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Iberdrola is a 100-year-old company based in Bilbao (Basque Country) devoted to the national and international energy sector. As of March 2006, it had an installed capacity of 3914 megawatts from renewable sources of which 3598 megawatts come from wind power.

In November 2006 Iberdrola made a bid to buy Scottish Power and this was completed in April 2007. The merger created the third largest utility in Europe, and generates around 6000 megawatts of renewable energy. Iberdrola is also Spain’s largest nuclear energy producer. The price offered for Scottish Power by Iberdrola, which generates most of its energy from coal fired power stations and natural gas, is 40% higher than a bid a year earlier from E.ON of Germany.
In recent developments, Iberdola has announced that it will spend about 6 billion Euros ($8.4 billion) in buying the U.S. power company Energy East.

In June 2007 when it announced plans to acquire the utility, Iberdrola had originally announced that it would be investing around 6.4 billion Euros in Energy East.

Iberdrola Chairman Ignacio Sanchez Galan has announced that the company has set a target of achieving more than 3 billion Euros in net profit in 2008, in line with the group’s targeted core earnings of about 7 billion Euros for the year.

The chairman also stated that each of Iberdrola’s main business areas have continued to exceed the company’s anticipations since June and noted that Scottish Power is performing well despite an adverse sterling to euro exchange rate.

Iberdrola’s acquisition of Energy East will metamorphose the electricity company - which purchased Scottish Power in 2007 - into the fourth-largest in the world in terms of market capitalization.

The deal will have a favorable affect on Iberdrola’s earnings per share from the first year, with Energy East contributing to Iberdrola’s results from the fourth quarter of 2008.

Energy East supplies either electricity or natural gas to about three million customers in five states in the U.S. Northeast.

The New York regulator enforced conditions on the deal which included $275 million in tariff adaptations and a requirement for Energy East to divest fossil fuel generation.

The divestments implemented by the regulator are expected to have a fewer than 1 million euro impact on the company’s core earnings for 2008, a company executive said.
Iberdrola said it hopes to close the deal to acquire Energy East by next week.
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Billions of people have been hit by double-digit energy bill rises after two of the United Kingdom’s “big six” companies put up their prices.

Scottish and Southern Energy (SSE) has become the second energy company to declare price rises on its gas and electricity tariff today, following E.ON’s price hike this week.

In a double-whammy, SSE will step-up its electrical energy prices by 19.2% and gas by 29.2% from Monday next week, but stated that it plans no further increases this year. This accompanies E.ON’s declaration that it will raise its electricity prices by 16% and its gas prices by 26%.

The firms are the third and fourth of the big six companies to step-up the cost of domestic energy bills in a second round of rises this summer, with the remaining firms - Scottish Power and npower - expected to follow suit.

Alistair Phillips-Davies, a representative from SSE, blamed energy imports to the Great Britain and said that the world is going through an energy shock of a kind not seen since the early 1970s. He further added that energy suppliers have to take steps towards covering their costs and that he was genuinely sorry that the company could not delay these price rises any longer.

While this will be little comfort, these increases would have been even higher but for the fact wholesale prices have fallen back a little in recent weeks. Comparison site uSwitch said the average household bill for an SSE dual fuel customer was £875 in January 2008 but will have risen to £1,259 by Monday next week. The E.ON step-up raises their average dual fuel bill from £1,063 to £1,297, an increase of £234.

Tim Wolfenden, head of home services at uSwitch.com, said: “Soaring energy bills pose a huge threat to our standard of living - gas and electricity are essential commodities, which have now become a luxury that many can no longer afford.”

Consumers are going to have to adapt rapidly and there are two key steps to this - making a point that they pay the lowest possible price for energy and learning to use less of it. He also said that consumers should look to pay by direct debit and move to an online plan where possible to get the best available prices and limit the impact of spiraling energy bills.

Adam Scorer, campaigns director with consumer group Energywatch, said: “It’s not just consumers who are confused about what drives price rises. The wholesale price of oil and gas has dropped off in recent weeks but companies still feel the need to raise costs by staggering amounts.” Scorer added that with household budgets being extended tighter and tighter the need for action has never been greater.

The hard fact is that prices are still set in reference to an illogical and toxic link to the price of oil. Whether the cure is to break the contractual link between oil and gas prices, or whether it is to find other ways to force greater competition into the European wholesale market, it must be the subject of determined and vigorous intervention by competition authorities at home and in Europe.

With declarations from government and Ofgem anticipated in the next month, the industry is all set to witness whether there is a coherent plan to tackle the myriad failings in this market.

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