UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

       [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

          For the fiscal years ended December 31, 2001, 2002, and 2003

                                       Or

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

    For the transition period from _________________ to ____________________

                           Commission File No. 0-13510

            ZOND-PANAERO WINDSYSTEM PARTNERS I, A CALIFORNIA LIMITED
                                   PARTNERSHIP

State or other jurisdiction of incorporation or organization: California

I.R.S. Employer Identification No: 77-0035358

Address of principal executive offices: 1221 Lamar Street, Suite 1600, Houston,
Texas 77010

Registrant's telephone number, including area code: (713) 345-3582

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g )of the Act: Units of Limited
Partnership Interest

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES NO X

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy of
information statements incorporated by reference in Part III of the Form 10-K or
any amendment to this Form 10-K.  /-/

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X

<PAGE>

                    Zond-PanAero Windsystem Partners I,
                     a California Limited Partnership
             for the fiscal years ended December 31, 2001, 2002 and 2003


                                 TABLE OF CONTENTS


Item Number                                                            Page

                 PART I

1.  Business..................................................................1
2.  Properties................................................................5
3.  Legal Proceedings.........................................................6
4.  Submission of Matters to a Vote of Security Holders.......................7

                PART II

5.  Market for Registrant's Common Equity and Related Unitholder
    Matters...................................................................7
6.  Selected Financial Data.................................................. 8
7.  Management's Discussion and Analysis of Financial Condition
    and Results of Operations.................................................8
7A. Quantitative and Qualitative Disclosures about Market Risk................11
8.  Financial Statements......................................................13
9.  Changes in and Disagreements with Accountants on Accounting and Financial
    Disclosure................................................................14
9A. Controls and Procedures...................................................14

              PART III

10. Directors and Executive Officers of the Registrant........................15
11. Executive Compensation....................................................16
12. Security Ownership of Certain Beneficial Owners and Management............18
13. Certain Relationships and Related Transactions............................18
14. Principal Accountant Fees and Services....................................20

             PART IV

15. Exhibits, Financial Statement Schedules, and Reports on Form
    8-K.......................................................................20

<PAGE>



PART I

Item 1.     BUSINESS

Introduction

Zond-PanAero Windsystem Partners I, a California Limited Partnership (the
"Partnership") was formed on June 29, 1984, to purchase, own and operate a
system of 300 Vestas Energy A/S Model V15 wind turbine electric generators (the
"Turbines"). The electricity generated by the Turbines is sold by the
Partnership to its sole customer, Southern California Edison Company ("SCE").

Each Turbine has a rated capacity of 65 kilowatts, and the Turbines have an
aggregate rated capacity of 19.5 megawatts. The Turbines, together with certain
infrastructural improvements (the "Infrastructural Improvements"), form an
integrated electric power generating facility (the "Windsystem"). The Windsystem
is located in the San Gorgonio Pass area of the San Bernardino Mountains near
Palm Springs, California (the "Operating Site").

The Turbines are interconnected by a system of transformers and power transfer
lines to a substation and SCE's transmission grid. The individual power lines
from each of the Turbines are fed into step-up transformers, which increase the
voltage from 480 volts to 12.5 kilovolts. Additional 12.5 kilovolt power
transfer lines carry electricity to a substation, which steps up the electric
power to 115 kilovolts for delivery to SCE.

The Windsystem, which became operational in November 1984, was constructed by
Mesa Construction Company ("MCC"), a joint venture formed between an affiliate
of Enron Wind Systems, Inc. ("EWSI") and an affiliate of PanAero Corporation
("PanAero"). The Partnership paid MCC a total of $48.9 million, comprised of
$22.4 million in cash and $26.5 million in the form of notes (the "Purchase
Notes"), for the purchase, construction and installation of the Turbines. The
Purchase Notes matured on December 31, 2002. At that time, there was $1.0
million and $5.7 million of principal and interest in arrears, respectively. As
of December 31, 2003, there was $0.5 million and $5.8 million of principal and
interest in arrears, respectively. The business of the Partnership and the
respective rights of its partners, including the Partnership's limited partners
(the "Limited Partners"), are governed by the First Amended and Restated
Certificate and Agreement of Limited Partnership of Zond-PanAero Windsystem
Partners I, a California Limited Partnership, entered into on November 29, 1984,
as amended (the "Partnership Agreement"). The Partnership Agreement terminates
on December 31, 2005, unless terminated earlier in accordance with the terms of
the Partnership Agreement. The Partnership Agreement is attached as Exhibit A to
the Partnership's Registration Statement on Form 10 dated April 29, 1985 as
filed with the Securities and Exchange Commission ("SEC"). The general partner
of the Partnership (the "General Partner") is Zond Windsystems Management LLC
("ZWM"), a California limited liability company wholly-owned by Enron Wind
Systems, LLC ("EWS").

Bankruptcy and Mergers

Commencing on December 2, 2001, and periodically thereafter, Enron Corp.
("Enron") and certain of its subsidiaries filed voluntary petitions for relief
under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code").

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On February 20, 2002, Enron Wind Corp. ("EWC") and EWSI each filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code. Additionally, two
California limited liability companies formed on February 19, 2002 for the
purposes of merging with EWC and EWSI in anticipation of the sale of Enron's
wind business also filed voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code.

EWC merged with and into one of such limited liability companies on April 19,
2002, and the surviving limited liability company changed its name to Enron Wind
LLC ("EW"). EWSI merged with and into the other limited liability company, also
on April 19, 2002, and the surviving limited liability company changed its name
to Enron Wind Systems, LLC.

On April 12, 2002, Zond Windsystems Management Corporation ("ZWMC"), the general
partner of the Partnership at such time, merged with and into a third California
limited liability company, formed on March 12, 2002, and the surviving limited
liability company changed its name to Zond Windsystem Management LLC. On May 3,
2002, Zond Construction Corp. merged with and into a fourth California limited
liability company, formed on March 21, 2002, and the surviving limited liability
company changed its name to Zond Construction LLC ("ZC"). Neither ZWM nor ZC has
filed for bankruptcy.

Sale to General Electric

On April 10, 2002, Enron, EWC and certain of its subsidiaries, including EWSI,
entered into an Amended and Restated Purchase and Sale Agreement in which such
entities agreed to sell in an asset sale (the "GE Sale") their wind turbine
manufacturing, operation and maintenance and construction businesses to General
Electric Company, acting through its GE power systems business ("GEPS"). The GE
Sale was consummated on May 10, 2002. EW and its subsidiary companies retained
its existing wind power projects, including the indirect ownership of the
general partnership interest in the Partnership. However, effective as of the
sale, substantially all of the employees who had been involved in the management
of the Partnership transferred to GEPS.

Following the sale to GEPS, new management was appointed to manage and operate
the Partnership and ZWM's principal executive offices were moved to 1400 Smith
Street, Houston Texas 77002. In March 2004, the principal executive offices were
moved to 1221 Lamar Street, Suite 1600, Houston, Texas 77010. Eric D. Gadd was
appointed President and Chief Executive Officer of ZWM on September 26, 2002.
Mary H. Cilia was appointed Chief Financial Officer and Treasurer of ZWM on May
3, 2004. ZWM has no directors.

New Management and Financial Reports

Until its appointment, the new management of the Partnership had no material
involvement with the business and operations of the Partnership. In the process
of reviewing the Partnership's books and records and through conversations with
prior management, it appeared to new management that the Partnership had
attempted, but failed, to file with the SEC certain Partnership Securities
Exchange Act of 1934 (the "Exchange Act") reports for certain time periods
preceding the Enron bankruptcy. The submissions of such reports into the EDGAR
filing system were not accepted although prior management apparently believed
the filings were made successfully. These reports consist of the Partnership's
Form 10-K for the year ended December 31, 1999, the Partnership's Form 10-Q's
for each of the three quarters of 2000, the Partnership's Form 10-K for the year
ended December 31, 2000, and the Partnership's Form 10-Q's for the first and
second quarters of 2001. These reports appear to have been prepared by prior
management of the Partnership and audited or reviewed, as the case may be, by
Arthur Andersen LLP. The Partnership has copies of the EDGARized version of each
of such reports as well as most of the cover sheets reflecting the

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attempted EDGAR submissions. To date, the Partnership has not filed any of these
reports with the SEC.

During 2003, current management of the Partnership reviewed the current and
historical financial information available to it, but was unable to prepare
quarterly and annual reports that complied with Exchange Act requirements
because the Partnership had not been able to retain an independent auditor.
Management believed that the fact that EWS is a debtor-in-possession under
Chapter 11 of the Bankruptcy Code and the fact that it and ZWM are indirect
wholly owned subsidiaries of Enron made it extraordinarily difficult for the
Partnership to find an independent auditor to replace Arthur Andersen LLP. In
2003, the Partnership decided to file quarterly and annual operating reports on
Form 8-K disclosing unaudited financial and business information about the
Partnership on a quarterly basis until the Partnership was able to retain an
independent auditor and recommence filing periodic reports on Forms 10-K and
10-Q. As of March 29, 2004, in addition to the reports disclosed in the previous
paragraph, the Partnership had not filed the Partnership's Form 10-K for the
year ended December 31, 2001, the Partnership's Forms 10-Q for each of the three
quarters of 2002, the Partnership's Form 10-K for the year ended December 31,
2002, the Partnership's Form 10-Q for each of the three quarters of 2003, or the
Partnership's Form 10-K for the year ended December 31, 2003.

On November 5, 2003, the Partnership filed a Form 8-K with the SEC disclosing
the foregoing information. Thereafter, using Form 8-K, the Partnership filed
operating reports with unaudited financial and business information for the
fiscal years ended December 31, 2001, 2002 and 2003, and for the fiscal quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003. By filing these
operating reports, the Partnership publicly disclosed recent financial and
business information. However, the operating reports contain unaudited financial
statements and are not in compliance with the requirements of the Exchange Act.
In addition, the operating reports do not cover all periods for which the
Partnership failed to file periodic reports. On January 28, 2004, the
Partnership retained Hein & Associates LLP as its independent accountant and is
now in a position to recommence filing periodic reports on Forms 10-K and 10-Q.

Operation and Maintenance Services

EWS manages the Windsystem pursuant to a windsystem management agreement with
the Partnership executed on July 27, 1988 (the "Management Agreement"). The
Management Agreement terminates by its terms on December 31, 2004. Prior to May
10, 2002, Enron Wind Maintenance LLC, an affiliate of EWS, provided operations
and maintenance services for the Windsystem. On May 10, 2002, in connection with
the GE Sale, EWS contracted with GE Wind Energy, LLC to perform certain
operations and maintenance services relating to the Windsystem for a period of
one year ending on May 10, 2003.

In April 2003, EWS entered into an agreement (the "O&M Agreement") with SeaWest
Asset Management Services, LLC ("SeaWest") to provide certain operation and
maintenance services relating to the Windsystem for a 5-year period ending on
May 10, 2008. If EWS terminates the O&M Agreement prior to the end of its stated
term, EWS may be required to pay certain agreed demobilization fees to SeaWest.
If EWS is required to pay such fees, EWS may seek recovery from the Partnership
of some, or all, of the amount of such fees pursuant to the terms of the
Management Agreement. Management currently estimates that the amount of the
demobilization fee, if any, for which EWS would seek recovery from the
Partnership would not be in excess of approximately $100,000 at December 31,
2004, with the amount of such demobilization fee declining as of May 10 of each
subsequent year until contract expiration.

Sale of Electric Power

The Partnership sells the electric power generated by the Turbines to SCE under
a power purchase and sales agreement (the "Power Agreement"). The Power
Agreement was originally entered into between SCE and PanAero in April 1982 and
covers an aggregate of 29.9 megawatts

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<PAGE>

of generating capacity. PanAero assigned the Power Agreement to Mesa Wind
Developers ("Mesa"), a joint venture between EWSI and an affiliate of PanAero,
in July 1984. Mesa subsequently assigned the portion of the Power Agreement that
covers the aggregate rated capacity of the Turbines (19.5 megawatts) to the
Partnership. Such assignment terminates effective December 31, 2004. The
remaining 10.4 megawatts of generating capacity available under the Power
Agreement was assigned by Mesa to Zond-PanAero Windsystem Partners II, a
California Limited Partnership ("ZPII"), whose general partner is an affiliate
of the General Partner. Such assignment also terminates effective December 31,
2004. Absent an extension of the assignment of rights under the Power Agreement,
the Partnership will not have the ability to sell power to SCE subsequent to
December 31, 2004. See Part I, "Item 1. BUSINESS - Going Concern" for additional
information.

Under the Power Agreement, SCE is required to purchase all of the electric
output from the Turbines at a rate equal to the greater of either 89% of SCE's
"cost of energy" or a fixed minimum price of $0.102 per kilowatt hour ("kWh").
The Power Agreement provides, however, that if SCE's cost of energy exceeds
$0.20 per kWh, the price per kWh paid by SCE will be limited to $0.20 per kWh
plus 70% of the difference between 89% of its cost of energy and $0.20 per kWh.
Since formation of the Partnership, SCE has paid only the fixed minimum price of
$0.102 per kWh. SCE takes monthly meter readings of the amount of electricity
delivered to SCE under the Power Agreement and makes payments based on such
meter readings.

Windsystem Performance

The amount of electricity produced by the Turbines depends upon wind speed,
which is subject to significant seasonal variations in the San Gorgonio Pass
area. Wind speed is generally highest during the summer months and lowest during
the winter months. These seasonal variations result in significant variations
from month to month in the net power production realized by the Turbines, and
therefore result in monthly variations in the amount of electricity sold to SCE.

During 2001, 2002 and 2003, SCE purchased an aggregate of 42.3, 47.2, and 37.8
million kWh of electricity from the Partnership for an aggregate purchase price
of $4.3, $4.8, and $3.9 million, respectively.

