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Glossary

      • Assets.

        Set of tangible and intangible assets that enable a company to generate profits in the future. Assets vary depending on the nature of the business.

      • AENOR.

        Spanish Association for Standardization and Certification. Is an organization dedicated to the development of standardization and certification (N + C) in all industrial and service sectors.

      • Biomass energy.

        Energy obtained using waste organic material left over from farming, livestock and forest activities as well as from by-products of food and agricultural industries, and from the transformation of wood. Biomass is used for the production of heat, electricity and biofuels for vehicles. It is non-polluting, since the carbon is captured by plant elements (the forest and farming leftovers, etc.) which free oxygen to the atmosphere. Power stations burn the biomass, returning to the atmosphere the CO2 captured by the plants at the start of the photosynthesis process. As such, net CO2 emissions to the atmosphere are zero.

      • Capacitor banks.

        Equipment that makes up for the extra non-useful energy demand (reactive energy), facilitating stability and quality of supply while optimising the performance of the installation. They form part of IBERDROLA's offer of energy efficiency solutions.

      • Carbon Disclosure Project.

        Prestigious study in which 385 (NOW 655 ACCORDING TO THE UPDATED CDP WEBSITE) international investors, who manage assets valued at 57 trillion dollars, evaluate 10 key aspects of the initiatives adopted by companies to bring a halt to climate change.

      • Carbon footprint.

        Also known as the climate footprint, it is the amount of CO2 that a company or individual emits in manufacturing or consuming a product. In January 2008, IBERDROLA launched its "Green Footprint" initiative, which calculates the level of emissions per person and helps reduce the footprint through practical advice.

      • Caring for Climate.

        Platform of business leaders, governments and some 190 companies from all over the world, inspired by the United Nations Global Compact to come up with solutions to tackle climate change. IBERDROLA joined the initiative in September 2008 and has committed itself to increasing the efficiency of energy use and reducing CO2 emissions from its activities. IBERDROLA is to adopt and promote among its stakeholders - employees, customers, investors, suppliers, etc. - measures designed to reduce climate risks and drive forward sustainable development.

      • Chlorofluorocarbons (CFCs).

        Substance derived from saturated hydrocarbons obtained through the substitution of hydrogen atoms by fluorine and or chlorine atoms. For a long time, they were used as coolants and propellants, but destroyed the ozone layer if released to atmosphere. Their use is to be restricted in most countries from 2010.

      • Clean Development Mechanism (CDM).

        Instruments of flexibility included in the Kyoto Protocol, allowing governments of industrialised countries and companies to strike agreements to fulfil goals for reducing greenhouse gases by investing in emission-reduction projects in developing countries as an alternative for acquiring Certified Emission Reductions (CERs) at lower costs than in the market. IBERDROLA has registered two initiatives as CDMs under the United Nations Framework Convention on Climate Change (UNFCCC): the wind farm of IBERDROLA Renovables at La Ventosa, Mexico; and the hydroelectric power station at Las Vacas, Guatemala.

      • Climate Action Network.

        International network sponsored by the Global Roundtable on Climate Change, with the vocation of influencing political, social and industrial domains to ensure that the energy systems used for economic growth are sustainable. Its demands include the establishment of objectives and prices for CO2 emissions and the development of policies to give impetus to energy efficiency. IBERDROLA is one of the companies sponsoring this network.

      • Climate change.

        Modifications in the climate, with respect to the past, on a global or regional scale. The energy sector is counted upon to play a fundamental role in the fight against climate change, since the technologies that fossil fuels use are to a large degree responsible for greenhouse gas emissions, one of the main causes of climate change. These emissions can be reduced by cutting down on energy consumption and improving efficiency in the generation, transport and final use of energy. Additionally, the use of renewable energies, and the substitution of fuels by others with less carbon dioxide content, are important vectors of action.

      • Climate Leadership Index.

        Selective index that recognises company strategies for combating climate change.

      • CO2 capture and storage.

        Consists of extracting CO2 from the flow of gases produced during combustion, for transport and storage in, for example, non-operational mines or exhausted oil reserves. Represents one of the challenges for electricity generation in the long term, since it concerns a technology that is not yet mature for large-scale use. IBERDROLA, through ScottishPower, is to lead the first project in the United Kingdom to investigate a method of underground storage of CO2 from Longannet coal-fired power station. The Company is also actively participating in the main forums in Europe and Spain to drive forward the development of technologies for CO2 capture. These are the Technology Platform on Zero-Emission Power Plants, the Spanish CO2 Technology Platform and the Spanish CO2 Association.

