The ratings on KELAG-Kärntner Elektrizitäts-Aktiengesellschaft (KELAG) reflect the low business risk from its strong position in the electricity supply market, and its regional electricity distribution monopoly in the Austrian Province of Carinthia. The ratings are further underpinned by KELAG's robust financial profile. These strengths are partly offset by KELAG's small size in terms of sales and customers, possible further pressure on supply margins, and uncertainty about the impact of regulatory pressure on network tariffs in the medium term. The Province of Carinthia, KELAG's traditional service area, has a somewhat patchy growth record and is economically weaker than the Austrian average. The province controls 51% of Kärnten Energieholding Beteiligungs GmbH (KEH), which holds a 63.85% interest in KELAG, while German utility
