Strong market position in the State of Carinthia. Flexible and low-cost generation portfolio. Significant contribution from low-risk regulated activities. Solid financial risk profile. Majority of earnings from generation. Exposure to hydro conditions and wholesale price volatility. Significantly expanded capital expenditure (capex) program. Rising competition in domestic electricity supply market. The ratings on Austria-based utility KELAG reflect Standard&Poor's Ratings Services' view of the company's strong market position in the State of Carinthia (not rated), where it is the dominant supplier of electricity. The ratings also reflect KELAG's stable and predictable cash flows from its monopoly regional distribution activities in electricity, gas, and heat, which account for about 20% of its earnings; its favorable low-cost, hydro-based generation activities, which supply
