars ARO from the Consolidated Balance Sheets for the three months ended March 31 were as follows:   Questar 2011 Form 10-Q 13   20112010(in millions)ARO liability at December 31$60.9$65.0Accretion0.70.7Liabilities incurred0.20.2Revisions2.5(8.3)Liabilities settled(0.1)(0.1)ARO liability at March 31$64.2$57.5  Wexpro collects from Questar Gas and deposits in trust certain funds related to estimated ARO costs. The funds amounted to $13.4 million at March 31, 2011, and $12.2 million at March 31, 2010. The funds are recorded in other noncurrent assets on the Condensed Consolidated Balance Sheets and used to satisfy retirement obligations as the properties are abandoned. The accounting treatment of reclamation activities associated with ARO for properties administered under the longstanding Wexpro Agreement is defined in a guideline letter between Wexpro and the Utah Division of Public Utilities and the staff of the Public Service Commission of Wyoming (PSCW).  Note 6 - Fair Value Measurements  Questar measures and discloses fair values in accordance with the provisions of the accounting standards for Fair Value Measurements and Disclosures. The standards establish a fair-value hierarchy. Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.  The following table discloses the carrying amount and related fair value of certain financial instruments not disclosed in other notes to the financial statements in this Quarterly Report on Form 10-Q:  Questar  CarryingEstimatedCarryingEstimatedCarryingEstimatedAmountFair ValueAmountFair ValueAmountFair ValueMarch 31, 2011March 31, 2010December 31, 2010(in millions)Financial assetsCash and cash equivalents$           -$          -$       -$       -$     21.8$     21.8Notes receivable--53.053.0--Long-term investment13.413.412.212.213.113.1Financial liabilitiesChecks outstanding in excess of cash balances1.61.60.80.8--Short-term debt86.086.0134.5134.5242.0242.0Notes payable--27.927.9--Long-term debt, including current portion$1,080.5$1,159.2$831.2$913.1$1,080.5$1,173.8  The carrying amounts of cash and cash equivalents, notes receivable, checks outstanding in excess of cash balances, short-term debt and notes payable approximate fair value. The fair value of fixed-rate long-term debt is based on the discounted present value of cash flows using the Company's current credit-risk adjusted borrowing rates. Notes receivable and notes payable represent borrowing transactions between Questar and pre-Spinoff affiliated companies. The long-term investment is recorded at fair value and consists of money market and short-term bond index mutual funds held in Wexpro's trust (see Note 5). The fair value of the long-term investment is based on quoted prices for the underlying funds, and is considered a Level 1 fair value.  The following table discloses the carrying amount and related fair value of certain financial instruments not disclosed in other notes to Questar Pipeline's condensed consolidated financial statements in this Quarterly Report on Form 10-Q:   Questar 2011 Form 10-Q 14  Questar Pipeline  CarryingEstimatedCarryingEstimatedCarryingEstimatedAmountFair ValueAmountFair ValueAmountFair ValueMarch 31, 2011March 31, 2010December 31, 2010(in millions)Financial assetsCash and cash equivalents$     0.9$     0.9$         -$         -$     5.3$     5.3Notes receivable from Questar40.740.769.669.630.330.3Financial liabilitiesLong-term debt, including current portion$460.9$496.8$461.2$497.9$460.9$501.9  The carrying amounts of cash and cash equivalents and notes receivable from Questar approximate fair value. The fair value of fixed-rate long-term debt is based on the discounted present value of cash flows using Questar Pipeline's current credit-risk adjusted borrowing rates.  The following table discloses the carrying amount and related fair value of certain financial instruments not disclosed in other notes to Questar Gas's condensed financial statements in this Quarterly Report on Form 10-Q:  Questar Gas  CarryingEstimatedCarryingEstimatedCarryingEstimatedAmountFair ValueAmountFair ValueAmountFair ValueMarch 31, 2011March 31, 2010December 31, 2010(in millions)Financial assetsCash and cash equivalents$     0.4$     0.4$     1.5$     1.5$     4.7$     4.7Financial liabilitiesNotes payable to Questar64.164.163.463.4153.6153.6Long-term debt, including current portion$370.0$417.0$370.0$415.2$370.0$425.3  The carrying amounts of cash and cash equivalents and notes payable to Questar approximate fair value. The fair value of fixed-rate long-term debt is based on the discounted present value of cash flows using Questar Gas's current credit-risk adjusted borrowing rates.  Note 7 - Share-Based Compensation  Questar issues stock options, restricted shares, restricted stock units and performance shares to certain officers, employees and non-employee directors under its Long-term Stock Incentive Plan (LTSIP). Questar recognizes expense over time as the stock options, restricted shares, restricted stock units and performance shares vest. Total share-based compensation expense amounted to $3.5 million in the first quarter of 2011 compared to $2.8 million in the first quarter of 2010. Deferred share-based compensation, representing the unvested value of restricted share awards, amounted to $9.3 million at March 31, 2011. Deferred share-based compensation is included in common stock on the Condensed Consolidated Balance Sheets. First quarter cash flow from income tax benefits in excess of recognized compensation expense amounted to $4.0 million in 2011 compared to $1.3 million in 2010. There were 7,546,987 shares available for future grants at March 31, 2011.  The Company uses the Black-Scholes-Merton mathematical model in estimating the fair value of stock options for accounting purposes. Fair-value calculations rely upon subjective assumptions used in the mathematical model and may not be representative of future results. The Black-Scholes-Merton model was intended for measuring the value of options traded on an exchange. Questar did not grant any stock options in the first quarter of 2011.   Questar 2011 Form 10-Q 15  Unvested stock options decreased by 115,068 shares to 117,794 shares in the first quarter of 2011. Stock-option transactions under the terms of the LTSIP are summarized below:  Options
