The decree read by Morales calls for Iberdrola to receive indemnification after an independent firm is hired within 180 days to determine the value of the nationalized shares.
Morales in May also nationalized Transportadora de Electricidad belonging to Spanish company Red Electrica, which controlled 74 percent of energy transmission in Bolivia.
In his first year in office in 2006, the Bolivian president nationalized the oil industry through a renegotiation of contracts with a dozen oil companies, including Repsol, Petrobras, BG and Total.
In 2009 Morales transferred to state control the country's largest telephone operator, which had been controlled by Italy's ETI, and in 2010 he did the same with the four largest power generators, which had belonged to French-owned Suez, Rurelec of Britain and Bolivian shareholders.
Associated Press writer Harold Heckle in Madrid contributed to this report.