BELCO Shareholders' Letter

Hamilton, Bermuda: June 29, 2007 - In an announcement made to the Bermuda Stock Exchange (BSX) the BELCO (BELCO.BH) Board of Directors has declared a dividend of 20.25¢ per share for the second quarter of 2007. A cheque is enclosed for shareholders who have requested direct payment.  Those who have designated a deposit to their savings or current account have been given credit effective today. As of June 18, the market price per share was $23.25.

The Annual General Meeting (AGM) of BELCO Holdings Limited was held on Monday, May 7, 2007 at the Bermuda Underwater Exploration Institute and was well attended. The annual report was accepted. Shareholders unanimously agreed to re-elect the existing Directors on block, and PricewaterhouseCoopers were reappointed as the auditor for the ensuing year.   The meeting was followed by a presentation, updating shareholders about the consultation that continues to take place regarding issues outlined in BELCO's Electric System Discussion Document.  The outcome of these discussions will ultimately help to define BELCO's energy development strategy going forward. As this was my final AGM as President & CEO, since I am retiring at the end of 2007, it gave me great pleasure to meet with many of you at the reception following the presentation and to thank you personally for your support over the past 14 years.   

On July 1, 2007, Executive Vice President and Chief Operating Officer A.L.Vincent Ingham will succeed me as President and Chief Executive Officer of BELCO. Please join me in congratulating Mr. Ingham on his new appointment and please continue to provide him the support I have enjoyed during my tenure.   I will remain President and Chief Executive Officer of BELCO Holdings Limited through December 31, 2007, at which time Mr. Ingham will also succeed me as President & Chief Executive Officer of BELCO Holdings Limited. 

BELCO

Total kilowatt sales through May were 3.53% ahead of the same period in 2006.  Demand, or large commercial sales, increased 4.44%, while small commercial sales were also ahead 2.38%. Since the beginning of the year, 753 new residential metered connections have been installed, contributing to a 3.14% increase in residential sales for the first five months of 2007 compared to the same period in 2006.

BELCO and BWSC are currently in the process of commissioning a new installation in BELCO's Oily Waste Water Treatment Plant. The original facility was built in 1997 to collect and treat waste lube oil for appropriate disposal. Water is extracted from the lube oil, treated and then pumped into the underground water lens on BELCO's site. The lube oil product is shipped to a recycling plant in the United States.  In compliance with BELCO's operating license under the Ministry of the Environment, the new treatment equipment improves overall waste oil handling, particularly as it relates to the standard of the water extracted from the process. The new system also reduces labour requirements and provides a better quality product for shipment overseas.  Approximately 840,000 litres of lube oil is shipped by BELCO to the U.S. for recycling annually. 

A highlight during the second quarter was BELCO's hosting of the 2007 CARILEC CEOs Conference at the Fairmont Hamilton Princess. CARILEC is the association of Caribbean electric utility companies.  The May 21-23 conference was opened by Bermuda's Deputy Premier the Hon. Paula A. Cox, JP, MP, and was attended by close to 100 people including CEO's from many Caribbean utilities and vendors from the United States, United Kingdom, Canada, Denmark, France and Germany.  The conference theme, "Partnerships and Strategies for Success in a Global Environment", covered a wide range of topics including the impact of global climate change on island nations, utility regulations, renewable energy technologies and human resource challenges facing the industry.  In addition to being extremely pleased with the high level of international participation, we were also very proud of the caliber of presentations and information exchanged. 

As with other electric utilities in North America and the Caribbean region, BELCO is facing recruiting challenges due to a worldwide shortage of electricity utility engineers and trained personnel to meet the requirements of highly skilled trade positions within the industry. Our traditional recruiting locations have not been able to fulfill our needs, and as a result our most recent recruitment drive has required us to try to attract applicants from as far away as India. We expect this trend will continue. There are clearly great opportunities in the electric utility industry, and we would like to see more Bermudians already within our industry and related fields preparing for these higher skilled positions. 

A wage and benefits dispute between BELCO and the Electricity Supply Trade Union that prolonged reaching a settlement for a new two-year collective agreement was resolved in April without having to resort to Permanent Arbitration.  We are pleased to report that the two sides were able to agree on a way forward that is mutually beneficial, and which has allowed for the finalization of the Collective Agreement.

Bermuda Gas

Bermuda Gas' overall sales through April 2007 are 11.08% ahead of the same period last year.  Gas sales for the period were up 3.92%.  Appliance sales, rebounding after resolution of supply and inventory issues, increased 41.86% over the same period in 2006, as Bermuda Gas is also now benefiting from greater consumer traffic at its central Church Street location.  Service and Parts sales were also 2.44% ahead of last year, despite a slight reduction in service personnel.  Bermuda Gas is continuing to partner with the Bermuda National Training Board and hopes to have as many as three people pursing overseas service technician training in the near future. 

Community Support

We are very pleased to report that this year's Rubber Duck Derby fundraiser on June 3, in support of the hospice for the terminally ill, netted record results of over $150,000.  As the title sponsor of this event for the past 11 years, we have been gratified to see the steady growth in both participation and support.

Congratulations to the Southampton Rangers who once again won the coveted cricket title, the BELCO Cup.  Janeiro Tucker was Man of the Match. St. David's and Flatts were semi-finalists, and Young Men's Social Club lost to Southampton Rangers in the final at St. David's.  The BELCO Cup is now in its fifth year.

Please remember we are in hurricane season.  Prepare ahead and shop for the materials and equipment you will need to keep you and your family safe and secure.  Please take the time to look at overhead power lines in your area, and where trees are dangerously close to power lines, please call BELCO to arrange tree trimming before bad weather is forecast and it is too late for BELCO to assist.

Yours sincerely,

Garry A. Madeiros

President & Chief Executive Officer