A

B

C

D

E

F

G

H

ADS Record Time

3.00 p.m. (New York time) on 26 March 2007

Iberdrola Shareholders’ Meeting – first call

Voting Record Time

Iberdrola Shareholders’ Meeting – second call

Court Meeting

ScottishPower EGM

4 April 2007¹

Sanction Court Hearing

Special Dividend Record Time

Reorganisation Record Time

Reduction Court Hearing

Effective Date of the Scheme

New Iberdrola Shares issued

¹

This date applies to ScottishPower ADS Holders who hold their ScottishPower ADSs through the Direct Registration System of DTC and make an election under the Mix and Match Facility. ScottishPower ADS Holders who do not hold their ScottishPower ADSs through the Direct Registration System of DTC but do make an election under the Mix and Match Facility will not be able to transfer their ScottishPower ADSs after they have returned their ADS Letters of Transmittal and Election Forms. ScottishPower ADS Holders who do not make an election under the Mix and Match Facility will be able to transfer their ScottishPower ADSs until the earlier of the date on which they return their ADS Letter of Transmittal and Election Form (or, if later, April 4, 2007 in the case of ScottishPower ADS Holders who hold their ScottishPower ADSs through the Direct Registration System of DTC) and 30 days after the termination of the ScottishPower Deposit Agreement.

B

B1

B2

Please refer to the Chairman’s letter in Part 1 of the Scheme Document for an explanation.

B3

As a current ScottishPower ADS Holder, you are being asked to approve the Offer, which is to be effected by way of a scheme of arrangement.

If the Offer becomes effective, following approval by ScottishPower Shareholders and ADS Holders and the Scottish Court of Session, then Iberdrola will acquire all the ordinary issued shares of ScottishPower (including the shares underlying ScottishPower ADSs).

B4

You will receive 1,600p in cash and 0.6584 of an Iberdrola ADS for every ScottishPower ADS you hold at the Reorganisation Record Time, subject to elections made under the Mix and Match Facility, where ScottishPower Shareholders and ADS Holders may opt to vary the proportion of cash and shares or Iberdrola ADSs received subject to equal and opposite elections being made by other ScottishPower Shareholders and ADS Holders.

You should note that the underlying asset of one Iberdrola ADS is one New Iberdrola Share.

You will also be entitled to receive a Special Dividend of 48 pence for each ScottishPower ADS you hold at the Special Dividend Record Time, which is expected to be 9.00 a.m. (London time) on April 20, 2007.

B5

The value of the Offer per ScottishPower ADS consists of i) 1,600 pence in cash, ii) the Special Dividend of 48 pence and iii) for each ScottishPower ADS 0.6584 of an Iberdrola ADS (share component of the Offer).

While the value of the first two cash components is fixed, the value of the Iberdrola ADS component depends on the market value of an Iberdrola Share at any point in time and the most current Euro to Sterling exchange rate.

Based on the closing price of an Iberdrola Share on February 22, 2007 (the last practicable date prior to the publication of the Scheme Document) of £23.32 per Iberdrola Share (based on an exchange rate of £0.67125:€1, being the exchange rate on February 22, 2007), the Offer values each ScottishPower Share (including the Special Dividend) at 795.6 pence and therefore values each ScottishPower ADS at £31.82. [TO BE UPDATED DAILY]

Please note the US Dollar amount received upon any subsequent sale of an Iberdrola ADS will depend upon both the market price of an Iberdrola Share and the relevant Dollar/Euro exchange rate at the relevant time. No assurances can be given as to the price that will be received for Iberdrola ADSs sold.

B6

As explained in paragraph 4 of Part 4 of the Scheme Document, you even if you do not wish to make an election under the Mix and Match Facility, if you are a registered ScottishPower ADS Holder you must return your ADS Letter of Transmittal and Election Form, along with any ScottishPower ADSs that you hold in certificated form, in order to receive the Basic Consideration, which in economic terms is equivalent to 1,600 pence and 0.6584 of an Iberdrola ADS for every ScottishPower ADS owned.

