Tortoise Energy Capital (XTYYX) N-CSRS Certified semi-annual shareholder report (management investment company)

As filed with the Securities and Exchange Commission on August 4, 2006

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-21725

Tortoise Energy Capital Corporation

(Exact name of registrant as specified in charter)

10801 Mastin Blvd., Suite 222, Overland Park, KS 66210

(Address of principal executive offices) (Zip code)

David J. Schulte

10801 Mastin Blvd., Suite 222, Overland Park, KS 66210

(Name and address of agent for service)

913-981-1020

Registrant's telephone number, including area code

Date of fiscal year end: November 30

Date of reporting period: May 31, 2006

Item 1. Report to Stockholders.

Insert cover page graphic here

Company at a Glance

• A pioneering closed-end investment company investing primarily in equity securities of Master Limited Partnerships (MLPs) operating energy infrastructure assets

• Objectives: Yield, Growth, Quality

About Master Limited Partnerships

MLPs are limited partnerships whose units trade on public exchanges such as the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) and the NASDAQ. Buying MLP units makes an investor a limited partner in the MLP. There are currently more than 50 MLPs in the market, mostly in industries related to energy, natural resources and real estate.

Investment Objectives: Yield, Growth and Quality

Tortoise Capital invests primarily in MLPs in the energy infrastructure sector. Our goal is to provide our stockholders with a high level of total return with an emphasis on current distributions paid to stockholders. Energy infrastructure MLPs are engaged in the transportation, storage and processing of crude oil, natural gas, and refined products from production points to the end users. Our investments are primarily in mid-stream (mostly pipeline) operations, which typically produce steady cash flows with less exposure to commodity prices than many alternative investments in the broader energy industry. With the growth potential of this sector along with our disciplined investment approach, we endeavor to generate a predictable and increasing dividend stream for our investors.

Tortoise Capital Investment Versus a Direct Investment in MLPs

Tortoise Capital provides its stockholders with an efficient alternative to investing directly in MLPs. A direct investment in an MLP offers the opportunity to receive an attractive distribution that is approximately 80 percent tax deferred, with a historically low correlation to returns on stocks and bonds. However, the tax characteristics of a direct MLP investment are generally undesirable for tax-exempt investors such as retirement plans. Tortoise Capital is structured as a C Corporation — accruing federal and state income taxes, based on taxable earnings and profits. Because of this innovative structure, pioneered by Tortoise Capital Advisors, institutions and retirement accounts are able to join individual stockholders as investors in MLPs.

Additional features of Tortoise Capital include:

• One Form 1099 per stockholder at the end of the year, thus avoiding multiple K-1s and multiple state filings for individual partnership investments;

• A professional management team, with nearly 100 years combined investment experience, to select and manage the portfolio on your behalf;

• The ability to access investment grade credit markets to enhance the dividend rate; and

• Access to direct placements and other investments not available through the public markets.

July 14, 2006

DEAR FELLOW STOCKHOLDERS,

We are pleased to submit the Tortoise Energy Capital Corp. (Tortoise Capital) report for the quarter ended May 31, 2006.

Performance Review

For the quarter ended May 31, 2006, we declared a $0.375 per share dividend. On an annualized basis, this equates to a six percent yield on our IPO price of $25.00. The proceeds from the Money Market Preferred Shares offering have been invested, and the second quarter dividend reflects full investment of the company’s assets, including leverage. Approximately 52 percent of total assets were invested through direct placements or IPOs of MLPs or their affiliates.

We expect to deliver on our commitment to steadily grow dividends, and expect that a significant portion of dividends paid in 2006 will be treated as return of capital for income tax purposes.

More than 80 percent of our MLP investments increased their distributions during this quarter. We are pleased with the investment performance of our holdings, and believe we are well positioned to benefit from demand for energy.

MLP Overview and Investment Outlook

The MLP market continues to grow and produce strong results with MLP market capitalization of approximately $76 billion at May 31, 2006. MLP companies reported strong results in the first quarter of 2006, resulting from internal growth projects, prior acquisitions, and a natural increase in demand. Based upon our current portfolio, we expect distribution growth from our portfolio holdings of approximately 4 percent for the remainder of this year. Long-term, we expect growth of at least 4 percent per annum.

Between 2006 and 2008, MLPs are expected to invest more than $13 billion on internal growth projects such as construction of new pipelines and storage tanks, as well as expanding existing facilities. The financing of these projects through debt and equity offerings could create some short-term price volatility as investors digest the increased supply of offerings. Over the long-term we expect these projects to lead to increased growth of our dividends.

Acquisition activity remains strong in 2006 with over $5 billion of mainly natural gas assets entering the MLP sector. We believe acquisitions will also drive future distribution growth since MLPs currently own 50 percent or less of the refined product, crude oil, and natural gas assets in the United States.

MLP revenue is primarily based upon volumes, which are also expected to increase. The Energy Information Administration projects an average annual growth rate of 1 percent for natural gas and petroleum over the next 25 years. We continue to monitor how rising interest rates may impact borrowing costs, and high oil and natural gas prices may impact demand.

2006 Semi-Annual     1

Conclusion

In our view, a TYY investment offers investors the potential for attractive returns through a combination of a high current yield and distribution growth, generated from a portfolio of quality investments in energy infrastructure assets. When compared to similar investment alternatives like REITs and utilities, we believe a TYY investment offers superior returns with less risk.

Thank you for entrusting us with your investment. As always, we will strive to deliver a rewarding return.

Sincerely,

The Managing Directors

Tortoise Capital Advisors, L.L.C.

/s/H. Kevin Birzer	/s/Zachary A. Hamel	/s/Kenneth P. Malvey
H. Kevin Birzer	Zachary A. Hamel	Kenneth P. Malvey
/s/Terry Matlack	/s/David J. Schulte
Terry Matlack	David J. Schulte

…Steady Wins^TM

2     Tortoise Energy Capital Corp.

SUMMARY FINANCIAL INFORMATION

		Six Months Ended
		May 31, 2006
Market value per share	$	22.40
Net asset value per share		24.38
Total net assets		389,304,556
Unrealized appreciation of investments (excluding
interest rate swap contracts) before deferred taxes		48,513,750
Unrealized appreciation of investments and
interest rate swap contracts after deferred taxes		34,470,147
Net investment loss		(3,049,921	)
Total realized gain after deferred taxes		650,003
Total return (based on market value)		4.55	%
Net operating expenses before leverage costs and
taxes as a percent of average total assets(1)		1.09	%
Distributable cash flow as a percent of average net assets(2)		6.35	%

(1)Annualized. Represents expenses after fee reimbursement, excluding leverage costs and taxes.

(2)Annualized. See Key Financial Data which illustrates the calculation of distributable cash flow.