Going Concern

The following matters raise substantial doubt about the Partnership's ability to
continue as a going concern:

1.   As discussed in Part I, "Item 1- BUSINESS - Introduction" and in Note 4 to
     the Financial Statements, the Partnership has not had sufficient cash flows
     from operations to make scheduled payments of principal and interest on the
     outstanding Purchase Notes. Accordingly, the Partnership is in default of
     the Purchase Notes. Upon notice of default, MCC has a right to foreclose
     against its security interests in the assets of the Partnership. As of the
     date of filing of this report, MCC has not notified the Partnership of its
     intent to foreclose on its security interest. Any such foreclosure by MCC
     on its security interests in the assets of the Partnership would have a
     material adverse effect on the Partnership.

2.   As discussed in Part I, "Item 1 - BUSINESS - Sale of Electric Power", the
     Partnership's assignment of rights under the Power Agreement expires on
     December 31, 2004 and the Power Agreement expires in June 2005.

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     Additionally, the Wind Park Easement Agreement (as defined in "Item 2 -
     PROPERTIES") expires on December 31, 2004. The Partnership will have no
     ability to sell the power it generates after December 31, 2004 without an
     extension of the assignment of rights under the Power Agreement and an
     extension of the Wind Park Easement Agreement. Additionally, if the
     Partnership were to obtain an extension of its assignment of rights under
     the Power Agreement, it could only be effective until June 2005, unless the
     Power Agreement were extended beyond that date or some other arrangements
     were made.

3.   As discussed in Part II, "Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Subsequent Event - SCE
     Curtailment" and Note 9 to the Financial Statements, SCE has substantially
     curtailed the Partnership's electrical production from the Windsystem
     beginning April 13, 2004 and continuing through the date of this report due
     to an SCE construction project. SCE has notified the Partnership that SCE
     estimates that the curtailment will continue through May 17, 2004.
     Management expects that this curtailment will have a material adverse
     effect on the Partnership's cash flows and financial results of operations
     during the period of the curtailment and for the Partnership's 2004 fiscal
     year. Depending on the duration and level of the curtailment by SCE,
     management believes that such curtailment could have a material adverse
     effect on the Partnership's ability to cure existing payment defaults on
     the Purchase Notes and/or make payments related to costs associated with
     the ongoing operations of the Windsystem.

Employees

The Partnership has no employees. EWS manages, operates, and maintains the
Windsystem pursuant to the Management Agreement. The General Partner, utilizing
employees of EW, attends to the remaining day-to-day activities of the
Partnership.

Item 2.     PROPERTIES

The Operating Site is situated on two adjoining parcels of land, consisting of
approximately 440 acres, located in the San Gorgonio Pass area of the San
Bernardino Mountains approximately 16 miles northwest of Palm Springs,
California. The Partnership owns the Turbines, including the supporting towers
and related concrete support pads and controllers. The Partnership uses a
portion of the Operating Site and the Infrastructural Improvements pursuant to a
20-year easement granted by Mesa under the terms of a Wind Park Easement
Agreement dated as of September 7, 1984, as amended (the "Wind Park Easement
Agreement"). The Infrastructural Improvements include roads, fences, the power
transfer system, the substation and maintenance facilities. Mesa has title to
the Infrastructural Improvements, but has granted the Partnership a security
interest in such assets under the Wind Park Easement Agreement. The
Infrastructural Improvements are also utilized by ZPII under a similar
arrangement with Mesa.

Mesa has rights to develop wind energy resources at the Operating Site, which
includes the Infrastructural Improvements, under a right-of-way grant (the
"Right-of-Way Grant") from the United States Bureau of Land Management ("BLM").
The Right-of-Way Grant was originally issued to PanAero on January 26, 1983, and
was assigned by PanAero to Mesa in April 1984. The primary term of the
Right-of-Way Grant expired on January 26, 2003. On December 19, 2002, the
Right-of-Way Grant was extended for a ten-year period commencing on January 27,
2003; however, the Wind Park Easement Agreement terminates on December 31, 2004.
See Part I., "Item 1. BUSINESS - Going Concern" for additional information.
EWSI, PanAero, and their affiliates have developed and sold additional wind
turbines on the Operating Site to ZPII and Mesa has granted a similar easement

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to ZPII. The general partner of ZPII is an affiliate of the General Partner.

Item 3.     LEGAL PROCEEDINGS

SCE Dispute

Market conditions in the California energy sector during 2000 and 2001 created a
significant cash flow problem for SCE. At the end of January 2001, SCE advised
the Partnership that SCE would not make payments for power deliveries in
November and December 2000. The Partnership, along with other renewable source
generators, engaged in discussions with SCE seeking payment from SCE for past
due amounts under applicable power agreements entered into with SCE.

The Partnership continued to operate the Windsystem and deliver power to SCE
believing that eventually a solution would be negotiated. SCE continued to
default on its contractual obligations by missing payments due for January,
February, and March 2001 power deliveries.

On March 27, 2001, the California Public Utilities Commission (the "CPUC")
issued an order (the "CPUC Order") obligating SCE to begin payments for power
delivered on a prospective basis. Following the issuance of the CPUC Order, SCE
initiated discussions with renewable source generators, including the
Partnership, to agree on a payment plan for power delivered on a prospective
basis. The Partnership and SCE agreed that SCE would pay for delivered power
twice a month. This payment plan was effective from March 27, 2001, the date of
the CPUC Order through December 31, 2004. The CPUC Order did not address the
issue of payments due for the period from November 1, 2000 to March 26, 2001.

By the end of April 2001, the Partnership and SCE were not able to resolve SCE's
non-payment for power delivered for the period between November 1, 2000 and
March 26, 2001. The Partnership, along with other renewable source generators
(collectively, the "Power Generators"), assisted by outside counsel, explored
various legal alternatives to enforce the contractual rights of the Power
Generators. On May 2, 2001, certain Power Generators, including the Partnership,
filed suit against SCE in Los Angeles Superior Court (the "SCE Litigation"). The
suit sought to recover compensation from SCE for power delivered, or at the
option of the plaintiffs, relief from the obligation to deliver power under the
existing contracts with SCE coupled with the right to sell power in the open
market across the SCE transmission grid.

In June 2001, SCE offered to settle all amounts past due, including a payment
for the past due amounts, with the Power Generators. The offer provided for the
payment of all amounts past due with interest accruing at 7% through the date of
payment. On August 22, 2001, Mesa, for the benefit of the Partnership, entered
into a settlement agreement with SCE that, among other things, set forth the
terms for payment of past due amounts to Mesa, and ultimately the Partnership
(the "SCE Payment Agreement").

The SCE Payment Agreement provides that past due amounts be paid in three
installments, 10% of the amount outstanding plus interest on all the past due
amounts to the date of the installment payment to be paid shortly after
execution of the SCE Payment Agreement, another 10% of the amount outstanding to
be paid when the SCE Payment Agreement becomes effective (after CPUC approval
and certain other conditions are satisfied), and the final 80% to be paid when
the California State Legislature approves a plan that restores SCE's credit. SCE
paid the first installment due under the SCE Payment Agreement on August 31,
2001. All remaining amounts outstanding from SCE under the SCE Payment Agreement
were collected from SCE by the end of March 2002. The Partnership, along with

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the other Power Generators party to the SCE Litigation, dismissed the SCE
Litigation in August 2003.

FERC Investigation

In May 2003, the Federal Energy Regulatory Commission (the "FERC"), pursuant to
FERC Docket No. EL03-47-000, began investigating whether the Windsystem and
certain other power projects owned by Enron or its affiliates failed to meet the
ownership criteria for qualifying facility ("QF") status under the Public
Utility Regulatory Policies Act of 1978 ("PURPA") following Enron's acquisition
of Portland General Electric Company in 1997. Under PURPA, and the applicable
FERC regulations, a power project is not a QF if more than 50% of the equity
interest in the project is owned by an electric utility or electric utility
holding company. The Partnership and FERC Trial Staff have settled the issues
under investigation and entered into a Consent Agreement dated March 10, 2004
(the "Consent Agreement"). The Consent Agreement is available on the FERC
website. Pursuant to the Consent Agreement, the Partnership and FERC Trial Staff
agree that the Windsystem is a QF notwithstanding Enron's indirect equity
interest in the Windsystem and the other contractual relationships between the
Partnership and various affiliates of Enron. The Consent Agreement has been
certified to the FERC by the FERC judge responsible for the case and is
currently subject to approval by the FERC.

Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the partners of the Partnership during
2001, 2002 or 2003.

                                     PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED UNITHOLDER MATTERS

Market Information

There is no established public trading market for the Partnership's limited
partnership units (the "Units"). The Partnership Agreement includes various
restrictions on the transfer of Units.

Holders

The Partnership's records indicate that at December 31, 2001, 2002 and 2003,
there were 883, 885 and 889 holders of record of the Partnership's Units,
respectively.

Cash Distributions

The Partnership makes cash distributions in accordance with the terms of the
Partnership Agreement. Due to less-than-projected operating results, the
Partnership has not distributed any cash during any fiscal year other than 1985,
in which the Partnership distributed an aggregate of approximately $158,000 to
the Limited Partners and $2,000 to the then General Partners. Under the Purchase
Notes, the Partnership cannot make cash distributions to its partners unless
certain cash reserve balances are maintained, no events of default exist, and
certain ratio tests are met. The Partnership has not met these criteria since
1985 and did not make any cash distributions to its partners during 2001, 2002
or 2003.

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Item 6.     SELECTED FINANCIAL DATA

From and after 1987, the Partnership's accounting records have been maintained
on a federal tax accrual basis, consistent with appropriate provisions of the
Internal Revenue Code. Such records have been adjusted to reflect accounting
principles generally accepted in the United States for purposes of filings with
the SEC. The selected financial data should be read in conjunction with the
financial statements and related footnotes included in Item 8.

<TABLE>
<CAPTION>
  As of and for the years ended December 31, 2003, 2002 and 2001.
  (Dollars in thousands, except per Unit values which are in whole dollars)


<S>                             <C>         <C>         <C>          <C>         <C>
                                  2003        2002        2001         2000         1999
                                _________   _________   _________    _________   _________

Total Revenue                   $  3,864    $  4,855    $  4,453     $  4,468    $  4,864
Net income (loss)                   (406)        466        (208)        (569)       (380)

Per unit:
  Net income (loss)                 (341)        392        (175)        (478)       (319)
  Partners' deficit               (1,161)       (820)     (1,212)      (1,037)       (559)

Total assets                       5,527       6,365       8,875       10,296      12,932
Current portion of notes
  payable to related party           458       1,008       4,497        3,498       6,583
Accrued interest to related party  5,804       5,718       5,442        4,753       4,073
Partners' deficit                 (1,382)       (976)     (1,442)      (1,234)       (665)

</TABLE>

All per Unit values were calculated based on 1,190 Units.


Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Going Concern

The following matters raise substantial doubt about the Partnership's ability to
continue as a going concern:

1.   As discussed in Part I, "Item 1- BUSINESS - Introduction" and in Note 4 to
     the Financial Statements, the Partnership has not had sufficient cash flows
     from operations to make scheduled payments of principal and interest on the
     outstanding Purchase Notes. Accordingly, the Partnership is in default of
     the Purchase Notes. Upon notice of default, MCC has a right to foreclose
     against its security interests in the assets of the Partnership. As of the
     date of filing of this report, MCC has not notified the Partnership of its
     intent to foreclose on its security interest. Any such foreclosure by MCC
     on its security interests in the assets of the Partnership would have a
     material adverse effect on the Partnership.

2.   As discussed in Part I, "Item 1 - BUSINESS - Sale of Electric Power", the
     Partnership's assignment of rights under the Power Agreement expires on
     December 31, 2004 and the Power Agreement expires in June 2005.
     Additionally, the Wind Park Easement Agreement (as defined in "Item 2 -
     PROPERTIES") expires on December 31, 2004. The Partnership will have no

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     ability to sell the power it generates after December 31, 2004 without an
     extension of the assignment of rights under the Power Agreement and an
     extension of the Wind Park Easement Agreement. Additionally, if the
     Partnership were to obtain an extension of its assignment of rights under
     the Power Agreement, it could only be effective until June 2005, unless the
     Power Agreement were extended beyond that date or some other arrangements
     were made.

3.   As discussed in Part II, "Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Subsequent Event - SCE
     Curtailment" and Note 9 to the Financial Statements, SCE has substantially
     curtailed the Partnership's electrical production from the Windsystem
     beginning April 13, 2004 and continuing through the date of this report due
     to an SCE construction project. SCE has notified the Partnership that SCE
     estimates that the curtailment will continue through May 17, 2004.
     Management expects that this curtailment will have a material adverse
     effect on the Partnership's cash flows and financial results of operations
     during the period of the curtailment and for the Partnership's 2004 fiscal
     year. Depending on the duration and level of the curtailment by SCE,
     management believes that such curtailment could have a material adverse
     effect on the Partnership's ability to cure existing payment defaults on
     the Purchase Notes and/or make payments related to costs associated with
     the ongoing operations of the Windsystem.

Liquidity and Capital Resources

The Partnership experienced a lack of liquidity throughout 2003, primarily due
to an ongoing shortfall in revenues from operations in comparison to the costs
and expenses of operations. As a result, principal payments on the Purchase
Notes in the aggregate amount of $0.5 million, and interest payments in the
amount of $5.8 million, were in arrears at December 31, 2003. The Partnership's
failure to make timely payments on the Purchase Notes gave MCC the right to
foreclose against the collateral of its loans as set forth in the Purchase
Notes. MCC has not exercised its right to foreclosure under the Purchase Notes.
See "Results of Operations for the Year Ended December 31, 2003 Compared to
December 31, 2002".