OutstandingPrice RangeWeighted-
average
PriceBalance at December 31, 20102,560,059$3.70 - $17.35$ 7.30Exercised(322,184)3.70 - 13.105.49Balance at March 31, 20112,237,875$3.70 - $17.35$7.56  Options OutstandingOptions ExercisableUnvested OptionsRange of exercise
pricesNumber outstanding at March 31, 2011Weighted-average remaining term in yearsWeighted-average exercise priceNumber exercisable
at March 31, 2011Weighted-average exercise priceNumber unvested
at March 31, 2011Weighted- average exercise price$3.70 -   $4.371,255,5011.5$4.111,255,501$4.11-$-7.84 -   12.43649,1743.711.17590,17711.1558,99711.40$13.10 - $17.35333,2005.313.52274,40313.6058,79713.102,237,8752.7$  7.562,120,081$  7.30117,794$12.25  Restricted share grants typically vest in equal installments over a three- or four-year period from the grant date. Several grants vest in a single installment after a specified period. The weighted-average vesting period of unvested restricted shares at March 31, 2011, was 23 months. Transactions involving restricted shares under the terms of the LTSIP are summarized below:  Restricted
Shares
OutstandingPrice RangeWeighted-average
PriceBalance at December 31, 2010568,707$11.40 - $20.31$14.66Granted348,12717.50 -  17.9717.96Distributed(126,406)11.40 -  17.3513.97Balance at March 31, 2011790,428$11.40 - $20.31$16.22  Restricted stock unit grants typically vest in equal installments over a three year period from the grant date. At March 31, 2011, Questars outstanding restricted stock units totaled 67,353 with a weighted-average price of $15.27 per share and a weighted-average vesting period of 15 months.  In the first quarter of 2011, Questar granted to certain Company executive officers a total of 128,021 performance shares under the terms of the LTSIP. The awards motivate and reward these executives for long-term Company performance and provide an incentive for them to remain with the Company. The target number of performance shares for each executive officer is subject to adjustment upward or downward based on the Companys performance over the three-year performance period ending December 31, 2013 with respect to specified performance criteria relative to a specified peer group of companies.   The actual performance shares awarded, if any, will be distributed in the first quarter of 2014 so long as such executive officer was employed by the Company or its affiliates as of December 31, 2013.  Half of any award will be distributed in shares of Company common stock and half in cash. The Monte Carlo simulation method was used to estimate the grant-date fair value of the performance share awards at $18.23 per share. The liability awards to be settled in cash will be marked-to-market at least annually using the Monte Carlo simulation method. Equity and liability-based performance share compensation expense amounted to $0.2 million in the first quarter of 2011.  Note 8 - Operations by Line of Business  Questar's three complementary lines of business include Wexpro, which develops and produces natural gas from cost-of-service reserves for Questar Gas; Questar Pipeline, which operates interstate natural gas pipelines and storage facilities; and Questar Gas, which provides retail natural gas distribution in Utah, Wyoming and Idaho. Line-of-business information is presented according to senior management's basis for evaluating performance and considering differences in the nature of products, services and regulation among other factors. Separation costs, comprised primarily of advisory fees, legal fees and employee severance expenses, were reported at the corporate level. Following is a summary of operations by line of business:   Questar 2011 Form 10-Q 16   3 Months Ended
March 31,12 Months Ended
March 312011201020112010(in millions)Revenues from Unaffiliated CustomersWexpro$     7.8$     6.2$      26.2$      21.6Questar Pipeline48.347.7197.8179.6Questar Gas413.9360.7955.0873.9Total$470.0$414.6$1,179.0$1,075.1--Revenues from Affiliated CompaniesWexpro$  60.9$  60.5$   240.6$   226.1Questar Pipeline18.618.873.872.5Questar Gas0.80.31.61.3Total$  80.3$  79.6$   316.0$   299.9--Operating Income (Loss)Wexpro$  34.5$  32.8$   135.4$   128.5Questar Pipeline29.333.5126.6119.4Questar Gas58.858.688.888.3Corporate0.2(0.1)(9.5)1.4Total$122.8$124.8$   341.3$   337.6--Income (Loss) From Continuing OperationsWexpro$  22.3$  21.2$     89.2$     83.1Questar Pipeline15.317.265.560.7Questar Gas33.433.144.242.9Corporate(1.1)0.7(8.9)0.7Total$  69.9$  72.2$   190.0$   187.4  Note 9 - Employee Benefits  Questar has defined-benefit pension and life insurance plans covering a majority of its employees. On July 1, 2010, Questar closed its defined-benefit pension plan to new hires or rehires. The Company previously closed its postretirement medical coverage and life insurance plan to employees hired or rehired after January 1, 1997, and established maximum amounts paid by the Company.  Questar is subject to and complies with minimum-required and maximum-allowed annual contribution levels for its qualified pension plan as determined by the Employee Retirement Income Security Act and Internal Revenue Code. The 2011 estimated qualified pension expense is $22.8 million.  The Company also has a nonqualified pension plan for eligible employees who participate in the qualified pension plan, which provides a "make-up" benefit due to the limits on compensation that can be taken into account in determining benefits under the qualified pension plan. The nonqualified pension plan is unfunded. Claims are paid from the Company general funds. The 2011 nonqualified pension plan expense is estimated to be $0.8 million. Components of the qualified and nonqualified pension expense included in the determination of net income are listed below and 2010 amounts are not recast for the Spinoff.  Questar 2011 Form 10-Q 17   3 Months Ended
