Belco Releases Letter To Shareholders

Hamilton, Bermuda:  30th June 2006 - Belco Holdings Ltd. has today released to the Bermuda Stock Exchange (BSX) its most recent letter to shareholders:

"June 30, 2006

Dear Shareholder,

The Board of Directors has declared a dividend of 40.5¢ per share for the first quarter of 2006.  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, 2006, the market price per share was $40.00.

The 2006 Annual General Meeting of BELCO Holdings Limited was held on May 8, at the Bermuda Underwater Exploration Institute. Shareholders unanimously agreed to increase the Company's share capital from 10 to 20 million shares. The number of Company Directors remains at 14 and the existing Directors were elected on block. The Company also agreed to reappoint PricewaterhouseCoopers as auditors for the ensuing year.  The meeting was followed by a presentation of BELCO's Electric System Discussion Document, outlining energy options for the next 20 years and, in recognition of the Company's 100^th Anniversary, a celebratory cocktail reception. We were very pleased that some 90 shareholders attended the event.

BELCO

Total kilowatt sales through May are 1.9% ahead of the same period in 2005.  Demand, or large commercial sales increased 5.16%, while small commercial sales were also ahead 3.96%. Perhaps reflecting milder temperatures and some conservation efforts in response to higher fuel adjustment costs, residential sales are 1.29% lower than last year, despite an increase of 582 additional metered residential customers.

A major focus this quarter has been on working toward the completion of the permanent switchboard facility that will replace the buildings and equipment destroyed by the July 14, 2005 fire. A roof wetting ceremony was held on June 22, 2006 and commissioning of the new $10.7 million facility is due by mid-July. This will conclude Phase I of this project, which includes construction of a two-storey, 9,500 sq.ft., reinforced concrete building and a low-maintenance, state-of-the-art switchboard that incorporates industry best practices and safety standards. Once completed, the new facility will provide access to two of the three generators which were left stranded from the system. This restores plant operating capacity and ensures the overall security of electricity supply in time for summer's peak electricity demands.  The third engine will be reconnected shortly thereafter, as work on the system continues. Phase II of this project will progress through late 2007, and includes making further changes to the transmission and distribution network to enhance the security of supply to Hamilton and areas outside the City.

In addition to completion of this new facility, we continue to place a great deal of time and effort on activities stemming from recommendations contained within the EA Technology and the Technical Standards & Safety Authority (TSSA) reports on the fire, commissioned by the BELCO Holdings Board of Directors and the Bermuda Government, respectively. These include action items stemming from an audit of the BELCO protection system, a strategic review of the BELCO power system, as well as fire prevention and protection studies.

Electric System Discussion Document

Since the beginning of the year, we have presented BELCO's  Electric System Discussion Document to over 16 external stakeholder groups, as well as employees.  The comprehensive document details and assesses energy production and delivery options, and weighs them against: feasible resources, environmental considerations, greater conservation activity, and how these factors will influence BELCO's business model going forward. 

The purpose is to stimulate thought and discussion in an effort to gain consensus regarding the best way forward, as well as to position the Company to adapt its business model accordingly.  This could include BELCO investing in generating sites away from its main Pembroke plant, partnerships with others to develop generation facilities elsewhere on the Island, and/or purchasing power from independent producers. Adding a renewable component to Bermuda's electricity generation mix is another element detailed in the discussion document, specifically the energy contribution BELCO expects to receive as a result of its recent agreement with Current to Current Bermuda Limited to purchase power generated by ocean currents.

Feedback from the sessions to date has been positive and constructive. We will now move the discussions to a more focused level and meet with smaller, working groups and target discussions on specific items of interest, and work through details to clarify the possibilities.

Bermuda Gas

We are very pleased to report that the Bermuda Gas showroom is now firmly established at its new Hamilton location in the Boyle's Building on Church Street. 

Bermuda Gas' overall sales for the five months through May 2006 are 1.9% lower than the same period last year. Gas sales for the period are 11.2% higher than last year due to continued higher gas prices. Appliance sales had a slow start to the year, down 26.7%.  However, sales are expected to improve with heavier volume of traffic in the new location. Service and parts revenues increased 6.3%, resulting from a significant number of construction projects.

