Very strong position in the power supply market in the Austrian State of Carinthia. Low marginal cost hydropower generation portfolio. Significant contribution from low-risk regulated activities. Modest financial risk profile. Exposure to wholesale price fluctuation in unregulated generation and supply operations. Sensitivity to hydrological conditions in power generation that add to cash flow volatility. Current capital expenditure program will weaken key credit metrics over the medium term. The rating on Austrian integrated regional utility KELAG reflects the company's strong market position in the State of Carinthia (not rated), where it is the dominant generator and supplier of electricity. The rating also reflects KELAG's stable and predictable cash flow from its monopolistic regional distribution activities in electricity and gas--which together account