March 31,12 Months Ended
March 31,2011201020112010(in millions)Service cost$2.2$2.4$9.1$9.8Interest cost7.17.927.930.3Expected return on plan assets(6.3)(6.4)(24.3)(25.3)Prior service and other costs0.30.31.11.2Recognized net-actuarial loss2.61.89.06.9Curtailment charges-0.22.2(0.1)Special-termination benefits---2.0Pension expense$5.9$6.2$25.0$24.8  The Company currently estimates a $4.8 million expense for postretirement benefits other than pensions in 2011 before $0.8 million for accretion of a regulatory liability. Postretirement benefit expense components are listed below and 2010 amounts are not recast for the Spinoff:  3 Months Ended
March 31,12 Months Ended
March 31,2011201020112010(in millions)Service cost$0.2$0.2$0.6$0.7Interest cost1.11.24.34.6Expected return on plan assets(0.7)(0.5)(2.6)(2.2)Amortization of transition obligation0.50.51.91.9Amortization of losses0.10.20.50.8Curtailment charges--0.3-Accretion of regulatory liability0.20.20.80.8Postretirement benefits expense$1.4$1.8$5.8$6.6  Note 10  Discontinued Operations  QEP operations are reflected as discontinued operations in this Quarterly Report on Form 10-Q and are summarized below:  3 Months Ended
March 31,12 Months Ended
March 31,2011201020112010(in millions, except per share amounts)Revenues$-$580.1$529.7$2,070.5Separation costs--14.0-Operating income-142.9127.6573.3--Discontinued operations, net of income taxes$-$  78.7$  69.5$  291.7Discontinued operations, noncontrolling interest-(0.6)(0.7)(2.7)Total discontinued operations, net of income taxes$-$  78.1$  68.8$  289.0Earnings Per Common Share Attributable To QuestarBasic from discontinued operations$-$  0.45$  0.39$    1.67Diluted from discontinued operations-0.440.391.64   Questar 2011 Form 10-Q 18  Note 11  Subsequent Event  Interest Rate Swap Transaction  In April of 2011, Questar executed a fixed-to-floating interest rate swap transaction with JPMorgan Chase Bank, N.A. and converted $125.0 million of its 2.75% fixed rate long-term debt to floating rate debt. The 2.75% fixed rate was swapped for a LIBOR-based floating rate that is determined at the beginning of August and February each year until the maturity of the notes on February 1, 2016. This transaction will be reflected beginning in the second quarter of 2011.   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  The following information updates the discussion of Questar's financial condition provided in its 2010 Form 10-K and analyzes the changes in the results of operations between the three and 12 months ended March 31, 2011, and March 31, 2010. For definitions of commonly used terms found in this Quarterly Report on Form 10-Q, please refer to the "Glossary of Commonly Used Terms" provided in Questar's 2010 Form 10-K.  RESULTS OF OPERATIONS  Following are comparisons of income (loss) from continuing operations by line of business:  3 Months Ended March 31,12 Months Ended March 31,20112010Change20112010Change(in millions, except per share amounts)Wexpro$22.3$21.2$1.1$  89.2$  83.1$ 6.1Questar Pipeline15.317.2(1.9)65.560.74.8Questar Gas33.433.10.344.242.91.3Corporate(1.1)0.7(1.8)(8.9)0.7(9.6)Income from continuing operations$69.9$72.2($2.3)$190.0$187.4$ 2.6Earnings from continuing operations per diluted share$0.39$0.41($0.02)$  1.06$  1.06$     -Average diluted shares178.5177.21.3178.5176.61.9  WEXPRO Wexpro reported income of $22.3 million in the first quarter of 2011 compared to $21.2 million in the first quarter of 2010, a 5% increase. For the 12 months ended March 31, 2011, Wexpro earned $89.2 million compared to $83.1 million for the year-earlier period. Following is a summary of Wexpro financial and operating results:  3 Months Ended March 31,12 Months Ended March 31,20112010Change20112010Change(in millions)Operating IncomeRevenuesOperator service fee$61.1$60.5$0.6$240.1$225.7$14.4Oil and NGL sales7.66.21.426.521.25.3Other---0.20.8(0.6)Total Revenues68.766.72.0266.8247.719.1Operating expensesOperating and maintenance5.45.00.420.618.81.8General and administrative6.24.81.421.917.54.4Depreciation, depletion and amortization16.115.90.262.359.72.6Production and other taxes5.77.8(2.1)24.721.53.2Oil income sharing0.80.30.51.61.30.3Total Operating Expenses34.233.80.4131.1118.812.3Net (loss) from asset sales-(0.1)0.1(0.3)(0.4)0.1Operating Income$34.5$32.8$1.7$135.4$128.5$  6.9  Questar 2011 Form 10-Q 19   Operating StatisticsProduction volumesNatural gas (Bcf)12.713.0(0.3)49.948.01.9Oil and NGL (MMbbl)0.10.1-0.40.4-Oil and NGL average sales price (per bbl)$81.34$64.46$16.88$69.69$56.57$13.12Investment base at March 31 (in millions)$445.3$427.8$17.5  Revenues Wexpro earned a 20.3% after-tax return on its average investment base for the 12 months ended March 31, 2011. Wexpro 2011 operating results benefited from a higher average investment base compared to the prior-year period. Pursuant to the terms of a longstanding agreement referred to as the Wexpro Agreement, Wexpro recovers its costs and receives an after-tax return on its investment base. Wexpros