The ratings on Austria-based utility KELAG AG reflect KELAG's low business risk, owing to its strong position in electricity supply and its monopoly on regional electricity distribution in the Austrian State of Carinthia (Carinthia). KELAG also has advantageous pumped-storage hydro-generation assets and a robust and further improving financial profile. These strengths are offset by KELAG's small size, its operation in a fully liberalized energy market, and further regulatory pressure from the recently announced new incentive-based regime for setting network tariffs. Carinthia controls 51% of Kärnten Energieholding Beteiligungs GmbH (KEH), which in turn holds a 63.85% interest in KELAG. German utility, RWE AG, holds the remaining 49% of KEH. Austrian law currently prohibits private majority ownership of electricity utilities and this