The Partnership's primary source of revenues and liquidity to fund operations of
the Windsystem, repay debt, administer the Partnership, and make distributions
to its partners is the production and sale of electricity from the Windsystem.
The Partnership's sole customer is SCE. The price paid by SCE for the
electricity is contractually defined under the Power Agreement.

See Part I, "Item 1. BUSINESS - Sale of Electric Power" for additional
information.

As of December 31, 2003, the Partnership had no current or planned commitments
for capital expenditures.

Subsequent Events

SCE Curtailment

The Partnership's operation and maintenance service provider was provided notice
from SCE that beginning April 13, 2004 the amount of electricity that the
Windsystem could generate and deliver to SCE was being curtailed by
approximately 75%. A representative from SCE explained that the curtailment
action was being taken due to the re-routing of power as a result of the
construction of a new power line. SCE has notified the Partnership that SCE

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estimates that the curtailment will continue through May 17, 2004. Management
expects that this curtailment will have a material adverse effect on the
Partnership's cash flows and financial results of operations during the period
of the curtailment and for the Partnership's 2004 fiscal year. Depending on the
duration and level of the curtailment by SCE, management believes that such
curtailment could have a material adverse effect on the Partnership's ability to
cure existing payment defaults on the Purchase Notes and/or make payments
related to costs associated with the ongoing operations of the Windsystem.

Purchase Notes

The Partnership is in default of the Purchase Notes. As of May 10, 2004, the
total amount in default is $4.3 million which is comprised of interest in
arrears. The principal was paid off in January of 2004. See Part I, "Item 1 -
BUSINESS - Going Concern" and Notes 2, 4 and 9 to the Financial Statements for
additional information.

Results of Operations for the Year Ended December 31, 2003 Compared to December
31, 2002

During 2003, the Partnership's electricity revenue was $3.9 million, and the
Windsystem produced 37.8 million kWh of electricity sold to SCE. This was a
decrease of $1.0 million or 20% in revenue and a decrease of 9.4 million kWh or
20% of electricity produced as compared to 2002.

Costs and expenses during 2003 were $4.3 million, a decrease of $0.1 million or
3%, as compared to 2002. Interest expense decreased by $0.3 million as compared
to 2002 due to lower average principal balances on the Purchase Notes
outstanding in 2003. Maintenance expenses increased by $0.1 million and easement
fees decreased by $0.1 million in 2003 as compared to 2002. The decrease in
easement fees is directly related to the decrease in Gross Operating Proceeds
received in 2003. During the 2003 year, Gross Operating Proceeds were $3.8
million which was a decrease of $1.6 million over 2002. Gross Operating Proceeds
are defined as all gross receipts from the sale of electricity generated by the
Turbines and all amounts paid in lieu of receipts from the sale of electricity,
including, without limitation, any proceeds of systems performance or wind
resource insurance, casualty loss and business interruption insurance paid in
reimbursement of lost revenues and warranty payments in reimbursement of lost
revenues. Additionally, accounting related expenses increased by $0.1 million in
2003 as compared to 2002. See Part III, "Item 11. EXECUTIVE COMPENSATION -
Operating Site Rentals" for additional information.

Overall, the Partnership reported a net loss of $0.4 million for 2003, a change
of $0.9 million from the net income of $0.5 million in 2002. During 2003, the
total partners' deficit increased by $0.4 million to $1.4 million. The net loss
per Unit was $341 for 2003 compared with a net income per Unit of $392 for 2002.

Cash flows from operations decreased by $1.7 million in 2003 as compared to
2002. This decrease was primarily due to the decrease in revenues in 2003 as
compared to 2002 and unfavorable changes in working capital during 2003. The
decrease in revenues and unfavorable changes in working capital during 2003 were
offset by the reduction in interest expense in 2003 as compared to 2002. Cash
flows used in financing activities decreased by $2.9 million due to decreased
principal payments on the Purchase Notes. Excess cash flows from operations are
used primarily to fund payments on the Purchase Notes.

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Results of Operations for the Year Ended December 31, 2002 Compared to December
31, 2001

During 2002, the Partnership's electricity revenue was $4.8 million, and the
Windsystem produced 47.2 million kWh of electricity sold to SCE. This was an
increase of $0.5 million or 12% in revenue and an increase of 4.9 million kWh or
12% of electricity produced as compared to the same period in 2001.

Costs and expenses during 2002 were $4.4 million, a decrease of $0.3 million or
6%, as compared to 2001. This decrease can mainly be attributed to the decrease
in interest expense of $0.3 million, as compared to 2001 due to lower average
principal balances on the Purchase Notes outstanding in 2002. Maintenance
expenses decreased by $0.1 million in 2002, as compared to 2001. See Note 1 to
the Financial Statements, "THE PARTNERSHIP - Operation and Maintenance Services"
for additional information.

Property taxes also decreased $0.1 million in 2002 as compared to 2001. This
decrease can be attributed to a one-time property tax assessment related to
prior years that was reflected in the 2001 year totaling $0.1 million that did
not occur in 2002.

During 2002 easement fees increased $0.1 million, as compared to 2001. The
increase in easement fees is directly related to the increase in Gross Operating
Proceeds received in 2002. During 2002, Gross Operating Proceeds were $5.3
million, which was an increase of $1.9 million over 2001. Insurance expense
increased by $0.1 million in 2002, as compared to 2001. This increase is
directly related to market conditions within the Property and Casualty Insurance
industry coupled with adverse experience in prior years.

Overall, the Partnership reported net income of $0.5 million for 2002; an
increase of $0.7 million as compared to 2001. During 2002, the deficit in
partners' capital decreased $0.5 million or 32% to ($1.0) million. This
represents net income per Unit of $392 compared with a net loss per Unit of $175
in 2001.

Cash flows from operations increased by $1.7 million in 2002 as compared to
2001. This increase was primarily due to the increase in revenues and decrease
in interest expense in 2002 as compared to 2001 and favorable working capital
changes during 2002. Cash flows used in financing activities increased by $1.4
million due to increased principal payments on the Purchase Notes. Excess cash
flows from operations are used primarily to fund payments on the Purchase Notes.

Item 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The financial performance of the Partnership is affected by, among other things,
general economic, financial, competitive, legislative, legal, regulatory and
other factors that are beyond management's control. Changes in these factors
could make it more expensive to operate the Windsystem, or require additional
capital expenditures, or reduce certain benefits currently available to the
Partnership. There are a variety of other risks that affect the financial
performance of the Partnership, some of which are beyond management's control,
including but not limited to:

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o    The Partnership could perform below expected levels of output or
     efficiency, which would reduce revenue;
o    Changes or modifications to the rules and regulations of the Western energy
     markets, and particularly the regulatory environment in California, may
     negatively impact SCE's financial viability and the Partnership's status as
     a QF;
o    Operating and royalty costs could increase;
o    Energy prices paid by SCE could decrease or terminate;
o    Delivery of electrical energy to SCE could be curtailed, disrupted or
     otherwise terminated;
o    Environmental problems or regulation changes could arise which could lead
     to fines or a shutdown of the Windsystem;
o    Windsystem units and equipment have broken down or failed in the past and
     could break down or fail in the future;
o    The operators of the Windsystem could suffer labor disputes;
o    The government could change permit or governmental approval requirements
     restricting operations;
o    Third parties could fail to perform their contractual obligations to the
     Partnership; and
o    Catastrophic events, such as fires, earthquakes, explosions, floods, severe
     declines in wind volume, severe storms or other occurrences including
     terrorism or war, could affect the Windsystem or SCE.

Recently Issued Accounting Pronouncements

SFAS NO. 150

On May 15, 2003, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 150 (FAS 150), Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. FAS 150 changes the accounting
for certain financial instruments that, under previous guidance, could be
classified as equity or "mezzanine" equity, by now requiring those instruments
to be classified as liabilities (or assets in some circumstances) in the
statement of financial position. Further, FAS 150 requires disclosure regarding
the terms of those instruments and settlement alternatives. FAS 150 affects an
entity's classification of the following freestanding instruments: a)
Mandatorily redeemable instruments; b) Financial instruments to repurchase an
entity's own equity instruments; and c) Financial instruments embodying
obligations that the issuer must or could choose to settle by issuing a variable
number of its shares or other equity instruments based solely on (i) a fixed
monetary amount known at inception or (ii) something other than changes in its
own equity instruments. FAS 150 does not apply to features embedded in a
financial instrument that is not a derivative in its entirety. The guidance in
FAS 150 is generally effective for all financial instruments entered into or
modified after May 31, 2003, and is otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. For private companies,
mandatorily redeemable financial instruments are subject to the provisions of
FAS 150 for the fiscal period beginning after December 15, 2003. The adoption of
FAS 150 will have no impact on the Partnership's financial position, results of
operations or cash flows.

SFAS NO. 149

In April 2003, the FASB issued SFAS No. 149 (FAS 149), "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." FAS 149 amends and
clarifies financial accounting and reporting for derivative instruments. This
statement is effective for contracts entered into or modified after June 30,

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<PAGE>

2003. The adoption of FAS 149 will have no impact on the Partnership's financial
position, results of operations or cash flows.

SFAS NO. 143

In June 2001, the Financial Accounting Standards Board issued SFAS No. 143 (FAS
143), "Accounting for Asset Retirement Obligations," effective for fiscal years
beginning after June 15, 2002. This standard addresses financial accounting and
reporting obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The standard requires us to
record the fair value of a liability for an asset retirement obligation in the
period in which it is incurred and to adjust its present value in each
subsequent period. In addition, we must capitalize an amount equal to the
adjustment by increasing the carrying amount of the related long-lived asset,
which is depreciated over the remaining useful life of the related asset. The
Partnership adopted FAS 143 during the first quarter of 2003 and it did not have
a significant effect on the Partnership's financial position, results of
operations or cash flows.

FIN NO. 46

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities, and Interpretation of ARB No. 51" ("FIN No. 46").
The interpretation requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity. FIN No. 46 is effective
for all new variable interest entities created or acquired after January 31,
2003. Adoption of this statement did not impact the financial position, results
of operations or cash flows of the Partnership.

FIN NO. 45

Effective January 1, 2003, the Partnership adopted FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, and Interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34"
("FIN No. 45"). The interpretation requires that upon issuance of a guarantee,
the entity must recognize a liability for the fair value of the obligation it
assumes under that guarantee. In addition, FIN No. 45 requires disclosures about
the guarantees that an entity has issued, including a roll forward of the
entity's product warranty liabilities. This interpretation is intended to
improve the comparability of financial reporting by requiring identical
accounting for guarantees issued with separately identified consideration and
guarantees issued without separately identified consideration. Adoption of this
statement did not impact the financial position, results of operations or cash
flows of the Partnership.

Safe Harbor Statement Regarding Outlook and Other Forward Looking Data

Portions of this report, including but not limited to Items 1 and 2 and the
information appearing under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations," contain forward-looking
statements and involve risks and uncertainties that could significantly affect
expected results of operations, liquidity, cash flows and business prospects.
Factors that could cause results to differ materially include, but are not
limited to: competitive pricing pressures; higher than expected costs; potential
liability resulting from pending or future litigation; domestic and
international political conditions; political events or insurgent activity;
capital expenditure, acquisition or disposition. Forward-looking statements are
generally accompanied by words such as "estimate", "project", "predict", "will",
"anticipate", "plan", "intend", "believe", "expect" or similar expressions that
convey the uncertainty of future events or outcomes. The Partnership expressly

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<PAGE>

disclaims any obligation to publicly update or revise any forward-looking
statements, whether as a result of new information or otherwise. In light of
these risks, uncertainties and assumptions, the forward-looking events discussed
might not occur.

Item 8.     FINANCIAL STATEMENTS

The financial statements of the Partnership for the fiscal years ended December
31, 2001, 2002, and 2003 filed as part of this Form 10-K and listed in response
to Part IV, "Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 10-K" hereof, are incorporated by reference herein.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The Partnership's Current Report on Form 8-K, filed with the SEC on February 13,
2002, as amended by Form 8-K/A, filed with the SEC on February 27, 2002,
discloses the following information:

Effective February 5, 2002, Arthur Andersen LLP ("Andersen") resigned as
independent auditors of the Partnership.

The reports of Andersen on the Partnership's financial statements for the years
ended December 31, 1999 and 2000 did not contain an adverse opinion or
disclaimer of opinion and were not qualified or modified as to the audit scope,
uncertainty or accounting principles. Andersen advised that it had not withdrawn
any of its opinions expressed in their auditor's report for any periods for
which they conducted audits of the Partnership.

The General Partner did not approve the resignation by Andersen.

During the preceding two years and in the subsequent interim periods through
February 5, 2002, there were no disagreements with Andersen on any matters of
accounting principles or practices, financial statement disclosures, or auditing
scope or procedures, which if not resolved to the satisfaction of Andersen would
have caused Andersen to make reference to the matter in their report.

During the preceding two years and in the subsequent interim periods through
February 5, 2002, there were no "reportable events" within the meaning of Item
304(a)(1)(v) of Regulation S-K.

On February 13, 2002, Andersen issued a letter to the SEC acknowledging that it
had read the above statements and was in agreement with such statements.

The Partnership engaged Hein & Associates LLP as the Partnership's new
independent auditor as of January 28, 2004. During the two most recent fiscal
years and during the current fiscal year through January 28, 2004, the
Partnership did not consult Hein & Associates LLP regarding (i) the application
of accounting principles to a specified transaction, either completed or
proposed; (ii) the type of audit opinion that might be rendered on the
Partnership's financial statements; or (iii) any matter which was the subject of
a disagreement or a reportable event, as such terms are defined in Item
304(a)(1) of Regulation S-K and its related instructions.

