IBERDROLA will once again offer its shareholders the opportunity to obtain bonus shares with no withholding tax under its new Iberdrola Flexible Dividend remuneration scheme. The scheme was first launched on payment of the dividend against 2009 results, and returns on the occasion of payment of the interim dividend for this year.

The company will issue a maximum of 149,496,000 new shares(*) as part of the second planned capital increase to finance this remuneration system. Trading in the new shares will start on 27 December.

Iberdrola Flexible Dividend will enable the company’s shareholders to opt either for bonus shares in IBERDROLA or an equivalent amount in cash.

Shareholders opting for bonus shares will receive the new shares without paying any withholding tax. The number of free allocation rights required to receive a new share has been set at 36.

If they opt for a cash payment, the shareholders can sell the rights to IBERDROLA at a guaranteed gross fixed price of €0.146 per right, subject to a withholding tax of 19%.

The calculations are based on the weighted average share price of €5.413 in the trading sessions from 24 to 30 November. This valuation means that the 2010 interim dividend is 2.1% higher than that distributed against 2009 results on 30 December last year (€0.143 per share).

Another option available to IBERDROLA shareholders is to sell their rights on the market with no withholding tax and no guaranteed price.

The company has been committed to serving its shareholders and the financial community as a whole ever since its foundation 110 years ago.

The IBERDROLA Group has undergone a wide-ranging transformation over the last ten years, which has enabled it to become the number one Spanish energy group, the world leader in wind energy, and one of the five main players in the global power market in terms of market capitalisation.

IMPORTANT INFORMATION

This release does not constitute an offer to sell securities in the US or in any other jurisdiction. 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.