IBERDROLA shareholders who sign up for the company's third Dividend Reinvestment Plan (DRP), announced on 6th June, will pay €40.74 for each share, a price vetted by the Bilbao Stock Exchange board.

As the company announced, this purchase price was based on the average weighted share price on the five trading days prior to today’s dividend payment, i.e. 25th-29th June, after deduction of the gross dividend amount.

Through the Bilbao Bizkaia Kutxa (BBK) bank, the company today paid the supplementary dividend against 2006 earnings, amounting to €0.593 gross per share (€0.48626 net, after the 15% tax withholding).

The dividend payment was determined at the IBERDROLA GSM held on 29th March in Bilbao. On 2nd January the company had already paid an interim 2006 dividend of €0.45 gross per share.

Thus the total dividend paid against 2006 earnings comes to €1.06 per share –a dividend of €1.04 plus a premium of €0.02 for attending the GSM. This represents a 20.1% increase over the dividend paid on 2005 earnings, and exceeds the €1.00/share target established in the strategic plan.

The number of shares IBERDROLA will issue in the next few days to each shareholder taking part in the DRP (net dividend divided by purchase price) will be rounded down to a whole number of shares, and any remainder will be paid to the shareholder’s cash account.

The idea behind the plan is to furnish shareholders with a convenient and simple alternative for enlarging their holdings of IBERDROLA shares. The company’s solid business performance and the high dividend yield make this an appealing option for savers.

The two earlier dividend reinvestment plans, in June and November of 2006, were both stunning successes. More than 22,000 shareholders, representing 7% of total equity, took part.

One of the more attractive features of IBERDROLA’s DRP is that purchasing additional shares does not entail any commissions or fees, since these costs are paid entirely by the company.

Given its popularity with shareholders, the company plans to continue with the DRP when dividends are paid in the future.

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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.

The shares of IBERDROLA, S.A.–insofar as they are and continue to be “restricted securities” as defined under Rule 144(a)(3) of the Securities Act— may not be deposited in an unrestricted deposit programme such as the IBERDROLA’s ADRs (Shareholder Dividend Reinvestment) programme sponsored Level 1, of which JP Morgan Chase Bank, N.A. is depositary.

IBERDROLA shareholders who are "U.S. Persons", as defined in Rule S of the U.S. Securities Act of 1933, may not participate in the Dividend Reinvestment Plan, and consequently they may not opt to have the cash dividend payable on 2nd July 2007 reinvested by the depositary in IBERDROLA shares.