SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549

                               FORM 10-K

(Mark One) 
 [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  
      EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 
      OR

 [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
      SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM 
      _____ TO _____

                       Commission File No. 1-935
                     MOUNTAIN FUEL SUPPLY COMPANY
        (Exact name of registrant as specified in its charter)

      State of Utah                                        87-0155877
(State or other jurisdiction of                     (I.R.S. Employer 
 incorporation or organization)                   Identification No.)

180 East First South, P.O. Box 45360, Salt Lake City, Utah  84145-360
(Address of principal executive offices)                   (Zip code)

Registrant's telephone number, including area code:    (801) 534-5555

      SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                 None
      SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                 None
     SECURITIES REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933:
                 Notes:  Medium Term Notes, 7.19% to 8.43%,
                        due 2007 to 2024

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        
State the aggregate market value of the voting stock held by 
nonaffiliates of the registrant as of March 22, 1996:  $0.
Indicate the number of shares outstanding of each of the registrant's 
classes of common stock, as of March 22, 1996:  9,189,626 shares of 
Common Stock, $2.50 par value.  (All shares are owned by Questar 
Corporation.)
<PAGE>

                            TABLE OF CONTENTS


Heading                                                             Page

                                 PART I

Items 1.
and 2.     BUSINESS AND PROPERTIES....................................  
              General.................................................  
              Gas Distribution........................................  
              Gas Supply..............................................  
              Competition, Growth and Unbundling......................  
              Regulation and Deregulation.............................  
              Relationships with Affiliates...........................  
              Employees.................................................
              Environmental Matters.....................................
              Research and Development..................................
              
Item 3.    LEGAL PROCEEDINGS............................................

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF
           SECURITY HOLDERS.............................................

                                 PART II

Item 5.    MARKET FOR REGISTRANT'S EQUITY
           AND RELATED STOCKHOLDER MATTERS..............................

Item 6.    SELECTED FINANCIAL DATA......................................

Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF
           OPERATION....................................................

Item 8.    FINANCIAL STATEMENTS AND
           SUPPLEMENTARY DATA...........................................

Item 9.    CHANGES IN AND DISAGREEMENTS WITH 
           ACCOUNTANTS ON ACCOUNTING AND 
           FINANCIAL DISCLOSURE.........................................

                                PART III

Item 10.   DIRECTORS AND EXECUTIVE OFFICERS
           OF THE REGISTRANT............................................

Item 11.   EXECUTIVE COMPENSATION.......................................

Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
           OWNERS AND MANAGEMENT........................................

Item 13.   CERTAIN RELATIONSHIPS AND RELATED
           TRANSACTIONS.................................................

                                 PART IV

Item 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
           AND REPORTS ON FORM 8-K......................................

SIGNATURES
<PAGE>
                                FORM 10-K
                           ANNUAL REPORT, 1995
                                 PART I
ITEMS 1. and 2.  BUSINESS AND PROPERTIES

General

      Mountain Fuel Supply Company (Mountain Fuel or the Company) is a 
wholly owned subsidiary of Questar Corporation (Questar), with 
headquarters in Salt Lake City, Utah, that distributes natural gas to 
more than 592,700 sales and transportation customers in Utah, 
southwestern Wyoming, and a small section in southeastern Idaho.  The 
Company, through a predecessor, began distributing natural gas in 1929 
when a pipeline was built to transport natural gas from southwestern 
Wyoming to Salt Lake City, Utah.  Between 1929 and the present time, 
Mountain Fuel gradually expanded the boundaries of its distribution 
system to include over 90 percent of Utah's population and to capture a 
market share of 85-95 percent for furnaces and water heaters.  

      During 1995, Mountain Fuel added over 20,500 customers while it 
consolidated its operations, reduced labor costs, and improved its 
customer service ratings.  Mountain Fuel has traditionally capitalized 
on two competitive advantages, owning natural gas reserves and offering a 
full-range of services to customers at reasonable prices.  The Company 
intends to maintain its competitive position in its traditional service 
area and to take advantage of opportunities created by the unbundling of 
retail distribution activities in other areas.

Gas Distribution

      As of December 31, 1995, Mountain Fuel was serving 592,738 
residential, commercial, and industrial customers, a 3.6 percent 
increase from the 572,174 customers served as of the end of 1994.  
(Customers are defined in terms of active meters.)  Mountain Fuel 
distributes gas to customers in the major populated area of Utah, 
commonly referred to as the Wasatch Front, in which the Salt Lake 
metropolitan area, Provo, Ogden, and Logan are located.  It also serves 
customers in eastern, central, and southwestern Utah with Price, 
Roosevelt, Fillmore, Richfield, Cedar City, and St. George as the 
primary cities.  Approximately 96 percent of Mountain Fuel's customers 
are in Utah.  The Company also serves the communities of Rock Springs, 
Green River, and Evanston in southwestern Wyoming and the community of 
Preston in southeastern Idaho.  Mountain Fuel has been granted the 
necessary regulatory approvals by the Public Service Commission of Utah 
(PSCU), the Public Service Commission of Wyoming (PSCW), and the Public 
Utilities Commission of Idaho (PUCI) to serve these areas.  It also has 
long-term franchises granted by communities and counties within its 
service area.  

      Mountain Fuel added almost 20,600 customers in 1995, almost 
equalling its record growth of 22,000 customers in 1994.  Most of the 
customer growth was attributable to new housing, although the Company 
continues to add customers in its traditional and new service areas that 
are converting to natural gas.  The population of Mountain Fuel's 
service area  in Utah continues to grow faster than the national 
average.  The Company expects to add 19,000-20,000 customers in 1996 and 
to add 15,000-18,000 customers per year for the remainder of the 
century.

      Mountain Fuel's sales to residential and commercial customers are 
seasonal, with a substantial portion of such sales made during the 
heating season.  The typical residential customer in Utah (defined as a 
customer using 115 decatherms (Dth) per year) uses more than 75 percent 
of his total gas requirements in the coldest six months of the year.  
The Company's revenue forecasts used to set rates are based on normal 
temperatures.  Consequently, Mountain Fuel's revenues and resulting net 
income may be affected by temperature patterns that are below or above 
normal.  As measured in degree days, temperatures in the Company's 
service area were 13 percent warmer than normal in 1995, after being 9 
percent warmer than normal in 1994.  (See "Regulation" for a discussion 
of the Company's "weather normalization adjustment" approved during 1995 
that will ameliorate the effect of temperature variations.)

      During 1995, Mountain Fuel sold 73,950 thousand decatherms (Mdth) 
of natural gas to residential and commercial customers, compared to 
74,233 Mdth in 1994.  (A Dth is an amount of heat energy equal to 10 
therms or 1 million Btu.  In the Company's system, each thousand cubic 
feet (Mcf) of gas equals approximately 1.07 Dth.)  The effect of 1995's 
warmer weather was almost completely offset by an expanded customer 
base.  General service sales to residential and commercial customers 
were responsible for 87 percent of Mountain Fuel's total revenues in 
1995.

      Mountain Fuel has designed its distribution system and annual gas 
supply plan to handle design-day demand requirements.  The Company 
periodically updates its design-day demand, which is the volume of gas 
that firm customers could use during extremely cold weather.  For the 
1995-96 heating season, Mountain Fuel is using a design-day demand of 
851,906 Dth.  Mountain Fuel's management believes that the distribution 
system is adequate to meet the demands of its firm customers.

      Mountain Fuel's total industrial deliveries, including both sales 
and transportation,  continued to increase during 1995, expanding from 
60,264 Mdth in 1994 to 68,779 Mdth in 1995.  Sales to industrial users 
increased for the third consecutive year and expanded from 8,882 Mdth in 
1994 to 9,210 Mdth in 1995.  The increase in total industrial deliveries 
reflects Utah's economic prosperity and the strength of several major 
industries as well as the success of the Company's marketing efforts.

      The Company's industrial sales increased as some smaller 
industrial customers continued to move from interruptible transportation 
to interruptible sales service on Mountain Fuel's system.  The majority 
of these interruptible sales service customers pay rates based on the 
Company's weighted average cost of purchased gas, which is periodically 
lower for some customers than the cost of purchasing volumes directly 
from producers and paying transportation rates.   The Company also has 
an interruptible sales rate utilizing a dedicated gas portfolio.  
Mountain Fuel's tariff permits industrial customers to make annual 
elections for interruptible sales or transportation service.  

      Mountain Fuel has been providing transportation service since 
1986.  Under Mountain Fuel's current rate schedules, a typical 
interruptible transportation customer pays block rates ranging from $.12 
to $.02 per Dth.  Mountain Fuel receives demand cost credits from 
Questar Pipeline Company (Questar Pipeline) for transportation customers 
who use the Company's released capacity.  These credits totaled 
approximately $13.0 million for the 12-month period ending August 31, 
1995.

      Mountain Fuel's largest transportation customers, as measured by 
revenue contributions, are the Geneva Steel plant in Orem, Utah; Utah 
Power, an electric utility that uses gas for an electric generating 
plant in Salt Lake City; the Kennecott copper processing operations, 
located in Salt Lake County; and the mineral extraction operations of 
Magnesium Corporation of America in Tooele County west of Salt Lake.  
Some transportation customers significantly reduced their volumes during 
late-1995 when the spot prices for electricity were lower than the cost 
of electricity generated by using natural gas.

      Mountain Fuel owns and operates distribution systems throughout 
its Utah, Wyoming and Idaho service areas and has a total of 18,027 
miles of street mains, service lines, and interconnecting pipelines.  
The Company owns an office building adjacent to its warehouse, garage, 
and operations center in Salt Lake City, Utah.  Mountain Fuel, during 
1995, closed two large operation centers in Sandy and Layton, Utah, and 
two smaller offices in Brigham City and Tooele, Utah.  The Company 
continues to own field offices and service center facilities in other 
parts of its service area.  The mains and lines are constructed pursuant 
to franchise agreements or rights-of-way.  The Company has fee title to 
the properties on which its office building and operation and service 
centers are constructed.  

Gas Supply

      Mountain Fuel owns natural gas producing properties in Wyoming, 
Utah and Colorado that are operated by Wexpro Company (Wexpro) and uses 
the gas produced from these properties for its base-load demand.  The 
Company's investment in these properties is included in its rate base.  
Mountain Fuel, as part of its 1993 general rate case, received 
regulatory approval to reserve "cost-of-service" gas for firm sales 
customers.  During 1995, approximately 64 percent of the Company's total 
system requirement was satisfied with cost-of-service gas produced from 
over 550 wells in more than 40 fields.  (As defined, cost-of-service gas 
includes related royalty gas.)  The volumes produced from such 
properties are transported for Mountain Fuel by Questar Pipeline.  See 
"Relationships with Affiliates."  During 1995, 53,476 Mdth of storage 
gas were delivered from such properties, compared to 44,413 Mdth in 
1994.  Mountain Fuel estimates that it had reserves of 389,440 million 
cubic feet (MMcf) of natural gas as of year-end 1995 compared to 416,312 
MMcf as of year-end 1994.  (These reserve numbers do not include gas 
attributed to royalty interest owners.  Reserve numbers are typically 
reported in volumetric units, such as MMcf, that don't reflect heating 
values.)  The average wellhead cost associated with gas volumes produced 
from Mountain Fuel's cost-of-service reserves was $1.25 per Dth in 1995.

      Some of the wells on Mountain Fuel's producing properties qualify 
for special tax credits, commonly referred to as "Section 29" or "tight 
sands" tax credits.  During 1995, Mountain Fuel, as the party with the 
economic interest in the gas produced from such wells, earned $4.4 
million in Section 29 tax credits.  To qualify for the special tax 
credits, production must flow from wells that meet specified tight sands 
criteria and that commenced drilling prior to January 1, 1993.  Only gas 
volumes produced prior to January 1, 2003, qualify for the special tax 
credit.  

      Mountain Fuel stores up to 12.5 billion cubic feet of gas at Clay 
Basin, a base-load storage facility owned and operated by Questar 
Pipeline.  Company-owned gas is stored at Clay Basin during the summer 
and withdrawn during the heating season.

      The Company has been directly responsible for its gas acquisition 
activities since September 1, 1993.  Mountain Fuel has a balanced and 
diversified portfolio of approximately 45 gas supply contracts with more 
than 35 suppliers located in the Rocky Mountain states of Wyoming, 
Colorado, and Utah.  The Company purchases gas on the spot market and 
under contracts, primarily during the heating season.  Mountain Fuel's 
gas purchase contracts have market-based provisions and are either of 
short-duration or renewable on an annual basis upon agreement of the 
parties.  Mountain Fuel's gas acquisition objective is to obtain 
reliable, diversified sources of gas supply at competitive prices.  In 
the Company's last semi-annual purchased gas cost filing, it estimated 
that its 1996 average wellhead cost of field purchased gas would be 
$1.34 per Dth.  Although Mountain Fuel has contracts with take-or-pay 
provisions, it currently has no material take-or-pay liabilities.

Competition, Growth, and Unbundling

      Mountain Fuel has historically enjoyed a favorable price 
comparison with all energy sources used by residential and commercial 
customers except coal and occasionally fuel oil.  This historic price 
advantage, together with the convenience and handling advantages 
associated with natural gas, has permitted the Company to retain 85-95 
percent of the residential space heating and water heating markets in 
its service area and to distribute more energy, in terms of Btu content, 
than any other energy supplier to residential and commercial markets in 
Utah.  These competitive advantages are responsible for the Company's 
ability to attract residential users of alternate energy sources to gas 
in its service areas in central and southwestern Utah even though such 
users are temporarily required to pay higher rates than their 
counterparts in the more populated areas of Utah.  (The first group of 
these customers will begin paying standard rates in 1997.)

      Mountain Fuel, during 1995, continued to expand the size of its 
customer base in new and existing service areas as Utah's growth rate 
exceeded the national average. The Company plans to extend service to 
Ogden Valley, an area east of Ogden, Utah, during 1996.  The Company is 
also focusing marketing efforts to develop incremental load in existing 
homes and new construction.  Most households in Mountain Fuel's service 
area already use natural gas for space heating and water heating.  The 
Company's market share for other secondary appliances, e.g., ranges and 
dryers, has historically been less than 20 percent, which is 
significantly lower than its 85-95 percent market share for furnaces and 
water heaters.  

