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 operations in a fully liberalized energy market, 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 below-average growth record and is economically weaker than the Austrian average. The province controls 51% of Kärnten Energieholding Beteiligungs GmbH (KEH), which in turn holds a 63.85% interest in KELAG, while German utility RWE
