It sounds like you're sure the regulator is in the alternator. Just checking. The 3-wire alts with the DA plug like (- -) has an internal reg, and the if the plug is like (| |) you should have an external regulator. On the internal type,like Stu says, the # 2 (voltage sensing wire) should go to your main power bus bar.
On late 60-70's model Chevy's, this is located somewhere on the drivers side, and sometimes on the horn relay. It typically is a cluster of 4 (or more wires). Chevy senses the voltage here to compensate for voltage drop on long wire runs under heavy load.
Regulating the voltage right at the BATT term on the alternator would NOT result in higher voltages, just a little low sometimes when the battery is low. Which is not a bad thing. It is more gentle on the battery to charge slowly.
Dave
