<PAGE>

                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 year ended December 31, 2005

                                       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

Zip code: 77010

Registrant's telephone number, including area code: (713) 853-0530

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 [X]  NO [ ]

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. YES [ ]  NO [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. YES [X]  NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer  [ ]   Accelerated Filer [ ]   Non-Accelerated Filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [ ]  NO [X]

State the aggregate market value of the voting and non-voting common equity held
by nonaffiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter. Not applicable - The registrant is a limited partnership and its units
of limited partnership interests are not traded.

<PAGE>

                       ZOND-PANAERO WINDSYSTEM PARTNERS I,
                        A CALIFORNIA LIMITED PARTNERSHIP
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                TABLE OF CONTENTS

ITEM NUMBER                                                           PAGE
-----------                                                           ----

                                     PART I

1.    Business ....................................................     1
1A.   Risk Factors ................................................     6
2.    Properties ..................................................     7
3.    Legal Proceedings ...........................................     8
4.    Submission of Matters to a Vote of Security Holders .........     8

                                     PART II

5.    Market for Registrant's Common Equity and Related
      Unitholder Matters ..........................................     8
6.    Selected Financial Data .....................................     8
7.    Management's Discussion and Analysis of
      Financial Condition and Results of Operations ...............     9
7A.   Quantitative and Qualitative Disclosures about Market Risk ..    12
8.    Financial Statements and Supplementary Data .................    13
9.    Changes in and Disagreements With Accountants
      on Accounting and Financial Disclosure ......................    13
9A.   Controls and Procedures .....................................    13
9B.   Other Information ...........................................    13

                                    PART III

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

                                     PART IV

15.   Exhibits and Financial Statements Schedules .................    19

<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, 2005, the total amount in default was $0.6 million, which was
comprised of interest in arrears. In March 2006, the Partnership paid the
remaining $0.6 million of interest in arrears due under the Purchase Notes.

On January 3, 1997, EWSI's parent company, Zond Corporation, became a
wholly-owned subsidiary of Enron Renewable Energy Corp. ("EREC"), which is
wholly owned by Enron Corp. ("Enron"). 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").

DISSOLUTION OF THE PARTNERSHIP

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 term of the Partnership ended on December 31, 2005 in
accordance with the terms of the Partnership Agreement. The Partnership
dissolved effective on the day on which the term of the Partnership ended. The
General Partner will liquidate the assets

                                        1
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of the Partnership, apply and distribute the proceeds thereof as contemplated by
the Partnership Agreement, and plans to cause the cancellation of the
Partnership's Certificate of Limited Partnership with the Secretary of State of
the State of California. The Partnership will then terminate and the General
Partner plans to file with the Securities and Exchange Commission ("Commission")
a Form 15 to terminate registration of the Units under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The General Partner is currently
evaluating the options in connection with the liquidation of the Partnership's
assets. The primary liquidation options that the General Partner is evaluating
are (i) the sale of the Turbines to a third party or to Mesa or one of its
affiliates and (ii) the abandonment of the Turbines to Mesa under the Wind Park
Easement Agreement (as defined in "Substantial Transactions and Operating
Agreements" below). In connection with the evaluation of the Turbine sale
alternative, the General Partner is reviewing the potential sale of only the
Turbines by the Partnership, as well as assessing if the Turbines can be
combined for sale with other related assets held by third parties. In connection
with the evaluation of the Turbine abandonment option, the General Partner has
obtained two appraisals of the value of the Turbines from independent third
party appraisal companies.

The General Partner is continuing the operation of the Windsystem during the
liquidation period of the Partnership. The Reservation of Rights Agreement, Wind
Park Easement Agreement and Management Agreement (as defined in "Sale of
Electric Power", "Operation and Maintenance Services" and "Item 2. PROPERTIES")
each were due to expire on December 31, 2005. The General Partner extended the
term of the Reservation of Rights Agreement and the Wind Park Easement Agreement
through March 31, 2006, and extended the term of the Management Agreement
through May 31, 2006. See "Sale of Electric Power", "Operation and Maintenance
Services" and "Item 2. PROPERTIES" for additional information. The Partnership
currently intends to continue to operate the Windsystem and deliver power to SCE
after March 31, 2006. The General Partner is seeking to extend the Reservation
of Rights Agreement and the Wind Park Easement Agreement. However, if the
Partnership cannot obtain extensions of these existing agreements on or prior to
March 31, 2006, the Partnership will not have a contractual right to generate
power at the Operating Site or to sell any power that it may generate after
March 31, 2006, and there is no assurance that the Partnership will receive
payment under the RSO1 Power Agreement (as defined in "Sale of Electric Power"
below) or otherwise with respect to any deliveries of energy to SCE made after
March 31, 2006.

Under the terms of the Partnership Agreement, the proceeds of the liquidation of
the assets of the Partnership are to be distributed in the following order: (i)
first, for the payment of any Partnership liquidation expenses and Partnership
debts (other than those owing to any of the Partners), such as the Purchase
Notes; (ii) second, for the payment of any Partnership debts owing to any of the
Partners; and (iii) third, for distributions to the Partners in proportion to
their Partnership adjusted capital accounts, after giving effect to all
contributions, distributions and allocations for all taxable years of the
Partnership, including the taxable year during which the final liquidating
distribution occurs. There is no assurance that, following the payment of the
liquidation expenses relating to the Partnership and the payment of the
Partnership's debts, there will be any remaining proceeds from the liquidation
of the Partnership's assets available for distribution to the Partners.

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"). This matter is referred
to herein as the "Enron Bankruptcy". On February 20, 2002, Enron Wind Corp.
("EWC") and EWSI each filed a voluntary petition for

                                        2
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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 turbine
manufacturing 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.