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Item 9A.  CONTROLS AND PROCEDURES

The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act. This term means controls and other procedures of
a company that are designed to ensure that information required to be disclosed
by the company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the company's
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.

During 2002, following the resignation of Andersen effective February 5, 2002,
the Partnership did not have an independent accountant and did not file periodic
reports required by the Exchange Act. See Part I, "Item 1. BUSINESS - New
Management and Financial Reports" and Part II, "Item 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE." During
2003, the Partnership actively sought to retain an independent accountant and
was successful in doing so effective January 28, 2004. In addition, during 2003,
the Partnership put into place procedures for gathering, analyzing,
communicating to management and disclosing the information the Partnership is
required to disclose in the periodic reports required by the Exchange Act.
However, during 2003, because the Company still had no independent accountant,
it was not able to file periodic reports under the Exchange Act, within the time
periods specified in the SEC's rules and forms.

The Partnership's management, with the participation of the General Partner's
Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Partnership's disclosure controls and procedures as of
December 31, 2002 and as of December 31, 2003. Based on these evaluations, the
General Partner's Chief Executive Officer and Chief Financial Officer concluded
that the Partnership's disclosure controls and procedures were not effective as
of December 31, 2002 or December 31, 2003 because disclosure controls and
procedures were not implemented until 2003 when preparation of the 2002 and 2003
annual financial statements commenced and because the Partnership did not timely
file any of the required periodic reports for the 2002 and 2003 fiscal years or
the quarterly periods therein. Subsequent to December 31, 2003, the Partnership
formalized in writing its disclosure controls and procedures. During the three
months ended December 31, 2002, the Partnership made no change in its internal
controls over financial reporting that materially affected, or is reasonably
likely to materially affect, its internal controls over financial reporting.
During the three months ended December 31, 2003, the Partnership made no change
in its internal controls over financial reporting that materially affected, or
is reasonably likely to materially affect, its internal controls over financial
reporting.

                                PART III

Item 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Partnership does not have any employees or directors. The General Partner of
the Partnership is ZWM. ZWM is responsible for the management of the
Partnership.

Rights and Powers of the General Partner

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Under the terms of the Partnership Agreement, the General Partner holds the
exclusive right to manage the business and affairs of the Partnership. The
Limited Partners, Dean Witter Reynolds Inc., as a special limited partner (the
"Special Limited Partner"), and the substituted limited partners are not
entitled to exercise any rights or powers to manage the business and affairs of
the Partnership. The Limited Partners, Special Limited Partner and substituted
limited partners have voting rights only with respect to certain fundamental
changes in the nature and operation of the Partnership, as set forth in the
Partnership Agreement. ZWM is a California limited liability company,
wholly-owned by EWS. As of December 31, 2003, the principal executive offices of
ZWM were located at 1400 Smith Street, Houston Texas 77002. In March 2004, the
principal executive offices of ZWM were moved to 1221 Lamar Street, Suite 1600,
Houston, Texas 77010.

Set forth below is certain information regarding the current officers of ZWM
that are deemed executive officers of the Partnership for SEC reporting
purposes. ZWM has no directors.

Eric D. Gadd, age 49, has served as President and Chief Executive Officer of ZWM
since September 26, 2002, and has served as President and Chief Executive
Officer of EWS since May 11, 2002. Mr. Gadd is responsible for managing and
restructuring global wind business operations.

Prior to his current assignment, Mr. Gadd served as vice president of business
development for Enron's natural gas pipeline affiliate. From 1995 to 2001, he
was involved in business development and commercial management in Enron's London
office.

Mr. Gadd was an executive officer of various subsidiaries of EW that filed
voluntary petitions for Chapter 11 reorganization with the U.S. Bankruptcy Court
for Southern District of New York filed in connection with the Enron bankruptcy.
See Part I, "Item 1 - BUSINESS - Bankruptcy and Mergers" for additional
information.

Mary H. Cilia, age 42, has served as Chief Financial Officer and Treasurer of
ZWM since May 3, 2004 and has served as Chief Financial Officer and Treasurer of
EWS since June 24, 2003.

Prior to her current assignment, Ms. Cilia served in various accounting
capacities for Enron and certain Enron affiliates from 1999 to 2002. Prior to
joining Enron, Ms. Cilia was an audit manager at Arthur Andersen LLP.

Enron Renewable Energy Corp. ("EREC"), a Delaware corporation, which indirectly
holds the sole membership interest in ZWM, has a board of directors. Because
neither the Partnership nor ZWM has an audit committee or a board of directors,
the board of directors of EREC serves the role of the audit committee for the
Partnership. Set forth below is certain information regarding the directors of
EREC.

Eric D. Gadd is a director of EREC.

Robert Semple, age 58, is a director of EREC, and has served as a financial
insolvency consultant with Kroll Zolfo Cooper LLC since 2000. Prior to his
current assignment, Mr. Semple served as an independent management consultant
for various companies.

The board of directors of EREC has determined that Mr. Semple is an "audit
committee financial expert" as such term is defined by the rules of the SEC. Mr.
Semple is not "independent" as such term is defined under the listing standards
of the New York Stock Exchange.

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Section 16(a) Beneficial Ownership Reporting Compliance.

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Partnership's directors, officers, and persons who own more
than 10% of a registered class of the Partnership's equity securities to file
reports of ownership and changes in ownership with the SEC. Eric D. Gadd,
President and Chief Executive Officer of ZWM, filed a Form 3 with the SEC on
December 13, 2003. Robert Semple, director of EREC, has not yet filed a Form 3
with the SEC but has applied for a Form ID with the intention to do so.

Code of Ethics

Enron (and all of its subsidiary companies, including ZWM and EW) is subject to
and covered by the Enron Corp. Code of Ethics (which applies to all covered
employees, officers and directors). The foregoing individuals are also subject
to and governed by the Enron Corp. Accounting and Financial Reporting Code of
Ethics, which also applies to all employees of Enron and its subsidiaries,
including ZWM and EW. A copy of the Enron Corp. Code of Ethics is available,
without charge, upon request in writing to the Partnership at 1221 Lamar Street,
Suite 1600, Houston, Texas 77010 Attention: Investor Relations.

Delegation of Management

The Partnership has delegated certain aspects of the operation, management,
maintenance and repair of the Windsystem to EWS pursuant to the Management
Agreement. See Part I, "Item 1. BUSINESS - Operation and Maintenance Services".

Item 11.    EXECUTIVE COMPENSATION

As the Partnership has no employees, it does not pay executive compensation to
any individual. The General Partner participates in the profits and losses of
the Partnership by virtue of its partnership interests, and EWS receives payment
under the Management Agreement for services rendered thereunder. During 2002 and
2003, Mr. Gadd and Ms. Cilia were compensated by Enron, or subsidiaries of
Enron, for all of their services rendered, including their services to the
Partnership, and were not compensated directly by the Partnership. Mr. Semple
was compensated for all of his services rendered, including services to the
Partnership, by Kroll Zolfo Cooper LLC. Messrs. Gadd and Semple have not been
compensated directly by the Partnership for their services as directors of EREC.

Distributions

Following its removal as a general partner of the Partnership in June 1988,
PanAero Management Corporation ("PAMC") became a substituted limited partner of
the Partnership. Under an agreement of Settlement and Mutual Release, dated June
26, 2000, settling all claims in the lawsuit entitled PanAero Management
Corporation et. al. v. Zond System, Inc. et al., Los Angeles Superior Court Case
No. BC 130959 (the "Settlement Agreement"), PAMC transferred its substituted
limited partner interest to ZWMC.

The Partnership makes distributions in accordance with the terms of the
Partnership Agreement. The Partnership did not distribute any amounts during
2001, 2002, or 2003.

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Windsystem Management Fees

As compensation for its services under the Management Agreement, EWS receives a
management fee of 2% of the Partnership's gross operating proceeds ("Gross
Operating Proceeds"). Gross Operating Proceeds are defined as all gross receipts
from the sale of electricity generated by the Turbines and all amounts paid in
lieu of receipts from the sale of electricity, including, without limitation,
any proceeds of systems performance or wind resource insurance, casualty loss
and business interruption insurance paid in reimbursement of lost revenues and
warranty payments in reimbursement of lost revenues. Under the Management
Agreement, EWS is also reimbursed for 115% of the maintenance costs, including
labor and material costs that it incurs in the performance of services,
including services by third parties. Upon termination of the Management
Agreement in December 2004, EWS will be entitled to receive an incentive fee
equal to the balance of the cash reserve maintained in connection with the
Purchase Notes. As of December 31, 2003, no cash reserve had been established.
During 2001, 2002 and 2003, the Partnership incurred $0.1 million for management
fees. During the same periods, the Partnership incurred $1.0, $0.9 and $0.9
million, respectively, for cost reimbursement of maintenance and other operating
costs under the Management Agreement.

Operating Site Rentals

Under the Wind Park Easement Agreement, Mesa charges the Partnership rental fees
for use of the Operating Site and Infrastructural Improvements in an amount
equal to the greater of 5% of Gross Operating Proceeds or the Partnership's pro
rata share (with the other producers of electric energy from wind power on the
Operating Site) of the payments due the BLM under the Right-of-Way Grant. For
2001, 2001 and 2003, the Partnership's easement fees were $0.2, $0.3, and $0.2
million, respectively

Interest on Purchase Notes

MCC earns interest from the Partnership on the principal balance outstanding
under the Purchase Notes (from inception until January 1990, at a rate of 13%
per annum and at a rate of 11% per annum thereafter). See Part III, "Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - Purchase Note
Financing" for additional information. During 2001 and 2002, MCC earned $0.7 and
$0.4 million, respectively, in interest on principal under the Purchase Notes
from the Partnership. In 2003, MCC earned $0.1 million in interest on principal
in arrears under the Purchase Notes from the Partnership.

Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Certain Beneficial Owners

To the Partnership's knowledge, no person (including a "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) is
the beneficial owner of more than 5% of the Partnership's equity interests.

Ownership of Management

ZWM owns the sole general partner interest in the Partnership. ZWM also owns the
substituted limited partner interest transferred by PAMC as discussed in Part
III, "Item 11- EXECUTIVE COMPENSATION - Distributions" and two Units. No person

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<PAGE>

who is deemed to be an executive officer or director of the Partnership owns any
interest in the Partnership, ZWM, EREC or any of its subsidiaries.

Changes In Control

In March 1988, ZWMC executed a conditional resignation of its position as a
General Partner, such resignation to become effective upon a material breach of
any of ZWMC's agreements contained in a Letter of Understanding dated March 24,
1988 among ZWMC, EWSI, Dean Witter Reynolds Inc. and certain EWSI affiliates
(the "Letter of Understanding"). It is not clear whether there was a material
breach of any of ZWMC's agreements under the Letter of Understanding; however,
based on a review of the Partnership's books and records, it does not appear
that any affirmative steps have been taken to effectuate a resignation by ZWMC
(or as of April 19, 2002, ZWM) of its position as a General Partner.
Furthermore, even if a material breach of any of ZWMC's agreements under the
Letter of Understanding had occurred, such a breach arguably would not result in
ZWMC's resignation as a General Partner because such a resignation would breach
the terms of the Partnership Agreement.

This description of the terms of ZWMC's conditional resignation is qualified in
its entirety by the Letter of Understanding, including its exhibits, a copy of
which was attached as Exhibit 28.1 to the Partnership's Annual Report on Form
10-K for the fiscal year ended December 31, 1989.

Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Purchase Note Financing

Prior to maturity on December 31, 2002, the Purchase Notes were payable in equal
semi-annual installments of principal and interest over 18 years, commencing in
1984. Interest was accrued from 1984 to January 1990 at a 13% rate per annum and
at an 11% rate per annum thereafter. At December 31, 2001, approximately $9.9
million, including $5.4 million of accrued interest was due to MCC under the
Purchase Notes. During 2001, 2002 and 2003, the Partnership made principal
payments to MCC on the Purchase Notes of $2.1, $3.5 and $0.6 million,
respectively. At December 31, 2002, approximately $6.7 million, including $5.7
million of accrued interest, respectively, was due to MCC under the Purchase
Notes, while at December 31, 2003, approximately $6.3 million, including $ 5.8
million of accrued interest, was due to MCC under the Purchase Notes, which were
then in arrears. The Partnership is in default of the Purchase Notes. Upon
notice of default, MCC has a right to foreclose against its security interest in
the assets of the Partnership, including the Windsystem. As of the date of
filing of this report, MCC has not notified the Partnership of its intent to
foreclose on its security interest. See Part II, "Item 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Liquidity and Capital Resources" for additional information.

Management of the Windsystem

Under the Management Agreement, EWS is obligated to exercise due diligence in
performing its duties and obligations. EWS's duties and obligations include, but
are not limited to: (1) representing the Partnership in its dealings with SCE,
(2) collecting all revenues from SCE, (3) disbursing funds to cover necessary
operating costs, including without limitation, repairs and maintenance,
easements, property taxes, debt service and insurance, (4) hiring and
supervising operating and maintenance personnel, (5) causing the Turbines to be
maintained in good condition and repair, (6) complying with any orders or
obligations imposed by any governmental agency with jurisdiction, unless the
Partnership instructs to the contrary, (7) investigating all accidents or damage


19


<PAGE>

relating to the ownership, operation or maintenance of the Turbines or
infrastructural facilities, (8) enforcing warranty and insurance claims
associated with the Turbines, the infrastructural facilities and components
thereof, (9) complying with the Right-of-Way Grant operating conditions and
requirements, (10) operating, maintaining and repairing the infrastructural
facilities, (11) maximizing production of electric power, (12) using best
efforts to ensure costs and expenses are reasonable and competitive with those
of unaffiliated third parties, (13) providing quarterly accounting and operating
reports, and (14) performing other services, in its reasonable judgment, that it
may deem necessary.