      Mountain Fuel has marketing campaigns to convince existing 
customers to take advantage of natural gas's lower prices, favorable 
environmental qualities, and greater efficiency by converting other 
appliances to natural gas.  The Company also has marketing campaigns to 
convince contractors to install the necessary lines for gas fireplaces, 
ranges, and dryers in new homes.  Mountain Fuel estimates that 
approximately 40 percent of the new homes constructed in its service 
area during 1995 included piping for gas fireplaces and approximately 
40-50 percent of such homes had piping for gas dryers or ranges.  As a 
result of its contacts with appliance dealers, the Company receives 
information about the sales of gas appliances and has been pleased with 
the growth of sales for fireplaces, ranges and dryers.

      The Company believes that it must maintain a competitive price 
advantage in order to retain its residential and commercial customers 
and to build incremental load by convincing current customers to convert 
additional secondary appliances to natural gas.  Mountain Fuel's rates 
for general service customers in Utah continue to be lower now than they 
were 10-11 years ago.  Using rates in effect as of January 1, 1996, the 
typical residential customer in Utah would have an annual bill of 
$490.42, compared to an annual bill of $607.07, using rates in effect as 
of January 1, 1985.

      Historically, Mountain Fuel's competitive position has been 
strengthened as a result of owning natural gas producing properties and 
satisfying as much as approximately 64 percent of its system 
requirements with the cost-of-service gas produced from such properties.  
Mountain Fuel has developed an annual gas supply plan that provides for 
a judicious balance between cost-of-service gas and purchased gas.  The 
Company believes that it is important to continue owning gas reserves, 
producing them in a manner that will serve the best short- and long-term 
interests of its customers, and satisfying a significant portion of its 
supply requirements with gas produced from such properties.  Mountain 
Fuel reserves cost-of-service gas for firm sales customers.

      No other distributor markets natural gas sales service in direct 
competition with the Company in its service area, but marketing firms 
are arranging direct purchase contracts between large users in the 
Company's service area and producers.  These customers can take 
advantage of the open-access status of either Questar Pipeline's or Kern 
River's open-access pipelines and can use the existence of the Kern 
River line to obtain discounted transportation charges.  Mountain Fuel's 
sales rates are competitive when compared to other energy sources, but 
are periodically higher than the delivered price of spot-market gas 
volumes transported through its system to large customers.

      The Kern River pipeline, which was built to transport gas from 
southwestern Wyoming to Kern County, California, runs through portions 
of the Company's service area and can provide an alternative delivery 
source to transportation customers.  As of the date of this report, 
Mountain Fuel has lost no industrial load as a result of the Kern River 
line.  The existence of the Kern River pipeline, however, coupled with 
the open-access status of Questar Pipeline's transmission system, have 
changed the nature of market conditions for the Company.  Large 
industrial customers in Utah's Wasatch Front area can acquire taps on 
Kern River's system or can take delivery of gas through a new tap that 
Mountain Fuel obtained in 1994.  This Hunter Park tap in Salt Lake 
County enables the Company to obtain delivery of additional peak-day 
supplies to meet increasing demand.  The existence and location of the 
Kern River pipeline system also made it possible for the Company to 
extend service into new areas in rural Utah and to develop a second 
source of supply for its central and southern Utah system.  

      Within the last several years, the Company has increased its 
activities to encourage the use of natural gas as a fuel in automobiles, 
trucks, buses, and forklifts.  Mountain Fuel has expanded the number of 
its service vehicles using natural gas and has helped convert fleet 
vehicles owned by several state agencies, municipalities, commercial 
businesses and others. There are nearly 1,800 natural gas vehicles in 
the Company's service territory and there are a total of 86 natural gas 
refueling stations within the Company's service area, including 23 that 
are open to the public.  Vehicles using natural gas emit less carbon 
monoxide and other harmful pollutants.  Consequently, the Company 
actively supports federal and state legislation promoting the use of 
natural gas in vehicles.  Mountain Fuel is actively promoting the 
environmental advantages of natural gas, particularly in the portions of 
its service area that do not satisfy the ambient air quality standards 
set by the Environmental Protection Agency.  

      Although Mountain Fuel is a public utility and has no direct 
competition from other distributors of natural gas sales for residential 
and commercial customers, the Company competes with other energy 
sources.  Mountain Fuel continues to monitor its competitive position, 
in terms of commodity costs and efficiency of usage, with other energy 
sources on a short-term and long-term basis.  PacifiCorp (using the name 
Utah Power in Utah) is the primary electric utility in the Company's 
service area.  Although its current rates for residential space heating 
and water heating are more than twice as high on a Btu basis as Mountain 
Fuel's rates for such service, PacifiCorp provides an ongoing source of 
competition.

      Mountain Fuel has adopted innovative and productivity-enhancing 
measures to deal with competitive pressures during the last several 
years.  One measure of improved efficiency is the number of customers 
served per employee.  This ratio has improved from 388 customers per 
employee for 1994 to 423 customers per employee for 1995.  Mountain Fuel 
intends to increase this ratio to greater than 440 customers per 
employee in 1996.

      The significant improvement in this ratio resulted from the 
Company's 1995 consolidation activities.  Mountain Fuel closed four 
offices and reduced the size of six additional offices as it 
consolidated customer service functions such as dispatching, telephone 
service and engineering.  The productivity of service technicians was 
increased as new computer technology and paging equipment eliminated the 
need for them to personally obtain service orders from a central 
location.  

      The Company's workforce decreased from 1,486 employees at year-end 
1994 to 1,373 employees at year-end 1995.  A special retirement program 
was accepted by 109 of the 169 eligible employees and became effective 
April 30, 1995.

      Mountain Fuel and all local distribution companies are faced with 
the challenges and opportunities posed by the unbundling and 
restructuring of traditional utility services.  As a local distribution 
company, Mountain Fuel owns and controls the lines through which gas is 
delivered, is the only supplier of natural gas to residential customers, 
measures the consumption of gas used by its customers, and bills for 
consumption and related services.  The services provided by Mountain 
Fuel are packaged and priced as a "bundle."  Most "unbundling" 
discussions focus on extending to residential and commercial customers 
the same choices provided to industrial customers, i.e., allowing them 
to separate the commodity supply from the transportation service.

      Mountain Fuel has been reviewing the opportunities associated with 
unbundling.  The Company believes that it is well-positioned to succeed 
in a competitive environment.  It has extensive gas-supply and marketing 
experience that may allow the Company to secure and manage gas supplies 
for groups of customers and sophisticated customer information systems 
that may allow it to perform billing and dispatch services for other 
companies.  Mountain Fuel is an efficient natural gas company, a 
statement that is supported by such statistics as an operating and 
maintenance expense of $158 per customer, a customer to employee ratio 
of 423 to 1, and an overall customer satisfaction rating of 91.3 
percent.  In addition, the Company's operating efficiency is buttressed 
by owning the reserves to meet over 60 percent of its current demand.  
Mountain Fuel intends to maintain its competitive position within its 
own service area and to take advantage of opportunities in new markets.

Regulation and Deregulation

      Mountain Fuel and all retail distribution companies have been 
subject to governmental regulation, as a substitute for competition.  
Other regulated industries; airline, trucking, telecommunication, 
financial service and interstate pipeline, have been and are being 
deregulated, and competitive market forces are forcing these industries 
to place more emphasis on operating efficiency.  The substitution of 
competition for regulation will cause Mountain Fuel and other 
distribution companies to review their costs and levels of service.

      The PSCW asked Mountain Fuel and other Wyoming gas utilities to 
review the unbundling of transportation and commodity services.  One 
Wyoming utility, KN Energy, Inc., recently obtained regulatory approval 
to unbundle sales service to a portion of its Wyoming customers.  
Mountain Fuel was involved in the regulatory proceedings involving KN 
Energy and is currently reviewing the advisability of offering unbundled 
services in Wyoming.

      The PSCU recently opened an informal docket to review the 
restructuring of electric utility services, but has not taken a similar 
action with gas utilities.

      As a public utility, Mountain Fuel is subject to the jurisdiction 
of the PSCU and PSCW.  (The Company's customers in Idaho are served 
under the provisions of its Utah tariff.  Pursuant to a special contract 
between the PUCI and the PSCU, Mountain Fuel's Idaho customers are 
regulated by the PSCU.)  Mountain Fuel's natural gas sales and 
transportation services are provided under rate schedules approved by 
the two regulatory commissions.  

      During 1995, Mountain Fuel filed and settled a general rate case 
in Utah.  Under the terms of the settlement, which was the Company's 
first Utah general rate case settlement in more than a decade and which 
became effective September 1, 1995, Mountain Fuel's approved revenue 
deficiency was $3.7 million, compared to the requested revenue 
deficiency of $11.4 million.  Approximately $2 million of the $3.7 
million will be recovered through new premise charges, with the 
remaining $1.7 million recovered through a change in the method for 
crediting revenues collected when the Company "releases" pipeline 
capacity.  The settlement agreement also permitted Mountain Fuel to 
incorporate a weather normalization mechanism on a phased-in basis.  
During the 1995-96 heating season, the mechanism is being used with the 
Company's commercial customers and equal payment residential customers, 
or approximately 40-45 percent of its general service load.  The 
mechanism adjusts the non-gas cost portion of a customer's monthly bill 
as the actual degree days in the billing cycle are warmer or colder than 
normal.  Mountain Fuel can apply the mechanism to the remainder of its 
residential customers as early as the fall of 1996, but these customers 
can choose, on an individual basis, to opt-out of the program.

      The settlement did not specify an authorized return on equity, but 
increased Mountain Fuel's allowed return on rate base from 10.08 percent 
to a range of 10.22 to 10.34 percent.  As a result of the PSCU's use of 
an historic test year, Mountain Fuel was also permitted to retain the 
cost savings associated with reducing its labor force and consolidating 
its operations.  These cost savings amounted to approximately $3.5 
million in 1995 and will amount to about $5 million on an annualized 
basis in 1996.

      Both the PSCU and the PSCW have authorized the Company to use a 
balancing account procedure for changes in the cost of natural gas, 
including supplier non-gas costs, and to reflect changes on a 
semi-annual basis.  Mountain Fuel's latest semi-annual balancing account 
applications become effective January 1, 1996.  The Company's base rates 
for natural gas service in both Utah and Wyoming were decreased as a 
result of an overall decrease in the cost of gas and an adjustment to 
offset the overcollection in its gas balancing account.  Mountain Fuel 
also received regulatory approval in both states to implement a one-time 
credit on its customers' February 1996 gas bills to return a portion of 
the overcollected balance.

      Mountain Fuel's Utah pass-through application was approved on an 
interim basis.  In connection with the application, the Utah Division of 
Public Utilities has raised issues about the continued propriety of 
treating gathering costs as pass-through costs and about the 
reasonableness of such costs.  The Company believes that its gathering 
costs are reasonable.  The Committee of Consumer Services has requested 
additional information concerning a gas imbalance and may decide to 
raise the issue in the proceedings.

      Mountain Fuel does not expect to file a general rate case 
application with the PSCU or PSCW in 1996.  It did not file a general 
rate case application with the PSCW in 1995.  Under a 1993 order issued 
by the PSCW, the Company is allowed to earn a return on rate base of 
10.4 percent.

      Mountain Fuel's responsibility for gas acquisition activities 
involves inherent risks of regulatory scrutiny.  In the past, the 
Company has been involved in regulatory proceedings in which the 
prudence of its gas supply activities has been challenged, but Mountain 
Fuel has successfully defended its activities and has not incurred any 
significant disallowance of gas costs.

      Under Utah law, Mountain Fuel must report its common stock 
dividends to the PSCU and must allow at least 30 days between declaring 
and paying dividends.  The PSCU can investigate any dividend declared by 
the Company to determine if payment of such dividend would impair the 
Company's capital or service obligations.  The PSCW and the PUCI, but 
not the PSCU, have jurisdiction to review the issuance of long-term 
securities by the Company.  

      The Company has significant relationships with its affiliates.  
The PSCU and PSCW have jurisdiction to examine these relationships and 
the costs paid by the Company for services rendered by or goods 
purchased from its affiliates.  A settlement agreement involving 
Mountain Fuel's cost-of-service gas and defining certain contractual 
obligations between Mountain Fuel and Wexpro is monitored by the Utah 
Division of Public Utilities.  
      The PSCU and PSCW have adopted regulations or issued orders that 
affect the Company's business practices in such areas as main 
extensions, credit and collection activities, and termination of service 
standards.

Relationships with Affiliates

      The Company has significant business relationships with affiliated 
companies, particularly Questar Pipeline and Wexpro.  The following 
diagram shows the corporate structure of the Company and its primary 
affiliates:


Questar Corporation
  Questar Energy Services, Inc.
  Universal Resources Corporation
  Entrada Industries Inc.
    Wexpro Company
    Celsius Energy Company
  Mountain Fuel Supply Company
  Questar InfoComm Inc.
  Questar Pipeline Company
    Questar Gas Management Company
  Questar Development Corporation
                                 

      The Company's relationships with its primary affiliates are 
described below.

      Questar Pipeline Company.  Questar Pipeline owns a two-pronged 
transmission system running from southwestern Wyoming into Mountain 
Fuel's Utah service area.  Questar Pipeline's historic function as the 
Company's supplier ended September 1, 1993, when Questar Pipeline's gas 
purchase contracts were transferred to Mountain Fuel and when the 
Company converted its firm capacity entitlements to firm transportation 
service.  Mountain Fuel has reserved about 800,000 Dth per day or 
approximately 79 percent of Questar Pipeline's total transmission 
capacity.

