In the context of the ScottishPower operation, completed successfully on April 23.

IBERDROLA CARRIES OUT A SECOND CAPITAL INCREASE, OF €424 MILLION

• The Company has issued 12,9 million new shares to beneficiaries of ScottishPower share purchase schemes and holders of bonds convertible into shares in the Scottish company
   
• These new IBERDROLA shares, whose issue was approved at the AGM on March 29, will commence trading tomorrow on the Spanish continous market

IBERDROLA today increased its share capital by 12,945,379 new shares, equivalent to €423.96 million, which are expected to commence trading on the Spanish continuous market tomorrow 11 May with the IBE.SM symbol.

This capital increase, which follows the 245,225,982 new IBERDROLA shares issued on April 23, is also in the context of the ScottishPower operation and is intended to fulfil share purchase plans in ScottishPower stock and holders of bonds convertible into shares in the company.

The new shares have a nominal value of  €3 and a paid-in surplus of €29.75, and represent 1,1% of the Company’s new share capital which now amounts to 1,159,720,542 shares.

IBERDROLA expects to carry out a third capital increase on June 28, also earmarked for share scheme beneficiaries and convertible bond holders.

The respective capital increases are being carried out in the context of the ScottishPower operation, and have a ceiling of 263,377,412 new shares as approved by the AGME on March 29 in Bilbao.

The friendly transaction between IBERDROLA and ScottishPower, valued at €17.1 billion and announced in November 2006, is a milestone in the 100-year history of the Company. A world energy leader is created, leader in renewable energy and an enterprise value of more than €70 billion.

In line with strategy for the period 2007-09, announced by IBERDROLA last October, the operation is expected to accelerate projected growth and offer new long-term business opportunities, while diversifying risk and conserving financial strength, thereby generating more value for shareholders.

One of the largest transactions in Spanish corporate history, the operation was massively supported by shareholders of both companies – 99.5% at the IBERDROLA shareholders meeting and 97.6% at the ScottishPower EGM - and was also well received by the markets, where the two companies generated more than €4 billion in share value between 27 November 2006 and 23 April.

The geographical footprint of IBERDROLA and ScottishPower is now of significant proportions, creating an Atlantic energy 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.

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.

IBERDROLA and ScottishPower will also reinforce the group’s world leadership in renewables, especially in wind power. Added to IBERDROLA’S more than 4,500 MW, is more than 2,000 MW from ScottishPower, mostly from its PPM subsidiary in the United States, for a total of 6,562 MW, an increase of 44%.

IBERDROLA and ScottishPower also have a project pipeline in renewables of 37,675 MW: approximately 6,000 MW is in Spain and a similar amount in the UK, nearly 5,400 MW is 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 of ScottishPower adding to the 18.4 million of IBERDROLA to total 21.8 million in Europe and the Americas, an increase of 18%.

At present, the Group 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 means a strengthening of their commitment to shareholders, customers, employees and communities where they do business. This is the product of the powerful platform the two companies have created: a leader in renewable energy, a balanced generation mix, low external dependence and financial strength.