UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.  20549FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarter ended March 31, 2006



[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from ___ to ___



Commission File Number 1-935



QUESTAR GAS COMPANY(Exact name of registrant as specified in charter)



STATE OF UTAH                                                                                             87-0155877

(State of other jurisdiction of                                                            (I.R.S. Employer

incorporation or organization)                                                          Identification No.)

180 East 100 South Street, P.O. Box 45360 Salt Lake City, Utah 84145-0360(Address of principal executive offices)
Registrants telephone number, including area code (801) 324-5555

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.  Yes  [X]     No  [  ]



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ]                              Accelerated filer [  ]                         Non-accelerated filer [X]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]     No  [X]



On April 30, 2006, 9,189,626 shares of the registrants common stock, $2.50 par value, were outstanding (all shares are owned by Questar Corporation).



Registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is filing this Form 10-Q with the reduced disclosure format.

#





Questar Gas Company

Form 10-Q for the Quarter Ended March 31, 2006



Table of Contents







Nature of Business





Where You Can Find More Information





Forward-Looking Statements





Glossary of Commonly Used Terms





PART I.

FINANCIAL INFORMATION





Item 1.

Financial Statements.





Statements of Income for the three and twelve months ended

March 31, 2006 and 2005





Condensed Balance Sheets at March 31, 2006, March 31, 2005

and December 31, 2005





Condensed Statements of Cash Flows for the three months ended

March 31, 2006 and 2005





Notes Accompanying the Financial Statements





Item 2.

Managements Discussion and Analysis of Financial Condition and

Results of Operations.





Item 4.

Controls and Procedures.





PART II.

OTHER INFORMATION



Item 6.

Exhibits.





Signatures



#





Nature of Business



Questar Gas Company (Questar Gas or the Company) distributes natural gas as a public utility in Utah, southwestern Wyoming and a small portion of southeastern Idaho. Questar Gas is regulated by the Public Service Commission of Utah (PSCU) and the Public Service Commission of Wyoming (PSCW). The Public Utility Commission of Idaho has contracted with the PSCU for rate oversight of Questar Gass Idaho operations. Questar Gas is a wholly-owned subsidiary of Questar Corporation (Questar) headquartered in Salt Lake City, Utah.



Where You Can Find More Information



Both Questar and Questar Gas file annual, quarterly, and current reports with the Securities and Exchange Commission (SEC). The public may read and copy these reports and other materials filed with the SEC at its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549-0213. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. The SEC also maintains a website that contains information filed electronically that can be accessed over the Internet at www.sec.gov.



Interested parties can also access financial and other information via Questars website at www.questar.com. Questar and Questar Gas make available, free of charge, through the website copies of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to such reports. Access to these reports is provided as soon as reasonably practical after such reports are electronically filed with the SEC. Questars website also contains Statements of Responsibility for Board Committees, Corporate Governance Guidelines and its Business Ethics and Compliance Policy.



Finally, you may request a copy of filings, other than an exhibit to a filing unless that exhibit is specifically incorporated by reference into that filing, at no cost by writing or calling Questar Gas, 180 East 100 South Street, P.O. Box 45360, Salt Lake City, Utah 84145-0360 (telephone number (801) 324-5555).



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, 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, 2005;

•

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 our control.



Questar Gas undertakes no obligation to publicly correct or update the forward-looking statements in this Quarterly Report, in other documents, or on the website to reflect future events or circumstances. All such statements are expressly qualified by this cautionary statement.



Glossary of Commonly Used Terms



B

Billion.

bbl

Barrel, which is equal to 42 U.S. gallons and is a common measure of volume of crude oil and other liquid hydrocarbons.