2006 Semi-Annual     3

KEY FINANCIAL DATA (Unaudited)

(dollar amounts in thousands unless otherwise indicated)

	2005		2005						2006
	May 31, 2005(1)		Q3(2)			Q4(2)			Q1(2)			Q2(2)
Total Distributions Received from Investments
Distributions received from master limited partnerships	$	—	$	1,928		$	5,058		$	7,537		$	8,436
Dividends paid in stock		—		1,464			1,549			1,580			1,454
Short-term interest and dividend income		—		1,578			494			311			182
Total from investments		—		4,970			7,101			9,428			10,072
Operating Expenses Before Leverage Costs and Current Taxes
Advisory fees		—		848			939			1,193			1,318
Other operating expenses		—		254			211			287			281
—				1,102			1,150			1,480			1,599
Distributable cash flow before leverage costs and current taxes		—		3,868			5,951			7,948			8,473
Leverage Costs(3)		—		—			372			1,935			2,530
Current income tax expense		—		—			—			17			4
Distributable Cash Flow	$	—	$	3,868		$	5,579		$	5,996		$	5,939
Dividends paid on common stock	$	—	$	3,739		$	5,423		$	5,742		$	5,989
Dividends paid on common stock per share		—		0.235			0.34			0.36			0.375
Payout percentage for period (4)		—		96.7	%		97.2	%		95.8	%		100.8	%
Total assets, end of period		334,464		392,059			494,402			580,569			607,064
Average total assets during period (5)		—		372,229			425,085			545,374			591,705
Leverage (Tortoise Notes and Preferred Stock)		—		—			120,000			190,000			190,000
Leverage as a percent of total assets		—		—			24.3	%		32.7	%		31.3	%
Unrealized appreciation (depreciation) net of deferred taxes, end of period		—		6,105			(813	)		8,716			33,657
Net assets, end of period		333,648		381,490			370,455			372,568			389,305
Average net assets during period (6)		—		371,678			381,915			373,251			380,117
Net asset value per common share		23.79		23.98			23.23			23.36			24.38
Market value per share		24.69		25.12			22.09			22.90			22.40
Shares outstanding		14,023		15,910			15,951			15,951			15,971
Selected Operating Ratios (7)
As a Percent of Average Total Assets
Total distributions received from investments		—		5.30	%		6.70	%		7.01	%		6.75	%
Net operating expenses before leverage costs and current taxes		—		1.17	%		1.09	%		1.10	%		1.07	%
Distributable cash flow before leverage costs and current taxes		—		4.12	%		5.61	%		5.91	%		5.68	%
As a Percent of Average Net Assets
Distributable cash flow		—		4.13	%		5.86	%		6.51	%		6.20	%

(1) Commencement of Operations.

(2) Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November.

(3) Leverage costs include interest expense, auction agent fees, interest rate swap expenses and preferred dividends.

(4) Dividends paid as a percentage of Distributable Cash Flow.

(5) Computed by averaging month-end values within each period.

(6) Computed by averaging daily values within each period.

(7) Annualized.

4 - 5     Tortoise Energy Capital Corp.

MANAGEMENT’S DISCUSSION

The information contained in this section should be read in conjunction with our Financial Statements and the Notes thereto. In addition, this report contains certain forward-looking statements. These statements include the plans and objectives of management for future operations and financial objectives and can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” or “continue” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are set forth in the “Risk Factors” section of our public filings with the SEC.

Overview

Tortoise Capital’s goal is to provide a growing dividend stream to our investors, and when combined with MLP growth prospects, the investment offers the opportunity for an attractive total return. We seek to provide our stockholders with an efficient vehicle to invest in the energy infrastructure sector. While we are a registered investment company under the Investment Company Act of 1940, we are not a “regulated investment company” for federal tax purposes. Our dividends do not generate unrelated business taxable income (UBTI) and our stock may therefore be suitable for holding by pension funds, IRAs and mutual funds as well as taxable accounts.

We invest primarily in MLPs through private and public market purchases. MLPs are publicly traded partnerships whose equity interests are traded in the form of units on public exchanges, such as the NYSE. Our private finance activity principally involves providing financing directly to an MLP through private placement equity investments. Our private financing is generally used to fund growth, acquisitions, recapitalizations, debt repayments and bridge financings. We generally invest in companies that are publicly reporting, but for which a private financing offers advantages.

Critical Accounting Policies

The financial statements are based on the selection and application of critical accounting policies, which require management to make significant estimates and assumptions. Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex, or subjective judgments. Our critical accounting policies are those applicable to the valuation of investments and certain revenue recognition matters as discussed below.

Note 2 in the Notes to Financial Statements included in this report discloses the significant accounting policies of Tortoise Capital.

Determining Dividends Distributed to Stockholders

Our portfolio generates cash flow from which we pay dividends to stockholders. We pay dividends out of our distributable cash flow (“DCF”), which is simply our distributions received from our investments less our total expenses. The total distributions received from our investments includes the amount received by us as cash distributions from MLPs, paid-in-kind distributions, and interest payments.

6     Tortoise Energy Capital Corp

MANAGEMENT’S DISCUSSION

(Continued)

The total expenses include current or anticipated operating expenses, total leverage costs and current income taxes on our operating income. Each are summarized for you in the table on pages 4 and 5 and are discussed in more detail below. We intend to reinvest the after-tax proceeds of sales of investments in order to maintain and grow our dividend rate.

Our Board of Directors reviews the dividend rate quarterly, and may adjust the quarterly dividend throughout the year. Our goal is to declare what we believe to be sustainable regular quarterly dividends. We have targeted to pay at least 95 percent of DCF on an annualized basis.

Distributions Received from Investments

Our ability to generate cash is dependent on the ability of our portfolio of investments to generate cash flow from their operations. In order to maintain and grow our dividend to our stockholders, we evaluate each holding based upon its contribution to our investment income, our expectation for its growth rate, and its risk relative to other potential investments.

We concentrate on MLPs with an increasing demand for services from economic and population growth. We utilize our disciplined investment process to select well-managed businesses with real, hard assets and stable recurring revenue streams.

Our focus remains primarily on investing in fee-based service providers that operate long-haul, interstate pipelines. We further diversify among issuers, geographies and energy commodities to achieve a dividend yield equivalent to a direct investment in energy infrastructure MLPs. In addition, most energy infrastructure companies are regulated and utilize an inflation escalator index that factors in inflation as a cost pass-through. So, over the long-term, we believe MLPs will outpace interest rate increases and produce positive returns.

Total distributions received from our investments relating to DCF for the quarter ended May 31, 2006 was approximately $10.1, million representing a 7 percent increase as compared to 1st quarter 2006. This change reflects a full quarter of earnings on the Money Market Preferred Shares (“MMP Shares”) issued in the 1st quarter and continuing distribution increases from a majority of our MLP investments. Total distributons received from investments represented 6.75 percent of average total assets for the 2nd quarter 2006, as compared to 7.01 percent for 1st quarter 2006. This change reflects the impact of earnings from the leverage issuance and rising distributions in the numerator of this calculation, as well as a substantial increase in our average total assets from leverage issuance and increasing market value of our investments in the denominator.

Expenses

We incur two types of expenses: (1) operating expenses, consisting primarily of the advisory fee; and (2) leverage costs. On a percentage basis, net operating expenses before leverage costs were an annualized 1.07 percent of average total assets for 2nd quarter 2006, a slight decrease from 1.10 percent for 1st quarter 2006. The net operating expenses before leverage costs for 2nd quarter 2006 increased $119,000 as compared to 1st quarter 2006, primarily as a result of increased average total assets of $46.3 million as compared to the prior quarter, which resulted in an increase in the asset based advisory fees.

2006 Semi-Annual     7

MANAGEMENT’S DISCUSSION

(Continued)

Leverage costs consist of four major components: (1) the direct interest expense, which will vary from period to period, as all of our Tortoise Notes have variable rates of interest; (2) the auction agent fees, which are the marketing costs for the variable rate leverage; (3) the realized gain or loss on our swap arrangements; and (4) our preferred dividends, which also carry a variable rate dividend. We have now locked-in our cost of capital through interest rate swap agreements, converting our variable rate obligations to fixed rate obligations for the term of the swap agreements. With very little short-term interest rate risk in Tortoise Capital, we now have an all-in weighted average cost of debt of 5.33 percent. Details of the swaps are disclosed in Note 10 of our Notes to Financial Statements.