On November 17, 2004, the Chapter 11 Plan (the "Plan") relating to the Enron
Bankruptcy became effective. The Plan provides for Enron and its affiliated
debtor companies (including EWS and EW) to sell most of their assets and
distribute to their creditors the proceeds of such sales. In connection with the
Plan, EWS assumed the Management Agreement (as defined in "Operation and
Maintenance Services" below) and that agreement remains in effect.

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, as amended, was due to terminate by its terms on March 31,
2006; however, the Partnership and EWS entered into a Sixth Amendment to
Windsystem Management Agreement (the "Management Agreement Amendment") dated as
of March 29, 2006 which extended the termination date of the Management
Agreement from March 31, 2006 to May 31, 2006.

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, 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 $50,000.

                                        3
<PAGE>

SALE OF ELECTRIC POWER

Through June 23, 2005, the Partnership sold 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 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
pursuant to that certain Partial Assignment of Wind Park Power Purchase and
Sales Agreement dated September 28, 1984 (the "Partial Assignment"). Each of the
Partial Assignment and the Power Agreement terminated by its terms on or about
June 23, 2005.

On or about June 23, 2005, the Partnership and PanAero Management Corporation
("PAMC"), a wholly-owned subsidiary of PanAero entered into a Reservation of
Rights Agreement dated as of June 23, 2005 (the "Reservation of Rights
Agreement") pursuant to which the Partnership is permitted to (i) sell power to
SCE from the Windsystem under a Reformed Standard Offer 1 As-Available Capacity
and Energy Power Purchase Agreement dated June 23, 2005 between SCE and PAMC
(the "RSO1 Power Agreement"), and (ii) interconnect the Windsystem with SCE's
transmission system under an Interconnection Facilities Agreement between SCE
and PAMC which was effective as of June 23, 2005 (the "Interconnection
Agreement").

Under the Reservation of Rights Agreement, the Partnership is permitted and has
agreed to deliver up to 19.5 megawatts of energy to SCE under the RSO1 Power
Agreement and to interconnect the Partnership's Windsystem to SCE's transmission
system under the Interconnection Agreement. The Reservation of Rights Agreement
was due to terminate on December 31, 2005; however, the Partnership and PAMC
entered into an Amendment to Reservation of Rights Agreement (the "Reservation
of Rights Agreement Amendment") which was effective as of December 31, 2005 and
which extended the termination date of the Reservation of Rights Agreement from
December 31, 2005 to March 31, 2006. See "Item 1. BUSINESS - Going Concern". The
Partnership is not required under the Reservation of Rights Agreement to pay to
PAMC a fee for the Partnership's use of the RSO1 Power Agreement or the
Interconnection Agreement. The Partnership is required to pay for a portion of
all fees, costs and expenses incurred by PAMC under the RSO1 Power Agreement and
the Interconnection Agreement, including, without limitation, interconnection
fees, back feed electricity costs and maintenance costs. The portion of such
fees, costs and expenses to be paid by the Partnership is based on the ratio of
(x) the aggregate installed name-plate capacity of the Partnership's Windsystem
to (y) the aggregate installed name-plate capacity of all the wind power
projects delivering power to SCE under the RSO1 Power Agreement.

PAMC also concurrently entered into a separate reservation of rights agreement
with Zond-PanAero Windsystem Partners II, a California limited partnership ("ZWP
II") and an affiliate of the Partnership, pursuant to which PAMC granted ZWP II
the right to sell to SCE under the RSO1 Power Agreement up to 10.4 megawatts of
energy from its wind turbine electric power generation facility and to
interconnect such wind power generation facility to SCE's transmission grid
under the Interconnection Agreement.

Under the RSO1 Power Agreement, SCE is required to purchase from PAMC, and PAMC
is required to sell to SCE, the output from the Partnership's Windsystem and ZWP
II's wind power facility, provided that the aggregate name-plate capacity of all
such generating facilities may not exceed 30 megawatts at any one time. The RSO1
Power Agreement has a five-year term, but may be terminated by PAMC upon 30 days
advance notice to SCE. The price to be paid by SCE for the energy delivered
under the RSO1 Power Agreement is equal to the short run avoided cost

                                        4
<PAGE>

to SCE for energy during the delivery period of such energy. Under the RSO1
Power Agreement, SCE also pays an annual capacity payment for the installed
capacity of such generation facilities that is based on SCE's avoided cost for
capacity.

Unlike the Power Agreement, which terminated on or about June 23, 2005, the RSO1
Power Agreement does not contain a minimum energy price payable by SCE. The
minimum price for energy that was paid by SCE under the Power Agreement was
$0.102 per kilowatt hour of energy, and SCE generally paid to the Partnership
such minimum price for energy during the term of the Power Agreement. As a
result, the Partnership expects that the price received by the Partnership for
the sale of energy under the RSO1 Power Agreement will be more volatile as
compared with the price that would have been received by the Partnership under
the Power Agreement during the same period of time.

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 2005, SCE purchased an aggregate of 35.8 million kWh of electricity from
the Partnership for an aggregate purchase price of $3.4 million.

GOING CONCERN

1.   As discussed in "Item 1 - BUSINESS - Dissolution of the Partnership", the
term of the Partnership ended on December 31, 2005. The Partnership dissolved
effective on the day on which the term of the Partnership ended. The General
Partner is currently evaluating opportunities to liquidate the assets of the
Partnership. Upon liquidation of the assets of the Partnership, the General
Partner will apply and distribute the proceeds thereof as contemplated by the
Partnership Agreement, and plans to cause the cancellation of the Partnership's
Certificate of Limited Partnership with the Secretary of State of the State of
California. The Partnership will then terminate and the General Partner plans to
file with the Commission a Form 15 to terminate registration of the Units under
the Exchange Act.