Btu

One British thermal unit  a measure of the amount of energy required to raise the temperature of a one-pound mass of water one degree Fahrenheit at sea level.

cf

Cubic foot is a common unit of gas measurement. One standard cubic foot equals the volume of gas in one cubic foot measured at standard conditions  a temperature of 60 degrees Fahrenheit and a pressure of 30 inches of mercury (approximately 14.7 pounds per square inch).

dth

Decatherms or ten therms. One dth equals one million Btu or approximately one Mcf.

gas

All references to gas in this report refer to natural gas.

heating degree days

A measure of the number of degrees the average daily outside temperature is below 65 degrees Fahrenheit.

M

Thousand.

MM

Million.

natural gas equivalents

Oil and NGL volumes are converted to natural gas equivalents using the ratio of one barrel of crude oil, condensate or NGL to 6,000 cubic feet of natural gas.

natural gas liquids (NGL)

Liquid hydrocarbons that are extracted and separated from the natural gas stream. NGL products include ethane, propane, butane, natural gasoline and heavier hydrocarbons.

proved reserves

Those quantities of natural gas, crude oil, condensate and NGL on a net revenue interest basis, which geological and engineering data demonstrate with reasonable certainty to be recoverable under existing economic and operating conditions. See 17 C.F.R. Section 4-10(a)(2) for a complete definition.

proved developed reserves

Reserves that include proved developed producing reserves and proved developed nonproducing reserves. See 17 C.F.R. Section 4-10(a)(3).

proved developed producing reserves

Reserves expected to be recovered from existing completion intervals in existing wells.

proved undeveloped reserves

Reserves expected to be recovered from new wells on proved undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. See 17 C.F.R. Section 4-10(a)(4).

reservoir

A porous and permeable underground formation containing a natural accumulation of producible natural gas and/or oil that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.



#





PART I. FINANCIAL INFORMATION



Item 1.  Financial Statements



QUESTAR GAS COMPANY

STATEMENTS OF INCOME

(Unaudited)



|                              | 3 Months Ended | 12 Months Ended
|----------------------------- | -------------- | ---------------
|                              | March 31,      | March 31,      
|                              | 2006           | 2005           
|                              | (in thousands)
|REVENUES                      |                |                
|From unaffiliated customers   | $466,939       | $343,690       
|From affiliated companies     | 1,577          | 1,261          
|TOTAL REVENUES                | 468,516        | 344,951        
|                              |                |                
|OPERATING EXPENSES            |                |                
|Cost of natural gas sold      | 371,142        | 251,597        
|Operating and maintenance     | 21,074         | 18,025         
|General and administrative    | 9,613          | 10,886         
|Other taxes                   | 3,608          | 3,186          
|Depreciation and amortization | 11,572         | 11,306         
|Rate-refund obligation        |                |                
|                              |                |                
|TOTAL OPERATING EXPENSES      | 417,009        | 295,000        
|                              |                |                
|OPERATING INCOME              | 51,507         | 49,951         
|                              |                |                
|Interest and other income     | 1,196          | 1,274          
|Interest expense              | (5,470)        | (5,064)        
|                              |                |                
|INCOME BEFORE INCOME TAXES    | 47,233         | 46,161         
|Income taxes                  | 17,869         | 17,449         
|                              |                |                
|NET INCOME                    | $  29,364      | $  28,712      