investment base includes its costs of commercial wells and related facilities adjusted for working capital and reduced for deferred income taxes and accumulated depreciation. The investment base grew in the 12 months ended March 31, 2011, but the increase due to investment in commercial wells was partially offset by increased deferred taxes due to bonus depreciation allowed for income tax purposes. Following is a summary of changes in the Wexpro investment base:  12 Months Ended March 31,20112010(in millions)Beginning investment base$427.8$400.1Successful development wells97.3106.5Depreciation, depletion and amortization(58.2)(55.0)Deferred income taxes(21.6)(23.8)Ending investment base$445.3$427.8  Wexpro produced 12.7 Bcf of cost-of-service natural gas for Questar Gas during the first quarter of 2011, down 2% from the first quarter of 2010. The decrease in the quarter was due to delays in the completion of wells. Wexpro produced 49.9 Bcf of cost of service gas in the 12 months ended March 31, 2011, compared to 48.0 Bcf for the 12 months ended March 31, 2010. On an annual basis, Wexpro natural gas production provides about half of Questar Gas's supply requirements.  Revenues from oil and NGL sales increased 23% in the first quarter of 2011 over the first quarter of 2010 and were up 25% in the 12 months ended March 31, 2011 over the year-earlier period. The increases were due to higher sales prices. The increase in revenues was largely offset by higher oil-related expenses and production taxes.  Expenses Operating and maintenance expenses were up 8% in the first quarter of 2011 and up 10% in 12-month period ended March 31, 2011 compared to prior year periods due to increased spending on repairs and maintenance. Lease operating expense per Mcfe was $0.40 in the first quarter of 2011 compared to $0.37 in the first quarter of 2010. General and administrative expenses were higher in the three- and 12-month periods ended March 31, 2011, compared to prior year periods. These increases are due to higher employee and share-based compensation expenses and higher allocation of corporate costs following the Spinoff of QEP Resources. Production and other taxes were lower in the first quarter of 2011 compared to the first quarter of 2010 and higher in the 12 months ended March 31, 2011 compared to the 2010 period due to changes in the value of natural gas, oil and NGL production.  Depreciation, depletion and amortization expense increased 1% in the first quarter of 2011 over the first quarter of 2010 and increased 4% in the 12 months ended March 31, 2011, over the 12 months ended March 31, 2010, due to increased investment in natural gas wells and facilities.  QUESTAR PIPELINE Questar Pipeline reported first quarter 2011 income of $15.3 million compared with $17.2 million in 2010, an 11% decrease. Questar Pipeline earned $65.5 million in the 12 months ended March 31, 2011, compared to $60.7 million in the 12 months ended March 31, 2010. Following is a summary of Questar Pipeline financial and operating results:  Questar 2011 Form 10-Q 20   3 Months Ended March 31,12 Months Ended March 31,20112010Change20112010Change(in millions)Operating IncomeRevenuesTransportation$47.7$47.0$0.7$189.4$177.5$11.9Storage9.79.60.137.738.9(1.2)NGL sales - transportation2.62.00.612.97.35.6NGL sales - field services2.03.1(1.1)10.57.23.3Energy services3.93.40.514.513.11.4Other1.01.4(0.4)6.68.1(1.5)Total Revenues66.966.50.4271.6252.119.5Operating expensesOperating and maintenance8.67.80.842.239.82.4General and administrative13.110.62.543.538.15.4Depreciation and amortization12.311.80.547.945.32.6Other taxes3.12.40.79.78.71.0Cost of sales0.60.50.12.51.31.2Total Operating Expenses37.733.14.6145.8133.212.6Net gain from asset sales0.10.1-0.80.50.3Operating Income$29.3$33.5($4.2)$126.6$119.4$7.2Operating StatisticsNatural gas-transportation volumes (MMdth)For unaffiliated customers162.5155.76.8649.2624.724.5For Questar Gas43.144.0(0.9)111.1112.5(1.4)Total Transportation205.6199.75.9760.3737.223.1Transportation revenue (per dth)$0.23$0.24($0.01)$0.25$0.24$0.01Net firm-daily transportation demand at
March 31 (in Mdth)4,9544,683271---Natural gas processingNGL sales (MMgal)2.83.4(0.6)17.312.54.8NGL sales price (per gal)$1.66$1.49$0.17$1.36$1.16$0.20  Revenues As of March 31, 2011, Questar Pipeline had net firm-transportation contracts of 4,954 Mdth per day, including 1,020 Mdth per day from Questar Pipelines 50% ownership of White River Hub, compared with 4,683 Mdth per day as of March 31, 2010. Questar Pipeline has expanded its transportation system in response to growing regional natural gas production and transportation demand. The increase in transportation revenues in the first quarter of 2011 was due primarily to expansions of the Overthrust Pipeline system that were completed in March 2011. The expansions of Overthrust Pipeline include the increase in compression completed in February 2010 and the 43-mile, 36-inch diameter loop placed in service in March 2011. The compression expansion added 160 Mdth per day of firm-transportation contracts in February 2010 and the loop expansion added 50 Mdth per day in December 2010 and 275 Mdth per day in March 2011. The company has long-term firm-transportation contracts of 325 Mdth per day associated with this expansion.  Questar Gas is Questar Pipelines largest transportation customer with contracts for 901 Mdth per day. The majority of the Questar Gas transportation contracts extend through mid 2017.  