Iberdrola Profit Declines on Regulatory Changes, Weak Demand

Spanish utility Iberdrola SA's (IBE.MC) net profit fell 3% in the first nine months of the year due to regulatory changes and weak demand, the company said Wednesday.

Net income for the nine months ended Sept. 30 dropped to 2.27 billion euros ($3.10 billion) from EUR2.34 billion in the same period last year.

The results underscore the effect of regulatory efforts in Spain that seek to keep electricity prices from rising too quickly.

In July, Spain 's government announced a sweeping electricity-sector reform that cut the compensation for transporting and distributing energy, payments that help gas-fired power plants stay open as backups for the electrical system, and subsidies for renewable-energy producers.

Ultimately, the regulator hopes to keep the costs of running Spain 's electrical system in line with the revenue it generates from selling power to consumers. The system has been running deficits for most of the last decade.

Partly because of the regulatory changes in Spain , Iberdrola said earnings before interest, taxes, depreciation and amortization, or Ebitda, a key metric of operating performance, declined 3.2% to EUR2.8 billion in its regulated networks division.

Overall Ebitda declined 4% to EUR5.54 billion in the first nine months of the year.

Revenue also declined 4% to EUR24.2 billion through September 2013 compared with the same period a year earlier.

The amount of electricity Iberdrola distributed in the first nine months fell 0.4%.