Form 6-K

6-K 1 d6k.htm FORM 6-K Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 or 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

April 27, 2007

IBERDROLA, S.A.

(Exact name of registrant as specified in its charter)

Cardenal Gardoqui, 8

48008 Bilbao

Spain

(Address of principal executive offices)

Copies to:

Michael S. Immordino

Latham & Watkins

99 Bishopsgate

London EC2M 3XF

United Kingdom

Tel: +44 20 7710 1000

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F: x Form 40-F: ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes: ¨ No: x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable

Exhibit Index


Exhibit Number		Description
Exhibit 99.1		Press release regarding Iberdrola’s 2007 First Quarter Results

Exhibit 99.2		Iberdrola’s 2007 First Quarter Results

Exhibit 99.3		Presentation regarding Iberdrola’s 2007 First Quarter Results

Exhibit 99.4		Report on Iberdrola’s 2007 First Quarter Results

Exhibit 99.5		Iberdrola and Scottish Power Presentation: Introduction

Exhibit 99.6		Iberdrola and Scottish Power Presentation: Introduction to Scottish Power and its markets

Exhibit 99.7		Iberdrola and Scottish Power Presentation: Generation and Supply

Exhibit 99.8		Iberdrola and Scottish Power Presentation: Wind

Exhibit 99.9		Iberdrola and Scottish Power Presentation: Scottish Power -Transmission and Distribution

Exhibit 99.10		Iberdrola and Scottish Power Presentation: Scottish Power - North American Businesses

Exhibit 99.11		Iberdrola and Scottish Power Presentation: Scottish Power - Strategic Fit & Valuation Considerations

Exhibit 99.12		Annex to Iberdrola’s 2007 First Quarter Results - Significant Events

Exhibit 99.13		Other communications in connection with Iberdrola’s increase of its stake in Medgaz and CNE’s authorisation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


IBERDROLA, S.A.
(Registrant)

By		/s/ JULIAN MARTINEZ-SIMANCAS SANCHEZ
		Name: Julián Martínez-Simancas Sánchez
		Title: General Secretary

Date: April 27, 2007

Exhibit 99.1

Birth of a world leader

PRESS RELEASE


26 April 2007


		Net profit rose 13.6% to €458.2 million in the first quarter of 2007
		IBERDROLA IS NOW ONE OF THE WORLD’S LARGEST ELECTRICITY COMPANIES WITH THE SCOTTISHPOWER OPERATION
		INTEGRATED GROUP
		• *GROWTH:* With an enterprise value of more than €67 billion and a project pipeline in renewables of 37,700 MW, the combination of Iberdrola and ScottishPower represents a platform for future growth in Europe and the Americas
		FIRST QUARTER: KEY DATA
		• *HIGHER PRODUCTION:* Electricity production rose 6.9% to 24,750 GWh; the increase in Spain is 2.5% compared to a fall of 0.5% for the rest of the sector
		• *LOWER EMISSIONS:* CO₂emissions per kWh were reduced by 37.1% in Spain from 212 to 133 grammes, increasing the ratio of clean energy production to 76%
		• *WIND POWER:* World leadership consolidated in this sector, with an operational capacity in renewables of 4,552 MW at the close of the quarter, of which 459 MW was outside Spain
		RESULTS
		• *FACTORS:* Group EBITDA rose 2.9% in the period to €1,087.1 million, in a context of lower prices and lower energy demand in Spain
		• *STRATEGY:* International and non-energy businesses increased their contributions to gross operating profit by 41% and 40%, respectively

Communications


		IBERDROLA has become one of the largest electricity companies in the world having last Monday completed the transaction with ScottishPower for €17.1 billion, one of the biggest in Spanish corporate history. With an enterprise value of more than €67 billion, the combination of the two companies creates a platform for future growth in Europe and the Americas.
		During the first quarter of the year, IBERDROLA has continued the strategy initiated in 2001 that has enabled it to successfully face this large-scale operation in record time. Net profit rose 13.6% to €458.2 million, in a difficult context of low electricity prices and lower energy demand in Spain.
		Completion of the IBERDROLA-ScottishPower transaction, valued at €17.1 billion and announced in November 2006, is a milestone in the Company’s 100-year history. It creates a world electricity giant, leader in renewable energy and an enterprise value of more than €67 billion.
		This operation, in line with the strategy drawn up by IBERDROLA last October for the period 2007-09, will enable the group to accelerate planned growth, offer new long-term business opportunities, diversify risk and maintain financial strength with a view to creating value for shareholders.
		The operation, which is among the largest in Spanish business history, has been strongly endorsed by shareholders of both companies – 99.5% at the IBERDROLA Shareholders Meeting and 97.6% at the ScottishPower EGM – as well as by the markets. Between 27 November 2006 and April 23 more than €4 billion in value was created.

		The geographical footprint of IBERDROLA and ScottishPower is now of significant proportions, creating an Atlantic platform. It has operations in Spain, the UK, the United States, Mexico, Brazil, Greece, Portugal, France, Germany, Italy, Poland, Guatemala, Bolivia and Chile. The group also has a substantial project pipeline that will enable it to continue growing in the future.

Communications


		The combined group has a total installed capacity of around 40,000 megawatts (MW) compared with the 30,500 MW of IBERDROLA alone (a rise of 28%). Of this new capacity, 32,500 MW relates to conventional generation, an increase of 25% over IBERDROLA’s current level of 26,000 MW.
		The new integrated group will consolidate IBERDROLA’s world leadership in renewable energy, especially in wind power. Added to the more than 4,500 MW of IBERDROLA are over 2,000 MW from ScottishPower, mostly from U.S. company PPM, increasing capacity by 44% to 6,562 MW.
		The combined project pipeline of IBERDROLA and ScottishPower in renewable energy stands at 37,675 MW: approximately 6,000 MW are in Spain and another 6,000 MW in the UK, nearly 5,400 MW in the rest of Europe, more than 19,200 MW in the United States, 400 MW in Latin America, and 500 MW in the rest of the world.
		The new Group has a significantly larger consumer base, with the 3.3 million customers of ScottishPower adding to the 18.4 million of IBERDROLA to total 21.7 million in Europe and the Americas, a rise of 18%.
		The Company now has 2.7 billion cubic metres of gas storage capacity in the UK and the United States, with significant expansion potential.

		The integration of IBERDROLA and ScottishPower also represents a strengthening of the commitment of both companies with shareholders, customers, employees and communities where they operate, thanks to their powerful business platform. The Group is a leader in renewable energy, with a balanced generation mix, low dependence on foreign supplies, excellent efficiency levels and financially sound.
		Net profit rose 13.6% in the first quarter
		IBERDROLA’s strategic decision to invest in basic energy, and its progressive international expansion, have once again been reflected in results for the first quarter of 2007 with a double digit rise in net profit (13.6%) to €458.2 million, in line with expectations for the year as a whole.
		In a difficult context in Spain, with falling energy prices (-41%) and modest growth in electricity demand (1.8%), the Company has succeeded in increasing gross operating profit (EBITDA) by 2.9% €1,087.1 million.
		IBERDROLA has assigned the bulk of investments over the past few years to increasing electricity production capacity via combined cycles and wind farms. Over the past 12 months it has started up 2,607 megawatts (MW) to achieve

Communications


		total capacity of 30,502 MW at March 31, of which 26,084 MW was in Spain (85.2% of the total).
		The IBERDROLA group has increased output in the first three months of the year by 6.9% to 24,752 million kWh, as a result of new capacity. In Spain, the Company generated 18,208 million kWh in the period, a rise of 2.5% over the same period of 2006.

		Increased output from clean energy technology has allowed IBERDROLA to substantially reduce its emissions during the period, both at Group level (24.2% less from 247 grammes of CO₂ per kWh to 188 grammes) and in Spain (37.1% lower from 212 grammes of CO₂ per kWh to 133 grammes, a third the level for the rest of the sector of 378 grammes. As a result, emission free production came to 76% of the total.
		These figures again underline that new investments in generation have not only allowed IBERDROLA to balance and diversify its production mix, placing a limit on traditional technologies, but also to continue contributing to meeting the goals of the Kyoto protocol, to which it is firmly committed.
		World leadership in wind power. The Company has continued to strengthen its leadership in renewable energy with new installations and a number of transactions outside Spain in the first three months of the year.

		The most significant of these was the acquisition of CPV Wind Ventures LLC of the United States por €55 million, in line with IBERDROLA’s plans to increase its presence in the wind power market in this country where it already has a project pipeline of 8,500 MW. It also signed an agreement in Italy with API Group to develop wind farms, increased its stake in Greek company Rokas to 52.7% and started work on two wind farms in France.
		The Company incorporated 638 MW in new wind power capacity over the past 12 months, to a total of 4,552 MW, an increase of 16.3% over the 3,914 MW in

Communications


		March 2006. Of total installed capacity, 4,210 MW relates to wind power – 459 MW outside Spain – and 342 to mini hydro plants.
		Renewable energy plants achieved a production of 2,725 million kWh in the first three months (+21%), accounting for 11% of total output, with a significant (23.2%) increase in wind power to 2,578 million kWh.
		IBERDROLA envisages renewable energy capacity of 7,000 MW on stream in 2009, almost entirely wind power, and more than 10,000 MW in 2011.
		The largest combined cycle operator in Spain. Consistent with its focus on clean energy, IBERDROLA continues to build combined cycle gas plants in Spain and manages a total installed capacity of 5,600 MW. It has plans to bring the Castellón 4 combined cycle on stream this year with installed capacity of 800 MW.


Project	Capacity (MW managed)	Startup
Castellón	800	Operative 2002
Castejón	400	Operative 2003
Bahía Bizkaia Electricidad	800	Operative 2003
Tarragona	400	Operative 2003
Santurce	400	Operative 2004
Arcos Group I & II	800	Operative 2004
Aceca	400	Operative 2005
Arcos Group III	800	Operative 2005
Escombreras	800	Operative 2006
Total 2002-2005	5,600	2006

Castellón 4	800	Projected 2007
Total 2002-2007	6,400 (5,600 owned)	2007


		In this context, a contract was signed recently to acquire the site for IBERDROLA’S first combined cycle plant in Portugal (Figueira da Foz), with a capacity of 850 MW and which could start up operations in 2009.
		At the same time, and meeting strategic goals of starting up power stations capable of covering increased demand, IBERDROLA has received approval from the Environment Ministry for two hydroelectric plants: a new complex at La Muela (Valencia) to double its capacity to 630 MW and a 175 MW expansion of the San Esteban plant in the Sil basin.
		Increase in international contribution First quarter results were supported substantially by the fruits of investments in business outside Spain, where EBITDA rose 41% to €200.5 million.
		Electricity production in Latin America rose 21.5% over the same period of 2006 to 6,544 million kWh (26.4% of Group total), with a significant contribution from combined cycles which generated 22.4% more to 6,161 million kWh

Communications


		acccounting for 94.1% of electricity produced by the Company in the region. Energy distributed there by IBERDROLA increased 6.2% to 7,254 kWh. IBERDROLA confirmed its position as the number one privately owned energy producer in Mexico, with an installed capacity of 3,814 MW. In February, it began tests at the combined cycle plant at Tamazunchale (1,135 MW) in the State of San Luis Potosí, the largest to be put in operation in this country.

		IBERDROLA THERMAL GENERATION PROJECTS IN MEXICO


Project	Capacity (MW)	Status
Enertek	120	100% operative
Monterrey III	1,037	100% operative
Altamira III y IV	1,036	100% operative
La Laguna II	500	100% operative
Altamira V	1,121	100% operative

Tamazunchale	1,135	Operational 2007
TOTAL	4,949	2007


Progressive contribution from non-energy business. These businesses, in particular the engineering and construction along with the real estate subsidiaries, played an important part in the first quarter registering a 40% rise in EBITDA to €122.5 million.
• Iberdrola Ingeniería y Construcción. The subsidiary has projects under way in more than 25 countries, and during the first quarter won a major contract worth 605 million dollars to modernise and increase capacity of the Laguna Verde nuclear plant in Mexico.
• Iberdrola Inmobiliaria. The company delivered 351 houses during the period and has a total of 16 housing projects under way (1,154 units) and another 20 under negotiation (1,498 homes). In the non-residential sector, it is promoted an office building in Málaga con 1,152 m² and the Porta Firal project in Barcelona, with 91,111 m² above street level and 42,363 m² below street level, due to start construction this summer.

Positive results in a difficult scenario


Eur MM	Q1 2007	Q1 2006	Change%
Gross Margin	1,572.4	1,493.9	+5.3
Net Op. Expenses	-439.3	-391.2	+12.3
EBITDA	1,087.1	1,056.6	+2.9
Operating Profit (EBIT)	794.8	788.4	+0.8
Financial Result	-163.5	-163.4	+0.1
Non-recurrent assets +Equity Income	29.3	5.7	N/M
Net Profit	458.2	403.2	+13.6

Communications


		This communication does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities. The shares of Iberdrola, S.A. may not be offered or sold in the United States of America except pursuant to an effective registration statement under the Securities Act or pursuant to a valid exemption from registration.
		FORWARD-LOOKING STATEMENTS
		This communication contains forward-looking information and statements about Iberdrola, S.A. and otherwise, including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, capital expenditures, synergies, products and services, and statements regarding future performance. Forward-looking statements are statements that are not historical facts and are generally identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions.
		Although Iberdrola, S.A. believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Iberdrola, S.A. shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Iberdrola, S.A., that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public documents sent by Iberdrola, S.A. to the Comisión Nacional del Mercado de Valores.
		Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Iberdrola, S.A. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date they were made. All subsequent oral or written forward-looking statements attributable to Iberdrola, S.A. or any of its members, directors, officers, employees or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included herein are based on information available to Iberdrola, S.A. on the date hereof. Except as required by applicable law, Iberdrola, S.A. does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Communications

Exhibit 99.2

LOGO

Income Statement

First Quarter 2007

(Unaudited)

Million Euros


	Q1 2007		Q1 2006		Change %
NET SALES	2,716.6		2,978.4		(8.8	)
PROCUREMENTS	(1,136.1	)	(1,377.1	)	(17.5	)
EMISSION ALLOWANCES	(8.0	)	(107.4	)	(92.6	)
GROSS MARGIN	1,572.5		1,493.9		5.3
EMISSION ALLOWANCES	2.3		6.2		(62.9	)
NET OPERATING EXPENSES	(439.4	)	(391.2	)	12.3
Net personnel expenses	(202.9	)	(211.4	)	(4.0	)
Personnel	(243.2	)	(253.1	)	(3.9	)
In-house work on fixed assets	40.3		41.7		-3.4
Net External Services	(236.5	)	(179.8	)	31.5
External services	(275.3	)	(222.5	)	23.7
Other operating revenues	38.8		42.7		-9.1
TAX	(48.3	)	(52.3	)	(7.6	)
EBITDA	1,087.1		1,056.6		2.9
AMORTISATION AND PROVISIONS	(292.3	)	(268.2	)	9.0
EBIT	794.8		788.4		.8
TOTAL FINANCIAL REVENUES	65.8		40.7		61.7
Financial revenues	41.9		19.4		116.0
Positive exchange rate differences	8.1		1.3		523.1
Capitalised financial expenses	15.8		20.0		(21.0	)
TOTAL FINANCIAL EXPENSES	(229.2	)	(204.1	)	12.3
Interest expenses	(169.7	)	(152.4	)	11.4
Negative exchange rate differences	(11.4	)	(2.9	)	293.1
Pension funds	(8.4	)	(8.8	)	(4.5	)
Change in provisions for short term financial investments	(.8	)	(.2	)	N/A
Other financial expenses	(38.9	)	(39.8	)	(2.3	)
RESULTS OF COMPANIES CARRIED BY EQUITY METHOD	19.9		4.1		385.4
INCOME FROM NON-CURRENT ASSETS	9.3		1.6		481.3
PROFIT BEFORE TAXES	660.6		630.7		4.7
Corporate income tax	(193.8	)	(221.6	)	(12.5	)
Minorities	(8.6	)	(5.9	)	45.8
NET PROFIT	458.2		403.2		13.6

LOGO

Balance Sheet

First Quarter 2007

(Unaudited)

Million Euros


	March 2007		December 2006		Change
FIXED ASSETS	25,532		25,188		344
Tangible fixed assets	21,737		21,564		173
Intangible fixed assets	967		900		67
Long-term financial investments	2,828		2,724		104
DEFERRED TAX	1,133		1,222		(89	)
NON-CURRENT ACCOUNTS RECEIVABLE	884		833		51
CURRENT ASSETS	6,453		5,818		635
Nuclear fuel	243		238		5
Inventories	1,340		1,193		147
Accounts receivable	2,759		2,791		(32	)
Taxes receivable	789		602		187
Short temp. Financial Investments	310		289		21
Cash & equivalents	1,012		705		307
TOTAL ASSETS	34,002		33,061		941

	March 2007		December 2006		Change
SHAREHOLDERS’ EQUITY	10,564		10,567		(3	)
Capital Stock	2,705		2,705
Reserves and other	7,298		6,100		1,198
Profit and Loss	458		1,660		(1,202	)
Treasury Stock	(3	)	(3	)
Exchange differentials	(50	)	(44	)	(6	)
Minority interest	156		149		7
LONG TERM PROVISIONS	1,658		1,718		(60	)
DEFERRED INCOME	864		818		46
FINANCIAL DEBT	14,599		14,352		247
OTHER LONG-TERM DEBT	5,217		4,541		676
OTHER SHORT TERM DEBT	957		847		110
PAYABLE TO CO. ACCOUNTED BY EQUITY METHOD	143		218		(75	)
TOTAL LIABILITIES	34,002		33,061		941

LOGO

Results by Business

First Quarter 2007

(Unaudited)

Million Euros


	Domestic Energy		International Business		Engineering & Non- Energy
Net sales	1,635.1		611.4		470.0
Procurements	(506.7	)	(344.9	)	(284.5	)
Emission allowances	(8.0	)
Gross Margin	1,120.4		266.5		185.5
Emission allowances	2.3
Net operating expenses	(314.5	)	(63.7	)	(61.0	)
Net personnel expenses	(149.5	)	(24.4	)	(29.0	)
Personnel	(177.0	)	(27.8	)	(38.4	)
In-house work on fixed assets	27.5		3.4		9.4
Net External Services	(165.0	)	(39.3	)	(32.0	)
External services	(193.8	)	(44.5	)	(36.9	)
Other operating revenues	28.8		5.2		4.9
TAX	(44.0	)	(2.3	)	(2.0	)
EBITDA	764.2		200.5		122.5
Amortisation and provisions	(230.1	)	(43.6	)	(18.6	)
EBIT / Operating Profit	534.1		156.9		103.9
Financial Result	(142.6	)	(21.1	)	.1
Companies using equity method	.7		1.4		17.8
Income from non-current assets	9.8		(.3	)	(.1	)
PROFIT BEFORE TAXES	402.0		136.9		121.7
Corporate tax & minorities	(131.1	)	(39.1	)	(32.3	)
Net Profit	270.9		97.8		89.4

*First Quarter 2006*

*Million Euros*

	Domestic Energy		International Business		Engineering & Non- Energy
Net sales	2,048.6		584.6		345.2
Procurements	(795.7	)	(388.7	)	(192.6	)
Emission allowances	(107.4	)
Gross Margin	1,145.5		195.9		152.6
Emission allowances	6.2
Net operating expenses	(276.0	)	(51.8	)	(63.5	)
Net personnel expenses	(156.2	)	(17.9	)	(37.3	)
Personnel	(181.7	)	(21.6	)	(49.7	)
In-house work on fixed assets	25.5		3.7		12.4
Net External Services	(119.8	)	(33.9	)	(26.2	)
External services	(142.7	)	(46.1	)	(33.8	)
Other operating revenues	22.9		12.2		7.6
TAX	(48.7	)	(1.9	)	(1.6	)
EBITDA	827.0		142.2		87.5
Amortisation and provisions	(211.8	)	(40.0	)	(16.3	)
EBIT / Operating Profit	615.2		102.2		71.2
Financial Result	(131.9	)	(27.5	)	(3.9	)
Companies using equity method	(1.5	)	2.8		2.7
Income from non-current assets	2.6		(.6	)	(.5	)
PROFIT BEFORE TAXES	484.4		76.9		69.5
Corporate tax & minorities	(191.6	)	(18.0	)	(17.9	)
Net Profit	292.8		58.9		51.6

LOGO

Domestic Energy Busines

First Quarter 2007

(Unaudited)

Million Euros


	GENER		RENEW		DISTRIB		SUPPLY		CORP.
Net sales	848.9		203.4		373.1		445.4		(235.7	)
Procurements	(316.9	)			(1.9	)	(419.9	)	232.0
Emission allowances	(8.0	)
Gross Margin	524.0		203.4		371.2		25.5		(3.7	)
Emission allowances	2.3
Net operating expenses	(139.0	)	(41.1	)	(114.0	)	(12.4	)	(8.0	)
Net personnel expenses	(49.2	)	(10.3	)	(44.9	)	(5.3	)	(39.7	)
Personnel	(54.7	)	(12.4	)	(63.7	)	(5.3	)	(40.8	)
In-house work on fixed assets	5.5		2.1		18.8				1.1
Net External Services	(89.8	)	(30.8	)	(69.1	)	(7.1	)	31.7
External services	(98.8	)	(35.3	)	(86.5	)	(7.1	)	33.9
Other operating revenues	9.0		4.5		17.4				(2.2	)
TAX	(18.6	)	(2.3	)	(30.6	)	8.6		(1.1	)
EBITDA	368.7		160.0		226.6		21.7		(12.8	)
Amortisation and provisions	(117.5	)	(53.9	)	(50.3	)	(1.0	)	(7.5	)
EBIT / Operating Profit	251.2		106.1		176.3		20.7		(20.3	)
Financial Result	(33.8	)	(31.3	)	(23.3	)	.1		(54.2	)
Companies using equity method	.2				.7		(.1	)
Income from non-current assets	(.1	)			7.4				2.4
PROFIT BEFORE TAXES	217.5		74.8		161.1		20.7		(72.1	)
Corporate tax & minorities	(69.7	)	(27.9	)	(51.8	)	(6.7	)	25.0
Net Profit	147.8		46.9		109.3		14.0		(47.1	)

*First Quarter 2006*

Million Euros

	GENER		RENEW		DISTRIB		SUPPLY		CORP.
Net sales	1,345.8		215.2		265.5		618.8		(396.8	)
Procurements	(556.6	)					(628.9	)	389.8
Emission allowances	(107.4	)
Gross Margin	681.8		215.2		265.5		(10.1	)	(7.0	)
Emission allowances	6.2
Net operating expenses	(118.5	)	(30.6	)	(124.9	)	(13.6	)	11.6
Net personnel expenses	(53.1	)	(5.3	)	(51.3	)	(11.1	)	(35.4	)
Personnel	(57.8	)	(6.5	)	(69.5	)	(11.1	)	(36.8	)
In-house work on fixed assets	4.7		1.2		18.2				1.4
Net External Services	(65.4	)	(25.3	)	(73.6	)	(2.5	)	47.0
External services	(73.1	)	(27.7	)	(90.3	)	(9.2	)	57.6
Other operating revenues	7.7		2.4		16.7		6.7		(10.6	)
TAX	(18.0	)	(1.9	)	(24.4	)	(3.6	)	(.9	)
EBITDA	551.5		182.7		116.2		(27.3	)	3.7
Amortisation and provisions	(96.4	)	(41.7	)	(64.7	)	(2.1	)	(6.9	)
EBIT / Operating Profit	455.1		141.0		51.5		(29.4	)	(3.2	)
Financial Result	(20.0	)	(21.2	)	(18.1	)	1.0		(73.6	)
Companies using equity method	(2.0	)			.6
Income from non-current assets	.3								2.2
PROFIT BEFORE TAXES	433.4		119.8		34.0		(28.4	)	(74.6	)
Corporate tax & minorities	(146.9	)	(44.0	)	(10.9	)	10.1		.2
Net Profit	286.5		75.8		23.1		(18.3	)	(74.4	)

LOGO

STATEMENT OF SOURCES & USES OF FUNDS

First Quarter 2007

(Unaudited)

Million Euros


	Jan - March 2007		Jan - March 2006		Difference
EBIT	795.0		788.0		7.0
Amortisation	284.0		249.0		35.0
Provisions	9.0		19.0		(10.0	)
Provision for the pension funds	(11.0	)	10.0		(21.0	)
Operating Cash Flow	1,077.0		1,066.0		11.0
Interest paid	(183.0	)	(195.0	)	12.0
Interest received	39.0		41.0		(2.0	)
Dividends received from affiliates	.0		5.0		(5.0	)
Minority interests	(9.0	)	(6.0	)	(3.0	)
Tax	(193.0	)	(221.0	)	28.0
Gross Cash Flow	731.0		690.0		41.0
Dividends paid	(406.0	)	(331.0	)	(75.0	)
Retained Cash Flow	325.0		359.0		(34.0	)
Investments	(506.0	)	(435.0	)	(71.0	)
Fixed asset disposals	(9.0	)	2.0		(11.0	)
Financial asset disposals	.0		.0		.0
Taxes on investment activities	(1.0	)	(1.0	)	.0
Pension payments & other	(56.0	)	(54.0	)	(2.0	)
Total Cash Flow Applications	(572.0	)	(488.0	)	(84.0	)
Capital subsidies received	43.0		29.0		14.0
Change in working capital	(38.0	)	(450.0	)	412.0
Change in debt	242.0		549.0		(307.0	)
Change in consolidation perimeter	4.0		2.0		2.0
					.0
Change in Gross Debt	246.0		551.0		(305.0	)

First Quarter 2007

Results

April 2007

Exhibit 99.3

DISCLAIMER

This

document

has

been

prepared

Iberdrola,

S.A.

(the

“Company”)

solely

for

use

during

the

presentation

corresponding

the

First

Quarter

2007

Results.

The

information

and

any

forward

looking

statements

contained

this

document

have

not

been

independently

verified

and

representation

warranty

express

implied

made

to,

and

reliance

should

placed

on,

the

fairness,

accuracy,

completeness

correctness

the

information

opinions contained herein.

None

the

Company,

any

its

advisors

representatives

shall

have

any

liability

whatsoever

(in

negligence

otherwise)

for

any

loss

howsoever

arising

from

any

use

this

document

its

contents

otherwise

arising

connection

with

this

document.

This

document

does

not

constitute

offer

invitation

purchase

for

any

securities

accordance

with

the

Spanish

Securities

Market

Law

(Law

24/1988,

amended),

Royal

Decree

Law

5/2005

and/or

Royal

Decree

1310/2005

and

the

rules

and

regulations

made

there

under.

Furthermore,

this

document

does

not

constitute

offer

purchase,

sell

exchange

the

solicitation

offer

purchase,

sell

exchange

any

securities

the

solicitation

any

vote

approval

any

other

jurisdiction.

Neither

this

document

nor

any

part

shall

form

the

basis

relied

connection

with

any

contract

or commitment whatsoever.

Legal Note

IMPORTANT INFORMATION

This

communication

does

not

constitute

offer

purchase,

sell

exchange

the

solicitation

offer

purchase,

sell

exchange

any

securities.

The

Iberdrola,

S.A.

may

not

offered

sold

the

United

States

America

except

pursuant

effective

registration

statement

under

the

Securities

Act

pursuant

valid

exemption

from

registration.

FORWARD-LOOKING STATEMENTS

This

communication

contains

forward-looking

information

and

statements

about

Iberdrola,

S.A.

and

otherwise,

including

financial

projections

and

estimates

and

their

underlying

assumptions,

statements

regarding

plans,

objectives

and

expectations

with

respect

future

operations,

capital

expenditures,

synergies,

products

and

services,

and

statements

regarding

future

performance.

Forward-looking

statements

are

statements

that

are

not

historical

facts

and

are

generally

identified

the

words

“expects,”

“anticipates,”

“believes,”

“intends,”

“estimates”

and

similar

expressions.

Although

Iberdrola,

S.A.

believes

that

the

expectations

reflected

such

forward-looking

statements

are

reasonable,

investors

and

holders

Iberdrola,

S.A.

are

cautioned

that

forward-looking

information

and

statements

are

subject

various

risks

and

uncertainties,

many

which

are

difficult

predict

and

generally

beyond

the

control

Iberdrola,

S.A.,

that

could

cause

actual

results

and

developments

differ

materially

from

those

expressed

in,

implied

projected

by,

the

forward-looking

information

and

statements.

These

risks

and

uncertainties

include

those

discussed

identified

the

public

documents

sent

Iberdrola,

S.A.

the

Comisión

Nacional

del

Mercado

Valores.

Forward-looking

statements

are

not

guarantees

future

performance.

They

have

not

been

reviewed

the

auditors

Iberdrola,

S.A.

You

are

cautioned

not

place

undue

reliance

the

forward-looking

statements,

which

speak

only

the

date

they

were

made.

All

subsequent

oral

written

forward-looking

statements

attributable

Iberdrola,

S.A.

any

its

members,

directors,

officers,

employees

any

persons

acting

its

behalf

are

expressly

qualified

their

entirety

the

cautionary

statement

above.

All

forward-looking

statements

included

herein

are

based

information

available

Iberdrola,

S.A.

the

date

hereof.

Except

required

applicable

law,

Iberdrola,

S.A.

does

not

undertake

any

obligation

publicly

update

revise

any

forward-looking

statements,

whether

result

new

information,

future

events

otherwise.

Agenda

Highlights of the Period

Analysis of Results

Conclusion

Consolidated

By Business

Highlights of the period

Net Profit up 13.6% to Eur

458.2 MM

Higher production (+6.9%) with low cost & emissions-free technologies

…

in a difficult scenario of low prices & moderate demand growth

Efficient management to provide positive results …

New transactions in wind energy expansion

in the US & Europe

Successful closing of ScottishPower

transaction

99.5% and 97.6% of the attending capital of Iberdrola

and

ScottishPower, respectively, voted in favour

24,752 GWh

(+6.9%)

Production Mix Q1 2007

Nuclear

26%

Comb.

Cycles

36%

Coal 5%

Fuel

Hydro

20%

Wind

11%

Cogen. 2%

. 2%

Production -

Group

Q1 2006

Q1 2007

Combined

Cycles

Emission-free*

24,752

23,154

Growth in Production

-2%

+25%

+6.9%

…

boosted by low emission technologies …

-46%

-46%

46%

Coal + Fuel

* Hydro + Nuclear + Wind

GWh

Increasing production in Spain by +1.8%

with low cost & emissions-free technologies …

Production -

Spain

…

vs. -1.6% of the rest of the sector*

* Excluding Iberdrola

Ordinary Regime

-0.6%

Special Regime

+16.3%

+2,442

Hydro

-1,339

Nuclear

-153

-485

Coal

-551

Fuel

+349

Wind + Mh

+55

Cogeneration

C. Cycles

GWh

Increasing hydro reserves …

Production -

Spain

64%

55%

6,170 GWh

7,193 GWh

Q1 2006

As of today

…

points out for sustainable results in Generation

+17%

Q1 2006

emissions -

Group

(gr./kWh)

Emissions

76%

’07

production

Spain

emissions-free

Q1 2007

1/3 of the emissions compared to

the rest of the sector (378* gr/kWh)

Q1 2006

Q1 2007

emissions -

Spain

(gr./kWh)

247

188

-24.2%

212

133

-37.1%

* Excluding Iberdrola

Q1 2007 Results

Efficient management of assets …

Hydro assets

Provides Iberdrola

with a balanced

generation mix

Wind energy

assets

Flexibility of

gas contracts

…

to optimize results in all scenarios

EBITDA -

Group

EBITDA up 2.9% to Eur

1,087.1 MM …

compensate

Distribution

Supply & Gas

International

Non-energy

Generation Spain

Wind energy business

…

in a difficult scenario of low prices &

moderate demand growth

Net Profit +13.6% to Eur

458.2 MM …

Net Profit

403.2

+13.6%

458.2

Net Profit (Eur

MM)

Q1 2006

Q1 2007

…

in line with double digit growth

expectations for 2007

Consolidating the international expansion

through new wind energy transactions …

Internationalization

…

in US & Europe, in countries

with high growth potential

USA:

acquisition of CPV

•

~1,100 MW to become

operational between

2008-2011

•

Agreement with GE for

the supply of turbines

•

USD 75 MM for 100% of

equity

Italy:

50% joint venture

with API

•

350 MW to become

operational between

2008-2009

Greece:

taking full control

of Rokas

•

Increasing stake to

52.7%

Agenda

Highlights of the Period

Analysis of Results

Conclusion

Consolidated

By Business

Gross Margin

Change %

Q1 2007

Net Op. Expenses

Eur

Q1 2006

Income Statement -

Group

EBITDA

Operating Profit (EBIT)

Net Profit

Non-recurrent assets

+Equity Income

+2.9

1,087.1

1,056.6

+0.8

794.8

788.4

N/M

29.3

5.7

+13.6

458.2

403.2

+5.3

1,572.4

1,493.9

Financial Result

+0.1

-163.5

-163.4

-439.3

+12.3

-391.2

Positive results in a difficult scenario

Iberdrola

estimates Eur

26.5 MM of tariff insufficiency

Net Sales

Net Sales fall by 8.8% to Eur

2,716.6 MM

driven by Domestic Energy …

…

due to lower prices in Generation & Wind

Net Sales

Q1 2006

Q1 2007

-261.8 MM

2,978.4

2,716.6

+36.2%

+4.6%

-20.2%

470.1

611.4

1,635.1

Eur

Non-energy

International

Domestic

Energy

Procurement Costs

Procurements decrease 17.5% to Eur

1,136.1 MM …

Eur

Procurements

Q1 2006

Q1 2007

-241.0 MM

1,377.1

1,136.1

Non-energy

Non-energy

-energy

energy

+47.8%

International

-11.3%

Domestic

Energy

-36.3%

284.5

344.9

506.7

…

due to the different production mix in Generation

Spain & lower procurements in International

Gross Margin -

Group

Eur

Domestic Energy *

(ex-Wind)

917.0 (-1.4%)

-18.2%

Non

Energy

Gross Margin

1,572.4

+5.3%

185.5

266.5

Internat.

203.4

Wind

Gross Margin +5.3% to Eur

1,572.4 MM, driven by

Distribution, Supply & Gas, International and Non-energy

+21.6%

-5.5%

+36.0%

Generation Spain & Wind affected by lower prices

* Generation + Supply + Gas + Distribution

+39.8%

Generation, Supply & Gas

Distribution

Recurrent Net Op. Expenses +4.2%, less than Gross Margin,

vs. a 12.3% growth of Reported Net Op. Exp. …

Net Operating Expenses -

Group

Net Op. Exp. by item

% vs.

Q1 2006

Q1 ‘07

…

due to non-recurrent expenses &

the 2007 AGM attendance premium

Reported

Net Op. Exp.

439.3

+12.3%

Recurrent

Net Op. Exp.

407.6

+4.2%

-17.6

Other

non-recurrent

-14.1

AGM attendance

premium

Recurrent Net Op. Exp.

Eur

Net Personnel

Total

439.3

+12.3%

202.9

-4.0%

Rec. N. Ext. Services

204.7

+13.8%

Rep. Net Ext. Servs.

236.4

+31.5%

Other non-recurrent

17.6

AGM attendance premium

14.1

EBITDA -

Group

EBITDA +2.9% to Eur

1,087.1 MM

Eur

Domestic Energy *

(ex-Wind)

604.1 (-6.2%)

-25.5%

Non

Energy

EBITDA

1,087.1

+2.9%

122.5

200.5

Internat.