As indicated in Note 10, Tortoise Capital has agreed to pay U.S. Bank a fixed rate while receiving a floating rate based upon the 1 month U.S. Dollar London Interbank Offered Rate (“LIBOR”). LIBOR is the primary global benchmark or reference rate for short-term interest rates, and is intended to approximate our variable rate payment obligation. The spread between the fixed rate and floating LIBOR rate is reflected in our statement of operations as a realized gain when the LIBOR rate exceeds the fixed rate (U.S. Bank pays Tortoise Capital the net difference) or loss when the fixed rate exceeds LIBOR rate (Tortoise Capital pays U.S. Bank the net difference).

Under the terms of the Tortoise Notes and MMP Shares, the rate on our leverage is determined by auction every 28 days. The spread between the winning auction rate and LIBOR is a variable component of total leverage costs. When the spread is negative (auction rate is less than LIBOR) total leverage costs are less than our fixed rate, with the opposite true if the spread is positive. Our spread to LIBOR has usually been between a negative 4 basis points (-0.04 percent) and positive 6 basis points (0.06 percent).

Leverage costs were $2.5 million in 2nd quarter 2006, as compared to $1.9 million in 1st quarter 2006, due to the increased amount of leverage outstanding during the 2nd quarter and full implementation of the swap agreements.

Distributable Cash Flow

Our 2nd quarter 2006, DCF was $5.9 million, a decrease of $57,000 or 1 percent as compared to 1st quarter 2006. The decrease is attributable to the timing of the $70 million leverage issuance during the 1st quarter. Tortoise Capital was able to invest the leverage and capture a full quarter distribution from MLPs while only paying dividends on the full amount of leverage for approximately 30 days. The 2nd quarter reflects full investment of the company’s assets, including leverage. From this, we paid a dividend of $6 million, or 100.8 percent of DCF. On a per share basis, we declared a $0.375 dividend on May 12, 2006, an increase of 4.2 percent from 1st quarter 2006. The annualized run-rate of $1.50 per share equates to a 6 percent yield on our IPO price of $25. With the growth in distributions from the master limited partnerships in which we invest, we expect the dividend to grow at least 4 percent annually.

8     Tortoise Energy Capital Corp.

MANAGEMENT’S DISCUSSION

(Continued)

Taxation of our Distributions

We invest in partnerships which generally have larger distributions of cash than the accounting income which they generate. Accordingly, the distributions include a return of capital component for accounting and tax purposes on our books. Dividends declared and paid by Tortoise Capital in a year generally differ from taxable income for that year, as such dividends may include the distribution of current year taxable income or return of capital.

The taxability of the dividend you receive depends on whether Tortoise Capital has annual earnings and profits. If so, those earnings and profits are first allocated to the preferred shares, and then to the common shares. Because most of the distributions we have received from MLP’s are not income for tax purposes, we currently have very little income to offset against our expenses.

In the future, however, Tortoise Capital could have earnings and profits. That would make our dividend like any other corporate dividend and taxable at the 15 percent qualified dividend rate. Our dividend would include a taxable component for either of two reasons: first, the tax characterization of the distributions we receive from MLPs could change and become less return of capital and more in the form of income. Second, and most likely, we could sell an MLP investment in which Tortoise Capital has a gain. The unrealized gain we have in the portfolio is reflected in the statement of assets and liabilities. Tortoise Capital’s investments at value at May 31, 2006, was $592.6 million, with a cost of $544.0 million. The $48.6 million difference is gain that would be recognized if those investments were sold at those values. A sale would most likely give rise to earnings and profits in that period and make the distributions taxable qualified dividends. Note, however, that the statement of assets and liabilities reflects as a deferred tax liability the possible future tax liability we would pay if all investments were liquidated at their indicated value. It is for these two reasons that we inform you of the tax treatment after the close of each year because both of these items are unpredictable until the year is over. We currently expect that our estimated annual taxable income for 2006 will be less than 20 percent of our estimated dividend distributions to shareholders in 2006, although the ultimate determination will not be made until January 2007.

Liquidity and Capital Resources

Tortoise Capital had total assets of $607 million at quarter end. Our total assets reflect the value of our investments, which are itemized in the schedule of investments. It also reflects cash, interest and other receivables and any expenses that may have been prepaid from time to time. During 2nd quarter 2006, total assets grew from $581 million to $607 million, an increase of $26 million or 4.5 percent. This growth was primarily a result of an increase in unrealized appreciation of investments during the quarter.

Total leverage outstanding as of May 31, 2006 is $190 million, representing 31.3 percent of total assets, which is close to our target for leverage of approximately 33 percent of total assets.

While we currently have no plans to do so, we may in the future raise new debt and equity capital from time to time in order to fund investments we believe are beneficial to our shareholders.

2006 Semi-Annual     9

SCHEDULE OF INVESTMENTS (Unaudited)

	May 31, 2006
	Shares		Value
Master Limited Partnerships and
Related Companies — 150.2%(1)
Crude/Refined Products Pipelines — 87.8%(1)
Buckeye Partners, L.P.		207,191	$	9,004,521
Enbridge Energy Partners, L.P.		860,700		37,457,664
Holly Energy Partners, L.P.		49,215		1,974,506
Kinder Morgan Management, LLC(3)		1,827,862		79,457,161
Magellan Midstream Partners, L.P.		952,429		32,992,140
Pacific Energy Partners, L.P.		1,612,700		50,477,510
Plains All American Pipeline, L.P.		560,600		27,189,100
Plains All American Pipeline, L.P.(2)		65,971		3,071,610
Sunoco Logistics Partners, L.P.		848,860		36,458,537
TEPPCO Partners, L.P.		755,898		28,452,001
Valero, L.P.		682,209		35,120,119
				341,654,869
Natural Gas/Natural Gas Liquid Pipelines — 25.2%(1)
DCP Midstream Partners, L.P.		323,250		9,186,765
Enterprise Products Partners, L.P.		2,956,496		74,503,699
ONEOK Partners, L.P.		289,050		14,365,785
				98,056,249
Natural Gas Gathering/Processing — 32.8%(1)
Boardwalk Pipeline Partners, L.P.		754,760		17,487,789
Copano Energy, LLC		531,701		24,809,168
Crosstex Energy, L.P.		1,269,913		43,634,211
Energy Transfer Partners, L.P.		662,720		29,981,453
Hiland Partners, L.P.		2,200		93,038
Regency Energy Partners, L.P.		471,720		10,519,356
Williams Partners, L.P.		32,335		1,116,204
				127,641,219

10     Tortoise Energy Capital Corp.

SCHEDULE OF INVESTMENTS (Unaudited)

(Continued)

	May 31, 2006
	Shares		Value
Shipping — 2.2%(1)
K-Sea Transportation Partners, L.P.		280,910	$	8,736,301
Propane Distribution — 2.2%(1)
Inergy, L.P.		330,229		8,734,557
Total Master Limited Partnerships and
Related Companies (Cost $536,208,268)				584,823,195
Promissory Note — 1.6%(1)		Principal
		Amount
Shipping — 1.6%(1)
E.W. Transportation, LLC — Unregistered, 8.80%, Due 3/31/2009
(Cost $6,189,833)(2) (4)	$	6,227,571		6,189,833
Short-Term Investments — 0.4%(1)
		Shares
Investment Companies — 0.4%(1)
First American Prime Obligations Money Market Fund —
Class Y, 4.69%(5)		795,161		795,161
First American Treasury Obligations Money Market Fund —
Class Y, 4.61%(5)		795,160		795,160
Total Short-Term Investments (Cost $1,590,321)				1,590,321
Total Investments — 152.2%(1)
(Cost $543,988,422)				592,603,349
Auction Rate Senior Notes — (30.8%)(1)				(120,000,000	)
Interest Rate Swap Contracts — 1.7%(1)
$190,000,000 notional — Unrealized Appreciation(6)				6,520,678
Liabilities in Excess of Cash and Other Assets — (5.1%)(1)				(19,819,471	)
Preferred Shares at Redemption Value — (18.0%)(1)				(70,000,000	)
Total Net Assets Applicable to Common
Stockholders — 100.0%(1)			$	389,304,556

(1)Calculated as a percentage of net assets applicable to common stockholders.