2.   As discussed in "Item 1 - BUSINESS - Dissolution of the Partnership", the
term of the Reservation of Rights Agreement and the Wind Park Easement Agreement
end on March 31, 2006. The General Partner is seeking to extend the Reservation
of Rights Agreement and the Wind Park Easement Agreement. However, if the
Partnership cannot obtain extensions of these existing agreements on or prior to
March 31, 2006, the Partnership will not have a contractual right to generate
power at the Operating Site or to sell any power that it may generate after
March 31, 2006, and there is no assurance that the Partnership will receive
payment under the RSO1 Power Agreement or otherwise with respect to any
deliveries of energy to SCE made after March 31, 2006.

EMPLOYEES

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

                                        5
<PAGE>

ITEM 1A.  RISK FACTORS

WIND RISK

The Partnership's sole source of revenue is from the sale to SCE of electric
power generated from the Windsystem. The generation of electric power is
dependent on the wind resource available at the Operating Site. This wind
resource is variable and there is a risk that the wind resource will reduce over
any particular time, or there will be no wind resource available for the
Windsystem over any particular time.

EQUIPMENT RISK

There is a risk that some or all of the Turbines will fail to operate or operate
less effectively or less often than they have in the past. Because the
Partnership's sole source of revenue is the sale of electric power generated
from the Windsystem, poorly operating or non-operating Turbines will result in
the generation of less electric power, and less revenue to the Partnership.

ENVIRONMENTAL RISK

There is a risk that the operation and maintenance of the Windsystem at the
Operating Site has resulted, or will result, in environmental damage to the
Operating Site, or some portion thereof, and that the Partnership could have
liability associated with such damage.

RISK OF NON-PAYMENT OR CURTAILMENT BY SCE

There is a risk of the Partnership not being paid by SCE for some or all of the
electric power generated and delivered by the Partnership and that SCE may
curtail the deliveries of electric power from the Windsystem. SCE is the sole
purchaser of the electric power generated by the Windsystem, and SCE's refusal
or inability to pay the Partnership for electric power delivered to SCE or SCE's
curtailment of deliveries of electric power from the Windsystem would remove or
reduce the Partnership's sole source of revenue.

NO MARKET FOR PARTNERSHIP INTERESTS

There is no public market for the Partnership Interests. Partnership Interests
may not be transferred without the consent of the General Partner. There is a
substantial risk that any holder of Partnership Interests will have no ability
to transfer, sell or assign any such Partnership Interests.

CONTRACTUAL RIGHTS

There is a risk that the Partnership may not be able to extend the term of
several of its material agreements, including without limitation the Wind Park
Easement Agreement and Reservation of Rights Agreement. The term of these
agreements each end on March 31, 2006. If the Partnership is unable to extend
the term of these agreements, there is a risk the Partnership will be unable to
continue the operation of the Windsystem, or if the Partnership continues to
operate the Windsystem, that the Partnership will not receive payment for
deliveries of electricity after March 31, 2006. In addition, under the terms of
the Wind Park Easement Agreement, the Partnership is required to abandon the
Turbines or remove the Turbines from the Operating Site by May 31,

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2006.  There is a risk that the Partnership will be unable to sell and remove
the Turbines by May 31, 2006, and will be forced to abandon the Turbines.

VALUATION RISK IN SALE PROCESS

The Partnership is currently operating in liquidation and is marketing its
assets for sale. There is no assurance of the amount of proceeds, if any, the
Partnership will receive for the assets of the Partnership. As a result, there
is significant risk that the Partnership will be unable to pay off its debts
prior to the termination of the Partnership, and that the holders of the
Partnership Interests will receive no distributions following the termination 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
an 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, power transfer system,
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.

The Wind Park Easement Agreement, as previously amended, was due to terminate on
December 31, 2005. The Partnership and Mesa entered into an Amendment to the
Wind Park Easement Agreement (the "Easement Amendment"), which was effective as
of December 31, 2005. The Easement Amendment extended the termination date of
the Wind Park Easement Agreement from December 31, 2005 to March 31, 2006. See
"Item 1. BUSINESS - Going Concern."

At the termination of the Wind Park Easement Agreement, the Partnership may: (1)
elect to abandon the Turbines, with Mesa becoming the owner, (2) at its own
expense, remove the Turbines, or (3) elect to sell the Turbines. If the
Partnership elects to sell the Turbines at any time, the Partnership must first
offer the Turbines to Mesa on the same terms and conditions. If the Partnership
abandons the Turbines, neither Mesa nor any affiliate shall have the right to
operate the Turbines unless Mesa pays to the Partnership the appraised fair
market value (as defined) of the Turbines. The General Partner is in the process
of evaluating the Partnership's options under the Wind Park Easement Agreement
upon termination. If the Partnership does not decide to abandon the Turbines,
under the Wind Park Easement Agreement, the Partnership is required to remove
the Turbines from the Operating Site on or before May 31, 2006.

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.

                                        7
<PAGE>

Under the Wind Park Easement Agreement, Mesa charges the Partnership easement
fees for the use of the Operating Site and Infrastructural Improvements in an
amount equal to the greater of (a) with respect to periods ending on or prior to
December 31, 2005, 5% of Gross Operating Proceeds and with respect to periods
after December 31, 2005, 55% of the net operating proceeds of the Partnership or
(b) 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. See "Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS - Wind Park Easement Agreement" for additional information.

ITEM 3.   LEGAL PROCEEDINGS

Not applicable.

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
2005.

                                     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. The Partnership did not repurchase any
Units during the fourth quarter of 2005.

HOLDERS

The Partnership's records indicate that at December 31, 2005 there were 897
holders of record of the Partnership's Units.

