...Balanced Contractual Position: Colbun S.A.'s ratings incorporate its commercial strategy based on contracts that represent 94% of the firm's energy capacity. The contracts are balanced between regulated and non-regulated clients and carry a weighted average life of approximately 9.8 years. These contracts have adequate indexation mechanisms that closely match the company's generation mix and somewhat mitigate Colbun's exposure to fuel price volatility. Based on normal to dry hydrology conditions, Colbun's contract requirements are balanced, with approximately 12,000 gigawatt hours (GWh) contracted per year. Favorable Natural Gas Contracts: Under a dry hydrology scenario, Colbun's contracted volume could be met by the company's natural gas units or by purchases on the spot market, with a negative effect on margins. Positively, the company has extended its temporary natural gas contracts for its thermal units with Metrogas SA and Enap Refinerias S.A. (A/Stable) until 2019. Fitch Ratings views...