(2)Fair valued securities represent a total market value of $9,261,443 which represents 2.4% of net assets.

      These securities are deemed to be restricted; see Note 6 for further disclosure.

(3)Security distributions are paid in kind. Related company of a master limited partnership.

(4)Security is a variable rate instrument. Interest rate is as of May 31, 2006.

(5)Rate indicated is the 7-day effective yield.

(6)See Note 10 for further disclosure.

See Accompanying Notes to the Financial Statements.

2006 Semi-Annual     11

STATEMENT OF ASSETS & LIABILITIES (Unaudited)

	May 31, 2006
Assets
Investments at value (cost $543,988,422)	$	592,603,349
Cash		6,144,538
Interest receivable		34,015
Unrealized appreciation on interest rate swap contracts		6,520,678
Prepaid expenses and other assets		1,761,399
Total assets		607,063,979
Liabilities
Payable to Adviser		883,448
Dividend payable on common shares		5,989,145
Dividend payable on preferred shares		79,024
Accrued expenses and other liabilities		475,421
Current tax liability		20,925
Deferred tax liability		20,311,460
Auction rate senior notes payable:
Series A, due November 14, 2045		60,000,000
Series B, due November 14, 2045		60,000,000
Total liabilities		147,759,423
Preferred Shares
$25,000 liquidation value per share applicable to 2,800 outstanding
shares (7,500 shares authorized)		70,000,000
Net assets applicable to common stockholders	$	389,304,556
Net Assets Applicable to Common Stockholders Consist of
Capital stock, $0.001 par value; 15,971,053 shares issued and
outstanding (100,000,000 shares authorized)	$	15,971
Additional paid-in capital		358,031,947
Accumulated net investment loss, net of deferred tax benefit		(3,049,921	)
Accumulated realized gain, net of deferred tax expense		649,687
Net unrealized gain on investments and interest rate swap contracts,
net of deferred tax expense		33,656,872
Net assets applicable to common stockholders	$	389,304,556
Net Asset Value per common share outstanding (net assets applicable
to common shares, divided by common shares outstanding)	$	24.38

See Accompanying Notes to the Financial Statements.

12     Tortoise Energy Capital Corp.

STATEMENT OF OPERATIONS (Unaudited)

	Period from
	December 1, 2005
	through
	May 31, 2006
Investment Income
Distributions received from master limited partnerships	$	15,972,843
Less return of capital on distributions		(15,124,821	)
Distribution income from master limited partnerships		848,022
Dividends from money market mutual funds		82,878
Interest		410,542
Total Investment Income		1,341,442
Expenses
Advisory fees		2,510,723
Administrator fees		180,977
Professional fees		137,604
Reports to stockholders		66,726
Directors’ fees		58,741
Fund accounting fees		29,770
Custodian fees and expenses		24,270
Registration fees		25,148
Stock transfer agent fees		7,048
Other expenses		37,474
Total Expenses before Interest Expense and Auction Agent Fees		3,078,481
Interest expense		3,043,441
Auction agent fees		198,466
Total Interest Expense and Auction Agent Fees		3,241,907
Total Expenses		6,320,388
Net Investment Loss, before income taxes		(4,978,946	)
Current tax expense		(20,925	)
Deferred tax benefit		1,949,950
Income tax benefit		1,929,025
Net Investment Loss		(3,049,921	)

2006 Semi-Annual     13

STATEMENT OF OPERATIONS (Unaudited)

(Continued)

	Period from
	December 1, 2005
	through
	May 31, 2006
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments, before deferred tax expense		1,174,399
Net realized loss on interest rate swap settlements		(108,821	)
Net realized gain, before deferred tax expense		1,065,578
Deferred tax expense		(415,575	)
Net realized gain on investments		650,003
Net unrealized appreciation of investments		48,513,750
Net unrealized appreciation of interest rate swap contracts		7,994,694
Net unrealized appreciation, before deferred tax expense		56,508,444
Deferred tax expense		(22,038,297	)
Net unrealized appreciation of investments and
interest rate swap contracts		34,470,147
Net Realized and Unrealized Gain on Investments		35,120,150
Dividends to Preferred Stockholders		(1,117,292	)
Net Increase in Net Assets Applicable to Common Stockholders
Resulting from Operations	$	30,952,937

See Accompanying Notes to the Financial Statements.

14     Tortoise Energy Capital Corp.

STATEMENT OF CHANGES IN NET ASSETS

	Period from			Period from
	December 1, 2005			May 31, 2005(1)
	through			through
	May 31, 2006			November 30, 2005
	(Unaudited)
Operations
Net investment income (loss)	$	(3,049,921	)	$	574,502
Net realized gain (loss) on investments		650,003			(316	)
Net unrealized appreciation (depreciation) of
investments and interest rate swap contracts		34,470,147			(813,275	)
Dividends to preferred stockholders		(1,117,292	)		—
Net increase (decrease) in net assets applicable to
common stockholders resulting from operations		30,952,937			(239,089	)
Dividends and Distributions to
Common Stockholders
Net investment income		—			(512,594	)
Return of capital		(11,731,383	)		(8,649,370	)
Total dividends to common stockholders		(11,731,383	)		(9,161,964	)
Capital Share Transactions
Proceeds from initial public offering of
14,000,000 common shares		—			350,000,000
Proceeds from issuance of 1,887,000 common shares in
connection with exercising an overallotment option
granted to underwriters of the initial public offering		—			47,175,000
Underwriting discounts and offering expenses associated
with the issuance of common shares		—			(18,780,799	)
Underwriting discounts and offering expenses associated
with the issuance of preferred shares		(848,812	)		—
Issuance of 20,392 and 41,131 common shares from
reinvestment of dividend distributions to stockholders		476,372			986,298
Net increase (decrease) in net assets, applicable
to common stockholders, from capital
share transactions		(372,440	)		379,380,499
Total increase in net assets applicable to
common stockholders		18,849,114			369,979,446
Net Assets
Beginning of period		370,455,442			475,996
End of period	$	389,304,556		$	370,455,442
Accumulated net investment loss
at the end of the period	$	(3,049,921	)	$	—

(1)Commencement of Operations.

See Accompanying Notes to the Financial Statements.

