An independent Scotland could affect some Spanish Iberdrola’s assets

Maybe Spaniards should pay more attention to polls on next Scotland’ independency referendum, not only because it will serve as a refererence for Catalonia aims of leaving Spain, but also because Scottish people’s voting intention could affect first Spanish energy company, and Europe’s third Iberdrola’s interests in the Highlands land.

Earlier this month David’s Cameron government published a report collecting options after Scotland’s potential departure for ScottishPower and its rival Scottish and Southern Energy in the EU’ context. This report is part of Downing Street political campaign before the referendum to be hold on next 18th September. It explains that Iberdrola’s subsidiary Scottish Power and also its domestic counterpart Southern Energy could lose the regulation advantages that London negotiated with Brussels for both, according to which they are not forced to separate transportation assets from other business such as generation and electricity supply. Other European countries, including Spain and UK,  did have to carry out that activities splitting. For instance in  Spain, company Red Eléctrica manages all high-power lines which previously were owned by supplying companies like Endesa or Iberdrola itself.

Some sources have understood the issue as a warning or a threat about possible risks for Iberdrola to be forced to sell its electricity transportation grid at Great Britain’s north. It only would comprise high-tension lines, which means a little portion of 20-25% of Iberdrola’s income coming from Scottish Power. The government’s document would also mention the possibility for Scotland to reapply for EU membership if Scottish citizens said yes to independency’s option.

“Iberdrola is used not to comment on political questions or circumstances that have not occurred yet”, companies sources said to The Corner. However, Scottish Power did make an official statement about the matter and dismissed its eventual breaking-up or the warning for Iberdrola’s assets in the region. A company’s spokesman said: “This is not an issue. It has not been raised with ScottishPower at any level.” 

“As the referendum approaches, and depending on surveys’ expectations of course there will be rumours and uncertainty over the Spanish company, but also over all foreign companies with assets in Scotland. Anyway, it is unlikely to see the scenario of Iberdrola selling its transportation assets in the region”, Isabel Mera says, specialized analyst on energy sector at Norbolsa.

On their part, Scottish government considers the country resulting from independency could stand belonging to the EU without too many changes. Within energy sector, their bet is to maintain current single market between Scotland and the rest of UK in order to guarantee Scottish Power competence against its English rivals Centrica as well as EDF, E.ON and RWE’s subsidiaries. Regarding to this point Isabel Mera explains that “words from Scottish leader Alex Salmond assuring there will be a single market, which is the logical tendency in the European context, undoubtedly would bring calm markets and companies”.

“ Iberdrola assets in Scotland are liquid and therefore very appreciated by investors, so that in the hypothetial case that it had to sell their high-power lines, it would have offers enough to meet its goals”, she adds.

In opinion of Renta 4’ analysts, “it is still very soon to assure anything. It is neccesary to see how the situation evolves including referendum results first and potencial negotiations with the EU afterwards”.

Last polls at the end of 2013 suggested 52% of Scottish citizens are not in favour of separation, but in the case Scotland decide to say yes they will have to wait until 24th March of 2016 to be an independent country in fact.

About the Author

Julia Pastor
Julia Pastor has broad experience in business writing for Consejeros Media Group at Consejeros, Consenso del Mercado and The Corner. Previously, she worked for the financial news agency GBA and contributed to El País Business. She holds a Master's in Financial Journalism and a degree in English from the Complutense University in Madrid.

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