Questar Pipeline owns and operates the Clay Basin underground storage complex in eastern Utah. This facility is 100% subscribed under long-term contracts. In addition to Clay Basin, Questar Pipeline also owns and operates three smaller aquifer gas storage facilities. Questar Gas has contracted for 26% of firm-storage capacity at Clay Basin for terms extending from three to nine years and 100% of the firm-storage capacity at the aquifer facilities for terms extending for eight years.  Questar 2011 Form 10-Q 21   Questar Pipeline charges FERC-approved transportation and storage rates that are based on straight-fixed-variable rate design. Under this rate design, all fixed costs of providing service including depreciation and return on investment are recovered through the demand charge. About 95% of Questar Pipeline costs are fixed and recovered through these demand charges. Questar Pipelines earnings are driven primarily by demand revenues from firm shippers. Since only about 5% of operating costs are recovered through volumetric charges, changes in transportation volumes do not have a significant impact on earnings.  NGL volumes decreased 18% in the first quarter of 2011 compared to the first quarter of 2010 due to a new third-party processing plant upstream of the companys Price, Utah processing facilities. NGL volumes were 38% higher in the 12 months ended March 31, 2011, compared to the year-earlier period due to higher liquids content of the gas stream. NGL prices were 11% higher in the first quarter of 2011 and 17% higher in the 12 months ended March 31, 2011, compared to year-earlier periods.  Expenses Operating and maintenance expenses increased by 10% in the first quarter of 2011, and 6% in the 12 months ended March 31, 2011, compared to corresponding 2010 periods. The increased costs are due primarily to higher compressor maintenance costs and the operation of system expansions. General and administrative expenses increased by 24% in the first quarter of 2011, and 14% in the 12 months ended March 31, 2011, compared to corresponding 2010 periods. These increases are due to higher employee and share-based compensation expenses and higher allocation of corporate costs following the Spinoff of QEP Resources. Operating, maintenance, general and administrative expenses per dth transported were $0.11 in the first quarter of 2011 compared to $0.09 in the first quarter of 2010.  Other taxes increased 29% in the first quarter of 2011 and 11% in the 12 months ended March 31, 2011, compared to year-earlier periods primarily due to higher property taxes driven by increased investment and tax rates.  Depreciation expense was up 4% in the first quarter of 2011 compared to the first quarter of 2010 because of system expansions placed into service.  QUESTAR GAS Questar Gas reported net income of $33.4 million in the first quarter of 2011 compared to $33.1 million in the first quarter of 2010. Net income was $44.2 million in the 12 months ended March 31, 2011, compared to $42.9 million in the year-earlier period. Questar Gas, because of the seasonal nature of its business, typically reports income in the first and fourth quarters of the year and losses in the second and third quarters of the year. Following is a summary of Questar Gas financial and operating results:  3 Months Ended March 31,12 Months Ended March 31,20112010Change20112010Change(in millions)Operating IncomeRevenuesResidential and commercial sales$396.8$342.0$54.8$887.8$824.0$63.8Industrial sales7.46.60.827.512.614.9Transportation for industrial customers2.72.9(0.2)9.511.6(2.1)Service1.61.7(0.1)4.75.4(0.7)Other6.27.8(1.6)27.121.65.5Total revenues414.7361.053.7956.6875.281.4Cost of natural gas sold288.7237.051.7643.9570.573.4Margin126.0124.02.0312.7304.78.0Other operating expensesOperating and maintenance37.439.0(1.6)112.8114.4(1.6)General and administrative14.611.33.353.244.48.8Depreciation and amortization10.911.1(0.2)43.544.1(0.6)Other taxes4.34.00.314.413.50.9Total other operating expenses67.265.41.8223.9216.47.5Operating income$  58.8$  58.6$  0.2$  88.8$  88.3$  0.5  Questar 2011 Form 10-Q 22   Operating StatisticsNatural gas volumes (MMdth)Residential and commercial sales48.944.64.3110.1109.50.6Industrial sales1.21.10.14.62.12.5Transportation for industrial customers14.216.5(2.3)57.058.0(1.0)Total industrial15.417.6(2.2)61.660.11.5Total deliveries64.362.22.1171.7169.62.1Natural gas revenue (per dth)Residential and commercial sales$  8.11$  7.66$  0.45$  8.07$ 7.52$0.55Industrial sales6.116.010.105.926.08(0.16)Transportation for industrial customers0.190.180.010.170.20(0.03)Colder than normal temperatures4%-3%5%Temperature-adjusted usage per
customer (dth)50.046.63.4110.3108.22.1Customers at March 31 (thousands)914.1904.010.1  Margin Analysis Questar Gas margin (revenues minus gas costs) increased $2.0 million in the first quarter of 2011 compared to the first quarter of 2010 and increased $8.0 million in the 12 months ended March 31, 2011 compared to the 12 months ended March 31, 2010. Following is a summary of major changes in Questar Gas margin:  3 Months12 Months2010 to 20112010 to 2011(in millions)Customer growth$1.1$2.7General rate increase0.94.7Feeder line cost recovery1.41.4Demand-side management cost recovery(1.6)(0.8)Recovery of gas-cost portion of bad-debt costs-0.8Other0.2(0.8)Increase$2.0$8.0  On March 31, 2011, Questar Gas served 914,054 customers, up 1.1% from 904,040 at March 31, 2010. Customer growth increased the margin by $1.1 million in the first quarter of 2011 and $2.7 million in the 12 months ended March 31, 2011.  Questar Gas benefited from a conservation-enabling (revenue decoupling) tariff since 2006. Under this tariff, Questar Gas is allowed to earn a margin for each general-service customer. Differences between the margin and the amount billed to customers are recovered from customers or refunded to customers through future rate changes. Because of this tariff, changes in usage per customer do not impact the companys margin. In addition, a weather-normalization adjustment of customer bills offsets the revenue impact of temperature variations.  