Belco Releases Letter To Shareholders

Hamilton, Bermuda:  30th June 2005 - Belco Holdings Ltd. has today released to the Bermuda Stock Exchange (BSX) its most recent letter to shareholders.

"The Board of Directors has declared a dividend of 38.5¢ per share for the second quarter of 2005.  A cheque is enclosed for shareholders who have requested direct payment.  Those who designated a deposit to their savings or current account have been given credit effective today.  As of June 23, the market price per share was $42.00.

BELCO

Total kilowatt hour sales for the first five months of 2005, January through May, are 3.4 percent ahead of last year. This increase is led by the residential sector with 2005 sales through May, 5.05 percent ahead of last year. Greater residential sales are attributed to an average 2.24 percent increase in the number of residential metered connections, reflecting completion of new housing units, as well as an average 2.75 percent increase in overall residential consumption.  Demand sales also increased 3.62 percent in the months through May 2005, reflecting the re-opening of tourism properties that were closed last year due to extensive Hurricane Fabian restorations. There was a slight increase in small commercial sales of 0.36 percent.

BELCO Milestone

The highlight of the second quarter was clearly the official opening of the final extension to the East Power Station electricity generating plant by the Premier on May 5^th. The addition of the two 14.5 medium speed diesel engines, E7 & E8, the building and ancillary equipment represent an investment of $45 million.  As you may have read in the commemorative brochure sent to you in May, the completion of the fourth and final phase of the East Power Station was the culmination of a 20-year project totaling $153 million.  Given the milestone this event represents in BELCO's history, we were pleased to have welcomed a number of important overseas and local guests representing many of the companies that have been involved in one or more of the development phases.  This included representatives from Burmeister & Wain Scandinavian Contractors of Denmark (BWSC), the primary contractor for three of the four development phases, and MAN B&W which built four of the eight engines in the East Power Station. 

The two new engines bring our summer-rated electricity generating capacity to 165 megawatts (MW), adequate to meet projected demand through 2008 when, our forecast indicates, additional plant capacity may be required. 

Integrated Resource Planning/Sustainable Development

We are currently in the process of developing the next Integrated Resource Plan and will be meeting with Government by the last quarter of this year to begin discussions on future requirements. We will also be taking our plan to the public in early 2006. The Integrated Resource Plan will address issues and options for future plant sites, the feasibility of renewable energy technology as a part of the overall electricity generating plant mix, and future transmission and distribution requirements. 

The timing of this planning exercise is particularly relevant given that Government is also in the process of developing a sustainable development plan for the Island.  In May, at the request of the Sustainable Development Project Team, BELCO participated in a meeting with individuals, organizations and business representatives who had expressed a specific interest in the energy component of the sustainable development discussions. There was a constructive exchange of information on the issues and challenges relating to the future. We have undertaken to meet with this group again, once we have completed the Integrated Resource Planning process. 

As one of the largest local companies on the Island with a customer base encompassing all of Bermuda, our interests in sustainable development extend beyond our core business to include all other aspects of our community life. Therefore, we were very pleased that the Premier invited BELCO to have a representative on the Sustainable Development Roundtable Advisory Board.   Executive Vice President and Chief Operating Officer A.L.Vincent Ingham is our primary representative on the Advisory Board, and I attend when he is unavailable.  We look forward to contributing to the Island's future well-being, specifically on technical, economic and social matters, as they relate to the discussions and deliberations.

BELCO Centenary

Beginning the third quarter of this year, and extending through the third quarter of 2006, BELCO will be commemorating its 100^th year.  What was then the Bermuda Electric Light Power & Traction Co. Ltd., held its first shareholders meeting on September 29, 1906. 

During the anniversary year, we will be acknowledging this historical marker with quarterly events. We are very pleased to report that the Bermuda Post Office has agreed to a Commemorative Stamp Issue, which includes a First Day Cover, due to be released in January 2006.   We are also working with the Bermuda Maritime Museum on a site for the BELCO Museum.  A number of artifacts, including equipment, photographs and documents, previously stored at BELCO, have been moved to Dockyard in preparation for a professional museum display.  We will provide further details as this project progresses.

Bermuda Gas

New housing units, tourism developments and the re-opening of hospitality related commercial properties, following completion of Hurricane Fabian repairs, contributed to a 12.3 percent increase in overall sales results through May 2005, compared with the same period in 2004. 

Gas sales are 14 percent ahead of the same period last year. Appliance sales for the first five months of the year increased 13.5 percent over 2004 led by commercial sales, as Bermuda Gas fulfilled medium to large scale contracts for outfitting commercial kitchens and laundries. Large scale project work moved Service Labour & Parts sales forward to end the period 1.8 percent above 2004.

Community Support

The second quarter of 2005 was an active period for BELCO's community support programs.  In May, the BELCO Bermuda Day Float was awarded Best Commercial Float in the Bermuda Day Parade.  Commemorating Bermuda's Quincentennial year, our float depicting the Bermuda crest was a crowd pleaser. Thank you to all those employees who volunteered their time to work on the float and congratulations on an excellent effort.

The last weekend of May, we hosted the third annual BELCO Cup cricket competition, a two day event involving the four top teams from the previous cricket season.  The semi-finals were played in Somerset and St. David's, with the final in St. David's.  The final match drew large crowds and provided an excellent display of superb cricket. We are pleased to congratulate the winners Southampton Rangers who have won the BELCO Cup for a second time, having taken the Cup during the first year of our sponsorship.

June 5th brought another great community event and significant accomplishment with the 9^th Annual Rubber Duck Derby that raised a record $120,000 for Agape House, Bermuda's only hospice for the terminally ill. The event held on Ordnance Island in St. George's was well attended by people of all ages who came out to enjoy an afternoon of food, fun and entertainment, including cheering on the racing ducks as they crossed the finish line. We are very proud to be the title sponsor of this event and thank all corporate sponsors and individuals who purchased ducks and promotional items.  I am specifically proud of our BELCO and Bermuda Gas employees who this year significantly exceeded their previous contributions to this event.

In closing, I cannot help but remind you that we are now in hurricane season. It has been forecast to be a busy season and, as in the past, I encourage each of you to prepare well ahead for the possibility of a severe storm. This includes cutting back trees and advance purchasing of the supplies and equipment you and your family may need to remain safe and comfortable.  Let's hope it will be a better season than what has been forecast."

Signed by,

Garry A. Madeiros

President & Chief Executive Officer