2006 Semi-Annual     15

STATEMENT OF CASH FLOWS (Unaudited)

	Period from
	December 1, 2005
	through
	May 31, 2006
Cash Flows From Operating Activities
Distributions received from master limited partnerships	$	15,972,843
Interest and dividend income received		537,108
Purchases of long-term investments		(82,636,822	)
Proceeds from sale of long-term investments		11,009,049
Proceeds from sale of short-term investments, net		6,117,508
Payments on interest rate swap contracts, net		(108,821	)
Interest expense paid		(3,227,145	)
Operating expenses paid		(2,915,501	)
Net cash used in operating activities		(55,251,781	)
Cash Flows From Financing Activities
Issuance of preferred stock		70,000,000
Advances from revolving line of credit		48,000,000
Repayments on revolving line of credit		(48,000,000	)
Preferred stock issuance costs		(848,812	)
Debt issuance costs		(360,966	)
Dividends paid to common stockholders		(6,457,129	)
Dividends paid to preferred stockholders		(1,038,268	)
Net cash provided by financing activities		61,294,825
Net increase in cash		6,043,044
Cash — beginning of period		101,494
Cash — end of period	$	6,144,538

16     Tortoise Energy Capital Corp.

STATEMENT OF CASH FLOWS (Unaudited)

(Continued)

	Period from
	December 1, 2005
	through
	May 31, 2006
Reconciliation of net increase in net assets applicable to
common stockholders resulting from operations to net
cash used in operating activities
Net increase in net assets applicable to common stockholders
resulting from operations	$	30,952,937
Adjustments to reconcile net increase in net assets applicable
to common stockholders resulting from operations to net cash
used in operating activities
Purchases of long-term investments		(82,636,822	)
Return of capital on distributions received		15,124,821
Proceeds from sales of long-term investments		11,009,049
Proceeds from sales of short-term investments, net		6,117,508
Deferred income taxes, net		20,503,922
Net unrealized appreciation on investments		(56,508,444	)
Realized gain on investments		(1,174,399	)
Accretion of discount on long-term investments		(6,130	)
Amortization of debt issuance costs		20,321
Dividends to preferred stockholders		1,117,292
Changes in operating assets and liabilities:
Decrease in interest receivable		49,818
Increase in prepaid expenses and other assets		(105,986	)
Increase in current tax liability		20,925
Increase in payable to Adviser		232,592
Increase in accrued expenses and other liabilities		30,815
Total adjustments		(86,204,718	)
Net cash used in operating activities	$	(55,251,781	)
Non-Cash Financing Activities
Reinvestment of distributions by common stockholders
in additional common shares	$	476,372

See Accompanying Notes to the Financial Statements.

2006 Semi-Annual     17

FINANCIAL HIGHLIGHTS

	Period from December 1, 2005through May 31, 2006			Period from May 31, 2005(1) through November 30, 2005
	(Unaudited)
Per Common Share Data(2)
Net Asset Value, beginning of period	$	23.23		$	—
Public offering price		—			25.00
Underwriting discounts and offering costs
on issuance of common shares		—			(1.18	)
Underwriting discounts and offering costs
on issuance of preferred shares		(0.05	)		—
Income from Investment Operations:
Net investment income (loss)(3)		(0.19	)		0.04
Net realized and unrealized gain (loss) on investments(3)		2.20			(0.05	)
Total increase (decrease) from investment
operations		2.01			(0.01	)
Less Dividends to Preferred Stockholders:
Net investment income		—			—
Return of capital		(0.07	)		—
Total dividends to preferred stockholders		(0.07	)		—
Less Dividends to Common Stockholders:
Net investment income		—			(0.03	)
Return of capital		(0.74	)		(0.55	)
Total dividends to common stockholders		(0.74	)		(0.58	)
Net Asset Value, end of period	$	24.38		$	23.23
Per common share market value, end of period	$	22.40		$	22.09
Total Investment Return Based on Market Value(4)		4.55	%		(8.33	)%
Supplemental Data and Ratios
Net assets applicable to common stockholders,
end of period (000’s)	$	389,305		$	370,455
Ratio of expenses (including current and deferred
income tax expense) to average net assets:(5) (6) (7)		14.29	%		1.29	%
Ratio of expenses (excluding current and deferred
income tax expense) to average net assets:(5) (6) (7)		3.36	%		1.39	%
Ratio of net investment income (loss) to average
net assets (including current and deferred income
tax expense):(5) (6) (7)		(13.58	)%		0.60	%
Ratio of net investment income (loss) to average
net assets (excluding current and deferred income
tax expense):(5) (6) (7) (8)		(2.65	)%		0.50	%

18     Tortoise Energy Capital Corp.

	Period from December 1, 2005 through May 31, 2006			Period from May 31, 2005(1) through November 30, 2005
	(Unaudited)
Portfolio turnover rate	1.99		%	0.08		%
Tortoise Auction Rate Senior Notes, end of period (000’s)	$	120,000		$	120,000
Tortoise Preferred Shares, end of period (000’s)	$	70,000			—
Per common share amount of auction rate senior notes
outstanding at end of period	$	7.51		$	7.52
Per common share amount of net assets, excluding
auction rate senior notes, at end of period	$	31.89		$	30.75
Asset coverage, per $1,000 of principal amount
of auction rate senior notes (9)
Series A	$	4,828		$	4,087
Series B	$	4,828		$	4,087
Asset coverage, per $25,000 liquidation value
per share of preferred shares (10)	$	164,037			—
Asset coverage ratio of auction rate senior notes (9)		483	%		409	%
Asset coverage ratio of preferred shares (11)		305	%

(1) Commencement of Operations.

(2) Information presented relates to a share of common stock outstanding for the entire period. (3) The per common share data for the period ended November 30, 2005, do not reflect the change in estimate of investment income and return of capital.

(4) Not annualized. Total investment return is calculated assuming a purchase of common stock at the beginning of period (or initial public offering price) and a sale at the closing price on the last day of the period reported. The calculation also assumes reinvestment of dividends at actual prices pursuant to the Company’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions.

(5) Annualized for periods less than one full year.

(6) For the period from December 1, 2005 through May 31, 2006, the Company accrued $20,524,847 in current and deferred income tax expense. For the period from May 31, 2005 through November 30, 2005, the Company accrued $192,462 in net deferred income tax benefit.

(7) The expense ratios and net investment loss ratios do not reflect the effect of dividend payments to preferred stockholders.

(8) This ratio excludes deferred income tax benefit (expense) on net investment loss (income).

(9) Represents value of total assets less all liabilities and indebtedness not represented by auction rate senior notes and preferred shares at the end of the period divided by auction rate senior notes outstanding at the end of the period.

(10) Represents value of total assets less all liabilities and indebtedness not represented by preferred shares at the end of the period divided by preferred shares outstanding at the end of the period.

(11) Represents value of total assets less all liabilities and indebtedness not represented by auction rate senior notes and preferred shares at the end of the period divided by the sum of auction rate senior notes and preferred shares outstanding at the end of the period.

See Accompanying Notes to the Financial Statements.

2006 Semi-Annual     19

NOTES TO FINANCIAL STATEMENTS (Unaudited)

May 31, 2006

1.O r g a n i z a t i o n

Tortoise Energy Capital Corporation (the "Company") was organized as a Maryland corporation on March 4, 2005, and is a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). The Company’s investment objective is to seek a high level of total return with an emphasis on current cash distributions paid to stockholders. The Company seeks to provide its stockholders with an efficient vehicle to invest in the energy infrastructure sector. The Company received the proceeds of its initial public offering and commenced operations on May 31, 2005. The Company’s shares are listed on the New York Stock Exchange under the symbol “TYY.”

2.Significant Accounting Policies

A. Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, recognition of distribution income, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

B. Investment Valuation

The Company owns securities that are listed on a securities exchange. The Company values those securities at their last sale price on that exchange on the valuation date. If the security is listed on more than one exchange, the Company uses the price of that exchange that it generally considers to be the principal exchange on which the stock is traded. Securities listed on the NASDAQ will be valued at the NASDAQ Official Closing Price, which may not necessarily represent the last sale price. If there has been no sale on such exchange or NASDAQ on such day, the security will be valued at the mean between bid and asked price on such day.