Centennial Anniversary

To commemorate BELCO's 100^th anniversary, we are preserving our history and sharing with the community the development of electricity services in Bermuda. In particular, we are focusing on BELCO's role as a service provider, employer and community partner.

Over the century, hundreds of photographs have accumulated at our Company headquarters, many undated and unmarked, but clearly historical and very interesting.  We are now bringing them into perspective by developing a pictorial book highlighting BELCO's history. The book will be available by the 100^th birthday date, September 29, 2006. 

The Bermuda Maritime Museum is also partnering with us to preserve BELCO artifacts. A BELCO exhibit is being developed at the Maritime Museum that will provide historical and educational information and displays.  The target date for the opening of the exhibit is also September 29.  We will keep you posted on the progress of these two significant projects.

Supporting One of Our Own

Earlier this month, BELCO announced that the Company has committed to support Bermuda's World Cup Cricket effort by sponsoring its own employee, National Team bowler Kevin Hurdle, as he trains for the 2007 World Cup competition with the National Team. Mr. Hurdle, an Operator Helper in the Energy Supply Group, will retain his position and will receive paid leave while training and competing with the National Team overseas.  The Company has committed to this arrangement up until the end of 2006 and will review it at the end of the year to determine requirements for further commitment as necessary.

The Company has traditionally supported employees who have represented Bermuda as a part of a national team in the Olympics, Commonwealth Games and other international events by providing paid leave during the event.  However, given Government's unprecedented $11 million investment to elevate the Island's cricket to an international level, BELCO agreed to expand its normal level of support to provide a meaningful contribution to the overall program.

Community Support

A unique project that began in 2001, concluded in May 2006 with the dedication of a new landmark at the entrance of the Bermuda Aquarium, Museum & Zoo (BAMZ). The copper sculpture, €˜The Grouper' was designed to replicate the 2001 BAMZ & Bermuda Zoological Society (BZS) Bermuda Day Float that unfortunately, due to bad weather, never debuted in the parade, but won public praise while on display at BAMZ.  The idea for a copper replica came to life when the Bermuda Cathedral was preparing to install a new copper roof and disposing of the old copper.  BELCO provided funding, so that BAMZ would obtain the copper from the Cathedral to turn the parade float into a permanent sculpture.  €˜The Grouper', beautifully constructed by Will Collieson, will eventually be part of a fountain.

June 4, 2006 marked the 10^th anniversary of the Rubber Duck Derby in support of Agape House, Bermuda's only hospice for the terminally ill.  We are very pleased to report that this year's Derby attracted more entries than ever, and raised $140,000, exceeding previous years and the 2006 target of $130,000.  In fact, a record number of 650 Corporate Ducks were purchased, resulting in two Corporate Duck races at Ordnance Island, St.George's.  We appreciate the support of all who purchased ducks and all who turned out for the Derby races, which helped to make it a great day and a great event.  We are also very grateful to the Friends of Hospice volunteers who work so hard in support of Agape House. 

We also report on a very successful BELCO Cup Cricket Final that took place on June 11, 2006 and drew a large enthusiastic crowd.  Congratulations to Southampton Rangers who won the BELCO Cup for a third time, having also won in 2003 and 2005. St. David's were the finalist, while Western Stars and Bailey's Bay were the semi finalists.  We are pleased to be able to sponsor this important fixture on the local cricket calendar. 

Summer is upon us and, as you are aware, we are in hurricane season. Once again, we urge everyone to prepare ahead.  This includes trimming trees and purchasing supplies, two preparations which may be difficult to accomplish at a time when a storm is imminent.

Finally, we are also pleased to note that CARILEC, an association of Caribbean electric utility companies, has just committed to hold its May 27-30 CEO Conference in Bermuda at Wyndham Resort. The organization's interest in coming to the Island is due in part to BELCO's agreement to purchase renewable energy generated by ocean currents from Current to Current Bermuda Limited. BELCO looks forward to hosting this distinguished group and, amongst other topics, exploring with them the use of renewable energy in island communities.

Yours Sincerely,

Garry A. Madeiros

President & Chief Executive Officer "