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 flexible and low-cost hydro-based generation activities, which supply about 65% of its own power needs; and its solid financial profile, with limited borrowing needs in the medium term. These strengths are partly offset by KELAG's exposure to volatile wholesale power prices in the liberalized Austrian energy market; its exposure to hydro levels, since generation output varies