Any Iberdrola ADSs that have not been claimed six months after the effective date of the scheme of arrangement (expected to be April 23, 2007) may be sold by the ScottishPower Depositary. If you return your ADS Letter of Transmittal and Election Form after that six-month period has expired, you will be entitled to receive only the cash consideration of 1,600 pence per ScottishPower ADS and the net cash proceeds from any such sale of the Iberdrola ADSs to which you otherwise would have been entitled. No assurances can be given as to the price that will be received for Iberdrola ADSs sold.

B7

As explained in paragraph 4 of Part 4 of the Scheme Document, you may elect to vary the proportions of cash consideration and Iberdrola ADSs to which you are entitled under the Offer. However, the total number of New Iberdrola Shares (including those underlying Iberdrola ADSs) and the amount of cash available will not be varied, so Iberdrola’s ability to satisfy all elections for Iberdrola ADSs or cash consideration will depend on other ScottishPower Shareholders and ADS Holders making equal and opposite elections. To the extent that elections for New Iberdrola Shares (including those underlying Iberdrola ADSs) and/or cash consideration cannot be satisfied in full, they will be scaled down on a pro rata basis.

The Mix and Match Facility will remain open until 3.00 p.m. (New York time) on April 4, 2007 and, if you are a registered ScottishPower ADS Holder, can be elected for by using the ADS Letter of Transmittal and Election Form, which you should return, along with any ScottishPower ADSs that you hold in certificated form, in the non-postage-paid envelope provided, by post (properly insured) or by hand (during normal business hours) so as to be received by JPMorgan Chase Bank, N.A., Reorganization Department at one of the addresses provided on the ADS Letter of Transmittal and Election Form.

Even if you do not wish to make an election under the Mix and Match Facility, if you are a registered ScottishPower ADS Holder, you must return your ADS Letter of Transmittal and

Election Form, along with any ScottishPower ADSs that you hold in certificated form, in order to receive the Basic Consideration, i.e. 1,600 pence and 0.6584 of an Iberdrola ADS for every ScottishPower ADS owned. Any Iberdrola ADSs that have not been claimed six months after the effective date of the scheme of arrangement (expected to be April 23, 2007) may be sold by the ScottishPower Depositary. Therefore, if you return your ADS Letter of Transmittal and Election Form after that six-month period has expired, you will be entitled to receive only the cash consideration of 1,600 pence per ScottishPower ADS and the net cash proceeds from any such sale of the Iberdrola ADSs to which you otherwise would have been entitled.

If you hold your ScottishPower ADSs indirectly, you must rely on the procedures of the bank, broker, financial institution, share plan administrator or other nominee through which you hold your ScottishPower ADSs if you wish to make an election under the Mix and Match Facility.

B8

As explained in paragraph 4 of Part 4 of the Scheme Document, under the Mix and Match Facility, ScottishPower ADS Holders will receive 1,520 pence in cash for each 0.6584 of an Iberdrola ADS (one Iberdrola ADS represents one Iberdrola Share) foregone, or 0.6584 of an Iberdrola ADS for every 1,520 pence in cash foregone.

This ratio has been calculated on the basis of the average closing price of an Iberdrola Share in pounds Sterling over the 15 trading days ending on February 22, 2007 (the last practicable date prior to the publication of the Scheme Document).

B9

You do not have to accept the Offer but are being asked to vote on it:

•      To register your vote or indicate that you intend to attend and vote at the Meetings in person, complete and sign the ADS Voting Instruction Card and return it in the enclosed reply-paid envelope (for use in the US only) to JPMorgan Chase Bank, N.A., to be received no later than 3.00 p.m. (New York time) on March 26, 2007.

•      You may also cast your vote by calling +1-866-540-5760 or by logging onto www.proxyvoting.com/spi, where details of the procedure to be followed are set out. You can also refer to your ADS Voting Instruction Card for further details. You can cast your vote in this way any time before 11.59 p.m. (New York time) on March 25, 2007.

•      If you hold your ScottishPower ADSs indirectly, you must rely on the procedures of the bank, broker, financial institution, share plan administrator or other nominee through which you hold your ScottishPower ADSs if you wish to vote. Alternatively, if you wish to attend and vote at the Meetings in person, you may present your ScottishPower ADSs to the ScottishPower Depositary for cancellation and receive (upon compliance with the terms of the ScottishPower Deposit Agreement, including payment of the ScottishPower Depositary’s fees and any applicable taxes and governmental charges) delivery of your ScottishPower Shares so as to become a registered holder of ScottishPower Shares prior to the Voting Record Time, which is 6.00 p.m. on 28 March 2007.