160.0

Wind

+40.0%

-12.4%

+41.0%

+95.0%

Generation, Supply & Gas

Distribution

* Generation + Supply + Gas + Distribution

EBIT -

Group

Operating Profit (EBIT) up 0.8% to Eur

794.8 MM …

D & A

% vs.

Q1 2006

Total

Q1 2007

292.3

+9.0%

283.8

+13.8%

Provisions

8.5

-54.5%

EBIT

Q1 2006

Q1 2007

+6.4 MM

788.4

794.8

Eur

…

driven by 13.8% rise in D&A

due to new plants in operation

Flat evolution of the Financial Result: +0.1% …

Financial Result

-163.4

-163.5

Q1 2006

Q1 2007

+0.1 MM

…

due to the control of the average cost of debt

Financial Result (Eur

MM)

Average Cost of Debt

Q1 2006

Q1 2007

4.65%

4.6%

Leverage falls to 54.1% vs. 54.7% in Q1 2006

Leverage

Q1 2006

Q1 2007

Leverage

54.1%

Ex-tariff insufficiency impact

Net Debt & Equity (Eur

MM)

Q1 2006

Tariff insufficiency

Adjusted Net Debt

ex-insufficiency

Equity

1,583

11,448

9,486

Q1 2007

606

12,454

10,564

Adjusted Net Debt

13,031

13,061

54.7%

Profit Before Taxes up

4.7% to

Eur

660.6 MM

PBT, Net profit & FFO

403.2

458.2

Q1 2006

Q1 2007

Profit Before Taxes

Q1 2006

Q1 2007

630.7

+4.7%

660.6

Eur

Sustainable lower tax rate

drives higher increase in

Net Profit (+13.6%)

FFO* up 8.3% to

Eur

721.2 MM

Net Profit

+13.6%

Eur

Funds from Operations

Q1 2006

Q1 2007

665.7

+8.3%

721.2

Eur

* Net Profit + Depreciation & Amortization –

Equity Income –

Non Recurrent Results

Agenda

Highlights of the Period

Analysis of Results

Conclusion

Consolidated

By Business

Gross Margin -23.1% as lower procurement costs

partially compensate pool prices

Financial highlights (Eur

MM)

Operating highlights

Results by Business

Generation Business

Gross Margin

EBITDA

-23.1%

524.0

-33.1%

349.0

Q1 2007

Net Op. Exp.

+17.3%

-139.0

% vs.

Q1 2006

EBITDA affected by Eur

17.6 MM of Non-recurrent Expenses

Similar production: -0.6%

Energy prices -40.9%

Lower CO

average cost: Eur

2.95/Tn

Lower procurements cost: -43.1%*

* Excluding CO2

cost

** Iberdrola’s

estimates

Lower capacity payments:

Eur

27.8 MM**

Compensated by

Fuel Cost (Eur/MWh)

Q1 ‘07

38.4

Avg. Fuel Cost *

Q1 ‘06

38.5

-0.1%

-0.1%

0.1%

Supply + Gas Gross Margin rises 35.6 MM to

Eur

25.5 MM driven by optimization of gas strategy

Results by Business

Supply & Gas

Supply + Gas

Gross Margin (Eur

MM)

Q1 ‘06

Elect. Supply

Gas

Q1 ‘07

8.5

30.7

-5.2

-18.6

-10.1

25.5

+35.6 MM

EBITDA

Gross Margin

2007

25.5

21.7

-10.1

-27.2

2006

Net Op. Exp.

-12.4

-13.6

Taxes

8.6

-3.6

Financial highlights

EBITDA improves Eur

48.9 MM vs. Q1 2006

Eur

Results by Business –

Wind + Mh

Q1 2006

4,552

Q1 2007

+ 638 MW

Capacity (MW)

Wind Spain

Mini-hydro

3,751

459

Q1 2006

2,253

2,725

Q1 2007

+21.0%

Production (GWh)

Capacity: +16.3% to 4,552 MW

Production: +21.0% to 2,725 GWh

International Wind: 10.1% of installed capacity & production

342

Wind Intl.

3,914

3,330

268

316

Wind Spain

Mini-hydro

2,304

274

147

Wind Intl.

1,942

151

160

5.5% decrease in Gross Margin due to

lower prices (-21.8%) to 74.7 Eur/MWh

Results by Business –

Wind + Mh

Financial highlights

-5.5%

203.4

EBITDA

-12.4%

160.0

Gross Margin

Q1 2007

Eur

Net Op. Exp.

+34.3%

-41.1

34.3% increase in Net Op. Expenses

due to international expansion

EBITDA (EUR MM)

% vs.

Q1 2006

+405.2%

-8.0

International

148.0

12.0

Domestic

International

-14.5%

+26.3%

160.0

-12.4%

Total

Results by Business -

Distribution

Gross Margin up 39.8% to Eur

371.2 MM

Eur

EBITDA

Gross Margin

2007

371.2

226.5

+39.8%

+95.0%

% vs.

Q1 2006

Higher regulated revenues and

lower Net Operating Expenses

Net Op. Exp.

-114.0

-8.7%

Operating Highlights

No impact from RDL 3/2006

Higher regulated revenues

in 2007 tariff

Financial Highlights

Results by Business –

International

…and 50.4% in local currency

International EBITDA grows 41.0% to Eur

200.5 MM …

Financial Highlights

EBITDA

Gross Margin

Q1 2007

Eur

Net Op. Exp.

+36.0%

266.5

+23.0%

-63.7

+41.0%

200.5

213.8

200.5

EBITDA

in local currency

Reported

EBITDA

+50.4%

+41.1%

Effect of currency evolution

% vs.

Q1 2006

Results by Business -

International

Operating Highlights

International accounts for 18.4% of total EBITDA

Brazil

Mexico-Guatemala

Contribution

to financial

statements

119.1

EBITDA (Eur

MM)

81.4

EBITDA (Eur

MM)

As a % of Debt

As a % of Equity

As a % of Debt

As a % of Equity

+6.5% demand

Higher tariffs

+24.2% more production

(Altamira V; 1,121 MW)

High availability and

efficiency

Business

Evolution

4.6%

9.8%

7.9%

8.1%

-4.4% exchange rate

-8.6% exchange rate

EBITDA up 40.0% to Eur

122.5 MM,

driven by strong growth in Real Estate

Results by Business

Non energy + Engineering

Financial Highlights (Eur

MM)

+21.6%

185.5

Q1 2007

EBITDA

Gross Margin

Net Op. Exp.

-4.0%

-61.0

+40.0%

122.5

% vs.

Q1 2006

Over Eur

6.0 Bn* estimated market value of stakes in listed &

non-energy companies and of Real Estate; Eur

3.5 Bn

of capital gains**

Breakdown of Gross Margin

Engineering &

Construction

Iberdrola

Inmobiliaria

IBV

Other Services

* Does not include Engineering & Construction

** Pre-tax

37%

10%

25%

28%

Iberdrola

Inmobiliaria

Gross Margin triples to Eur

68.2 MM

Financial Highlights

+199.9%

68.2

+301.7%

61.1

Q1 2007

EBITDA

Gross Margin

Eur

+506.6%

35.9

Net Profit

Property Portfolio

(buildable

sq. mt.)

Dec-2006

Q1-2007

+4.4%

3.57 MM

3.42 MM

Commercial

Residential

Rentals

28%

60%

12%

20%

68%

12%

% vs.

Q1 ‘06

Q1 2006 affected by seasonality

Engineering & Construction

Sales to third parties up 57.4% to Eur

177.5 MM

Increasing backlog to Eur

2.6 Bn

Q1 2006

112.8

177.5

Q1 2007

+57.4%

Sales to third parties (Eur

MM)

Backlog (Eur

Bn)

1.0

2.6

Q1 2006

Q1 2007

+2.6x

Agenda

Highlights of the Period

Analysis of Results

Conclusion

Consolidated

By Business

Conclusion

Positive results in a difficult scenario…

Different trend in

prices expected for

2007 vs. 2006

Impact of RDL

3/2006 in 2006

Tariff

improvements in

Distribution

Personnel

non-recurrent

expenses Q4 ‘06

Higher hydro

production &

reserves

Double-digit

growth in

2007

Flexibility of gas

contracts

…

that will lead for an improvement throughout 2007

First Quarter 2007

Results

Exhibit 99.4

LOGO

LEGAL NOTICE:

DISCLAIMER

This document has been prepared by Iberdrola, S.A. (the “Company”) solely for use during the presentation corresponding to the First Quarter 2007 Results.

The information and any forward looking statements contained in this document have not been independently verified and no representation or warranty express of implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein.

None of the Company, or any of its advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document.

This document does not constitute an offer or invitation to purchase or subscribe for any securities in accordance with the Spanish Securities Market Law (Law 24/1988, as amended), Royal Decree-Law 5/2005 and/or Royal Decree 1310/2005 and the rules and regulations made there under.

Furthermore, this document does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities or the solicitation of any vote or approval in any other jurisdiction.

Neither this document nor any part of it shall form the basis of or be relied in connection with any contract or commitment whatsoever.

IMPORTANT INFORMATION

This communication does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities. The shares of Iberdrola, S.A. may not be offered or sold in the United States except pursuant to an effective registration statement under the Securities Act or pursuant to a valid exemption from registration.

FORWARD-LOOKING STATEMENTS

This communication and other documents relating to the Offer contain forward-looking information and statements about ScottishPower and Iberdrola, S.A. and their combined businesses after completion of the proposed Offer and otherwise. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, capital expenditures, synergies, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although the managements of ScottishPower and Iberdrola, S.A. believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ScottishPower and Iberdrola, S.A. shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of ScottishPower and Iberdrola, S.A., that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public documents sent by ScottishPower and Iberdrola, S.A. to the Comisión Nacional del Mercado de Valores and under “Risk Factors” in the annual report on Form 20-F for the year ended March 31, 2006 filed by ScottishPower with the SEC on June 30, 2006.

Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Iberdrola, S.A. or of ScottishPower. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date they were made. All subsequent oral or written forward-looking statements attributable to Iberdrola, S.A. or ScottishPower or any of their respective members, directors, officers, employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included in documents relating to the Offer are based on information available to Iberdrola, S.A. on the date thereof. Except as required by applicable law, Iberdrola, S.A. does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


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IBERDROLA-SCOTTISH POWER: A WORLDWIDE LEADER EMERGES

Net profit up 13.6% to 458 million euros

More production (+6.9%) with a generation mix of lower variable costs and emissions (-24.2%)

•

Flexibility of generation capacity: Production grew 2.5% in Spain (sector: -0.5%).

•

Production without emissions: Clean power generation in Spain grew by 25%.

•

CO₂ emissions: Down 37.1% in Spain, which is 2.8 times lower than the rest of the sector.

•

Market environment: Energy prices fell by 41% to 46.4 Eur/Mwh, price of emissions rights set at 2.95 Eur/ton and demand increases by 1.8%.

In an challenging environment of low energy prices and moderate increase of demand, Gross Operating Profit (EBITDA) rose 2.9% to 1,087.1 MM€

Growing in the international business

•

USA: Acquisition of CPV Wind Ventures LLC for 55 million euros, with pipeline of 3,500 MW

•

Italy: Strategic alliance with italian energy group API Holding for the construction and operation of 350 MW of wind.

•

Greece: Increasing the stake at the Rokas Group to 52.7%, taking full control of the Company.

Iberdrola - ScottishPower Integration

•

On 29 and 30 March of this year, a broad majority of the shareholders in both companies approved the merger (99.4% at Iberdrola and 97.6% at ScottishPower).

•

The operation is effective from 23 April, after its approval by the Sessions Court in Edinburgh.

•

This has been carried out under the framework of what is known as Scheme of Arrangement in British law, pursuant to Section 425 of the Companies Act in Great Britain.


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Basic figures for the businesses


Operating Data		Q1 2007	Q1 2006	%
Net production	GWh	24,752	23,154	6.9
Gas combined cycle	GWh	8,880	9,093	-2.3
Wind and Mini-Hydroelectric	GWh	2,725	2,253	21.0
Hydroelectric	GWh	4,861	2,386	103.7
Nuclear	GWh	6,509	6,662	-2.3
Fuel oil	GWh	15	566	-97.3
Coal	GWh	1,212	1,697	-28.6
Cogeneration	GWh	550	497	10.7
Installed capacity	MW	30,502	27,895	9.3
Gas combined Cycle	MW	8,818	6,897	27.9
Wind and Mini-hydroelectric	MW	4,552	3,914	16.3
Hydroelectric	MW	9,149	9,118	0.3
Nuclear	MW	3,344	3,344	—
Fuel oil	MW	2,889	2,889	—
Coal	MW	1,253	1,253	—
Cogeneration	MW	497	480	3.5
Energy Distributed	GWh	34,010	33,054	2.9
Consumers (supply points under management)	No (mil.)	18.5	17.9	3.3
Employees	No	16,347	17,514	-6.6


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Operating Data		Q1 2007	Q1 2006	%
Spain
Net Production	GWh	18,208	17,767	2.5
Gas Combined Cycle	GWh	2,719	4,058	-33.0
Wind and Mini-Hydroelectric (1)	GWh	2,725	2,253	21.0
Hydroelectric	GWh	4,598	2,156	113.3
Nuclear	GWh	6,509	6,662	-2.3
Fuel oil	GWh	15	566	-97.3
Coal	GWh	1,212	1,697	-28.6
Cogeneration	GWh	430	375	14.7
Installed capacity	MW	26,084	24,606	6.0
Gas combined cycle	MW	4,800	4,000	20.0
Wind and Mini-Hydroelectric (1)	MW	4,552	3,914	16.3
Hydroelectric	MW	8,842	8,819	0.3
Nuclear	MW	3,344	3,344	—
Fuel oil	MW	2,889	2,889	—
Coal	MW	1,253	1,253	—
Cogeneration	MW	404	387	4.4
Energy Distributed	GWh	26,756	26,224	2.0
Regulated market	GWh	22,125	19,790	11.8
Commercial	GWh	4,631	6,434	-28.0
Gas Supplies	GWh	9,904	15,466	-36.0
Customers	GWh	4,124	6,008	-31.3
Gas combined cycle	GWh	5,780	9,458	-38.9
Customers (supply points under management)	No (mil.)	10.0	9.7	3.0
Latin America
Production	GWh	6,544	5,387	21.5
Gas combined cycle	GWh	6,161	5,035	22.4
Hydroelectric	GWh	263	230	14.3
Cogeneration	GWh	120	122	-1.6
Installed capacity	MW	4,418	3,289	34.3
Gas combined cycle	MW	4,018	2,897	38.7
Hydroelectric	MW	307	299	2.7
Cogeneration	MW	93	93	—
Energy distributed (under management)	GWh	7,254	6,830	6.2
Customers (supply points under management)	No (mil.)	8.5	8.2	3.6

Note: Installed capacity, production, and number of employees according to consolidation criterion.

(1)	Includes for 2007 460 MW of international capacity with production of 274 GWh. For 2006: 316 MWwith production of 151 GWh.


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Market Data		Q1 2007	Q1 2006
Market capitalisation (3/31)	Million €	31,906	24,017
Earnings per share (quarter)	€	0.51	0.45
Net operating cash flow per share (quarter)	€	0.80	0.74
PER	Times	19.2	16.7
Price/Book Value (Capitalisation to NBV at end of period)	Times	3.02	2.53
Economic/Financial Data
Income Statement		Q1 2007	Q1 2006
Net Sales	Million €	2,716.6	2,978.4
EBITDA	Million €	1,087.1	1,056.6
EBIT	Million €	794.8	788.4
Net Profit	Million €	458.2	403.2
Net Operating expenses / gross Margin	%	27.9	26.2
Balance sheet		Q1 2007	Q1 2006
Total assets	Million €	34,002	33,061
Shareholders’ Equity	Million €	10,564	10,567
Net adjusted financial debt (1)	Million €	13,061	13,119
ROE	%	16.2	16.6
Financial leverage (2)	%	55.3	55.4
Debt/equity ratio	Times	1.24	1.24

(1)	Includes the amounts corresponding to the tariff insufficiency: 606 million euros from March of 2007 and 572 million euros from December 2006.

(2)	Net Debt/Net Debt+FL. Includes financing the tariff insufficiency. If the tariff insufficiency was not included, leverage as at March 2007 would be 54.1 % and 54.3% as at December 2006.


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Operating highlights

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In the first quarter of 2007, IBERDROLA reached a new Group production record, with production rising by 6.9% to 24,752 GWh. This was achieved with a mix of low cost and cleaner generation, which allowed CO₂ emissions to fall by 24.2%.

In Spain, IBERDROLA saw growth in production of 2.5%, while overall system production in Spain fell by 0.5%. Emissions in Spain were down 37.1%, to 133 gr/kWh, a third of the rest of the sector (378 gr/kWh). Other highlights include:

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103.7% increase in hydroelectric production to 5,598 GWh and a 23.2% increase in wind production to 2,578 GWh (274 GWh international).

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Market environment during the first quarter of 2007 was marked by low energy prices (-41%) and very mild winter temperatures which led to a moderate increase in domestic demand (+1.8%).

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In this challenging scenario of low prices and moderate increase of demand, Operating Profit improved in both gross terms (EBITDA +2.9%) and net terms (EBIT +0.8%).

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Domestic Energy Business EBITDA falls by -7.6%. Distribution business growth by 95%, what offsets the falls in Generation (-33.1%) and Renewables (-12.4%), reflecting the downward trend of pool prices. In the case of Generation, lower prices have been compensated with a fall in Procurements due to a cleaner generation mix (76% of non-pollutant technologies), and lower regulatory impacts.

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International and Engineering and Non Energy business achive strong growths at EBITDA level, offsetting the falls in Generation and Renewables:

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International: EBITDA up 41.1% to 200.5 million euros, thanks primarily to the good development of business in Mexico and Brazil. The generation business saw an increase in production of 21.5%. The distribution business recorded an increase of 6.2% in energy distributed. In addition, it should be mentioned that the change in the exchange rate between the Brazilian Real and the Dollar in the period resulted in an effect of about-13.3 million euros.

•

Engineering and Non-Energy Businesses increased their EBITDA by 40.0% to 122.5 million euros, basically boosted by the results of Iberdrola Inmobiliaria.

•

Net Profit totalled 458.2 million euros, an increase of 13.6%, in line with the expectations of double digit growth contemplated for the full 2007 fiscal year.


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Profit before taxes is up by 4.7%, slightly improving the trend followed at the operating level. The effective tax rate in 2007 has been normalized in the 29.3%, according to current tax rules, compare to 35.1% for the same period of 2006.

•

On 29 and 30 March of this year, a broad majority of the shareholders in both companies approved the merger (99.4% at Iberdrola and 97.6% at ScottishPower). The operation is effective from 23 April, after approval by the Sessions Court in Edinburgh, and has been carried out under the framework of what is known as Scheme of Arrangement in British law, pursuant to Section 425 of the Companies Act in Great Britain.


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Development of the Strategic Plan

1. GENERATION

Total installed capacity

Over the first quarter of 2007, IBERDROLA brought into service 118 MW of additional power compare to December 2006, taking total installed capacity up to 30,502 MW. All of the additional installed capacity is derived from newly installed renewable capacity, both in Spain (98 MW) and abroad (20 MW). Year on year, the additional capacity represents an increase of 9.3%.

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1.1 Traditional Generation

1.1.1. Combined Cycle Plants

Spain

Installed capacity

IBERDROLA’s Combined Cycle Plant (CCGTs) total capacity in Spain was 4,800 MW at the end of March 2007 (5,600 MW under management), corresponding to nine plants. It is planned to bring the Castellón 4 Plant, with an additional 800 MW, on line during 2007.


Project	Capacity (MW managed)		Start of operations
Castellón	800		Operative 2002
Castejón	400		Operative 2003
BBE	800		Operative 2003
Tarragona	400		Operative 2003
Santurce	400		Operative 2004
Arcos Grupos I y II	800		Operative 2004
Aceca	400		Operative 2005
Arcos Grupo III	800		Operative 2005
Escombreras	800		Operative 2006
Total 2006	5,600
Castellón 4	800		Planned 2007

TOTAL 2002-2007	6,400	(5,600 owned)

Mexico

IBERDROLA is the leading private electricity producer in Mexico. The Company now has 3,815 MW of installed capacity in operation in Mexico.


Proyect	Capacity (MW)	Operational Status
Enertek	120	100% operative
Monterrey III	1,037	100% operative
Altamira III y IV	1,036	100% operative
La Laguna II	500	100% operative
Altamira V	1,121	100% operative
Tamazunchale	1,135	Operative 2007

Total	4,949

In February 2007, IBERDROLA started the testing period for the Tamazunchale electrical plant


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located in the Mexican state of San Luís Potosí. With installed capacity of 1,135 MW, it is the largest combined cycle plant in operation in the country.

Portugal

On 10 April of this year, IBERDROLA and the municipality of Figueira da Foz signed a contract for the acquisition of land on which, after having received the approval of the Direcção Geral de Energia in Portugal, the first combined-cycle plant to be built by the Company in Portugal will be located. The land for the new IBERDROLA gas plant, which will be built in Lavos (Figueira da Foz), between Lisbon and Porto, has a total area of about 208,000 square metres. This new electrical generation plant, which will have an installed capacity of 850 MW, could come on line at the end of 2009 if all necessary requirements are met.

1.1.2 Hydroelectric energy Spain

The Ministry of the Environment has authorised two hydroelectric plants, a new group in the plant at La Muela, in Valencia which will double its current capacity of 630 MW, and the expansion of the San Esteban plant in the Sil basin by 175 MW. The La Muela 2 pumping plant project is now underway, with the excavation of the access tunnel.

1.1.3 Cogeneration

Spain

Operating capacity

IBERDROLA has cogeneration operating installed capacity in Spain of an attributable 404 MW, equivalent to a total of 549 MW installed.

With the projects completed in 2006, IBERDROLA has consolidated its position as the largest cogeneration company in Spain, with a total of 549 MW installed. The Company also participates in more 29 cogeneration plants, supplying electricity and steam to clients such as Michelin, General Electric Plastics in Cartagena, Calvo Conservas in La Coruña, Holmen Paper in Madrid and Montefibre in Miranda de Ebro.


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Location of all IBERDROLA cogeneration plants

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Capacity under construction

In April 2007, IBERDROLA presented a construction project for the Barcial del Barco (Zamora) bioethanol production plant. This plant, which will have the capacity to produce 149,000 cubic metres of bioethanol annually, will come on line in July 2008. The Project will be developed by the company Ecobarcial, in which Proencalsa has a 51% participation (property of our Company, Collosa and the Ente Regional de la Energía) and by Green Source (Sniace) (30%), Ecoteo (14%), ITACYL (4.9%) and various cooperatives (0.1%).

1.1.5 Wind and Mini-Hydroelectric Energy

At the close of the first quarter of 2007, IBERDROLA had an installed capacity of 4,552 MW (4,210 MW for wind farms and 342 MW for Mini-hydroelectric facilities), confirming IBERDROLA’s position as the world leader in this business. During the first quarter of the financial year, 118 MW of additional power were installed as compared with the capacity available at the close of 2006 (109 wind and 9 small-scale hydroelectric). Of the total power added, 98 MW corresponds to Spain and 20 MW is international.


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Year on year, the installed capacity at the close of the first quarter of 2007 is 16.3% greater than that at the close of the same period of 2006.

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IBERDROLA has a portfolio of projects of almost 19,000 MW, the result of the development of our own projects and operations undertaken in the context of renewable energy outside of Spain.

Spain

The new capacity installed in Spain during the first quarter of 2007 totalled 98 MW, which breaks down as follows: Castilla y León 61 MW, Andalusia 15 MW, Region of Murcia 10 MW, Castilla - La Mancha 9 MW and La Rioja 3 MW.

United States

The United States have become one of the most important markets for developing IBERDROLA’s objectives in the area of renewable energy. The Company has 26 MW in operation, which consists of the wind farm at Locust Ridge coming from the acquisition of Community Energy, and a portfolio of projects that will be close to 8,500 MW in the first half of 2007, once they are included the MW coming from recent acquisitions. IBERDROLA already has a permanent office in the State of Pennsylvania.

To strengthen its portfolio of projects in the country, IBERDROLA has undertaken various operations. The highlights are as follows:

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Acquisition of the US wind company CPV Wind Ventures. IBERDROLA has reached an agreement to acquire, for 55 million euros, 100% of the US company CPV Wind Ventures LLC, headquartered in Silver Spring (Maryland), as part of the Company’s focus on international expansion and its interest in increasing its presence in the wind market in the United States. CPV Wind Ventures LLC has a portfolio of projects of 3,500 MW of wind power in 15 states in the US, with the construction of the first wind farms planned for next year. With this in mind, this company has already signed an agreement with General Electric to supply turbines beginning in 2008.

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Agreement with Gamesa to purchase wind farms in the US. This agreement provides for the acquisition of wind installations with about 500 MW of power that Gamesa will bring on line before the end of 2009. Of these, 300 MW are firm commitments, while the remaining 200 MW will be subject to a right of purchase. The other 500 MW would correspond to the acquisition of developments under way.

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Acquisition in the US of Community Energy (CEI), which has a portfolio of projects of 2,000 MW of wind power in various coastal zones of


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the country in the initial study phase, an additional 200 MW are in an advanced stage of development. CEI has sales of more than 3,000 GWh of wind power, 100,000 residential customers and commercial agreements with about 20 municipal and private electricity companies. The US company has had two wind farms in operation since the end of 2005: Jersey-Atlantic (7.5 MW) and Bear Creek (24 MW).

•

Acquisition in the US of MREC Partners and its participation Midwest Renewable Energy Projects. The portfolio of projects of the two companies totals 1,600 MW of wind power located in various zones of the Midwest of the US. Of this total, 400 MW are in an advanced phase of development and 1,200 MW are in the initial study phase with a high probability of approval.

Greece

The Alogorachis wind farm has been brought on line through its acquisition to Gamesa, and the Modi Ampliación wind farm through Rokas has been concluded, adding a total of 18 new MW. This gives IBERDROLA 210 MW in operation in the country. IBERDROLA is a strategic partner of the principal promoter and producer of wind energy in Greece, Rokas, in which it has a 52.7% interest.

Agreement with the Rokas family

During the first quarter of 2007, IBERDROLA, through its renewable energies subsidiary, has reached a new agreement with the Rokas family to promote the development of the Rokas Group, and gives another indication of the clear commitment the Company has to this market. Under the terms of the agreement:

•

The Rokas family will transfer to IBERDROLA all of the preferred non-voting shares it holds, directly or indirectly, in the Rokas Group (about 45% of the existing shares) for about 32 million euros.

•

The agreement reached in December 2004 is replaced by this, subject to the approval by Greek competition authorities. After the acquisition in the market of an additional 2.8% of the capital share, for 12.5 million euros, IBERDROLA increases its participation in Rokas up to 52.7%

In addition, the Rokas family, after reaching an agreement with various financial entities for sale of the majority of its common shares in the Rokas Group (9.82% of the capital), has proceeded to the sale of those shares. IBERDROLA has consented to this transaction, renouncing to its preferred acquisition right.


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The Rokas Group closed 2006 with installed wind capacity of 193.3 MW and production of 520 GWh. It currently has three wind farms under construction totalling about 60 MW, and is seeking authorisation to develop another 488 MW in Greece and 179 MW in Cyprus.

Portugal

The installation of the Alto Monçao wind farm has been completed, with an additional 18 MW included in the acquisition agreement with Gamesa in Portugal, which contemplates the construction of 32 MW. IBERDROLA also has another 18 MW in operation, corresponding to the wind farm at Catefica. In addition, IBERDROLA has 122 MW in advanced projects that will enter into operation in the next two years.

France

Fitou wind farm has been completed, with 1 additional MW. IBERDROLA’s installed wind capacity at the close of the first quarter of 2007 is 49 MW. More than 100 MW of power are planned for installation in 2007, as a result of the development of the most advanced projects of Perfect Wind and Gamesa. To reinforce its pipeline in the country, IBERDROLA acquired french company Perfect Wind, considered as one of the companies with larger development potential in our neighbour country, with a pipeline of 600 MW, 17 MW currently in operation and 78 MW corresponding to projects in an advanced stage of development.

Poland

The Kisielice wind farm (41 MW) is already in operation. This is IBERDROLA’s first installed capacity in Poland. This farm (27 1.5 MW General Electric 1.5 SL turbines) is the first Project in the portfolio acquired from Eternegy Polska in September of 2005 to be built and brought on line. When the Malbork farm (18 MW) is brought on line next, IBERDROLA will be one of the main wind generators in Poland. In addition, another 141 MW, now at an advanced stage of development, will be put into service between 2007 and 2008.

Germany

34 MW have been brought on line, as provided for in the agreement reached with Gamesa at the end of 2005. When put into service, Iberenova will be part of the German wind market, which is the most developed in the world, with more than 20,000 MW installed. The portfolio of projects totalls 47 MW.

United Kingdom

IBERDROLA is developing its own projects, with potential to reach 200 MW. In addition, the acquisition of two projects, Darracott y Clachan Flats (both in the final stage of development, totalling 21 MW) will permit IBERDROLA to have its first MWs in operation on the British market during 2007.


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Italy

During the period 2007 - 2009 IBERDROLA will acquire from Gamesa a total of 100 MW by means of an agreement signed for that purpose in the month of October of 2005.

Strategic alliance with the API Holding Group

During the first quarter of 2007, IBERDROLA signed a strategic alliance with the Italian energy group API Holding for the construction and development of approximately 350 MW of wind power in Italy. The projected investment is about 500 million euros. Once that alliance is realised, the Company will be a 50% stakeholder in the joint company that will be created with API Nova Energia, subsidiary of API Holding, called Società Energie Rinnovabili. The objective will be to develop seven wind projects located in the regions of Sicily and Puglia. These projects are currently at a very advanced stage of development. It is expected that the projects will be brought into service in 2008 and 2009.

Brazil

The Rio do Fogo wind farm has been completed and brought on line, an additional 43 MW to make a total of 49 MW. In Brazil, Neoenergia has the Afluente small-scale hydroelectric plant with 18 MW (8 MW attributable to IBERDROLA). Neoenergía (in which IBERDROLA has a 39% stake) has the concessions to build, maintain and operate the Baguari hydroelectric plant and the Nova Aurora and Goiandira small-scale hydroelectric plants, for a total of 188 MW.

Mexico

IBERDROLA is developing promotions in the State of Oaxaca that add up to 150 MW of capacity. In 2007, La Ventosa wind farm, 30 MW, will be brought on line.

Total project portfolio

In total, IBERDROLA already has a portfolio of projects of about 19,000 MW in different stages of development, both in Spain and abroad. This pipeline is not including the MWs coming from recent acquisitions in the US, that will be included at closing of the first half of 2007.


MW	Under development	Validated resource	Connection rights & under construction
Spain	6,166	5,453	2,519
*Wind*	5,279	4,973	2,066
*Mini-hydroelectric*	176	176	76
*Solar*	686	286	359
*Biomass*	24	17	17
*Wave energy*	1	1	0
International wind	12,829	5,912	1,452
Total	18,996	11,365	3,971

1.1.6 Other Sources of Renewable Energy (Non-Wind)

Thermo-solar energy

There are currently various solar thermo-electric energy projects using parabolic cylinder collector technology in development. Total power is 50 MW. Meteorological stations for measuring


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solar resources for the projects have been installed in Sevilla, Ciudad Real, Badajoz and Albacete. The portfolio of three projects totals 650 MW of power. They are being developed in Extremadura, Castilla y León, Andalucía, Castilla - La Mancha, Murcia, Madrid and Aragón. During the first quarter of 2007, work has begun on the first 50 MW plant in Puertollano.

Photovoltaic energy

The priority here is to develop our own portfolio within IBERDROLA’s combined cycle installations and nuclear plants. IBERDROLA currently has an advanced portfolio of 30 MW in Spain. IBERDROLA, together with a group of partners, has set up the company Global Solar Energy, whose purpose is to promote a photovoltaic power installation of 10 MW in Murcia. Study of the possibility of other projects using this technology in some of our generation facilities has also begun, so that we can have a presence in the development of this source of renewable energy. Internationally, during the first quarter of 2007 a Greek facility (Rokas) of 0.17 MW was added.

Biomass

The development of projects will be carried out very selectively, while always ensuring the long-term supply of raw materials. IBERDROLA plans to install three forest biomass plants in Spain for a total of 24 MW, located in the municipalities of Somozas (La Coruña), Archidona (Málaga) and Corduente (Guadalajara).

In February of 2007, IBERDROLA began construction of the Corduente (Guadalajara) plant, the first of the Company’s plants in Spain that will use forest residue to generate energy, after having undertaken the appropriate environmental and viability studies and receiving the approval of the competent authorities (the regional government of Castilla-La Mancha and the municipal government of the city). The Company’s new renewable energies plant there, which should be brought on line within 18 months, is located outside Alto Tajo Natural Park. With installed capacity of 2 MW, the plan calls for the use of about 20,000 tonnes of forest residue per year.

Marine energy

IBERDROLA plans to install the first pilot wave energy plant in Europe in the municipality of Santoña (Cantabria). The project will be implemented in two phases. The first will be completed with the installation of a 40 kW buoy, and the second phase will analyse the increase in power of the plant to a total of 1.35 MW.

Special Regime Mini-hydroelectric

IBERDROLA has a domestic portfolio of 186 MW and an international portfolio of 100 MW. During the first quarter of 2007, the installation of the plant at La Fuensanta was completed. The plant is 8.84 MW and is located in Albacete.

2. DISTRIBUTION

2.1 Spain

At closing of the first quarter of 2007, IBERDROLA had 10 million customers in Spain, and the total energy distributed in the network was 26,756 GWh, an increase of 2.0% compared with the corresponding previous period. 83% of the energy (22,125 GWh) is distributed at market rates.


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2.2. Latin America

At closing of the first quarter of 2007, IBERDROLA had more than 8.5 million customers in the region, and the total energy distributed in the network was 7,254 GWh, an increase of 6.2% compared with the corresponding previous period.

3. SUPPLY

3.1 Electricity

•

Spanish business: eligible electricity customers

Energy sold in this market totalled 1,097 GWh, down -66.2% compared to the previous period of 2006, although the figure for energy sold is 30% higher than that of the 4th quarter of 2006, as a result of current market conditions.

3.2 Gas

Procurements

In the first quarter of 2007, IBERDROLA provided 14% of the total amount of gas consumed on the deregulated market. The winter season was very mild, and since production in the combined cycle plants was reduced because of hydroelectric power and increased wind production, there was a reduction of 5% in domestic demand for gas compared with the same period in 2006. In this environment, IBERDROLA has optimised its participation in the gas market with supply to the combined cycle plants, sales to customers, and domestic and international trading activities, all thanks to the flexibility of its portfolio of procurements contracts.

IBERDROLA ended the period with a global supply portfolio of 16 bcm per annum, of which 7 bcm per annum cover its procurement requirements in Spain and 9 bcm per annum its requirements in Mexico and Brazil.

The most significant gas procurement transactions in the period were the following:

•

Regular shipments of LNG are received through the contracts signed with ENI, GNA, SONATRACH, NIGERIA LNG and SNOHVIT at the regasification plants at Bilbao, Huelva y Sagunto, three logistic centres around the peninsula that guarantee supply. The gas received originates in Algeria, Nigeria, Libya, Egypt and Qatar, well diversified sources to ensure supply.


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•

Extraction of gas reserves from the subterranean storage capacity at Gaviota (Vizcaya) and Serrablo (Huesca) to adjust supply to demand at all times, while always fulfilling the winter operation plan put into place by the Ministry for Industry and with the obligation of maintaining minimum security reserves.