      Mountain Fuel transports both cost-of-service gas and purchased 
gas on Questar Pipeline's transmission system.  (The Company also 
transports gas volumes on the transmission systems owned by Northwest 
Pipeline Company and Colorado Interstate Gas Company.  Mountain Fuel 
purchases "city gate" gas supplies from transportation customers on Kern 
River's system.)  The Company releases its firm transportation capacity, 
pursuant to capacity release procedures adopted by the Federal Energy 
Regulatory Commission (FERC), when it does not need such service for its 
sales customers.  Because Mountain Fuel has sufficient capacity on the 
system to meet peak-demand periods, it has unused capacity for the 
balance of the year.

      During the 12-month period ending August 31, 1995, Mountain Fuel 
released an average of 632,867 Dth per day.  When the released capacity 
is coupled with the Company's average sales volume of 270,337 Dth during 
this same period, Mountain Fuel "used" approximately 72 percent of its 
reserved capacity on Questar Pipeline's system.

      During 1995, Questar Pipeline transported 79,872 Mdth of gas for 
Mountain Fuel, compared to 75,941 Mdth in 1994.  Under Questar 
Pipeline's "straight fixed-variable" rate schedules, Mountain Fuel is 
obligated to pay demand charges for firm capacity, regardless of the 
volumes actually transported.  The Company paid approximately $49.4 
million in demand charges to Questar Pipeline in 1995 for firm 
transportation capacity and "no notice" transportation.  Questar 
Pipeline also credits Mountain Fuel with revenues it receives from 
transportation customers that use the Company's released capacity.  
During the 12-month period ending August 31, 1995, Mountain Fuel 
received $13.0 million in revenue credits from Questar Pipeline.  

      Mountain Fuel purchases storage capacity at Clay Basin, a large 
base-load storage facility operated by Questar Pipeline, and also has 
peaking storage capacity at three additional storage reservoirs owned by 
Questar Pipeline.  The Company paid Questar Pipeline $13.5 million in 
demand charges during 1995 in connection with storage services.

      Prior to March 1, 1996, Questar Pipeline provided the Company with 
gathering services under a gathering agreement that became effective on 
September 1, 1993, when the FERC approved a joint settlement filed by 
the parties.  Questar Pipeline gathered 31,691 Mdth for Mountain Fuel 
during 1995, compared to 32,098 Mdth in 1994.  This agreement was 
transferred to Questar Gas Management as of March 1, 1996.  Under the 
terms of the agreement, Questar Gas Management will gather gas volumes 
produced from cost-of-service properties for the life of such 
properties.  The Company's obligation to use Questar Gas Management to 
gather purchased gas terminates in 1997.

      Wexpro Company.  Wexpro operates certain properties owned by 
Mountain Fuel.  Under the terms of a settlement agreement, which was 
approved by the PSCU and PSCW and upheld by the Utah Supreme Court, 
Mountain Fuel owns gas produced from specified properties that were 
productive as of August 1, 1981 (the effective date of the settlement 
agreement).  Such gas is reflected in rates at cost-of-service prices 
based on rates of return established by the settlement agreement.  In 
addition, Wexpro conducts development gas drilling for Mountain Fuel on 
specified properties and is reimbursed for its costs plus a current rate 
of return of 22.03 percent (adjusted annually using a specified formula) 
on its net investment in such properties, adjusted for working capital 
and deferred taxes, if the wells are successful.  Under the terms of the 
settlement agreement, the costs of unsuccessful wells are borne by 
Wexpro.  The settlement agreement also permits Mountain Fuel to share 
income from hydrocarbon liquids produced from certain properties 
operated by Wexpro after Wexpro recovers its expenses and a specified 
rate of return.  The income received by Mountain Fuel from Wexpro is 
used to reduce natural gas costs to its customers.

      Wexpro only conducts drilling activities in response to the needs 
of Mountain Fuel or the demands from other working interest owners.  The 
significant decrease in Rocky Mountain wellhead prices resulted in the 
near cessation of Wexpro's drilling activities.  Only 9,760 MMcf in 
proved development reserves were added to Mountain Fuel's net reserves 
in 1995, compared to 36,632 MMcf in production.

      Other Affiliates.  Other significant affiliates of Mountain Fuel 
include Questar  InfoComm, Inc., Questar Development Corporation 
(Questar Development), Celsius Energy Company (Celsius), and Universal 
Resources Corporation (Universal Resources).  Questar InfoComm provides 
data processing and telecommunication services for the Company and other 
affiliates.  It owns and operates a network of microwave facilities, all 
of which are located in Mountain Fuel's service area or near Questar 
Pipeline's transmission system.  Services are priced to recover 
operating expenses and a return on investment.  Questar InfoComm 
personnel have assisted Mountain Fuel with the development of new 
customer information systems that facilitated the Company's 
consolidation of customer service activities.

      Mountain Fuel leases some space in an office building located in 
Salt Lake City, that is owned by Interstate Land Corporation (a 
subsidiary of Questar Development).  Mountain Fuel expects to continue 
leasing space in this building, which is currently being enlarged and 
remodeled.

      Celsius conducts oil and gas exploration and related development 
activities in the Rocky Mountain area.  Universal Resources conducts oil 
and gas exploration and related development activities primarily in the 
Midcontinent region outside the Company's service area.  It also markets 
gas volumes, including the majority of volumes produced by Celsius, and 
is responsible for some of the contracts providing gas to the Company's 
transportation customers.  

      Entrada Industries, Inc. (Entrada), is a wholly owned subsidiary 
of Questar and is the direct parent of Celsius and Wexpro.  While 
Mountain Fuel and Entrada are subject to common control by Questar, 
there is no direct control of Entrada by the Company or of the Company 
by Entrada.  See "Legal Proceedings." 

      Questar, Mountain Fuel's parent, provides certain administrative 
services, e.g., personnel, legal, public relations, financial, tax, and 
audit, to the Company and other members of the consolidated group.  
Questar also sponsors the qualified and welfare plans in which the 
Company's employees participate.  Mountain Fuel is responsible for a 
proportionate share of the costs associated with these services and 
benefit plans.

Employees

      As of December 31, 1995, the Company had 1,373 employees, compared 
to 1,486 at year-end 1994.  A special early retirement offer was 
accepted by 109 employees (of 169 eligible employees) in the spring of 
1995.  None of these employees was replaced.  Mountain Fuel's employees 
are nonunion employees who are not represented under collective 
bargaining agreements.  Mountain Fuel participates in Questar's 
comprehensive employee benefit plans and pays the share of costs 
attributable to its employees covered by such plans.  Employee relations 
are generally deemed to be satisfactory.

Environmental Matters  

      The Company is subject to the National Environmental Policy Act 
and other federal and state legislation regulating the environmental 
aspects of its operations.  Although  Mountain Fuel does not believe 
that environmental protection laws and regulations will have any 
material effect on its competitive position, it does believe that such 
provisions have added and will continue to add to the Company's 
expenditures and annual maintenance and operating expenses.  See "Legal 
Proceedings" for a discussion of litigation concerning liability for 
contamination on property owned by a former subsidiary of the Company.

      Mountain Fuel has an obligation to treat waste water and monitor 
the effectiveness of an underground slurry wall that was constructed in 
1988 at its operations center in Salt Lake City, Utah.  The slurry wall 
was built to contain contaminants from an abandoned coal gasification 
plant that operated on the site from 1908 to 1929.

      As previously noted, Mountain Fuel is emphasizing the 
environmental advantages of natural gas.  Several industrial customers 
have converted to natural gas or plan to increase their use of natural 
gas in order to lower emissions.  The Company's marketing campaigns 
feature the clean-burning characteristics of natural gas fireplaces.  
Natural gas vehicles are also being encouraged on the basis of 
environmental considerations.

Research and Development  

      The Company conducts studies of gas conversion equipment, gas 
piping, and engines using natural gas and has funded demonstration 
projects using such equipment.  The total dollar amount spent by the 
Company on research activities is not material.  

ITEM 3.  LEGAL PROCEEDINGS

      There are various legal and regulatory proceedings pending that 
involve the Company and its affiliates.  While it is not feasible to 
predict or determine the outcome of these proceedings, the Company's 
management believes that the outcome will not have a material adverse 
effect on the Company's financial position.

      Mountain Fuel, as a result of acquiring Questar Pipeline's gas 
purchase contracts, is responsible for any judgment rendered against 
Questar Pipeline in a lawsuit that was tried before a jury in 1994.  The 
jury awarded an independent producer compensatory damages of 
approximately $6,100,000 and punitive damages of $200,000 on his claims 
involving take-or-pay, tax reimbursement, contract breach, and tortious 
interference with a contract.  A judgment has not been entered because 
the presiding judge has still not issued a decision concerning the 
competing forms of judgment entered by the opposing parties.  The 
producer's counterclaims originally exceeded $57,000,000, but were 
reduced to less than $10,000,000, when the presiding judge dismissed 
with prejudice some of the claims prior to the jury trial.  Under 
existing PSCU rulings, any payments resulting from this judgment will be 
included in Mountain Fuel's gas balancing account and recovered in its 
rates for natural gas sales service.

      As a result of its former ownership of Entrada and Wasatch 
Chemical Company, Mountain Fuel has been named as a "potentially 
responsible party" for contaminants located on property owned by Entrada 
in Salt Lake City, Utah.  Questar and Entrada have also been named as 
potentially responsible parties.  (Entrada and the Company are both 
direct, wholly owned subsidiaries of Questar; prior to October 2, 1984, 
Mountain Fuel was the parent of Entrada.)  The property, known as the 
Wasatch Chemical property, was the location of chemical operations 
conducted by Entrada's Wasatch Chemical division, which ceased operation 
in 1978.  A portion of the property is included on the national 
priorities list, commonly known as the "Superfund" list.

      In September of 1992, a consent order governing clean-up 
activities was formally entered by the federal district court judge 
presiding over the underlying litigation involving  the property.  This 
consent order was agreed to by Questar, Entrada, the Company, the Utah 
Department of Health and the Environmental Protection Agency (the EPA).

      During 1995, Entrada completed soil remediation activities on the 
property, using an in situ vitrification procedure.  It is continuing to 
conduct ground water remediation activities.

      Entrada has accounted for all costs spent on the environmental 
claims and has also accounted for all settlement proceeds, accruals and 
insurance claims.  It has received cash settlements, which together with 
accruals and insurance receivables, should be sufficient for future 
clean-up costs.  Mountain Fuel has consistently maintained that Entrada 
should be responsible for any liability imposed on the Questar group as 
a result of actions involving Wasatch Chemical.  The Company has not 
paid any and does not expect to pay any costs associated with the 
clean-up activities for the property.

      Mountain Fuel recently settled a lawsuit in which Utah Power 
claimed that the Company was responsible for contamination located on 
property that is next to Mountain Fuel's operations center in Salt Lake 
City.  The operations center was the site of an abandoned coal 
gasification plant.  

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      During the fourth quarter of 1995, Mountain Fuel did not submit 
any matters to a vote of security holders.


                                 Part II

ITEM 5.  MARKET FOR REGISTRANT'S EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company's outstanding shares of common stock, $2.50 par value, 
are owned by Questar.  Information concerning the dividends paid on such 
stock and the ability to pay dividends is reported in the Statements of 
Common Shareholder's Equity and the Notes to Financial Statements 
included in Item 8.
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                    Year Ended December 31,
                                        1995        1994        1993        1992        1991
                                    (In Thousands)
<S>                                  <C>         <C>         <C>         <C>         <C>
Revenues                               $362,769    $378,260    $402,391    $373,047    $416,759
Operating expenses
  Natural gas purchases                 190,606     210,507     230,139     218,123     253,111
  Other expenses                        128,441     128,432     125,743     110,527     108,761
    Total operating expenses            319,047     338,939     355,882     328,650     361,872
    Operating income                    $43,722     $39,321     $46,509     $44,397     $54,887

Net income                              $23,668     $23,352     $25,069     $23,395     $25,074

Cash dividends paid on common stock      20,000      19,500      18,000      18,000      19,000

Total assets                            600,261     590,275     581,027     490,614     452,139

Capital expenditures                     51,413      53,816      50,658      55,721      36,984

Capitalization
  Long-term debt                       $175,000    $175,000    $158,000    $150,126    $148,953
  Redeemable cumulative preferred
    stock                                 4,957       6,324       7,525       8,726       9,955
  Common shareholder's equity           208,645     205,461     182,200     175,826     171,231
                                       $388,602    $386,785    $347,725    $334,678    $330,139
</TABLE>
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Following is a summary of revenues and operating information
for the Company's operations:
<TABLE>
<CAPTION>
                                           Year Ended December 31,
                                        1995        1994        1993
                                           (Dollars In Thousands)
<S>                                  <C>         <C>         <C>
OPERATING INCOME
Revenues
  Residential and commercial sales     $315,458    $329,576    $360,210
  Industrial sales                       22,479      24,395      21,678
  Industrial transportation               6,127       5,665       5,898
  Other                                  18,705      18,624      14,605
        Total revenues                  362,769     378,260     402,391

Operating expenses
  Natural gas purchases                 190,606     210,507     230,139
  Operating and maintenance              93,384      94,094      92,486
  Depreciation and amortization          25,469      24,749      23,244
  Other taxes                             9,588       9,589      10,013
        Total expenses                  319,047     338,939     355,882
          Operating income              $43,722     $39,321     $46,509

OPERATING STATISTICS
  Natural gas volumes (in Mdth)
    Residential and commercial sales     73,950      74,233      79,369
    Industrial deliveries
      Sales                               9,210       8,882       6,514
      Transportation                     59,569      51,382      53,105
        Total industrial                 68,779      60,264      59,619
        Total deliveries                142,729     134,497     138,988
  Natural gas revenue (per dth)
    Residential and commercial            $4.27       $4.44       $4.54
    Industrial sales                       2.44        2.75        3.33
    Transportation for industrial
        customers                          0.10        0.11        0.11
Natural gas purchase price (per dth)      $2.16       $2.40       $2.52
Heating degree days (normal 5,801)        5,047       5,290       6,073
   Colder (warmer) than normal             (13%)        (9%)          5%
Number of customers at end of period    592,738     572,174     550,184
</TABLE>

Revenues, net of gas costs, increased $4,410,000 in 1995 when
compared with 1994 after decreasing $4,499,000 in 1994 when
compared with 1993.  The positive influences derived from a
general rate case settlement, a 3.6% increase in the number of
customers, an increase in transportation volumes for
industrial customers and productivity improvement measures
offset the effect of temperatures that were 5% warmer than
were experienced in 1994.