•      Even if you vote against the Offer or do not vote on it, it will be binding on you if a sufficient number of ScottishPower Shareholders and ScottishPower ADS Holders vote in favor of it and certain other conditions are met.

B10

The scheme of arrangement will only become effective if: (a) more than 50 per cent. in number of the ScottishPower Shareholders present and voting at the Court Meeting (whether in person or by proxy) vote in favour of the Scheme; and (b) such majority holds 75 per cent. or more in value of the ScottishPower Shares (including ScottishPower ADS Holders as holders of ScottishPower Shares underlying their ADSs) present and voting at the Court Meeting (whether in person or by proxy).

In addition, it is necessary for the special resolution at the EGM to be approved by ScottishPower Shareholders and ScottishPower ADS Holders holding not less than 75 per cent. of the votes cast at the EGM (whether in person or by proxy).

B11

B12

If you do not approve of the Offer, then you are entitled to vote “against” the resolutions.

However, if the scheme of arrangement becomes effective, then the Offer will become binding on all ScottishPower Shareholders and ADS Holders and you will receive cash and Iberdrola ADSs (subject to any Mix and Match Election) for your ScottishPower ADSs, even if you voted against the resolutions.

B13

Completion of the Offer is expected to take place on April 23, 2007, with the cash consideration and Iberdrola ADSs expected to be despatched to the ScottishPower Depositary within 14 days of the Effective Date (expected to be by May 7, 2007).

The ScottishPower Depositary will send you a cheque for your portion of the cash consideration and a statement of entitlement to your Iberdrola ADSs as soon as possible thereafter (so long as it has received your completed ADS Letter of Transmittal and Election Form, along with any ScottishPower ADSs you hold in certificated form).

B14

B15

B16

B17

B18

B19

If you hold your ScottishPower ADSs indirectly, you should contact the bank, broker, financial institution, share plan administrator or other nominee through who you hold your ADSs in order to vote on the proposals at the Meetings, make an election under the Mix and Match Facility or receive any consideration under the Mix and Match Facility.

Alternatively, you may present your ScottishPower ADSs to the ScottishPower Depositary for cancellation and receive (upon compliance with the terms of the ScottishPower Deposit Agreement, including payment of the ScottishPower Depositary’s fees and any applicable taxes and governmental charges) delivery of your ScottishPower Shares in order to be treated like other registered holders of ScottishPower Shares.

B20

If I can take your details, we will arrange for the documents to be sent to you.

Check registered address and complete remail request (note documents required)

If address incorrect:

Refer to Section H for address change procedure.

C

C1

Please refer to paragraphs 3 and 7 of the Chairman’s letter in Part 1 of the Scheme Document for details of the ScottishPower Board’s recommendation and its reasons for recommending the Offer.

C2

Iberdrola has received irrevocable undertakings to vote in favour of the Offer and the resolutions to be proposed at the Court Meeting and the ScottishPower EGM from the ScottishPower Directors in respect of 142,196 ScottishPower Shares, representing approximately 0.1 per cent. of the ScottishPower Shares. These undertakings are in respect of the ScottishPower Directors’ aggregate entire beneficial holdings of ScottishPower Shares.

C3

As explained in paragraph 19 of Part 4 of the Scheme Document, the Offer will be implemented by way of a scheme of arrangement of ScottishPower under section 425 of the UK Companies Act 1985. Under the terms of the scheme of arrangement, the ScottishPower Shares underlying your ADSs will be cancelled and you will receive cash and/or Iberdrola ADSs in exchange, plus the Special Dividend.

You should note that the underlying asset of one Iberdrola ADS is one New Iberdrola Share.

In addition, before the scheme of arrangement can become effective, a number of Conditions need to be satisfied or waived. These are listed in Part 5 of the Scheme Document.

C4

As explained in paragraph 19 of Part 4 of the Scheme Document, a scheme of arrangement is a legal arrangement between a company and its shareholders. It is a common process for dealing with acquisitions of listed companies in the UK. It requires approval of the shareholders and ADS holders both at a Court Meeting and, in this case, at a separate EGM.