See notes accompanying the financial statements



#





QUESTAR GAS COMPANY

CONDENSED BALANCE SHEETS



|                                                | March 31,      | December 31,
|----------------------------------------------- | -------------- | ------------
|                                                | 2006           | 2005        
|                                                | (Unaudited)    |             
|                                                | (in thousands)
|ASSETS                                          |                |             
|Current assets                                  |                |             
|Cash and cash equivalents                       |                |             
|Accounts receivable, net                        | $  116,612     | $  77,228   
|Unbilled gas accounts receivable                | 43,122         | 42,570      
|Accounts receivable from affiliated companies   | 3,372          | 4,152       
|Federal income taxes recoverable                |                |             
|Inventories, at lower of average cost or market |                |             
|Gas stored underground                          | 22,987         | 12,074      
|Materials and supplies                          | 7,019          | 4,550       
|Prepaid expenses and other                      | 1,897          | 2,150       
|Purchased-gas adjustments                       | 5,734          | 14,766      
|Total current assets                            | 200,743        | 157,490     
|Property, plant and equipment                   | 1,398,032      | 1,343,636   
|Less accumulated depreciation and amortization  | 626,800        | 595,451     
|Net property, plant and equipment               | 771,232        | 748,185     
|Goodwill and other noncurrent assets            | 12,008         | 12,134      
|Regulatory assets                               | 23,545         | 22,647      
|                                                | $1,007,528     | $ 940,456   
|                                                |                |             
|LIABILITIES AND SHAREHOLDERS EQUITY            |                |             
|Current liabilities                             |                |             
|Checks in excess of cash balances               | $   4,449      | $       402 
|Notes payable to Questar                        | 21,200         | 55,900      
|Accounts payable and accrued expenses           | 117,731        | 83,986      
|Accounts payable to affiliated companies        | 29,485         | 23,548      
|Customer-credit balances                        | 5,237          | 7,949       
|Rate-refund obligation                          |                | 9,187       
|Deferred income taxes - current                 | 1,159          | 12,693      
|Total current liabilities                       | 179,261        | 193,665     
|Long-term debt                                  | 323,000        | 273,000     
|Deferred income taxes                           | 116,829        | 107,141     
|Other long-term liabilities                     | 47,045         | 36,087      
|                                                |                |             
|Common shareholders equity                     |                |             
|Common stock                                    | 22,974         | 22,974      
|Additional paid-in capital                      | 115,583        | 115,255     
|Retained earnings                               | 202,836        | 192,334     
|Total common shareholders equity               | 341,393        | 330,563     
|                                                |                |             
|                                                | $1,007,528     | $ 940,456   



See notes accompanying the financial statements



#





QUESTAR GAS COMPANY

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                            | 3 Months Ended
|------------------------------------------- | --------------
|                                            | March 31,     
|                                            | 2006          
|                                            | (in thousands)
|OPERATING ACTIVITIES                        |               
|Net income                                  | $29,364       
|Adjustments to reconcile net income to net  |               
|cash provided from operating activities:    |               
|Depreciation and amortization               | 12,324        
|Deferred income taxes                       | (14,160)      
|Share-based compensation                    | 328           
|Net (gain) loss from asset sales            | 231           
|                                            | 28,087        
|Changes in operating assets and liabilities | 49,684        
|NET CASH PROVIDED FROM                      |               
|OPERATING ACTIVITIES                        | 77,771        
|                                            |               
|INVESTING ACTIVITIES                        |               
|Capital expenditures                        | (23,214)      
|Proceeds from disposition of assets         | 613           
|NET CASH USED IN INVESTING ACTIVITIES       | (22,601)      
|                                            |               
|FINANCING ACTIVITIES                        |               
|Checks in excess of cash balance            | 4,449         
|Change in notes payable to Questar          | (56,200)      
|Dividends paid                              | (6,625)       
|NET CASH USED IN FINANCING ACTIVITIES       | (58,376)      
|                                            |               
|Change in cash and cash equivalents         | (3,206)       
|Beginning cash and cash equivalents         | 3,206         
|Ending cash and cash equivalents            | $          -  
|                                            |               



See notes accompanying the financial statements



#





QUESTAR GAS COMPANY

NOTES ACCOMPANYING THE FINANCIAL STATEMENTS

(Unaudited)



Note 1  Basis of Presentation of Interim Financial Statements



The accompanying interim financial statements of Questar Gas have not been audited by an independent registered public accounting firm with the exception of the condensed balance sheet at December 31, 2005, which was derived from audited financial statements at that date. The unaudited financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the SECs instructions for Form 10-Q. The interim financial statements reflect all normal, recurring adjustments and accruals that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods presented. The preparation of financial statements and notes in conformity with GAAP requires that management make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities. Actual results could differ from estimates. Certain reclassifications were made to the 2005 financial statements to conform with the 2006 presentation.