The Company may invest up to 50 percent of its total assets in restricted securities. Restricted securities are subject to statutory or contractual restrictions on their public resale, which may make it more difficult to obtain a valuation and may limit the Company’s ability to dispose of them. Investments in restricted securities and other securities for which market quotations are not readily available will be valued in good faith by using fair value procedures approved by the Board of Directors. Such fair value procedures consider factors such as discounts to publicly traded issues, securities with similar yields, quality, type of issue, coupon, duration and rating.

The Company generally values short-term debt securities at prices based on market quotations for such securities, except those securities purchased with 60 days or less to maturity are valued on the basis of amortized cost, which approximates market value.

The Company generally values its interest rate swap contracts using industry-accepted models which discount the estimated future cash flows based on the stated terms of the interest rate swap agreement by using interest rates currently available in the market, or based on dealer quotations, if available.

20     Tortoise Energy Capital Corp.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

(Continued)

If events occur that affect the value of the Company’s portfolio securities before the net asset value has been calculated (a “significant event”), the portfolio securities so affected will generally be priced using a fair value procedure.

C. Security Transactions and Investment Income

Security transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses are reported on an identified cost basis. Interest income is recognized on the accrual basis, including amortization of premiums and accretion of discounts. Dividend and distribution income is recorded on the ex-dividend date. Distributions received from the Company’s investments in master limited partnerships (“MLPs”) generally are comprised of ordinary income, capital gains and return of capital from the MLP. The Company records investment income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on historical information available from each MLP and other industry sources. These estimates may subsequently be revised based on information received from MLPs after their tax reporting periods are concluded.

For the period from May 31, 2005 (commencement of operations) through November 30, 2005, the Company estimated the allocation of investment income and return of capital for the distributions received from MLPs within the Statement of Operations. For this period, the Company had estimated approximately 21 percent as investment income and approximately 79 percent as return of capital.

Subsequent to November 30, 2005, the Company reclassified the amount of investment income and return of capital it recognized based on the 2005 tax reporting information received from the individual MLPs. This reclassification amounted to a decrease in pre-tax net investment income of approximately $1.3 million or $0.08 per share ($0.8 million or $0.05 per share, net of deferred tax benefit), and a corresponding increase in unrealized appreciation of investments for the period from December 1, 2005 through May 31, 2006. The reclassification is reflected in the accompanying financial statements.

D. Dividends to Stockholders

Dividends to common stockholders are recorded on the ex-dividend date. The character of dividends to common stockholders made during the year may differ from their ultimate characterization for federal income tax purposes. For the year ended November 30, 2005, the Company’s dividends, for book purposes, were comprised of approximately 6 percent investment income and 94 percent return of capital. For the period ended May 31, 2006, the Company’s dividends, for book purposes, were comprised entirely of return of capital as a result of the net investment loss incurred by the Company in the reporting period. For the year ended November 30, 2005, for tax purposes, the Company determined the dividends to common stockholders were comprised of 100 percent return of capital.

Dividends to preferred stockholders are based on variable rates set at auctions, normally held every 28 days. Dividends on preferred shares are accrued on a daily basis for the subsequent 28 day period at a rate as determined on the auction date. Dividends on preferred shares are payable every 28 days, on the first day following the end of the dividend period. The character of dividends to preferred stockholders made during the year may differ from their ultimate characterization for federal income tax purposes.

2006 Semi-Annual     21

NOTES TO FINANCIAL STATEMENTS (Unaudited)

(Continued)

E. Federal Income Taxation

The Company, as a corporation, is obligated to pay federal and state income tax on its taxable income. The Company invests its assets primarily in MLPs, which generally are treated as partnerships for federal income tax purposes. As a partner in the MLPs, the Company reports its allocable share of the MLP’s taxable income in computing its own taxable income. The Company’s tax expense or benefit is included in the Statement of Operations based on the component of income or gains (losses) to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

F. Organization Expenses, Offering and Debt Issuance Costs

The Company is responsible for paying all organizational expenses, which are expensed as incurred. Offering costs related to the issuance of common and preferred stock are charged to additional paid-in capital when the shares are issued. Offering costs (excluding underwriter commissions) of $907,924 and $237,000 were charged to additional paid-in capital for the initial public offering of common stock in May 2005 and the issuance of preferred stock in January 2006, respectively. Debt issuance costs related to the auction rate senior notes are capitalized and amortized over the period the notes are outstanding. The amounts of such capitalized costs for the Auction Rate Senior Notes Series A and B issued in November of 2005 (excluding underwriter commissions) was $415,650.

G. Derivative Financial Instruments

The Company uses interest rate swap contracts to manage interest rate risk. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. The Company does not hold or issue derivative financial instruments for speculative purposes. All derivative financial instruments are recorded at fair value with changes in value during the reporting period, and amounts accrued under the agreements, included as unrealized gains or losses in the Statement of Operations.

H. Indemnifications

Under the Company’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Company. In addition, in the normal course of business, the Company may enter into contracts that provide general indemnifications to other parties. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred, and may not occur. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

22     Tortoise Energy Capital Corp.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

(Continued)

3.Concentration of Risk

The Company’s investment objective is to seek a high level of total return with an emphasis on current distributions paid to its stockholders. Under normal circumstances, and once fully invested in accordance with its investment objective, the Company will have at least 80 percent of its net assets, plus any borrowings for investment purposes, invested in equity securities of entities in the energy sector within the United States and at least 80 percent of its total assets in equity securities of MLPs and their affiliates in the energy infrastructure sector. The Company will not invest more than 15 percent of its total assets in any single issuer as of the time of purchase. The Company may invest up to 20 percent of its total assets in debt securities, including securities rated below investment grade. In determining application of these policies, the term “total assets” includes assets to be obtained through anticipated leverage.

4.Agreements

The Company has entered into an Investment Advisory Agreement with Tortoise Capital Advisors, L.L.C. (the “Adviser”). Under the terms of the agreement, until May 31, 2006, the Company will pay the Adviser a fee equal to an annual rate of 0.90 percent of the Company’s average monthly total assets (including any assets attributable to leverage) minus accrued liabilities (other than deferred income taxes, debt entered into for purposes of leverage and the aggregate liquidation preference of outstanding preferred shares) (“Managed Assets”), in exchange for the investment advisory services provided. Thereafter, the Company will pay the Adviser a fee equal to an annual rate of 0.95 percent of the Company’s Managed Assets.

The Company has engaged U.S. Bancorp Fund Services, LLC to serve as the Company’s administrator. The Company pays the administrator a monthly fee computed at an annual rate of 0.07 percent of the first $300 million of the Company’s Managed Assets, 0.06 percent on the next $500 million of Managed Assets and 0.04 percent on the balance of the Company’s Managed Assets, subject to a minimum annual fee of $45,000.

Computershare Investor Services, LLC serves as the Company’s transfer agent, dividend paying agent, and agent for the automatic dividend reinvestment plan.

U.S. Bank, N.A. serves as the Company’s custodian. The Company pays the custodian a monthly fee computed at an annual rate of 0.015 percent on the first $100 million of the Company’s Managed Assets and 0.01 percent on the balance of the Company’s Managed Assets, subject to a minimum annual fee of $4,800.