•

Export to France through the Euskadour international gas pipeline. IBERDROLA was the first company to export gas through Euskadour after it came into service in June 2006.

•

During the period, for the purpose of optimising the flexibility of its gas resources, the Company undertook various international LNG trading operations.

•

The Company doubled its reserve capacity at the Bahía de Bizkaia Gas (BBG) regasificiation plant at the port of Bilbao, which is the principal operator at that terminal.

•

Additional subterranean storage capacity was contracted in France to provide supply-demand coverage for supply activities in that country and for carrying out seasonal price arbitrage.

Infrastructures

IBERDROLA continues moving forward with the development of the Sagunto regasification plant (Saggas, 30% owned by IBERDROLA), closing an agreement with the EIB at the end of March to finance its capacity expansion. This expansion will increase the plant’s capacity by 50%. In addition, development of expansion by 50% of Bahia Bizkaia Gas (25% owned by IBERDROLA) continues. During this quarter, the application for administrative authorisation for the expansion was submitted.

With respect to Medgaz, company that will construct the direct undersea gas pipeline between Algeria and Spain with an initial capacity of 8 bcma, IBERDROLA finalised an increase in its participation in the company from 12% to 20% in January 2007. The final investment decision on the project was adopted in December 2006, ensuring that IBERDROLA will receive 1.6 bcm annually beginning in 2009.

The Company has also continued its development of natural gas distribution in various municipalities in the Madrid, Valencia and Murcia regions. In this respect, of special relevance is the recent decision to grant IBERDROLA, as the main gas distributor in the Valencia region, the GasBenidorm Distribution Authorisation, the only municipality on the Levante coast whose current level of gasification is practically nil.

Supply

As a continuation of the major supply of gas carried out in 2006, in the first quarter of 2007 IBERDROLA increased sales of gas to high-pressure industrial customers, whose prices will be completely deregulated this coming 1 July. This will significantly increase the volumes to be supplied both this year and in 2008.


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In addition, in the first quarter, IBERDROLA Gas Plan was launched. This is a gas sales campaign in the residential sector focussed on maximising profitability for the company and added value for the customer by including a series of services, such as maintaining gas installations in homes. At the end of the first quarter, IBERDROLA had a total of 153,000 gas sales contracts with end customers.

4. NON-ENERGY BUSINESSES

Iberdrola Inmobiliaria

IBERDROLA (through its parent company and its subsidiary Iberdrola Inmobiliaria) closed out first quarter of 2007 with 16 residential developments under construction, representing a total of 1,154 homes and a further 20 residential developments under management, representing another 1,498 homes. 351 homes were completed in the quarter.

IBDI currently has one non-residential development under construction. This development is an office building in Málaga comprising a buildable 1,152 sqm. Also under management is the development of the new Commercial Real Estate Project in Porta Firal (Barcelona). The total surface area for construction will be 91,111 sqm above ground and 42,363 sqm below ground. The below-ground construction is set to begin in June/July 2007.

The total investment made in purchasing public deed land was 44.5 million euros during the first quarter of the year. 103,611 sqm of buildable land was acquired.

The following transactions were the highlights of the first quarter:

•

Iberdrola Inmobiliaria will invest 75.4 million euros in a new urban development of primary residences in the area of Molina de Segura, in the Murcia region, with the anticipated completion date in 2012. The Company has also completed purchase of the land, with a gross surface area of 240,247 sqm and buildable surface of 93,060 sqm. 744 multi- and single-family dwellings will be developed.

•

Iberdrola Inmobiliaria will invest 57.3 million euros in a residential and commercial development in the area of Lliria, 25 km west of the city of Valencia, with the anticipated completion date in 2011. The Company has also completed the purchase of land, with a gross surface area of 250,000 sqm and buildable area of 40,000 sqm.

•

Iberdrola Inmobiliaria has begun marketing its new residential development Los Altos de Arroyomolinos, located in the Madrid municipality of Arroyomolinos, in the suburbs of Centro de Ocio Madrid Xanadú. This development will be handed over in the first half of 2009.


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5. IBERDROLA ENGINEERING AND CONSTRUCTION

Iberdrola Engineering is working on projects in 25 countries, and already has subsidiaries in Mexico, Brazil, Venezuela, the US, the United Kingdom, Germany, Latvia, Poland, Russia, Slovakia, Bulgaria, Greece, Qatar, Kenya, Tunisia and India.

Iberdrola Engineering was awarded with a project of special relevance in the first quarter of 2007, a contract for the modernisation and redevelopment of the Laguna Verde nuclear plant in Mexico, increasing its nominal power by 20%, with a budget of 605 million dollars.

In addition, its currently carrying on nuclear-type works in the Flamamville nuclear power station in France for EDF.

Finally, on 29 March of this year, the La Venta II wind power station (85MW) was officially opened. This facility was a turnkey construction by Iberdrola Engineering in the Mexican state of Oaxaca.

6. REGULATION

The most significant events for the period in terms of regulation have been the following:

IBERDROLA and Endesa have agreed to carry out five energy auctions jointly to comply with Royal Decree 1634/2006

IBERDROLA and Endesa have agreed to carry out five energy auctions jointly to comply with Royal Decree 1634/2006, which obliges both companies to carry out primary energy auctions as a mechanism to aid development of the electricity market in Spain

The total volume auctioned off will reach 14.9 million MWh, distributed over a series of five auctions that will begin in June of this year and be held every three months until June 2008. To further this initiative, the two companies have prepared a plan of action in order to give notice of the process to all potential interested parties in Spain and in the rest of Europe.

Specifically, a Web page (www.endesa-iberdrola-vpp.com) has been launched in Spanish and in English, comprising a public area with basic information on the primary energy issues process - known on the international market as Virtual Power Plant Auctions, VPP - and another restricted area for companies interested in the process, which must register in order to be able to take part in the auctions and have access to the relevant information.

Regulation of distribution company bilateral contracts for supplies at tariff (OM ITC/400/2007)

Royal Decree-Law 3/2006 established a mechanism for assimilation to physical bilateral contracts, covering matching power sales and acquisition amounts on the electricity market made by parties belonging to the same business group.

Now, with the passing of OM ITC/400/2007, which governs this type of bilateral contracts, the assimilation method under Royal Decree-Law 3/2006 has become void and only Article 2 thereof, on deduction of the value of the


18		First Quarter 2007 financial results

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emission rights allocated free to generating facilities, remains in effect.

The Ministerial Order’s Explanation of Reasons makes reference to the aforesaid provision’s loss of effectiveness. It expressly notes: “Accordingly, with the effectiveness of the present provision, the rules whereby distribution companies trade in electric power through bilateral contracts with physical delivery are understood to be implemented for the purposes provided for in Article 1, Section 1 of Royal Decree-Law 3/2006”.

In this regard, OMEL announced on the 27th of February that as of the second intraday session on that date, assimilation of Royal Decree-Law 3/2006 would no longer be carried out.

7. IBERDROLA - SCOTTISH POWER INTEGRATION

On 27 November 2006, the board of directors of Iberdrola and ScottishPower, meeting in Madrid and Glasgow, respectively, reached an agreement on the terms of an offer by Iberdrola on the entire share capital of ScottishPower.

The transaction has been carried out under what is known under British law as a Scheme of Arrangement, in accordance with Rule 425 of the British Companies Act, with its approval by the Edinburgh Court of Sessions effective dated 23 April 2007 and its subsequent application for registration at Scotland’s Companies House.

Terms of the agreement

Pursuant to the terms of the agreement reached with ScottishPower, Iberdrola is acquiring part of the ordinary shares of ScottishPower by paying consideration in cash and loan notes. The rest of the ordinary shares of ScottishPower are being acquired by Iberdrola through the delivery of new-issue ordinary Iberdrola shares as resolved by the company General Shareholders Meeting held on 29 March 2007.

The financial impact of such terms for ScottishPower shareholders is equivalent to receiving 400 pence of sterling pound in cash and 0.1646 new Iberdrola shares (valued at the close of business on 27 November 2006 at 365 pence of sterling pound) for each of their stocks. In turn, the financial impact for holders of ScottishPower ADS’s is equivalent to receiving 1,600 pence of sterling pound and 0.6584 newly created Iberdrola ADSs (the underlying investment for each Iberdrola ADS will be one new Iberdrola share).

In addition, on 27 April 2007, ScottishPower will make payment of an extraordinary dividend of 12 pence of sterling pound per share (48 pence of sterling pound in the case of ADS).


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Considering the IBERDROLA stock closing price on 27 November 2006 of Euros 32.75 and an exchange rate of 1.4755 euros to 1 pound sterling, under the terms of the agreement the value of each share of ScottishPower is 777 pence of sterling pound (including the special dividend of 12 pence of sterling pound that ScottishPower will pay its shareholders), whereby the valuation of this company would reach on the order of € 17,100 million. To meet the consideration in stock, IBERDROLA will have issued approximately 263 million new shares, whereby the former ScottishPower shareholders will receive shares representing over 20% of the share capital of IBERDROLA after completion of the capital increase.

Scheme of the economic effect of the terms of the agreement

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Completion of the transaction

After obtaining the necessary regulatory approvals (as summarised in the table below), the shareholders of Iberdrola and ScottishPower approved at their respective General Meetings, held on 29th and 30th of March, the completion of the transaction, which became effective on 23 April after its approval by the Edinburgh Court of Sessions and its subsequent application for registration at Scotland’s Mercatile Register:


Regulatory notifications and approvals			Application filing		Approval received
European	European Commission	ü	12/01/07	ü	15/02/07
	Hart-Scott-Rodino Act	ü	21/12/06	ü	22/01/07
	FERC	ü	22/12/06	ü	25/01/07

U.S.A.	Federal Telecommunications Commission	ü	23/01/07	ü	05/02/07
	Exxon Florio Act	ü	22/01/07		21/02/07
	NY State Public Utilities Commission	ü	03/01/07		28/02/07

Spain	National Energy Commission: Confirmation of non-applicability of Function 14	Delivery of documentation (12/01/07 and 05/03/07)			22/03/07
Spain	National Securities Market Commission: registration of 1 the securities note	ü	09/03/07	ü	12/04/07


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The schedule followed by the transaction until its completion is shown in the following chart:

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(^*)

^*On 14 May 2007 and on 28 June 2007, the capital increase for meeting to the exercise of rights and options under the Scottish Power Stock Plans and the exercise of conversion rights by holders of ScottishPower convertible bonds will be carried out

Strategic sense and creation of value

Finalisation of the deal with ScottishPower comes after a period of five years of strong organic growth by the Company and creation of value for the shareholders of Iberdrola, thanks to the achievement of the 2001-2006 Strategic Plan.

The friendly takeover proposed has met all the criteria stipulated for non-organic growth in the 2007-2009 Strategic Plan, and will enable moving ahead with the objectives set in that strategy. The basic principles of action are growth, internationalisation, and efficiency, all with the ultimate goal of achieving greater profitability ratios for Iberdrola.

From the strategic point of view, Iberdrola believes that the transaction is attractive and will allow for the creation of one of the leaders on the European energy market, with a broad geographical presence and a strong platform that will make futue growth possible.

The transaction will not only bolster the internationalisation of Iberdrola, but will also consolidate the Company as one of the leaders on the global renewable energy market.


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Iberdrola has obtained financing in the amount of 7,655 million pounds sterling from a group of 27 top financial institutions to finance the cash component of the consideration and to refinance certain elements of ScottishPower’s existing debt.

•

A new energy leader

All of the foregoing means that integration of both companies will give rise to one of the largest European power company in terms of enterprise value. Finally, this integration will allow for creation of a new, more profitable, more solid, more balanced company with a greater focus on global growth.

•

Pro forma Financial Information

The pro forma financial information is appended to the report issued by the Board of Directors of Iberdrola relative to the capital increase, which has been filed with the Spanish securities regulator (CNMV) and is available to the public, both from the CNMV and from the company web site (www.iberdrola.com).

The pro forma financial information has been drawn up solely for reference, notably with a view to:

•

Complying with the requirements of Appendix II to European Commission Regulation 809/2004 of 29 April 2004 relative to the application of European Parliament and Council Directive 2003/71/EC.

•

Providing information on how the operation might have affected the Iberdrola Group’s financial statements at 31 December 2006.

On account of its very nature, pro forma financial information concerns a hypothetical situation and, as such, does not represent the actual financial position or earnings of the IBERDROLA Group integrated with SCOTTISH POWER.

Below is included the pro forma balance sheet and income statement at 31 December 2006, followed by explanations for the adjustments made. The audit firm Ernst & Young, S.L. has issued a special report on the revised pro forma financial information dated 21 February 2007.


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Pro forma balance sheet at 31 December 2006

MillIon Euros


ASSETS	Iberdrola	ScottishPower	Adjustments		Pro forma
Non-current assets
Fixed assets	21,067	8,423	9,929	(^A)	39,419
Goodwill and intangible fixed assets	900	374	6,440	(^B)	7,714
Investments recorded under equity method	761	244	—		1,005
Other non-current assets	4,517	843	—		5,360
Total non-current assets	27,245	9,884	16,369		53,498
Current assets
Cash and cash equivalents	705	1,903	(488	) (C)	2,120
Other current assets	5,111	2,647	171	(D)	7,929
Total current assets	5,816	4,550	(317	)	10,049
TOTAL ASSETS	33,061	14,434	16,052		63,547

SHAREHOLDERS’ EQUITY AND LIABILITIES	Iberdrola	ScottishPower	Adjustments		Pro forma
Net shareholders’ equity
Paid-in capital	2,705	922	(185	)(E)	3,442
Other reserves	6,053	751	5,675	(F)	12,479
Earnings for the year	1,660	2,204	(1,895	)	1,969
Equity allocated to majority company partners	10,418	3,877	3,595		17,890
Minority interests	149	12	—		161
Total shareholders’ equity	10,567	3,889	3,595		18,051
Non-current liabilities
Financial debt	12,618	4,989	9,049	(G)	26,656
Other non-current liabilities	3,419	2,078	3,408	(D)	8,905
Total non-current liabilities	16,037	7,067	12,457		35,561
Current liabilities
Financial debt	1,734	1,460	—		3,194
Trade payables and related	3,323	2,002	—		5,325
Other current liabilities	1,400	16	—		1,416
Total current liabilities	6,457	3,478	—		9,935
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES	33,061	14,434	16,052		63,547


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Pro forma income statement at 31 December 2006

Million Euros


	Iberdrola		ScottishPower		Adjustments		Pro forma
Operating income	11,252		8,980		—		20,232
Operating expenses	7,363		7,028		—		14,391
Depreciation and provisions	1,235		382		373	(^H)	1,990
EBIT	2,654		1,570		(373	)	3,851
Net financial loss	(518	)	(278	)	(488	) (^C)	(1,284	)
Income from equity-consolidated companies	69		3		—		72
Income from disposal of non-current assets	181		3		—		184
Consolidated pre-tax profit	2,386		1,298		(861	)	2,823
Corporate income tax costs	695		412		(283	) (^D)	824
Profit for the period	1,691		886		(578	)	1,999
Earnings from discontinued activities	—		1,317		(1,317	) (^I)
Minority interests	(31	)	1		—		(30	)
Profit for the period allocated to majority company shareholders	1,660		2,204		(1,895	)	1,969
Explanation of adjustments

A	This adjustment factors in the impact of the allocation of part of the SCOTTISH POWER acquisition price for the fair value of its tangible fixed assets, representing a total of 10,301 million euros, net of depreciation in 2006.

B	This adjustment factors in the goodwill generated through the acquisition of SCOTTISH POWER for 5,011 million euros and the allocation of part of the SCOTTISH POWER acquisition price for the fair value of its intangible assets, representing a total of 1,429 million euros.

C	This adjustment factors in accrued interest on the bank financing taken out by IBERDROLA in connection with the acquisition of SCOTTISH POWER.

D	Primarily tax effects for the other adjustments.

E	This adjustment factors in the write-off of SCOTTISH POWER capital as a result of the pro forma consolidation process, giving a negative amount of 922 million euros, and the capital increase of 737 million euros carried out by IBERDROLA in connection with the acquisition.

This adjustment factors in the issue premium to be obtained by IBERDROLA as a result of the abovementioned capital increase, totaling 7,313 million euros, net of the write-off of SCOTTISH POWER reserves as a result of the consolidation. This also includes the impact of the adjustment indicated in Section I below on the balance sheet.

G	This adjustment factors in the bank financing taken out by IBERDROLA to pay for the acquisition.

H	This adjustment factors in the impact on depreciation for the year of the allocation of part of the SCOTTISH POWER acquisition price for the fair value of its net assets.

On 24 May 2005, SCOTTISH POWER considered that its equity interest in PacifiCorp was compliant with the conditions set out under IFRS 5: “Non-current assets held for sale and discontinued operations” for its consideration as held for the sale; the main implications of the application of this standard on SCOTTISH POWER’s financial information were as follows:

•

The transfer of each one of the sections from the profit and loss account over to only one line, recorded under “Earnings for the year from discontinued operations”.

•

Assets held for sale are valued at the lower of their book value or their fair value, less the costs required for their disposal. If the latter value is lower, the difference is booked against “Earnings for the year from discontinued operations”.

The effective sale took place on 20 March 2006. As a result, the pro forma balance sheet does not include the equity interest in PacifiCorp. On the sale side, and for this report to be more representative of the Group resulting from IBERDROLA’s acquisition of SCOTTISH POWER, within the initial SCOTTISH POWER balances used to calculate the PRO FORMA FINANCIAL INFORMATION 1,317 million euros have been reclassified on the balance sheet, with this amount recorded as income under “Earnings for the year from discontinued operations” over the period from 1 October 2005 to 30 September 2006.

*	Additional information, on our Web page: www.iberdrola.com

Important information

“This notice is not intended as a purchase, sale or exchange offer or as a solicitation of a securities, purchase, sale or exchange offer. The shares of Iberdrola S.A. cannot be offered or sold in the United States, unless it is through an actual declaration of notification as provided for by the Securities Actor pursuant to a valid exemption from the duty of notification.”


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ANALYSIS OF Q1 2007

Energy Production


	GWh	vs. Q1 2006			% Weight
Gas combined cycle	8,880	-213	-2.3	%	35.9	%
Wind and mini-hydroelectric	2,725	472	21.0	%	11.0	%
Hydroelectric	4,861	2,475	103.7	%	19.6	%
Nuclear	6,509	-153	-2.3	%	26.3	%
Fuel-oil	15	-551	-97.3	%	0.1	%
Coal	1,212	-485	-28.6	%	4.9	%
Cogeneration	550	53	10.7	%	2.2	%

TOTAL NET PRODUCTION	24,752	1,598	6.9	%	100.0	%

ENERGY DISTRIBUTED	34,010	2.9%

Energy Production in Spain


	GWh	vs. Q1 2006		% Weight
Gas combined cycle	2,719	-33.0	%	14.9	%
Wind energy and mini-hydroelectric ⁽¹⁾	2,725	21.0	%	15.0	%
Wind farms	2,578	23.2	%	—
Hydroelectric	4,598	113.3	%	25.3	%
Nuclear	6,509	-2.3	%	35.7	%
Fuel-oil	15	-97.3	%	0.1	%
Coal	1,212	-28.6	%	6.7	%
Cogeneration	430	14.7	%	2.4	%

TOTAL NET PRODUCTION	18,208	2.5	%	100.0	%

ENERGY DISTRIBUTED	26,756	2.0	%
HYDRO ELECTRIC RESERVE LEVELS AT 31.03.07	7,154 GWh	(63.4%)

Energy Production: Latin America


	GWh	vs. Q1 2006		% Weight
Gas combined cycle	6,161	22.4	%	94.1	%
Hydroelectric	263	14.3	%	4.0	%
Cogeneration	120	-1.6	%	1.8	%

TOTAL NET PRODUCTION	6,544	21.5	%	100.0	%

ENERGY DISTRIBUTED (managed)	7,254	6.2	%

(1)	Includes 460 MW of international capacity with production of 274 GWh. For 2006: 316 MW with production of 151 GWh.


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1. PRODUCTION: SPAIN

Group’s net production in Spain showed growth of 2.5% in the first quarter of 2007 compared to the same period during the previous fiscal year, reaching 18,208 GWh. It is important to emphasise that this increase in production by IBERDROLA was achieved during a quarter in which total net production by the Spanish electricity system overall has shown a drop of -0.5%. IBERDROLA has produced more than the system, and has moreover done so with a cleaner generation mix, reducing emissions by -37.1%:

•

Hydroelectric production rose by 113.3%, in an increasingly hydroelectric environment where IBERDROLA has also carried out active management of existing reserves, which, together with the flexibility of the generation facilities, has allowed for more efficient management of the 55.3% increase experienced by hydroelectric production during the period in Spain overall.

•

Renewable energy production (wind and mini-hydroelectric) grew by 21%. Wind production grew by 23.2%, with noteworthy performance by wind production abroad, which reached 274 GWh during the period, or 10.6% of the Group’s total wind production.

•

Nuclear production remains stable, posting a slight decrease of -2.3%. This technology remains the one with the greatest contribution to the generation mix, with a weighting of 35.7%.

•

Combined-cycle production fell -33% to 2,719 GWh. This change shows the flexibility of IBERDROLA’s generation facilities, which allows the sources of production to be adapted to the conditions that arise during each period.

•

The significant reduction of production using more polluting sources of energy consolidated itself during the period, with a drop of -28.6% in coal production and a drop of -97.3% in fuel oil production, which, at only 15 GWh, practically reduced production from these energy sources to zero.

Emissions have been reduced by 37.1% in year-on-year terms, reaching 133 gr/kWh, 2.8 times lower than emissions for the rest of the sector. The percentage of emission-free production rose to 76%, jumping from the 62.3% achieved during the same period of 2006.

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IBERDROLA has obtained a market share of 26.45% on the wholesale market during the first quarter of 2007, out of total demand in Spain. Comparatively speaking, energy production can be broken down as follows:


	Q1 2007		Q1 2006
Gas combined cycle	14.9	%	22.8	%
Renewable energy	15.0	%	12.7	%
Hydroelectric	25.3	%	12.1	%
Nuclear	35.7	%	37.5	%
Fuel-oil	0.1	%	3.2	%
Coal	6.7	%	9.6	%
Cogeneration	2.4	%	2.1	%

Total	100	%	100	%

2. PRODUCTION: LATIN AMERICA

In Latin America, total production is up 21.5% to 6,544 GWh. This significant growth has been achieved thanks to new investments in combined-cycle plants entailing 94% of the total produced.


	Productión	Change
Mexico (c. cycles)	5,778	24.2	%
South America	766	4.2	%
Combined - cycle	383	0.0	%
Hydroelectric	263	14.3	%
Cogeneration	120	-1.6	%

TOTAL	6,544	21.5	%

The increase posted in the region is due primarily to the 24.2% growth in combined-cycle production in Mexico thanks to the Altamira V combined-cycle plant (1,121 MW) going into operation and the full operation and greater availability of the Mexican plants of Monterrey (1,037 MW), Altamira (1,036 MW), Enertek (120 MW) and La Laguna (500 MW). In terms of hydroelectric power, it experienced growth of 14.3%.

3. MARKET: SPAIN

In the domestic market the total demand of IBERDROLA measured on the grid increased 2.0%, reaching 26,756 GWh. The number of users reached 10 million.

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4. MARKET: LATIN AMERICA

The trend for demand at the three distributors in which IBERDROLA has an interest in Brazil is reflected in the following table:


Energy distributed (GWh) (under management)	Q1 2007	vs.Q1 2006
Coelba	3,132	4.9	%
Cosern	984	10.7	%
Celpe	2,282	7.0	%

TOTAL	6,398	6.5	%


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Analysis of results for the period

Below is the interpretation adopted by IBERDROLA with respect to the following items:

Tariff Insufficiency

With regard to the tariff insufficiency estimated for 2007, sector-wide, and once the value of the emission rights consumed is discounted, the estimated tariff deviation could reach a figure on the order of € 75.8 million. According to Royal Decree 5/2005 of 11 March, the provisional percentage that would correspond to IBERDROLA for financing that tariff deviation would reach 35.01%, which entails a deviation of € 26.5 million.

Royal Decree 3/2006

Emission rights

According to the interpretation made of Royal Legislative Decree 3/2006 at IBERDROLA, and after the publication of the aforementioned Ministerial Order ITC/400/2007, the initial sector-wide deviation figure of € 75.8 million includes € 48.9 million corresponding to the value to be reimbursed for the emission rights assigned pursuant to the National Allowance Plan and consumed during the period. On the other hand, no other emission rights subsidies are considered, except those under the Special Regime, specifically those corresponding to Co-generation activity. The impact for IBERDROLA pertaining to Emission Rights according to the above interpretation, amounts to € -5.7 million, posted in the Generation business. This impact is calculated from the difference between the emission rights granted to co-generators for € 2.3 MM, and the cost of emission rights for the period, which amounts to € -8.0 MM.

Furthermore, the changes occurring with respect to CO₂ emissions have been the following:


	Million Tn	Average price
Allowances consumed	2.7	2.95

No effect from assimilation to bilateral contracts

Insofar as bilateralisation, as of the publication of the Royal Decree on 2007 Tariffs, the provisional price for bilateral contracts ceases to be € 42.35/MWh, being assimilated to the market price, as stipulated in the aforementioned Royal Decree. In addition, following the publication of Ministerial Order ITC/400/2007, which governs this type of bilateral contract, the assimilation method under Royal Decree-Law 3/2006 has become void and only Article 2 thereof, on the deduction of the value of emission rights assigned for free to generating facilities, remains in effect. In this sense, OMEL announced on the 27th of February that as of the second intraday session on this date, the assimilation under Royal Decree-Law 3/2006 would no longer be carried out.

The most noteworthy aspects of the results for the first quarter of 2007 are the following:


€ Millions	Q1 2007	vs. Q1 2006
Net Sales	2,716.6	-8.8	%
GROSS MARGIN	1,572.5	+5.3	%
EBITDA	1,087.1	+2.9	%
EBIT	794.8	+0.8	%
NET PROFIT	458.2	+13.6	%


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1. NET SALES

The Net Sales of the Group reached € 2,716.6 million at the end of the first quarter of 2007, a decrease of 8.8% compared to the same period of 2006. Growth in International (+4.6%) Engineering and Non-Energy (+36.2%), did not suffice to offset the drop in the Domestic Energy business (20.2%).

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Net Sales for the Domestic Energy Business fall by 20.2% due to the effect of the lower prices obtained in Generation and Renewables. Nevertheless, Distribution achieved growth of 40.5% in Net Sales, deriving from two factors: the increase in remuneration for the regulated business and the lack of a negative impact from bilateralisation associated with Royal Decree 3/2006.

2. GROSS MARGIN

At a consolidated level, the Gross Margin reached € 1.572.5 million, with growth of 5.3% compared to what was obtained in the same period of 2006. Whilst International (+36%) and Engineering and Non-energy (+21.6%) improved substantially, the Domestic business (-1.4%) and Renewables (-5.5%) were affected by the aforementioned energy price situation.

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The Group’s total Procurement cost showed a significant reduction of 17.5%, as a result of a different production mix in Generation in Spain and due to less procurement in International.

The Gross Margin includes € -17 million due to the negative effect deriving from the devaluation of the Real in Brazil and the dollar in Mexico.

Breaking down the change in Gross Margin by business, the following aspects are noteworthy:

2.1 Domestic Energy Business

The Gross Margin reached E 1,120.4 million, showing a drop of -2.2% compared to the same period of 2006. For the Spain Energy business (excluding renewables), the decrease was -1.4%, which can be explained as follows: while the Distribution business posted an increase of 39.8%, the Generation, Commercial and Gas businesses together suffered a drop of -18.2%. The Renewables business alone showed a decline of -5.5%.


30		First Quarter 2007 financial results

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Various factors have influenced the change in Gross Margin:

•

The Distribution business rose by € 105.7 million (+39.8%), posting an increase of € 46 million thanks to the increase in the remuneration of regulated activities. In addition, it no longer shows any negative impact from Royal Decree 3/2006 in terms of bilateralisation, since the latter is carried out at market prices. In the first quarter of 2006, the negative impact from bilateralisation due to the effects of Royal Decree 3/2006 was € 47.6 million.

•

Generation experienced a drop of 23.1% due to a 40.9% decrease in the pool price. A similar amount of production under the Ordinary Regime (-0.6%), with a generation mix of variable low-cost and cleaner technologies, lowered Procurement costs by 43.1%. The impact due to emission allowances consumed during the period was only € -5.7 million, compared to the € 101.2 million posted during the same period of 2006.

•

The growing contribution of the Supply & Gas business, as a result of the policy followed in the liberalised market and the flexibility of the portfolio of gas contract (+35.6 million).

•

Renewables posted a drop of 5.5% in terms of Gross Margin, much lower than the drop of 21.8% in prices, thanks to the greater installed capacity (+16.3%), which has translated into greater wind production (+ 23.2%).

2.2 International Business

The Gross Margin reached € 266.5 million, a 36.0% increase, due to the good evolution of the Group’s businesses in the region. The energy generated grew by 21.5% thanks to the Altamira V cycle (1,121 MW) in operation since the fourth quarter of 2006, together with a greater availability index and improvements in efficiency at the rest of the plants. Energy distributed grew by 6.2%. Procurement was reduced by 11.3%. Another factor to consider is the devaluation of the exchange rate for the region’s local currencies: the real in Brazil (-4.4%) and the U.S. dollar, which affects Mexico (-8.6%).

2.3 Non-Energy and Engineering and Services

They contributed € 185.5 million to the total Gross Margin, showing growth of 21.6%, in a quarter in which the Real Estate Business improved its contribution by €` 45.5 million following various transactions closed during the period, which was offset partially by the lower contribution by Corporación IBV in terms of Gross Margin as a result of the sale of Azertia and of Landata during the 2006 financial year.


First Quarter 2007 financial results		31

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3. EBITDA / GROSS OPERATING RESULT

The consolidated EBITDA has increased by 2.9% up to € 1,087.1 million. Added to the changes already explained under Gross Margin should be an analysis of Net Operating Expenses, which increased by 12.3%, with the following items being noteworthy:

•

The decrease in Net Personnel Expenses of 4.0%.

•

A 31.5% increase in Net External Services Reported. It includes two effects of an extraordinary nature: € 14.1 million of attendance premium to the General Shareholders Meeting and other non-recurring expenses of € 17.6 million

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The change in Net Operating Expenses in homogeneous terms, deducting the non-recurring items, reaches growth of 4.2% (versus the 12.3% reported); lower than the 5.3% increase in Gross Margin. In addition, there is a positive impact due to exchange rate of € 4 million, associated with the changes in the currencies of the businesses in Latin America.

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The breakdown of the Net Operating Expenses Reported is as follows:


Euros MM	Q12007	vs. Q1 2006
Net Personnel Expenses	202.9	-4.0	%
Personnel	243.2	-3.9	%
In-house work on fixed assets	-40.3	-3.4	%
Net External Services	236.5	31.5	%
External Services	275.3	23.7	%
Other operating revenues	-38.8	-8.9	%

TOTAL	439.3	12.3	%

On the other hand, Taxes decreased by 7.6% to € 48.3 million, a change that is due to issues associated with provisions for the payment of various taxes that have already lapsed. This lower tax payment more than offsets the increases in Real Estate Tax (IBI) associated with the new facilities that have gone into operation.


32		First Quarter 2007 financial results

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4. EBIT / NET OPERATING RESULT

The EBIT reached € 794.8 million, for an increase of 0.8% compared to the same period of 2006. Amortisation and Provisions are up 9.0% (€ 24.1 million). The increase in Amortisation and Provisions is mainly due to:

•

Amortisations increased by 13.8% to reach € 283.8 million. This increase was mainly driven by the new facilities that have gone into operation.

•

Provisions decreased by € 10.2 million to € 8.5 million, as a result of a change in the provisions for the Domestic Energy Business.


Euros MM	Q1 2007	Q1 2006	% Change
Amortisation	283.8	249.5	+13.8	%
Provisions	8.5	18.7	-54.5	%

TOTAL	292.3	268.2	+9.0	%

5. FINANCIAL RESULT

The Financial Result reached € 163.5 million, which represents an almost flat evolution (+0.1%) vs. the result for the same period of 2006. Before deducting tariff insufficiency impact, the balance of debt remains stable at 13,061 million euros by March 2007 compared to 13,031 million euros for the same period of 2006.

Furthermore, in a context of rising interest rates, the average cost of the debt reached 4.65% during the first quarter of 2007, compared to 4.6% during the same period of the previous year.

The breakdown of the Financial Results is as follows:


Euros MM	Q1 2007	Q12006	% Change
Financial Revenues	65.8	40.7	+61.7	%
Financial Expenses	229.2	204.1	+12.3	%

TOTAL	-163.4	-163.4	+0.1	%

6. RESULTS OF COMPANIES CONSOLIDATED USING THE EQUITY METHOD

The Results of Companies Consolidated by the Equity Method posted an increase of € 15.8 million up to € 19.9 million, with most of the results being contributed by the financial stakes. The breakdown is as follows:


Euros MM	Q1 2007	Q1 2006	% Changee
Financial stakes	17.5	2.5	15.1
Rest	2.4	1.6	0.7

TOTAL	19.9	4.1	15.8

The increase of these results for financial stakes is due basically to the greater contribution by Gamesa.


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7. NON-RECURRENT RESULTS

Non-recurrent results reached € 9.3 million, resulting from the sale of real estate assets, a usual practice engaged in by the Group.

8. NET PROFIT

Profit Before Taxes grew by +4.7% to reach a figure of 660.5 million euros. They showed slightly higher growth than the change in Net Operating Profit (+0.8%), considering the flat evolution in Financial Result and the increase of 23.5 million euros shown by the Results of Companies Consolidated by the Equity method and the Non-recurrent Results, explained above.

The effective tax rate is 29.3%, in accordance with the tax rules currently in force, which is below the 35.1% seen in the same period of 2006.

Finally, the Net Profit reached € 458.1 million, a 13.6 % increase compared to the Net Profit achieved during the same period of 2006. This increase is in line with the double-digit growth expectations for the whole 2007 financial year.


34		First Quarter 2007 financial results

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Results by business

1. ENERGY BUSINESS: SPAIN

1.1 Generation

a) Gross Margin

To analyse the change in this item during the first quarter of 2007, the following must be borne in mind:

•

A similar amount of production under the Ordinary Regime (-0.6%), although with greater weight for variable low-cost emission-free production technologies, which reaffirms the flexibility of IBERDROLA’s generation mix (hydraulic +113.3%; nuclear -2.3%).

•

In addition, strong decreases were experienced in production through thermal energy sources -28.6% for coal, -97.3% for fuel-oil, and -33.0% for combined cycles).

•

A drop of 41% in the pool price.

The Gross Margin for the Generation Business posted a 23.1% decrease. It is worth highlighting the following:

•

Net Sales decreased by 36.9%, in line with the aforementioned drop in the pool price (-41.0%).

•

Procurement costs dropped -43.1%, as a result of the different production mix mentioned above. The average cost of fossil fuel (not including nuclear) stood at 38.4 € / MWh.

Fuel Cost & CO₂


Eur/MWh	Q1 2007	Q1 2006	%
Avg Fuel Cost*	38.4	38.5	-0.1	%
Co2 Cost (Eur/Ton)	2.95	25.9	-88.6	%

*	Includes the C. Cycles, Coil & Oil

•

In addition to the procurement cost, a negative impact of € 8.0 million was posted for the cost of the emission allowances consumed, well under the € 107.4 million seen during the same period of 2006. The average cost per CO₂ allowance for the period amounted to 2.95€/t, as against 25.89€/t during the first quarter of 2006.

b) Operating Profit/EBIT

EBIT recorded a decrease of 44.8% in relation to the same period of the previous fiscal year, reaching € 251.2 million euros. In terms of EBITDA, which totalled € 368.7 million, the decrease experienced was of 33.1%.