      • CO2 emission.

        CO2 is a greenhouse gas and thus one of the causes of climate change. IBERDROLA’s strategy is based on the development of renewable energies, mainly wind power, and on more efficient thermal production technology, together with combined-cycle natural gas power stations. This places it among the largest European companies with the least CO2 emissions per GWh produced.

      • Cogeneration.

        A process whereby electricity and useful thermal energy, such as steam, domestic hot water and cold air, are obtained simultaneously. The advantages of cogeneration are greater energy efficiency, fuel savings and a reduction in CO2 emissions.

      • Combined cycle.

        Energy generation infrastructure which uses natural gas as a fuel. Incorporates one or several units formed by a gas turbine and a steam cycle (boiler and turbine) which utilizes energy from the exhaust gases. The efficiency of a combined-cycle power station is much higher than a coal-fired power station: 55%, compared to 35% for the latter. This greater efficiency translates into a lower consumption of fuel per GWh, lower consumption by auxiliaries in thermal production, less emissions per GWh, a lower consumption of water and a lower volume of waste (ash).

      • Comprehensive risk control and management system.

        The aim for this system is to contribute the maximum level of guarantees, in terms of economic performance and environmental and social impact, to shareholders, other stakeholders and the markets in general, as well as to increase the creation of value through appropriate management of the risk-opportunity binomial, establishing the independent management of each risk.

      • Corporate Reputation Forum.

        The Foro de Reputación Corporativa is a forum, founded in 2002, for meeting, analysis and disclosure of trends, tools and corporate reputation management models. It is formed by a relatively small group of companies, among them IBERDROLA, whose vocation is to work together closely and efficiently in creating value through the management of intangible assets.

      • Dow Jones EuroStoxx 50.

        Stock market index formed by the 50 most important stocks in the Eurozone. IBERDROLA is included in the index.

      • Dow Jones Stoxx Global 1800.

        Stock market index formed by the leading 1,800 companies in the European, Asia-Pacific and American stock markets. IBERDROLA is included in the index.

      • Dow Jones Sustainability Index.

        Wall Street stock market index which lists the companies with the best sustainability profile. It has become a benchmark for measuring the sustainability commitment of companies. IBERDROLA has been present in the index since 1999.

      • Earnings per share.

        Obtained by dividing net profit by the number of shares in circulation.

      • EBIT.

        Earnings Before Interest and Taxes. Net operating profit, after depreciation and amortization.

      • EBITDA.

        Earnings Before Interest, Taxes, Depreciation and Amortization. Gross operating profit.

      • EFR Certification.

        The Family-Responsible Company (Empresa Familiarmente Responsable) certificate is awarded by the +Familia Foundation for compliance with the 1000-1 standard supported by the Ministry of Labour and Social Affairs. Recognises organisations that have most contributed to the conciliation of personal and working lives, through the evaluation of different factors such as stability in employment, flexibility of hours and support for integration, for the family and for equal opportunities, as well as initiatives of the Company in favour of gender equality, with a progressive incorporation of women in positions of responsibility. In 2006, the companies, IBERDROLA S.A., IBERDROLA Generación S.A. and IBERDROLA Distribución Eléctrica S.A., obtained this certificate. In 2007, IBERDROLA Renovables S.A. and IBERDROLA Operación y Mantenimiento S.A. acquired the certification, and in 2008 it was obtained by IBERDROLA Ingeniería and Construcción S.A. All certified companies renew the certification annually.

      • Electromagnetic fields.

        Combination of invisible fields of electrical and magnetic force. Exist since the Earth was formed as solar radiation and static fields, and are necessary for human life. Without them, life would disappear. Added to these natural electromagnetic fields are electromagnetic fields generated artificially by, for example, electricity installations and distribution networks, and any kind of machine and household electrical appliance that operates with electrical energy.

      • Emission Trading Scheme (ETS).

        A market instrument creating economic incentives and disincentives in the pursuit of environmental benefits, whereby a body of industrial plants collectively reduces pollutant gases emitted to the atmosphere. There are currently emissions markets operating in different countries and which affect different gases. The European Union launched the most ambitious CO2 market to date on 1 January 2005, which is regulated by Directive 2003/87/CE and impacts globally upon more than 10,000 installations and over two billion tonnes of CO2, around 45% of the EU's greenhouse gases. In Spain, the trade in emissions allowances is regulated by Act 1/2005, of 9 March. In the electricity sector, the entry into force of the emissions trading scheme has meant an important change in the management of companies, since it implies the consideration of a new cost for the by-products of electricity generation. The main financial consequence is that, at the end of each year, and within periods of several years (2005-2007 and 2008-2012), the Company has to present its emission allowances alongside the emissions actually produced by its power stations in Spain and the United Kingdom.