On April 8, 2010, the Public Service Commission of Utah (PSCU) approved a settlement in Questar Gass Utah general rate case to increase the utilitys allowed return on equity from 10% to 10.35% and to indefinitely extend the existing conservation-enabling (revenue decoupling) tariff. The stipulation agreement increased customer rates by $5.0 million annually effective August 1, 2010. Increased revenues from the case resulted in higher gross margin of $0.9 million in the first quarter of 2011 and $4.7 million in the 12 months ended March 31, 2011.  The stipulation further approves an infrastructure cost-tracking mechanism that allows the company to place into rate base and earn on capital expenditures associated with a multiyear high-pressure natural gas feeder-line replacement program, and do it immediately upon the completion of each project. Questar Gas recognized $1.4 million of increased margin due to the infrastructure tracking mechanism in the first quarter of 2011.   Questar 2011 Form 10-Q 23  As a partial offset to other margin changes, Questar Gas margin decreased during the three- and 12-month periods ended March 31, 2011, due to lower recovery of demand-side management costs used to promote energy conservation by customers. Changes in the margin contribution from demand-side management recovery revenues are offset by equivalent changes in program expenses.  Expenses Cost of natural gas sold rose 22% in the first quarter of 2011 and 13% in the 12 months ended March 31, 2011, compared to the same periods of 2010 due to higher volumes and higher rates. Questar Gas received authorization from the PSCU to increase rates by an annualized $48.0 million effective August 1, 2010, to recover higher gas costs. Questar Gas accounts for purchased-gas costs in accordance with procedures authorized by the PSCU and the PSCW. Purchased-gas costs that are different from those provided for in present rates are accumulated and recovered or credited through future rate changes. As of March 31, 2011, Questar Gas had a $29.7 million over-collected balance in the purchased-gas adjustment account representing costs recovered from customers in excess of costs incurred.  Operating and maintenance expenses decreased $1.6 million in the first quarter of 2011 and decreased $1.6 million in the 12 months ended March 31, 2011, compared to the same periods of 2010. These decreases included lower demand-side management costs of $1.6 million, and $0.8 million for the three- and 12-month periods respectively. The demand-side management costs are for the companys energy efficiency program and are recovered from customers through periodic rate changes. General and administrative expenses increased $3.3 million in the 2011 first quarter and $8.8 million in the 12 months ended March 31, 2011. These increases are due to higher employee and share-based compensation expenses and higher allocation of corporate costs following the Spinoff of QEP Resources. Operating, maintenance, general and administrative expenses per customer, exclusive of demand-side management costs, were $141 in the 12 months ended March 31, 2011, compared to $133 in the 12 months ended March 31, 2010.  Depreciation expense decreased 2% in the first quarter of 2011 compared to the first quarter of 2010. A reduction of depreciation rates was ordered by the PSCU effective August 1, 2010, which offset increased depreciation from plant additions driven by customer growth and replacement of feeder lines.  Other Consolidated Results  Separation costs Questar's share of separation costs associated with the June 30, 2010, Spinoff of QEP Resources amounted to $11.5 million. Separation costs were primarily for advisory fees, legal fees and employee severance costs. Separation costs were reported at Corporate and resulted in a loss from continuing operations, totaling $8.9 million for the 12 months ended March 31, 2011.  Interest expense Interest expense increased in the first quarter and 12 months ended March 31, 2011, compared with the corresponding 2010 periods because of higher long-term debt balances. In June 2010, Questar entered into a new $250.0 million 364-day revolving credit loan agreement and a new $350.0 million multi-year revolving credit agreement to support commercial paper borrowing, which resulted in an increase in commitment fee expense. Questar borrowed $250.0 million in commercial paper and contributed the proceeds to QEP Resources prior to the Spinoff. In December 2010, Questar issued $250.0 million of 2.75% Senior Notes due 2016 to repay the commercial paper.  Income taxes Questar's effective combined federal and state income tax rate was 36.8% in both the first quarter of 2011 and the first quarter of 2010.  LIQUIDITY AND CAPITAL RESOURCES  Operating Activities Net cash provided by operating activities by continuing operations increased 59% in the first quarter of 2011 compared to the first quarter of 2010 due primarily to changes in deferred income taxes and operating assets and liabilities. Deferred income taxes increased due to bonus tax depreciation rules, which allow the Company to deduct the cost of certain capital expenditures for income tax purposes. Cash sources from operating assets and liabilities were higher in 2011 due to a liability for over-collected gas purchase costs. Net cash provided by operating activities by continuing operations is presented below:  3 Months Ended March 31,20112010Change(in millions)Income from continuing operations$  69.9$  72.2($  2.3)Noncash adjustments to net income76.644.831.8Changes in operating assets and liabilities82.326.555.8Net cash provided by operating activities by continuing operations$228.8$143.5$85.3  Questar 2011 Form 10-Q 24     Investing Activities A comparison of capital expenditures of continuing operations for the first quarter of 2011 and 2010 and a forecast for calendar year 2011 are presented below:  Forecast3 Months Ended