In addition to what was already mentioned under Gross Margin, an increase of 17.3% took place in Net Operating Expenses (€ +20.5 million), which include E 17.6 million in non-recurring items. The Recurrent Net Operating Expenses show moderate growth of only 2.4%:

•

Net External Services increased by 37.3%. Added to the € 17.6 of an extraordinary nature mentioned above are the effects of the new installed capacity in combined cycles.


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•

Net Personnel Expenses posted a decrease of 7.3%, with the lower cost deriving from the cutting of personnel under the Early Retirement Plan.

Amortisation & Provisions have increased by 21.9% due primarily to the new facilities put into operation. Taxes posted a slight increase of 3.3% associated with the Real Estate Tax (IBI) on the new facilities put into operation.

•

The key figures for this Business are:


GENERATION (Euros MM)	Q1 2007	vs. Q1 2006
Net Sales	848.9	-36.9	%
Gross Margin	524.0	-23.1	%
EBITDA	368.7	-33.1	%
EBIT	251.2	-44.8	%

1.2 Supply & gas

a) Gross Margin

In terms of the Gross Margin for the Supply business, the following is noteworthy:

•

The significant reduction in the volumes of electricity sold (-66.1 %).

•

The policy of active management and optimization of the gas procurement portfolio.

It thus manages to show a positive contribution of up to € 25.5 million against the losses of € 10.1 million posted during the same period of 2006.

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By units, the following is also worth noting:

•

Electricity: An improvement from the € -18.6 million of the first quarter of 2006 to the € -5.2 million recorded as of March 2007, where the decrease in the volumes of electricity sold should be taken into account.

•

Gas: Its contribution to the Gross Margin grew by € 22.2 million, standing at € 30.7 million in the first quarter of 2007.

b) Operating Profit / EBIT

The policy of optimising the gas and reducing exposure to the electricity business has managed to show a positive contribution in terms of EBITDA of € 21.7 million, as against losses of € -27.3 million during the same period of 2006. In terms of EBIT, a positive contribution is also shown during the first quarter of 2007 in the amount of € 20.7 million after making € 1 million in amortisation, appreciably improving the progress of the business following the € -29.4 million in losses reached in terms of EBIT at the end of the first quarter of 2006.


36		First Quarter 2007 financial results

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In addition to what was already stated in terms of Gross Margin, the efficiency of the business improved significantly as a result of the policy followed, being reflected in a significant reduction in Operating Expenses, down € 1.2 million (-8.8%), with drops in Net Personnel Expenses (-52.3%) and in Net External Services (-22.8%), linked to the lower level of activity within the framework of a new more efficient organisational structure.

•

The key figures for this Business are:


SUPPLY (Eur MM)	Q12007	vs. Q1 2006
Net Sales	445.4	-28.0	%
Gross Margin	25.5	N/A
EBITDA	21.7	N/A
EBIT	20.7	N/A

1.3. Renewables

a) Gross Margin

The following factors are especially noteworthy in the change in the Renewables business throughout the first quarter of 2007:

•

Following the aforementioned evolution undergone by the pool price, renewable energy prices are down 21.8%. At the end of the first quarter of 2007, 99% of the facilities are operating under the market participation system.

•

Total installed capacity rose 16.3% (+638 MW) to 4,552 MW. This increase in capacity has translated into growth of 23.2% in domestic and international wind production, up to 2,578 GWh. Total renewable energies production (wind plus mini-hydro) grew 21.0%. The growth achieved in renewable production is practically double that experienced by the whole Spanish electric system, which was at 11.8%.

LOGO

•

International Renewables accounted for 10.1 % of installed capacity and for 10.1 % of production in the first quarter of 2007.

•

The 21% increase in production has managed to lessen the effects of the aforementioned 21.8% drop in prices, so that the decrease posted in terms of Gross Margin is of only 5.5% to € 203.4 million. The Gross Margin for Renewables already represents 28% of the total obtained for generation by IBERDROLA in Spain.

b) Operating Profit / EBIT:

The EBIT posted a drop of 24.8% to € 106.1 million due to the following factors:


First Quarter 2007 financial results		37

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•

The EBITDA showed a decrease of 12.4%, slightly higher than the fall experienced in terms of Gross Margin as a result of the growth (+34.3%) in Net Operating Expenses driven by the new facilities that have become operational and the significant increase in international activity.

The EBITDA margin remains at levels very close to 80%, despite the price situation described. In addition, the contribution by Renewables to the Group’s EBITDA continued its growth trend, to reach 14.7%, rising from the 14.3% posted for the 2006 financial year overall.

•

Amortisation & Provisions are 29.3% higher, due to the addition of new installed capacity during the financial year.

Insofar as Net Operating Expenses, it is important to highlight the increase in the international area, up E 6.4 million, reaching € 8.0 million and placing overall Net Operating Expenses for the business at € 41.1 million (+34.3%).

•

The key operating figures for this business are as follows:


RENEWABLES (Million euros)	Q1 2007	vs. Q1 2006
Net Sales	203.4	- 5.5	%
Gross Margin	203.4	- 5.5	%
EBITDA	160.0	-12.4	%
EBIT	106.1	-24.8	%

1.4. Distribution

a) Gross margin

The Gross Margin of the Distribution business experienced growth of 39.8%, to reach € 371.1 million, primarily as a result of the following factors:

•

Positive effect of € 46 million reflecting the increase in remuneration of regulated activities in line with the Royal Decree on 2007 Tariffs.

•

Lack of negative impact due to bilateralisation resulting from the application of Royal Decree 3/2006 of 24 February. At the end of the first quarter of 2006, the negative impact posted for that reason reached € 47.6 million. Since the publication of the Royal Decree on 2007 Tariffs, the settlement price for bilateral contracts ceases to be the provisional one of 42.35 €/MWh), being assimilated to the market price, as stipulated in the aforementioned Royal Decree on tariffs. In addition, following the publication of Ministerial Order ITC/400/2007, which governs this type of bilateral contracts, the assimilation method under Royal Decree-Law 3/2006 has remained without effect.

b) Operating Profit / EBIT

The EBITDA for Distribution is up 95% (€ 226.5 million), given that the growth posted in terms of Gross Margin is combined with an 8.7% decrease in Net Operating Expenses, with various efficiency measures made. Net Personnel Expenses were down 12.5% and Net External Services experienced a drop of 6.1 %.


38		First Quarter 2007 financial results

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The EBIT for Distribution grew by € 124.8 million (+242%) to € 176.3 million, given that the growth posted in terms of EBITDA is combined with a 22.3% decrease in Amortisation & Provisions, reaching € 50.3 million, due mainly to the change in provisions because of the inclusion of some non-recurring items in 2006, partially offset by growth of 25.4% in Taxes, associated with increased demand and the switch from free to regulated tariff energy.

•

The key figures for this Business are as follows:


DISTRIBUTION (Million euros)	Q1 2007	vs. Q1 2006
Net Sales	373.1	40.5	%
Gross Margin	371.2	39.8	%
EBITDA	226.6	95.0	%
EBIT	176.3	242.3	%

1.5 Corporation

This includes eliminations of inter-group expenses between the corporation and the businesses.

2. INTERNATIONAL BUSINESS

a) Gross Margin

Net Sales from International increased 4.6% to reach € 611.4 million. Mexico, with a 60.5% contribution, is the area making the greatest relative contribution, thanks to increases in production, with the new Altamira V (1,121 MW) plant on line since the fourth quarter of 2006, along with greater plant availability. Also notable is the increase in Revenues in Brazil by 15.1%, resulting essentially from increased demand and from the tariff adjustments.

The Gross Margin for the International business is up 36% (€ +70.6 million) to € 266.5 million, an increase achieved even considering the negative exchange rate impact. The change in the Gross Margin for the Latin America region can be broken down as follows:

•

Increase in the Gross Margin in functional currency: € +87.8 million

•

Exchange rate effect: € -17.2 million, due to the depreciation of the U.S. dollar (-8.6%) and of the Brazilian real in relation to the euro (-4.4%).

In Mexico-Guatemala, the Gross Margin amounted to € 104.9 million (+32.8%). This increase is due to the full contribution to results by the new combined cycles and the significant improvements in plant efficiency and availability, which together have led to a 24.2% increase in production in the area. The exchange rate impact is slightly negative, with the dollar posting a devaluation of-8.6%, the effect of which is € -10.2 million.

In Brazil, the Gross Margin showed a positive change of 38.2% (to € 161.6 million), thanks to a greater contribution from the distribution businesses arising from growth in demand (+6.5%), tariff adjustments and reviews that added another € 22.2 million, and the larger contribution of the Generation business. The exchange rate effect is also slightly negative following the devaluation of the real in relation to the euro (-4.4%), with an effect of € -7 million.


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b) Operating Profit/ EBIT

The change in International EBIT, which has increased 53.5% to € 156.9 million, reflects an increase in EBITDA of 41% and moderate growth of 9% in Amortisation & Provisions, deriving primarily from the aforementioned plants going into operation. EBITDA growth in local currency reached 50.4%.

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As far as EBITDA, it posted growth of +29.8% in Mexico, mainly as a result of greater activity in Generation. In South America, it rose +48.8% due to the change already described in the Gross Margin and due to the increase in efficiency.

Thus, total EBITDA growth in the International business is at 41 %.

The EBITDA per region and business is broken down as follows:

•

Mexico-Guatemala


EurMM	Q1 2007	vs. Q1 2006
Generation	63.8	38.7	%
Distribution	17.6	5.4	%

TOTAL	81.4	29.8	%

•

South America


EurMM	Q1 2007	vs. Q1 2006
Generation	18.9	-3.1	%
Distribution	100.2	67.0	%

TOTAL	119.1	49.8	%

The 23% increase in Net Operating Expenses was mitigated by the impact of the change in the exchange rate (€ +3.9 million).

By geographical areas, the breakdown is as follows:


EurMM	Q1 2007	vs. Q1 2006
Mexico-Guatemala	23.4	43.6	%
South America	40.3	13.5	%

TOTAL	63.7	23.0	%

The key operating figures for the business are:


INTERNATIONAL (Eur MM)	Q1 2007	vs. Q1 2006
Net Sales	611.4	4.6	%
Gross Margin	266.5	36.0	%
EBITDA	200.5	41.0	%
EBIT	156.9	53.5	%


40		First Quarter 2007 financial results

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3. CONSTRUCTION BUSINESSES AND ENGINEERING & NON-ENERGY

a) Gross Margin

Non-energy and Engineering & Construction

Net Sales grew 36.2% to € 470 million in a quarter with a strong contribution by Iberdrola Inmobiliaria (E +82.4 million to € 126.1 million), following the closing of various transactions during the quarter, and a continued high level of contribution by the activity of the Engineering and Construction businesses, which contributed € 177.5 million in Net Sales, growing 57% (€ + 64.7 million). These increases were partially offset by the decrease in the contribution of Corporación IBV (€ -29.6 million) as a result of the sale of Azertia and of Landata in 2006.

The Gross Margin reached € 185.5 million, up 21.6% compared to the same period of 2006, thanks to the greater contribution from Iberdrola Inmobiliaria and the continued high level of contribution by Engineering and Construction, despite the effects of the aforementioned change in the accounting perimeter at Corporación IBV. It can be broken down as follows:


EurMM	Q1 2007	Q1 2006	Change million
Engineering & Construction	46.3	45.1	+1.2
IBERDROLA Inmobiliaria	68.2	22.7	+45.5
Corporación IBV	19.5	41.3	-21.8
Other services	51.5	43.5	+8.0

TOTAL	185.5	152.6	+32.9

The increase of € 45.5 million at Iberdrola Inmobiliaria is due to the closing of various transactions during the quarter. As for Engineering & Construction (€ +1.2 million), Engineering shows growth in its contribution that is partially offset by the seasonality that affects the services area. The drop of € 21.8 million at Corporación IBV is attributable to the sale of Azertia and of Landata in 2006, which ceased contributing to results.

b) Operating Profit / EBIT

In terms of EBITDA, the contributions can be broken down as follows:

•

In terms of the contribution of Iberdrola Engineering & Construction, the EBITDA of Engineering reached € 12.5 million, growing 96%, while the one for Services reached € 4.9 million, falling due to the seasonality proper to the business. The growth experienced in volumes also had an effect in terms of Net Operating Expenses, whereby the EBITDA for the business showed a drop of 42.7%.

•

The contribution of Iberdrola Inmobiliaria is € 61.1 million, in line with the trend shown in terms of Gross Margin, with a greater contribution this quarter.

•

Corporación IBV, which is consolidated by proportionate consolidation according to IFRS, has contributed € 5.2 million through its various industrial businesses.

•

The contribution of Other Services was € 38.9 million.

The key operating figures for the business are:


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EurMM	Q12007	vs. Q1 2006
Net Sales	470.0	36.2	%
GROSS MARGIN	185.5	21.6	%
EBITDA	122.5	40.0	%
EBIT	103.9	45.9	%

The main items for Iberdrola Inmobiliaria at the end of the first quarter of 2007 are the following:

•

Iberdrola Inmobiliaria business data:


PORTFOLIO OF BUILDABLE AREA-RESIDENTIAL USE (sqm)
Total		1,551,909
Under construction		115,137
Under management		403,059
In planning		1,033,713

PORTFOLIO OF BUILDABLE AREA-COMMERCIAL USE (sqm)
Total		567,581
Under construction		4,431
Under management		192,954
In planning		370,196

•

Iberdrola Inmobiliaria Balance Sheet data:


		MM€
TOTAL ASSETS		1,763
INTANGIBLE FIXED AND INVESTMENT ASSETS		523
CURRENT ASSETS		1,191
SHAREHOLDERS’ EQUITY		731
FINANCIAL DEBT		70

•

Iberdrola Inmobiliaria Income Statement data:


	EurMM	Vs Q1 2006
NET SALES	126.1	+188.5	%
GROSS MARGIN	68.2	+199.9	%
EBITDA	61.1	+301.7	%
EBIT	59.7	+327.4	%
Non Current Assets	0	0
NET PROFIT	35.9	+506.5	%


42		First Quarter 2007 financial results

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Balance sheet

January-March 2007 Period


	Million euros	vs. Dec. 2006
TOTAL ASSETS	34,002	2.9	%
TANGIBLE & INTANGIBLE FIXED	22,703	1.1	%
LONG-TERM FINANCIAL INVESTMENTS	2,828	3.8	%
SHAREHOLDERS’ EQUITY	10,564	-0.03	%
ADJUSTED NET DEBT	13,061	-0.4	%

The Balance Sheet of IBERDROLA at 31 March 2007 shows Total Assets of € 34,002 million, highlighting the maintenance of its financial strength, even taking into account the investments made during the period (€ 506 million).

The leverage ratio in March 2007 stood at 55.3%, compared to 57.9% in March 2006. If financing of the tariff insufficiency is taken into account, the adjusted leverage at March of this year would be 54.1% (in March 2006, it would have been 54.7%).

Thus, the adjusted financing of the tariff insufficiency corresponding to IBERDROLA reached € 606 million in March 2007, after the securitization of the tariff insufficiency rights attributable to IBERDROLA in 2006.

Analysis of the Balance Sheet

1. FIXED ASSETS

Total investments during the period from January to March 2007 added up to € 506 million. Their breakdown is as follows:

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	Jan-March 2007	%
Spain	342	67.6	%
Generation	79
Renewables	91
Distribution	115
Other	57
Mexico	18	3.6	%
Generation	15
Distribution	3
South America	41	8.1	%
Generation	15
Distribution	26
Other International	105	20.7	%
TOTAL	506


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With respect to investments in Spain, those made in the Company’s basic activity, both in production and distribution, stand out, totalling € 285 million, broken down as follows:

•

€ 79 million allocated to the Generation business.

•

€ 91 million allocated to the Renewables business.

•

€ 115 million allocated to the Distribution business

Under the heading “Other,” included in the Spain section, it is worth highlighting the transaction, completed in January, increasing the stake in Medgas from 12% to 20%, in addition to which there are various transactions by the Non-Energy businesses.

Investments in Mexico have mainly focused on the combined cycle of Tamazunchale, with € 11 million. As far as Brazil is concerned, investments have been made both in the distribution, as well as in the generation business, being financed in large part through funds generated in Brazil.

Under the heading “Other International”, the investments pertaining to the international area for Renewables are included, with notable investments in Greece, Portugal, the United States, Poland and France.

2. SHARE CAPITAL

The Share Capital at 31 December 2006 was comprised of 901,549,181 bearer shares with a par value of € 3 each.

On 2 January 2007, an interim dividend charged to the 2006 financial year in the amount of € 0.45 per share was paid.

3. FINANCIAL DEBT

The adjusted net financial debt at the end of March totalled € 13,061 million, and the financial leverage stood at 55.3%. If financing of the tariff insufficiency is taken into account, which at March 2007 amounted, in the case of IBERDROLA, to € 606 million, the adjusted net financial debt would be € 12,455 million and the adjusted leverage would reach 54.1%

Of particular relevance is the change in the Company’s financial cost, which at March 2007 stood at 4.65%, 5 basis points higher than in march 2006, which suggests significant financial cost containment considering the upward trend in interest rates.

The debt structure can be broken down by currency and interest rate as follows:


44		First Quarter 2007 financial results

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	March 2007		March 2006
Euro	86.4	%	84.8	%
Dollar	8.3	%	9.8	%
Real	4.8	%	5.0	%
Other currencies	0.5	%	0.5	%
Fixed Rate	57	%	58	%
Capped Rate	9	%	12	%
Floating Rate*	34	%	30	%

(*)	Without the tariff insufficiency (€ 606 million) and without the sector^´s CO₂ financing (€ 306 million), the floating rate % would be reduced to 30% in March 2007.

Note: At March 2007, IBERDROLA had already signed Forward Swaps amounting 1,061 million euros and 200 million US dollars, to become effective almost entirely in 2007.

In line with the policy to minimise the Company’s financial risks, it is necessary to recall that currency risks have continued to be mitigated by financing investments in Latin America in local currencies (the real, in the case of Brazil) or in their functional currencies (the dollar, in the case of Mexico).

The debt structure per company is shown in the following table:


	March 2007		March 2006
IBERDROLA, S.A	80.1	%	84.8	%
Generation	0.5	%	0.5	%
Networks	0.9	%	0.9	%
Mexico	7.9	%	4.7	%
South America	4.6	%	5.0	%
Renewables	4.7	%	2.8	%
Iberdrola Inmobiliaria & others	1.3	%	1.3	%

Total	100	%	100	%

The breakdown of the debt by product type is as follows:


	March 2007		March 2006
Euro Bonds	39.6	%	39.7	%
US PP	4.3	%	5.1	%
Rest of Bonds	2.7	%	5.4	%
Domestic com. paper	4.5	%	3.6	%
Euro com. paper (ECP)	1.4	%	3.7	%
Euro loans	35.8	%	33.8	%
Other curr. loans	11.7	%	8.7	%

Total	100	%	100	%


Million euros	March 2007		Dec. 2006
Shareholders’ equity	10,564		10,567
Gross Debt	14,599		14,353
Cash	1,012		705
Capitalised derivatives	87		98
IFTs	143		132
CO₂ Financing	296		299
Adjusted Net Debt	13,061		13,119
Leverage (*)	55.3	%	55.4	%

•	Without the effect of tariff insufficiency, the adjusted leverage stands at 54.1% at March 2007, compared to 54,3% in December 2006.

4. WORKING CAPITAL

Net Working Capital was down by € 38 million, compared to the end of the 2006 financial year. This result derives fundamentally from an increase in current assets affected by an increase in inventories and in treasury instruments, offset by an increase in current liabilities as a result of changes in certain provisions and accounts payable.


First Quarter 2007 financial results		45

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5. FUNDS GENERATED IN OPERATIONS

The Funds Generated from Operations at March 2007 stood at € 721.2 million, representing an increase of 8% in relation to March 2006.

Contribution by business to Profits and Loss account


	Sales		Operat. Profit		Net Profit
Spain Business	77.5	%	80.3	%	78.7	%
International Business	22.5	%	19.7	%	21.3	%

TOTAL	100	%	100	%	100	%


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Income Statement

First Quarter 2007

(Unaudited)

Million Euros


	Jan-March 2007		Jan-March 2006		%
NET SALES	2,716.6		2,978.4		(8.8	)
PROCUREMENTS	(1,136.1	)	(1,377.1	)	(17,5	)
EMISSION ALLOWANCES	(8.0	)	(107.4	)	(92,6	)
GROSS MARGIN	1,572.5		1,493.9		5,3
EMISSION ALLOWANCES	2.3		6.2		(62.9	)
NET OPERATING EXPENSES	(439.4	)	(391.2	)	12.,3
Net Personnel Expenses	(202.9	)	(211.4	)	(4.0	)
Personnel	(243.2	)	(253.1	)	(3.9	)
In house work on fixed assets	40.3		41.7		(3.4	)
Net External Services	(236.5	)	(179.8	)	31.5
External services	(275.3	)	(222.5	)	23.7
Other operating revenues	38.8		42.7		(9.1	)
TAXES	(48.3	)	(52.3	)	(7.6	)
EBITDA	1,087.1		1,056.6		2.9
AMORTISATION and PROVISIONS	(292.3	)	(268.2	)	9.0
EBIT	794.8		788.4		0,8
TOTAL FINANCIAL REVENUES	65.8		40.7		61.7
Financial revenues	41.9		19.4		116.0
Positive exchange rate differences	8.1		1.3		523.1
Capitalised financial expenses	15.8		20.0		(21.0	)
TOTAL FINANCIAL EXPENSES	(229.2	)	(204.1	)	12.3
Interest expenses	(169.7	)	(152.4	)	11.4
Negative exchange rate differences	(11.4	)	(2.9	)	293.1
On pension funds	(8.4	)	(8.8	)	(4.5	)
Change in provision for short-term financial investments	(0.8	)	(0.2	)	N/M
Other financial expenses	(38.9	)	(39.8	)	(2.3	)
RESULTS FROM COMPANIES CARRIED BY EQUITY METHOD	19.9		4.1		385.4
RESULTS FROM NON-CURRENT ASSETS	9.3		1.6		481.3
PROFIT BEFORE TAXES	660.6		630.7		4.7
Corporate income tax	(193.8	)	(221.6	)	(12.5	)
Minorities	(8.6	)	(5.9	)	45.8
NET PROFIT	458.2		403.2		13.6


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Balance Sheet

First Quarter 2007

(Unaudited)

Million Euros


	March 2007	December 2006	Change
FIXED ASSETS	25,532	25,188	344
Tangible Fixed Assets	21,737	21,564	173
Intangible Fixed Assets	967	900	67
Long-term financial investments	2,828	2,724	104
DEFERRED TAXES	1,133	1,222	(89	)
NON-CURRENT RECEIVABLES	884	833	51
CURRENT ASSETS	6,453	5,818	635
Nuclear Fuel	243	238	5
Inventories	1,340	1,193	147
Accounts receivable	2,759	2,791	(32	)
Taxes receivable	789	602	187
Short-term financial investments	310	289	21
Cash and equivalents	1,012	705	307

TOTAL ASSETS	34,002	33,061	941

Million Euros


	March 2007		December 2006		Change
SHAREHOLDERS’ EQUITY	10,564		10,567		(3	)
Capital Stock	2,705		2,705		—
Reserves and other	7,298		6,100		1,198
Profit and Loss	458		1,660		(1,202	)
Treasury Stock	(3	)	(3	)
Exchange differentials	(50	)	(44	)	(6	)
Minority Shareholders	156		149		7
LONG-TERM PROVISIONS	1,658		1,718		(60	)
DEFERRED INCOME	864		818		46
FINANCIAL DEBT	14,599		14,352		247
OTHER LONG-TERM DEBT	5,217		4,541		676
OTHER SHORT-TERM DEBT	957		847		110
GROUP INTERCOMPANY & RELATED PARTY DEBT	143		218		(75	)

TOTAL LIABILITIES	34,002		33,061		941


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Results By Business

First Quarter 2007 (Unaudited)

Million Euros


	Domestic Energy		International Business		Engineering Non-energy
Net Sales	1,635.1		611.4		470.0
Procurements	(506.7	)	(344.9	)	(284.5	)
EMISSION ALLOWANCES	(8.0	)
GROSS MARGIN	1,120.4		266.5		185.5
EMISSION ALLOWANCES	2.3
NET OPERATING EXPENSES	(314.5	)	(63.7	)	(61.0	)
Net Personnel Expenses	(149.5	)	(24.4	)	(29.0	)
Personnel	(177.0	)	(27.8	)	(38.4	)
In house work on fixed assets	27.5		3.4		9.4
Net External Services	(165.0	)	(39.3	)	(32.0	)
External services	(193.8	)	(44.5	)	(36.9	)
Other operating revenues	28.8		5.2		4.9
TAXES	(44.0	)	(2.3	)	(2.0	)
EBITDA	764.2		200.5		122.5
Amortisation and Provisions	(230.1	)	(43.6	)	(18.6	)
EBIT / Operating Profit	534.1		156.9		103.9
Financial Result	(142.6	)	(21.1	)	0.1
Results from companies carried by equity method	0.7		1.4		17.8
Results of non-current assets	9.8		(0.3	)	(0.1	)
Profit before taxes	402.0		136.9		121.7
Corporate tax and minority shareholders	(131.1	)	(39.1	)	(32.3	)
Net Profit	270.9		97.8		89.4

First Quarter 2006

Million Euros


	Domestic Energy		International Business		Engineering Non-energy
Net Sales	2,048.6		584.6		345.2
Procurements	(795.7	)	(388.7	)	(192.6	)
EMISSION ALLOWANCES	(107.4	)
GROSS MARGIN	1,145.5		195.9		152.6
EMISSION ALLOWANCES	6.2
NET OPERATING EXPENSES	(276.0	)	(51.8	)	(63.5	)
Net Personnel Expenses	(156.2	)	(17.9	)	(37.3	)
Personnel	(181.7	)	(21.6	)	(49.7	)
In house work on fixed assets	25.5		3.7		12.4
Net External Services	(119.8	)	(33.9	)	(26.2	)
External services	(142.7	)	(46.1	)	(33.8	)
Other operating revenues	22.9		12.2		7.6
Taxes	(48.7	)	(1.9	)	(1.6	)
EBITDA	827,0		142,2		87,5
Amortisation and Provisions	(211.8	)	(40.0	)	(16.3	)
EBIT / Operating Profit	615.2		102.2		71.2
Financial result	(131.9	)	(27.5	)	(3.9	)
Results from companies carried by equity method	(1.5	)	2.8		2.7
Results of non-current assets	2.6		(0.6	)	(0.5	)
Profit before taxes	484.4		76.9		69.5
Corporate tax and minority shareholders	(191.6	)	(18.0	)	(17.9	)
Net Profit	292.8		58.9		51.6


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Domestic Energy Business

First Quarter 2007 (Unaudited)

Million Euros


	GENER.		RENEW.		DISTRIB.		SUPPLY & GAS		STRUCT.
Net Sales	848.9		203.4		373.1		445.4		(235.7	)
Procurements	(316.9	)			(1.9	)	(419.9	)	232.0
Emission Allowances	(8.0	)
GROSS MARGIN	524.0		203.4		371.2		25.5		(3.7	)
EMISSION ALLOWANCES	2.3
NET OPERATING EXPENSES	(139.0	)	(41.1	)	(114.0	)	(12.4	)	(8.0	)
Net Personnel Expenses	(49.2	)	(10.3	)	(44.9	)	(5.3	)	(39.7	)
Personnel	(54.7	)	(12.4	)	(63.7	)	(5.3	)	(40.8	)
In house work on fixed assets	5.5		2.1		18.8				1.1
Net External Services	(89.8	)	(30.8	)	(69.1	)	(7.1	)	31.7
External services	(98.8	)	(35.3	)	(86.5	)	(7.1	)	33.9
Other operating revenues	9.0		4.5		17.4				(2.2	)
Taxes	(18.6	)	(2.3	)	(30.6	)	8.6		(1.1	)
EBITDA	368.7		160.0		226.6		21.7		(12.8	)
Amortisation and Provisions	(117.5	)	(53.9	)	(50.3	)	(1.0	)	(7.5	)
EBIT / Operating Profit	251.2		106.1		176.3		20.7		(20.3	)
Financial result	(33.8	)	(31.3	)	(23.3	)	0.1		(54.2	)
Results from companies carried by equity method	0.2				0.7		(0.1	)
Results of non-current assets	(0.1	)			7.4				2.4
PROFIT BEFORE TAXES	217.5		74.8		161.1		20.7		(72.1	)
Corporate tax and minority shareholders	(69.7	)	(27.9	)	(51.8	)	(6.7	)	25.0
NET PROFIT	147.8		46.9		109.3		14.0		(47.1	)

First Quarter 2006

Million Euros


	GENER.		RENEW.		DISTRIB.		SUPPLY & GAS		STRUCT.
Net sales	1,345.8		215.2		265.5		618.8		(396.8	)
Procurement	(556.6	)					(628.9	)	389.8
Emission allowances	(107.4	)
GROSS MARGIN	681.8		215.2		265.5		(10.1	)	(7.0	)
Emission allowances	6.2
Net operating expenses	(118.5	)	(30.6	)	(124.9	)	(13.6	)	11.6
Net personnel expenses	(53.1	)	(5.3	)	(5.3	)	(11.1	)	(35.4	)
Personnel	(57.8	)	(6.5	)	(69.5	)	(11.1	)	(36.8	)
In house work on fixed assets	4.7		1.2		18.2				1.4
Net external services	(65.4	)	(25.3	)	(73.6	)	(2.5	)	47.0
External services	(73.1	)	(27.7	)	(90.3	)	(9.2	)	57.6
Other operating revenues	7.7		2.4		16.7		6.7		(10.6	)
Taxes	(18.0	)	(1.9	)	(24.4	)	(3.6	)	(0.9	)
EBITDA	551.5		182.7		116.2		(27.3	)	3.7
Amortisation and Provisions	(96.4	)	(41.7	)	(41.7	)	(2.1	)	(6.9	)
EBIT / operating profit	455.1		141.0		51.5		(29.4	)	(3.2	)
Financial result	(20.0	)	(21.2	)	(18.1	)	1.0		(73.6	)
Results from companies carried by equity method	(2.0	)			0.6
Results of non-current assets	0.3								2.2
PROFIT BEFORE TAXES	433.4		119.8		34.0		(28.4	)	(74.6	)
Corporate tax and minority shareholders	(146.9	)	(44.0	)	(10.9	)	10.1		0.2
NET PROFIT	286.5		75.8		23.1		(18.3	)	(74.4	)


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Statement Of Origin And Use Of Funds

First Quarter 2007

(Unaudited)


	Jan-March 2007		Jan-March 2006		Difference
EBIT	795		788		7
Amortisation	284		249		35
Provisions	9		19		(10	)
Pension fund allocations	(11	)	10		(21	)
Operating Cash Flow	1,077		1,066		11
Interest paid	(183	)	(195	)	12
Interest received	39		41		(2	)
Dividends received from affiliates			5		(5	)
Minority interests	(9	)	(6	)	(3	)
Taxes	(193	)	(221	)	28
Gross Cash Flow	731		690		41
Dividends paid	(406	)	(331	)	(75	)
Retained Cash Flow	325		359		(34	)
Investments	(506	)	(435	)	(71	)
Fixed asset disposals	(9	)	2		(11	)
Financial asset disposals
Taxes on investment	(1	)	(1	)
Pension payments and other	(56	)	(54	)	(2	)
Total Cash Flow Allocations	(572	)	(488	)	(84	)
Capital subsidies received	43		29		14
Change in working capital	(38	)	(450	)	412
Change in debt	242		549		(307	)
Change in consolidation perimeter	4		2		2
Change in Gross debt	246		551		(305	)


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Stock Market Evolution

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IBERDROLA stock	Q1 2007		Q1 2006
Number of shares outstanding	901,549,181		901,549,181
Share price at close of period	35.39		26.64
Average price over period	33.62		24.97
Average daily volume	10,363,205		6,981,824
Maximum volume (16-02-07/21-02-06)	54,401,371		26,886,823
Minimum volume (25-01-07/02-01-06)	4,600,289		2,086,955
Dividends paid (€)	1.063		0.89
Interim (2 January 2007 / 2 January 2006)	0.450		0.37
Supplemental (Payable 2 July 2007/ 3 July 2006)	0.593		0.52
AGM attendance premium	0.02		—
Yield per share (Div paid year/ price close of previous year)	3.21	%	3.8	%


IBERDROLA Senior Unsecured Debt Credit Rating
Agency	Rating	Outlook
Standard & Poors	A	Negative
Moody^´s	A2	Negative
Fitch IBCA	A+	Negative

NOTE: Since the asset acquisition agreement signed with Gas Natural, S&P, Moody^´s and Fitch put the ratings of IBERDROLA’s Senior Debt on “credit watch with negative implications”, “review for a possible downgrade” and “credit watch negative (RWN)”, respectively. In April 2007, Fitch downgraded IBERDROLA’s rating from AA- to A+, as a result of the closing of the transaction.


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APPENDIX.- IBERDROLA and Sustainability

IBERDROLA’s contribution to sustainable development is reflected in several corporate responsibility practices that attend to the needs and expectations of its interest groups, with whom the Company maintains a combination of open communication channels and dialogue, which are designed for: communication on goals, activities and successes achieved in the three areas of sustainable development (economic, environmental and social), as well as receiving evaluations and requests from the parties involved.

1. SUSTAINABILITY INDICATORS


Sustainability Indicators	Q1 2006		Q1 2007
Contribution to GDP (Gross Margin) (*)	0.50	%	0.47	%
Contribution to GDP (Turnover) (*)	0.89	%	1.07	%
Investments on equipment (million euros)	425		478
Investments on clean generation (million euros)	91.8		218
Net profit (million euros)	346.6		458.2
Dividend yield (%)	3.8	%	3.21	%
Emissions of CO₂ in the period (gr. CO₂/kWh). CO₂ /kWh). Total	247		188
Emissions of CO₂ in the period (gr. CO₂/kWh). CO₂ /kWh). Spain	212		133
Emission-free production: total (GWh)	11,301		14,095
Emission-free production: Spain (GWh)	11,071		13,832
Production free of emissions over total production (%)	48.8	%	56.9	%
Ratio of emission-free production in Spain to total production (%)	62.3	%	76.0	%
Total emission-free installed capacity (MW)	16,376		17,045
Total emission-free installed capacity in Spain (MW)	16,077		16,738
Total emission-free installed capacity (%)	58.7	%	55.9	%
Emission-free installed capacity in Spain (%)	65.3	%	64.2	%

(*)	Data from 2006 and 2005. Source: Spain National Quarterly Accounting -INE (last data published for the fourth quarter of 2006)


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Change in specific emissions in the thermal mix: CO₂, SO₂, particles and NO_X

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2. INDEXES, RATINGS AND AWARDS

Presence of Iberdrola in indexes and Sustainability, Reputation, and Corporate Governance rankings


		Sustainability Indexes		Rating / Position

		Jones Sustainability World Index 06 Dow Jones Sustainability Stoxx Index 06		74 points / Group of leaders in sustainability 74 points / Group of leaders in sustainability

		Climate Leadership Index		Only Spanish utility included in the index

		Storebrand Investments SRI		Number two power company worldwide

		OEKOM		B- / Group of leaders: Top Spanish company and among the top 3 in the Worldwide Utilities category

		Global 100		IBERDROLA among the 100 most sustainable companies in the world Second consecutive year

		Global Roundtable on Climate Change		IBERDROLA is among the sponsors

		Pacific Sustainability Index (PSI)		Group of leaders: Among the top 3 in the Energy & Utilities Sectors category

		BusinessWeek, Climate Group		Group of leaders: Top 3 ranking of most noteworthy companies in the management of greenhouse gases (GG) and Top 10 in companies that have contributed most to reducing GG’s and have been leading on environmental management in the last 10 years

		INNOVEST		Included in group 5 “Best in class” for the utilities sector

		VIGEO		Rating from neutral to positive in the main categories

		CR- Risk Premium Survey. University of Hamburg & SRI Deutsche Bank		30.5 points. IBERDROLA in utilities sector Leadership Group


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		Corporate Reputation Indexes		Rating / Position
		MERCO 2007		IBERDROLA is in eighth position among the 100 companies comprising the overall ranking and again leads the Energy, Gas and Water sector

		Corporate Governance Indexes		Rating / Position
		ISS		Index Ranking 76,4. Industry Ranking 71,4

3. ENVIRONMENTAL COMMITMENT AND SOCIALLY RESPONSIBLE INVESTMENT

Analyst and Investor Assessment of Socially Responsible Investment


		IBERDROLA is among the sponsors of the Global Roundtable on Climate the network for action against climate change

IBERDROLA is one of the companies sponsoring the Network for Action against Climate Change, under the aegis of the Global Roundtable on Climate Change (GROCC), which was unveiled in late February at an event held in New York.