2006 Semi-Annual     23

NOTES TO FINANCIAL STATEMENTS (Unaudited)

(Continued)

5.Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and tax purposes. Components of the Company’s deferred tax assets and liabilities as of May 31, 2006 are as follows:

Deferred tax assets:
Net operating loss carryforwards	$	4,191,015
Organization costs		22,400
		4,213,415
Deferred tax liabilities:
Net unrealized gains on investment securities and interest rate swap contracts		21,502,890
Basis reduction of investment in MLPs		3,021,985
		24,524,875
Total net deferred tax liability	$	20,311,460

For the period from December 1, 2005 to May 31, 2006, the components of income tax expense include current foreign taxes payable of $20,925 and deferred federal and state income taxes (net of federal tax benefit) of $18,400,956 and $2,102,966, respectively. As of November 30, 2005, the Company had a net operating loss for federal income tax purposes of approximately $555,000. This net operating loss may be carried forward for 20 years and, accordingly, would expire after the year ending November 30, 2025.

Total income taxes differ from the amount computed by applying the federal statutory income tax rate of 35 percent to net investment income and realized and unrealized gains on investments before taxes, as follows:

Application of statutory income tax rate	$	18,408,277
State income taxes, net of federal taxes		2,103,803
Other, net		12,767
Total	$	20,524,847

At May 31, 2006, the Company did not record a valuation allowance against its deferred tax asset.

24     Tortoise Energy Capital Corp.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

(Continued)

6.Restricted Securities

Certain of the Company’s investments are restricted and are valued as determined in accordance with procedures established by the Board of Directors and more fully described in Note 2. The table below shows the number of units held or principal amount, the acquisition date, acquisition cost, value per unit and percent of net assets which the securities comprise.

Investment Security		Number of Units Held or Principal Amount	Acquisition Dates	Acquisition Cost	Value Per Unit	Percent of Net Assets
Plains All American
Pipeline, L.P.	Common Units	65,971	3/22/06-4/9/06	$        2,765,013	$46.56	0.8%
E.W. Transportation,
LLC	Promissory Note	$6,227,571	9/08/05	6,947,500	N/A	1.6
				$       9,712,513		2.4%

7.Investment Transactions

For the period ended May 31, 2006, the Company purchased (at cost) and sold securities (at proceeds) in the amount of $82,636,822 and $11,009,049 (excluding short-term debt securities and interest rate swaps), respectively.

8.Auction Rate Senior Notes

The Company has issued two $60,000,000 aggregate principal amounts of auction rate senior notes Series A and Series B, respectively (collectively, the “Notes”). The Notes were issued in denominations of $25,000. The principal amount of the Notes will be due and payable on November 14, 2045. Fair value of the Notes approximates carrying amount because the interest rate fluctuates with changes in interest rates available in the current market.

Holders of the Notes are entitled to receive cash interest payments at an annual rate that may vary for each rate period. Interest rates for Series A and Series B as of May 31, 2006, were 5.23 percent and 5.24 percent, respectively. The weighted average interest rates for Series A and Series B for the period ended May 31, 2006, were 4.78 percent and 4.78 percent, respectively. These rates include the applicable rate based on the latest results of the auction, plus commissions paid to the auction agent in the amount of 0.25 percent. For each subsequent rate period, the interest rate will be determined by an auction conducted in accordance with the procedures described in the Notes’ prospectus. Generally, the rate period will be 28 days for Series A and Series B. The Notes will not be listed on any exchange or automated quotation system.

The Notes are redeemable in certain circumstances at the option of the Company. The Notes are also subject to a mandatory redemption if the Company fails to meet an asset coverage ratio required by law, or fails to cure in a timely manner a deficiency as stated in the rating agency guidelines applicable to the Notes.

2006 Semi-Annual     25

NOTES TO FINANCIAL STATEMENTS (Unaudited)

(Continued)

The Notes are unsecured obligations of the Company and, upon liquidation, dissolution or winding up of the Company, will rank: (1) senior to all the Company’s outstanding preferred shares; (2) senior to all of the Company’s outstanding common shares; (3) on a parity with any unsecured creditors of the Company and any unsecured senior securities representing indebtedness of the Company; and (4) junior to any secured creditors of the Company.

9.Preferred Shares

The Company has 7,500 authorized Money Market Preferred (“MMP”) Shares, of which 2,800 shares are currently outstanding. The MMP Shares have rights determined by the Board of Directors. The MMP Shares have a liquidation value of $25,000 per share plus any accumulated, but unpaid dividends, whether or not declared.

Holders of the MMP Shares are entitled to receive cash dividend payments at an annual rate that may vary for each rate period. The dividend rate for the MMP Shares as of May 31, 2006, was 5.33 percent. The weighted average dividend rate for the MMP Shares for the period ended May 31, 2006, was 5.04 percent. This rate includes the applicable rate based on the latest results of the auction, plus commissions paid to the auction agent in the amount of 0.25 percent. Under the Investment Company Act of 1940, the Company may not declare dividends or make other distributions on shares of common stock or purchases of such shares if, at the time of the declaration, distribution or purchase, asset coverage with respect to the outstanding MMP Shares would be less than 200 percent.

The MMP Shares are redeemable in certain circumstances at the option of the Company. The MMP Shares are also subject to a mandatory redemption if the Company fails to meet an asset coverage ratio required by law, or fails to cure a deficiency in a timely manner as stated in the rating agency guidelines.

The holders of MMP Shares have voting rights equal to the holders of common stock (one vote per share) and will vote together with the holders of shares of common stock as a single class except on matters affecting only the holders of preferred stock or the holders of common stock.

10.Interest Rate Swap Contracts

The Company has entered into interest rate swap contracts to protect itself from increasing interest expense on its leverage resulting from increasing short-term interest rates. A decline in interest rates may result in a decline in the value of the swap contracts, which may result in a decline in the net assets of the Company. In addition, if the counterparty to the interest rate swap contracts defaults, the Company would not be able to use the anticipated receipts under the swap contracts to offset the interest payments on the Company’s leverage. At the time the interest rate swap contracts reach their scheduled termination, there is a risk that the Company would not be able to obtain a replacement transaction or that the terms of the replacement would not be as favorable as on the expiring transaction.

26     Tortoise Energy Capital Corp.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

(Continued)

In addition, if the Company is required to terminate any swap contract early due to the Company failing to maintain a required 300 percent asset coverage of the liquidation value of the outstanding auction rate senior notes or if the Company loses its credit rating on its auction rate senior notes, then the Company could be required to make a termination payment, in addition to redeeming all or some of the auction rate senior notes. Details of the interest rate swap contracts outstanding as of May 31, 2006, were as follows:

Counterparty	Maturity Date	Notional Amount	Fixed Rate Paid by the Company	Floating Rate Received by the Company	Unrealized Appreciation
U.S. Bank, N.A.	11/25/2015	$60,000,000	5.11%	1 month U.S. Dollar LIBOR	$1,894,376
U.S. Bank, N.A.	12/02/2015	60,000,000	5.11%	1 month U.S. Dollar LIBOR	1,899,549
U.S. Bank, N.A.	2/15/2013	20,000,000	4.95%	1 month U.S. Dollar LIBOR	580,635
U.S. Bank, N.A.	3/01/2018	20,000,000	4.99%	1 month U.S. Dollar LIBOR	1,007,383
U.S. Bank, N.A.	2/28/2017	15,000,000	5.05%	1 month U.S. Dollar LIBOR	613,262
U.S. Bank, N.A.	2/28/2015	15,000,000	5.01%	1 month U.S. Dollar LIBOR	525,473
		$190,000,000			$6,520,678

The Company is exposed to credit risk on the interest rate swap contracts if the counterparty should fail to perform under the terms of the interest rate swap contracts. The amount of credit risk is limited to the net appreciation of the interest rate swap contract, as no collateral is pledged by the counterparty.