The results of operations for the three-and twelve-month periods ended March 31, 2006, are not necessarily indicative of the results that may be expected for the year ending December 31, 2006, due to a variety of factors listed in the Forward-Looking Statements section of this report. Interim financial statements do not include all of the information and notes required by GAAP for audited annual financial statements. For further information please refer to the financial statements and notes included in the Companys Annual Report on Form 10-K for the year ended December 31, 2005.



Note 2  Share-Based Compensation



Questar issues stock options and restricted shares to certain officers, employees and non-employee directors under its Long Term Stock Incentive Plan (LTSIP). Questar has granted and continues to grant share-based compensation to certain Questar Gas employees. Prior to January 1, 2006, Questar and the Company accounted for share-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion (APBO) 25 Accounting for Stock Issued to Employees and related interpretations. No compensation cost was recorded for stock options because the exercise price equaled the market price on the date of grant. The granting of restricted shares results in recognition of compensation cost. Restricted shares are valued at the grant-date market price and amortized to expense over the vesting period.



Questar and the Company implemented SFAS 123R Share-Based Payment, effective January 1, 2006 and chose the modified prospective phase-in method of accounting by SFAS 123R. The modified prospective phase-in method requires recognition of compensation costs for all share-based payments granted, modified or settled after January 1, 2006, as well as for any awards that were granted prior to the implementation date for which the required service has not yet been performed. As a result of adopting SFAS 123R, the Companys income before income taxes for the three months ended March 31, 2006, was approximately less than $0.1 million lower than if the Company had continued to account for share-based compensation under APBO 25. The pro forma share-based compensation expense impact for the first quarter of 2005 was $0.1 million.



Transactions involving stock options granted to employees of Questar Gas under the LTSIP are summarized below:

|                           | Outstanding
Options | Price Range     | Weighted-Average
Price
|-------------------------- | ------------------- | --------------- | ----------------------
|                           |                     |                 |                       
|Balance at January 1, 2006 | 657,646             | $15.00  $28.01 | $25.00                
|Exercised                  | (46,748)            | 15.00    28.01 | 25.72                 
|Balance at March 31, 2006  | 610,890             | $15.00  $28.01 | $24.95                



There were no changes in the number of unvested stock options held by employees of Questar Gas in the first quarter of 2006.



|Options Outstanding      | Options Exercisable                  | Unvested Options                        
|------------------------ | ------------------------------------ | ----------------------------------------
|Range of exercise
prices | Number
outstanding at March 31,
2006 | Weighted-average remaining term in years
|                         |                                      |                                         
|$15.00  $17.00          | 63,550                               | 3.5                                     
|19.13    22.95          | 155,593                              | 5.0                                     
|27.11    28.01          | 391,755                              | 6.2                                     
|                         | 610,898                              | 5.6                                     



Restricted shares generally vest in three to five years. The weighted average remaining vesting term of unvested restricted shares at March 31, 2006 was three years. Transactions involving restricted shares held by employees of Questar Gas are summarized below:



|                           |         |                 | Weighted Average
|-------------------------- | ------- | --------------- | ----------------
|                           | Shares  | Price Range     | Price           
|                           |         |                 |                 
|Balance at January 1, 2006 | 21,700  | $34.90  $51.00 | $42.84          
|Granted                    | 9,350   | 73.50           | 73.50           
|Distributed                | (3,671) | 34.90           | 34.90           
|Balance at March 31, 2006  | 27,379  | $34.90  $73.50 | $54.37          



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Summary



Questar Gas net income in the first quarter of 2006 was 2% higher and in the 12 months ended March 31, 2006 was 8% higher than the year earlier periods. The 2006 results included the settlement of a long-standing regulatory dispute with the State of Utah.



