The ratings on Austria-based utility KELAG AG (KELAG) reflect the low business risk arising from its strong position in electricity supply and its regional electricity distribution monopoly in the Austrian State of Carinthia. Further rating strengths are KELAG's advantageous pumped-storage hydro-generation assets and its robust and improving financial profile. These strengths are offset by KELAG's small size, its operation in a fully liberalized energy market, and uncertainties about the effect of regulatory pressure on network tariffs over the medium term. The State of Carinthia, KELAG's traditional service area, is economically weaker than the Austrian average. The state still controls 51% of Kärnten Energieholding Beteiligungs GmbH (KEH), which in turn holds a 63.85% interest in KELAG. German utility RWE AG holds