On August 11, 1995, the Public Service Commission of Utah (PSCU)
approved a settlement of Mountain Fuel's general rate case
filed April 13, 1995.  Mountain Fuel received a $3.7 million
increase in revenues. The settlement allowed the Company to
implement a weather normalization adjustment, provided about
$2 million in additional revenues through a new-premises fee
and added about $1.7 million from sharing capacity-release
revenues. The settlement did not specify an authorized return
on equity, but Mountain Fuel's allowed return on rate base
increased from 10.08% to between 10.22% and 10.34%.   A
weather-normalization adjustment applied to about 40% of
Mountain Fuel's weather sensitive volumes for the last quarter
of 1995 and reduced the net income effect caused by
warmer-than-normal temperatures by about $1.3 million.
Mountain Fuel pays for firm-transportation capacity and sells
unused firm-transportation capacity as capacity-release
service.  Under the rate settlement, Mountain Fuel is allowed
to credit 20% of capacity-release revenues, which amounted to
$676,000 in 1995, to earnings.

Natural gas deliveries to residential and commercial customers
were largely unchanged in 1995 when compared with 1994.  Both
years experienced warmer-than-normal temperatures and a near
4% increase in the number of customers.   Sales volumes
dropped 6% in 1994 after increasing 16% in 1993 due to 1994
being 13% warmer than 1993.  The number of customers increased
by 3.6% in 1995, 4.0% in 1994 and 3.4% in 1993.

Gas deliveries to industrial customers increased by 14% in
1995 and 1% in 1994. Mountain Fuel's service area has
experienced strong economic growth for several successive
years.  The Company has benefitted from a higher gas demand
for expanded operations and environmental reasons.

Mountain Fuel closed four regional offices and reduced
functions at six other offices in an effort to consolidate and
restructure operations.  In addition, the Company's offer of
early retirement was accepted by 109 employees effective April
30, 1995.  The cost reductions associated with these changes
averaged $400,000 per month or about $3.2 million for 1995.
The early retirement program did not cause a material increase
in pension expense. Mountain Fuel is depending on its
investment in customer information system technology to
provide increased efficiency in serving customers. Mountain
Fuel's customers satisfaction rating continued to increase
reaching a record 91.3% in 1995.

Starting in 1993, Mountain Fuel began accruing
gas-distribution revenues for gas delivered to residential and
commercial customers but not billed at the end of the
reporting period.  The impact of these accruals on the income
statement has been deferred and is being recognized at the
rate of $2,011,000 per year over a five-year period beginning
in 1994, in accordance with a PSCU rate order.  This rate
order also reduces customer rates by $2,011,000 per year over
the same five-year period.  In addition in 1994, Mountain Fuel
recorded other income of $5,589,000 for a one-time reduction
in gas costs associated with these unbilled revenues.  This
transaction added about $3.5 million to net income in 1994.

Natural gas purchases decreased 4% in 1995 when compared with
1994 primarily due to lower prices for natural gas.  Natural
gas purchases decreased 9% in 1994 when compared with 1993
largely the result of a reduction in volumes sold.

Operating and maintenance expenses decreased 1% in 1995
primarily because of productivity improvement measures
implemented in 1995.  Operating and maintenance expenses were
2% higher in 1994 when compared to 1993 because of the costs
associated with more customers and an expanded service
territory. Depreciation and amortization expense increased 3%
in 1995 and 6% in 1994 as a result of capital expenditures.

The effective income tax rate was 24.6% in 1995, 25.3% in 1994
and 23.5% in 1993 primarily due to  income tax credits
received from production of gas from certain properties. These
credits amounted to $4,376,000 in 1995, $4,670,000 in 1994 and
$5,463,000 in 1993.

Mountain Fuel, as a result of acquiring Questar Pipeline's gas
purchase contracts, is responsible for any judgment rendered
against Questar Pipeline in a lawsuit that was tried before a
jury in 1994.  The jury awarded an independent producer
compensatory damages of approximately $6.1 million and
punitive damages of $200,000 on his claims. The producer's
counterclaims originally exceeded $57 million, but were
reduced to less than $10 million, when the presiding judge
dismissed with prejudice some of the claims prior to the jury
trial. Under existing PSCU rulings, any payments resulting
from this judgment will be included in Mountain Fuel's gas
balancing account an recovered in its rates for natural gas
service.

In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, that becomes effective for the
Company January 1, 1996.  Statement No. 121 requires the
Company to review for impairment, assets that are held and
used whenever events or changes in circumstances indicate that
an asset's carrying value may not be recoverable.  If
impairment is indicated, the Company must reduce the carrying
value of the asset in question. The Company will adopt
Statement No. 121 in 1996 and does not expect a significant
effect to either operating results or financial position.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Net cash provided from operating activities increased 107% in
1995.  Net cash provided from operating activities was
$68,546,000 in 1995, $33,143,000 in 1994 and $37,139,000 in
1993.  The increase in 1995 was largely due to the collection
of accounts receivable and lower gas purchase costs.

Investing Activities

Following is a summary of capital expenditures for 1995 and
1994, and a forecast of 1996 expenditures.
<TABLE>
<CAPTION>
                                        1996
                                     Estimated      1995        1994
                                                (In Thousands)
<S>                                  <C>         <C>         <C>
New-customer service equipment          $27,700     $24,950     $22,343
Distribution system                      11,300       9,981       7,085
Buildings                                 1,500       3,473       7,193
Computer software and hardware            6,600       5,121       5,849
General and other                         7,900       7,888      11,346
                                        $55,000     $51,413     $53,816
</TABLE>

Mountain Fuel's capital spending is primarily in response to a
rapid increase in the number of customers, amounting to 20,564
in 1995, 21,990 in 1994 and 18,075 in 1993 due to population
growth and construction activity in its service area.
Mountain Fuel extended its system by 559 miles of main, feeder
and service lines in 1995.

Mountain Fuel transferred a building with a net book value of
$8,915,000 to an affiliate in the third quarter of 1994.

Financing Activities

The Company funded 1995 capital expenditures and cash
dividends with cash provided from operations and borrowings
from Questar.  Forecasted 1996 capital expenditures of $55
million are expected to be financed with cash provided from
operations and borrowings from Questar.

The Company has a short-term line-of-credit arrangement with a
bank under which it may borrow up to $500,000.  The line has
interest rates generally below the prime interest rate and is
renewable on an annual basis.  No amount was borrowed under
this arrangement at either December 31, 1995 or 1994.  Questar
loans funds to the Company under a short-term borrowing
arrangement. Outstanding short-term notes payable to Questar
totaled $56,100,000 with an interest rate of 6.01% at December
31, 1995 and $53,500,000 with an interest rate of 6.11% at
December 31, 1994.

Mountain Fuel has a capital structure of 45% long-term debt,
1% preferred stock and 54% common equity. Moody's and Standard
and Poor's have rated Mountain Fuel's long-term debt A-1 and A+.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The Company's financial statements are included in Part IV, Item 
14, herein.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE

      Mountain Fuel has not changed its independent auditors or had any 
disagreements with them concerning accounting matters and financial 
statement disclosures within the last 24 months.


                                PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Information concerning the Company's directors and executive 
officers is located in the following chart:

                               Business Experience and Positions Held
     Name          Age             With the Company and Affiliates    

M. E. Benefield    56     Vice President, Gas Supply, May 1992; Vice 
                          President, Planning and Corporate Development, 
                          Questar (March 1989 to May 1992.)

R. D. Cash         53     Director, May 1977; Chairman of the Board, May 
                          1985; Director, President and Chief Executive 
                          Officer, Questar, May 1984; Chairman of the 
                          Board, Questar, May 1985.  Director, Zions 
                          First National Bank and Zions Bancorporation, 
                          Associated Electric and Gas Insurance Services 
                          Limited, and a member of the Board of 
                          Directors of the Federal Reserve Bank (Salt 
                          Lake branch) of San Francisco; Trustee, 
                          Southern Utah University.

Susan Glasmann     48     Vice President, Marketing, February 1994; 
                          General Manager, Marketing, April 1991 to 
                          February 1994; Manager, Corporate 
                          Communications, Questar, October 1989 to April 
                          1991.

Robert E. Kadlec   62     Director, March 1987; Director, Questar, March 
                          1987; President and Chief Executive Officer, 
                          BC Gas Inc. (Vancouver, British Columbia) to 
                          December 1995; founder of Kadlec Holdings 
                          (investment and consulting firm); Director, BC 
                          Gas Inc., Trans Mountain Pipe Line Company 
                          Ltd., British Pacific Properties Ltd., and 
                          International Forest Products Limited, and 
                          Advisory Director, Andersen Consulting.

Dixie L. Leavitt   66     Director, May 1987; Director, Questar, May 
                          1987; founder and Chairman of the Board, 
                          Leavitt Group Agency Association (a group of 
                          approximately 54 separate insurance agencies); 
                          President and Chairman of entities engaged in 
                          dairy, cattle, agriculture, and real estate 
                          operations in Utah and southern Nevada; 
                          Director, Zions First National Bank.

Gary G. Michael    55     Director, February 1994; Director, Questar, 
                          February 1994; Chairman and Chief Executive 
                          Officer, Albertson's; Director, Albertson's 
                          and of the Federal Reserve Bank of San 
                          Francisco. 

S. E. Parks        44     Vice President, Treasurer and Chief Financial 
                          Officer, Mountain Fuel and Questar, February 
                          1996; Treasurer, Questar and Mountain Fuel, 
                          May 1984.

D. N. Rose         51     President and Chief Executive Officer, October 
                          1984; Director, May 1984; Executive Vice 
                          President, Questar, February 1996; Director, 
                          Questar, May 1984; Director, Key Bank of Utah; 
                          Trustee, Westminster College.

G. H. Robinson     45     Vice President and Controller, April 1991; 
                          Vice President, Marketing, March 1985 to April 
                          1991.

S. C. Yeager       48     Vice President, Customer Service, April 1991; 
                          Vice President, Retail Operations, March 1985 
                          to April 1991.

      Except as otherwise indicated, the executive officers and 
directors have held the principal occupations described above for more 
than the past five years.  There are no family relationships among the 
directors and executive officers of the Company.  Directors of the 
Company are elected to serve three-year terms.  Executive officers of 
the Company serve at the pleasure of the Board of Directors.  

ITEM 11.  EXECUTIVE COMPENSATION

      The following Summary Compensation Table lists annual and 
long-term compensation earned by Mr. D. N. Rose, the Company's President 
and Chief Executive Officer, and the other four most highly compensated 
officers during 1993, 1994, and 1995:


                          Summary Compensation Table
<TABLE>
<CAPTION>
                       Annual Compensation         Long-Term Compensation
                           
Name and                                            Restricted                All 
Other                       Base                    Stock                     Other
Principal           Year    Salary($)1   Bonus($)2  Awards($)3  Options(#) 4 Compensation($) 5
<S>                <C>     <C>           <C>       <C>          <C>          <C>                          
D. N. Rose          1995    235,167       27,852    27,808       19,000       29,064
President and Chief 1994    209,500       36,061    36,053       19,000       21,713
Executive Officer   1993    200,417       38,572    38,525       19,000       18,786

R. D. Cash 6        1995    138,597       9,682       9,670      30,000       21,516
Chairman of the     1994    138,337      38,770      38,767      30,000       17,467
Board               1993    128,835      37,406      37,406      30,000       14,946

M. E. Benefield     1995    145,483      11,567      11,533       9,000       10,384
Vice President,     1994    139,500      15,862      15,850       9,000        9,888
Gas Supply          1993    134,050      20,163      17,136       9,000        8,743

G. H. Robinson      1995    140,000      12,081      11,029       9,000        9,882
Vice President and  1994    133,083      15,114      15,084       9,000        9,118
Controller          1993    127,533      16,223      16,223       9,000        8,107

S. C. Yeager        1995    140,000      14,081      11,029       9,000       12,459
Vice President,     1994    133,083      15,114      15,084       9,000        9,118
Customer Service    1993    127,533      16,223      16,223       9,000        8,031
</TABLE>

      1/ Base salary amounts listed for Messrs. Robinson and Yeager for 
1995 include lump-sum merit payouts that were received in lieu of base 
salary increases.

      2/ Amounts listed under this heading are cash payments earned and 
discretionary bonuses awarded under the Annual Management Incentive 
Plans (AMIP) for the Company and Questar (for Mr. Cash).  The amounts 
listed for Mr. Cash are the amounts allocated to Mountain Fuel.

      3/ Amounts under this heading include the value (as of the grant 
date) of any restricted shares of Questar's common stock used in 1994, 
1995 and 1996, in lieu of cash, as partial payment of bonuses earned 
under the Company's AMIP and the Company's allocated portion of the 
value of restricted shares granted to Mr. Cash under Questar's AMIP.  
All shares of restricted stock vest in two equal, annual installments 
occurring on the first business day in February of the first and second 
years following the grant date.  Dividends are paid on the restricted 
shares at the same rate dividends are paid on other shares of Questar's 
common stock.  As of year-end 1995, Mr. Rose had 1,928 shares of 
restricted stock having a market value of $64,558; Mr. Cash had 4,683 
shares worth $156,881; Mr. Benefield had 851 shares worth $28,509; 
Messrs. Robinson and Yeager each had 808 shares worth $27,608.

      4/ Mountain Fuel's executive officers are granted stock options to 
purchase shares of Questar's common stock under Questar's Long-Term 
Stock Incentive Plan.