      • Energy efficiency.

        Series of actions allowing the optimisation of the relationship between the quantity of energy consumed and the end product or service. Improving energy efficiency has become a key objective of the European Union's energy policy. IBERDROLA is working in favour of energy efficiency through a series of actions that can be seen from a triple perspective: (1) as an electricity company, incorporating clean, advanced and efficient technologies in production and distribution; (2) as a commercial company, offering efficient solutions to customers; (3) as a consumer of energy, ensuring the continuous improvement in the energy efficiency of work centres, buildings and vehicles, developing mobility plans and sensitizing employees.

      • Environmental Management System.

        IBERDROLA disposes of environmental management systems, based on the standard UNE-EN-ISO 14001:2004, which have been implemented in a large part of the organisation and which allow environmental risks to be reduced, the management of resources to be improved and investments and costs to be optimised. In addition, many electric power plants in Spain and the United Kingdom have been certified for EMAS, the European Eco-Management and Audit Scheme. Indeed, one of the achievements of 2008 was the EMAS certification of IBERDROLA Operación y Mantenimiento for deregulated business in Spain, and the Company has expanded these environmental requirements to its conditions for contracting equipment, materials, works and services. In 2008, 50% of its suppliers had been certified for ISO 14001 or equivalent. As a consequence of strong international expansion, IBERDROLA approved its new Environmental Management Model in December 2008 with the objective of creating a common and homogeneous framework for environmental matters across the Group.

      • Equivalent Time Interruption of Installed Power (TIEPI).

        Represents the average annual time when supply to users was interrupted.

      • Financial leverage.

        Relationship between Other Resources (debt) and Own Resources (shareholders’ equity). Calculated by dividing Total Liabilities by Own Resources.

      • Generation park.

        The entire installed production of an electrical power company.

      • Global 100 Most Sustainable Corporations in the World.

        Index that recognises the most sustainable companies in the world, compiled by the Canadian magazine specialised in corporate social responsibility, Corporate Knights, and by the New York sustainability analysts, Innovest Strategic Value Advisors. In 2011, IBERDROLA was selected, for the sixth successive year, to form part of this index, in which only two other Spanish companies figure.

      • Global Compact.

        United Nations initiative whose objective is to secure from organisations a voluntary commitment to social responsibility, through the implementation of 10 Principles based upon human, labour and environmental rights, and the fight against corruption. IBERDROLA joined the Global Compact in 2002. COELBA, COSERN and CELPE, from Brazil, ELFEO and ELECTROPAZ, from Bolivia, and EEGSA, from Guatemala, also recently joined the Compact.

      • Global Roundtable on Climate Change.

        Organisation dedicated to the debate and analysis of key economic, technological and scientific strategies in the fight against climate change. IBERDROLA is the only Spanish electricity company among the founding members.

      • Green energy.

        IBERDROLA refers to "green energy" as coming exclusively from 100% renewable energy sources, which are characterized by their maximum respect for the environment and by avoiding emissions of CO2 and other polluting gases. IBERDROLA green energy is certified in origin through Renewable Energy Certificates and in the commercial process by an external, independent body.

      • Greenhouse effect.

        This is an increase in temperature in the atmosphere closest to the earth’s crust, brought on by the difficulty of radiant heat dissipation due to the presence of a layer of carbon monoxide from industrial emissions and deforestation. The carbon biogeochemical cycle naturally controls the transfer of this element among the earth, the oceans and the atmosphere.

      • Greenhouse gases.

        Gases, such as carbon dioxide (CO2), nitrogen oxide and methane, whose presence in the atmosphere contribute to the greenhouse effect. According to current scientific consensus, this effect is being accentuated on Earth by human economic activity, which is increasing global warming.

      • Hydro power.

        Based on the use of the force of falling water to generate electricity. As with other renewable energies, it contributes to reducing CO2 emissions produced by the use of fossil fuels. Additonally, it does not produce polluting wastes and is inexhaustible thanks to the natural water cycle.

      • Iberian Electricity Market (MIBEL, Mercado Ibérico de Electricidad).