Results of Operations



Following is a summary of Questar Gas financial and operating results for the first quarter and trailing 12 months ended March 31, 2006 compared with the same periods of 2005:



|                                        | 3 Months Ended | 12 Months Ended
|--------------------------------------- | -------------- | ---------------
|                                        | March 31,      | March 31,      
|                                        | 2006           | 2005           
|                                        | (in thousands)
|OPERATING INCOME                        |                |                
|Revenues                                |                |                
|Residential and commercial sales        | $   441,493    | $   322,046    
|Industrial sales                        | 9,640          | 10,407         
|Transportation for industrial customers | 1,611          | 1,607          
|Other                                   | 15,772         | 10,891         
|Total revenues                          | 468,516        | 344,951        
|Cost of natural gas sold                | 371,142        | 251,597        
|Margin                                  | 97,374         | 93,354         
|Operating expenses                      |                |                
|Operating and maintenance               | 21,074         | 18,025         
|General and administrative              | 9,613          | 10,886         
|Other taxes                             | 3,608          | 3,186          
|Depreciation and amortization           | 11,572         | 11,306         
|Rate-refund obligation                  |                |                
|Total operating expenses                | 45,867         | 43,403         
|Operating income                        | $51,507        | $49,951        
|                                        |                |                
|OPERATING STATISTICS                    |                |                
|Natural gas volumes (in Mdth)           |                |                
|Residential and commercial sales        | 42,265         | 39,919         
|Industrial sales                        | 1,151          | 1,703          
|Transportation for industrial customers | 8,485          | 8,655          
|Total deliveries                        | 51,901         | 50,277         



|Natural gas revenue (per dth)           |              |              |             |            
|--------------------------------------- | ------------ | ------------ | ----------- | -----------
|Residential and commercial sales        | $     10.45  | $       8.07 | $     10.01 | $      7.89
|Industrial sales                        | 8.37         | 6.11         | 7.67        | 5.71       
|Transportation for industrial customers | $       0.19 | $       0.19 | $     0.19  | $      0.18
|Heating degree days                     |              |              |             |            
|warmer than normal                      | 2%           | 5%           | 2%          | 5%         
|Average temperature adjusted usage      |              |              |             |            
|per customer (dth)                      | 48.9         | 49.9         | 112.7       | 115.3      
|Customers at March 31,                  | 834,252      | 800,523      |             |            



Questar Gas net income was $29.4 million in the first quarter of 2006 compared with $28.7 million in the first quarter of 2005 and $36.6 million in the trailing 12 months of 2006 compared with $33.9 million with the 2005 period. The 2006 periods benefited from settlement of a long-standing regulatory dispute with the State of Utah. Excluding the settlement, Questar Gas net income was about flat with the first quarter of 2005. Total margin from gas sales increased 4% in the first quarter of 2006 and 7% in the 12 months ended March 31, 2006, due to a 4.2% growth in the number of customers offset by a 2% decrease in temperature adjusted usage per customer.



Margin Analysis

Questar Gas margin (revenues less gas costs) increased $4.0 million in the first quarter and $16.3 million in the 12 months ended March 31, 2006 compared to the same periods of 2005. Following is a summary of major changes in Questar Gas margin:



|                                                           | 3 Months Ended
March 31, 2006
Compared with 2005 | 12 Months Ended
March 31,2006
Compared with 2005
|---------------------------------------------------------- | ------------------------------------------------ | ------------------------------------------------
|                                                           | (in thousands)                                  
|                                                           |                                                  |                                                 
|                                                           |                                                  |                                                 
|New customers                                              | $  3,134                                         | $  7,222                                        
|Decreased usage per customer                               | (1,585)                                          | (3,963)                                         
|Gas process revenues
collected from customers              | 1,417                                            | 4,198                                           
|Interest on past-due receivables                           | 290                                              | 1,052                                           
|Recovery of bad debt costs                                 | 1,439                                            | 3,276                                           
|Other  includes customers shifting between
rate schedules | (675)                                            | 4,476                                           
|Increase                                                   | $ 4,020                                          | $16,261                                         