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 2005.

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

                                        8
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purposes of filings with the Commission. The selected financial data should be
read in conjunction with the financial statements and related footnotes included
in Item 8.

                   As of and for the years ended December 31,
    (Dollars in thousands, except per Unit values which are in whole dollars)

<TABLE>
<CAPTION>
                                                 As of and for the years ended December 31,
                                      -----------------------------------------------------------------
                                         2005         2004          2003          2002          2001
                                      ----------   ----------    ----------    ----------    ----------
<S>                                   <C>          <C>           <C>           <C>           <C>
Total revenue                         $    3,439   $    3,616    $    3,864    $    4,855    $    4,453
Net income (loss)                          1,922          (20)         (406)          466          (208)

Per unit:
  Net income (loss)                        1,615          (17)         (341)          392          (175)
  Partners' capital (deficit)                437       (1,178)       (1,161)         (820)       (1,212)

Total assets                          $    1,548   $    3,402    $    5,527    $    6,365    $    8,875
Current portion of notes
 payable to related party             $        -   $        -    $      458    $    1,008    $    4,497
Accrued interest to related party     $      565   $    4,265    $    5,804    $    5,718    $    5,442

Partners' capital (deficit)           $      520   $   (1,402)   $   (1,382)   $     (976)   $   (1,442)
</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

1.   As discussed in "Item 1 - BUSINESS - Dissolution of the Partnership", the
term of the Partnership ended on December 31, 2005. The Partnership dissolved
effective on the day on which the term of the Partnership ended. The General
Partner is currently evaluating opportunities to liquidate the assets of the
Partnership. Upon liquidation of the assets of the Partnership, the General
Partner will apply and distribute the proceeds thereof as contemplated by the
Partnership Agreement, and plans to cause the cancellation of the Partnership's
Certificate of Limited Partnership with the Secretary of State of the State of
California. The Partnership will then terminate and the General Partner plans to
file with the Commission a Form 15 to terminate registration of the Units under
the Exchange Act.

2.   As discussed in "Item 1 - BUSINESS - Dissolution of the Partnership", the
term of the Reservation of Rights Agreement and the Wind Park Easement Agreement
end on March 31, 2006. The General Partner is seeking to extend the Reservation
of Rights Agreement and the Wind Park Easement Agreement. However, if the
Partnership cannot obtain extensions of these existing agreements on or prior to
March 31, 2006, the Partnership will not have a contractual right to generate
power at the Operating Site or to sell any power that it may generate after
March 31, 2006, and there is no assurance that the Partnership will receive
payment under the RSO1 Power Agreement or otherwise with respect to any
deliveries of energy to SCE made after March 31, 2006.

LIQUIDITY AND CAPITAL RESOURCES


                                        9
<PAGE>

The Partnership experienced a lack of liquidity throughout 2005, primarily due
to ongoing payments of interest in arrears on the Purchase Notes. As a result,
interest payments on the Purchase Notes in the aggregate amount of $0.6 million
were in arrears as of December 31, 2005. During 2005, the Partnership made
interest payments to MCC on the Purchase Notes in the aggregate amount of $3.7
million. In March 2006, the Partnership paid the remaining $0.6 million of
interest in arrears due under the Purchase Notes. The Partnership's failure to
make timely payments on the Purchase Notes gave MCC the right to foreclose
against its security interest in all the assets of the Partnership, including
the Turbines. However, MCC did not exercise its right to foreclosure under the
Purchase Notes. See "Results of Operations for the Year Ended December 31, 2005
Compared to December 31, 2004".

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 RSO1 Power Agreement.

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

As of December 31, 2005, the Partnership had no current or planned commitments
for capital expenditures.

PURCHASE NOTES

As of December 31, 2005, the Partnership was in default of the Purchase Notes.
The total amount in default was $0.6 million, which was comprised of interest in
arrears. In March 2006, the Partnership paid the remaining $0.6 million of
interest in arrears due under the Purchase Notes. See "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, 2005 COMPARED TO DECEMBER
31, 2004

During the year ended December 31, 2005, the Partnership's electricity revenue
was $3.4 million, and the Windsystem produced 35.8 million kWh of electricity
sold to SCE. This was a decrease of $0.2 million or 6% in revenue and an
increase of 0.4 million kWh or 1% of electricity produced as compared to the
year ended December 31, 2004. The decrease in electricity revenue was primarily
due to the effect of the change in price paid by SCE for the energy delivered by
the Partnership beginning near the end of the second quarter of 2005. From
January 1, 2005 through June 23, 2005, the price paid by SCE for energy
delivered by the Partnership was at a rate of $0.102 per kWh. Beginning on June
24, 2005, under the RSO1 Power Agreement, SCE has paid a price equal to its
short-run avoided cost for all energy delivered by the Partnership. During the
period from June 24, 2005 through December 31, 2005, SCE's short-run avoided
cost (and the price paid by SCE for energy delivered by the Partnership during
this period) ranged from $0.053 to $0.137 per kWh. Throughout the year ended
December 31, 2005, the price paid by SCE for the energy delivered by the
Partnership was an average rate of $0.084 per kWh. Throughout the year ended
December 31, 2004, the price paid by SCE for the energy delivered by the
Partnership was a higher fixed rate of $0.102 per kWh. See "Item 1. BUSINESS -
Sale of Electric Power."