The declaration of principles by this international network, which has been joined by close to one hundred multinationals from all economic sectors, focuses on a determination to bring influence to bear in the political, social and industrial spheres in order to make the energy systems necessary for economic growth sustainable.

This founding document, which assumes that climate change is an urgent problem, urges governments to establish objectives and prices for CO₂emissions and other greenhouse gas emissions, at the same time demanding that policies promoting energy efficiency be developed.


		IBERDROLA, named for the second year in a row as one of the 100 most sustainable companies in the world

For the second year in a row, IBERDROLA has been selected as one of the 100 most sustainable companies in the world, according to the Global 100 Most Sustainable Corporations in the World, an index unveiled in late January at the World Economic Forum in Davos, Switzerland.


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In addition, IBERDROLA continues to be the only Spanish electric utility included in this index, prepared for the third year by Corporate Knights, a Canadian magazine specializing in corporate social responsibility, and by Innovest Strategic Value Advisors, a sustainability studies firm, which analyzes risk and stock market value components and their relationship to environmental protection, social responsibility and corporate governance initiatives.

Analyst and Investor Asessment of Corporate Reputation


		MERCO 2007. Iberdrola is in eighth position among the 100 companies comprising the general classification, and again leads the Energy, Gas and Water sector

According to the results of the 2007 Spanish Corporate Reputation Monitor (MERCO), the chief of the reputation indicators published in Spain, IBERDROLA is in eighth position among the 100 companies comprising the overall ranking and again leads the Energy, Gas and Water sector.

As far as business leaders with the best reputation are concerned, IBERDROLA’s President, Ignacio Galán, is in one of the lead positions among Spanish business leaders, ranking tenth out of the 100 leaders rated.

The method whereby the MERCO index is prepared includes a survey of 12,000 business leaders and an evaluation by various groups of experts. Financial analysts evaluate the economic and financial results; members of NGOs do the same for ethics and corporate social responsibility; union representatives weigh employment quality; and consumer associations evaluate the quality of the sales offerings. In addition, a group of opinion leaders evaluates the business managers. Finally, analysts from the Institute in charge of the charge check the reputation of companies against a “ merits questionnaire” and compare the information received.

4. CONTRIBUTION TO SOCIAL DEVELOPMENT

For IBERDROLA, the key events of 2007 with regard to its social dimension were as follows:

a) “Education and Training” Programme

•

Promotion of Electrical Safety. IBERDROLA has continued its electrical hazard prevention awareness campaigns, offering courses to various professional groups: Electricity Installers (in Valencia and Valladolid) and Construction Companies (in Murcia).

•

Promotion of Energy Savings and Efficiency. Under the agreement with the Community of Madrid for the promotion of energy savings and efficiency, two new Energy Savings Guidebooks have been developed, one for Food Businesses and another for Restaurant Companies.


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•

University Support. IBERDROLA continues its support to Spanish universities, having signed various cooperation agreements during this period with the Universities of Deusto (Basque Country), Castilla-La Mancha, Cantabria, and Jaime I de Castellón.

b) Surrounding Economic Development” Programme’

•

Regional Advisory Boards. Working meetings have been held of the Consultative Committees of Andalucia, Castilla y León and the Valencia Community, respectively, which were formed by major industrial and financial groups of these Communities.

•

Dissemination of Corporate Social Responsibility. IBERDROLA has participated in 4 conferences promoting corporate social responsibility practices, presenting the “IBERDROLA model” to business and academic circles.

c) Art and culture programme

•

Reconstruction and Lighting of Monuments. The inauguration has been held of the complete restoration and lighting work performed at the Cartuja de Miraflores (Burgos). In addition, exterior lighting projects have been undertaken at: Yuso Monastery (San Millán de la Cogolla-La Rioja) and Hospital de la Santa Cruz (Barcelona)

•

Support for cultural organizations. As part of IBERDROLA’s policy of support for foundations and cultural institutions, it has renewed cooperation agreements with the Bilbao Choral Society and the Ondarreta de Getxo Choral Society (Vizcaya); in addition to which it has sponsored a CD book with the Euskadi Symphony Orchestra as part of a project to bring classical music to younger audiences.

d) “Solidarity” Programme

•

“Implica2” Project for the disabled. Project “Implica2,” the objective of which is to promote competitive access to the job market by disabled persons, is preparing to expand to the Community of Murcia. The respective agreement would involve the Federation of organisations working for victims of mental disability and cerebral palsy) and the Murcia Work and Social Policy Council.

•

‘Castilla-La Mancha Olympic and Para- olympic’ programme. IBERDROLA has signed an agreement with the Castilla-La Mancha Culture and Sports Foundation to support the “Castilla-La Mancha Olympic Promises and Para-Olympics” program and another thirteen initiatives.

•

Support for other solidarity projects. The company has cooperated with various entities involved in solidarity tasks in Albacete, Cádiz, Cuenca and Vizcaya.

e) ‘Environmental Sponsorships’ Programme’

•

Actions against Climate Change. IBERDROLA is one of the companies sponsoring the Network for Action against Climate Change, under the aegis of the Global Roundtable on Climate Change (GROCC), and


58		First Quarter 2007 financial results

LOGO

unveiled in New York in February 2007; this initiative has been joined by close to one hundred multinationals from all economic sectors.

5. CORPORATE GOVERNANCE

The highlights for Corporate Governance over the first quarter of 2007 were as follows:

General Shareholders Meeting Held On 29th of March 2007 last, at the Palacio Euskalduna in Bilbao, the Company’s General Shareholders meeting was held, with due notice for this purpose, and was chaired for the first time by its President and Managing Director, Ignacio Sánchez Galán.

The Meeting, which went into session with a quorum of 77.33% of the share capital (14.55% present and 62.78% represented), discussed and resolved matters regarding (i) the Annual Accounts and corporate management, (ii) the composition of the Board of Directors and the express authorisations and delegations that are being requested for that body, (ii) bringing internal regulations into line with the Unified Code of Good Governance, approved by the National Securities Market Commission (Comisión Nacional del Mercado de Valores -CNMV) on 22 May, 2006, and other bylaws and regulatory amendments, and (iv) the Scottish Power Plc transaction.

All of the resolutions were approved by a majority of shareholders, with a vote in favour greater than 99% of the capital present and represented at the meeting.

i) Resolutions regarding the Annual Accounts and the corporate management

The General Meeting approved the Annual Accounts for the 2006 fiscal year and the Management Reports for the Company and its Consolidated Group, as well as the corporate management and performance by the Board of Directors during the 2006 fiscal year. In addition, the proposed allocation of the results was approved, which includes the payment of a gross dividend of € 1.043 per share.

The full text of the Annual Accounts for the 2006 fiscal year and of the Management Reports on the Company and on its Consolidated Group, as well as the respective auditors’ reports, are available at www.iberdrola.com.

ii) Resolutions regarding the composition of the Board of Directors and the express authorisations and delegations in favour of that body

The General Shareholders Meeting resolved to confirm the Director appointments made by cooptation since the last Meeting was held, namely, Iñigo Víctor de Oriol Ibarra, Inés Macho Stadler, Braulio Medel Cámara and José Carlos Pla Royo, as well as to re-elect the first three as Directors and José Orbegozo Arroyo, Lucas María de Oriol López-Montenegro, Mariano de Ybarra y Zubiría and Xabier de Irala Estévez. Lastly, it was also resolved to appoint Nicolás Osuna García as a Director, all of them for the five-year term stipulated in the bylaws.


First Quarter 2007 financial results		59

LOGO

Accordingly the Board of Directors of Iberdrola is currently made up of a total of fifteen Directors, of which only the President and Managing Director are classified as executive. The remaining 14 directors include 12 independents, one representing substantial shareholders and one classified within the category of “other external shareholders”.

Details on the Directors’ identity, type and profile, as well as on the composition of the Executive Board, the Auditing and Compliance Board, and the Appointments and Salaries Committee, are available in continuously updated form at the Company Web site (www. iberdrola.com).

Furthermore, the General Meeting resolved to authorise the Board of Directors so that, subsequent to the completion of the merger transaction with Scottish Power Plc, it may carry out an Iberdrola share split at the rate of 1 to 4. As a result of this split, the number of shares outstanding will be increased fourfold, reducing the nominal value of each share from 3 euros to 0.75 euros, without modifying the share capital figure. In addition, as a result, Article 5 of the Corporate Bylaws on share capital will be amended.

The objectives of the split, which will be carried out in any case once the integration with Scottish Power Plc is completed, are fundamentally to offer the stock greater liquidity and negotiability and to further the performance of the loyalty-building programmes directed at investors (such as, for example, the Dividend Reinvestment Plan, implemented by the company in 2006).

In addition, the General Meeting approved the granting of the following express authorisations and delegations in favour of the Board of Directors:

•

Authorisation for the derivative acquisition of treasury stock by the Company and/or by its Subsidiaries, up to a limit of 5% of the share capital and for a maximum term of 18 months.

•

Delegation, for a period of five years, of the authority to issue: a) bonds or simple debentures and other fixed-income securities of a similar nature, as well as preferred shares, with a maximum limit of € 20.0 billion and b) notes with a maximum amount, separately from the foregoing, of € 4.0 billion, and authorisation for the Board to be able to guarantee, on behalf of the Company within the limits specified above, the new securities issues that may be made by Subsidiaries.

•

Authorisation to request the admission and exclusion of the securities issues or that may be issued by the Company from trading on secondary markets.

•

Authorisation to the Board of Directors for the creation and endowment of Associations and Foundations up to the amount of € 10 million yearly.


60		First Quarter 2007 financial results

LOGO

iii) Resolutions relative to compliance with the Unified Code of Good Governance and other bylaws and regulatory amendments

The General Meeting also approved the proposed amendments of the Corporate Bylaws and Shareholder Meeting Rules and the new amalgamated drafts of these documents, and took note of the amendment and approval, dated 20 February, of a new amalgamated draft of the Board of Directors’ Rules.

In this regard, on the same date the Board of Directors resolved to amend the Internal Rules of Conduct on Securities Markets and the Appointments and Salaries Committee’s Rules, as well as to ratify the amendment of the Auditing and Compliance Committee’s Rules as approved by that Committee at a session on 14 February 2007, amendments which went into effect on 29 March 2007, as a result of the aforesaid proposed amendments of the Corporate Bylaws and the General Shareholders Meeting Rules, with the exception of the Internal Rules of Conduct on Securities Markets, which will become effective on 28 April 2007.

The purpose of these amendments is to bring the Company’s internal rules into line with the recommendations of the Unified Code of Good Governance, as well as to amend them for the purpose of clarifying the rules on certain matters.

The full draft of the Corporate Bylaws, the General Shareholders Meeting Rules, and the remaining internal rules for the corporate bodies currently in force may be consulted at www.iberdrola.com.

iv) Resolutions relative to the Scottish Power Plc transaction

In connection with the combination agreement reached with Scottish Power Plc in November 2006, the General Shareholders Meeting resolved to increase the capital stock of Iberdrola by a maximum of 263,377,413 shares, representing over 20% of the share capital resulting from the increase. The equivalent value of that capital increase, for a maximum of approximately € 8,625 billion between the par value and the issuance premium, will be paid in by means of non-monetary contributions consisting of ordinary shares of Scottish Power Plc.

In addition, the General Meeting has approved an issue of simple debentures for a nominal amount ranging from 20 to 750 million pounds sterling for the purpose of meeting the claims of ordinary shareholders of Scottish Power Plc, who choose to receive debentures in full or partial cash consideration for their shares, delegating to the Board the authority to set the terms and conditions of that issue.

Furthermore, the General Meeting authorised (i) the continuation, once the Scottish Power Plc transaction is completed, of the plans established for the employees of the Scottish Power Plc group, in which residual rights exist to acquire shares of that company after the transaction, for the sole purpose of administering those residual rights in accordance with the plan rules and (ii) the delivery of Iberdrola shares, under the terms provided for in the Scottish Power Plc transaction, in relation to the Scottish Power Plc shares that are issued once the Scottish Power Plc transaction is completed, to the holders of such residual rights for the liquidation thereof.


First Quarter 2007 financial results		61

LOGO

Similarly, for the purpose of meeting Iberdrola’s commitments in the context of the Scottish Power Plc transaction on the future maintenance of this company’s policy of compensating its personnel in shares, the General Meeting has authorised the Board of Directors so that it will be able to implement, develop and execute plans intended for the employees of Scottish Power Plc and extend them to all employees of the new Iberdrola Group and, for this purpose, it has agreed to increase the share capital, through monetary contributions, by issuing 11,649,266 new shares (or 46,597,064 new shares if the increase is carried out after the completion of the stock split described above) with exclusion of a pre-emptive right of subscription.

It is expected that the deal with Scottish Power Plc, also approved by the General Shareholders Meeting of the Scottish company this 30th of March, will be finalised during April, following the completion of the remaining relevant steps to be taken in accordance with the rules on the matter.

All information on the ScottishPower transaction may be accessed at www.iberdrola.com.

Information Transparency

One of our Company’s core corporate governance principles is to promote maximum transparency in the information - financial and other - provided to shareholders and markets. In this regard, during the first quarter of 2007, there has been a high level of activity involving face-to-face information sessions with institutional investors and financial analysts.

On February 20, 2007, the Board approved the Annual Report on Corporate Governance for 2006, in accordance with the form required by Circular 1/2004 of 17 March of the Spanish securities regulator (CNMV).

On the same date, the Board of Directors approved the Report on the Activities of the Audit and Compliance Board for fiscal year 2006, the publication of which is intended to contribute to “good practices” in corporate governance by disseminating the annual activities of the latter Board.

Furthermore, the most significant events concerning the Company and all the relevant information it discloses (with a possible impact on the share price) have been reported first to the CNMV as a relevant event.

Once the information has been sent to the CNMV, and to the Takeover Panel and the SEC, through the appropriate channel, it was transmitted to analysts, as well as to the primary news media and international, local and regional news agencies, and then posted on the corporate Web site, in both Spanish and English.


62		First Quarter 2007 financial results

LOGO


Spanish stock market commission (CNMV): Chief Relevant Events for the first quarter of 2007

Event		Registration No.
Acquisitions or transfers of holdings: The Company reports that today, 30 March 207, the shareholders of Scottish Power PLC have approved the Scheme of Arrangement, at the Meeting called by order of the Edinburgh Court of Sessions, as well as at the extraordinary General Meeting, both regarding the integration with IBERDROLA, S.A.		78700
Acquisitions or transfers of holdings: ACS has reported to the Takeover Panel in London, pursuant to Article 8 of the Mergers and Acquisitions Code, that the derivatives contract, specifically an equity swap, referred to in the previous Relevant Events of 28 December 2006 and 10 and 23 January and 12 February 2007 affects as of today’s date a total of 27,046,475 shares representing 3% of the share capital of IBERDROLA, S.A.		78693
Acquisitions or transfers of holdings: BBVA sends information regarding transactions made by BBVA on IBERDROLA on 29/03/2007 on the basis of discretionary management of client/investor funds.		78678
Acquisitions or transfers of holdings: The Company announces that the General Shareholders Meeting, held on second notice on this date, has approved each and every one of the resolutions included in the Agenda.		78634
Acquisitions or transfers of holdings: With regard to the deal announced by IBERDROLA, S.A. with ScottishPower, BBVA announces the operations made on IBERDROLA, S.A. shares.		78624/78516/
		78454/78404/
		78342/78312/
		78255/78217/
		78181/78146/
		78104/78067/
		78036/77992/
		77964/77903/
		77817/77774/
		77661/77578/
		77512/77436v
		77340/77270/
		77188/77047/
		76991/76931/
		76888/76871/
		76801/76701/
		76630/76574/
		76471/76419/
		76346/76273/
		76216/76171/
		76105/76070/
		76045/76030/
		75882/75775/
		75693/75671/
		75590/75564/
		75532/75446/
		75328/75227/
		75184/75158/
		75112/75039/


First Quarter 2007 financial results		63

LOGO


Spanish stock market commission (CNMV): Chief Relevant Events for the first quarter of 2007 (cont.)

Event		Registration No.
Other Significant Events: The Company sends a Spanish translation of the Scheme Document, which includes the terms and conditions for the integration with Scottish Power Plc.		78034
Acquisitions or transfers of holdings: The Company announces that the English version of the Scheme Document (hereinafter the “Agreement Document”), which includes the terms for the integration of IBERDROLA, S.A. (“IBERDROLA”) with Scottish Power Plc was made available to Iberdrola shareholders at the company headquarters and on its corporate Web page (www.iberdrola.com). In addition, a copy of the pro forma financial information is attached as an Appendix to this notice.		77542
Notices of Meeting and Meeting Resolutions: The company remits the agenda for the Ordinary General Shareholders’ Meeting to take place on May 9 or 10,2007, on first and second notice respectively. The information attached is available to the public at the offices of the CNMV.		77421
Acquisitions or transfers of holdings: The Company submits the Scheme Document, which includes the terms for the integration of IBERDROLA, S.A. with Scottish Power, Plc		77320/77317
Notices of Meeting and Meeting Resolutions: The Board submits an expanded announcement on account of the notice of a General Shareholders Meeting, which will be held on 28 or 29 March, on first or second notice, respectively.		77309
Treasury stock increases or decreases: The Company submits the treasury stock purchase/sale transactions at the market session on 21 February 2007.		77181
Annual Corporate Governance Report.		77051
Issuer Earnings Report: The Company communicates on the financial results for H2 2006.		77008
Board of Directors Resolutions: The company announced the resolutions adopted by the Board of Directors on this date, highlighting among these the notice of a General Shareholders Meeting to be held on 28 and 29 March.		76979
Other Significant Facts: BBVA announces transactions made with IBERDROLA, S.A. shares on the basis of discretionary management of client/investor funds.		76954
Acquisitions or transfers of holdings: ACS has reported to the Takeover Panel in London, pursuant to Article 8 of the Mergers and Acquisitions Code, that the derivatives contract, specifically equity swap, referred to in the previous Relevant Events of 28 December 2006 and 10 and 23 January 2007 as of today’s date affects 21,995,554 shares representing 2.440% of the share capital of IBERDROLA, S.A.		76628
Acquisitions or transfers of holdings: Omega Capital, S.L. announced that as of 3 February 2007 it owns 2% of the capital of IBERDROLA, S.A.		76338
Treasury stock increases or decreases: The company announces that it has made treasury stock purchase/sale transactions at the market session on 1 February 2007.		76184
Relevant Events on compensation systems: IBERDROLA, S.A. announces that pursuant to the Board of Directors resolution, it will offer its employees, for the third year in a row, the possibility of receiving part of their variable remuneration in shares. Delivery will take place during February 2007.		76059
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions it made at the market session on 25 January 2007.		76018
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions it made at the market session on 17 January 2007.		75646


64		First Quarter 2007 financial results

LOGO


Spanish stock market commission (CNMV): Chief Relevant Events for the first quarter of 2007 (cont.)
Event		Registration No.
Acquisitions or transfers of holdings: BBVA announces the transactions made with IBERDROLA, S.A. shares at the session on 16 January 2007.		75614
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 16 January 2007.		75604
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 15 January 2007.		75583
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 12 January 2007.		75556
Acquisitions or transfers of holdings: With regard to the transaction announced by IBERDROLA, S.A. on ScottishPower, BBVA announces the transactions made with IBERDROLA, S.A. shares on the basis of discretionary management of client/investor funds since this past 10 November 2006 until 21 December 2006, inclusive.		75534
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 11 January 2007.		75524
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 10 January 2007.		75440
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 9 January 2007.		75313
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 8 January 2007.		75197
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 5 January 2007.		75180
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 4 January 2007.		75141
Treasury stock increases or decreases: The company submitted a correction of Relevant Event No. 75081 regarding its treasury stock purchase/sale transactions at the market session on 3 January 2007.		75103
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 3 January 2007.		75081
Treasury stock increases or decreases: The company announces the treasury stock purchase/sale transactions that it has made at the market session on 2 January 2007.		74977
Acquisitions or transfers of holdings: BBVA announces the transactions made with IBERDROLA, S.A. shares.		74881


First Quarter 2007 financial results		65

IBERDROLA informs you that the data used to send you this information are included in a file property of IBERDROLA, S. A., with the only purpose of sending you financial information about the Company. Such data were included in our file either at your request or due to previous relations held between you and IBERDROLA.

As stated by the Organic Law 15/1999 of 13 December on the Protection of Personal Data (Ley Orgánica de Protección de Datos de Carácter Personal, LO 15/1999), you can at any time exercise your rights of access, rectification, objection and cancellation on your personal data. Should this be the case, you must send a letter, with a photocopy of your identity card or passport attached, to the following address:

IBERDROLA, S.A.

Investor relations

C/Tomás Redondo, 1

28033 - Madrid (Spain)

Notwithstanding this, if you are not interested in receiving any more information related to Iberdrola, please let us know by calling the toll free line +34 900 10 00 19.

IBERDROLA, S.A.

Investor relations

Phone: 00 34 91 784 2804

Fax:0034 91 784 2064

investor.relations@iberdrola.es

Introduction

Ignacio Galán

Chairman & CEO

Exhibit 99.5

Legal Note

IMPORTANT INFORMATION

This

communication

does

not

constitute

offer

purchase,

sell

exchange

the

solicitation

offer

purchase,

sell

exchange

any

securities.

The

Iberdrola,

S.A.

may

not

offered

sold

the

United

States

America

except

pursuant

effective

registration

statement

under

the

Securities

Act

pursuant

valid

exemption

from

registration.

FORWARD-LOOKING STATEMENTS

This

communication

contains

forward-looking

information

and

statements

about

Iberdrola,

S.A.

and

otherwise,

including

financial

projections

and

estimates

and

their

underlying

assumptions,

statements

regarding

plans,

objectives

and

expectations

with

respect

future

operations,

capital

expenditures,

synergies,

products

and

services,

and

statements

regarding

future

performance.

Forward-looking

statements

are

statements

that

are

not

historical

facts

and

are

generally

identified

the

words

“expects,”

“anticipates,”

“believes,”

“intends,”

“estimates”

and

similar

expressions.

Although

Iberdrola,

S.A.

believes

that

the

expectations

reflected

such

forward-looking

statements

are

reasonable,

investors

and

holders

Iberdrola,

S.A.

are

cautioned

that

forward-looking

information

and

statements

are

subject

various

risks

and

uncertainties,

many

which

are

difficult

predict

and

generally

beyond

the

control

Iberdrola,

S.A.,

that

could

cause

actual

results

and

developments

differ

materially

from

those

expressed

in,

implied

projected

by,

the

forward-looking

information

and

statements.

These

risks

and

uncertainties

include

those

discussed

identified

the

public

documents

sent

Iberdrola,

S.A.

the

Comisión

Nacional

del

Mercado

Valores.

Forward-looking

statements

are

not

guarantees

future

performance.

They

have

not

been

reviewed

the

auditors

Iberdrola,

S.A.

You

are

cautioned

not

place

undue

reliance

the

forward-looking

statements,

which

speak

only

the

date

they

were

made.

All

subsequent

oral

written

forward-looking

statements

attributable

Iberdrola,

S.A.

any

its

members,

directors,

officers,

employees

any

persons

acting

its

behalf

are

expressly

qualified

their

entirety

the

cautionary

statement

above.

All

forward-looking

statements

included

herein

are

based

information

available

Iberdrola,

S.A.

the

date

hereof.

Except

required

applicable

law,

Iberdrola,

S.A.

does

not

undertake

any

obligation

publicly

update

revise

any

forward-looking

statements,

whether

result

new

information,

future

events

otherwise.

ScottishPower

A combination aligned with

the principles of Iberdrola’s

strategy …

…

that will generate more value for shareholders

Accelerates

projected growth

Diversifies risk

Provides new

business

opportunities for

long term growth

Maintains

financial solidity

Strategic

fit

ScottishPower

Fulfilling the established criteria

for non-organic growth

Strategic

Criteria

Financial

Criteria

Form

•

Liberalised markets

•

Integrated businesses

•

Operating & technological

synergies

•

Complimentary businesses

•

No dilution of EPS & CPS

•

Maintaining financial

solidity

•

Commitment with ratings

•

Through a friendly

agreement between both

parties

ScottishPower

Fully supported by

the shareholders of both companies …

99.5%

97.6%

•

Of attending capital voted

in favour

•

Of shareholders voted in

favour

•

77.3% attendance record

ScottishPower

…

and by the market …

Iberdrola

+14.1%

ScottishPower

+9.1%

…

with over Eur

4.0 Bn* of value creation

since announcement

* As of 23-April-07

ScottishPower

One of the largest

electricity companies in the world …

Over 67 Bn

Eur

of enterprise

value

…

and one of the largest transactions

in the Spanish business history

ScottishPower

Major global presence …

…

with operations in over 30 countries worldwide

Spain

Portugal

Italy

Greece

U.K.

Germany

Poland

France

Brazil

Mexico

U.S.A.

Chile

Guatemala

Bolivia

ScottishPower

Well positioned for further growth …

…

with a large portfolio of projects

Europe: a reference player

in the future Single Energy Market …

•

Benefiting from EU liberalization & integration

•

Spain & UK as platforms for further expansion

•

Playing a leading role in wind energy

North America: main growth

opportunity for the Group

•

Leading energy player (wind, gas, other…)

Latin America: presence in highest

growth areas (Mexico, Brazil)

•

Growing organically with potential

additional opportunities

ScottishPower

A larger Iberdrola

…

with significant expansion in all business areas

Points of Supply

+18%

Wind Energy* (MW)

+44%

Conventional

Generation (MW)

+25%

Total Installed Capacity

(MW)

+28%

IBE

IBE + SPW

* Includes mini-hydro & other renewable energy technologies

25,950

4,552

30,502

18.4

32,524

6,562

39,086

21.8

ScottishPower

Worldwide leader in wind energy …

…

with a huge pipeline that

provides for future growth

Pipeline

6,562 MW

of installed

capacity

37,675

of pipeline*

Spain

U.K.

Rest of

Europe*

USA

Latam

Rest of

world

* Includes mini-hydro & other renewable energy technologies

6,166

5,996

5,382

19,231

400

500

ScottishPower

The combination strengthens our commitments …

Shareholders

Customers

Society

People

…

based on a powerful business platform

ScottishPower

Worldwide leader in wind energy

Benchmark in efficiency

Financial solidity

Low external dependency

Low cost & low emissions mix

ScottishPower

+ Profitable

+ Global

+ Solid

+ Growth

+ Balanced

Together we will grow more

Iberdrola

+ ScottishPower:

a worldwide leader emerges

+ Efficient

End of the

Introduction

Technical Session I

Introduction to

ScottishPower

& its markets

Exhibit 99.6

Legal Note

IMPORTANT INFORMATION

This

communication

does

not

constitute

offer

purchase,

sell

exchange

the

solicitation

offer

purchase,

sell

exchange

any

securities.

The

Iberdrola,

S.A.

may

not

offered

sold

the

United

States

America

except

pursuant

effective

registration

statement

under

the

Securities

Act

pursuant

valid

exemption

from

registration.

FORWARD-LOOKING STATEMENTS

This

communication

contains

forward-looking

information

and

statements

about

Iberdrola,

S.A.

and

otherwise,

including

financial

projections

and

estimates

and

their

underlying

assumptions,

statements

regarding

plans,

objectives

and

expectations

with

respect

future

operations,

capital

expenditures,

synergies,

products

and

services,

and

statements

regarding

future

performance.

Forward-looking

statements

are

statements

that

are

not

historical

facts

and

are

generally

identified

the

words

“expects,”

“anticipates,”

“believes,”

“intends,”

“estimates”

and

similar

expressions.

Although

Iberdrola,

S.A.

believes

that

the

expectations

reflected

such

forward-looking

statements

are

reasonable,

investors

and

holders

Iberdrola,

S.A.

are

cautioned

that

forward-looking

information

and

statements

are

subject

various

risks

and

uncertainties,

many

which

are

difficult

predict

and

generally

beyond

the

control

Iberdrola,

S.A.,

that

could

cause

actual

results

and

developments

differ

materially

from

those

expressed

in,

implied

projected

by,

the

forward-looking

information

and

statements.

These

risks

and

uncertainties

include

those

discussed

identified

the

public

documents

sent

Iberdrola,

S.A.

the

Comisión

Nacional

del

Mercado

Valores.

Forward-looking

statements

are

not

guarantees

future

performance.

They

have

not

been

reviewed

the

auditors

Iberdrola,

S.A.

You

are

cautioned

not

place

undue

reliance

the

forward-looking

statements,

which

speak

only

the

date

they

were

made.

All

subsequent

oral

written

forward-looking

statements

attributable

Iberdrola,

S.A.

any

its

members,

directors,

officers,

employees

any

persons

acting

its

behalf

are

expressly

qualified

their

entirety

the

cautionary

statement

above.

All

forward-looking

statements

included

herein

are

based

information

available

Iberdrola,

S.A.

the

date

hereof.

Except

required

applicable

law,

Iberdrola,

S.A.

does

not

undertake

any

obligation

publicly

update

revise

any

forward-looking

statements,

whether

result

new

information,

future

events

otherwise.

Agenda

Introduction to UK and US Utility Sectors

Introduction to ScottishPower

Positive macroeconomic backdrop

Second largest EU energy market

History of early deregulation and privatisation leading to three

distinct

subsectors:

•

Generation –

market based with attractive fundamentals

•

Supply –

liberalised, consolidated market

•

Transmission / Distribution –

asset based regulation

Independent and stable regulatory environment

Need for investment in future capacity highlighted in recent government Energy

Review

Rapidly developing opportunities, particularly in ScottishPower’s core US

subsectors:

•

Wind Generation

•

Gas Storage

•

Energy Management

UK market

US market

Key messages

Source:

EIU, US Energy Information Administration, Bloomberg

Note:

1. Estimated 2006 GDP per capita (US$ at PPP)

2. Current central bank rates

3. UK: 10 year gilt; Spain: 10 year government bond; US: 10 year

Treasury Bond as at 23 April 2007

4. Percentage change in consumer price index over previous year

Strong macroeconomic fundamentals support growth prospects

2006e GDP per capita (US$)

(1)

2006 real GDP growth (% pa)

Short term interest rate

(2)

Long term interest rate

(3)

2006 inflation

(4)

34,300

2.7%

5.25%

5.05%

2.3%

28,140

3.9%

3.75%

4.23%

3.5%

Spain

44,237

3.3%

5.25%

4.64%

3.2%

2006 energy demand (TWh)

409

268

3,820

UK, US and Spain: macroeconomic

background

Production (TWh)

Net imports/ (exports) (TWh)

Installed capacity (MW)

Electricity points of supply

(MM)

399

81,738

26.7

Gas points of supply (MM)

21.4

Source: Department of Trade and Industry, Ofgem, UCTE and REE

Note UK: Production and net imports for 2006. Points of supply as at Mar 2006

Note Spain: Production, net imports and installed capacity for 2006. Electricity points of supply as at Sep 2006. Gas points of supply as at Dec 2006

271

(3)

82,336

25.2

6.4

Spain

The

and

Spanish

markets

are

the

“power

islands”

Europe

–

the

significantly

larger

market

than

Spain

UK and Spain: key energy market data

UK: key current utility sector themes

Key drivers

Security of

supply

Competitive

markets

Environment

Energy

efficiency

All these themes are at the heart of Iberdrola’s

strategic plan

Regulation

From pool concept

to bilateral

concept

BETTA

(2)

live

Electricity pool opens

for trading

Mar 1990

Apr 2005

UK market has gone through a process of regulatory change and

industry restructuring in order to reach a stable framework today

Privatisation

New foreign

entrants

Vertical

integration

Early 90s

Mid 90s

2000 -

today

Ownership

Mar 2001

Note:

(1) New Electricity Trading Arrangements (NETA)

(2) British Electicity

Trading and Transmission Arrangements (BETTA)

UK generation: regulation and industry

development

NETA

(1)

live

2001

Fuel mix

Source:

Department of Trade & Industry, ScottishPower Interim Results Presentation Sep 2006

Market share of top 10 players

Source:

Department of Trade and Industry

Note:

(1)

ScottishPower

installed

capacity

Mar

2007;

fuel

mix

and

market

are

based

installed

capacity

Total UK capacity

81,738 MW

Total SPW capacity

(1)

6,380 MW

13%

15%

UK generation market is competitive compared to certain other

European countries

12%

14%

“Big Six”

Integrated Supplier

UK generation: players and fuel mix

35%

Coal

Hydro

Renewables

38%

Gas

15%

Nuclear

Oil

Greater need for new build in the UK compared to other European

countries due to ageing coal and nuclear fleets

Peak demand:

75GW by 2016/17

With 20% margin:

90GW by 2016/17

Post 2016/17

20 to 35 GW

supply gap

“Over next two decades, UK needs

substantial investment in generation

capacity to replace closing coal, oil

and nuclear plant…”

Energy Review, July 2006

Coal

CCGT and CHP

Nuclear

OCGT and Oil

Hydro

Renewables

Existing capacity:

55GW by 2016/17

UK generation: significant new build

required

Source: BWEA, Department of Trade and Industry, Ofgem

Compliance shortfall creates further opportunities

Obligatory % supply from renewable sources

Shortfall

Actual supply from

renewable sources (%)

UK renewables: high growth outlook

with committed targets

...