Residential and commercial sales volumes increased 6% in the first quarter of 2006 over the first quarter of 2005 and increased 8% in the trailing 12 months ended March 31, 2006 as a result of additional customers. These increases were partially offset by decreased usage per customer. At March 31, 2006, Questar Gas was serving 834,252 customers, a 4.2% increase over the prior year. Housing construction in Utah and Wyoming remained strong, driven by population growth. Usage per customer, adjusted for normal temperatures, was down 2% in the in the 2006 periods compared with the 2005 periods. Over the long-term, usage per customer has been decreasing due to more efficient appliances and homes and customer response to higher prices.



Weather, as measured in degree days, was 2% warmer than normal in the 2006 periods compared with 5% warmer than normal in the 2005 periods. A weather-normalization adjustment on customer bills generally offsets financial impacts of moderate temperature variations.



Industrial deliveries (including sales and transportation) declined 7% and 11% in the first quarter and 12 months ended March 31, 2006 compared with the same periods in 2005 primarily driven by lower power-generation requirements in the current period.



As discussed below, Questar Gas received rate coverage for gas processing costs of $1.4 million and $4.2 million in the first quarter and trailing 12 months of 2006, respectively.



The increase in bad-debt costs as discussed below has been partially offset with recovery of the gas-cost portion of bad debt costs through the gas balance account. This increased the margin by $1.4 million and $3.3 million in the first quarter and trailing 12 months of 2006, respectively.



Expenses

Cost of natural gas sold increased 48% in the first quarter of 2006 and 47% in the 12 months ended March 31, 2006 compared with the 2005 periods due primarily to increased gas purchase cost per dth. 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, 2006, Questar Gas had a $5.7 million balance in the purchased-gas adjustment account representing gas costs incurred but not yet recovered from customers. Rates in Utah effective in April 2006 were 26% higher than a year earlier.



Operating, maintenance, general and administrative expenses increased $1.8 million or 6% in the first quarter of 2006 and increased $9.6 million or 9% in the 12 months ended March 31, 2006 compared with 2005. Increased bad debt costs accounted for $1.5 million of the increase in the first quarter and $3.6 million in the 12 months ended March 31, 2006. As noted earlier, the gas-cost portion of bad debts is recovered through the gas balance account.



Depreciation expense increased 2% in the first quarter and 7% in the trailing 12 months of 2006 compared with the 2005 periods due to plant additions from customer growth.



Gas processing dispute

On August 1, 2003, the Utah Supreme Court issued an order reversing an August 2000 decision made by the PSCU concerning certain natural gas processing costs incurred by Questar Gas to manage the heat content of its gas supply. As a result of the courts order, Questar Gas recorded a $29 million liability for a potential refund to gas distribution customers. This liability included revenue received for processing costs and interest from June 1999 through September 2004. On August 30, 2004, the PSCU ruled that Questar Gas failed in 1999 to prove that its decision to contract for gas processing with an affiliate was prudent. Questar Gas reduced its rates on September 1, 2004, to eliminate the collection of gas processing costs and on October 1, 2004, began refunding previously collected costs, plus interest, over a 12-month period.



In response to a Questar Gas petition, the PSCU clarified that its order did not preclude recovery of ongoing and certain past processing costs. Questar Gas requested ongoing rate coverage for gas processing costs in its pass-through filings. On January 31, 2005, Questar Gas filed a rate request with the PSCU to recover $5.7 million per year of gas processing costs through its gas-balance account. The $5.7 million is Utahs share of the estimated $6 million annual cost of operating the gas processing plant. The Wyoming share has been recovered in rates.