Costs and expenses during 2005 were $1.5 million, a decrease of $2.1 million or
58%, as compared to 2004. Depreciation decreased $2.0 million in 2005 as
compared to 2004 due to the Turbines being fully depreciated during 2004. The
Partnership is continuing to depreciate other

                                       10
<PAGE>

assets, including the service building and relocation/upgrades on the Turbines.
Property taxes remained constant during 2005 as compared to 2004. Easement fees
and management fees decreased $0.04 million and $0.02 million, respectively,
during 2005 as compared to 2004. Easement and management fees are calculated as
a percentage of Gross Operating Proceeds. "Gross Operating Proceeds" is 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. Maintenance expenses increased $0.05 million in 2005, as compared to
2004, due to an increase in unscheduled maintenance. Insurance costs decreased
by $0.05 million in 2005 due to a decrease in premiums as compared with 2004.
Other operating costs decreased $0.02 million in 2005 due to a decrease in the
use of outside consultants as compared to 2004.

Overall, the Partnership reported net income of $1.9 million for 2005, a change
of $1.9 million from the net loss of $0.02 million in 2004. During 2005, the
total partners' deficit decreased by $1.9 million to partner's capital of $0.5
million. The net income per Unit was $1,615 for 2005 compared with a net loss
per Unit of $17 for 2004.

Cash flows from operations decreased by $2.7 million in 2005 as compared to
2004. This decrease was primarily due to increased payments of outstanding
interest in arrears on the Purchase Notes in 2005 as compared to 2004 and
decreased depreciation. Cash flows used in financing activities decreased by
$0.5 million in 2005 as compared to 2004 due to decreased principal payments on
the Purchase Notes. Excess cash flows from operations were used primarily to
fund payments of the interest in arrears on the Purchase Notes.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 COMPARED TO DECEMBER
31, 2003

During the year ended December 31, 2004, the Partnership's electricity revenue
was $3.6 million, and the Windsystem produced 35.4 million kWh of electricity
sold to SCE. This was a decrease of $0.3 million or 6% in revenue and a decrease
of 2.4 million kWh or 6% of electricity produced as compared to the year ended
December 31, 2003. The decrease was primarily due to a curtailment by SCE. SCE
substantially curtailed the Partnership's electrical production from the
Windsystem from April 13, 2004 though May 17, 2004 in connection with the
construction by SCE of a new transmission line for SCE's transmission system.
During this period, SCE curtailed the Partnership's production of electric power
by approximately 75% resulting in the Partnership's inability to sell a
significant portion of electric power.

Costs and expenses during 2004 were $3.6 million, a decrease of $0.7 million or
15%, as compared to 2003. Depreciation decreased $0.4 million in 2004 as
compared to 2003 due to the Turbines being fully depreciated during 2004.
Interest expense decreased by $0.1 million as compared to 2003 due to lower
average principal balances on the Purchase Notes outstanding in 2004.
Maintenance expenses decreased by $0.1 million due to a decrease in unscheduled
maintenance in 2004 as compared to 2003. Easement fees remained constant in 2004
as compared to 2003. Insurance costs decreased by $0.1 million in 2004 as
compared to 2003 due to decreased premiums.

Overall, the Partnership reported a net loss of $0.02 million for 2004, a change
of $0.4 million from the net loss of $0.4 million in 2003. During 2004, the
total partners' deficit increased by

                                       11
<PAGE>

$0.02 million to $1.4 million. The net loss per Unit was $17 for 2004 compared
with a net loss per Unit of $341 for 2003.

Cash flows from operations decreased by $1.3 million in 2004 as compared to
2003. This decrease was primarily due to increased payments of outstanding
interest in arrears on the Purchase Notes in 2004 as compared to 2003 and
decreased revenues. Cash flows used in financing activities decreased by $0.1
million in 2004 as compared to 2003 due to decreased principal payments on the
Purchase Notes. Excess cash flows from operations were used primarily to fund
payments of the interest in arrears on the Purchase Notes.

CONTRACTUAL OBLIGATIONS

The Partnership's contractual obligations as of December 31, 2005 are as follows
(in millions):

                                         2006*
                                      ----------
Purchase obligations:

  Scheduled maintenance fees          $    0.174
  Easement fees                       $    0.051
  Demobilization fees                 $    0.050

*The term of the Partnership ended on December 31, 2005; however, the
Partnership is operating in liquidation and obtained the right to sell power
under the Reservation of Rights Agreement, and extended the term of the Wind
Park Easement Agreement, through March 31, 2006, and extended the term of the
Management Agreement through May 31, 2006.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership's management with the participation of the General Partners'
Chief Executive Officer and Chief Financial Officer has evaluated the disclosure
requirements of Item 305 of Regulation S-K "Quantitative and Qualitative
Disclosures about Market Risk," and has concluded that the Partnership currently
has no market risk sensitive instruments for which this disclosure is required.

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; and
capital expenditures, acquisitions or dispositions. 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 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.

                                       12
<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Partnership for the fiscal year ended December
31, 2005, filed as part of this Form 10-K and listed in response to "Item 15.
EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES" hereof, are incorporated by
reference herein.

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

Effective February 5, 2002, Arthur Andersen LLP resigned as independent auditors
of the Partnership. The Partnership's Current Report on Form 8-K, filed with the
Commission on February 13, 2002, as amended by Form 8-K/A, filed with the
Commission on February 27, 2002, disclosed that during the preceding two years
and in the subsequent interim period through February 5, 2002, there were no
"reportable events" within the meaning of Item 304(a)(1)(v) of Regulation S-K.

The Partnership initially engaged Hein & Associates LLP as the Partnership's
independent auditor as of January 28, 2004. During the 2002 and 2003 fiscal
years and during the 2004 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.

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 Commission'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.

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, 2005. 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 effective as of December 31, 2005.
During the three months ended December 31, 2005, the Partnership made no change
in its internal control over financial reporting that materially affected, or is
reasonably likely to materially affect, its internal control over financial
reporting.

ITEM 9B.  OTHER INFORMATION

Not applicable.