15.4

3.0

4.3

4.9

5.5

UK wind installed capacity (MW)

Pre Renewable

Obligation

Renewable

Obligation

1,963

1,353

888

648

552

474

406

CAGR

37%

UK supply: regulation and industry

development

Regulation

Consumers using

>1 MW allowed

to switch

Consumers using >100

kW allowed to switch

May 1990

2001

The UK supply market is one of the most open and deregulated

markets in Europe

14 companies

companies

Consolidated

to sustainable

status quo

1996 -

2005

Today

Ownership

May 1994

May 1999

Utilities Act separates electricity

distribution and supply

Electricity and gas supply

markets fully open to

competition across UK

Ofgem

confirm

fully competitive

market

Jul 2003

UK supply: overview of players

UK electricity customers

(1)

26.7 MM

SPW electricity customers

(2)

3.4 MM

Source: OFGEM, Mar 2006

Note

(1) Market shares as at Mar 2006 based on total customers

(2) March 2007

Electricity

13%

15%

16%

20%

22%

Centrica

E.ON

SSE

RWE

SPW

Scottish Hydro (SSE)

ScottishPower (SPW)

Northern (RWE)

Norweb

(E.ON)

SWALEC

(SSE)

Seeboard

(EDF)

Midlands

(E.ON)

Southern (SSE)

Manweb (SPW)

SWEB (EDF)

London (EDF)

East

Midlands

(E.ON)

Yorkshire (RWE)

Supply home areas

Market share

(1)

A clear dual fuel supply strategy has

emerged in the UK

13%

EDF

Eastern (E.ON)

UK gas customers

(1)

21.4 MM

SPW gas customers

(2)

2.0 MM

10%

13%

52%

Centrica

E.ON

SSE

RWE

Gas

SPW

EDF

Regulation

Distribution

Review 3

A stable and predictable framework has emerged

Privatisation:

operators

Acquisitions by

foreign

companies

Consolidation to

7 operators

Early 90s

Mid 90s

2000 -

today

Distribution

ownership

Distribution

Review 1

Transmission

Review 3

UK transmission and distribution:

Regulation and industry development

Distribution

Review 2

Transmission

Review 2

Distribution

Review 4

Transmission

Review 4

Transmission

Review 1

Nov 2004

Dec 1999

Jul 1995

Apr 1990

Jul 1992

Aug 1996

Sep 2000

Dec 2006

Distribution footprint

SPW Distribution

RAB

(1)

Eur

2,939 MM

Distribution activity (by RAB)

Transmission activity (by RAB)

Source: Ofgem, Mar 2006

(1)

March

2006,

2002/3

prices,

converted

Eur

1.4755

(2)

March

2007,

2004/5

prices,

converted

Eur

1.4755

21%

17%

16%

12%

10%

EDF

SSE

SPW

E.ON

MidAmerican

PPL

United

Utilities

12%

SSE

SPW

Scottish Hydro

(SSE)

ScottishPower

(SPW)

Northern (MidAm.)

Norweb (UU)

SWALEC

(PPL)

Seeboard

(EDF)

Midlands

(E.ON)

Southern (SSE)

Manweb

(SPW)

SWEB (PPL)

Yorkshire (MidAm.)

London

(EDF)

Eastern (EDF)

East Midlands

(E.ON)

Efficiencies are now being driven by

consolidation

84%

UK transmission and distribution:

Overview of players

SPW Transmission

RAB

(2)

Eur

1,127 MM

US renewables

capacity (MW)

US gas storage potential

Substantial growth –

over 9 GW added in last

six years. Strong support through “PTC”

High US gas import dependency and

weather drive strong summer / winter price

differentials

2000

2001

2002

2003

2005

2006

2004

US market: summary

US gas price

(14 day

Henry Hub

average)

2007E

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1.5

3.5

5.5

7.5

9.5

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Winter/summer

spread

CAGR

28%

Conclusion

Supply

•

Fully liberalised market

•

Concentrated market structure

•

Market offers scale and opportunities

•

Attractive fundamentals and regulation

•

Significant new build needed

•

Limited regulatory / structural risk

•

Shortfall in renewable targets create further growth

opportunities

Generation

Distribution

•

Stable asset based regulation

•

Need for capex

supports returns

Liberalised

business

Regulated

business

Transmission

•

Rapidly developing opportunities in distinct sub-

sectors –

wind generation, gas storage, energy

management

Agenda

Introduction to UK and US Utility Sectors

Introduction to ScottishPower

Key messages

Highly attractive UK integrated energy player

•

Generation and trading

•

Electricity and gas supply

•

Transmission and distribution

Early mover in two key wind power markets

•

No. 2 wind operator in US market

•

No.1 UK onshore wind operator

Right strategic direction

•

Built strong positions organically and via M&A

•

Strong EBIT growth track record

Attractive set of investment opportunities

Strong mix of high growth competitive and low risk regulated

businesses

4,000 km

transmission

network

3.4MM distribution

points of supply

6,036 MW conv.

installed capacity

344 MW wind

installed capacity

5.4 MM customers

538 MW

(2)

conv.

installed capacity

1,666 MW wind

installed capacity

2.7 bcm

gas

storage

ScottishPower today …

Note:

(1)

GBP:Eur

exchange

rate

GBP

Eur

1.4755

(2)

Includes

PPM’s

47%

ownership

Klamath

Cogeneration’s

output

(506

total)

Business overview

Key financial data

(1)

Liberalised

Generation &

Supply

US & Canada

Liberalised

Generation &

Gas Storage

Revenue

8,980

EBITDA

1,952

Net income

887

Leverage

46%

Well positioned in UK and US with strong financial profile

EBIT

1,570

Capex

1,378

Eur

UK Regulated

Transmission

& Distribution

12 months

to Sep 06

Energy

Retail &

Wholesale

PPM

Energy

Networks

…

created through a series of successful

strategic moves …

Note:

(1)

Installed

capacity

2000

excludes

Inverkip

and

NEA/SHE

contracts

Elec

2000

(1)

2007

Scotland

1.7 MM

points of supply

3.4 MM

points of supply

2000

2007

Distribution growth

Gas

2.7

3.4

2.0

5.4

3.5

0.8

Customers (MM)

Geographic

diversification

Privatisation

1991

Manweb

acquisition 1995

Generation

diversification

CCGT growth

2000 -

2004

Supply growth

Successful organic

growth and dual fuel

supply strategy

Coal

Other

Coal

6,380

4,500

CCGT

Wind+Hydro

CCGT

Wind+Hydro

Generation mix (MW)

Successfully targeted key domestic growth drivers

…

whilst achieving strong EBIT growth

EBIT from continuing operations

1,284

993

845

717

693

200

400

600

800

1,000

1,200

1,400

2002

(1)

2003

(1)

2004

(1)

2005

(2)

2006

(2)

Eur

Note:

(1)

GAAP

(2)

IFRS

(3)

GBP:Eur

assumed

1.4755

Growing to become leading player in UK

and US wind

ScottishPower is the leading wind operator in the UK and the

second largest in the US with a strong pipeline

US wind: second biggest in the US

Cumulative installed capacity (MW)

UK wind: biggest in the UK

Cumulative installed capacity (MW)

2000

2001

2004

2005

2006

128

158

271

344

818

under

construction/

consented

2002

128

2003

128

2001

2002

326

2003

830

2005

1,271

2006

1,621

2,192

2004

830

Average annual capacity growth 2002-2006:

43 MW

Average annual capacity growth 2002-2006:

319 MW

2000

1. ScottishPower

17%

2. RWE

3. E.ON

Share of installed capacity

1. FPL

(1)

29%

2. ScottishPower

(1)

14%

3. MidAmerican

Share of installed capacity

Source: BWEA Feb 2007, AWEA Apr 2007

Note: (1) Adjusted for contracted capacity

under

construction/

consented

2007 +

under const

2007 +

under const

Key ScottishPower strengths

•

UK requiring significant generation investment over the next 10 years

•

Leading positions in high growth renewables markets:

•

No. 1 UK onshore wind farm developer

•

No. 2 US wind farm developer

•

Network assets focused in high growth areas –

renewable

infrastructure

Well positioned in

growth markets

•

Presence in all parts of the energy chain, diversifying risk in a

competitive market with volatile commodity prices

•

Largely asset-backed businesses providing stable returns

•

Supportive regulatory and government framework

Integrated across

the full energy

value chain

•

Experienced management team

•

Strong track record of delivery –

EBIT increased by 17% per annum

between FY02 and FY06

•

Shareholder value focus –

prioritising cash management and high

levels of returns from investments

Track record

End of Technical

Session I

Introduction to

ScottishPower

& its markets

Technical Session II

ScottishPower

UK liberalised businesses:

Generation & Supply

Exhibit 99.7

Legal Note

IMPORTANT INFORMATION

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communication

does

not

constitute

offer

purchase,

sell

exchange

the

solicitation

offer

purchase,

sell

exchange

any

securities.

The

Iberdrola,

S.A.

may

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offered

sold

the

United

States

America

except

pursuant

effective

registration

statement

under

the

Securities

Act

pursuant

valid

exemption

from

registration.

FORWARD-LOOKING STATEMENTS

This

communication

contains

forward-looking

information

and

statements

about

Iberdrola,

S.A.

and

otherwise,

including

financial

projections

and

estimates

and

their

underlying

assumptions,

statements

regarding

plans,

objectives

and

expectations

with

respect

future

operations,

capital

expenditures,

synergies,

products

and

services,

and

statements

regarding

future

performance.

Forward-looking

statements

are

statements

that

are

not

historical

facts

and

are

generally

identified

the

words

“expects,”

“anticipates,”

“believes,”

“intends,”

“estimates”

and

similar

expressions.

Although

Iberdrola,

S.A.

believes

that

the

expectations

reflected

such

forward-looking

statements

are

reasonable,

investors

and

holders

Iberdrola,

S.A.

are

cautioned

that

forward-looking

information

and

statements

are

subject

various

risks

and

uncertainties,

many

which

are

difficult

predict

and

generally

beyond

the

control

Iberdrola,

S.A.,

that

could

cause

actual

results

and

developments

differ

materially

from

those

expressed

in,

implied

projected

by,

the

forward-looking

information

and

statements.

These

risks

and

uncertainties

include

those

discussed

identified

the

public

documents

sent

Iberdrola,

S.A.

the

Comisión

Nacional

del

Mercado

Valores.

Forward-looking

statements

are

not

guarantees

future

performance.

They

have

not

been

reviewed

the

auditors

Iberdrola,

S.A.

You

are

cautioned

not

place

undue

reliance

the

forward-looking

statements,

which

speak

only

the

date

they

were

made.

All

subsequent

oral

written

forward-looking

statements

attributable

Iberdrola,

S.A.

any

its

members,

directors,

officers,

employees

any

persons

acting

its

behalf

are

expressly

qualified

their

entirety

the

cautionary

statement

above.

All

forward-looking

statements

included

herein

are

based

information

available

Iberdrola,

S.A.

the

date

hereof.

Except

required

applicable

law,

Iberdrola,

S.A.

does

not

undertake

any

obligation

publicly

update

revise

any

forward-looking

statements,

whether

result

new

information,

future

events

otherwise.

Agenda

UK Conventional Generation

UK Supply

Integrated Generation and Supply

•

Asset optimisation:

availability

efficiency

maintenance

•

Investment: thermal

upgrades

new capacity

•

Customer facing business

•

Value delivered from:

sales capability

targeted retention

product innovation

service delivery

•

Trading and scheduling:

capture plant value

minimise commodity

cost

manage risk and return

•

Oversee full chain

economics:

generation and supply

margins

Energy Wholesale

Energy Retail

Managing the integrated business to maximise value

Integrated energy –

UK value chain

Generation

Trading

Supply

…

with joint decision making

Two businesses but one P&L

Each business brings its skills and knowledge to bear

Single view of forward wholesale prices

Joint understanding of marginal retail

economics

Joint decisions on retail pricing and

customer growth targets

Agreed view of long term “through the

cycle”

supply net margins

EBIT

(1)

trend (IFRS excl. IAS 39)

2004/05

Full Year

2005/06

Full Year

2006/07

139MM

316MM

Half Year

319MM

Creating value by integrating

Generation and Supply

Integrated commercial approach …

(1) Converted to Eur

at exchange rate of 1.4755

Overall aim of growing our portfolio of assets and customers

Maximising whole chain profitability

1. Increase integrated energy margins

2. Invest in generation assets

3. Focus on operational performance

•

Restore margins

•

Grow customers when economic

•

Competitive advantage from trading

•

FGD at Longannet

•

CCGT

•

Drive value from plant

•

Proactive customer service

•

Benchmarked performance

Generation and Supply –

strategic

focus

ScottishPower -

Generation

Agenda

Market overview

UK Conventional Generation

UK Supply

Integrated Generation and Supply

Key messages

Shifting political and regulatory priorities

•

Before –

competition and pricing

•

Now –

environment and security of supply

Significant new capacity requirements

Wholesale power prices have tracked commodity cycle

ScottishPower is one of the top generation players

•

Attractive mix of assets

•

Customer hedge from supply business

•

Strong investment opportunities

Managing the integrated Generation/Supply business to

create value

Current themes in UK generation

Competition

Environmental

Security of supply

UK generation output is changing …

UK generation presents a diversified mix with growing

renewables

capacity

Note:

(1) Department of Trade and Industry (2005)

(2) Internal estimates (assuming no nuclear build by 2016 and 20% plant margin)

Current generation mix

(1)

Forecast generation mix 2016/17

(2)

35%

Coal

Hydro

Renewables

38%

Gas

15%

Nuclear

Oil

19%

Coal

Hydro

Renewables

59%

Gas

Nuclear

Oil

Greater need for new build in the UK compared to other European countries

due to ageing coal and nuclear fleets

Peak demand:

75GW by 2016/17

With 20% margin:

90GW by 2016/17

Post 2016/17

20 to 35 GW

supply gap

“Over next two decades, UK needs

substantial investment in generation

capacity to replace closing coal, oil

and nuclear plant…”

Energy Review, July 2006

Coal

CCGT and CHP

Nuclear

OCGT and Oil

Hydro

Renewables

Existing capacity:

55GW by 2016/17

…

with reserve margins

becoming tighter …

…

and the generation capacity older …

Source: Department of Trade and Industry

Note: Percentages indicate installed generation capacity of that age as a proportion of the total installed capacity

Almost 50% of UK generation capacity is more than 30 years old

10%

5,000

10,000

15,000

20,000

25,000

0-5

6-10

11-15

16-20

21-25

26-30

31-35

36-40

41-45

46-50

51-120

coal

nuclear

oil

gas

hydro

renewables

Age (years)

13%

18%

28%

Total installed capacity: 81,738 MW

Significant baseload new build requirement post 2015

9,791

29,184

1,385

1,055

4,015

20,362

Coal

Renewables

OCGT

and oil

Hydro

New Build

High cost, dependent

on RO, vital role

Renewables

Competitive with

CCGT, depending on

the cost of gas

New Coal

(supercritical)

New environmental

costs

Old Coal

(supercritical

retrofit)

Low risk, technology of

choice, LNG link

New CCGT

Comment

Technology

Gas

Note: Existing 2016/17 capacity reflects 2005/06 plant that has run-off by 2016/17. Gas includes CHP

Estimated 2016/17 capacity

New build required to meet estimated peak demand

9,220

Nuclear

Competitive but wide

cost range, other

issues

Nuclear

…

requiring new build capacity

Demand profile (2006)

Source: National Grid, Department of Trade and Industry

…with some intra-year demand

fluctuation

Production by fuel type

Conventional thermal and other

CCGT

Nuclear

Renewables

& pumped storage

Decline in conventional generation

more than offset by growth in CCGT…

100

150

200

250

300

350

400

450

1991

1994

1997

2000

2003

2006

UK generation market characteristics

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

•

Second ETS

phase

•

New gas

infrastructure

Price £

/ MWh

Second

tranche of

NPR and

PWG floated

Beginning of

investment in UK

generation by US

companies

British Energy

floated

Lifting of gas

moratorium

Gas moratorium

announced

Introduction of

NETA

•

First ETS phase

•

LCPD

•

Net importer of

gas

•

High oil prices

Plant being

mothballed

Volatility highlights strength of vertical integration

Legacy coal

contracts expired

UK wholesale prices have followed

need for new capacity and global

commodity prices…

Gas is key to the UK market

…

with recent prices driven

by gas market developments

Wholesale Prices 07/08 (nominal)

Mar-06

Apr-06

May-06

Jun-06

Jul-06

Aug-06

Sep-06

Oct-06

Nov-06

Dec-06

Jan-07

Feb-07

Mar-07

Power (£/MWh)

Gas (p/therm)

Front month Brent ($/bbl)

Coal (£/tonne)

Source: Power -

European Daily Electricity Markets, Heren

Energy; Gas -

European Spot Gas Markets, Heren

Enrrgy; Front month brent

Reuters

News Services, Front month coal -

Daily Coal & Emissions Report, TFS Energy

...but even vertically integrated players are not balanced at all times

Vertical integration provides good hedge of value...

•

Fragmented generation market leads to actively traded market:

Trading electricity in the UK

Most trades are forward contracts ‘for physical delivery’

•

Liquidity best in front year –

limited liquidity for products other than baseload

beyond this

•

Well developed broker market –

final contract is bilateral between counterparties

•

Limited power exchange market –

counterparty is always the exchange

•

Good price discovery for main traded products in liquid period

•

Only allowed to trade with system operator up to 1 hour before delivery –

no trading

after delivery, imbalance charges apply

Industrial/commercial contracts do not give hedge beyond contract period –

typically

one year

Trading electricity in the UK –

example

Trading provides the market linkage for Generation and Supply

•

Generation output to Supply –

but

not a perfect match (shape, volume)

•

Trading in market:

to provide balance

to reflect churn of position

for incremental value

•

Trading = up to 3x physical

volumes i.e. liquid market

•

Generation returns:

part of retail price

part from wholesale trades

all returns controlled by

trading

Generation

Trading

Market

Supply

33.5

TWh

28.7TWh

£0.85bn

£1.25bn

38.3

TWh

£1.3bn

£0.6bn

23.9

TWh

•

The

structure

the

industry

dictates

the

use

four

different

kinds

trading

mechanism (apart from the centralised Balancing Mechanism):

Internal trades between generator businesses and their wholesale

trading and retail

supply businesses, within vertically integrated companies

Long-term agreements (typically 15 years) between independent generators and other

market participants

Traded markets for medium-term OTC contracts

Power exchange(s)

•

Under the British Electricity Trading and Transmission Arrangements (“BETTA”)

there is no centralised spot market or pool, so there is little public information on

the means of trading electricity, used by individual players

•

The

starting

point

for

BETTA

reliance

bilateral

contract

trading

establish

the

initial plan for each generator’s output

•

The

majority

trades

are

forward

contracts

“

for

physical

delivery”

(there

small

options market, but it is not well developed)

•

Parties may have to enter into brokered negotiations before settling on the transaction

price

Trading electricity in the UK (2)

Key generation players in the UK …

Total installed capacity: 81,738 MW

Note 1: Excludes interconnector capacity with Scotland and France

Source: Department of Trade and Industry

Competitive

generation

market

with

the

largest

player

holding

less

than

15% of market share

% of total installed capacity

15%

13%

RWE

12%

E.ON

13%

SSE

SPW

EDF

IPR

DRX

CNA

INT

14%

OTH

…

have different strategic positions

Note:

(1) ScottishPower

estimates

(2) Estimates based on UK installed capacity

Source: company web sites

ScottishPower has a balanced portfolio in terms of upstream downstream

position and fuel mix

RWE

E.ON

SPW

CEN

-10

-20

TWh

Upstream / downstream positioning

(1)

Fuel mix

(2)

Wind and hydro

Other

Coal

Gas

15%

44%

46%

80%

58%

40%

38%

31%

20%

15%

24%

14%

21%

20%

40%

60%

80%

100%

EDF

RWE

E.ON

SSE

CEN

Coal

heavy

Gas

heavy

Balanced mix

SSE

EDF

54%

30%

14%

SPW

Renewables

ScottishPower -

Generation

Agenda

Market overview

UK Conventional Generation

UK Supply

Integrated Generation and Supply

ScottishPower’s generation fleet

A well balanced generation mix

6,380

Coal

CCGT & CHP

Wind

Hydro

2007 generation mix (MW)

Installed

Capacity (MW)

Plant

2,304

1,152

800

715

Longannet

(LCPD opt-in)

Cockenzie

(LCPD opt-out)

Damhead

Creek

Rye House

400

Brighton

440

Cruachan

(pump storage)

106

Galloway Scheme

Lanark Scheme

32%

54%

Operational highlights -

coal

Production (TWh)

3.9

6.8

H1 05/06

H1 06/07

Availability (%)

58%

61%

H1 05/06

H1 06/07

FY 05/06

12.9

65%

FY 05/06

Strong spreads incentivise

maximum

running and support FGD investment

Investing in improving availability

Low sulphur coal strategy

Load factors lower summer than winter –

lower spreads, outage schedules

Significant value in coal generation in the UK

Operational highlights -

gas

Production (TWh)

5.2

2.9

H1 05/06

H1 06/07

Availability (%)

77%

47%

H1 05/06

H1 06/07

FY 05/06

9.8

83%

FY 05/06

Plant run on economics rather than to

meet demand

Low baseload spreads put emphasis on

flexibility / 2 shifting to capture peaks

Rye House one of top 2 shifting gas

plants in UK

Spark spreads now improving but not yet

at LRMC

Flexing gas plant running to capture peak prices

UK markets function effectively

Both UK power and gas markets relatively liquid

on year ahead basis

Able to operate gas generation on a spread basis

•

long-term contract base with swing (~0.32

bcm)

•

own gas storage at Hatfield (~0.06 bcm)

LT contracts have delivered

substantial value to ScottishPower

Steady buying strategy for domestic gas

customers dampens wholesale movements:

•

buying for customers stretches into medium

term

•

significant cost advantage 2005/06, 2006/07

•

in line with industry / competitor approach

•

sell power, buy fuel when in money

•

buy back power, sell fuel when out of

money

•

churn position repeatedly to delivery

Gas portfolio:

Gas demand

cover

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Generation

Domestic

LT Contracts

Net Contracts

Storage

ScottishPower gas hedging position

LNG offers attractive gas opportunities

By 2015 the majority of UK gas will be sourced from abroad and therefore

LNG growth will present an opportunity for Iberdrola’s

energy business

100

150

200

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

10%

20%

30%

40%

50%

60%

70%

UKCS

Norway

Continent

LNG

Margin (RHS)

Demand

Source: National Grid 7 Year Statement

Generation and trading capability

Turning good assets and opportunities into “best in class”

returns

Commercial and trading

•

Highly capable and experienced trading

desk covering power/gas/coal/environmental

•

International coal and biomass logistics

•

Strong analytical capabilities

•

Benchmark favourably to EU peers

(McKinsey)

•

Diverse portfolio: coal, gas, storage, hydro,

wind

•

Optimising through availability and

flexibility

•

Top performer in Balancing Mechanism

•

Benchmarked operations and safety

Generation

Supply

Incremental trading

Schedule plant to optimise value

Capture maximum spread opportunity

Competitive commodity cost

Manage wholesale price risks

Aggregate annual incremental contribution:

approximately Eur

100MM

Capturing value across full chain

Asset operation

UK generation: key economic drivers

ScottishPower generation volumes

Load factors: Coal 45-50%, CCGT 45-65%, Hydro 30%

Maintenance schedules / outages

Captured load-to-baseload premium

Clean dark and spark spreads

Attractive returns can be earned from UK generation

Baseload price

Ancillary services / balancing market flexibility

O&M costs

EBITDA margin

Conclusion

ScottishPower

•

Balanced portfolio

•

Attractive locations

•

Strong operational performance

•

Trading capability

•

Investment opportunities

•

Tightening reserve margins

•

Market based solutions

•

Competitive market with no dominant

player

•

Customers provide robust hedge

Generation

players

UK market

ScottishPower offers one of the best balanced generation

mixes in the attractive UK generation market

ScottishPower –

Supply

Agenda

Market overview

UK Conventional Generation

UK Supply

Integrated Generation and Supply

Key messages

Recently improving margins

Business drivers

•

Customer mix, responsiveness to wholesale prices

•

Customer retention / growth or margin

Competition reduced to six majors

ScottishPower has an attractive portfolio of gas and

electricity customers

•

Electricity hedge from generation business

…with ScottishPower demonstrating excellent performance in

the competitive market

The UK has six major energy suppliers …

Domestic Retail Energy Accounts (MM)

TOTAL

(1)

5.1

(3)

7.5

6.0

4.6

6.7

15.7

Electricity

market

(2)

13%

20%

15%

13%

16%

22%

(1) Internal estimates

(2) Source: Ofgem, Mar 2006

(3) Excludes Industrial/Commercial and small business customers

Change from

Deregulation

70%

11%

63%

21%

Gas

market

(2)

13%

10%

52%

Supply competition has reduced

customer bills in real terms …

Recently real energy bills have risen on the back of all time

high wholesale prices

Gas

Annual bill (Eur)

Electricity

200

400

600

800

1000

Q286

Q289

Q291

Q293

Q295

Q297

Q299

Q201

Q203

Q205

Incumbent

Best offer

200

400

600

800

Q189

Q191

Q193

Q195

Q197

Q199

Q101

Q103

Q105

Incumbent

Best offer

Q205

Source: Ofgem

…

with retail margins driven by mainly

controllable parameters

Value drivers

Average UK residential energy bill

Margin targets set through customer mix and wholesale/retail

price management

Eur

851

Gas

Eur

530

Electricity

Transmission

Energy,

supply costs

and margin

Distribution

16%

74%

17%

70%

VAT

Environmental

Meter provision

Component

Value drivers

Controllable by

management

•

Oil price and other

commodity prices

•

Environmental (ROCs)

•

Contracted position /

owned upstream

•

Various distribution and

transmission charges

•

Sales and marketing

•

Quality of service

•

Metering, billing and debt

management

•

Customer mix

•

Tariff strategy: margin vs.

volume

Wholesale

procurement

Transportation

Cost to serve

(CTS)

Margin

Source: Ofgem, Datamonitor

Supply economics improving

Average customer bill

Electricity

•

Retail tariffs tend to lag

wholesale prices

•

Series of tariff increases

throughout 2005 and 2006

•

Fall in wholesale prices since

summer 2006 peak

•

Competition for customers

intensifying as economics

improve

•

Tariff proposals under

continual review

Indicative

Energy

Pipes

T&D

CTS

Net Profit

WACOE

Net Profit

WACOG

Gas

Market share of new entrants has

slowly developed since opening …

Gas out-of-area market share

Electricity out-of-area market share

Full national

domestic

competition

10%

20%

30%

40%

50%

Apr-96

Apr-97

Apr-98

Apr-99

Apr-00

Apr-01

Apr-02

Apr-03

Apr-04

Apr-05

Source: Ofgem

…

driven by price, increased marketing spend and customer

service

Some switching in

2006 as prices rose

Incumbent market

shares now less

than 50% for E.ON,

RWE and Centrica

Agenda

ScottishPower –

Supply

Market overview

UK Conventional Generation

UK Supply

Integrated Generation and Supply

Customer base of ScottishPower has

increased …

3.0

3.5

4.0

4.5

5.0

5.5

3.10

1998

3.30

1999

3.50

2000

3.50

2001

3.50

2002

3.65

2003

4.25

2004

5.00

2005

5.25

2006

Deregulatio

Early

growth

Billing

migration and

reshaping

Accelerated

growth

Customer numbers have increased by over 70% since deregulation

2007

5.35

…

with clear initiatives to increase

value per customer …

Maximising value from the customer base

2002

2007

Gas Solus

DD Dual Fuel

295k

213k

678k

2,512k

Electricity

Solus

1,724k

1,551k

RCQ Dual

Fuel

367k

565k

Prepayment

474k

516k

2002

2007

2002

2007

2002

2007

Key drivers of value:

•

Margin

•

Churn

•

Cost-to-serve

•

Debt

Customer collections

Sales and marketing

…

and ScottishPower has key strengths

in the retail gas and electricity market

Operations

Continuous operational improvement

Customer services

Source:(1) Uswitch

survey (2) Datamonitor

(3) Energywatch, March 2007 (4) 2007 European Six Sigma Awards

•

for on-line services

(1)

•

Proven and flexible sales resource

•

Product innovation and speed to market

•

Highest customer Direct Debit penetration in

industry

•

overall for customer satisfaction

(1)

•

73% reduction in year on year complaint

levels

(3)

•

75% first contact resolution

•

World class telephony and support system

•

for metering and billing services

(1)

•

Top UK performer in bill quality

•

Lowest cost-to-serve in industry

(2)

•

Award winning Six Sigma and Operational

Excellence programme

(4)

•

13% working capital reduction over 2 yrs

•

Lower quartile bad debt write off levels

•

Leading debt management systems

Further opportunities to enhance

the value of the business

Customer growth when economic conditions are right

Reshaping customer base towards secure/direct debit payment

Cost-to-serve reductions through increased self service and focus

on ‘getting it right, first time’

Smart metering: lower cost-to-serve and debt through consumption

aligned with bill and payment

Competitive edge through differentiated customer service -

optimise

industry leading on-line capability

Optimise output from Energy Review: grow and develop, where

appropriate, the energy efficiency business model and capability

Continual operational improvement

UK supply: key economic drivers

Retail customer growth

Recently improving margins in UK supply are supported by

levelling off of wholesale power and gas prices

EBIT margins

Current / short-term

Long term

Energy use per customer

SP averages: gas 600-700 thm

and electricity 4,500-5,000 kWh per annum

Energy purchase costs

Market

Weighted average cost

Average customer bill

Other costs: cost-to-serve, T&D

Conclusion

ScottishPower

•

Attractive mix of gas and electricity

customers

•

Balanced portfolio

•

Increase in dual fuel customer base

•

Improving conditions in retail

•

Balance between margins and customers

•

“Major

six”

•

Competition to achieve economies

Supply players

UK market

ScottishPower has been a successful player

in the supply market since deregulation

Agenda

Appendix

ScottishPower’s conventional

generation assets …

Installed

Capacity (MW)

Fuel

Age

Plant

2,304

1,152

800

715

Coal

CCGT

440

Hydro

Longannet

(LCPD opt-in)

Cockenzie

(LCPD opt-out)

Damhead

Creek

Rye House

Cruachan

(pump

storage)

106

Hydro

70*

Galloway

Scheme

Lanark Scheme

* Approximation, plants range from 1935-1985 opening years

CHP

Hydro

CCGT

Pumped

Cruachan

Longannet

Cockenzie

Lanark

Galloway

Ravenshead

Sappi

Rye House

NHHT

Basingstoke

Brighton

Pearsons

Damhead

Creek

Coal

Transmission Network Use of System charge zones

…

represent a balanced generation mix

400

CCGT

Brighton

…

include coal generation …

Operational date

No of units

Installed capacity

1970

4 x 576 MW

2,304 MW

Location

Fife

Employees

320

Operational date

No of units

Installed capacity

1967

4 x 288 MW

1,152 MW

Location

Edinburgh

Employees

150

•

Opted in LCPD -

£170m investment secures plant to

2015

•

Turbine blade upgrade

•

Developing blueprint for supercritical retrofit (carbon

capture ready)

•

First UK plant to burn biomass / WDF

•

20MW dedicated biomass planned for site

•

Benchmarked operational performance

•

Opted out LCPD

•

Exploring potential for supercritical retrofit

•

Burning biomass up to 5%

•

Flexibility in Balancing Market

Longannet

Cockenzie

Strong dark spreads drive investment in coal plant to maintain

operations for next 20 years

…

gas generation …

Operational date

Installed capacity

2000

800 MW

Location

Kent

Employees

Operational date

Installed capacity

1993

715 MW

Location

Hertfordshire

Employees

•

Modern, efficient plant

•

Acquired by ScottishPower in 2004

•

Damhead

Creek’s prime location in Southern

England enables it to benefit from relatively

favourable transmission charges

•

Valuable gas contract

Damhead

Creek

Rye House

•

Converted from baseload to one of the most

flexible CCGTs

in UK

–

<5 p.a. pre acquisition

–

up to 200 starts p.a. currently

•

Control systems and valves replaced to

optimise performance. Improved monitoring

•

Transferring best practice to other assets

Rye House is one of most flexible CCGTs

in the UK

Operational date

Installed

capacity

1965

440MW

Location

Argyll &

Bute

Cruachan

Galloway

1930s/1985

106MW

Galloway

Lanark

1920s

17MW

Lanarkshire

Operational date

Installed

capacity

2000

400MW

Location

Sussex

Brighton

…

and hydro generation

•

American Electric Power (parent company to

SEEBOARD) and ScottishPower

built

Brighton together in 2001, each holding a

50% stake in the plant

•

In October 2004 ScottishPower bought out

the remaining 50% it did not already own

•

Plant offline until late summer 2007 for station

transformer repair

•

In 2004 Cruachan

upgraded to

increase power

output by 10 per

cent

•

Flexibility for SO

•

Sub 20MW hydro

secures ROCs

Hydro assets were recently upgraded to increase output by 10%

End of Technical

Session II

Introduction to

ScottishPower

& its markets

Technical Session III

ScottishPower

UK Wind generation

Exhibit 99.8

Legal Note

IMPORTANT INFORMATION

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does

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purchase,

sell

exchange

the

solicitation

offer

purchase,

sell

exchange

any

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The

Iberdrola,

S.A.

may

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the

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except

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and

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statements

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Forward-looking

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Although

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Iberdrola,

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various

risks

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uncertainties,

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the

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Forward-looking

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S.A.