ScottishPower Shareholders and ADS Holders will vote on whether to approve the scheme of arrangement at the Court Meeting and then on certain resolutions required to implement it at the EGM.

C5

A scheme of arrangement is a normal process for dealing with acquisitions of public companies in the UK, particularly when they involve a large number of retail shareholders (approximately 400,000 in this case).

This process was followed, for example, in takeovers and mergers involving Barclays (with the Woolwich), Lloyds (with TSB), Halifax (with Bank of Scotland) and CGU (with Norwich Union).

In order for the scheme of arrangement to become effective, resolutions at the Court Meeting and the EGM must be approved by ScottishPower Shareholders and ADS Holders. It is therefore important that as many votes as possible are cast at the Court Meeting, in particular, so that the Court may be satisfied that there is a fair representation of ScottishPower Shareholder and ADS Holder opinion.

C6

C7

C8

D

D1

D2

At the Court Meeting you will be asked to vote on whether to approve the scheme of arrangement, and therefore the Offer from Iberdrola. Further details of the Court Meeting are set out in the Notice of Court Meeting in Part 16 of the Scheme Document.

At the EGM, you will be asked to vote on a special resolution which will do a number of things to enable the scheme of arrangement to be put into effect as described in the Scheme Document, including amending ScottishPower’s Articles of Association and its capital structure. The resolution being voted on at the EGM is set out in the notice of EGM, which is in Part 17 of the Scheme Document.

D3

If you are a registered ScottishPower ADS Holder, you may attend and vote at the Meetings in person. If you wish to do so, please indicate this on the ADS Voting Instruction Card that you wish to attend and vote at the Meetings. Please note that you will not be admitted to the Meetings unless you present a valid passport or other government issued photo identification.

If you hold your ScottishPower ADSs indirectly, you must rely on the procedures of the bank, broker, financial institution, share plan administrator or other nominee through which you hold your ScottishPower ADSs if you wish to vote. Alternatively, if you wish to attend and vote at the Meetings in person, you may present your ScottishPower ADSs to the ScottishPower Depositary for cancellation and receive (upon compliance with the terms of the ScottishPower Deposit Agreement, including payment of the ScottishPower Depositary’s fees and any applicable taxes and governmental charges) delivery of your ScottishPower Shares so as to become a registered holder of ScottishPower Shares prior to the Voting Record Time, which is 6.00 p.m. on 28 March 2007.

D4

Yes, irrespective of whether or not you can find your ADS certificate, if you were a registered holder of ScottishPower ADSs at 4.00 p.m. (New York time) on February 20, 2007, you should have received an ADS Voting Instruction Card with respect to your voting rights. The ADS Voting Instruction Card will set forth how many ScottishPower ADSs are registered in your name as of 4.00 p.m. (New York time) on February 20, 2007.

For the replacement of lost, missing or destroyed certifcate(s), registered holders must complete Section D of the ADS Letter of Transmittal and Election Form sent to them and submit this to JP Morgan Chase Bank, N.A.

D5

D6

Yes. You are able to appoint someone else the nominee of the ScottishPower Depositary or another person as your proxy. If you appoint the nominee of the ScottishPower Depositary as your proxy, the nominee will vote in accordance with your instructions.

If you appoint a person other than the nominee of the ScottishPower Depositary as your proxy, you are responsible for ensuring that the person you appoint is able and willing to attend the Meetings on your behalf. If your proxy does not attend the Meetings, your votes will not be cast.

D7

We are not able to advise you how to vote. You will have received details of the proposals to be considered at the Meetings. You should read this information before deciding how to vote.

If you have any questions, you should consult an independent professional adviser.

D8

The scheme of arrangement will only become effective if: (a) more than 50 per cent. in number of the ScottishPower Shareholders present and voting at the Court Meeting (whether in person or by proxy) vote in favour of the Scheme; and (b) such majority holds 75 per cent. or more in value of the ScottishPower Shares (including ScottishPower ADS Holders as holders of ScottishPower Shares underlying their ADSs) present and voting at the Court Meeting (whether in person or by proxy).

In addition, it is necessary for the special resolution at the EGM to be approved by ScottishPower Shareholders and ScottishPower ADS Holders holding not less than 75 per cent. of the votes cast at the EGM (whether in person or by proxy).