As compensation for its services under the Management Agreement, EWS receives a
management fee of 2% of the Partnership's Gross Operating Proceeds. Under the
Management Agreement, EWS is entitled to be reimbursed for 115% of the
maintenance costs, including labor and material costs that it incurs in the
performance of services including services by third parties. See Part III, "Item
11. EXECUTIVE COMPENSATION - Windsystem Management Fees" for additional
information.

During 2002 and 2003, Eric D. Gadd was Chief Executive Officer and President of
EWS. During 2003, Robert Semple was Managing Director of EWS. During 2002, the
Partnership made payments under the Management Agreement to or on behalf of EWS
in an aggregate amount of approximately $0.9 million. During 2003, the
Partnership made payments under the Management Agreement to or on behalf of EWS
in an aggregate amount of approximately $1.0 million. During 2004, the
Partnership estimates that payments under the Management Agreement to or on
behalf of EWS will be approximately $1.0 million in the aggregate. See Part I,
"Item 1 -- BUSINESS -- Operation and Maintenance Service".

Wind Park Easement Agreement

The Partnership uses a portion of the Operating Site and the Infrastructural
Improvements pursuant to the Wind Park Easement Agreement. Under the Wind Park
Easement Agreement, Mesa charges the Partnership rental fees in an amount equal
to the greater of 5% of Gross Operating Proceeds or the Partnership's pro rata
share (with the other producers of electric energy from wind power on the
Operating Site) of the payments due the BLM under the Right-of-Way Grant.

Effective January 1, 1996, the BLM changed the annual rental payment due under
the Right-of-Way Grant to a flat rent of $79,000. ZPI and ZPII are each charged
a pro rata share of the $79,000 in accordance with the Wind Park Easement
Agreement based on their ratios of aggregated rated capacity of the turbines
installed on the Operating Site. Rental payments may be adjusted by the BLM
annually to reflect any change in the fair rental value of the Operating Site,
which could result in revised easement payments by the Partnership to Mesa.

Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees for professional audit services rendered to the Partnership
by Hein & Associates LLP for the fiscal years ended December 31, 2001, 2002 and
2003 were approximately $35,000 in total. The Partnership did not pay to Hein &
Associates LLP any audit-related fees, tax fees or other fees during the
aforementioned periods. The board of directors of EREC pre-approves all audit
and non-audit services provided by Hein & Associates LLP to the Partnership.

                                     PART IV

Item 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(a).1     Financial Statements

          Balance Sheets at December 31, 2003, 2002 and 2001

20

<PAGE>

          Statements of Operations for the years ended December 31, 2003, 2002
          and 2001

          Statements of Changes in Partners' Capital (Deficit) for the years
          ended December 31, 2003, 2002 and 2001

          Statements of Cash Flows for the years ended December 31, 2003, 2002
          and 2001

          Notes to Financial Statements


(a).2     Exhibits


 Number                   Description

3.1     First Amended and Restated Certificate and Agreement of Limited
        Partnership of Zond-PanAero Windsystem Partners I (Incorporated by
        reference from Exhibit A to the Partnership's Registration Statement on
        Form 10 dated April 29, 1985).

3.2     First Amendment to First Amended and Restated Certificate dated as of
        June 27, 1988 (Incorporated by reference from Exhibit 3.2 to the
        Partnership's Annual Report on Form 10-K (File No. 0-13510) for the
        fiscal year ended December 31, 1988).

10.1    Wind Park Power Purchase and Sale Agreement between PanAero and Southern
        California Edison Company dated April 12, 1982; Assignment of Wind Park
        Power Purchase and Sale Agreement dated July 28, 1984, between PanAero
        and Mesa; and Partial Assignment of Wind Park Power Purchase and Sale
        Agreement effective September 25, 1984, between Mesa and the Partnership
        (Incorporated by reference from Exhibit B to the Partnership's
        Registration Statement on Form 10 dated April 29, 1985).

10.2    Right-of-Way Grant (Serial No. CA-11688-A) issued by the Bureau of Land
        Management of the United States Department of the Interior to PanAero
        and assigned to Mesa (Incorporated by reference from Exhibit C to the
        Partnership's Registration Statement on Form 10 dated April 29, 1985);
        as amended by the Decision of the United States Department of the
        Interior Bureau of Land Management dated December 19, 2002.

10.3    Wind Park Easement Agreement dated as of September 7, 1984, between Mesa
        and the Partnership; Amendment to Wind Park Easement Agreement dated as
        of November 28, 1984 (Incorporated by reference from Exhibit D to the
        Partnership's Registration Statement on Form 10 dated April 29, 1985).

10.4    Windsystem Management Agreement dated July 27, 1988, between EWS and the
        Partnership, and First Amendment to Windsystem Management Agreement,
        (Incorporated by reference from Exhibit 10.5 to the Partnership's Annual
        Report on Form 10-K (File No. 0-13510) for the fiscal year ended
        December 31, 1988).

10.5    Second Amendment to Windsystem Management Agreement between EWS and the
        Partnership (Incorporated by reference from Exhibit 10.5 to the
        Partnership's Annual Report on Form 10-K (File No. 0-13510) for the

21


<PAGE>

        fiscal year ended December 31, 1989).

10.6    Purchase Note and Security Agreement dated as of November 26, 1984,
        between MCC and the Partnership (Incorporated by reference from Exhibit
        G to the Partnership's Registration Statement on Form 10 dated April 29,
        1985).

10.7    First Amendment to Purchase Note and Security Agreement dated as of
        November 7, 1989, between MCC and the Partnership (Incorporated by
        reference from Exhibit 10.7 to the Partnership's Annual Report on Form
        10-K (File No. 0-13510) for the fiscal year ended December 31, 1989).

10.8    Agreement Addressing Renewable Energy Pricing and Payment Issues dated
        as of August 22, 2001 between Mesa and SCE (Incorporated by reference
        from Exhibit 99.1 to the Partnership's Current Report on Form 8-K dated
        November 25, 2003).

31.1    Rule 13a-14(a) Certification of Eric D. Gadd

31.2    Rule 13a-14(a) Certification of Eric D. Gadd

31.3    Rule 13a-14(a) Certification of Mary H. Cilia

31.4    Rule 13a-14(a) Certification of Mary H. Cilia

32.1    Section 1350 Certification of Eric D. Gadd

32.2    Section 1350 Certification of Mary H. Cilia


(b) Reports on Form 8-K

      Current Report on Form 8-K filed November 14, 2003; Item 5

      Current Report on Form 8-K filed November 25, 2003; Item 5; Unaudited
          Financial and Business Information for the fiscal year ended December
          31, 2001

      Current Report on Form 8-K filed December 19, 2003; Item 5; Unaudited
          Financial and Business Information for the fiscal year ended December
          31, 2002

22

<PAGE>



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                       Zond-PanAero Windsystem Partners I

                                       By:  Zond Windsystems Management LLC,
                                       General Partner

                                       By:  /s/ Eric D. Gadd
                                            ----------------
                                       Eric D. Gadd
                                       Chief Executive Officer
                                       -----------------------

                                       May 10, 2004
                                       ------------




Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<S>                                    <C>                                            <C>

              Signature                         Title                                     Date

By:   /s/ Eric D. Gadd                 Chief Executive Officer of Zond                May 10, 2004
    -------------------------          Windsystems Management LLC, the
          Eric D. Gadd                 General Partner of Zond-PanAero
                                       Windsystem Partners I and Director
                                       of Enron Renewable Energy Corp.

By:  /s/ Mary H. Cilia                 Chief Financial Officer of Zond                May 10, 2004
    -------------------------          Windsystems Managment LLC, the
         Mary H. Cilia                 General Partner of Zond-PanAero
                                       Windsystem Partners I

By:   /s/ Robert Semple                Director of Enron Renewable Energy             May 10, 2004
    -----------------------            Corp.
           Robert Semple


</TABLE>

23

<PAGE>




                                  Exhibit Index

Number                   Description

3.1    First Amended and Restated Certificate and Agreement of Limited
       Partnership of Zond-PanAero Windsystem Partners I (Incorporated by
       reference from Exhibit A to the Partnership's Registration Statement on
       Form 10 dated April 29, 1985).

3.2    First Amendment to First Amended and Restated Certificate dated as of
       June 27, 1988 (Incorporated by reference from Exhibit 3.2 to the
       Partnership's Annual Report on Form 10-K (File No. 0-13510) for the
       fiscal year ended December 31, 1988).

10.1   Wind Park Power Purchase and Sale Agreement between PanAero and Southern
       California Edison Company dated April 12, 1982; Assignment of Wind Park
       Power Purchase and Sale Agreement dated July 28, 1984, between PanAero
       and Mesa; and Partial Assignment of Wind Park Power Purchase and Sale
       Agreement effective September 25, 1984, between Mesa and the Partnership
       (Incorporated by reference from Exhibit B to the Partnership's
       Registration Statement on Form 10 dated April 29, 1985).

10.2*  Right-of-Way Grant (Serial No. CA-11688-A) issued by the Bureau of Land
       Management of the United States Department of the Interior to PanAero and
       assigned to Mesa (Incorporated by reference from Exhibit C to the
       Partnership's Registration Statement on Form 10 dated April 29, 1985);
       amended by Decision of the United States Department of the Interior
       Bureau of Land Management dated December 19, 2002.

10.3   Wind Park Easement Agreement dated as of September 7, 1984, between Mesa
       and the Partnership; Amendment to Wind Park Easement Agreement dated as
       of November 28, 1984 (Incorporated by reference from Exhibit D to the
       Partnership's Registration Statement on Form 10 dated April 29, 1985).

10.4   Windsystem Management Agreement dated July 27, 1988, between EWS and the
       Partnership, and First Amendment to Windsystem Management Agreement,
       (Incorporated by reference from Exhibit 10.5 to the Partnership's Annual
       Report on Form 10-K (File No. 0-13510) for the fiscal year ended December
       31, 1988).

10.5   Second Amendment to Windsystem Management Agreement between EWS and the
       Partnership (Incorporated by reference from Exhibit 10.5 to the
       Partnership's Annual Report on Form 10-K (File No. 0-13510) for the
       fiscal year ended December 31, 1989).

10.6   Purchase Note and Security Agreement dated as of November 26, 1984,
       between MCC and the Partnership (Incorporated by reference from Exhibit G
       to the Partnership's Registration Statement on Form 10 dated April 29,
       1985).

10.9   First Amendment to Purchase Note and Security Agreement dated as of
       November 7, 1989, between MCC and the Partnership (Incorporated by
       reference from Exhibit 10.7 to the Partnership's Annual Report on Form
       10-K

24

<PAGE>

       (File  No. 0-13510) for the fiscal year ended December 31, 1989).

10.10  Agreement Addressing Renewable Energy Pricing and Payment Issues dated as
       of August 22, 2001 between Mesa and SCE (Incorporated by reference from
       Exhibit 99.1 to the Partnership's Current Report on Form 8-K dated
       November 25, 2003).

31.1*  Rule 13a-14(a) Certification of Eric D. Gadd

31.2*  Rule 13a-14(a) Certification of Eric D. Gadd

31.3*  Rule 13a-14(a) Certification of Mary H. Cilia

31.4*  Rule 13a-14(a) Certification of Mary H. Cilia

32.1*  Section 1350 Certification of Eric D. Gadd

32.2*  Section 1350 Certification of Mary H. Cilia

* Filed with this report

25

<PAGE>


                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                              FINANCIAL STATEMENTS


                                TABLE OF CONTENTS


Independent Auditor's Report

Balance Sheets at                                                            F-1
December 31, 2003, 2002 and 2001

Statements of Operations for the years ended                                 F-2
December 31, 2003, 2002 and 2001

Statements of Changes in Partners' Capital (Deficit) for the years ended     F-3
December 31, 2003, 2002 and 2001

Statements of Cash Flows for the years ended                                 F-4
December 31, 2003, 2002 and 2001

Notes to Financial Statements                                                F-5

26

<PAGE>


                          INDEPENDENT AUDITOR'S REPORT


To Zond PanAero Windsystem Partners I:


We have audited the accompanying balance sheet of Zond PanAero Windsystem
Partners I (the "Partnership") as of December 31, 2003, 2002 and 2001 and the
related statements of operations, Partners' deficit and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits in accordance
with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2003, 2002 and 2001, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in note 2 to the
financial statements, the Partnership has not had sufficient cash flows from
operations to make payments of scheduled principal and interest on outstanding
debt, certain agreements relating to the Partnership's ability to generate
electricity expire in 2004 and 2005, and the Partnership has been notified of a
curtailment of electrical production beginning April 13, 2004 by Southern
California Edison. These matters raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.