                                       13
<PAGE>

                                    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, a California limited liability company, wholly-owned by
EWS. 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, a special limited partner, and the substituted limited
partners as defined in the Partnership Agreement 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.

EXECUTIVE OFFICERS

Set forth below is certain information regarding officers of ZWM that may be
deemed executive officers of the Partnership for SEC reporting purposes.

Jesse E. Neyman, age 62, has served as President and Chief Executive Officer of
ZWM since January 3, 2006. Mr. Neyman is responsible for managing and
liquidating the global wind business operations of Enron and its affiliates. Mr.
Neyman has served as Vice President, Principal Investments of Enron, since
early 2002. He is responsible for managing financial investment portfolios of
Enron and its affiliates. Prior to these assignments, Mr. Neyman served as
Vice President of Enron Producer Finance, an affiliate of Enron, providing risk
capital to the oil and gas sector.

Mary H. Cilia, age 44, has served as Chief Financial Officer and Treasurer of
ZWM since May 3, 2004. Ms. Cilia has served in various accounting capacities for
Enron and certain Enron affiliates since 1999.

Mr. Neyman and Ms. Cilia were executive officers of various subsidiaries of
Enron 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 "Item 1. BUSINESS - Bankruptcy and Mergers" for additional
information.

DIRECTORS

ZWM has no directors. EREC, 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 and these directors may be
deemed to be directors of the Partnership under the Exchange Act. The members of
the board of directors of EREC may also be deemed directors of Zond Windsystem
Partners, Ltd. Series 85-A, Zond Windsystem Partners, Ltd. Series 85-B and Zond
Windsystem Partners, Ltd. Series 85-C, each a California Limited Partnership.
Set forth below is certain information regarding the directors of EREC.

K. Wade Cline, age 43, has been a director of EREC since November 17, 2004. Mr.
Cline was elected as Managing Director and Assistant General Counsel of Enron in
February 2002, and was elected Managing Director and General Counsel of Enron in
September 2005. Mr. Cline has served multiple Enron companies in various legal
and management roles since 1992.

                                       14
<PAGE>

Richard Lydecker, age 61, has been a director of EREC since January 3, 2006, and
has served as Managing Director and Chief Accounting Officer of Enron since
February 2002. Mr. Lydecker also was elected as Enron's Chief Financial Officer
effective December 20, 2005. Prior to his appointment to these positions with
Enron, Mr. Lydecker was Vice President, Principal Investments of Enron. The
board of directors of EREC has determined that Mr. Lydecker is an "audit
committee financial expert" as such term is defined by the rules of the
Commission. Mr. Lydecker is not "independent" as such term is defined under the
listing standards of the New York Stock Exchange.

Messrs. Cline and Lydecker were executive officers of various subsidiaries of
Enron 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 "Item 1 BUSINESS - Bankruptcy and Mergers" for additional
information. In addition, Mr. Cline was an executive officer of Dabhol Power
Company, a foreign Enron affiliated entity, for which a receiver was appointed.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of 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. Based solely on its review of the copies of such reports
received by the Partnership, or written representations from certain reporting
persons, the Partnership believes that during the last fiscal year, all Section
16 filing requirements applicable to its reporting persons were complied with.

CODE OF ETHICS

Enron (and all of its subsidiary companies, including ZWM and EWS) is subject to
and covered by the Enron Corp. Code of Ethics (which applies to all covered
employees, officers and directors). The foregoing entities 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 EWS. 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 "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. Eric D. Gadd
served as President and Chief Executive Officer of ZWM from September 26, 2002
through December 31, 2005. Individuals that may be deemed executive officers of
the Partnership are compensated by Enron, or subsidiaries of

                                       15
<PAGE>

Enron, for all of their services rendered, including their services to the
Partnership, and were not compensated directly by the Partnership. The directors
of EREC are compensated for all of their services rendered, including services
to the Partnership, by Enron, and they are not compensated directly by the
Partnership for their services as directors of EREC. See also "Item 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS" for a discussion of payments made by the
Partnership to EWS, MCC and Mesa.

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 Exchange Act) 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 "Item
11- EXECUTIVE COMPENSATION - Distributions" and two Units. No person 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

The following summarizes payments made to and proposed to be made to, and made
by and proposed to be made by, the Partnership to the General Partner and its
affiliates in connection with certain agreements. These payments were determined
by and among affiliated entities and, consequently, are not the result of
arm's-length negotiations.

EWS receives payments from the Partnership pursuant to the Management Agreement.
EWS has an indirect 50% interest in MCC, which received payments from the
Partnership pursuant to the

                                       16
<PAGE>

Purchase Notes. EWS also has a 50% interest in Mesa, which receives easement
payments from the Partnership pursuant to the Wind Park Easement Agreement. In
addition, through September 2005, Mesa allocated payments received from SCE
pursuant to the Power Agreement to the Partnership based upon the amount of
electricity generated by the Partnership. On August 8, 2005 the executive
officers of EWS resigned and accordingly, since such date, the executive
officers of EREC may be deemed executive officers of EWS. Eric Gadd was the
President and Chief Executive Officer of EWS from May 11, 2002 through August 7,
2005. Wade Cline was a Vice President of EWS from November 17, 2004 through
August 7, 2005, and has been the Executive Vice President of EREC since
September 6, 2005. Richard Lydecker has been Chief Accounting Officer of EREC
since September 8, 2005. Jesse Neyman, Jr. has been President and Chief
Operating Officer of EREC since January 3, 2006. Robert Semple was a director of
EREC from December 12, 2002 through December 31, 2005, and from November 17,
2004 through August 7, 2005 he was the Associate Restructuring Director of EWS.