You

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any

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Key messages

UK is a significant wind power market

Attractive wind resource

Traded certificate (ROC) structure

•

Provides attractive economics

•

ROC scheme in place until 2027

UK has adopted ambitious targets for renewables

ScottishPower is UK’s onshore market leader with a

strong pipeline of future projects

Agenda

ScottishPower

–

Wind

Market overview

The UK wind market has experienced

rapid growth in recent years …

1990 –

First Non

Fossil Fuel

Obligation

2001 –

Introduction of the

Climate Change

Levy

2002 –

Introduction of the

Renewables

Obligation

2007 –

becomes 7th

country worldwide

to install over 2GW

of Wind Energy

The UK Wind market has experienced strong growth since 2002 fuelled by

the introduction of the Renewables

Obligation framework

Source: BWEA

Total installed capacity

Annual capacity installed

Average growth

2002 -2006

37%

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Regulatory

support:

…

becoming an attractive market

for wind energy …

UK wind velocity

UK wind market (MW)

The UK is one of the windiest regions in Europe

Approved

Under construction

Operational

3,777

1,275

2,066

Planned

10,770

Total

17,888

Source: BWEA statistics April 2007

…with committed targets for renewables…

3.0

4.3

4.9

5.5

6.7

7.9

9.1

9.7

10.4

11.4

12.4

13.4

14.4

15.4

Compliance shortfall

creates further value

opportunities

Source: Department of Trade and Industry

By 2015 obligation to supply over 15% of electricity from renewable

sources –

may rise to 20%

Obligatory % of supply from renewable sources

Shortfall

…which will require significant

new build

2005/06 ROCs

issued by technology

Source:

OFGEM

Renewables

Obligation:

Annual

report

2005

–

2006,

February

2007

16.5 GW needs to be built to meet the 2015/16 target –

with onshore

and offshore wind key technologies

19%

25%

29%

Landfill

gas

Co-firing

Onshore

wind

Biomass

Sewage

gas

0.1%

Other

Offshore

wind

14%

Hydro

Facing usual market development issues

Process slow although reform underway

Political will varies between local authorities

Successful planning knowledge and stakeholder relations is key

Planning timescales

Grid infrastructure

Turbine supply

Capacity is available to early projects

Later projects face delays

Some “queue”

reform underway

UK lacks incumbent suppliers, exposed to worldwide shortage

The UK faces the same issues for wind development as most

European wind energy markets

ROC pricing

Time

Buyout price

Recycle

Current month ahead

wholesale baseload

(1)

Total

£35.18

Buy-out price

(2)

Climate change levy

(2)

£34.30

£86.06

Recycle price

(3)

£12.93

Sources: (1) Heron, (2) Ofgem, (3) Implied for the purpose of this example, (4) Levy Exemption Certificates

£3.65

Renewables

Obligation Certificates (ROC)

Illustrative revenues for UK wind per MWh

Supply and demand based

Projects earn ROCs

= base price (buyout) plus shared

element of suppliers’

non-compliance fines (recycle)

Plus price of power and LECs

(4)

As compliance is met, recycle falls –

price moves towards

buyout

Eur

51.91

Eur

50.61

Eur

126.98

Eur

19.08

Eur

5.39

Agenda

ScottishPower

–

Wind

Market

overview

and dynamics

Market leading onshore developer …

…

with c.17% installed capacity in a fragmented market

Note: latest available data

Wind installed capacity (MW)

100

150

200

250

300

350

…

with minor interests maintained in

offshore while policy/economics evolve

Clear potential to increase offshore development

UK Offshore Wind market (MW)

Approved

Under construction

Operational

2,196

474

304

Planned

2,625

Total

5,599

•

Two planned wind farms:

–

West of Duddon

Sands –

167 MW

–

Shell Flats –

35 MW

•

1,000 MW offshore factored into

ScottishPower’s ‘Pre-Planning and

Feasibility’

capacity

Sizeable opportunity…

…

which ScottishPower is ideally

placed to rapidly exploit

ScottishPower’s net offshore interests

Source: BWEA

ScottishPower’s UK wind farms

ScottishPower wind farms are mostly located in Scotland where the

best wind sites in the UK are located

•

Leading onshore developer

•

344 MW operating capacity

•

474 MW construction programme including:

–

Whitelee

322 MW among largest in

Europe

•

772 MW in planning

•

3,628 MW in pre-planning and feasibility

Beinn

Tharsuinn

Cruach

Mhor

Whitelee

Black Law

Shell Flats

Dun Law & Extension

Hare Hill

Hagshaw

Hill

& Extension

Coal Clough

P&L

CarlandCross

Barnesmore

Elliots

Rigged Hill

Beinn

an Tuirc

& Extension

Corkey

Operational

Under construction or consented

In planning

Wether

Hill

Ewe Hill

Harestanes

Greenknowes

Dersalloch

Coldham

Callagheen

West of Duddon

Arecleoch

Lynemouth

Wolf Bog

•

Benefits from early mover in onshore wind:

site selection, high wind yields

•

Strength of in-house development team:

environment impact, project design, risk assessment, technology

•

Seen as a responsible developer:

public consultation, partnerships

relationships with key stakeholders

Queens Award for Sustainable Development

Vision in Business for Environment Scotland Award

three Green Energy Awards

•

Strong in-house renewables

operational and trading skills

ScottishPower has market leading wind

capabilities …

Successfully built on rapid market entry

•

Scotland well positioned to exploit

wave and tidal resources

•

Wave power demonstration project

to be established (3 MW)

•

OPD Pelamis

technology

•

Accelerate commercialisation

•

Strong support from Scottish

Executive

…

as well as developing marine

renewables

strength

Growth potential over a wide range of renewable technologies

UK wind: key economic drivers

High load factors

2,300 –

2,800 hrs on average

Attractive economic incentives

Stable regulatory framework

Potential returns in the UK are more attractive than those available

several other wind markets in Europe

Opex

40 –

50 £/kW per annum

Capex

1,000 –

1,200 £/kW

ScottishPower

•

Currently #1 onshore operator

•

Strong development pipeline

•

High quality sites

•

Options in offshore, marine

•

Long term and stable regulatory

framework (until 2027)

•

Increasing ROC demand

Market environment

•

15% of generation to be sourced

from renewable sources by 2015

•

Attractive economic incentives

Conclusions

Government

commitment

Agenda

Appendix

Detailed UK wind farm overview

Name

Installed capacity (MW)

Operational

Barnesmore

1997

Beinn

an Tuirc

2002

Black Law I

2005

Callagheen

2006

Carland

Cross (45% owned)

1992

Coal Clough

(45% owned)

1992

Operational

344

Coldham

2005

Corkey

1994

Cruach

Mhor

2004

Dun Law

2000

Elliots

Hill

1995

Hagshaw

Hill

1995

Hare Hill

2000

P&L (50% owned)

1992

Rigged Hill

1994

Black Law II

2006

Beinn

Tharsuinn

2006

Source: As at April 2007. (1) Average load factor

Load Factor

33%

35%

30%

32%

28%

26%

29%

37%

22%

26%

37%

30%

41%

24%

37%

25%

29%

30%¹

Detailed UK wind farm overview (2)

Name

Installed capacity (MW)

Operational

Beinn

an Tuirc

Post 2010

Greenknowes

2008

Hagshaw

Hill Extension

2008

Dun Law Extension

2008

Wether

Hill

2007

Whitelee

322

2008

Arecleoch

180

2009

Black Law Phase 3

2009

Dersalloch

2010

Ewe Hill

2010

Harestanes

213

2010

Lynemouth

2010

Under construction / consented

474 (818 incl. operational)

Total (Operational and Pipeline)

Pre-Planning and Feasibility

In Planning

772

Load Factor

32%

27%

34%

29%

27%

31%

28%

Wolf Bog

2008

35%

3,628

5,218

West of Duddon

Sands Offshore

167

2013

40%

Shell Flats Offshore

2012

40%

31%¹

30%¹

Source: As at April 2007. (1) Average load factor

Onshore 2,628 / offshore 1,000

End of Technical

Session III

ScottishPower

UK Wind generation

Technical Session IV

ScottishPower

UK Regulated businesses:

Transmission &

Distribution

Exhibit 99.9

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sell

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offer

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The

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and

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statements

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future

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capital

expenditures,

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products

and

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statements

regarding

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Forward-looking

statements

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that

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historical

facts

and

are

generally

identified

the

words

“expects,”

“anticipates,”

“believes,”

“intends,”

“estimates”

and

similar

expressions.

Although

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believes

that

the

expectations

reflected

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forward-looking

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reasonable,

investors

and

holders

Iberdrola,

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are

cautioned

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forward-looking

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and

statements

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subject

various

risks

and

uncertainties,

many

which

are

difficult

predict

and

generally

beyond

the

control

Iberdrola,

S.A.,

that

could

cause

actual

results

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differ

materially

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expressed

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projected

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the

forward-looking

information

and

statements.

These

risks

and

uncertainties

include

those

discussed

identified

the

public

documents

sent

Iberdrola,

S.A.

the

Comisión

Nacional

del

Mercado

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Forward-looking

statements

are

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guarantees

future

performance.

They

have

not

been

reviewed

the

auditors

Iberdrola,

S.A.

You

are

cautioned

not

place

undue

reliance

the

forward-looking

statements,

which

speak

only

the

date

they

were

made.

All

subsequent

oral

written

forward-looking

statements

attributable

Iberdrola,

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any

its

members,

directors,

officers,

employees

any

persons

acting

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behalf

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expressly

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their

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the

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All

forward-looking

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herein

are

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information

available

Iberdrola,

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the

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law,

Iberdrola,

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revise

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Key messages

Value creation based on regulatory out-performance of

allowances and incentive targets

Attractive, increasingly incentive based, RPI-X regulatory

framework

Clear value creation potential for distribution (opex) and

transmission (capex)

Attractive asset mix

•

English and Scottish Distribution

•

Scottish Transmission

Market overview

Agenda

ScottishPower –

T&D

General

Transmission

Distribution

Ofgem

regulates the UK electricity and gas

markets …

Regulation based on price cap (RPI-X) methodology

Ofgem

is the regulator of the Gas and Electricity Markets Authority. Northern

Ireland’s Regulator is Ofreg

Cost of transmission and distribution: 25-30% of average domestic electricity

bill

Ofgem

protects consumers by promoting competition and ensuring effective

regulation of “wires and gas pipes”

Regulation of the “wires”

businesses has lead to cost reductions and has been

successful

…

through a price-setting mechanism …

Current distribution price control mechanism (2005-2010) will be in

place until 2010 and transmission until 2012

Five year price control period

Operator base revenue allowances linked to revenue driver –

equally weighted

function of units distributed and number of customers

Regulatory revenue also linked to incentive mechanisms, for example relating to

Losses and Quality of Service

Pass-through for costs of business rates on network assets, licence fees,

transmission charges and other specified non-controllable costs

Correction mechanism adjusts price control for previous over/under recovery of

revenue

Source: Ofgem

…

that allows generation of

minimum returns

In the UK the price setting mechanism allows T&D companies to

earn regulated target returns on their investment

Electricity distribution

Electricity transmission (Scotland,

England & Wales)

Gas distribution

Gas transmission

Water and sewerage

4.80%

4.40%

4.38%

4.40%

5.10%

2008 WACC real post tax

Business activity

Although revenue requirement is fixed by Ofgem, the return can be

improved by beating opex

and capex

/ depreciation allowances

REGULATION

Eur

500 MM

Eur

208 MM

Eur

150 MM

Eur

138 MM

6.9%

This is fixed subject to

incentives

Beat the opex

target

Beat the capex

target

Increased realised

return

Allowed revenue

Allowed opex

Allowed capex

/ dep

Allowed return

(pre tax)

RAB

Eur

2,000 MM

Example (5 year)

Price-setting mechanism –

example

Agenda

Market overview

ScottishPower –

T&D

General

Transmission

Distribution

•

In England and Wales, National Grid (“NG”) is

the owner of the single transmission network

(excluding 132kV network)

•

In Scotland, ScottishPower and Scottish and

Southern Energy own two separate

transmission networks, and are responsible for

planning, constructing and maintaining the

network (including 132kV network)

•

NG is the system operator for the whole GB

region (under BETTA)

•

NG’s

subsidiary, Elexon, manages the

governance and settlement of trading

arrangements

UK transmission network split between National

Grid, Scottish & Southern and ScottishPower …

UK geographic coverage

Description

SSE

SPW

Source: Ofgem, company web sites and annual reports

ScottishPower is one of three transmission network owners in the

…

dominated in scale by National Grid

…

with ScottishPower comprising 12% total UK RAB

Source:

Ofgem

Note:

(1) 2004/05 prices. 5-year allowances are 2007/08 to 2011/12 inclusive

Revenue allowance

Opex

allowance

Capex

allowance

Total circuit length (km)

5 year (cumulative) price control elements

(1)

SPW

SSE

4,028km

14,664km

4,938km

Number of substations

119

445

System maximum demand (MW)

4,300

56,700

1,700

Regulated asset base (2006/7)

£764MM

£5,416MM

£288MM

% total regulated asset base

12%

84%

£780MM

£5,465MM

£250MM

£143MM

£1,289MM

£46MM

£608MM

£2,997MM

£181MM

The Transmission Price Control Review

(TPCR) is reviewed every 5 years …

Total opex

allowance

•

Eur

3.3bn over next 5 years

•

Assumes further efficiency improvements of 3% per annum

Expect increasing investment and thus rising transmission charges continuing beyond 2012

Total capex allowance

•

Eur

6.9bn (in 2004/5 prices) over next 5 years

•

Eur

8.0bn including renewable generation under TIRG (up

170% for electricity transmission companies)

Total revenue allowance

•

2007/8 -

Eur

2,501 MM; 2011/12 -

Eur

2,646 MM

•

Initial rise of 7.8% against 2006/07 and then 2% above retail

price index (RPI) for each year thereafter

Final outcome occurred during Iberdrola’s

offer for ScottishPower

with favourable impact

Source: Ofgem

…

and provides scheduling, balancing as well as

some other mandatory and commercial services

•

Generators schedule plants

•

Generators inform NG of expected levels

•

NG balances one hour prior to start by:

–

trading in the forward market when generation insufficient or

excessive

–

accepting bids and offers from generators and consumers

–

using ancillary services contracts, negotiated in advance

•

NG recovers cost through the Balancing Services Use of

System charge (BSUOS)

–

based on costs incurred per half hour

–

pro-rated by generation and consumption volumes during that

period

Real time Balancing Services

Ancillary services

•

Mandatory services

–

Reactive power

–

Frequency response

•

Black start and Fast start

•

Commercial services

–

Maximum Generation Service

–

Enhanced Reactive Service

–

Commercial Frequency Response

–

Fast Reserve

–

Standing Reserve

–

Warming

–

Emergency Assistance

•

Other services

NG provides real time balancing services and ancillary services apart

from being the largest transmission network owner in the UK

Interconnection

•

Main transmission flows are north to

south

•

Interconnection with Scotland limited at

c.2,200 MW

–

key for further renewables

development in Scotland

–

upgrade of interconnector

to 2,800

MW by 2010 underway

–

funding for increase to 3,200 MW by

2012 agreed with Ofgem

•

2002: new 500 MW interconnector

between Scotland and Northern Ireland

was commissioned

10.3 / 0.8 TWh

1,988 MW

-1.6 TWh

120 MW

330 MW

Interconnectors

(2004)

Import Capacity

Export Capacity

Imports/Exports

(net)

Maximum import 2,330 MW

Maximum export 2,120 MW

UK geographic coverage

Description

Further plans for interconnection with the Netherlands

and Norway of c.800 MW each

Source: CERA

1,000 MW

7.0 TWh

500 MW

80 MW

3.0

TWh

2,200 MW

0.6 TWh

0.0 TWh

Agenda

Market overview

ScottishPower –

T&D

General

Transmission

Distribution

Introduction –

Distribution

At privatisation, the UK was separated into 14 regions

(12 in England/ Wales and 2 in Scotland)

After consolidation, 7 groups of Distribution Network Operators

(DNOs) remain

Networks are ‘passively managed’

with balancing done by National

Grid (NG)

After privatisation and consolidation

seven groups of distribution companies remain …

Eastern

Midlands

Southern Electric

Norweb

Manweb

Scottish

Power

Northern

SWALEC

SWEB

Seeboard

Yorkshire

East

Midlands

Scottish

Hydro

Pre-privatisation

London

Privatisation introduced some consolidation, but also introduced

foreign ownership

distribution (E.ON, EDF, MA and PPL) in the UK

Eastern

(EDF)

Southern Electric

(SSE)

United Utilities

Manweb (SPW)

Scottish

Power (SPW)

Northern

(MidAmerican)

SWALEC (PPL)

SWEB (PPL)

South East

(EDF)

Yorkshire

(MidAmerican)

East Midlands

(E.ON)

Scottish

Hydro

(SSE)

Midlands

(E.ON)

London

(EDF)

Post-privatisation

…

each representing in excess of 8% of

the network

ScottishPower is the third largest distributor measured by regulated asset base

Source: Ofgem

Note: (1) 2004/5. RAB figures are in 2002/3 prices

21%

17%

16%

12%

10%

EDF

SSE

SPW

E.ON

MidAmerican

PPL

United

Utilities

12%

28%

EDF

SSE

SPW

PPL

United

Utilities

17%

E.ON

13%

MidAmerican

Regulated asset base (£

MM)

and % of total

(1)

Points of supply (MM)

and % of total

2,689

1,913

2,078

1,401

1,969

1,269

920

7.6

3.4

4.7

3.3

3.7

2.5

2.3

The Distribution Price Control Review (DPCR)

sets allowed revenue, opex

and capex

for a 5 yr period

Set by regulator based on the upper quartile of proposals submitted by each

company

Source: Electricity Distribution Price Control Review: Final Proposals Office of Gas and Electricity Markets (November 2004)

Allowed revenue

Allowed

controllable opex

2005 -

2010

Eur

4,601 MM

Eur

1,138 MM

Reducing 1.5% pa

Allowed capex

Eur

8,601 MM

Allowed return

6.9% pre tax real

(4.8% post tax real)

Agreed subject to

changes in incentives

Beat the opex

target

Beat the capex

target

…

leads to improved

realised return

Agenda

Market overview

ScottishPower –

T&D

General

Transmission

Distribution

Different players have varying degrees of

success …

Source: Ofgem, Distribution Price Control Review, Final Proposals

EDF LPN & EPN

210

180

150

120

EDF-SPN

CN-West

CN-East

WPD

CE Electric

SPW (current)

SSE

SPW

(potential)

Based on Ofgem’s

cost efficiency

analysis

ScottishPower is

less efficient than a

number of its peers

taking size, network

length, customers,

etc into

consideration

Regression line Upper quartile

Composite scale variable (network length, customer numbers, units distributed, etc)

Relative to peers ScottishPower has significant scope for cost

reduction which leaves room for higher returns

Eur

733MM

…

with ScottishPower offering cost

improvements

Revenue

Opex

(1)

Allowed

Capex

Return

Annual average for 5

years

Eur

208MM

Eur

286MM

Continuous drive

for capital

efficiencies

Note: (1) Opex

includes allocation of corporate costs

Room for improvement in network performance

Levers to deliver improvement

•

Mobile information technology

•

Satellite navigation

•

Network control centre at Kirkintilloch

•

Innovative design

•

Smart procurement

Improved

operating

practices

6.9%

•

Programme of network automation

Striving for

improved

performance

Ongoing dialogue with Ofgem

to ensure allowed

returns encourage continued investment in the

networks

Conclusions

•

112,000 system km and around 40,000 GWh

distributed per year (growing

historically at ca 1%)

•

Further growth driven by high levels of renewables

development

•

Established expertise in asset ownership, regulatory management and

operational service provision

Attractive mix of

transmission and

distribution assets

•

Proven track record major project delivery (e.g. interconnector

upgrade)

•

Strong Transmission and Distribution design teams with ability maximise

investment value

•

Dedicated operational training centres focussed on training and underlining

safety across the business

•

Ranked by the Ofgem’s

Asset Management Survey as top quartile

•

Well defined Asset Risk Assessment process recognised by regulatory

consultants

•

Leading player in Ofgem

Innovation initiative

•

Process underway to achieve PASS 55 accreditation

Strong asset

management

processes

Highly skilled

engineering and

frontline workforce

Agenda

Appendix

UK electricity distributors: key figures

ScottishPower is the third largest distributor measured by regulated asset base

Revenue allowance

Opex

allowance

(2)

Capex

allowance

(2)

Network length (‘000km)

5 year (cumulative) price control elements

(1)

EDF

SSE

SPW

172

129

122

Points of supply (MM)

7.6

4.7

3.4

% total points of supply

28%

17%

12%

Units distributed (GWh)

84.5

56.2

41.3

Minutes lost per cust.

67 min

92 min

76 min

Reg. asset base (04/05)

£2,689MM

£1,913MM

£2,078MM

% total asset base

21%

16%

17%

£3,488MM

£2,466MM

£2,562MM

£1,642MM

£1,154MM

£1,239MM

£1,789MM

£1,101MM

£858MM

E.ON

3.7

13%

41.3

69 min

£1,401MM

12%

£1,826MM

£898MM

£724MM

113

3.3

12%

39.1

68 min

£1,969MM

16%

£2,352MM

£991MM

£859MM

PPL

2.5

28.0

56 min

£1,269MM

10%

£1,644MM

£817MM

£537MM

2.3

25.4

57 min

£920MM

£1,149MM

£526MM

£513MM

Source: Ofgem

1. 2002/03 prices. 5-year allowances are 2005/06 to 2009/10 inclusive

2. Capex

excludes entire pension cost allowance; Opex

includes entire pension cost allowance, tax and incentives

End of Technical

Session IV

ScottishPower

UK Regulated businesses:

Transmission &

Distribution

Technical Session V

ScottishPower

North-American businesses:

PPM

Exhibit 99.10

Legal Note

IMPORTANT INFORMATION

This communication does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase,

sell or exchange any securities. The shares of Iberdrola, S.A. may not be offered or sold in the United States of America

except

pursuant

effective

registration

statement

under

the

Securities

Act

pursuant

valid

exemption

from

registration.

FORWARD-LOOKING STATEMENTS

This communication contains forward-looking information and statements about Iberdrola, S.A. and otherwise, including

financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and

expectations with respect to future operations, capital expenditures, synergies, products and services, and statements

regarding future performance. Forward-looking statements are statements that are not historical facts and are generally

identified by the words “expects,”

“anticipates,”

“believes,”

“intends,”

“estimates”

and similar expressions.

Although Iberdrola, S.A. believes that the expectations reflected in such forward-looking statements are reasonable,

investors and holders of Iberdrola, S.A. shares are cautioned that forward-looking information and statements are subject

to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Iberdrola, S.A.,

that could cause actual results and developments to differ materially from those expressed in, or implied or projected by,

the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the

public documents sent by Iberdrola, S.A. to the Comisión

Nacional

del Mercado de Valores.

Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of

Iberdrola, S.A. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of

the date they were made. All subsequent oral or written forward-looking statements attributable to Iberdrola, S.A. or any of

its members, directors, officers, employees or any persons acting on its behalf are expressly qualified in their entirety by

the cautionary statement above. All forward-looking statements included herein are based on information available to

Iberdrola,

S.A.

the

date

hereof.

Except

required

applicable

law,

Iberdrola,

S.A.

does

not

undertake

any

obligation

to publicly update or revise any forward-looking statements, whether as a result of new information, future events or

otherwise.

PPM is a world class renewables

player

with substantial gas storage assets

PPM structure

Wind

Thermal

Enstor

Energy Management

Owned

gas storage

1.4 bcm

538 MW

(1)

Contracted wind

606 MW

Owned wind

1,060 MW

Marketing alliances

and transport

contracts

Contracted gas

storage 1.3 bcm

Optimise PPM

assets

and contracts

Shared Support Services

Note:

(1) Reflects 47% ownership of Klamath (506 MW total)

75% of new investments in wind energy

Eur

FY03

Energy

Management

FY04

FY05

FY06

Thermal

Enstor

Wind

Eur

•

Wind, gas storage and energy management

has grown significantly since 2003

•

Thermal assets are providing a strong,

stable base of profits

•

PPM had invested Eur

1.35bn by 2006

Note:

(1)

Financials

are

based

the

exchange

rate

USD

Eur

0.75;

(2)

Wind

includes

pre-tax

value

production

tax

credits

Equivalent EBIT

(1)

Cumulative capex

(1)

EBIT historically driven by growth in gas storage,

however future investment focused on wind

143

Thermal

Enstor

Wind

(2)

FY03

FY04

FY05

FY06

435

600

698

1,350

Growth A&G,

other

Agenda

US wind

US energy management

US gas storage

US thermal

US Wind power installed capacity started

to grow significantly around 2000

Source: US Department of Energy, AWEA

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1,525

1990

1,575

1991

1,584

1992

1,617

1993

1,656

1994

1,697

1995

1,698

1996

1,706

1997

1,848

1998

2,511

1999

2,578

2000

4,275

2001

4,686

2002

6,353

2003

6,725

2004

9,149

2005

11,603

2006

CAGR

2000-2006:

28%

Key market drivers are positive in the US

•

Higher and more volatile fuel prices for competing generation

•

Federal and state policies

•

Economic development

•

Green power

•

Energy security

•

Siting

and permitting: avian, noise, visual, federal land

•

Transmission: FERC rules, access, RTO formation, new lines

•

Operational impacts: intermittency, ancillary services, allocation of

costs

Drivers for wind

power

Key issues for

wind power

US wind remains a very attractive market as a result of increased

cost competitiveness and a positive regulatory framework

Very strong regulatory support for wind

energy

•

State level policy mandating the state to generate a percentage of its

electricity from renewable sources

•

The exact details of the policy varies depending on state. Basic

structure involves giving renewable energy source targets to suppliers,

with fines imposed in some cases if targets are not met

Renewables

Portfolio Standard

(RPS)

•

An income tax credit is allowed for the production of electricity from

qualified wind energy facilities and other sources of renewable energy

•

Eur

15/MWh for 10 years; indexed to inflation; locked-in at plant

completion

•

Current legislation expires 31/12/08

Production Tax

Credit Extension

•

Allows investment to be depreciated over five years

•

20-25% of project value

•

Available continuously since 1987

Modified

Accelerated Cost

Recovery System

(MACRS)

Renewable Portfolio Standards are set

by most states

States with RPS

Minnesota

15% by 2015

Hawaii

20% by 2020

Texas

5,880 MW by 2015

New Mexico

10% by 2011

Arizona

15% by 2025

Nevada

20% by 2015

California

20% by 2017

Montana

15% by 2015

Iowa

105 MW

Wisconsin

10% by 2011

Pennsylvania

8% by 2020

Illinois

Voluntary

8% by 2013

Maryland

7.5% by 2019

Delaware

10% by 2019

D.C.

11% by 2022

New Jersey

20% by 2020

Connecticut

7% by 2010

Rhode Island

16% by 2020

New York

24% by 2013

Maine

30% by 2000

Massachusetts

4% by 2009

Washington

15% by 2020

Colorado

20% by 2020

US wind price setting mechanism is

backed by the PTC system and MACRS

After-tax value of wind generation

•

Output typically contracted at Eur

38 –

Eur

45 / MWh

•

The Production Tax Credit (“PTC”) is a per kilowatt-hour

tax credit for wind-generated electricity

•

Current PTC of Eur

15 / MWh

•

Available during the first 10 years of operation and

locked-in at construction date, and adjusted annually for

inflation

•

Current legislation expires on 31 Dec 2008

Contracted price

PTC

Government support is expected to continue to be reflected in

a PTC or PTC-like mechanism and MACRS benefit

MACRS

•

Depreciating asset over five years creates substantial

economic value

Ten key players account for three

quarters of the activity

(1) As at 31 December 2006

(2) Adjusted for 606 MW of contracted capacity provided to PPM by FPL

Source: AWEA

PPM has grown rapidly to be the second largest wind farm

developer in the US

29%

(2)

14%

(2)

27%

FPL

PPM

Energy

Mid

American

Babcock

& Brown

Horizon

Puget

Sound

Energy

Caithness

Shell

AEP

enXco

Other

contracted

owned

% installed capacity

(1)

PPM has a unique pan-US platform …

2007 approved / construction

526 MW

2010 goal

3,500 MW

Operating assets -

owned

1,060 MW

Windiest region

Least windy region

Build to Sell (BTS)

101 MW

Operating assets -

PPA

606 MW

Operating wind projects

Wind projects approved/under construction

Build to Sell (BTS)

Operating assets -

total

1,666 MW

CO Green Windfarm

81 MW Owned

(162 MW Project)

West Region

Mid-Continent

Region

MV III & Phoenix

24 MW Owned

Shiloh

150 MW

Owned

High Winds

162 MW PPA

Klondike II

75 MW Owned

Klondike III

221 MW Owned

Klondike

24 MW Owned

Stateline

300 MW PPA

Big Horn

200 MW Owned

SW Wyoming

144 MW PPA

Twin Buttes

75 MW Owned

Elk River

150 MW Owned

Flying Cloud

44 MW Owned

Trimont

100 MW Owned

MinnDakota

150 MW Owned

Moraine

51 MW Owned

Maple Ridge II

45.4 MW Owned

(91 MW Project)

Maple Ridge Ia

16.5 MW Owned

(33 MW Project)

Maple Ridge I

99 MW Owned

(198 MW Project)

Leaning Juniper

101 MW BTS

Northeast

Region

Casselman

35 MW Owned

Dillon

45 MW Owned

(pending final approvals)

…

and an impressive wind pipeline

Probability of

completion:

PPM’s

criteria

for Tier:

500

1000

1500

2000

2500

3000

3500

4000

4500

Canada

East

Midwest

West

Under Const

100%

•

Board

approvals

received

•

Constructio

n underway

PPM controls a significant 11,200 MW pipeline

Holding

0-10%

•

Projects that

currently have

transmission,

land, permitting

or marketing

concerns or are

awaiting

verification of

wind resource

Tier IV

10-15%

•

Opportunity

under

assessment,

some with

initial land

control

Tier III

25%

•

Full land

control

•

1 yr wind data

Tier II

50%

•

Proven CF

•

Permitting

and TX plan

•

>50%

probability of

2-300bps >

WACC

Tier I

80%

•

PPA sale,

marketing

plan, and/or

permits

•

High

probability of

2-300bps >

WACC

US wind: key economic drivers

Attractive load factor range: 2,600 –

3,500 hrs

Capex

before synergies: 1,500 -

1,700 $/kW

PPM’s

wind business is a leading US developer and operator

O&M before synergies: 25 $/kW pa

Attractive all-in tariff

Strong government support through

Renewable Portfolio Standards

(49GW in newbuild by 2015)

Pipeline: volume and delivery

Agenda

US wind

US energy management

US gas storage

US thermal

US gas storage key messages

Attractive fundamentals in gas storage

PPM has demonstrated track record

Well positioned for continued strong growth and premium

returns

Supply shortfall driving sustained high

gas prices and volatility

•

Continued demand growth

•

Supply lags demand, with

growing imbalance

•

Shortfall met by Canadian

imports and LNG

•

Increasing long-haul gas, with

potential geopolitical risks, drives

high gas prices and volatility

EIA US supply / demand forecast

Total US demand

Domestic production

tcf

Potential for increased summer/winter

spread

NYMEX

Zeebrugge

4.5

6.0

7.5

9.0

10.5

12.0

13.5

NBP

15.0

Eur

North American Gas Storage has

significant barriers to entry

People and pipeline

are key

Business model

•

Traditional business

model offers limited

earnings growth

Construction

•

Limited storage

construction

management expertise

Site availability

•

Scarcity of high-quality

development sites

Permitting

•

Patchwork regulatory

structure (FERC,

regional, state-level in

US)

Technical requirements

•

Limited pool of qualified

geologists, engineers,

etc

Development cycle

•

Long-term development

cycle requires stable

funding source

PPM pursues innovative business model

Business model

•

Asset based service company

•

Key trading locations

•

Offer simple, quality services

Business advantages

•

Minimal credit risk

•

Minimal working capital

•

Service based business

LDCs

Marketers

Pipelines

End Users

Producers

Gas Storage

Hub

Enstor

Services

•

Firm storage

•

Parking and loaning

PPM has grown by 0.3 bcm

p.a.

2001

2002

2003

2004

2005

2006

2007

2008

Enstor Development Acquired

Acquisition of initial

share of Alberta Hub

Acquisition of Katy

Hub

Acquisition of additional share of Alberta Hub

Construction of

Waha started

Acquisition of Grama Ridge

Construction of

Houston Hub

target start

Waha

Phase I

target

completion

Furthermore, there is 0.9 bcm

ongoing development and

construction at Waha (0.3 bcm), Grama Ridge (0.2 bcm) and

Houston Hub (0.4 bcm)

Development of

Houston Hub

started

PPM a market leader in independent

gas storage

•

#3 in North America for

independent storage

•

~10% of independent gas storage

market

•

Independent storage represents

~12% of total gas storage market

Cycled Gas Capacity

Chevron (8.7%)

Carlyle (11.7%)

Total cycled gas capacity 32.3 bcm

PPM (10.4%)

Duke (27.5%)

PPM well placed in expanding market

PPM’s

gas storage operations

have delivered strong profit growth

•

Robust EBITDA growth

•

1.4 bcm

of operating storage

(Eur

188 MM invested capital)

•

Excellent returns

•

Minimal working capital and

credit risk

•

0.9 bcm

under development

•

Further 1.2 bcm

organic growth

and acquisitions planned to

2010

EBIT and EBITDA

(1,2)

7.5

22.5

29.0

50.0

54.0

32.3

25.5

9.0

7.5

15.0

22.5

30.0

37.5

45.0

52.5

60.0

02/03

03/04

04/05

05/06

EBITDA

EBIT

Note:

(1)

Financials

are

based

the

exchange

rate

USD

Eur

0.75

(2) 02/03 and 03/04 under UK GAAP excluding goodwill amortisation; 04/05 and 05/06 under IAS excluding IAS39 and exceptionals

Successful development track record

US gas storage: key economic drivers

Contracted storage

(Reservoir)

1.3 bcm

third party in

operation

New build (Salt Storage)

0.9 bcm

construction /

permitting

Further 1.2 bcm

pipeline

Owned storage

(Reservoir)

1.4 bcm

in operation

US storage highly attractive with recent transaction

multiples up to 600 $/bcm

Revenue –

Low Cycle

: $1.80 –

2.30

O&M costs

: $0.30 -

0.30

EBITDA

: $1.50 –

2.00

Revenue –

Low Cycle

: $1.50 –

2.30

Lease payments

: $0.70 –

0.90

Inventory carry costs

: $0.15 –

0.25

EBITDA

: $0.80 –

1.60

Per MM BTU

Revenue –

High Cycle

: $2.60 –

3.50

Development Cost

: $13.00 –

18.00

EBITDA

: $2.30 –

3.20

Agenda

US wind

US energy management

US gas storage

US thermal

US Energy Management key messages

Provides service to PPM’s

existing asset-based business

Trading, a natural extension of PPM’s

activity, creates

additional value

Delivers market knowledge, skills and system integration

Well positioned for continued strong growth and

premium returns

Energy Management’s role

•

Builds upon PPM’s

existing asset-

based businesses

•

Optimises

value from core assets

•

Minimises

risk by forward

hedging and balancing asset

positions

•

Creates value through expansion

into closely related activities:

•

Portfolio optimisation

•

Storage

•

Transportation / marketing

alliances

•

Demonstrated business model

based on reputation and capabilities

•

Embedded risk management culture

Risk

Management

and Credit

Pricing,

Structuring and

Origination

PPM's Core

Assets

Forward and

Operational

Trading

Storage, Transport

and Marketing

Alliances

Combination of asset management and trading skills

Energy Management delivering strong

profit growth

•

Strong growth in EBITDA

•

Solid base of contracted gas

storage capacity

•

Significant growth potential from

transport contracts and marketing

alliances

•

Expanding PPM’s geographic

footprint across North America

Note : For Energy Management EBIT equates to EBITDA. 02/03 and 03/04 under UK GAAP excluding goodwill amortisation; 04/05 and 05/06

under IAS excluding IAS39 and exceptionals

EBIT and EBITDA

1.5

7.5

15.0

22.5

30.0

03/04

04/05

05/06

9.8

27.8

0.0

Stable and growing trading related earnings

bcm

3rd party

Enstor

(2)

Note:

(1) For years ending 31 March

(2) Contracted from Enstor by Energy Management

•

Strategically located storage

•

Capitalised on low cost

storage in FY04/05

•

1.6 bcm

currently

•

0.3 bcm

from Enstor

•

1.3 bcm

from 3

parties

•

Supportive market fundamentals

•

Further growth targeted

Contract Storage -

a building block for

growth

Contracted storage capacity

(1)

0.3

0.6

0.9

1.2

1.5

1.8

04/05

03/04

05/06

06/07

07/08

outlook

Agenda

US wind

US energy management

US gas storage

US thermal

US thermal generation: fully contracted

through mid-term at robust margins

EBIT and EBITDA

•

Portfolio of generating assets

•

Klamath Cogeneration (506 MW

)

•

Klamath Generation (100 MW)

•

West Valley (200 MW)

•

Klamath plants fully contracted at

robust margins over mid term

•

West Valley leased and operated by

PacifiCorp through June 2008

•

Steady earnings stream

Description

Note:

1. 47% owned

Financials

are

based

the

exchange

rate

USD

Eur

0.75

7.5

15.0

22.5

30.0

37.5

45.0

52.5

60.0

67.5

Eur

EBIT

EBITDA

2003

2004

2005

2006

Growth in renewables

creating increased demand

for dispatchable

resources

PPM Key messages

Leading positions in attractive high growth market

segments in North America

Experienced leadership team with excellent track

record of delivery

Delivering strong returns well ahead of cost of capital

Significant future growth potential with high quality

pipelines in Wind and Gas Storage

Agenda

Appendix

US thermal generation

Operational date

Installed capacity

2001

506 MW

Location

Oregon

Employees

Overview

•

State-of-the-art CCGT owned by the City of

Klamath Falls

•

PPM owns 47% of plant output; sold forward

under mid-term contracts to California utilities

•

PPM is fuel supplier and brokers City’s output

•

Operated by PPM subsidiary Pacific Klamath

Energy

Klamath Cogeneration

Overview

•

Gas turbine peaking facility owned by PPM

•

Operated by Klamath Cogeneration staff

•

Summer and Winter capacity sold forward

under mid-term contracts

•

PPM owns development rights for fully

permitted 550 MW CCGT on adjacent site

100 MW

2002

Oregon

Installed capacity

Operational date

Location

n/a

Employees

Klamath Generation

Growth in renewables creating increased demand for

dispatchable resources

US thermal generation

Operational date

Installed capacity

2002

200 MW

Location

Utah

Overview

•

Gas turbine peaking facility owned by PPM

•

Currently leased to and operated by PacifiCorp,

who has given notice of lease termination

effective June 2008

•

Lease termination may be rescinded by July

2007 or equipment can be re-deployed in

higher value California marketplace

West Valley

Employees

Located in high-demand markets

End of Technical

Session V

ScottishPower

North-American businesses:

PPM

Technical Session VI

ScottishPower

Strategic Fit & Valuation

Considerations

Exhibit 99.11

Legal Note

IMPORTANT INFORMATION

This

communication

does

not

constitute

offer

purchase,

sell

exchange

the

solicitation

offer

purchase,

sell

exchange

any

securities.