HEIN & ASSOCIATES LLP

Houston, Texas
April 14, 2004


27

<PAGE>




                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                                 BALANCE SHEETS
                             (Dollars in thousands)




<TABLE>
<CAPTION>

<S>                                          <C>                     <C>                   <C>
                                              December 31, 2003      December 31, 2002     December 31, 2001
                                             ---------------------   -------------------   ------------------
 Assets
 Current assets:
   Cash and cash equivalents                  $             2,125     $             472      $            83
   Accounts receivable                                          -                   105                   -
   Accounts receivable from related party                     921                   813                1,320
   Other current assets                                        40                    39                   41
                                             ---------------------   -------------------   ------------------
 Total current assets                                       3,086                 1,429                1,444
                                             ---------------------   -------------------   ------------------

 Property, Plant and Equipment
   Buildings                                                   98                    98                   98
   Plant and equipment                                     49,561                49,561               49,561
   Less - accumulated depreciation                        (47,218)              (44,723)             (42,228)
                                             ---------------------   -------------------   ------------------
 Property, Plant and Equipment, net                         2,441                 4,936                7,431
                                             ---------------------   -------------------   ------------------
       Total assets                           $             5,527     $           6,365                8,875
                                             =====================   ===================   ==================

 Liabilities and partners' deficit
 Current liabilities:
    Accounts payable and accrued expenses     $              392      $              68                  128
    Accounts payable to related party                        255                    547                  250
    Current portion of notes payable
       to related party                                      458                  1,008                4,497
    Accrued interest to related party                      5,804                  5,718                5,442
                                              --------------------   -------------------   ------------------
 Total current liabilities                                 6,909                  7,341               10,317
                                              ====================   ===================   ==================

  Partners deficit
   General partner                                            (6)                    (4)                  (6)
   Limited partners                                       (1,951)                (1,549)              (2,011)
   Substituted limited partner (Note 1)                       (6)                    (4)                  (6)
   Contributed capital                                       581                    581                  581
                                               ------------------    --------------------- ------------------
      Total partners' deficit                             (1,382)                  (976)              (1,442)
                                               ------------------    --------------------- ------------------

      Total liabilities and partners'
         deficit                                -----------------    --------------------- ------------------
                                                     $ 5,527                      6,365                8,875
                                               ==================    ===================== ==================

</TABLE>



The accompanying notes are an integral part of the financial statements.

                                                                  F-1


28

<PAGE>




                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                            STATEMENTS OF OPERATIONS
    (Dollars in thousands, except per Unit value, which is in whole dollars)




<TABLE>
<CAPTION>


<S>                                             <C>                       <C>                <C>
                                                                   For the years ended,
                                            --------------------------------------------------------------
                                            December 31, 2003      December 31, 2002   December 31, 2001
                                            --------------------   ------------------  -------------------
Revenue:
  Sale of electricity                        $          3,858      $           4,814   $           4,317
  Other income                                              6                     41                 136
                                            --------------------   ------------------  -------------------
Total revenue                                           3,864                  4,855               4,453

Costs and expenses:
  Depreciation                                          2,495                  2,495               2,497
  Interest expense                                         86                    376                 689
  Property taxes                                           79                     72                 168
  Easement fees to related party                          188                    261                 170
  Management fees to
     related party                                         75                    104                  68
  Maintenance and other operating costs
     to related and other parties                         927                    850                 958
  Insurance costs                                         269                    222                  87
  Other operating costs                                   151                      9                  24
                                            --------------------   ------------------  -------------------
Total costs and expenses                                4,270                  4,389               4,661
                                            --------------------   ------------------  -------------------
Net income                                  $            (406)     $             466   $            (208)
                                            ====================   ==================  ===================
Net income per Unit                         $            (341)     $             392   $            (175)
                                            ====================   ==================  ===================
Number of outstanding Limited
   Partner Units                            $           1,190      $           1,190   $           1,190
                                            ====================   ==================  ===================


</TABLE>



The accompanying notes are an integral part of the financial statements.

                                                                  F-2

29

<PAGE>


                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                   STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
                             (Dollars in thousands)




<TABLE>
<CAPTION>



                                              For the years ended December 31, 2003, 2002 and 2001
<S>                                   <C>            <C>           <C>             <C>           <C>

                                                                               Substituted
                                                                                 Limited      Contributed
                                                    General        Limited        Partner        Capital
                                      Total         Partner       Partners       (Note 1)       (Note 4)
                                 -------------- -------------- -------------- -------------- --------------
                                    100.00%          0.50%         99.00%          0.50%
                                 -------------- -------------- -------------- -------------- --------------

Balances at December 31, 2000           (1,234)           (5)      (1,805)             (5)            581

Net (loss)                                (208)           (1)        (206)             (1)              -
                                 -------------- -------------- -------------- -------------- --------------

Balances at December 31, 2001           (1,442)           (6)      (2,011)             (6)            581

Net income                                 466             2          462               2               -
                                 -------------- -------------- -------------- -------------- --------------
Balances at December 31, 2002             (976)           (4)      (1,549)             (4)            581

Net (loss)                                (406)           (2)        (402)             (2)              -
                                 -------------- -------------- -------------- -------------- --------------
Balances at December 31, 2003       $   (1,382) $         (6)  $   (1,951)    $        (6)   $        581
                                 ==========================================================================


</TABLE>





The accompanying notes are an integral part of the financial statements.

                                                                  F-3


30

<PAGE>


                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                            STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)



<TABLE>
<CAPTION>



                                                                                      For the years ended,
                                                       -----------------------------------------------------------------------------
                                                             December 31, 2003          December 31, 2002     December 31, 2001
                                                       -------------------------  ------------------------  ------------------------
<S>                                                                     <C>                  <C>                             <C>
Cash Flow From Operating Activities:

Net loss                                               $                  (406)                       466                 (208)

Reconciliation of net income (loss) to net cash
      provided by operating activities:


Depreciation                                                             2,495                      2,495                2,497

Changes in operating assets and liabilities
  Accounts receivable                                                      105                       (105)                   -
  Accounts receivable from related party                                  (108)                       507               (1,021)
  Prepaid insurance and other                                               (1)                         2                   11
  Accounts payable and accrued expenses                                    324                        (60)                 102
  Amount payable to related party                                         (292)                       297                   81
   Accrued interest payable to related party                                86                        276                  689
                                                       -------------------------  ------------------------  ------------------------
Net cash provided by operating activities                                2,203                      3,878                2,151

Cash flows used in financing activities:

 Principal payments on notes payable to related party                     (550)                    (3,489)              (2,085)
                                                       -------------------------  ------------------------  ------------------------
Net increase in cash and cash equivalents                                1,653                        389                   66

Cash and cash equivalents at beginning of the period                       472                         83                   17
                                                       -------------------------  ------------------------  ------------------------
Cash and cash equivalents at end of period              $                2,125    $                   472   $               83

                                                       =========================  ========================  ========================

Supplemental disclosure of cash flow information:
  Cash paid during the year for interest                $                    -    $                   99     $               -


</TABLE>




The accompanying notes are an integral part of the financial statements.

                                                                  F-4


31

<PAGE>



                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - THE PARTNERSHIP

Introduction

Zond-PanAero Windsystem Partners I, a California Limited Partnership (the
"Partnership"), was formed on June 29, 1984, to purchase, own and operate a
system of 300 Vestas Energy A/S Model V-15 wind turbine electric generators (the
"Turbines"). The Turbines, together with certain infrastructural improvements
(the "Infrastructural Improvements") which are owned by Mesa Wind Developers
("Mesa"), a joint venture between Enron Wind Systems, Inc. ("EWSI") and an
affiliate of PanAero Corporation ("PanAero"), form an integrated electric power
generating facility (the "Windsystem") with a rated capacity of 19.5 megawatts
in the San Gorgonio Pass area of the San Bernardino Mountains near Palm Springs,
California (the "Operating Site"). EWSI is a developer and operator of
commercial wind-powered electric generating facilities and PanAero is a wind
resources development company. On January 3, 1997, EWSI's parent, Zond
Corporation, became a wholly-owned subsidiary of Enron Renewable Energy Corp.,
which is wholly-owned by Enron Corp. ("Enron"). In May 1997, the name of Zond
Corporation was changed to Enron Wind Corp. ("EWC").

The general partner (the "General Partner") of the Partnership is Zond
Windsystems Management LLC ("ZWM"), a California limited liability company
wholly-owned by Enron Wind Systems, LLC ("EWS"). See "Bankruptcy and Mergers"
regarding certain affiliated mergers and name changes affecting ZWM, EWS and
EWC. The business of the Partnership and the respective rights of its partners,
including the Partnership's limited partners (the "Limited Partners"), are
governed by the First Amended and Restated Certificate and Agreement of Limited
Partnership of Zond-PanAero Windsystem Partners I, a California Limited
Partnership, entered into on November 29, 1984, as amended (the "Partnership
Agreement").

The Partnership Agreement states that the Partnership will terminate on December
31, 2005, unless earlier terminated in accordance with the provisions of the
Partnership Agreement. The Windsystem, which became operational in November
1984, was constructed by Mesa Construction Company ("MCC"), a joint venture
between an affiliate of EWSI and an affiliate of PanAero. The Partnership paid
MCC a total of $48.9 million for the purchase, construction and installation of
the Turbines, comprised of $22.4 million in cash and $26.5 million in the form
of eighteen-year, 13% notes payable in equal semi-annual installments of
principal and interest totaling $1.9 million (the "Purchase Notes"). As of the
date of filing of this report, the Partnership is in default of the Purchase
Notes. See Notes 3 and 4 below.

Bankruptcy and Mergers

Commencing on December 2, 2001, and periodically thereafter, Enron and certain
of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the
United States Bankruptcy Code (the "Bankruptcy Code"). On February 20, 2002, EWC
and EWSI each filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code. Additionally, two California limited liability companies formed
on February 19, 2002 for the purposes of merging with EWC and EWSI in

32

<PAGE>

anticipation of the sale of Enron's wind business also filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code.

EWC merged with and into one of such limited liability companies on April 19,
2002 and the surviving limited liability company changed its name to Enron Wind
LLC ("EW"). EWSI merged with and into the other limited liability company, also
on April 19, 2002, and the surviving limited liability company changed its name
to Enron Wind Systems, LLC.

On April 12, 2002, Zond Windsystems Management Corporation ("ZWMC"), the general
partner of the Partnership at such time, merged with and into a third California
limited liability company, formed on March 12, 2002, and the surviving limited
liability company changed its name to Zond Windsystems Management LLC. On May 3,
2002, Zond Construction Corp. merged with and into a fourth California limited
liability company, formed on March 21, 2002, and the surviving limited liability
company changed its name to Zond Construction LLC ("ZC"). Neither ZWM nor ZC has
filed for bankruptcy.

Substituted Limited Partner

PanAero Management Corporation ("PAMC"), a California corporation wholly-owned
by PanAero, formerly served as a general partner of the Partnership (together
with ZWMC, the "Former General Partners"). In June 1988, the Partnership
solicited a vote by proxy of the Limited Partners to remove PAMC as a general
partner. Pursuant to that vote, PAMC was converted to a substituted limited
partner. Although the term "Substituted Limited Partner" is defined in the
Partnership Agreement as any individual, partnership, corporation, trust or
other entity admitted to the Partnership as a Limited Partner pursuant to
transfer provisions under the Partnership Agreement, the term substituted
limited partner is used in the accompanying financial statements in reference to
the substituted limited partner interest created by the removal of PAMC as a
general partner. Under an Agreement of Settlement and Mutual Releases (the
"Settlement Agreement") executed on June 26, 2000, PAMC agreed to transfer its
substituted limited partner interest in the Partnership to ZWMC.

Sale to General Electric

On April 10, 2002, Enron, EWC and certain of its subsidiaries, including EWSI,
entered into an Amended and Restated Purchase and Sale Agreement in which such
entities agreed to sell in an asset sale (the "GE Sale") their wind turbine
manufacturing, operation and maintenance and construction businesses to General
Electric Company, acting through its GE power systems business ("GEPS"). The GE
Sale was consummated on May 10, 2002. EW and its subsidiary companies retained
its existing wind power projects including the indirect ownership of the general
partnership interest in the Partnership. However, effective as of the sale,
substantially all of the employees who had been involved in the management of
the Partnership transferred to GEPS.

Following the sale to GEPS, new management was appointed to manage and operate
the Partnership, and ZWM's principal executive offices were moved to 1400 Smith
Street, Houston, Texas 77002 and subsequently were moved to 1221 Lamar Street,
Suite 1600, Houston, Texas 77010. Eric D. Gadd was appointed President and Chief
Executive Officer of ZWM on September 26, 2002. Mary H. Cilia was appointed
Chief Financial Officer and Treasurer of ZWM on May 3, 2004.

33

<PAGE>

Operation and Maintenance Services

EWS manages the Windsystem pursuant to a windsystem management agreement with
the Partnership executed on July 27, 1988 (the "Management Agreement"). The
Management Agreement terminates by its terms on December 31, 2004. Prior to May
10, 2002, Enron Wind Maintenance LLC, an affiliate of EWS, provided operations
and maintenance services for the Windsystem. On May 10, 2002, in connection with
the GE Sale, EWS contracted with GE Wind Energy, LLC to perform certain
operations and maintenance services relating to the Windsystem for a period of
one year ending on May 10, 2003.

In April 2003, EWS entered into an agreement (the "O&M Agreement") with SeaWest
Asset Management Services, LLC ("SeaWest") to provide certain operation and
maintenance services relating to the Windsystem for a 5-year period ending on
May 10, 2008. If EWS terminates the O&M Agreement prior to the end of its stated
term, EWS may be required to pay certain agreed demobilization fees to SeaWest.
If EWS is required to pay such fees, EWS may attempt to seek recovery from the
Partnership of some or all of the amount of such fees pursuant to the terms of
the Management Agreement. Management currently estimates that the amount of the
demobilization fee, if any, for which EWS would seek recovery from the
Partnership would not be in excess of approximately $100,000 at December 31,
2004, with the amount of such demobilization fee declining as of May 10 of each
subsequent year until contract expiration.

Substantial Transactions and Operating Agreements

The accompanying financial statements include substantial transactions with
related parties. These transactions are further described in Notes 3 and 4.