      5/ Amounts listed under this heading include employer matching and 
nonmatching contributions, matching contributions to the Deferred Share 
Plan, and directors' fees paid by the Company, and, for 1995 only, 
vacation buy-back pay.  The figure opposite Mr. Rose's name for 1995 
include $8,795 in contributions to the Employee Investment Plan, $8,853 
in matching contributions to the Deferred Share Plan, $6,800 in 
director's fees, and $4,616 for unused vacation.  The 1995 figure for 
Mr. Cash includes the Company's allocated portion of contributions to 
the Employee Investment Plan of $3,882, $6,800 in directors' fees paid 
by the Company, and the Company's allocated portion of contributions to 
the Deferred Share Plan of $10,834.  The 1995 figure listed for Mr. 
Benefield includes $8,795 in contributions to the Employee Investment 
Plan and $1,589 in matching contributions to the Deferred Share Plan.  
The 1995 figure for Mr. Robinson includes $8,795 in contributions to the 
Employee Investment Plan and $1,087 in matching contributions to the 
Deferred Share Plan.  The 1995 figure for Mr. Yeager includes $8,795 in 
contributions to the Employee Investment Plan, $1,087 in matching 
contributions to the Deferred Share Plan and $2,577 for unused vacation.

      6/ Mr. Cash also serves as an executive officer of Questar and 
other affiliated companies.  The base salary shown for Mr. Cash is the 
combination of the amount directly paid by the Company and the amount 
allocated to the Company.

      The following table lists information concerning the stock options 
to purchase shares of Questar's common stock that were granted to 
Mountain Fuel's five highest paid officers during 1995 under Questar's 
Long-Term Stock Incentive Plan.  No stock appreciation rights were 
granted during 1995.


                    Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
                             % of Total   
                             Options Granted
                 Options     to Employee in   Exercise or       Expiration    Grant Date
Name             Granted #1/ Last Fiscal Year Base Price ($)    Date          Value ($)2/
<S>              <C>         <C>             <C>               <C>           <C>  
D. N. Rose       19,000          5.0          27.375            2/14/2005     134,710
R. D. Cash       30,000          7.8          27.375            2/14/2005     212,700
M. E. Benefield   9,000          2.3          27.375            2/14/2005      63,810
G. H. Robinson    9,000          2.3          27.375            2/14/2005      63,810
S. C. Yeager      9,000          2.3          27.375            2/14/2005      63,810
</TABLE>

      1/ These stock options vest in four annual, equal installments, 
with the first installment exercisable as of August 14, 1995.  
Participants can use cash or previously-owned shares as consideration 
for option shares.  Options expire when a participant terminates his 
employment, unless termination is caused by an approved retirement, 
death, or disability.  Options can be exercised for three months 
following a participant's approved retirement and 12 months following a 
participant's death or disability.

      2/ When calculating the present value of options as of the date 
granted (February 14, 1995), Questar used the Black-Scholes option 
pricing model.  Questar assumed a volatility of 20.81 percent, a risk 
free interest rate of 7.7 percent, a dividend yield of 4.16 percent and 
a vesting discount of 5.7 percent.  The real value of the listed options 
depends upon the actual performance of Questar stock.  There can be no 
assurance that the values shown in this table will be achieved.

      The following table lists information concerning the options to 
purchase shares of Questar's common stock that were exercised by the 
officers named above during 1995 and the total options and their value 
held by each at year-end 1995:


           Aggregated Option/SAR Exercises in Last Fiscal Year
                 and Fiscal Year-End Options/SAR Values
<TABLE>
<CAPTION>                                
                                                                  Value of Unexercisable   
               Shares                   Number of Unexercisable   in-the-Money            
               Acquired     Value       Options/SARs at Year-End  Options/SARs at Year-End   
Name               (#)      ($)         Exercisable Unexercisable Exercisable Unexercisable
<S>            <C>          <C>         <C>         <C>           <C>         <C>
D. N. Rose     17,450       195,342     28,500       28,500       114,000     128,250
R. D. Cash          0             0     69,373       45,000       518,175     202,500
M. E. Benefield     0             0     15,500       13,500       102,563      60,750
G. H. Robinson      0             0     15,500       13,500       102,563      60,750
S. C. Yeager        0             0     20,250       13,500       147,656      60,750
</TABLE>

      1/ The "value" is calculated by subtracting the fair market value 
of the shares purchased on the date of exercise minus the option price.  
The value is equal to the amount of ordinary income recognized by each 
officer.  The current value of the shares may be higher or lower than 
the aggregate value reported in the table.

      2/ Stock appreciation rights (SARs) have not been granted since 
February of 1989.  At year-end 1995, there were no SARs outstanding.

Retirement Plan

      Company employees (including executive officers) participate in 
the employee benefit plans of Questar.  The Company has agreed to pay 
its share of the costs associated with the plans that are described 
below.  Questar maintains a noncontributory Retirement Plan that is 
funded actuarially and does not involve specific contributions for any 
one individual.  The following table lists the estimated annual benefits 
payable under the Retirement Plan as of December 31, 1995, and, if 
necessary, the Supplemental Executive Retirement Plan (the SERP).  The 
benefits shown are based on earnings and years of service reaching 
normal retirement age of 65 in 1995 and do not include Social Security 
benefits.  Benefits under the Retirement Plan are not reduced or offset 
by Social Security benefits.

                    PENSION PLAN TABLE          
<TABLE>
<CAPTION>
Highest Consecutive            Years of Service        
Three-Year Average                                     
Annual Compensation  15         20         25         30         35   
<S>                  <C>        <C>        <C>        <C>        <C>
 $150,000            $40,417    $53,890    $67,362    $71,112    $74,862
  175,000             47,542     63,390     79,237     83,612     87,987
  200,000             54,667     72,890     91,112     96,112    101,112
  225,000             61,792     82,390    102,987    108,612    114,237
  250,000             68,917     91,890    114,862    112,112    127,362
  275,000             76,042    101,390    126,737    133,612    140,487
  300,000             83,167    110,890    138,612    146,112    153,612
</TABLE>

      Questar's Retirement Plan has a "step rate/excess" benefit 
formula.  The formula provides for a basic benefit that is calculated by 
multiplying the employee's final average earnings by a specified base 
benefit factor and by subsequently multiplying such sum by the 
employee's years of service (up to a maximum of 25).  This basic benefit 
is increased for each year of service in excess of 25 and is reduced for 
retirement prior to age 62.  Employees also receive a supplemental 
benefit calculated by multiplying the difference between the employee's 
final average earnings and his "covered compensation" by a supplemental 
factor that varies by age.  (The term covered compensation refers to the 
35-year average Social Security wage base tied to year of an employee's 
birth.)  Employees who retire prior to age 62 also receive a temporary 
supplement that is tied to years of service until they are eligible to 
receive Social Security benefits at age 62.

      Federal tax laws impose limits on the amount of annual 
compensation that can be used when calculating benefits under qualified 
plans and on the amount of benefits that can be paid from such plans.  
The SERP, a nonqualified plan, was adopted in 1987 to compensate 
officers who are affected by these limits; it provides for retirement 
benefits equal to the difference between the benefits payable under the 
qualified Retirement Plan and the benefits that would be payable absent 
such limits.  All of the officers listed in the table earn annual 
compensation in excess of the current cap of $150,000 and all of them 
have vested benefits under the SERP.

      The "final average earnings" (average annual earnings for the last 
three years) for purposes of calculating retirement benefits for the 
executive officers named above in the table as of December 31, 1995, is 
as follows:  $283,605 for Mr. Rose; $174,552 for Mr. Benefield; $162,750 
for Mr. Robinson; and $162,250 for Mr. Yeager.  (No figure is given for 
Mr. Cash because his final average earnings for purposes of the 
Retirement Plan and SERP would include compensation paid by the 
Company's affiliates.)  (Mr. Benefield was eligible to participate in 
the early retirement program offered by the Company in the spring of 
1995.  As an eligible participant, he is eligible to receive the higher 
of his frozen benefit as of April 30, 1995, or his benefit earned under 
the Retirement Plan and SERP, when he does retire.)  The officer's base 
salary, cash bonus payments, and value of restricted stock (paid in lieu 
of cash) reported in the Summary Compensation Table would be included in 
the calculation of the officer's final average earnings.  The amounts 
reported in the Summary Compensation Table are somewhat different than 
the final average earnings because the latter figures include cash 
payments when made, not when earned, and the value of restricted stock 
when granted, not distributed.  Dividends on the restricted shares are 
also included in the officer's final average earnings, but are not 
reported in the table.  The years of credited service for the 
individuals listed in the compensation table are:  20 years for Mr. 
Cash; 27 years for Mr. Rose; 18 years for Mr. Benefield; 22 years for 
Mr. Robinson; and 20 years for Mr. Yeager.  

      The Company also participates in Questar's Executive Incentive 
Retirement Plan (the EIRP).  Under the terms of this nonqualified plan, 
a participant will receive monthly payments upon retirement until death 
equal to 10 percent of the highest average monthly compensation 
(excluding incentive compensation) paid to the officer during any period 
of 36 consecutive months of employment.  The plan also provides for a 
family benefit in the event of the death of an officer.  Although not 
required to do so, Questar and its affiliates have purchased life 
insurance on the life of each participant, with Questar named as owner 
and beneficiary.  The covered officers have no rights under or to such 
insurance policies.  All of the Company's officers listed in the 
compensation table have been nominated to participate in the plan, have 
satisfied the 15 years of service requirement and have a vested right to 
receive benefits under the EIRP.  The annual benefits payable to the 
named officers under this plan as of December 31, 1995, are as follows:  
Mr. Rose, $21,503; Mr. Benefield, $13,968 and Messrs. Robinson and 
Yeager, $13,154.  (No figure is given for Mr. Cash because his 
compensation for purposes of calculating benefits under the EIRP would 
include compensation paid by the Company's affiliates.)

      Any benefits payable under the SERP are offset against payments 
from the EIRP.  Consequently, an officer would not receive any benefits 
for the SERP unless his benefit under the EIRP was less than the 
difference between what he could be paid under Questar's Retirement Plan 
at the date of retirement and what he had earned under such plan absent 
federal tax limitations.  Given this relationship between the two 
nonqualified plans, the amounts listed in the table above do not include 
benefits payable under the EIRP.

Executive Severance Compensation Plan 

      Questar has an Executive Severance Compensation Plan that covers 
the Company's executive officers.  Under this plan, participants, 
following a change in control of Questar, are eligible to receive 
compensation equal to up to two years' salary and miscellaneous benefits 
upon a voluntary or involuntary termination of their employment, 
provided that they have continued working or agree to continue working 
for six months following a potential change in control of Questar.  This 
plan was originally adopted in 1983 by Mountain Fuel and was assumed by 
Questar as of October 2, 1984.  The plan also contains a provision that 
limits compensation and benefits payable under the plan to amounts that 
can be deducted under Section 280G of the Internal Revenue Code of 1986.  

      The dollar amounts payable to the Company's executive officers 
(based on current salaries paid by the Company) in the event of 
termination of employment following a change in control of Questar are 
as follows:  $525,200 to Mr. Rose; $305,400 to Mr. Benefield; and 
$279,400 each to Messrs. Yeager and Robinson.  (The amount payable to 
Mr. Cash is not given since such amount is based on each officer's total 
salary.)  The Company's executive officers would also receive certain 
supplemental retirement benefits, welfare benefits, and cash bonuses.  

      Under the plan, a change in control is defined to include any 
change in control of Questar required to be reported under Item 6(e) of 
Schedule 14A of the Securities Exchange Act of 1934, as amended.  A 
change in control is also deemed to occur once any person becomes the 
beneficial owner, directly or indirectly, of securities representing 15 
percent or more of Questar's outstanding shares of common stock.  

Directors' Fees

      All directors receive an annual fee of $4,800 payable in 12 
monthly installments and fees of $500 for each meeting of the Board of 
Directors that they attend. 

      The Company has a Deferred Compensation Plan for Directors under 
which directors can elect to defer all or any portion of the fees 
received for service as directors until their retirement from such 
service and can choose to have the deferred amounts earn interest as if 
invested in long-term certificates of deposit or be accounted for with 
"phantom shares" of Questar's common stock.  Upon retirement, the 
phantom shares of stock are "converted" to their fair market cash 
equivalent.  During 1995, several directors of the Company chose to 
defer receipt of all or a portion of the compensation earned by them for 
their service.  (Any shares of phantom stock credited to directors are 
not included in the number of shares listed opposite their names below.)

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The Company is a direct, wholly owned subsidiary of Questar.  The 
following table sets forth information, as of December 31, 1995, with 
respect to each person known or believed by Questar to be the beneficial 
owner of 5 percent or more of its common stock:

                                   Shares and
Name and                            Nature of
Address of                         Beneficial               Percent
Beneficial Owner                    Ownership              of Class

First Security Bank of Utah         4,072,485                10.0 
N.A., 79 South Main Street         Trustee for
Salt Lake City, Utah 84111      Company Employee
                                  Benefit Plans
                                    and Bank1


    1/ Of this total, First Security beneficially owns 3,971,820 shares 
in its role as trustee of employee benefit plans sponsored by Questar.  
Participating employees control the voting of such shares.

    The following table sets forth information, as of March 1, 1996, 
concerning the shares of Questar's common stock beneficially owned by 
each of the Company's named executive officers and directors and by the 
Company's executive officers and directors as a group:


                                    Shares Owned        Percent of
         Name of Beneficial Owner   Beneficially   Outstanding Shares1
                                          
         Directors
         Robert H. Bischoff           3,279               *
         R. D. Cash2,3,4,5,6        223,211            .55%
         W. Whitley Hawkins7          7,370               *
         Robert E. Kadlec7,8         14,750               *
         Dixie L. Leavitt6,7         18,863               *
         Gary G. Michael7             3,400               *
         D. N. Rose2,3,4             65,886            .16%

         Named Executive Officers
         M. E. Benefield2,3,4        33,977              *1
         G. H. Robinson2,3,4         30,339              *1
         S. C. Yeager2,3,4           30,655              *1

         All directors and executive503,645           1.2%1
         officers (12 individuals)9

    1/ Unless otherwise listed, the percentage of shares owned is less 
than .1 percent.  The percentages of beneficial ownership have been 
calculated in accordance with Rule 13d-3(d)(1) under the Securities 
Exchange Act of 1934, as amended.

