1st Quarter 2009 Report to Shareholders

Dear Shareholder,

The Board of Directors has declared a dividend of 21.25ยข for the first quarter of 2009. 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 23 March, the market price per share was $16.20.

The Annual General Meeting (AGM) of BELCO Holdings Limited will be held on Wednesday, 20 May at 3:30 pm., at the Bermuda Underwater Exploration Institute. The AGM will include an update presentation about our renewable energy initiatives, as well as expectations for a new regulatory environment. The Annual Report is being prepared and is scheduled to be mailed in early May.

BELCO Holdings Limited ended 2008 with consolidated net earnings of $21,425,427, an increase of 5.03 percent, compared with $20,399,518 earned in 2007. The $1,025,909 increase in 2008 net earnings is primarily due to improved BELCO performance, offset by both start-up costs incurred by newly formed PureNERGY Renewables Ltd. and decreased earnings realised by Bermuda Gas.

During the year, BELCO Holdings Limited acquired a building and associated property for $13.3 million to allow space for future expansion. A new subsidiary, Serpentine Properties Limited, was incorporated as a wholly owned subsidiary of BELCO Properties Limited. Serpentine Properties Limited provides leased space to several commercial tenants within the complex.

BELCO ended the year earning $21,374,791, as compared to $19,217,850 in 2007. It is important to note, however, that 2007 results for BELCO were negatively affected by a $1.8 million inventory write-off . Total kilowatt hour (kWh) sales in 2008 were 0.18 percent ahead of 2007, mainly attributed to a 1.49 percent increase in commercial sales brought about by the addition of new customers and increased consumption. Conversely, sales to residential customers decreased 2.58 percent, despite an increase in the average number of residential customers from 31,627 to 32,207. Energy conservation by many households resulted in an average monthly consumption decrease of 4.34 percent from 726.39 kWh in 2007 to 694.88 kWh in 2008.

Total fuel costs increased by $43,720,261 from $85,767,287 in 2007 to $129,487,548, as the average price for a barrel of fuel was 41.49 percent above 2007, rising from $84.36 to $126.11 in 2008. A fuel adjustment rate of 20.5 cents per kWh from September through November was the highest ever. Fuel adjustment finally began decreasing in December and is continuing to decrease in 2009. BELCO was able to achieve greater fuel efficiency of 707 kWh per barrel of fuel compared with 705 kWh in 2007. This improved performance is attributed to relatively consistent day and evening loads and increased availability and use of diesel plant, which is more efficient than gas turbines. The peak load on our system increased 1.78 percent on 23 September, at 8 pm. when the demand reached 119.8 MW compared to 117.7 in 2007. Maximum evening loads closely approximate daytime loads, indicating that high levels of demand for electricity are being maintained for longer periods.

BELCO invested $21,794,926 in energy infrastructure projects and financial systems during 2008. This included work associated with energy supply planning and enhanced protection systems at the power station site. On the energy delivery system there were large transmission and distribution projects to meet new customer demand, increase power flow, improve reliability and allow for the possibility of distributed generation in the future. The company also invested in a new customer information system that went live in January 2009.

Bermuda Gas
Bermuda Gas' net earnings decreased to $419,383 from $1,127,895 in 2007. Propane gas price increases, as well as the general downturn in the economy affected overall gas, appliance and service sales. A review of sales processes late in the year and the addition of four apprentice technicians, following completion of training, will enhance sales and service capabilities.

PureNERGY Renewables Ltd. was launched in May 2008 to provide customised design and installation of small scale renewable energy products to residential and commercial customers. As per the business plan, start-up costs were incurred in 2008 to allow the new company to establish itself in the market.

Integrated Energy Plan
The Bermuda Government's Green Paper on Energy was released in February and debated in both the House of Assembly and the Senate in March. As we had made numerous presentations to Government on recommendations for greater energy efficiency and incentives for renewable energy, we are very pleased that the Green Paper supports the adoption of efficiency standards and Customs Duty relief for renewable energy components. The Green Paper will be followed by further public consultation, and then a White Paper leading to policy and legislation.

In our effort to attract renewable energy providers to Bermuda, we have invited five successful respondents to our Solicitation of Interest to present their technologies to Government and the public. Principals representing proposals for photovoltaic, wind, biomass, waste-to-energy and ocean will be presenting their technologies at public forums scheduled for Tuesday, 31 March and Tuesday, 7 April at North Hall at The Bermuda College. For further information, please check BELCO's website at www.empoweringprogress.bm or call our External Relations and Corporate Communications department at 298-6126 for further information.

I am sure we will have much more to share with you in May, and look forward to seeing you at the AGM on the 20 May.

Yours sincerely,
A.L.Vincent Ingham
President & Chief Executive Officer