The

Iberdrola,

S.A.

may

not

offered

sold

the

United

States

America

except

pursuant

effective

registration

statement

under

the

Securities

Act

pursuant

valid

exemption

from

registration.

FORWARD-LOOKING STATEMENTS

This

communication

contains

forward-looking

information

and

statements

about

Iberdrola,

S.A.

and

otherwise,

including

financial

projections

and

estimates

and

their

underlying

assumptions,

statements

regarding

plans,

objectives

and

expectations

with

respect

future

operations,

capital

expenditures,

synergies,

products

and

services,

and

statements

regarding

future

performance.

Forward-looking

statements

are

statements

that

are

not

historical

facts

and

are

generally

identified

the

words

“expects,”

“anticipates,”

“believes,”

“intends,”

“estimates”

and

similar

expressions.

Although

Iberdrola,

S.A.

believes

that

the

expectations

reflected

such

forward-looking

statements

are

reasonable,

investors

and

holders

Iberdrola,

S.A.

are

cautioned

that

forward-looking

information

and

statements

are

subject

various

risks

and

uncertainties,

many

which

are

difficult

predict

and

generally

beyond

the

control

Iberdrola,

S.A.,

that

could

cause

actual

results

and

developments

differ

materially

from

those

expressed

in,

implied

projected

by,

the

forward-looking

information

and

statements.

These

risks

and

uncertainties

include

those

discussed

identified

the

public

documents

sent

Iberdrola,

S.A.

the

Comisión

Nacional

del

Mercado

Valores.

Forward-looking

statements

are

not

guarantees

future

performance.

They

have

not

been

reviewed

the

auditors

Iberdrola,

S.A.

You

are

cautioned

not

place

undue

reliance

the

forward-looking

statements,

which

speak

only

the

date

they

were

made.

All

subsequent

oral

written

forward-looking

statements

attributable

Iberdrola,

S.A.

any

its

members,

directors,

officers,

employees

any

persons

acting

its

behalf

are

expressly

qualified

their

entirety

the

cautionary

statement

above.

All

forward-looking

statements

included

herein

are

based

information

available

Iberdrola,

S.A.

the

date

hereof.

Except

required

applicable

law,

Iberdrola,

S.A.

does

not

undertake

any

obligation

publicly

update

revise

any

forward-looking

statements,

whether

result

new

information,

future

events

otherwise.

Agenda

Valuation Considerations

Strategic Fit

Conclusions

Synergies & efficiency

Combination with ScottishPower

is creating a leading global utility …

Traditional generation

(MW)

Renewable energies

(3)

(MW)

Total capacity

(MW)

Points of supply (MM)

Production

(2)

(GWh)

124,670

32,524

6,562

39,086

21.9

Note:

(1) Nota

Valores

pro

forma

financials

based

Iberdrola

results

for

12m

ended

Dec

2006

and

ScottishPower

results

for

12m

ended

Sept

2006.

Excludes

synergies

(2) Production for 12 months ended 31 Mar 2007

(3) Renewable energies includes wind power and mini-hydro

(4) Does not include procurement for use in gas fired generation

(5) Capex

based on Iberdrola results for 12 months ended 31 Dec 2006 and ScottishPower results for 12 months ended 30 Sept 2006; rating: S&P

Immediate and significant growth achieved

Gas supply

(4)

(bcm)

4.2

Gas storage

(bcm)

2.8

Key financials (Eur MM)

(Nota de Valores)

(1)

Enlarged Iberdrola

as at 31 Mar 2007

EBITDA

EBIT

Net profit

Revenue

20,232

5,841

3,851

1,969

Rating

A -

Capex

4,277

Other key financials (Eur MM)

(5)

…

with a material contribution from

ScottishPower …

Note:

(1) Nota

Valores

pro

forma

financials

based

Iberdrola

results

for

12m

ended

Dec

2006

and

ScottishPower

results

for

12m

ended

Sept

2006.

Excludes

synergies

(2) Tax effect of depreciation and finance cost adjustments

Key financials (Nota de Valores)

(1)

Pro forma net profit

before synergies

Pro forma EBITDA

before synergies

EUR MM

3,889

1,952

5,841

1,000

3,000

5,000

7,000

Iberdrola

31 Dec 2006

ScottishPower

30 Sep 2006

Enlarged

Iberdrola

Pro forma

1,660

887

373

488

283

1,969

500

1,000

1,500

2,000

2,500

3,000

Major global presence …

…

and balanced exposure to liberalised and regulated businesses

Pro forma EBITDA

(1)

USA

57%

29%

11%

LatAm

Spain

48%

Others

32%

Regulated

OECD

businesses

11%

LatAm

businesses

Liberalised

OECD

businesses

Enlarged Iberdrola

…

and with uniquely diverse geographic

and business exposure …

By region

By business

Key markets

Note:

(1) Nota de Valores

pro forma EBITDA based on Iberdrola results for 12m ended 31 Dec 2006 and ScottishPower results for 12m ended 30 Sept 2006. Excludes synergies

Installed capacity (MW)

Significant growth opportunities …

…

with unrivalled scale and expertise

•

Leading expertise in site selection,

procurement, construction and

marketing

•

Significant scale benefits

–

turbine procurement

–

specialist skills

•

Unparalleled pipeline for future

development

•

Increased diversification of wind

portfolio reducing risk

•

Strong US demand driven by

Renewable Portfolio Standards

2,443

4,163

6,562

…

an extended lead in renewables …

2,010

Note:

(1) Iberdrola and ScottishPower installed capacity as at 31 Mar 2007

(2) FPL as at 31 Mar 2007, Acciona

as at 31 Dec 2006 (source: company websites/presentations)

Enlarged

Iberdrola

4,552

…

and scale to compete with peers

Iberdrola emerges as a leading European utility player

EBITDA

Net Profit

Production (GWh)

(1)

IBE

(1)

124,670

Renewables capacity (MW)

6,562

Total capacity (MW)

39,086

Electricity customers (MM)

21.9

RWE

330,000

1,374

43,434

19.9

7,861

2,509

Enel

131,000

964

50,776

32.4

8,019

3,036

Source:

E.ON

2006

Annual

Report,

E.ON

Strategy

and

Key

Figures

2006,

EDF

2005

Annual

Report,

EDF

2006

Results

Presentation,

Enel

2006

Annual

Report,

Enel

2006

Results

Presentation,

Enel

2005

Environmental

Report,

RWE

2006

Annual

Report

Note:

(1)

Operational

data

March

2007;

EBITDA,

net

profit

and

net

debt

from

pro

forma

financial

information

included

the

Nota

Valores,

which

exclude

synergies

(2)

Based

prices

April

2007

and

last

reported

balance

sheet

figures

Financials, Eur MM

EDF

640,000

596

130,776

40.2

13,930

4,227

E.ON

230,300

435

53,542

28.6

11,353

4,386

Enterprise Value

(2)

5,841

1,969

70,735

39,697

64,121

130,198

77,973

Iberdrola / SPW

Gas Natural / Endesa

EON / Endesa

Gaz

de France / Suez

5 mo.

COMPLETED

•

Potential acquisition of asset

portfolio 18 mo. after initial bid

•

Withdrawal from process 17 mo.

after initial bid

Enel-Acciona

/ Endesa

•

Outcome not yet predictable

•

Potential acquisition 11 mo. after

Acciona’s

10% share purchase

> 18 mo.

17 mo.

18 mo.

(2)

11 mo.

(1)

FPL / Constellation

•

Cancelled

10 mo.

Exelon / PSEG

•

Cancelled

> 21 mo.

Note:

(1) Assumes start of transaction with stake purchase by Acciona

and closing of acquisition at the beginning of September 2007

(2) Assumes that asset sale to Endesa takes place in the beginning of September 2007

Source: Company press releases, Mergermarket

…

becoming the only major acquisition in the last 18 months

completed according to announced timetable

The transaction was successfully

completed in record time …

30.00

31.00

32.00

33.00

34.00

35.00

36.00

37.00

38.00

39.00

27-Nov-06

18-Dec-06

08-Jan-07

29-Jan-07

19-Feb-07

12-Mar-07

02-Apr-07

23-Apr-07

27 Nov

Dec

Jan

Feb

Mar

Apr

23 April

29,526

33,682

+ €4,156MM

334

-288

334

2,001

1,776

Value

creation

(Eur

MM)

(from 27

Nov 06)

Share price

performance

(from 27

Nov 06)

27 Nov

Dec

Jan

Feb

Mar

Apr

23 April

16,144

17,607

+ €

137

222

147

648

309

1,462MM

Source: Datastream

Eur

GBp

Iberdrola

ScottishPower

700

720

740

760

780

800

820

840

860

880

Iberdrola

14.1%

SPW

9.1%

…

and is creating value for shareholders …

680

Iberdrola-ScottishPower: a combination aligned with the

principles of Iberdrola’s

Strategic Plan

Accelerates projected growth

Diversifies risk

Provides new business opportunities

Creates one of the largest electrical power companies

in the world

Increases net profit whilst maintaining

financial stability

…

all of which is in line with the

2007-2009 Strategic Plan

The combination of Iberdrola and ScottishPower

leverages the strengths of the individual companies

Enlarged Iberdrola is well positioned

for new business opportunities

Opportunity to optimise

LNG trading and gas

procurement contracts

Other

Wind

Generation

Wind

Gas

storage

Supply

Gas

Ability to apply experience in managing liberalised

supply businesses to other markets

Strong gas storage pipeline in the US

Growth potential of US renewables based on

experience / pipeline of both companies

Identified opportunities: CCGT, FGD and Biomass

Possible UK nuclear programme

Growth potential of UK renewables pipeline

Well positioned for further global M&A opportunities

M&A

Agenda

Valuation Considerations

Strategic Fit

Conclusions

Synergies & efficiency

ScottishPower’s standalone SOTP

valuation –

pre-announcement

Source:

Selected

broker

research

(May

–

November

2006)

Note:

(1) Determined as average of selected broker estimates

(2) Total shares outstanding used 1,489 MM, net debt of GBP 2,284 MM as at Sep 2006, exchange rate GBP 1:Eur 1.4738

Generation

Supply

PPM

T&D

Others

Enterprise

Value

Net Debt

(2)

Equity

Value

227p

297p

57p

106p

114p

184p

222p

249p

34p

623p

870p

470p

717p

(153)p

~ 600p

Broker estimates

(1)

High

Low

Broker estimate

range (GBp

per

share)

•

Increase the value of residential customers to Eur 502 per account

•

Value supported by transaction multiples up to value per customer of Eur 472

(Yorkshire Electricity purchase by Innogy)

•

Recognition of circa 2 GW of PPM pipeline wind projects (operational by 2010)...

•

…with US wind business’

pipeline to 2010 valued at Eur 1,101MM (equivalent to

Eur 300/kW)

•

A 30% premium is applied to RAB for the UK T&D assets based on current

transactions…

•

…with LBO valuation at a possible 1.3x exit multiple to March 2007 RAB,

equivalent to Eur 5,830 MM

Recognition of improving G&S fundamentals,

attractive US pipeline and increasing T&D premia

contributed to upgraded valuations

Supply

Renewables

T&D

Traditional

Generation

•

Longannet

to be valued in line with Drax, after deducting Eur 207 MM capex not

yet spent on FGD, reflecting wider dark spreads

•

Reflecting spark spreads and asset multiples, CCGT to be valued up to Eur

871/kW

Post-announcement changes to brokers’

views on ScottishPower’s valuation …

Source: Selected broker research (November 2006)

Specific comments from analysts post announcement

…

has led to higher post-announcement

brokers’

standalone SOTPs

…

230p

297p

99p

115p

138p

235p

224p

277p

(9)p

19p

682p

943p

529p

790p

(153)p

High

Low

Broker estimate

range (GBp

per

share)

Generation

Supply

PPM

T&D

Others

Enterprise

Value

Net Debt

(2)

Equity

Value

Broker estimates

(1)

~ 700p

Source: Selected broker research (November 2006)

Note:

(1) Determined as average of selected broker estimates

(2) Total shares outstanding used 1,489 MM, net debt of GBP 2,284 MM as at Sep 2006, exchange rate GBP 1:Eur 1.4738

•

ScottishPower’s industry-leading trading capabilities are not

specifically recognised, including significant ancillary services

revenue and recurring UK balancing market revenues (Eur

60 MM per

year in the UK)

•

Value not specifically allocated to certain ScottishPower businesses

including UK CHP, UK gas storage assets, contracts, metering and

connections, SME energy supply and Industrial/Commercial energy

supply

…

in addition to synergy value and tax benefits

Other

…

and some themes require further

explanation

Trading

Significant further standalone value to be recognised …

•

Value is not being ascribed to the majority of PPM’s

10,700 MW and

the UK’s 4,400 MW wind pipelines despite recent impressive track

record

Renewables

pipeline

•

Significant pipeline (planned investments of over Eur 500 MM to 2010,

with attractive returns targeting WACC + 300bp) not fully recognised

US gas storage

asset/contracts

Energy contract

portfolio

•

Value is often still not specifically allocated to ScottishPower’s in-the-

money energy contracts whilst valuing the assets on a merchant basis

Supply

•

Supply margin adjusting to falling wholesale prices

•

Value creation through integration with generation and trading

Significant value from this activity

Renewables

•

Highly attractive UK regulatory environment

•

Pipeline: significant growth requirement for UK wind

•

Unique synergies with Iberdrola’s

existing global wind business

Benefits of global scale and large pipeline

T&D

•

Cost reduction opportunity due to ScottishPower’s cost position

•

Very significant current market multiples

•

Attractive regulatory returns

Well understood and low-risk

Combination of low risk, visible cash flows with high

growth and upside opportunities

Generation

•

Gas price and spark/dark spread evolution

•

Declining reserve margin leading to new capacity pricing

Attractive market economics driven by new build requirement

Potential approach to fundamental DCF

valuation –

summary

UK generation: DCF parameters

Load factors

Captured load-to-

baseload premium

Clean dark and spark

spreads

Attractive returns in UK generation supported by tightening

supply and demand balance

Baseload price

Ancillary services

Note: (1) For 2008 contract, sourced from Heren; (2) Sourced from Platts; (3) Based on modern CCGT plant with thermal efficiency of 53% (LHV);

(4) DTI

Coal (FGD)

: 45 -

50 %

CCGT

: 55 -

65 %

Hydro

: 30 %

Spot

: 18.6 £/MWh

Forward

: 36.9 £/MWh

(1)

Coal

: 11.9 £/MWh

(3)

CCGT

: 6.1 £/MWh

(3)

Newbuild

: 10.0 £/MWh

(3)

UK peak-to-baseload premium

: ~

30%

(2)

Recurring revenue

: £

20 –

40 MM pa

and balancing market flexibility

O&M costs

Coal (FGD)

: 25 £/kW pa

(4)

CCGT

: 7 £/kW pa

(4)

UK supply: DCF parameters

Customer breakdown

Recently improving margins in UK supply are supported by

levelling off of wholesale power and gas prices

EBIT margins

Electricity residential

: 3.2 MM

Gas residential

: 1.9 MM

Other

: 0.2 MM

(1)

Total customers today

: 5.4 MM

(2)

Note: (1) Industrial and commercial and small business; (2) Electricity and gas; (3) Average of Direct Debit and Standard, sourced from Energywatch; (4) Ofgem; (5)

Datamonitor; (6) Market consensus

Long run average

: 5 -

(6)

Energy use per customer

Gas (average)

: 600 –

700 thm pa

Electricity (average)

: 4,500 –

5,000 kWh pa

Average bill per

customer

Gas (average)

: £590 pa

(3)

Electricity (average)

: £374 pa

(3)

Other costs

Cost-to-serve

: 21 £/cust. pa

(5)

Energy purchase cost

(market)

UK spot wholesale gas

: 16.2p / thm

UK spot wholesale electricity

: 1.9p / kWh

External costs as % of revenue

: gas 26%, elec. 30%

(4)

UK T&D: DCF parameters

The regulator has set reasonable returns in UK T&D to create

incentive for the necessary investments

REGULATION

Eur

500 MM

Eur

208 MM

Eur

150 MM

Eur

138 MM

6.9%

This is fixed subject to

incentives

Beat the opex

target

Beat the capex

target

Increased realised return

Allowed revenue

Allowed opex

Allowed capex

/ dep

Allowed return

(pre tax)

RAB

Eur

2,000MM

Example (5 year)

UK wind: DCF parameters

High load factors

Attractive economic

incentives

Stable regulatory framework

Potential returns in the UK are more attractive than those

available in several other wind markets in Europe

Opex

Capex

Pipeline

Average load factor

: 2,300 –

2,800 hrs

Current revenue

: 85 £/MWh

Opex before synergies

: 40 -

50 £/kW pa

Capex before synergies

: 1,000 -

1,200 £/kW

Construction

: 474 MW

In planning

: 772 MW

Pre-planning and feasibility

: 3,628 MW

US wind: DCF parameters

Attractive all-in tariff

Strong government

support

Attractive load factor

range

Opex

Capex

Pipeline

Renewable Portfolio Standards

: 49GW build by 2015

Opex before synergies

: 25 $/kW pa

Capex

before synergies

: 1,500 -

1,700 $/kW

Construction

: 526 MW

Target by 2010

: 3,500 MW

Pre-planning and feasibility

: 7,700 MW

Load factor range

: 2,600 –

3,500 hrs

Tariff

: 68 –

77 $ / MWh

Plus accelerated depreciation benefit

PPM’s

wind business is a leading US developer and operator

US storage highly attractive with recent transaction

multiples up to 600 $/bcm

US gas storage: DCF parameters

Contracted storage

(Reservoir)

1.3 bcm

third party in

operation

New build (Salt Storage)

0.9 bcm

construction /

permitting

Further 1.2 bcm

pipeline

Owned storage

(Reservoir)

1.4 bcm

in operation

Revenue –

Low Cycle

: $1.80 –

2.30

O&M costs

: $0.30 -

0.30

EBITDA

: $1.50 –

2.00

Revenue –

Low Cycle

: $1.50 –

2.30

Lease payments

: $0.70 –

0.90

Inventory carry costs

: $0.15 –

0.25

EBITDA

: $0.80 –

1.60

Per MM BTU

Revenue –

High Cycle

: $2.60 –

3.50

Development Cost

: $13.00 –

18.00

EBITDA

: $2.30 –

3.20

Note

(1) Broker estimates for asset values

Observable benchmark provided by

asset transaction multiples …

UK conventional

generation

UK T&D

US gas storage

UK supply

6,036 MW

Eur 4,499MM

(Mar 07 RAB)

4.8 bcm

5.1 MM cust.

779–

1,002 (Eur/kW)

1.25x–

1.30x (Eur/RAB)

164 –

301 (Eur/bcm)

480 –

502 (Eur/cust.)

US conventional

generation

538 MW

424 –

525 (Eur/kW)

Transaction asset

multiple range

(1)

Wind pipeline

15,108 MW

74 –

221 (Eur/kW)

•

Weighted average asset multiple

•

RAB of transmission and distribution

(average of broker estimates)

•

Includes pipeline and storage under

management

•

Residential electricity and gas customers

•

PPM’s

thermal generation business

Comment

•

4,400 MW for UK and 10,708 MW for US

Other

•

Value of Energy contracts, UK gas

storage, Metering & connections, SME

and I&C energy supply

UK wind

818 MW

1,827 –

2,220 (Eur/kW)

•

Operational and under construction

US wind

2,158 MW

807 –

1,098 (Eur/kW)

•

Operational and under construction

…

and if applied to ScottishPower’s

assets implies 724 –

1007p value

range

Net debt

Equity

Value

1,007p

conv. gen.

276p

214p

supply

117p

112p

T&D

276p

252p

other

79p

46p

Wind

pipeline

152p

51p

Enterprise

Value

1,161p

878p

724p

(153)p

Reflects further upside potential in wind pipeline

and PPM storage

Other

71p

83p

68p

wind

108p

79p

55p

Note: Total shares outstanding used 1,489MM, net debt of GBP 2,284 MM as at 30 Sep 2006, exchange rate used GBP 1: Eur 1.4738

Midpoint of range

~ 850p

Agenda

Valuation Considerations

Strategic Fit

Conclusions

Synergies & efficiency

Opex

synergies

Yr 1

Eur

40 MM

Yr 2

Eur

90 MM

Yr 3+

Eur

130 MM

Capex savings

in near term

Additional

synergies not

quantified

Annual Savings

(Eur MM)

31 p.a.

•

Corporate centre –

efficiency improvement

•

Total 5 year savings from wind/CCGT

•

Recurring annual distribution/supply savings

•

Option of new nuclear plant / LNG entrance

•

Loss reduction in supply business contracts

•

Efficiency in generation and processes

Dedicated integration team already working towards on-

schedule delivery of targets

5 p.a.

67 p.a.

130 p.a.

27 p.a.

192 total

6 p.a.

•

Shared services –

optimisation, IT, purchasing

•

Wind US –

efficiency improvement

•

Generation/Supply –

procurement/efficiency

Total < 5% combined group expense

Synergies identified across a range

of functions

MW/employee (home market)

GWh distribution/employee (home market)

SPW

0.7

Portugal

1.3

Rest of

Spain

1.9

Iberdrola

+ SPW

3.2

0.8

France

0.9

Italy

1.0

Germany

0.6

1.8

Iberdrola

Rest of

Spain

Iberdrola

+ SPW

4.3

6.7

8.2

12.2

4.4

4.8

5.5

4.0

8.2

SPW

Portugal

France

Italy

Germany

Iberdrola

Significant opportunity to share best

practice and extract synergies

Agenda

Valuation Considerations

Strategic Fit

Conclusions

Synergies & efficiency

Conclusions

Transaction creates global leader in utilities sector

Shareholder value significantly increased through

transaction structure

Group well positioned for further development in core

markets

Pre-eminent example of non-organic growth in utility

markets

Significant synergies and opportunity for exchange of

best practice

New group Strategic Plan in Q4 to reflect full

combination potential

End of Technical

Session VI

ScottishPower

Strategic Fit & Valuation

Considerations

Exhibit 99.12

ANNEX EXPLAINING SIGNIFICANT FACTS OR EVENTS

E - 3. Other significant increases or reductions of fixed assets (holdings of over 10% in unlisted companies, significant investments or divestments of fixed assets, etc).

Increase in the share capital of the company KORINTHOS POWER, S.A. Following this operation the direct interest of IBERDROLA S.A. in the aforementioned company remains unchanged.

Ancillary contribution (“prestación accesoria”) in IBERDROLA PORTUGAL ELECTRICIDAD E GAS, S.A. (100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company remains unchanged.

Establishment, by TELTRONIC, (50% owned by CORPORACION IBV, PARTICIPACIONES EMPRESARIALES, S.A. and IBERDROLA, S.A.) of 100% of the company TELTRONIC REDES Y SERVICIOS, with the indirect interest of IBERDROLA S.A. in the aforementioned company remaining at 50%.

Acquisition of IBERDROLA ENERGIA, S.A., by IBERDROLA INMOBILIARIA, S.A. (100% owned by IBERDROLA, S.A.) of 100% of the company DESARROLLOS INMOBILIARIOS LAGUNA DEL MAR, S.A. de C.V., with the indirect interest of IBERDROLA, S.A. in the aforementioned company remaining at 100%.

Acquisition, by IBERDROLA, S.A., of 4.21% of shares in the company MEDGAZ. Following this operation the direct interest of IBERDROLA, S.A. in the aforementioned company is 20%.

Increase in the share capital of the Italian company IBERDROLA ENERGIE RINNOVABILI, SPA (100% owned by IBERDROLA ENERGÍA RENOVABLES S.A., in turn 100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company remains unchanged.

Increase in the share capital of the American company IBERDROLA RENEWABLE ENERGIES USA LIMITED (100% owned by IBERDROLA ENERGÍA RENOVABLES S.A., in turn 100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company remains unchanged.

Increase in the share capital of the Brazilian company ENERBRASIL (100% owned by IBERDROLA ENERGÍA RENOVABLES S.A., in turn 100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company remains unchanged.

Acquisition, by IBERDROLA ENERGÍA RENOVABLES, S.A. (100% owned by IBERDROLA, S.A), of the Hungarian company MAGELLAN INVESTMENT VAGYONKEZELO, KFT, whereby the indirect interest of IBERDROLA in the aforementioned company is 100%.

Increase in the share capital of the company ENERGIAS EOLICAS DE CUENCA, S.A. (62.5% owned by IBERDROLA ENERGÍA RENOVABLES DE CASTILLA-LA MANCHA, S.A., owned 100% by IBERDROLA ENERGÍA RENOVABLES, S.A., in turn 100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company remains unchanged.

Acquisition, by IBERDROLA ENERGÍA RENOVABLES, S.A. (100% owned by IBERDROLA, S.A), of 10% of the company BIOVENT HOLDING. Following this operation the direct interest of IBERDROLA, S.A. in the aforementioned company is 95%.

Increase in the share capital of VILLARDEFRADES EOLICAS, S.L. (80% owned by BIOVENT HOLDING., in turn 95% owned by IBERDROLA ENERGIA RENOVABLES, S.A., 100% owned by IBERDROLA, S.A.), subscribed by BIOVENT HOLDING. Following this operation the direct interest of IBERDROLA, S.A. in the aforementioned company is 76%.

Acquisition by BIOVENT HOLDING (95% owned by IBERDROLA ENERGIA RENOVABLES, S.A., in turn 100% owned by IBERDROLA, S.A.), of 40% of the company ENERGIA GLOBAL CASTELLANA, S.A., whereby BIOVENT HOLDING holds 100% of this company and the indirect interest of IBERDROLA is 95%.

Increase in share capital of the company PARQUES EOLICOS LOS COLLADOS, S.L., 100% owned by VILLARDEFRADES EOLICAS, S.L. (80% owned by BIOVENT HOLDING., in turn 95% owned by IBERDROLA ENERGIA RENOVABLES, S.A., 100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company is 76%.

Increase in share capital of the company PARQUES EOLICOS FUENTE SALADA, S.L., 100% owned by VILLARDEFRADES EOLICAS, S.L. (80% owned by BIOVENT HOLDING., in turn 95% owned by IBERDROLA ENERGIA RENOVABLES, S.A., 100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company is 76%.

Increase in share capital of the company PARQUES EOLICOS CRUZ DEL CARRUTERO, S.L., 80% owned by VILLARDEFRADES EOLICAS, S.L. (80% owned by BIOVENT HOLDING., in turn 95% owned by IBERDROLA ENERGIA RENOVABLES, S.A., 100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company is 60.80%.

Acquisition by IBERDROLA ENERGIAS RENOVAVEIS, S.A. (100% owned by IBERDROLA ENERGÍA RENOVABLES, S.A. in turn 100% owned by IBERDROLA, S.A.), of 100% of the Portuguese company EONERGI ENERGIA EOLICA, S.A., whereby the indirect interest of IBERDROLA S.A. in the aforementioned company is 100%.

Acquisition, by PERFECT WIND, owned 100% by the French company IBERDROLA ENERGIA RENOUVELABLES, SAS (100% owned by IBERDROLA ENERGÍA RENOVABLES, S.A., in turn 100% owned by IBERDROLA, S.A.), of 100% of the company SDEVEF, SAS, whereby the indirect interest of IBERDROLA S.A. in the aforementioned company is 100%.

Establishment, by IBERDROLA ENERGIAS RRENOVABLES DE CASTILLA-LA MANCHA (100% owned by IBERDROLA ENERGIA RENOVABLES, S.A., in turn 100% owned by IBERDROLA, S.A.), of 90% of the company IBERDROLA ENERGIA SOLAR DE PUERTOLLANO, S.A., whereby the indirect interest of IBERDROLA S.A. in the aforementioned company is 90%.

Acquisition, by IBERDROLA ENERGIAS RENOVABLES, SAU (100% owned by IBERDROLA, S.A.), of 2.8% of the company ROKAS S.A., whereby the indirect interest of IBERDROLA, S.A. in the aforementioned company increases from 49.9% to 52.7%.

Acquisition, by PERFECT WIND, owned 100% by the French company IBERDROLA ENERGIA RENOUVELABLES, SAS (100% owned by IBERDROLA ENERGÍA RENOVABLES, SAU, in turn 100% owned by IBERDROLA, S.A.), of 100% of the company PELESTE, SAS, whereby the indirect interest of IBERDROLA S.A. in the aforementioned company is 100%.

Increase in the share capital of the Estonian company OUSAÜHING RAISNER (80% owned by IBERDROLA ENERGÍA RENOVABLES S.A., in turn 100% owned by IBERDROLA, S.A.). Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company remains unchanged.

Establishment, by IBERDROLA ENERGIA, S.A., (100% owned by IBERDROLA, S.A.), of the company DESARROLLOS INMOBILIARIOS LAGUNA DEL MAR, S.A. DE C.V., with a holding of 100%. Following this operation the indirect interest of IBERDROLA, S.A. in the aforementioned company is 100%.

E - 5. Issues, redemptions or cancellations of debentures and notes.


ISSUE	DATE	REDEMPTION DATE	NOMINAL AMOUNT REDEEMED (€)
IB I. May 57	31.05.57	02.01.07	82,337.00	(R)
IB I. Apr 58	20.04.58	02.01.07	92,554.00	(D)

(D): Draw.

(R): Remainder.

E - 9 Changes in the institutional regulation of the sector that significantly affect the economic or financial situation of the Company or Group

Up to 31 March 2007 the following regulations have been published which could be of some relevance to activity in the electricity and gas sector:

ELECTRICITY INDUSTRY

•

ORDER ITC/400/2007, of 26 February, regulating the bilateral contracts between distribution companies for tariff supplies within the peninsula.

The purpose of this Order is to regulate the bilateral contracting of electricity with physical delivery by the companies responsible for tariff supplies within the peninsula.

The Order will apply to the purchase of electricity by the distribution companies (in future, from the last-resort retailers.).

Contracts may be signed with the distribution companies by the following market operators who will act as sellers: electricity producers, both ordinary and special regime, retailers, external agents, consumers acting directly in the market, and their respective representatives.

The energy to be supplied by each seller will be assigned by an auction process in which, starting from an amount of energy to be supplied for the distribution companies as a whole and from an initial price, the price will be progressively lowered until a balance is reached between energy supply and demand.

Once the results are published, and before 72 hours have elapsed, sellers and distribution companies will be obliged to formalise their commitments by signing bilateral contracts undertaking the obligation of physical delivery in their corresponding amounts.

•

ORDER ITC 446/2007, of 27 February, regulating grants for autochthonous coal transport between coalfields for the years 2006 and 2007.

The purpose of the grants is to compensate for the cost of transporting between coalfields. These grants may be applied for by electricity companies that transport during the years 2006 and 2007 the maximum quantities set out in this Order.

•

ORDER ITC 447/2007, of 27 February, regulating the grants for financing power-station coal stocks in excess of the necessary amounts to cover seven hundred and twenty hours’ operation for the years 2006 and 2007.

The purpose of the grants regulated under this order is to compensate for the financing of power-station coal stores (anthracite, soft coal and lignites) in excess of the necessary amounts to cover seven hundred and twenty hours’ full-load operation and wastage.

•

ORDER ITC 843/2007, of 28 March, modifying ORDER ITC/4112/2005, of 30 December, stipulating the applicable regime for intra-community and international electricity exchange.

This Order regulates the management mechanism of the Spain-Portugal connection. The mechanism consists of two complementary processes: one is based on the assignation of physical rights of capacity by means of explicit auctions at different times, and the other, short-term process is based on a “market separation” mechanism, known in the

literature as “market splitting”, managed by the Iberian Energy Market Operator and, formerly, by the Iberian Energy Market-Spanish Pole Operator.

A similar adaptation is made in the management mechanism of the Spain-France connection whereas the current system for managing the connection between Spain and Morocco is maintained, now coming under specific consideration.

•

Royal Decree 47/2007, of 19 January, approving the basic Procedure for energy-efficiency certification of new construction.

The purpose of the basic Procedure for certifying the energy efficiency of buildings is to determine the method of calculating the energy efficiency classification, with which the certification process commences, taking into consideration the factors that most affect the energy consumption in newly -built buildings or those undergoing a certain degree of alteration or refurbishing; to establish the technical and administrative conditions for the energy efficiency certification of the projects and the finished buildings; and to approve a nationwide logo called the energy efficiency label.

The aim of approving this basic Procedure is to promote energy efficiency by providing objective mandatory information to buyers and users in relation to the energy characteristics of buildings, in the form of an energy efficiency certificate that serves to appraise and compare the different features.

GAS INDUSTRY

No regulations have been published that are of any relevance to gas industry.

Exhibit 99.13

LOGO

COMISIÓN NACIONAL DEL MERCADO DE VALORES

Mr. Rodrigo Buenaventura

Market Area Director

P^ode la Castellana n^o 19

28046 Madrid

Bilbao, April 26 2007

COMISIÓN NACIONAL DEL MERCADO DE VALORES – Other communications

Dear Sir,

On April 18, 2007, IBERDROLA, S.A. (hereinafter “Iberdrola”) reported to that Commission, through a communication filed with registry number 23250, that, as a consequence of the increase of its stake in the share capital of MEDGAZ, S.A. (“Medgaz”) by 8% (hereinafter, the “Acquisition”) the COMISIÓN NACIONAL DE ENERGÍA (hereinafter the “CNE”) had filed three requests to Iberdrola in order for this to apply for the granting of the authorisation of the Acquisition before the CNE, in accordance with the Additional Provision eleventh, Third 1, function fourteenth of the Hidrocarbures Sector Law according to the drafting given to the same by the Royal Law Decree 4/2006, February 24^th, by virtue of which the functions of the CNE have been modified (hereinafter “Function 14”), conditioning the effectiveness of the Acquisition to the granting of the aforementioned authorisation. In said communication Iberdrola further reported that the CNE has ordered to initiate an administrative sanctioning proceeding based on the failure to comply with Function 14.

In this respect, Iberdrola hereby informs that, on April 24, 2007, it has had access to the proposal of resolution prepared by the Board of the CNE within the sanctioning proceeding referred to above, in which, for the first time, a mention is made to the reasons for which the CNE considers that the Acquisition is subject to Function 14, as, in its opinion, said Acquisition grants to Iberdrola a “significant influence” in Medgaz.

In this regard, once the CNE has made explicit the reasons for its position, and despite the discrepancy with the same, Iberdrola has considered appropriate to request from the CNE, with subsidiary character, the granting of said administrative authorisation for the case where, notwithstanding the assertions of Iberdrola, the CNE still considers compulsory its granting for the validity of the Acquisition.

IMPORTANT INFORMATION

This communication does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities. The shares of IBERDROLA S.A. may not be offered or sold in the United States except pursuant to an effective registration statement under the Securities Act or pursuant to a valid exemption from registration.