      2/ The Company's executive officers own shares through their 
participation in Questar's Employee Investment Plan.  The number of 
shares owned through this plan as of December 31, 1995, is as follows 
for the named officers:  Mr. Benefield, 4,631; Mr. Cash, 29,550; Mr. 
Robinson, 7,747; Mr. Rose, 15,814; and Mr. Yeager, 8,551.

      3/ The Company's executive officers have been granted nonqualified 
stock options under Questar's Stock Option Plan and Long-Term Stock 
Incentive Plan.  The number of shares listed opposite the named officers 
attributable to vested options as of March 1, 1996, is as follows:  Mr. 
Benefield, 15,500; Mr. Cash, 69,373; Mr. Robinson, 15,500; Mr. Rose, 
28,500; and Mr. Yeager, 13,500.

      4/ The Company's executive officers acquired restricted shares of 
Questar's common stock in partial payment of bonuses earned in the 1994 
and 1995 bonus plans.  The number of restricted shares beneficially 
owned by each of the named officers as of March 1, 1996, is as follows:  
Mr. Benefield, 632; Mr. Cash, 2,327; Mr. Robinson, 603; Mr. Rose, 1,485; 
and Mr. Yeager, 603.

      5/ Mr. Cash is the Chairman of the Board of Trustees of the Questar 
Corporation Educational Foundation and the Questar Corporation Arts 
Foundation, two nonprofit corporations that own an aggregate of 42,596 
shares of Questar's common stock.  As the Chairman, Mr. Cash has voting 
control for such shares, but disclaims any beneficial ownership of them.

      6/ Of the total shares reported for Mr. Cash, 3,270 shares are 
owned jointly with his wife and 4,899 are controlled by him as custodian 
for his son.  Messrs. Leavitt and Yeager own their shares of record with 
their respective wives.

      7/ Messrs. Hawkins, Kadlec, Leavitt, and Michael, as nonemployee 
voting directors of Questar, have been granted nonqualified stock 
options to purchase shares of Questar's common stock as follows:  Mr. 
Hawkins, 7,150 shares; Mr. Kadlec, 11,150 shares; Mr. Leavitt, 7,000 
shares, and Mr. Michael, 2,100 shares.  These shares are included in the 
numbers listed opposite their respective names.

      8/ Mr. Kadlec's wife owns 200 shares of common stock.  Mr. Kadlec 
has voting control and investment control over such shares.  Such shares 
are included in the shares listed opposite his name.

      9/ The total number of shares reported for this group includes 
vested options to purchase 207,648 shares of Questar's common stock.

Committee Interlocks and Insider Participation

      The Company itself has no formal "Compensation Committee."  
Questar's Board of Directors has a Management Performance Committee that 
makes recommendations to the Company's Board of Directors concerning 
base salary and bonus payments.  (Questar's Board approves all stock 
options.)  Messrs. Cash and Rose, as directors and officers of the 
Company, are formally excused from all discussions by the Company's 
Board involving their compensation.  

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      There are no relationships or transactions involving the Company's 
directors and executive officers.  

      As described above, there are significant business relationships 
between the Company and its affiliates, particularly Wexpro and Questar 
Pipeline.  Questar, the Company's parent, also provides certain 
administrative services, e.g., personnel, legal, public relations, 
financial, tax, and audit to the Company and other members of the 
consolidated group.  The costs of performing such services are allocated 
to the Company.  Questar InfoComm, another affiliate, provides data 
processing and communication services for the Company; the charges for 
such services are based on cost of service plus a specified return on 
assets.  

      See Note H to the financial statements for additional information 
concerning transactions between the Company and its affiliates.


                                 PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 
8-K

      (a)(1)(2)  Financial Statements and Financial Statement Schedules.  
The financial statements identified in the List of Financial Statements 
are filed as part of this report.  

      (3)  Exhibits.  The following is a list of exhibits required to be 
filed as a part of this report in Item 14(c).

Exhibit No.                      Exhibit

  3.1.*    Restated Consolidated Articles of Incorporation dated August 
           15, 1980.  (Exhibit No. 4(a) to Registration Statement No. 
           2-70087, filed December 1, 1980.)

  3.2.*    Certificate of Amendment to Restated Consolidated Articles of 
           Incorporation dated May 13, 1982.  (Exhibit No. 3(b) to Form 
           10-K Annual Report for 1982.)

  3.3.*    Certificate of Amendment to Restated Consolidated Articles of 
           Incorporation dated May 10, 1983.  (Included in Exhibit No. 
           4.1. to Registration Statement No. 2-84713, filed June 23, 
           1983.)

  3.4.*    Certificate of Amendment to Restated Consolidated Articles of 
           Incorporation dated August 16, 1983.  (Exhibit No. 3(a) to 
           Form 8 Report amending the Company's Form 10-Q Report for 
           Quarter Ended September 30, 1983.)

  3.5.*    Certificate of Amendment to Restated Consolidated Articles of 
           Incorporation dated October 26, 1984.  (Exhibit No. 3.5. to 
           Form 10-K Annual Report for 1984.)

  3.6.*    Certificate of Amendment to Restated Consolidated Articles of 
           Incorporation dated May 13, 1985.  (Exhibit No. 3.1. to Form 
           10-Q Report for Quarter Ended June 30, 1985.)

  3.7.*    Articles of Amendment to Restated Consolidated Articles of 
           Incorporation dated February 10, 1988.  (Exhibit No. 3.7. to 
           Form 10-K Annual Report for 1987.)

  3.8.*    Bylaws (as amended effective August 11, 1992).  (Exhibit No. 
           3.8. to Form 10-K Annual Report for 1992.)

  4.*      Indenture dated as of May 1, 1992, between the Company and 
           Citibank, as trustee, for the Company's Debt Securities. 
           (Exhibit No. 4. to Form 10-Q Report for Quarter Ended June 
           30, 1992.)

  10.1.*   Stipulations and Agreement, dated October 14, 1981, executed 
           by Mountain Fuel Supply Company; Wexpro Company; the Utah 
           Department of Business Regulations, Division of Public 
           Utilities; the Utah Committee of Consumer Services; and the 
           staff of the Public Service Commission of Wyoming.  (Exhibit 
           No. 10(a) to Form 10-K Annual Report for 1981.)

  10.7.*   Data Processing Services Agreement effective July 1, 1985, 
           between Questar Service Corporation and Mountain Fuel Supply 
           Company.  (Exhibit 10.7. to Form 10-K Annual Report for 
           1988.)

  10.8.1   Mountain Fuel Supply Company Annual Management Incentive Plan 
           as amended and restated effective February 13, 1996.  

  10.9.*1  Mountain Fuel Supply Company Window Period Supplemental 
           Executive Retirement Plan effective January 24, 1991.  
           (Exhibit No. 10.9. to Form 10-K Annual Report for 1990.)

  10.10.1  Mountain Fuel Supply Company Deferred Compensation Plan for 
           Directors as amended and restated effective February 13, 
           1996.

  10.11.*  Gas Gathering Agreement between Mountain Fuel Supply Company 
           and Questar Pipeline Company effective September 1, 1993.

  25.      Power of Attorney.

  27.      Financial Data Schedule.
_______________________
    *Exhibits so marked have been filed with the Securities and Exchange 
Commission as part of the referenced filing and are incorporated herein 
by reference.  

    1 Exhibits so marked are management contracts or compensation plans 
or arrangements.

    (b)  Mountain Fuel did not file any Current Reports on Form 8-K 
during the last quarter of 1995. 
<PAGE> 


ANNUAL REPORT ON FORM 10-K

ITEM 8. ITEM 14 (a) (1) and (2), (c) and (d)

LIST OF FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


YEAR ENDED DECEMBER 31, 1995
<PAGE>

MOUNTAIN FUEL SUPPLY COMPANY

SALT LAKE CITY, UTAH

FORM 10-K--ITEM 14 (a) (1) and (2)

MOUNTAIN FUEL SUPPLY COMPANY

LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES

The following financial statements of Mountain Fuel Supply Company
are included in Item 8:

Statements of income -- Years ended December 31, 1995, 1994 and
1993

Balance sheets -- December 31, 1995 and 1994

Statements of common shareholder's equity -- Years ended December
31, 1995, 1994 and 1993

Statements of cash flows -- Years ended December 31, 1995, 1994 and
1993

Notes to financial statements

Financial statement schedules, for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission, are not required under the related instructions or are
inapplicable, and therefore have been omitted.
<PAGE>

Report of Independent Auditors


Board of Directors
Mountain Fuel Supply Company

We have audited the balance sheets of Mountain Fuel Supply Company
as of December 31, 1995 and 1994, and the related statements of
income, common shareholder's equity, and cash flows for each of the
three years in the period ended December 31, 1995.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.  An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Mountain Fuel Supply Company at December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.

As discussed in Note G to the financial statements, Mountain Fuel
Supply Company changed its method of accounting for postemployment
benefits in 1994.


ERNST & YOUNG LLP

Salt Lake City, Utah
February 9, 1996
<PAGE>


MOUNTAIN FUEL SUPPLY COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                              1995        1994        1993
                                                     (In Thousands)
<S>                                        <C>         <C>         <C>
REVENUES - Note H                            $362,769    $378,260    $402,391

OPERATING EXPENSES
  Natural gas purchases
    From affiliates - Note H                  129,781     132,889     174,401
    From unaffiliated parties                  60,825      77,618      55,738
      Total natural gas purchases             190,606     210,507     230,139
  Operating and maintenance - Note H           93,384      94,094      92,486
  Depreciation and amortization                25,469      24,749      23,244
  Other taxes                                   9,588       9,589      10,013

    TOTAL OPERATING EXPENSES                  319,047     338,939     355,882

    OPERATING INCOME                           43,722      39,321      46,509

INTEREST AND OTHER INCOME                       4,232       7,820       1,692

DEBT EXPENSE                                  (16,580)    (15,886)    (15,423)

    INCOME BEFORE INCOME TAXES                 31,374      31,255      32,778

INCOME TAXES - Note E                           7,706       7,903       7,709

    NET INCOME                                $23,668     $23,352     $25,069
</TABLE>

See notes to financial statements.
<PAGE>

MOUNTAIN FUEL SUPPLY COMPANY
BALANCE SHEETS

ASSETS
<TABLE>
<CAPTION>
                                                            December 31,
                                                          1995        1994
                                                            (In Thousands)
<S>                                                    <C>         <C>
CURRENT ASSETS
  Cash and short-term investments - Note D                 $1,466      $2,529
  Accounts receivable                                      36,864      47,146
  Unbilled gas accounts receivable -
    Note F                                                 25,149      26,456
  Accounts receivable from affiliates                       1,658         618
  Federal income taxes receivable                           3,971
  Inventories, at lower of average
     cost or market
    Gas stored underground                                 16,310      21,439
    Materials and supplies                                  4,605       3,502
      Total inventories                                    20,915      24,941
  Prepaid expenses and deposits                             3,843       4,279
    TOTAL CURRENT ASSETS                                   93,866     105,969

PROPERTY, PLANT AND EQUIPMENT
  Production - Note H                                      97,870      97,380
  Distribution                                            587,128     551,461
  General                                                  79,871      75,153
  Construction in progress                                 19,597      15,951
                                                          784,466     739,945
  Less allowances for depreciation
   and amortization                                       302,619     280,162
    NET PROPERTY, PLANT AND EQUIPMENT                     481,847     459,783

OTHER ASSETS
  Income taxes recoverable from
    customers - Note E                                      8,214      10,578
  Unamortized costs of reacquired debt                     10,090      10,584
  Other                                                     6,244       3,361
    TOTAL OTHER ASSETS                                     24,548      24,523

                                                         $600,261    $590,275
</TABLE>
<PAGE>



LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
                                                            December 31,
                                                          1995        1994
                                                           (In Thousands)
<S>                                                    <C>         <C>
CURRENT LIABILITIES
  Notes payable to Questar - Notes B and D                $56,100     $53,500
  Accounts payable and accrued expenses
    Accounts payable                                       21,794      22,566
    Accounts payable to affiliates                         16,283      11,677
    Customer refund - Note F                               11,886
    Federal income taxes payable                                        1,649
    Other taxes                                             4,762          36
    Accrued interest                                        3,676       3,730
    Other                                                   3,399       9,412
      Total accounts payable and
        accrued expenses                                   61,800      49,070
  Purchased-gas adjustments                                 9,182      17,071
    TOTAL CURRENT LIABILITIES                             127,082     119,641

LONG-TERM DEBT - Notes B and D                            175,000     175,000

OTHER LIABILITIES
  Unbilled gas revenues - Note F                           15,541      20,721
  Other                                                       488         562
    TOTAL OTHER LIABILITIES                                16,029      21,283

DEFERRED INVESTMENT TAX CREDITS                             7,157       7,541

DEFERRED INCOME TAXES - Note E                             61,391      55,025

COMMITMENTS AND CONTINGENCIES - Note F

REDEEMABLE CUMULATIVE PREFERRED STOCK
  - Notes C and D                                           4,957       6,324

COMMON SHAREHOLDER'S EQUITY
  Common stock - par value $2.50 per
   share; authorized 50,000,000 shares;
   issued and outstanding 9,189,626 shares                 22,974      22,974
  Additional paid-in capital                               41,875      41,875
  Retained earnings                                       143,796     140,612
    TOTAL COMMON SHAREHOLDER'S EQUITY                     208,645     205,461

