The ratings on Empresa Electrica del Norte Grande S.A. (Edelnor) reflect the company's weak although improving financial profile partly offset by its diversified generation base, ownership of transmission assets (a competitive advantage), and its 21% equity stake in the Gasoducto Norandino pipeline, which provides stable cash flow. Edelnor operates in the Northern Interconnected System (SING), where about 40% of the nearly 2,600 MW of installed generation depends on natural gas (considering dispatch restrictions to natural gas-fired units). The need to burn coal or fuel oil as a result of natural gas supply shortages to gas-fired power plants and the system's oversupply when natural gas is available (peak demand reached 1,645 MW in 2004) subjects Edelnor to spot-price volatility, which affects