In October 2005, Questar Gas, the Utah Division of Public Utilities and the Committee of Consumer Services submitted a stipulation to the PSCU to resolve issues related to the recovery of gas processing costs. The PSCU held a hearing on October 20, 2005, and issued an order on January 6, 2006, approving the stipulation beginning on February 1, 2005. The stipulation provides for the recovery of 90% of the non fuel cost of service for processing and 100% of the fuel costs up to 360 Mdth per year. Half of the third-party processing revenues are shared with customers after the first $0.4 million. In the fourth quarter of 2005 Questar Gas reduced expenses for recovery of gas costs by $4.9 million for the period from February 1, 2005 to December 31, 2005. A request to the PSCU for rehearing of this issue was denied. The individuals who filed this request have appealed the issue to the Utah Supreme Court.



Rate Matters

The PSCU has scheduled hearings in May and June, 2006 to consider Questar Gas proposed Conservation Enabling Tariff (CET). If the PSCU approves the CET as proposed, Questar Gas revenues would no longer be sensitive to changes in average temperature-adjusted usage per customer. In return for the adoption of the CET, Questar Gas would promote gas-use conservation. Questar Gas rates would also be adjusted to reflect lower depreciation rates, rate coverage for pipeline integrity costs, an increased level of long-term debt in its capital structure, and possibly other changes.



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 (the Exchange Act)) as of the end of the period covered by the report (the Evaluation Date). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Companys disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company, 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.

Since the Evaluation Date, there have not been any changes in the Companys internal controls or other factors during the most recent fiscal quarter that could materially affect such controls.



#





PART II.  OTHER INFORMATION



Item 6.  Exhibits



a.

The following exhibits are filed as part of this report:



Exhibit No.

Exhibit





31.1.

Certification signed by Alan K. Allred, Questar Gas Companys President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2.

Certification signed by S. E. Parks, Questar Gas Companys Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32.

Certification signed by Alan K. Allred and S. E. Parks, Questar Gas Companys President and Chief Executive Officer and Vice President and Chief Financial Officer, respectively, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





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 GAS COMPANY

(Registrant)





May 11, 2006

/s/Alan K. Allred



Date

Alan K. Allred

President and Chief Executive Officer







May 11, 2006

/s/S/ E. Parks



Date

S. E. Parks

Vice President and Chief Financial Officer







Exhibits List



Exhibit No.

Exhibit



31.1.

Certification signed by Alan K. Allred, Questar Gas Companys President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2.

Certification signed by S. E. Parks, Questar Gas Companys Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32.

Certification signed by Alan K. Allred and S. E. Parks, Questar Gas Companys President and Chief Executive Officer and Vice President and Chief Financial Officer, respectively, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



Exhibit 31.1.



CERTIFICATION



I, A. K. Allred, certify that:



1.

I have reviewed this quarterly report of Questar Gas Company on Form 10-Q for the period ending March 31, 2006;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and we have:



a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b)

evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



c)

disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.



5.

The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and



b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.



May 11, 2006

/s/A. K. Allred



Date

A. K. Allred,

President and Chief Executive Officer

Exhibit 31.2.



CERTIFICATION





I, S. E. Parks, certify that:



1.

I have reviewed this quarterly report of Questar Gas Company on Form 10-Q for the period ending March 31, 2006;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and we have:



a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b)

evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



c)

disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.



5.

The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and



b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.



May 11, 2006

/s/S. E. Parks



Date

S. E. Parks

Vice President

and Chief Financial Officer

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Exhibit No. 32.



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002





In connection with the Quarterly Report of Questar Gas Company (the Company) on Form 10-Q for the period ending March 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the Report), Alan K. Allred, President and Chief Executive Officer of the Company, and S. E. Parks, Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:



(1)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.









QUESTAR GAS COMPANY







May 11, 2006

/s/Alan K. Allred



Date

Alan K. Allred

President and Chief Executive Officer







May 11, 2006

/s/S. E. Parks



Date

S. E. Parks

Vice President and Chief Financial Officer











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