                                                         $600,261    $590,275
</TABLE>

See notes to financial statements.
<PAGE>

MOUNTAIN FUEL SUPPLY COMPANY
STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
                                                       Additional
                                             Common     Paid-in     Retained
                                             Stock      Capital     Earnings
                                                      (In Thousands)
<S>                                         <C>         <C>         <C>
Balances at January 1, 1993                   $22,974     $21,875    $130,977
  1993 net income                                                      25,069
  Payment of dividends
    Preferred stock                                                      (695)
    Common stock                                                      (18,000)
Balances at December 31, 1993                  22,974      21,875     137,351
  Capital contribution                                     20,000
  1994 net income                                                      23,352
  Payment of dividends
    Preferred stock                                                      (591)
    Common stock                                                      (19,500)
Balances at December 31, 1994                  22,974      41,875     140,612
  1995 net income                                                      23,668
  Payment of dividends
    Preferred stock                                                      (483)
    Common stock                                                      (20,000)
  Redemption cost                                                          (1)
Balances at December 31, 1995                 $22,974     $41,875    $143,796
</TABLE>

See notes to financial statements.
<PAGE>

MOUNTAIN FUEL SUPPLY COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                              1995        1994        1993
                                                     (In Thousand)
<S>                                       <C>         <C>         <C>
OPERATING ACTIVITIES
  Net income                                  $23,668     $23,352     $25,069
  Depreciation and amortization                28,295      27,337      25,492
  Deferred income taxes                         6,366       5,102      (1,906)
  Deferred investment tax credits                (384)       (400)       (412)
                                               57,945      55,391      48,243
  Changes in operating assets and liabilities
    Accounts receivable                        10,549       7,448          38
    Inventories                                 4,026        (969)    (20,869)
    Prepaid expenses and deposits                (722)        460         336
    Accounts payable and accrued expenses      14,379     (16,141)     10,668
    Federal income taxes                       (5,620)        463       1,706
    Purchased-gas adjustments                  (7,889)     (8,656)      4,686
    Other                                      (4,122)     (4,853)     (7,669)
    NET CASH PROVIDED FROM
       OPERATING ACTIVITIES                    68,546      33,143      37,139

INVESTING ACTIVITIES
  Capital expenditures                        (51,413)    (53,816)    (50,658)
  Proceeds from disposition and transfer
    of property, plant and equipment            1,054       9,482         991
     CASH USED IN INVESTING
       ACTIVITIES                             (50,359)    (44,334)    (49,667)

FINANCING ACTIVITIES
  Capital contribution                                     20,000
  Redemption of preferred stock                (1,367)     (1,201)     (1,201)
  Issuance of long-term debt                               17,000      91,000
  Redemption of long-term debt                                        (99,126)
  Change in notes payable to Questar            2,600      (4,300)     38,900
  Payment of dividends                        (20,483)    (20,091)    (18,695)
    CASH PROVIDED FROM (USED IN)
      FINANCING ACTIVITIES                    (19,250)     11,408      10,878
    Change in cash and short-term
      investments                              (1,063)        217      (1,650)
Beginning cash and short-term investments       2,529       2,312       3,962
    ENDING CASH AND SHORT-TERM
       INVESTMENTS                             $1,466      $2,529      $2,312

NONCASH TRANSACTION
  Recording of unbilled revenues                                      $27,313
</TABLE>

See notes to financial statements.
<PAGE>

MOUNTAIN FUEL SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS

Note A - Summary of Accounting Policies

Mountain Fuel Supply Company (the Company or Mountain Fuel) is a
wholly-owned subsidiary of Questar Corporation (Questar).

Business and Regulation:  The Company's business consists of
natural gas distribution operations for residential, commercial and
industrial customers.  Mountain Fuel is regulated by the Public
Service Commission of Utah (PSCU) and the Public Service Commission
of Wyoming (PSCW).  While Mountain Fuel also serves a small area of
southeastern Idaho, the Idaho Public Service Commission has
deferred to the PSCU for rate oversight of this area. These
regulatory agencies establish rates for the sale and transportation
of natural gas.  The regulatory agencies also regulate, among other
things, the extension and enlargement or abandonment of
jurisdictional natural gas facilities.  Regulation is intended to
permit the recovery, through rates, of the cost of service
including, a rate of return on investment.

The financial statements are presented in accordance with
regulatory requirements. Methods of allocating costs to time
periods, in order to match revenues and expenses, may differ from
those of nonregulated businesses because of cost-allocation methods
used in establishing rates.

Use of Estimates:  The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets and liabilities and disclosure of contingent
liabilities reported in the financial statements and accompanying
notes.   Actual results could differ from those estimates.

Revenue Recognition:   Revenues are recognized in the period that
services are provided or products are delivered.   Mountain Fuel
accrues gas distribution revenues for gas delivered to residential
and commercial customers but not billed at the end of the
accounting period.  Mountain Fuel periodically collects revenues
subject to possible refund pending final orders from regulatory
agencies. In these situations the Company establishes reserves for
revenues collected subject to refund.

Purchased-Gas Adjustments:  Mountain Fuel accounts for
purchased-gas costs in accordance with procedures authorized by the
PSCU and PSCW whereby purchased-gas costs that are different from
those provided for in the present rates are accumulated and
recovered or credited through future rate changes.

Property, Plant and Equipment:  Property, plant and equipment are
stated at cost.  The provision for depreciation and amortization is
based upon rates which will amortize costs of assets over their
estimated useful lives.  The costs of natural gas distribution
property, plant and equipment, excluding gas wells, are amortized
using the straight-line method ranging from 3% to 33% per year and
averaging 3.9% in 1995. The costs of gas wells were amortized using
the units-of-production method at $.17 per Mcf of natural gas
production during 1995.  In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
No.121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. The Company will adopt
Statement No. 121 in 1996 and does not expect a significant effect
to either operating results or financial postion.

Credit Risk:  The Company's primary market area is the Rocky
Mountain region of the United States.  The Company's exposure to
credit risk may be impacted by the concentration of customers in
this region due to changes in economic or other conditions.  The
Company's customers include individuals and numerous industries
that may be affected differently by changing conditions. Management
believes that its credit-review procedures, loss reserves and
customer deposits have adequately provided for usual and customary
credit-related losses.  The carrying amount of trade receivables
approximates fair value.

Income Taxes:  Mountain Fuel records cumulative increases in
deferred taxes as income taxes recoverable from customers.  The
Company has adopted procedures with its regulatory commissions to
include under-provided deferred taxes in customer rates on a
systematic basis. Mountain Fuel uses the deferral method to account
for investment tax credits as required by regulatory commissions.
The Company's operations are consolidated with those of Questar and
its subsidiaries for income tax purposes.  The income tax
arrangement between Mountain Fuel and Questar provides that amounts
paid to or received from Questar are substantially the same as
would be paid or received by the Company if it filed a separate
return.  Mountain Fuel also receives payment for tax benefits used
in the consolidated tax return even if such benefits would not have
been usable had the Company filed a separate return.

Reacquisition of Debt:  Gains and losses on the reacquisition of
debt are deferred and amortized as debt expense over the life of
the replacement debt in order to match regulatory treatment.

Allowance for Funds Used During Construction:  The Company
capitalizes the cost of capital during the construction period of
plant and equipment using a method required by regulatory
authorities.  This amounted to $391,000 in 1995, $397,000 in 1994
and $528,000 in 1993.

Cash and Short-Term Investments:  Short-term investments consist
principally of Euro-time deposits and repurchase agreements with
maturities of three months or less.


Note B - Debt

The Company has a short-term line-of-credit arrangement with a bank
under which it may borrow up to $500,000.  The line has interest
rates generally below the prime interest rate and  is renewable on
an annual basis.  No amount was borrowed under this arrangement at
either December 31, 1995 or 1994. Questar loans funds to the
Company under a short-term borrowing arrangement.  Outstanding
short-term notes payable to Questar totaled $56,100,000 with an
interest rate of 6.01% at December 31, 1995 and $53,500,000 with an
interest rate of 6.11% at December 31, 1994.

Mountain Fuel's long-term debt consists of medium-term notes with
interest rates ranging from 7.19% to 8.43%, due 2007 to 2024.
There are no maturities of long-term debt for the five years
following December 31, 1995 and no long-term debt provisions
restricting the payment of dividends.  Cash paid for interest was
$16,458,000 in 1995, $15,290,000 in 1994 and $14,698,000 in 1993.


Note C - Redeemable Cumulative Preferred Stock

Mountain Fuel has authorized 4,000,000 shares of nonvoting
redeemable cumulative preferred stock with no par value, but a
stated and redemption value of $100 per share.  During 1995, the
remaining shares of the $8.625 series were fully redeemed.
<TABLE>
<CAPTION>
                                           8% Series  $8.625 Series
                                               (In Thousands)
<S>                                       <C>         <C>
Balance at January 1, 1993                     $5,126      $3,600
1993 redemption of stock                           (1)     (1,200)
1994 redemption of stock                           (1)     (1,200)
1995 redemption of stock                         (167)     (1,200)
Balance at December 31, 1995                   $4,957      -
</TABLE>

Redemption requirements for the five years following
December 31, 1995, are as follows:
                                          (In Thousands)

    1996                                          $97
    1997                                          180
    1998                                          180
    1999                                          180
    2000                                          180


Note D - Financial Instruments

The carrying amounts and estimated fair values of the Company's
financial instruments were as follows:
<TABLE>
<CAPTION>
                                            December 31, 1995       December 31, 1994
                                            Carrying   Estimated    Carrying   Estimated
                                             Amount    Fair Value    Amount    Fair Value
                                                      (In Thousands)
<S>                                         <C>         <C>         <C>         <C>
Financial assets
    Cash and short-term investments            $1,466      $1,466      $2,529      $2,529
Financial liabilities
    Short-term loans                           56,100      56,100      53,500      53,500
    Long-term debt                            175,000     184,577     175,000     163,952
    Redeemable cumulative preferred stock       4,957       5,006       6,324       6,377
</TABLE>

The Company used the following methods and assumptions in
estimating fair values:  (1) Cash and short-term investments - the
carrying amount approximates fair value; (2) Short-term loans - the
carrying amount approximates fair value; (3) Long-term debt - the
fair value of the medium-term notes is based on the discounted
present value of cash flows using the Company's current borrowing
rates; (4) Redeemable cumulative preferred stock - the fair value
is based on the discounted present value of cash flows using
current preferred stock rates.  Fair value is calculated at a point
in time and does not represent what the Company would pay to retire
the debt securities.


Note E - Income Taxes

The components of income taxes were as follows:
<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                              1995        1994        1993
                                                   (In Thousands)
<S>                                          <C>         <C>         <C>
Federal
  Current                                       ($294)     $2,717      $9,301
  Deferred                                      7,099       4,527      (2,739)
State
  Current                                         302         484       1,428
  Deferred                                        983         575         131
Deferred investment tax credits                  (384)       (400)       (412)
                                               $7,706      $7,903      $7,709
</TABLE>

The difference between income tax expense and the tax computed by
applying the statutory federal income tax rate to income before
income taxes is explained as follows:
<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                              1995        1994        1993
                                                    (In Thousands)
<S>                                         <C>         <C>         <C>
Income before income taxes                    $31,374     $31,255     $32,778

Federal income taxes at statutory rate        $10,981     $10,939     $11,472
State income taxes, net of federal income
    tax benefit                                 1,179         890       1,059
Tight-sands gas production credits             (4,376)     (4,670)     (5,463)
Investment tax credits                           (384)       (400)       (412)
Reduction in deferred income tax rate            (571)
Deferred taxes related to regulated assets
    for which deferred taxes were not
    provided in prior years                       921         921         921
Other                                             (44)        223         132
    Income tax expense                         $7,706      $7,903      $7,709

Effective income tax rate                        24.6%       25.3%       23.5%
</TABLE>

Significant components of the Company's deferred tax liabilities
and assets were as follows:
<TABLE>
<CAPTION>
                                                December 31,
                                              1995        1994
                                               (In Thousands)
<S>                                         <C>         <C>
Deferred tax liabilities
  Property, plant and equipment               $73,200     $70,496
  Unamortized debt reacquisition costs          3,859       4,022
  Income taxes recoverable from customers       3,368       3,430
  Pension costs                                 1,291         360
  Other                                           893       3,023
    Total deferred tax liabilities             82,611      81,331

Deferred tax assets
  Purchased-gas adjustments                     3,489       8,486
  Alternative minimum tax and production
    credit carryovers                           6,562       5,701
  Unbilled revenues                             5,905       7,574
  Deferred investment tax credits               2,720       2,874
  Other                                         2,544       1,671
    Total deferred tax assets                  21,220      26,306
       Net deferred tax liabilities           $61,391     $55,025
</TABLE>

Cash paid for income taxes was $7,333,000 in 1995, $6,404,000 in
1994 and $8,631,000 in 1993.

Note F - Rate Matters, Litigation and Commitments

On August 11, 1995, the PSCU approved a settlement of Mountain
Fuel's general rate case filed April 13, 1995.  Mountain Fuel
received a $3.7 million increase in revenues. The settlement, which
became effective September 1, allowed the Company to implement a
weather normalization adjustment, provided about $2 million in
additional revenues through a new-premises fee and added about $1.7
million from sharing capacity-release revenues. The settlement did
not specify an authorized return on equity, but Mountain Fuel's
allowed return on rate base increased from 10.08% to between 10.22%
and 10.34%.

In December 1995, Mountain Fuel requested approval from the PSCU to
make a lump sum refund of gas costs to Utah customers.  The PSCU
agreed with the procedure and the refund appeared as a credit on
customers' February 1996 gas bills.  A surplus of gas costs
collected in 1995 led to the refund.  The lump-sum refund was
chosen as a mechanism to more quickly credit customers' accounts.
Normally, amortization of either over-or under-collected gas costs
requires about 12 months.

Mountain Fuel's Utah gas cost pass-through application was approved
on an interim basis effective January 1, 1996.  In connection with
the application, the Utah Division of Public Utilities has raised
issues about continuing to treat gathering costs as pass-through
costs and about the reasonableness of such costs.  The Company
believes that its gathering costs are reasonable.  The Committee of
Consumer Services has requested additional information concerning a
gas imbalance and may decide to raise the issue in the proceedings.

