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 for about 30% of EBITDA--and its low marginal cost hydropower generation assets. Further supportive factors include satisfactory electricity coverage of about 60% of its contracted power needs, which comes from own generation, as well as its solid financial profile. Standard&Poor's Ratings Services considers the rating on KELAG to be constrained by the company's exposure to volatile wholesale power prices and the unregulated Austrian energy supply