A summary of the major operating agreements entered into by the Partnership,
directly or indirectly, is set forth below:

(1)  The Partnership sells the electricity produced by the Turbines to Southern
     California Edison Company ("SCE"), pursuant to a power purchase and sales
     agreement (the "Power Agreement"). The Power Agreement was originally
     entered into between SCE and PanAero in April 1982 and covers an aggregate
     of 29.9 megawatts of generating capacity. PanAero assigned the Power
     Agreement to Mesa in July 1984. Mesa subsequently assigned the portion of
     the Power Agreement that covers the aggregate rated capacity of the
     Turbines (19.5 megawatts), to the Partnership until December 31, 2004. The
     remaining 10.4 megawatts of generating capacity available under the Power
     Agreement was assigned by Mesa to Zond-PanAero Windsystem Partners II, a
     California Limited Partnership ("ZPII"), whose general partner is an
     affiliate of the General Partner. SCE purchases electricity produced by the
     Turbines at a price equal to the greater of 89% of SCE's "Cost of Energy"
     (as defined in the Power Agreement) or a fixed minimum price of $.102 per
     kilowatt hour ("kWh"), with the limitation that when 89% of SCE's Cost of
     Energy exceeds $.20 kWh, the price per kWh paid by SCE will be limited to
     $.20 per kWh plus 70% of the difference between 89% of SCE's Cost of Energy
     and $.20 per kWh. During 2001, 2002 and 2003, the Partnership earned $.102
     per kWh of electricity delivered to SCE. Absent an extension of the
     assignment of rights under the Power Agreement, the Partnership will not
     have the ability to sell power to SCE subsequent to December 31, 2004. See
     Note 2 for additional information.

(2)  Since July 1988, the Partnership has contracted with EWS (or its
     predecessor) for the operation and maintenance of the Turbines and the
     performance of certain ancillary management services, such as collection of

34

<PAGE>

     revenues from SCE and the administration and payment of all Partnership
     expenses. Under the provisions of the Management Agreement, the Partnership
     pays a management fee of 2% of "Gross Operating Proceeds", which are
     defined as all gross receipts from the sale of electricity generated by the
     Turbines and all amounts paid in lieu of receipts from the sale of
     electricity, including, without limitation, any proceeds of systems
     performance or wind resource insurance, casualty loss and business
     interruption insurance paid in reimbursement of lost revenues and warranty
     payments in reimbursement of lost revenues. Under the Management Agreement,
     EWS is entitled to be reimbursed for 115% of the maintenance costs,
     including labor and material costs that it incurs in the performance of
     services including services performed by third parties. See Note 5.

(3)  The Operating Site is situated on two adjoining parcels of land, consisting
     of approximately 440 acres, located in the San Gorgonio Pass area of the
     San Bernardino Mountains approximately 16 miles northwest of Palm Springs,
     California. The Partnership uses the Infrastructural Improvements and a
     portion of the Operating Site pursuant to a 20-year easement granted by
     Mesa under the terms of a Wind Park Easement Agreement dated as of
     September 7, 1984, as amended (the "Wind Park Easement Agreement"). Mesa
     has rights to develop wind energy resources at the Operating Site, which
     includes the Infrastructural Improvements, under a right-of-way grant (the
     "Right-of-Way Grant") from the United States Bureau of Land Management
     ("BLM"). The primary term of the Right-of-Way Grant expired on January 26,
     2003. On December 19, 2002, the Right-of-Way Grant was extended for a
     ten-year period commencing on January 27, 2003; however, the Wind Park
     Easement Agreement terminates on December 31, 2004. See Note 2 for
     additional information.

     EWSI, PanAero, and their affiliates have developed and sold additional
     wind turbines on the Operating Site to ZPII and Mesa has granted a similar
     easement to ZPII.

     Under the Wind Park Easement Agreement, Mesa charges the Partnership
     rental fees in an amount equal to the greater of 5% of Gross Operating
     Proceeds or the Partnership's pro rata share (with the other producers of
     electric energy from wind power on the Operating Site) of the payments due
     the BLM under the Right-of-Way Grant. Effective January 1, 1996, the BLM
     changed the annual rental payment due under the Right-of-Way Grant to a
     flat rent of $79,000. ZPI and ZPII are each charged a pro rata share of the
     $79,000 in accordance with the Wind Park Easement Agreement based on their
     ratios of aggregated rated capacity of the turbines installed on the
     Operating Site as described above. Rental payments may be adjusted by the
     BLM annually to reflect any change in the fair rental value of the
     Operating Site, which could result in revised easement payments by the
     Partnership to Mesa.

Cash Distributions

The Partnership distributes cash in accordance with the terms of the Partnership
Agreement. Due to less-than-projected operating results, the Partnership has not
distributed any cash to the General Partner, Limited Partners, Dean Witter
Reynolds Inc. as a special limited partner, the Former General Partners or the
substituted limited partners during any fiscal year other than 1985, in which
the Partnership distributed an aggregate of approximately $158,000 to the
Limited Partners and $2,000 to the Former General Partners. Under the Purchase
Notes, the Partnership cannot make cash distributions to its partners unless
certain cash reserve balances are maintained, no events of default exist, and
certain ratio tests are met. The Partnership has not met these criteria since

35

<PAGE>

1985 and did not make any cash distributions to its partners during 2001, 2002,
or 2003

NOTE 2 - GOING CONCERN

The following matters raise substantial doubt about the Partnership's ability to
continue as a going concern:

1.   As discussed in Note 4, the Partnership has not had sufficient cash flows
     from operations to make scheduled payments of principal and interest on the
     outstanding Purchase Notes. Accordingly, the Partnership is in default of
     the Purchase Notes. Upon notice of default, MCC has a right to foreclose
     against its security interests in the assets of the Partnership. As of the
     date of filing of this report, MCC has not notified the Partnership of its
     intent to foreclose on its security interest. Any such foreclosure by MCC
     on its security interests in the assets of the Partnership would have a
     material adverse effect on the Partnership.

2.   The Partnership's assignment of rights under the Power Agreement expires on
     December 31, 2004 and the Power Agreement expires in June 2005.
     Additionally, the Wind Park Easement Agreement expires on December 31,
     2004. The Partnership will have no ability to sell the power it generates
     after December 31, 2004 without an extension of the assignment of rights
     under the Power Agreement and an extension of the Wind Park Easement
     Agreement. Additionally, if the Partnership were to obtain an extension of
     its assignment of rights under the Power Agreement, it could only be
     effective until June 2005, unless the Power Agreement were extended beyond
     that date or some other arrangements were made.

3.   As discussed in Note 9, SCE has substantially curtailed the Partnership's
     electrical production from the Windsystem beginning April 13, 2004 and
     continuing through the date of this report due to an SCE construction
     project. SCE has notified the Partnership that SCE estimates that the
     curtailment will continue through May 17, 2004. Management expects that
     this curtailment will have a material adverse effect on the Partnership's
     cash flows and financial results of operations during the period of the
     curtailment and for the Partnership's 2004 fiscal year. Depending on the
     duration and level of the curtailment by SCE, management believes that such
     curtailment could have a material adverse effect on the Partnership's
     ability to cure existing payment defaults on the Purchase Notes and/or make
     payments related to costs associated with the ongoing operations of the
     Windsystem.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Partnership's accounting records are maintained on the basis used for
federal income tax reporting purposes. For purposes of filing with the
Securities and Exchange Commission, the accounting records have been adjusted to
reflect accounting principles generally accepted in the United States of America
("GAAP").

36

<PAGE>


Income Taxes

The Partnership is not subject to federal and state income taxes. Accordingly,
no recognition has been given to income taxes in the accompanying financial
statements since the income or loss of the Partnership is to be included in the
tax returns of the individual partners. The tax returns of the Partnership are
subject to examination by federal and state taxing authorities. If such
examinations result in adjustments to distributive shares of taxable income or
loss, the tax liability of the partners could be adjusted accordingly.

The tax attributes of the Partnership's net assets flow directly to each
individual partner. Individual partners will have different investment bases
depending upon the timing and prices of acquisition of Partnership units.
Further, each partner's tax accounting, which is partially dependent upon their
individual tax position, may differ from the accounting followed in the
financial statements. Accordingly, there could be significant differences
between each individual partner's tax basis and their proportionate share of the
net assets reported in the financial statements. Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes", requires
disclosure by a publicly held partnership of the aggregate difference in the
basis of its net assets for financial and tax reporting purposes. However, the
Partnership does not have access to information about each individual partner's
tax attributes in the Partnership, and the aggregate tax basis cannot be readily
determined. In any event, management does not believe that, in the Partnership's
circumstances, the aggregate difference would be meaningful information.

Cash Equivalents

Cash equivalents are considered to be all highly liquid investments purchased
with an original maturity of three months or less.

Depreciation

The Turbines are recorded at cost and are being depreciated on the straight-line
method over a twenty-year life. Capitalized improvements and the building are
being depreciated on a straight-line method over a fifteen-year life.
Expenditures that materially increase the useful lives of assets are
capitalized, while ordinary maintenance and repairs are charged to operations as
incurred. Replacement of defective parts or expenditures designed to modify
Turbines to improve their productivity are expensed as incurred.

Earnings Per Limited Partner Unit

Earnings per Limited Partner Unit are calculated based upon the number of
Limited Partner units outstanding during each year.

Fair Value of Financial Instruments

For each class of financial instruments, including cash and cash equivalents,
accounts receivable, prepaid insurance and other current assets, accounts
payable and accrued expenses, accounts payable to related party and accrued
interest to related party, the carrying amount approximates fair value because
of the short maturity of those instruments.


37

<PAGE>

The estimated fair value of the Partnership's note payable to related party is
not materially different from its carrying amount. The fair value is based on
discounted present value cash flows using the Partnership's current borrowing
rate.

Estimates

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Electricity Sales and Significant Customer

Power generated by the Windsystem is recognized as revenue upon delivery of
power to SCE at prices as defined in the Power Agreement. All power produced is
sold to SCE under contracts that expire on December 31, 2004. See Note 2.

NOTE 4 - PURCHASE NOTES

Under an agreement reached in April 1989, MCC reduced the interest rate on the
Purchase Notes from 13% to 11% per annum effective in January 1990. The
Partnership secured its payment obligations under the Purchase Notes by granting
MCC security interests in the Turbines and other intangible collateral including
the rights, title and interests of the Partnership under several of the
Partnership's major operating agreements.

At December 31, 2001, approximately $9.9 million, including $5.4 million of
accrued interest was due to MCC under the Purchase Notes. At December 31, 2002,
approximately $6.7 million, including $5.7 million of accrued interest,
respectively, was due to MCC under the Purchase Notes, while at December 31,
2003, approximately $6.3 million, including $ 5.8 million of accrued interest,
was due to MCC under the Purchase Notes, which were then in arrears.

The Partnership's cash flows have been insufficient to pay all scheduled
principal and interest associated with the Purchase Notes. The Purchase Notes
matured on December 31, 2002. The Partnership's failure to make timely payments
on the Purchase Notes gave MCC the right to foreclose against its security
interest in the assets of the Partnership. MCC has not notified the Partnership
of its intent to foreclose on its security interests.

NOTE 5 - TRANSACTIONS WITH RELATED PARTIES

In addition to the Purchase Notes (See Note 4 above) the Partnership had amounts
payable to MCC, EWS and Painted Hills Wind Developers, respectively. Amounts
payable to Mesa include easement fees and other miscellaneous expenses related
to Windsystem operations. Amounts payable to EWS include management fees and
other miscellaneous expenses related to Windsystem operations. Amounts payable
to Painted Hills Wind Developers are specific to a deposit that was incorrectly
deposited into a Partnership account. Such amounts are unsecured and
non-interest bearing.

38

<PAGE>

The Partnership has the following related party transactions and relationships:

(1)  Mesa assigned easement rights to a portion of the Operating Site and
     granted rights to use the Infrastructural Improvements to the Partnership
     under the Wind Park Easement Agreement (See Note 1 above). The Partnership
     incurred $0.2 million, $0.3 million and $0.2 million in easement fees
     during 2003, 2002 and 2001, respectively, pursuant to the Wind Park
     Easement Agreement.

(2)  The Partnership contracted with EWSI to operate and maintain the Turbines
     and to perform certain management and administrative services under the
     Management Agreement (See Note 1 above). The Partnership incurred expenses
     of $0.9 million, $0.9 million and $1.0 million during 2003, 2002 and 2001,
     respectively, pursuant to the Management Agreement.

In 1988, Mesa assigned $581,000 of receivables from the Partnership to each of
its partners, EWSI and an affiliate of PanAero. EWSI subsequently forgave its
$581,000 of receivables from the Partnership. This forgiveness was treated as a
capital contribution in the accompanying financial statements.

NOTE 6- LITIGATION

SCE Dispute

Market conditions in the California energy sector during 2000 and 2001 created a
significant cash flow problem for SCE. At the end of January 2001, SCE advised
the Partnership that SCE would not make payments for power deliveries in
November and December 2000. The Partnership, along with other renewable source
generators, engaged in discussions with SCE seeking payment from SCE for past
due amounts under applicable power agreements entered into with SCE.

The Partnership continued to operate the Windsystem and deliver power to SCE
believing that eventually a solution would be negotiated. SCE continued to
default on its contractual obligations by missing payments due for January,
February, and March 2001 power deliveries.

On March 27, 2001, the California Public Utilities Commission (the "CPUC")
issued an order (the "CPUC Order") obligating SCE to begin payments for power
delivered on a prospective basis. Following the issuance of the CPUC Order, SCE
initiated discussions with renewable source generators, including the
Partnership, to agree on a payment plan for power delivered on a prospective
basis. The Partnership and SCE agreed that SCE would pay for delivered power
twice a month. This payment plan was effective from March 27, 2001, the date of
the CPUC Order through December 31, 2004. The CPUC Order did not address the
issue of payments due for the period from November 1, 2000 to March 26, 2001.