In 1993, Mountain Fuel began accruing revenues for gas delivered to
residential and commercial customers but not billed at the end of
the year.  The impact of these accruals on the income statement has
been deferred and is being recognized at the rate of $2,011,000 per
year over a five-year period beginning in 1994 in accordance with a
rate order received from the PSCU.  This rate order also reduces
customer rates by $2,011,000 per year over the same five-year
period. In addition, Mountain Fuel recorded other income of
$5,589,000 for a one-time reduction of gas costs associated with
these unbilled revenues. This transaction resulted in additional
net income of about $3.5 million in 1994.

Each year, Mountain Fuel purchases significant quantities of
natural gas under numerous gas- purchase contracts with varying
terms and conditions.  Purchases under these agreements totalled
$44,892,000 in 1995, $73,682,000 in 1994 and $85,909,000 in 1993.
Some of the agreements have terms that obligate Mountain Fuel to
purchase specific quantities on a periodic basis into the future,
while a few contracts have take-or-pay provisions that obligate
Mountain Fuel to take delivery of a minimum amount of gas on an
annual basis.

Projected natural gas purchase commitments for the
next five years are reported in the table below.
These commitments are based upon current market
conditions.  Future  changes will occur as a result of
negotiations with suppliers and changes in market
conditions.

                                          (In Millions)

    1996                                     $17.0
    1997                                      2.0
    1998                                      2.0
    1999                                      2.1
    2000                                      2.2

The Company has received notice that it may be partially liable in
several environmental clean-up actions on sites that involve
numerous other parties. Management believes that the Company's
responsibility for remediation will be minor and that any potential
liability will not be significant to its results of operations,
financial position or liquidity.

Mountain Fuel, as a result of acquiring Questar Pipeline's gas
purchase contracts, is responsible for any judgment rendered
against Questar Pipeline in a lawsuit that was tried before a jury
in 1994.  The jury awarded an independent producer compensatory
damages of approximately $6.1 million and punitive damages of
$200,000 on his claims. The producer's counterclaims originally
exceeded $57 million, but were reduced to less than $10 million,
when the presiding judge dismissed with prejudice some of the
claims prior to the jury trial. Under existing PSCU rulings, any
payments resulting from this judgment will be included in Mountain
Fuel's gas balancing account an recovered in its rates for natural
gas service.

There are various legal proceedings against the Company.  While it
is not currently possible to predict or determine the outcome of
these proceedings, it is the opinion of management that the outcome
will not have a material adverse effect on the Company's results of
operations, financial position or liquidity.


Note G - Employee Benefits

Pension Plan:  Substantially all Company employees are covered by
Questar's defined benefit pension plan. Benefits are generally
based on years of service and the employee's 36-month period of
highest earnings during the ten years preceding retirement.  It is
Questar's policy to make contributions to the plan at least
sufficient to meet the minimum funding requirements of applicable
laws and regulations. Plan assets consist principally of equity
securities and corporate and U.S. government debt obligations.
Pension cost was $3,352,000 in 1995, $2,962,000 in 1994 and
$3,251,000 in 1993.

Mountain Fuel's portion of plan assets and benefit obligations is
not determinable because the plan assets are not segregated or
restricted to meet the Company's pension obligations.  If the
Company were to withdraw from the pension plan, the pension
obligation for the Company's employees would be retained by the
pension plan.  At December 31, 1995, Questar's fair value of plan
assets exceeded the accumulated benefit obligation.

Postretirement Benefits Other Than Pensions:  The Company pays a
portion of the health-care costs and all the life insurance costs
for employees who retired prior to January 1, 1993. The plan was
changed for employees retiring after January 1, 1993, to link the
health-care benefit to years of service and to limit the Company's
monthly health-care contribution per individual to 170% of the 1992
contribution. Employees hired after December 31, 1996, will not
qualify for benefits under this plan.  The Company's policy is to
fund amounts allowable for tax deduction under the Internal Revenue
Code.  Plan assets consist of equity securities, corporate and U.S.
government debt obligations, and insurance company general
accounts. The Company is amortizing the transition obligation over
a 20-year period.  Total costs of postretirement benefits other
than pensions were $3,183,000 in 1995, $3,584,000 in 1994 and
$3,350,000 in 1993. Both the PSCU and the PSCW allowed Mountain
Fuel to recover future costs if the amounts are funded in an
external trust.

The Company's portion of plan assets and benefit obligations
related to postretirement medical and life insurance benefits is
not determinable because the plan assets are not segregated or
restricted to meet the Company's obligations.

Postemployment Benefits:  The Company recognizes the net present
value of the liability for postemployment benefits, such as
long-term disability benefits and health care and life insurance
costs, when employees become eligible for such benefits.
Postemployment benefits are paid to former employees after
employment has been terminated but before retirement benefits are
paid. The Company accrues both current and future costs. The PSCU
and the PSCW have allowed Mountain Fuel to recover postemployment
costs through December 31, 1994 in future rates.  At December 31,
1995, the Company had a $935,000 regulatory asset that it is
amortizing over the next nine years.

Employee Investment Plan:  The Company participates in Questar's
Employee Investment Plan (ESOP), which allows eligible employees to
purchase Questar Corporation common stock or other investments
through payroll deduction.  The Company makes contributions of
Questar Corporation common stock to the ESOP of approximately 75%
of the employees' purchases and contributes an additional $200 of
common stock in the name of each eligible employee.   The Company's
expense and contribution to the plan was $1,622,000 in 1995,
$1,542,000 in 1994 and $1,435,000 in 1993.


Note H - Related Party Transactions

Wexpro, an affiliated company, operates certain properties owned by
Mountain Fuel under the terms of the Wexpro Settlement Agreement.
The Company receives a portion of Wexpro's income from oil
operations after recovery of Wexpro's operating expenses and a
return on investment.  This amount, which is included in revenues,
was $3,400,000 in 1995, $3,391,000 in 1994 and $1,028,000 in 1993.
The Company paid Wexpro for the operation of Company-owned gas
properties.  These costs are included in natural gas purchases and
amounted to $59,831,000 in 1995, $57,870,000 in 1994 and
$49,595,000 in 1993.

Mountain Fuel purchased gas from Questar Pipeline amounting to
$81,813,000 in 1993. The Company did not purchase gas from Questar
Pipeline subsequent to September 1, 1993 when Questar Pipeline
began operating in accordance with FERC Order No. 636.  Also
included in natural gas purchases are amounts paid to Questar
Pipeline for the transportation, storage and gathering of
Company-owned gas and purchased gas.  These costs were $69,950,000
in 1995, $70,945,000 in 1994 and $38,862,000 in 1993.

Mountain Fuel has reserved transportation capacity on Questar
Pipeline's system of approximately 800,000 decatherms per day and
pays an annual demand charge of approximately $49.4 million for
this reservation. Mountain Fuel releases excess capacity to its
industrial transportation or other customers and receives a credit
from Questar Pipeline for the released-capacity revenues and a
portion of Questar Pipeline's interruptible-transportation
revenues.

Questar InfoComm Inc. is an affiliated company that provides data
processing and communication services to Mountain Fuel.  The
Company paid Questar InfoComm $15,781,000 in 1995, $15,996,000 in
1994 and $14,847,000 in 1993.

Questar charges Mountain Fuel for certain administrative functions
amounting to $5,283,000 in 1995, $5,814,000 in 1994 and $5,609,000
in 1993.   These costs are included in operating and maintenance
expenses and are allocated based on each affiliated company's
proportional share of revenues less gas costs; property, plant and
equipment; and labor costs. Management believes that the allocation
method is reasonable.

The Company received interest income from affiliated companies of
$10,000 in 1995, $225,000 in 1994 and $327,000 in 1993.  The
Company had debt expense to affiliated companies of $1,273,000 in
1995, $134,000 in 1994, and $21,000 in 1993.


Note I - Oil and Gas Producing Activities (Unaudited)

The following information discusses the Company's oil and gas
producing activities.  All of the properties are cost-of-service
properties with the return on investment established by state
regulatory agencies. Mountain Fuel has not incurred any costs for
oil and gas producing activities for the three years ended December
31, 1995.  Wexpro develops and produces gas reserves owned by the
Company.  See Note I for the amounts paid by Mountain Fuel to
Wexpro.

Estimated Quantities of Proved Oil and Gas Reserves:  The following
estimates were made by Questar's reservoir engineers.  Reserve
estimates are based on a complex and highly interpretive process
which is subject to continuous revision as additional production
and development drilling information becomes available.  The
quantities are based on existing economic and operating conditions
using current prices and operating costs. All oil and gas reserves
reported are located in the United States.  Mountain Fuel does not
have any long-term supply contracts with foreign governments or
reserves of equity investees. No estimates are available for proved
undeveloped reserves that may exist.
<TABLE>
<CAPTION>
                                          Natural Gas     Oil
                                          (In Million     (In Thousands
                                          Cubic Feet)     of Barrels)
<S>                                        <C>             <C>
Proved Developed Reserves
Balance at January 1, 1993                    399,611         787
      Revisions of estimates                   (1,158)         57
      Extensions and discoveries               65,293           9
      Production                              (35,508)        (81)
Balance at December 31, 1993                  428,238         772
      Revisions of estimates                     (576)         13
      Extensions and discoveries               26,085         (13)
      Production                              (37,435)        (65)
Balance at December 31, 1994                  416,312         707
      Revisions of estimates                     (831)         10
      Extensions and discoveries               10,591           2
      Production                              (36,632)        (57)
Balance at December 31, 1995                  389,440         662
</TABLE>
<PAGE>

                               SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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, on the 27th day of March, 1996.

                                 MOUNTAIN FUEL SUPPLY COMPANY
                                       (Registrant)


                                 By  /s/ D. N. Rose
                                    D. N. Rose
                                    President and Chief 
                                    Executive Officer


      Pursuant to the requirements of the Securities Exchange Act of 
1934, this report has been signed below by the following persons on 
behalf of the registrant and in the capacities and on the date 
indicated.


  /s/ D. N. Rose                 President and Chief Executive 
 D. N. Rose                      Officer;  Director (Principal
                                 Executive Officer)


  /s/ S. E. Parks                Vice President, Treasurer and Chief 
 S. E. Parks                     Financial Officer
                                 (Principal Financial Officer)


  /s/ G. H. Robinson             Vice President and Controller  
 G. H. Robinson                  (Principal Accounting Officer)


*Robert H. Bischoff              Director
*R. D. Cash                      Chairman of the Board
*W. Whitley Hawkins              Director
*Robert E. Kadlec                Director
*Dixie L. Leavitt                Director
*Gary G. Michael                 Director
*D. N. Rose                      Director


March 27, 1996                   *By  /s/ D. N. Rose
  Date                                D. N. Rose, Attorney in Fact
<PAGE>

                               EXHIBIT INDEX

Exhibit
Number      Exhibit     

 3.1.*      Restated Consolidated Articles of Incorporation dated August 
            15, 1980.  (Exhibit No. 4(a) to Registration Statement No. 
            2-70087, filed December 1, 1980.)

 3.2.*      Certificate of Amendment to Restated Consolidated Articles 
            of Incorporation dated May 13, 1982.  (Exhibit No. 3(b) to 
            Form 10-K Annual Report for 1982.)

 3.3.*      Certificate of Amendment to Restated Consolidated Articles 
            of Incorporation dated May 10, 1983.  (Included in Exhibit 
            No. 4.1. to Registration Statement No. 2-84713, filed June 
            23, 1983.)

 3.4.*      Certificate of Amendment to Restated Consolidated Articles 
            of Incorporation dated August 16, 1983.  (Exhibit No. 3(a) 
            to Form 8 Report amending the Company's Form 10-Q Report for 
            Quarter Ended September 30, 1983.)

 3.5.*      Certificate of Amendment to Restated Consolidated Articles 
            of Incorporation dated October 26, 1984.  (Exhibit No. 3.5. 
            to Form 10-K Annual Report for 1984.)

 3.6.*      Certificate of Amendment to Restated Consolidated Articles 
            of Incorporation dated May 13, 1985.  (Exhibit No. 3.1. to 
            Form 10-Q Report for Quarter Ended June 30, 1985.)

 3.7.*      Articles of Amendment to Restated Consolidated Articles of 
            Incorporation dated February 10, 1988.  (Exhibit No. 3.7. to 
            Form 10-K Annual Report for 1987.)

 3.8.*      Bylaws (as amended effective August 11, 1992).  (Exhibit No. 
            3.8. to Form 10-K Annual Report for 1992.)

 4.*        Indenture dated as of May 1, 1992, between the Company and 
            Citibank, as trustee, for the Company's Debt Securities. 
            (Exhibit No. 4. to Form 10-Q Report for Quarter Ended June 
            30, 1992.)

 10.1.*     Stipulations and Agreement, dated October 14, 1981, executed 
            by Mountain Fuel Supply Company; Wexpro Company; the Utah 
            Department of Business Regulations, Division of Public 
            Utilities; the Utah Committee of Consumer Services; and the 
            staff of the Public Service Commission of Wyoming.  (Exhibit 
            No. 10(a) to Form 10-K Annual Report for 1981.)

 10.7.*     Data Processing Services Agreement effective July 1, 1985, 
            between Questar Service Corporation and Mountain Fuel Supply 
            Company.  (Exhibit 10.7. to Form 10-K Annual Report for 
            1988.)

 10.8.1     Mountain Fuel Supply Company Annual Management Incentive 
            Plan as amended and restated effective February 13, 1996.  

 10.9.*1    Mountain Fuel Supply Company Window Period Supplemental 
            Executive Retirement Plan effective January 24, 1991.  
            (Exhibit No. 10.9. to Form 10-K Annual Report for 1990.)

 10.10.1    Mountain Fuel Supply Company Deferred Compensation Plan for 
            Directors as amended and restated effective February 13, 
            1996.

 10.11.*    Gas Gathering Agreement between Mountain Fuel Supply Company 
            and Questar Pipeline Company effective September 1, 1993.

 25.        Power of Attorney.

 27.        Financial Data Schedule.
_______________________
    *Exhibits so marked have been filed with the Securities and Exchange 
Commission as part of the referenced filing and are incorporated herein 
by reference.  

    1 Exhibits so marked are management contracts or compensation plans 
or arrangements.