        Joint initiative of the Spanish and Portuguese governments to integrate the two electricity markets, following an agreement signed on 1 October 2004. It is formed by the joining of the markets through electricity transactions and contracts, and the negotiation of benchmark financial instruments. IBERDROLA operates in MIBEL with the priority aim of creating value.

      • Installed capacity.

        Volume of production that can be obtained with the available infrastructure.

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      • LNG.

        Initials of Liquefied Natural Gas, processed as such to be transported in the liquid form. IBERDROLA manages LNG loads throughout the year, transporting them in methane carriers from countries such as Nigeria, Algeria, Egypt, Qatar, Libya and Norway to regasification plants at Bilbao, Barcelona, Huelva and Sagunto, as well as others abroad.

      • London Benchmarking Group (LBG).

        Methodology allowing companies' community actions to be structured, quantified and their impact measured, as much for businesses as for society. IBERDROLA took part in the constitution of the LBG Spain Group in 2007, along with eight other Spanish companies.

      • Marine energy.

        Obtained from waves and tides. At present, different devices are being developed that are capable of converting this energy into electricity and transporting it to land. The prospects are very promising: experts estimate that the quantity of energy obtained by just 30 typical mechanisms would be capable of supplying some 20,000 homes with the average European consumption. IBERDROLA, through IBERDROLA RENOVABLES, is a pioneer in the development of projects using marine energy. It has a pilot wind energy plant at Santoña (Cantabria) and its subsidiary in the United Kingdom is developing another off the Orkney Islands (Scotland). It is also studying three sites where tidal wave projects could be developed off the coasts of Scotland and Northern Ireland.

      • Millennium Development Goals.

        Fixed in the year 2000, the Millennium Development Goals are eight objectives which 191 member countries of the United Nations agreed to achieve by 2015: eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality and empower women; reduce the under-five child mortality rate; improve maternal health; combat HIV/Aids, malaria and other diseases; ensure environmental sustainability; and develop a global partnership for development. IBERDROLA supports these Goals through initiatives such as "2015: A Better World for Joana", a campaign of great scope aimed at stakeholders of companies in the Corporate Reputation Forum, of which the Company is a part. This revolves around the symbol of Joana, a nine-year-old girl who represented millions of children who will be adults by 2015.

      • National Allocation Plan for emission allowances.

        Plan which establishes the total number of allowances, for the 2008-2012 five-year period, which are to be assigned to installations included in the field of application of the greenhouse gas emission trading scheme. Also establishes the calculation methodology and the rules for assignment.

      • National Emission Reduction Plan.

        Programme to carry out the policies and measures foreseen for compliance with Directive 2001/81/EC on national emission ceilings established for 2010 for the following atmospheric pollutants: ammonia (NH3), nitrogen oxides (NOx), volatile organic compounds (VOCs) and sulphur dioxide (SO2).

      • Net earnings.

        Profit after tax.

      • Nuclear energy.

        That freed as a result of a nuclear reaction. It can be obtained by the process of nuclear fission (division of heavy atomic nuclei) or nuclear fusion (union of very light atomic nuclei).

      • OMEL, Operador del Mercado Ibérico-Polo Español S.A.

        Created on 24 December 1997, OMEL is the company that manages the Spanish wholesale electricity market, responsible for the coordination between offers made by electricity producers and the demand from distribution companies and large consumers.

      • Payout.

        Percentage of profits destined to pay dividends to shareholders.

      • PER.

        Price-to-Earnings Ratio. The market value of a company's shares (stock market capitalisation) divided by the net profit. Reflects the value of the net profit as a function of the stock market valuation (capitalisation).

      • Photovoltaic solar energy.

        Based upon the direct obtainment of electricity from sunlight, which is captured by photovoltaic solar panels. At present, IBERDROLA possesses this technology through IBERDROLA RENOVABLES, which has one photovoltaic energy installation in Spain (in Castilla-La Mancha) and another in Greece.

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      • R&D Management System.

        In 2008, IBERDROLA launched an R&D Management System, implemented according to the standard UNE 166002:2006 and certified by AENOR, which allows the Company's R&D activity criteria to be systemized and homogenized in a global and efficient way.

      • Reactive energy.

        The extra non-useful energy demand that some electrical equipment needs to operate. This extra energy has to be reduced to the minimum, given also that it can subtract from the output of the electrical installation. To neutralize this reactive energy, capacitor banks, which IBERDROLA includes in its offer of energy efficiency solutions, are used.

      • RECS Certification.

        The RECS is the Renewable Energy Certificate System. It specifies that a certain amount of electricity has been produced by means of renewable energy at a specific plant and at a specific time.