March 31,12 Months Ended
Dec. 31,201120102011(in millions)Wexpro$23.9$17.5$108Questar Pipeline25.717.3105Questar Gas25.926.1132Corporate0.5-4Total capital expenditures of continuing operations$76.0$60.9$349  Financing Activities In the first quarter of 2011, the Company reduced short-term debt by $156.0 million from the excess of cash flow from operations over investing activities.  Questar issues commercial paper to meet short-term financing requirements. The bank-credit commitments provide back-up credit liquidity support for Questars commercial-paper program. Credit commitments under the bank lines totaled $600.0 million at March 31, 2011, with no amounts borrowed. Commitments of $250.0 million mature on June 29, 2011, and commitments of $350.0 million mature on July 1, 2013. The Company does not plan to renew the $250.0 million bank line. Commercial paper outstanding amounted to $86.0 million at March 31, 2011, compared with $134.5 million a year earlier. The Company believes the credit commitments are adequate for its working capital and short-term financing requirements during 2011.  Questar Pipeline has $180.0 million and Questar Gas has $2.0 million of long-term debt maturing in 2011. Questar Pipeline expects to refinance its maturing debt using publicly traded notes. The Company believes it will have adequate access to long-term capital based on current credit markets and its investment-grade credit ratings.  At March 31, 2011, combined short-term and long-term debt was 52% and equity was 48% of total capital.   ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  Wexpro operations are subject to various government controls and regulation at the federal, state and local levels. Wexpro must obtain permits to drill and produce, maintain bonding requirements to drill and operate wells, submit and implement spill-prevention plans, and file notices relating to the presence, use, and release of specified contaminants incidental to gas and oil production. Wexpro is also subject to various conservation matters, including the regulation of the size of drilling and spacing units, the number of wells that may be drilled in a unit and the unitization or pooling of gas and oil properties. In addition, the Utah Division of Public Utilities has oversight responsibility and retains an outside reservoir-engineering consultant and a financial auditor to assess the prudence of Wexpro's activities.  Questar Pipelines primary market risk exposures arise from changes in demand for transportation and storage services and competition from other pipelines. The demand for transportation and storage services will vary based on the markets expectations about future volumes of natural gas likely to be produced in the basins served by Questar Pipeline and changes in market demand for natural gas. On some portions of its pipeline system the Company faces the risk that it will not be successful in recontracting capacity under favorable terms once existing contracts expire. Revenue may also be reduced if NGL prices or volumes decline.  Questar Gass primary market risk exposures arise from changes in demand for natural gas and competition from other energy sources. The demand for natural gas will vary based on economic conditions, conservation efforts and prices. The temperature-adjusted usage per residential customer has decreased due to more energy efficient appliances and homes, and behavior changes in response to higher natural gas prices. The economic impact of this decline in usage per customer has been somewhat offset by the addition of new customers and the conservation-enabling tariff.  Credit Risk Questar Pipeline requests credit support, such as letters of credit and cash deposits, from companies that pose unfavorable credit risks. All companies posing such concerns were current on their accounts at March 31, 2011. Questar Pipeline's largest customers include Questar Gas, Rockies Express Pipeline, EOG Resources, XTO Energy,Wyoming Interstate Pipeline, EnCana Marketing, PacifiCorp and Anadarko Energy Services.  Questar 2011 Form 10-Q 25   Questar Gas's primary market area is located in Utah, southwestern Wyoming and southeastern Idaho. Exposure to credit risk may be affected by the concentration of customers in these regions due to changes in economic or other conditions. Customers include individuals and numerous commercial and industrial enterprises that may react differently to 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.  Interest-Rate Risk Management On March 31, 2011, Questar had $898.5 million of fixed-rate long-term subsidiary debt with a weighted-average life to maturity of 7.7 years. The Company also had $182.0 million of subsidiary long-term debt maturing in the next six months and $86.0 million of floating-rate debt outstanding in the form of short-maturity commercial paper.  Forward-Looking Statements This quarterly report may contain or incorporate by reference information that includes or is based upon "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate," "estimate," "expect," "may" "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, exploration efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.  Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining actual future results. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Among factors that could cause actual results to differ materially are:  - the risk factors discussed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2010; - general economic conditions, including the performance of financial markets and interest rates; - changes in industry trends; - changes in laws or regulations; and - other factors, most of which are beyond the Company's control.  Questar undertakes no obligation to publicly correct or update the forward-looking statements in this quarterly report, in other documents, or on the Web site to reflect future events or circumstances. All such statements are expressly qualified by this cautionary statement.   ITEM 4.  CONTROLS AND PROCEDURES.  Evaluation of Disclosure Controls and Procedures. The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2011. Based on such evaluation, such officers have concluded that, as of March 31, 2011, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company, including its consolidated subsidiaries, required to be included in the Company's reports filed or submitted under the Exchange Act. The Company's Chief Executive Officer and Chief Financial Officer also concluded that the controls and procedures were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management including its principal executive and financial officers or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure.  Changes in Internal Controls. There were no changes in the Company's internal controls over financial reporting that occurred during the quarter ended March 31, 2011, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.  Questar 2011 Form 10-Q 26    PART II.  OTHER INFORMATION        ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.  Questar had no unregistered sales of equity during the first quarter of 2011. Questar repurchased shares in conjunction with tax-payment elections under the Company Long-term Stock Incentive Plan and rollover shares used in exercising stock options. The following table sets forth the Company's purchases of common stock registered under Section 12 of the Exchange Act that occurred during the quarter ended March 31, 2011:  2011Number of Shares Purchased*Average Price per ShareTotal Number of Shares Purchased as Part of Publicly Announced PlansMaximum Number of Shares that May Yet Be Purchased Under the PlansJanuary28,810$18.02--February73,496$17.79--March58,341$17.32--Total160,647$17.66--  *Excludes any fractional shares purchased from terminating participants in the Questar Dividend Reinvestment and Stock Purchase Plan and any shares of restricted stock forfeited when failing to satisfy vesting conditions.  ITEM 6.  EXHIBITS.  The following exhibits are being filed as part of this report:  Exhibit No. Exhibits  12.1. Questar Corporation ratio of earnings to fixed charges.  12.2. Questar Pipeline Company ratio of earnings to fixed charges.  12.3. Questar Gas Company ratio of earnings to fixed charges.  31.1. Questar Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.2. Questar Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.3. Questar Pipeline Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.4. Questar Pipeline Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.5. Questar Gas Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.6. Questar Gas Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  32.1. Questar Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.2. Questar Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.3. Questar Pipeline Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.4. Questar Pipeline Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.5. Questar Gas Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.6. Questar Gas Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.   Questar 2011 Form 10-Q 27  101.INS XBRL Instance.  101.SCH XBRL Taxonomy.  101.LAB XBRL Labels.  101.PRE XBRL Presentation.  101.CAL XBRL Calculations.  101.DEF XBRL Definitions.    SIGNATURES  Pursuant to the requirements 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.  QUESTAR CORPORATION QUESTAR PIPELINE COMPANY QUESTAR GAS COMPANY (Registrants)   May 6, 2011 /s/Ronald W. Jibson Ronald W. Jibson President and Chief Executive Officer, Questar and Questar Gas  May 6, 2011 /s/R. Allan Bradley R. Allan Bradley President and Chief Executive Officer, Questar Pipeline  May 6, 2011 /s/Kevin W. Hadlock Kevin W. Hadlock Executive Vice President and Chief Financial Officer, Questar, Questar Pipeline and Questar Gas   Exhibits List Exhibits  12.1. Questar Corporation ratio of earnings to fixed charges.  12.2. Questar Pipeline Company ratio of earnings to fixed charges.  12.3. Questar Gas Company ratio of earnings to fixed charges.  31.1. Questar Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.2. Questar Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.3. Questar Pipeline Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.4. Questar Pipeline Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.5. Questar Gas Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.6. Questar Gas Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   Questar 2011 Form 10-Q 28  32.1. Questar Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.2. Questar Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.3. Questar Pipeline Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.4. Questar Pipeline Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.5. Questar Gas Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  32.6. Questar Gas Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002.  101.INS XBRL Instance.  101.SCH XBRL Taxonomy.  101.LAB XBRL Labels.  101.PRE XBRL Presentation.  101.CAL XBRL Calculations.  101.DEF XBRL Definitions.   Questar 2011 Form 10-Q 29