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. During 2005, the Partnership paid MCC $3.7
million of interest in arrears due under the Purchase Notes. At December 31,
2005, $0.6 million of accrued interest was due to MCC under the Purchase Notes.
In March 2006, the Partnership paid the remaining $0.6 million of interest in
arrears due under the Purchase Notes. Prior to the date of payment of such
remaining interest in arrears under the Purchase Notes, the Partnership was in
default under the Purchase Notes. During such period and upon notice of default,
MCC had the right to foreclose against its security interest in the assets of
the Partnership, including the Turbines. However, MCC did not elect to foreclose
on its security interest during such period. See "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
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.

                                       17
<PAGE>

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" is 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 by third parties. Upon termination of the Management Agreement, 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 the date of this
filing, there is no cash reserve. During 2005, the Partnership incurred $0.1
million for management fees and incurred $0.9 million for cost reimbursement of
maintenance and other operating costs under the Management Agreement. See "Item
1 - BUSINESS - Operation and Maintenance Services" for additional information.

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 easement fees in an amount
equal to the greater of (a) with respect to periods ending on or prior to
December 31, 2005, 5% of Gross Operating Proceeds and, with respect to periods
ending after December 31, 2005, 55% of the Partnership's net operating proceeds
or (b) 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. During the year ended December 31, 2005, the Partnership
paid $0.2 million in easement fees to Mesa under the Wind Park Easement
Agreement.

The annual easement payment due under the Right-of-Way Grant is $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. Easement payments may be
adjusted by the BLM annually to reflect any change in the fair easement value of
the Operating Site, which could result in revised easement payments by the
Partnership to Mesa under the Wind Park Easement Agreement.

PARTIAL ASSIGNMENT

Under the Partial Assignment, Mesa was an agent for the Partnership in
connection with the collection of the payments from SCE for deliveries of
electric power to SCE by the Partnership under the Power Agreement. Mesa also
served as an agent for ZPII under a similar partial assignment of the Power
Agreement relating to that entity. Mesa allocated the payments received from SCE
under the Power Agreement between the Partnership and ZPII based upon the
prorated amount of electricity generated by each entity with respect to the
period applicable to such payment. During 2005, Mesa allocated and distributed
to the Partnership approximately $2 million of revenues received from SCE under
the Power Agreement.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees for professional audit services rendered to the Partnership
by Hein & Associates LLP for the years ended December 31, 2005 and 2004 were
$23,000 and

                                       18
<PAGE>

$46,000, respectively. 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 AND FINANCIAL STATEMENT SCHEDULES

  (a)1    Financial Statements

          Balance  Sheets at December 31, 2005 and 2004

          Statements of Operations for the years ended December 31, 2005, 2004
          and 2003

          Statements of Changes in Partners' Capital (Deficit) for the years
          ended December 31, 2005, 2004 and 2003

          Statements of Cash Flows for the years ended December 31, 2005, 2004
          and 2003

          Notes to Financial Statements

  (a)2    Schedules

          None

  (a)3    Exhibits

  NUMBER      DESCRIPTION
----------    ------------------------------------------------------------------
    3.1       First Amended and Restated Certificate and Agreement of Limited
              Partnership of Zond-PanAero Windsystem Partners I entered into on
              November 29, 1984 (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 Sales Agreement between PanAero and
              Southern California Edison Company dated April 12, 1982;
              Assignment of Wind Park Power Purchase and Sales Agreement dated
              July 28, 1984, between PanAero and Mesa; and Partial Assignment
              of Wind Park Power Purchase and Sales 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); and
              Amendment to Partial Assignment of Wind Park Power Purchase and
              Sales Agreement effective

                                       19
<PAGE>

              December 31, 2004, between Mesa and the Partnership (Incorporated
              by reference from Exhibit 10.1 to the Partnership's Current
              Report on Form 8-K dated February 16, 2005).

   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 (Incorporated by
              reference from Exhibit 10.2 to the Partnership's Annual Report on
              Form 10-K (File No. 0-13510) for the fiscal years ended December
              31, 2001, 2002 and 2003).

   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); Amendment to Wind
              Park Easement Agreement effective December 31, 2004 between Mesa
              and the Partnership (Incorporated by reference from Exhibit 10.3
              to the Partnership's Current Report on Form 8-K dated February
              16, 2005); Amendment to Wind Park Easement Agreement dated June
              23, 2005 (Incorporated by reference from Exhibit 10.5 to the
              Partnership's Current Report on Form 8-K dated June 23, 2005);
              and Amendment to Wind Park Easement Agreement entered into on
              March 3, 2006, effective as of December 31, 2005 (Incorporated by
              reference from Exhibit 10.3 to the Partnership's Current Report
              on Form 8-K filed March 9, 2006).

   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); Third
              Amendment to Windsystem Management Agreement effective December
              31, 2004 between EWS and the Partnership (Incorporated by
              reference from Exhibit 10.2 to the Partnership's Current Report
              on Form 8-K dated February 16, 2005); Fourth Amendment to
              Windsystem Management Agreement dated June 23, 2005 (Incorporated
              by reference from Exhibit 10.4 to the Partnership's Current
              Report on Form 8-K dated June 23, 2005); Fifth Amendment to
              Windsystem Management Agreement dated as of January 5, 2006,
              effective as of December 31, 2005 (Incorporated by reference from
              Exhibit 10.1 to the Partnership's Current Report on Form 8-K
              dated December 31, 2005); and Sixth Amendment to Windsystem
              Management Agreement dated as of March 29, 2006.

                                       20
<PAGE>

   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).

   10.9       Reformed Standard Offer 1 As-Available Capacity and Energy Power
              Purchase Agreement dated June 23, 2005 between PAMC Management
              Corporation and Southern California Edison Company (Incorporated
              by reference from Exhibit 10.2 to the Partnership's Current
              Report on Form 8-K dated June 23, 2005).