By the end of April 2001, the Partnership and SCE were not able to resolve SCE's
non-payment for power delivered for the period between November 1, 2000 and
March 26, 2001. The Partnership, along with other renewable source generators
(collectively, the "Power Generators"), assisted by outside counsel, explored
various legal alternatives to enforce the contractual rights of the Power
Generators. On May 2, 2001, certain Power Generators, including the Partnership,
filed suit against SCE in Los Angeles Superior Court (the "SCE Litigation"). The
suit sought to recover compensation from SCE for power delivered, or at the

39

<PAGE>

option of the plaintiffs, relief from the obligation to deliver power under the
existing contracts with SCE coupled with the right to sell power in the open
market across the SCE transmission grid.

In June 2001, SCE offered to settle all amounts past due, including a payment
for the past due amounts, with the Power Generators. The offer provided for the
payment of all amounts past due with interest accruing at 7% through the date of
payment. On August 22, 2001, Mesa, for the benefit of the Partnership, entered
into a settlement agreement with SCE that, among other things, set forth the
terms for payment of past due amounts to Mesa, and ultimately the Partnership
(the "SCE Payment Agreement").

The SCE Payment Agreement provides that past due amounts be paid in three
installments, 10% of the amount outstanding plus interest on all the past due
amounts to the date of the installment payment to be paid shortly after
execution of the SCE Payment Agreement, another 10% of the amount outstanding to
be paid when the SCE Payment Agreement becomes effective (after CPUC approval
and certain other conditions are satisfied), and the final 80% to be paid when
the California State Legislature approves a plan that restores SCE's credit. SCE
paid the first installment due under the SCE Payment Agreement on August 31,
2001. All remaining amounts outstanding from SCE under the SCE Payment Agreement
were collected from SCE by the end of March 2002. The Partnership, along with
the other Power Generators party to the SCE Litigation, dismissed the SCE
Litigation in August 2003.

FERC Investigation

In May 2003, the Federal Energy Regulatory Commission (the "FERC"), pursuant to
FERC Docket No. EL03-47-000, began investigating whether the Windsystem and
certain other power projects owned by Enron or its affiliates failed to meet the
ownership criteria for qualifying facility ("QF") status under the Public
Utility Regulatory Policies Act of 1978 ("PURPA") following Enron's acquisition
of Portland General Electric Company in 1997. Under PURPA, and the applicable
FERC regulations, a power project is not a QF if more than 50% of the equity
interest in the project is owned by an electric utility or electric utility
holding company. The Partnership and FERC Trial Staff have settled the issues
under investigation and entered into a Consent Agreement dated March 10, 2004
(the "Consent Agreement"). Pursuant to the Consent Agreement, the Partnership
and FERC Trial Staff agree that the Windsystem is a QF notwithstanding Enron's
indirect equity interest in the Windsystem and the other contractual
relationships between the Partnership and various affiliates of Enron. The
Consent Agreement has been certified to the FERC by the FERC judge responsible
for the case and is currently subject to approval by the FERC.

NOTE 7 - ACCOUNTING PRONOUNCEMENTS

SFAS NO 150

On May 15, 2003, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 150 (FAS 150), Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. FAS 150 changes the accounting
for certain financial instruments that, under previous guidance, could be
classified as equity or "mezzanine" equity, by now requiring those instruments
to be classified as liabilities (or assets in some circumstances) in the
statement of financial position. Further, FAS 150 requires disclosure regarding
the terms of those instruments and settlement alternatives. FAS 150 affects an
entity's classification of the following freestanding instruments: a)
Mandatorily redeemable instruments; b) Financial instruments to repurchase an

40

<PAGE>

entity's own equity instruments; and c) Financial instruments embodying
obligations that the issuer must or could choose to settle by issuing a variable
number of its shares or other equity instruments based solely on (i) a fixed
monetary amount known at inception or (ii) something other than changes in its
own equity instruments. FAS 150 does not apply to features embedded in a
financial instrument that is not a derivative in its entirety. The guidance in
FAS 150 is generally effective for all financial instruments entered into or
modified after May 31, 2003, and is otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. For private companies,
mandatorily redeemable financial instruments are subject to the provisions of
FAS 150 for the fiscal period beginning after December 15, 2003. The Partnership
does not expect the adoption of FAS No. 150 to have an impact on its financial
position, results of operations or cash flows.

SFAS NO. 149

In April 2003, the FASB issued SFAS No. 149 (FAS 149), "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." FAS 149 amends and
clarifies financial accounting and reporting for derivative instruments. This
statement is effective for contracts entered into or modified after June 30,
2003. The adoption of FAS 149 will have no impact on the Partnership's financial
position, results of operations or cash flows.

FAS NO. 143

In June 2001, the Financial Accounting Standards Board issued SFAS No. 143 (FAS
143), "Accounting for Asset Retirement Obligations," effective for fiscal years
beginning after June 15, 2002. This standard addresses financial accounting and
reporting obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The standard requires us to
record the fair value of a liability for an asset retirement obligation in the
period in which it is incurred and to adjust its present value in each
subsequent period. In addition, we must capitalize an amount equal to the
adjustment by increasing the carrying amount of the related long-lived asset,
which is depreciated over the remaining useful life of the related asset. The
Partnership adopted FAS 143 during the first quarter of 2003 and it did not have
a significant effect on the Partnership's financial position, results of
operations or cash flows.

FIN NO. 45

Effective January 1, 2003, the Partnership adopted FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, and Interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34"
("FIN No. 45"). The interpretation requires that upon issuance of a guarantee,
the entity must recognize a liability for the fair value of the obligation it
assumes under that guarantee. In addition, FIN No. 45 requires disclosures about
the guarantees that an entity has issued, including a roll forward of the
entity's product warranty liabilities. This interpretation is intended to
improve the comparability of financial reporting by requiring identical
accounting for guarantees issued with separately identified consideration and
guarantees issued without separately identified consideration. The adoption of
this statement did not have a impact on the financial position, results of
operations or cash flows of the Partnership.

FIN NO. 46

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities, and Interpretation of ARB No. 51". ("FIN No. 46").
The interpretation requires certain variable interest entities to be

41

<PAGE>

consolidated by the primary beneficiary of the entity. FIN No. 46 is effective
for all new variable interest entities created or acquired after January 31,
2003. The Partnership does not expect the adoption of this statement to have a
material impact on the financial position, results of operations or cash flows
of the Partnership.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Leases Payable

Future annual minimum payments under non-cancelable obligations as of December
31, 2003 are $0.1 million. There are no lease obligations subsequent to December
31, 2004.

NOTE 9 - SUBSEQUENT EVENTS

SCE Curtailment

The Partnership's operation and maintenance service provider was provided notice
from SCE that beginning April 13, 2004 the amount of electricity that the
Windsystem could generate and deliver to SCE was being curtailed by
approximately 75%. A representative from SCE explained that the curtailment
action was being taken due to the re-routing of power as a result of the
construction of a new power line. SCE has notified the Partnership that SCE
estimates that the curtailment will continue through May 17, 2004. Management
expects that this curtailment will have a material adverse effect on the
Partnership's cash flows and financial results of operations during the period
of the curtailment and for the Partnership's 2004 fiscal year. Depending on the
duration and level of the curtailment by SCE, management believes that such
curtailment could have a material adverse effect the Partnership's ability to
cure existing payment defaults on the Purchase Notes and/or make payments
related to costs associated with the ongoing operations of the Windsystem.

Purchase Notes

The Partnership is in default of the Purchase Notes. As of May 10, 2004, the
total amount in default is $4.3 million which is comprised of interest in
arrears. The principal was paid off in January of 2004. See Notes 2 and 4 for
additional information.

42

<PAGE>



NOTE 10 - QUARTERLY FINANCIAL INFORMATION (Unaudited)

Summarized quarterly financial information for the years ended December 31,
2003, 2002 and 2001 is as follows:


                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                         QUARTERLY FINANCIAL INFORMATION
                             (Dollars in thousands)
                                   (Unaudited)



<TABLE>
<CAPTION>

<S>                                    <C>              <C>           <C>         <C>

2003                                       First          Second       Third        Fourth
                                           Quarter        Quarter      Quarter      Quarter
                                       --------------------------------------------------------
Revenue:
  Sale of electricity                  $       675      $   1,706     $     785   $       692
  Other income                                   -              -             -             6
                                       --------------------------------------------------------
                                                675         1,706           785           698
Total revenue

Costs and expenses:
  Depreciation                                  624           624           624           623
  Interest expense                               27            28            17            14
  Property taxes                                 20            19            20            20
  Easement fees to related party                 30            44            51            63
  Management fees to
     related party                               12            18            20            25
  Maintenance and other operating costs
     to related and other parties               249           253           225           200
  Insurance costs                                67            68            67            67
  Other operating costs                           -            14            17           120
                                       --------------------------------------------------------
Total costs and expenses                      1,029         1,068         1,041         1,132

Net income                             $       (354)     $    638     $    (256)  $      (434)
                                       ========================================================

Net income per Unit                    $       (297)     $    536     $    (215)  $      (365)
                                       ========================================================

Number of outstanding Limited
   Partner Units                              1,190         1,190         1,190         1,190
                                       ========================================================

</TABLE>




43

<PAGE>


                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                         QUARTERLY FINANCIAL INFORMATION
                             (Dollars in thousands)
                                   (Unaudited)




<TABLE>
<CAPTION>

<S>                                    <C>               <C>          <C>         <C>

2002                                       First          Second       Third        Fourth
                                           Quarter        Quarter      Quarter      Quarter
                                       --------------------------------------------------------
Revenue:
  Sale of electricity                  $        807      $  1,939     $   1,255   $       813
  Other income                                   40             -             1             -
                                       --------------------------------------------------------
                                                847         1,939         1,256           813
Total revenue

Costs and expenses:
  Depreciation                                  624           624           624           623
  Interest expense                              122            99            80            75
  Property taxes                                 12            21            19            20
  Easement fees to related party                 76            25             -           160
  Management fees to
     related party                               30            10             -            64
  Maintenance and other operating costs
     to related and other parties               315           103           260           172
  Insurance costs                                57            55            55            55
  Other operating costs                           -             1             -             8
                                       --------------------------------------------------------

Total costs and expenses                      1,236           938         1,038         1,177

Net income                             $       (389)     $  1,001     $     218   $      (364)
                                       ========================================================
Net income per Unit                    $       (327)     $    841     $     183   $      (306)
                                       ========================================================

Number of outstanding Limited
   Partner Units                              1,190         1,190         1,190         1,190
                                       ========================================================


</TABLE>


44

<PAGE>



                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                         QUARTERLY FINANCIAL INFORMATION
                             (Dollars in thousands)
                                   (Unaudited)





<TABLE>
<CAPTION>

<S>                                    <C>               <C>          <C>         <C>

2001                                       First          Second       Third        Fourth
                                           Quarter        Quarter      Quarter      Quarter
                                       --------------------------------------------------------
Revenue:
  Sale of electricity                  $        813      $  1,342     $   1,248   $       914
  Other income                                    4             3            81            48
                                       --------------------------------------------------------
                                                817         1,345         1,329           962
Total revenue

Costs and expenses:
  Depreciation                                  624           624           623           626
  Interest expense                              181           181           136           191
  Property taxes                                 26            25            21            96
  Easement fees to related party                  -            67            70            33
  Management fees to
     related party                                -            27            28            13
  Maintenance and other operating costs
     to related and other parties               259           254           265           180
  Insurance costs                                22            22            21            22
  Other operating costs                          10             6             2             6
                                       --------------------------------------------------------

Total costs and expenses                      1,122         1,206         1,166         1,167

Net income                             $       (305)     $    139     $     163   $      (205)
                                       ========================================================
Net income per Unit                    $       (256)     $    117     $     137   $      (172)
                                       ========================================================

Number of outstanding Limited
   Partner Units                              1,190         1,190         1,190         1,190
                                       ========================================================


</TABLE>


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NOTE 11 - RECONCILIATION OF GAAP BASIS AND TAX BASIS FINANCIAL STATEMENTS:

Listed below are the reconciliations between the Partnership's tax basis
financial statements and the financial statements included herein for results of
operations, partners' capital (deficit) balances and total assets:


                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
         RECONCILIATION OF GAAP BASIS AND TAX BASIS FINANCIAL STATMENTS
                             (Dollars in thousands)



<TABLE>
<CAPTION>


<S>                                               <C>                    <C>                    <C>
                                                                For the years ended December 31,
                                                        2003                   2002                   2001
                                                        ----                   ----                   ----
Tax basis Income                                  $       2,116          $       2,903          $       2,399
Tax basis depreciation less than
  GAAP depreciation                                      (2,492)                (2,492)                (2,494)
  Auditing Accrual                                            -                      -                      -
  Interest on principal in arrears                                                   -
  Other                                                     (30)                    55                   (113)
                                                  ---------------        ---------------        ----------------
GAAP basis income (loss)                          $        (406)         $         466          $        (208)
                                                  ===============        ===============        ================

Tax basis partners' income (deficit)              $       2,459                    343                 (2,559)
Cumulative tax basis income (losses)
   in excess of cumulative GAAP income (losses)          (4,422)                (1,900)                   536
GAAP basis contributed capital                              581                    581                    581
                                                  ---------------        ---------------        ----------------
GAAP basis partners' deficit                      $      (1,382)         $        (976)         $      (1,442)
                                                  ===============        ===============        ================
Tax basis total assets                            $       9,295          $       7,783          $       7,667
Cumulative tax depreciation
  (in excess of) les than GAAP depreciation              (3,768)                (1,276)                 1,216
Other                                                         -                   (142)                    (8)
                                                  ---------------        ---------------        ----------------
GAAP basis total assets                           $       5,527                  6,365                  8,875
                                                  ===============        ===============        ================

</TABLE>


46

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