As the political temperature on energy bills rose yesterday with former prime minister Sir John Major's call for a windfall tax on energy companies, the Spanish utility giant said regulation at home and in the UK had squeezed its nine-month profits, including a 67% rise in generation and retail levies.
"In the UK, this business was affected by tight margins, aggravated by energy efficiency and environmental measures imposed by the regulator," Iberdrola said.
"As a consequence, generation and supply is now loss-making, and leaves the company no option but to increase tariff."
Iberdrola said net earnings from generation and supply were nearly 9% down at €1,531million, with a 6% rise in gross margin outweighed by a 67% rise in taxation.
Levies in Spain had doubled to €626m while taxes on generation in Spain came to €381m.
Its renewables business recorded a 2.5% increase in net earnings to €1,211m, of which 53% was from "outside Spain where taxation increased by 3.5 times".
Iberdrola, based in Bilbao, said "positive business activity, including efficiency gains" had reduced the impact on net earnings to a negative €240m or a 3% decline.
It said that in its networks business, gross margin was up 3% in the UK due to increased revenues resulting from a larger asset base following investments.
The company has cut its debt by €3.3 billion over the past 12 months, meeting 50% of its objective of a €6bn cut in the period 2012-2014.