      • Regasification.

        Process by which liquefied natural gas is converted into natural gas. In Spain, IBERDROLA has shares in the Bahía Bizkaia Gas (BBG) and SAGGAS regasification plants, in Bilbao and Sagunto, respectively.

      • Reputational risk.

        Possibility of the loss an organisation can incur through discredit, poor image or negative publicity, true or not, which results in the loss of customers, reduced revenues or legal action. The reputational risk has the singularity that it is not exclusively internal to the management of organisations, but an external evaluation by a third party which converts a risk or incident into a threat or real damage to the reputation of the organisation, with an impact difficult to predict in quantitative terms. IBERDROLA has formulated a framework policy for the control and management of reputational risk, both from the perspective of the ethics of the Group's business activities and the activities carried out in relation to electricity supply and customer care.

      • ROA.

        Return On Assets, an indicator of how profitable a company is relative to its assets. It is the net profit divided by total assets of the company at book value.

      • ROE.

        Return On Equity, an indicator of the profitability of a company relative to its share value. It is calculated by dividing net profit by the value of the Own Resources (capital and reserves) of the company.

      • Spanish Carbon Fund.

        One of the instruments of flexibility the Kyoto Protocol offers for achieving the aim of reducing CO2 emissions. It was created in 2005 with an initial contribution of 170 million euros from the Spanish Government and later also benefited from private sector resources. Managed by the World Bank, which invests the money in the financing of projects in developing countries, contributing to the reduction in greenhouse gas emissions, and to promote the transfer of clean technologies to beneficiary countries. Nations and companies that invest in this type of fund can obtain a number of CO2 emission credits equivalent to the reduction in emissions they bring about. The Spanish Carbon Fund is on of the Clean Development Mechanisms (CDMs) that IBERDROLA uses.

      • Sustainability Excellence Club.

        The Spanish Club de Excelencia en Sostenibilidad is a business association comprising a group of large companies committed to sustainable growth from the economic, social and environmental point of view. Its aim is to conduct a forum of dialogue with stakeholders, a sustainable development benchmarking platform and to transmit good practices to the Spanish corporate community. IBERDROLA is a founding member.

      • Sustainable development.

        The term appeared for the first time in 1987 (in the Bruntland Report). According to the Rio Declaration on Environment and Development (1992), it refers to that development which satisfies the needs of present generations without compromising the possibilities of future generations to attend to their own needs. IBERDROLA is firmly committed to sustainable development and, indeed, has made this its distinguishing characteristic.

      • Tariff deficit.

        The difference between the cost of producing electricity and the price the consumer pays. In Spain, the sale of electricity is regulated by official tariffs that do not reflect the real cost of supply; the cost of raw materials such as natural gas, oil and coal have increased spectacularly since 2004, to which is added the increase in environmental and production costs following the entry into force of CO2 emissions allowances. The tariffs, especially domestic, however, have not taken these increases into account. In July 2008, the Ministry of Industry calculated that, with the price levels in force, the electricity sector’s accumulated debt would reach 26.9 billion euros in 2012 and account for 80% of its revenues.

      • Thermal energy.

        Obtained from fossil fuels, usually coal.

      • Thermal solar energy.

        Based upon the capture of solar radiation and its use as a source of heat. It is especially utilized for domestic hot water systems, interior heating and drying. IBERDROLA, through its subsidiary IBERDROLA RENOVABLES, has a portfolio of 13 thermal solar projects which amount to 600 MW of power.

      • Total shareholder return (TSR).

        Annual variation in value for the shareholder in percentage terms. Includes the variation of the stock price and dividends received.

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      • Wind energy.

        This is one of the most developed renewable energies. Based on the use of the force of wind mainly to generate electricity, this clean and inexhaustible energy source contributes to the reduction of the emission of harmful gases and preserves the environment. In fact, each kiloWatthour (kWh) produced with wind energy has 21 times less environmental impact than that produced by oil, 10 times less than that produced from nuclear energy and five times less that that produced by gas. The listed subsidiary, IBERDROLA RENOVABLES S:A:, in which IBERDROLA holds 80% of the share capital, leads the world wind power market.

      • Wind Turbine.

        Electric generator moved by wind. Its direct precedents are the windmills that were used for grinding and getting flour. In this case, wind power, in fact the kinetic energy of moving air, the propeller and moves through a mechanical system of gears, rotates the rotor of a generator, typically an alternator that converts mechanical energy rotational energy.

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