D9

D10

If you do not approve of the Offer, then you are entitled to vote “against” the resolutions on the ADS Voting Instruction Card.

However, if the scheme of arrangement becomes effective, then the Offer will become binding on all ScottishPower ADS Holders and you will receive cash and Iberdrola ADSs (subject to any Mix and Match Election) for your ScottishPower ADSs, even if you voted against the proposal.

D11

D12

If you are driving, you should take the exit at Junction 19 of the M8 and follow the signs for the Scottish Exhibition and Conference Centre (SECC). The hotel is next to the SECC. Free car parking will be offered in Car Park 1 in front of the Clyde Auditorium and spaces for disabled drivers will be available.

If you are travelling by train, travel west on the low level service from Glasgow Central Station to Exhibition Centre Station. Trains from Glasgow run every 20 minutes.

D13

D14

D15

D16

D17

E

E1

The acquisition of ScottishPower is being made by Iberdrola, and if the scheme of arrangement becomes effective, you will receive 1,600 pence in cash (converted into US dollars at the exchange rate prevailing at the time of conversion), and 0.6584 of an Iberdrola ADS (equivalent to 0.6584 of a New Iberdrola Share) for each ScottishPower ADS you hold as of the Reorganisation Record Time, which is expected to be 3.00 p.m. (London time) on April 22, 2007, subject to any Mix and Match Election.

You should note that the underlying asset of one Iberdrola ADS is one New Iberdrola Share.

E2

Sorry, we are not in a position to give advice on an individual basis. Summaries of the tax consequences of the scheme of arrangement for ADS Holders who are resident in the US are set out in paragraph 26 of Part 4 of the Scheme Document.

If you are in any doubt as to your tax position you should consult an appropriate independent professional adviser.

E3

Completion of the Offer is expected to take place on April 23, 2007, with the cash consideration and Iberdrola ADSs expected to be despatched to the ScottishPower Depositary within 14 days of the Effective Date (expected to be by May 7, 2007).

The ScottishPower Depositary will send you a cheque for your portion of the cash consideration and a statement of entitlement to your Iberdrola ADSs as soon as possible thereafter (so long as it has received your completed ADS Letter of Transmittal and Election Form, along with any ScottishPower ADSs you hold in certificated form).

E4

Only whole Iberdrola ADSs will be allotted. Any remaining fractions of Iberdrola ADSs will be

aggregated and sold after the effective date of the scheme of arrangement, which is expected to be April 23, 2007. The net proceeds of that sale will be paid in cash in US Dollars to you according to your fractional entitlements. No assurances can be given as to the price that will be received for Iberdrola ADSs sold in this way.

E5

E6

E7

E8

Iberdrola’s share price can be found on Iberdrola’s website (www.iberdrola.com), as well as other

financial websites.

E9

Iberdrola currently pays dividends twice a year with record dates typically in June and December.

Iberdrola’s final dividend for the 2005 financial year amounted to €0.5181 per Iberdrola Share. Iberdrola’s interim dividend for the first six months of the 2006 financial year amounted to €0.4500 per Iberdrola Share and therefore would have amounted to €0.4500 per Iberdrola ADS.

Subject to its shareholders’ approval, Iberdrola has proposed to distribute a final dividend for the 2006 financial year of €0.6100 per Iberdrola Share (which includes a €0.02 attendance premium for attendance of the Iberdrola general shareholders’ meeting) with reference to a record date of the last business day in June 2007. The dividend itself will be paid to shareholders (and ADS holders) shortly thereafter.

Although Iberdrola has paid dividends in the past, there can be no assurance that it will pay dividends in the future.

E10

E11

E12

E13

As described in paragraph 1(r)(iii) of Part 8 of the Scheme Document, the stock split is the proposal by the Iberdrola Board to split each Iberdrola Share into four shares with a quarter of the value of the original share. The stock split is common practice among large companies listed on the Spanish stock exchanges, like Iberdrola, and, among other things, makes Iberdrola Shares easier to trade. The stock split, if approved by the Iberdrola shareholders, will only take place after the Effective Date and after the Iberdrola ADSs have been issued. It will not reduce any entitlements you may have under the scheme of arrangement.