11.Common Stock

The Company has 100,000,000 shares of beneficial interest authorized and 15,971,053 shares outstanding at May 31, 2006. Transactions in common shares for the period May 31, 2005 (commencement of operations) and the period ended May 31, 2006, were as follows:

Shares at May 31, 2005	22,530
Shares sold through initial public offering and exercise of overallotment options	15,887,000
Shares issued through reinvestment of dividends	41,131
Shares at November 30, 2005	15,950,661
Shares issued through reinvestment of dividends	20,392
Shares at May 31, 2006	15,971,053

12.Credit Facility

On December 5, 2005, the Company entered into a $50 million secured credit facility, maturing February 10, 2006, with U.S. Bank, N.A. The credit facility was retired on January 31, 2006, with the proceeds from the issuance of preferred shares described in Note 9. The average interest rate for the period during which the credit facility was outstanding was 5.28 percent.

13.Subsequent Events

On June 1, 2006, the Company paid a dividend in the amount of $0.375 per share, for a total of $5,989,165. Of this total, the dividend reinvestment amounted to $1,423,000.

2006 Semi-Annual     27

ADDITIONAL INFORMATION (Unaudited)

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the Securities Act of 1933. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect Tortoise Energy Capital Corporation’s (the “Company”) actual results are the performance of the portfolio of investments held by it, the conditions in the U.S. and international financial, petroleum and other markets, the price at which shares of Tortoise Energy Capital Corp. will trade in the public markets and other factors discussed in filings with the SEC.

Proxy Voting Policies

A description of the policies and procedures that the Company uses to determine how to vote proxies relating to portfolio securities owned by the Company and information regarding how the Company voted proxies relating to the portfolio of securities during the period ended June 30, 2005 is available to stockholders (i) without charge, upon request by calling the Company at (913) 981-1020 or toll-free at (800) 727-0254; and (ii) on the SEC’s Web site at www.sec.gov.

Form N-Q

The Company files its complete schedule of portfolio holdings for the first and third quarters of each fiscal year with the SEC on Form N-Q. The Company’s Form N-Q and statement of additional information are available without charge upon request by calling the Company at (800) 727-0254 or by visiting the SEC’s Web site at www.sec.gov. In addition, you may review and copy the Company’s Form N-Q at the SEC’s Public Reference Room in Washington D.C. You may obtain information on the operation of the Public Reference Room by calling (800) SEC-0330.

Privacy Policy

In order to conduct its business, the Company collects and maintains certain nonpublic personal information about our stockholders of record with respect to their transactions in shares of our securities. This information includes the stockholder’s address, tax identification or Social Security number, share balances, and dividend elections. We do not collect or maintain personal information about stockholders whose share balances of our securities are held in “street name” by a financial institution such as a bank or broker.

We do not disclose any nonpublic personal information about you, our other stockholders or our former stockholders to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law.

To protect your personal information internally, we restrict access to nonpublic personal information about our stockholders to those employees who need to know that information to provide services to our stockholders. We also maintain certain other safeguards to protect you nonpublic personal information.

28    Tortoise Energy Capital Corp.

Office of the Company and of the Investment Adviser Tortoise Capital Advisors, L.L.C. 10801 Mastin Boulevard, Suite 222 Overland Park, Kan. 66210 (913) 981-1020 (913) 981-1021 (fax) www.tortoiseadvisors.com   Managing Directors of Tortoise Capital Advisors, L.L.C. H. Kevin Birzer Zachary A. Hamel Kenneth P. Malvey Terry Matlack David J. Schulte   Board of Directors of Tortoise Energy Capital Corp.   H. Kevin Birzer, Chairman Tortoise Capital Advisors, L.L.C.   Terry Matlack Tortoise Capital Advisors, L.L.C.   Conrad S. Ciccotello Independent   John R. Graham Independent   Charles E. Heath Independent ADMINISTRATOR U.S. Bancorp Fund Services, L.L.C. 615 East Michigan St. Milwaukee, Wis. 53202   CUSTODIAN U.S. Bank, N.A. 425 Walnut St. Cincinnati, Ohio 45202   TRANSFER, DIVIDEND DISBURSING AND REINVESTMENT AGENT Computershare Investor Services, L.L.C. 2 North LaSalle St. Chicago, Ill. 60602 (800) 727-0254 www.computershare.com   LEGAL COUNSEL Blackwell Sanders Peper Martin LLP 4801 Main St. Kansas City, Mo. 64112   INVESTOR RELATIONS (913) 981-1020 info@tortoiseadvisors.com   STOCK SYMBOL Listed NYSE Symbol: TYY   This report is for stockholder information. This is not a prospectus intended for use in the purchase or sale of fund shares. Past performance is no guarantee of future results and your investment may be worth more or less at the time you sell.

Tortoise Capital Advisor’s Family of Funds
Name	Ticker/ Inception Date	Targeted Investments	Investor Suitability	Investment Restrictions	Total Assets as of 5/31/06 ($ in millions)
Tortoise Capital	TYG May 2005	U.S. Energy Infrastructure, More Concentrated, More Direct Placements	Retirement Accounts Pension Plans Taxable Accounts	50% Restricted Securities 15% Issuer-Limited	$607
Tortoise Energy	TYY Feb. 2005	U.S. Energy Infrastructure, More Diversified in MLPs	Retirement Accounts Pension Plans Taxable Accounts	30% Restricted Securities 10% Issuer-Limited	$759
Tortoise North America	TYN	Canadian and U.S Energy Infrastructure, Diversified in Canadian RITs and U.S. MLPs	Taxable Accounts	50% Restricted Securities Diversified to Meet RIC Requirements	$167

Item 2. Code of Ethics.

Not applicable for semi-annual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semi-annual reports.

Item 4. Principal Accountant Fees and Services.

Not applicable for semi-annual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semi-annual reports.

Item 6. Schedule of Investments.

Schedule of Investments is included as part of the report to shareholders filed under Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable for semi-annual reports.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not yet applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1 12/1/05-12/31/05	0	0	0	0
Month #2 1/1/06-1/31/06	0	0	0	0
Month #3 2/1/06-2/28/06	0	0	0	0
Month #4 3/1/06-3/31/06	0	0	0	0
Month #5 4/1/06-4/30/06	0	0	0	0
Month #6 5/1/06-5/31/06	0	0	0	0
Total	0	0	0	0

Item 10. Submission of Matters to a Vote of Security Holders.

None.

Item 11. Controls and Procedures.

(a)   The Registrant’s President/Chief Executive Officer and Chief Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)   There were no changes in the Registrant's internal controls over financial reporting (as defined in rule 30a-3(d) under the 1940 Act) that occurred during the Registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 12. Exhibits.

(a)   (1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the Registrant intends to satisfy Item 2 requirements through filing of an exhibit. Not Applicable.

(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons. None.

(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Tortoise Energy Capital Corporation               

By (Signature and Title)* _/s/ David J. Schulte                  

David J. Schulte

President and Chief Executive Officer

Date July 31, 2006                                                            

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By (Signature and Title)* _/s/ David J. Schulte                   

David J. Schulte

President and Chief Executive Officer

Date July 31, 2006                                                            

By (Signature and Title)* _/s/ Terry Matlack                     

Terry C. Matlack

Chief Financial Officer

Date July 31, 2006                                                            

* Print the name and title of each signing officer under his or her signature.