Distribution monopoly and very strong market position in electricity and gas supply; Robust financial profile; Favorable low-cost generation portfolio; and No regulatory pressure on network charges expected in the short term (until mid-2004). Small-sized utility by Austrian and European comparison; Expected regulatory pressure on system charges (network tariffs) in the medium term (from 2004 onward); and Operates in a 100%-liberalized market. The ratings on KELAG AG (KELAG) reflect the low business risk from its strong position in electricity supply, and its regional electricity distribution monopoly in the Austrian province of Carinthia. Further rating strengths are KELAG's strategic pumped-storage hydro-generation assets and its robust financial profile. These strengths are partly offset by KELAG's small size, its operation in a fully liberalized