The stock split will multiply the amount of Iberdrola ADSs you hold (or, if you have not yet collected them, are entitled to hold), along with the New Iberdrola Shares they represent, by four, but the value of your aggregate holding, and your rights, should remain the same.

F

F1

Iberdrola, S.A. is offering to buy your shares.

Further details about Iberdrola can be found in paragraph 8 of Part 4 of the Scheme Document and on Iberdrola’s website - www.iberdrola.com.

F2

Please see paragraph 9 of Part 4 of the Scheme Document for Iberdrola’s reasons for the Offer.

G1

Sorry, we are not in a position to give advice on an individual basis. Summaries of the tax consequences of the Scheme for ADS Holders who are resident in the US are set out in paragraph 26 of Part 4 of the Scheme Document.

If you are in any doubt as to your tax position you should consult an appropriate independent professional adviser.

G2

H1

Q

A

Who is the Depositary?

The Depositary is JPMorgan Chase Bank, N.A.

Address:        JPMorgan Service Center, PO Box 3408, South Hackensack, NJ 07606-3408

Telephone:    +1 (866) 726 8237 (Toll Free)

Q

A

I have changed/am changing my address. What should I do?

If you are a registered ScottishPower ADS Holder,, please contact JPMorgan Chase Bank, N.A. for information on how to change your address of record.

Quote address in question H1 above.

If you are an indirect ScottishPower ADS Holder, please contact the bank, broker, financial institution, share plan administrator or other nominee through which you hold your ScottishPower ADSs for information on how to record an address change.

Q

A

I have changed/am changing my name. What should I do?

If you are a registered ScottishPower ADS Holder, please contact JPMorgan Chase Bank, N.A. for information on how to change your name of record.

Quote address in question H1 above.

If you are an indirect ScottishPower ADS Holder, please contact the bank, broker, financial institution, share plan administrator or other nominee through which you hold your ScottishPower ADSs for information on how to record a name change.

Q

A

The ADS Holder has died. What should I do?

I am sorry to hear of the death of Mr/Mrs/Miss xxxxxxxxxx.

If he/she was a registered ScottishPower ADS Holder, please contact JPMorgan Chase Bank, N.A. for information on how to move the ADSs into the name of the estate. Otherwise you will need to contact the broker in whose name the ADSs are held for information.

Quote address in question H1 above.

If he/she was an indirect ScottishPower ADS Holder, please contact the bank, broker, financial institution, share plan administrator or other nominee through which he/she held your ScottishPower ADSs for information on how to move the ADSs into the name of the estate.

Q

A

I have power of attorney over this holding. What should I do?

If the holder of the ScottishPower ADSs is a registered holder and you are not listed in the registration books of JPMorgan Chase Bank, N.A. as holding the power of attorney over such account, please contact JPMorgan Chase Bank, N.A. for information on whether a power of attorney can be accepted.

Quote address in question H1 above.

If the holder of the ScottishPower ADSs is an indirect ScottishPower ADS Holder, please contact the bank, broker, financial institution, share plan administrator or other nominee through which he/she holds the ScottishPower ADSs for information on the exercise of a power of attorney.

Q

A

I wish to sell my ADSs/buy more ADSs.

If you wish to buy additional ADSs, or sell your ADSs, you will need to do this through a stockbroker or financial intermediary on their own commercial terms.

Q

A

I do not have a stockbroker. Can you recommend one?

We are not able to recommend one particular stockbroker.

Q

A

I wish to transfer some or all of my ADSs to someone else/add a joint holder.

If you are a registered ScottishPower ADS Holder, please contact JPMorgan Chase Bank, N.A. for information on how to transfer ADSs.

Quote address in question H1 above.

If you are an indirect ScottishPower ADS Holder, please contact the bank, broker, financial institution, share plan administrator or other nominee through which you hold your ScottishPower ADSs for information on how to transfer your ADSs or add a joint holder.

Q

A

I wish to amalgamate my holdings of ADSs.

If you are a registered ScottishPower ADS Holder, please contact JPMorgan Chase Bank, N.A. for information on how to consolidate your ADSs.

Quote address in question H1 above.

If you are an indirect ScottishPower ADS Holder, please contact the bank, broker, financial institution, share plan administrator or other nominee through which you hold your ScottishPower ADSs for information on how to consolidate your ADSs.