   10.10      Interconnection Facilities Agreement dated June 23, 2005 between
              PAMC Management Corporation and Southern California Edison
              Company (Incorporated by reference from Exhibit 10.3 to the
              Partnership's Current Report on Form 8-K dated June 23, 2005).

   10.11      Reservation of Rights Agreement, dated as of June 23, 2005
              between the Partnership and PAMC Management Corporation
              (Incorporated by reference from Exhibit 10.1 to the Partnership's
              Current Report on Form 8-K dated June 23, 2005); Amendment to
              Reservation of Rights Agreement entered into on March 8, 2006,
              effective as of December 31, 2005 (Incorporated by reference from
              Exhibit 10.2 to the Partnership's Current Report on Form 8-K
              filed March 9, 2006).

   31.1       Rule 13a-14(a) Certification of Jesse E. Neyman

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

   32.1       Section 1350 Certification of Jesse E. Neyman

   32.2       Section 1350 Certification of Mary H. Cilia

                                       21
<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/  Jesse E. Neyman
                                                --------------------------------
                                                Jesse E. Neyman
                                                Chief Executive Officer

                                                March 31, 2006

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>
<CAPTION>
          SIGNATURE                                   TITLE                              DATE
--------------------------------   ----------------------------------------------   --------------
<S>                                <C>                                              <C>
By: /s/ Jesse E. Neyman            Chief Executive Officer of Zond Windsystems      March 31, 2006
    ----------------------------   Management LLC, the General Partner of
    Jesse E. Neyman                Zond-PanAero Windsystem Partners I


By: /s/ Mary H. Cilia              Chief Financial Officer of Zond Windsystems      March 31, 2006
    ----------------------------   Management LLC, the General Partner of
    Mary H. Cilia                  Zond-PanAero Windsystem Partners I


By: /s/ Richard Lydecker           Director of Enron Renewable Energy Corp.         March 31, 2006
    ----------------------------
    Richard Lydecker


By: /s/ Kenneth Wade Cline         Director of Enron Renewable Energy Corp.         March 31, 2006
    ----------------------------
    Kenneth Wade Cline
</TABLE>

                                       22
<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 Sales Agreement between PanAero and
         Southern California Edison Company dated April 12, 1982; Assignment of
         Wind Park Power Purchase and Sales Agreement dated July 28, 1984,
         between PanAero and Mesa; and Partial Assignment of Wind Park Power
         Purchase and Sales 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);
         and Amendment to Partial Assignment of Wind Park Power Purchase and
         Sales Agreement effective December 31, 2004, between Mesa and the
         Partnership (Incorporated by reference from Exhibit 10.1 to the
         Partnership's Current Report on Form 8-K dated February 16, 2005).

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 (Incorporated by
         reference from Exhibit 10.2 to the Partnership's Annual Report on Form
         10-K (File No. 0-13510) for the fiscal years ended December 31, 2001,
         2002 and 2003).

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); Amendment to Wind Park Easement Agreement effective December 31,
         2004 between Mesa and the Partnership (Incorporated by reference from
         Exhibit 10.3 to the Partnership's Current Report on Form 8-K dated
         February 16, 2005); Amendment to Wind Park Easement Agreement dated
         June 23, 2005 (Incorporated by reference from Exhibit 10.5 to the
         Partnership's Current Report on Form 8-K dated June 23, 2005); and
         Amendment to Wind Park Easement Agreement entered into on March 3,
         2006, effective as of December 31, 2005 (Incorporated by reference from
         Exhibit 10.3 to the Partnership's Current Report on Form 8-K filed
         March 9, 2006).

                                       23
<PAGE>

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); Third Amendment to Windsystem
         Management Agreement effective December 31, 2004 between EWS and the
         Partnership (Incorporated by reference from Exhibit 10.2 to the
         Partnership's Current Report on Form 8-K dated February 16, 2005);
         Fourth Amendment to Windsystem Management Agreement dated June 23, 2005
         (Incorporated by reference from Exhibit 10.4 to the Partnership's
         Current Report on Form 8-K dated June 23, 2005); Fifth Amendment to
         Windsystem Management Agreement dated as of January 5, 2006, effective
         as of December 31, 2005 (Incorporated by reference from Exhibit 10.1 to
         the Partnership's Current Report on Form 8-K dated December 31, 2005);
         and Sixth Amendment to Windsystem Management Agreement dated as of
         March 29, 2006.*

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).

10.9     Reformed Standard Offer 1 As-Available Capacity and Energy Power
         Purchase Agreement dated June 23, 2005 between PAMC Management
         Corporation and Southern California Edison Company (Incorporated by
         reference from Exhibit 10.2 to the Partnership's Current Report on Form
         8-K dated June 23, 2005).

10.10    Interconnection Facilities Agreement dated June 23, 2005 between PAMC
         Management Corporation and Southern California Edison Company
         (Incorporated by reference from Exhibit 10.3 to the Partnership's
         Current Report on Form 8-K dated June 23, 2005).

10.11    Reservation of Rights Agreement, dated as of June 23, 2005 between the
         Partnership and PAMC Management Corporation (Incorporated by reference
         from Exhibit 10.1 to the Partnership's Current Report on Form 8-K dated
         June 23, 2005); Amendment to Reservation of Rights Agreement entered
         into on March 8, 2006, effective as of December 31, 2005 (Incorporated
         by reference

                                       24
<PAGE>

         from Exhibit 10.2 to the Partnership's Current Report on Form 8-K
         filed March 9, 2006).

31.1*    Rule 13a-14(a) Certification of Jesse E. Neyman

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

32.1*    Section 1350 Certification of Jesse E. Neyman

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

Report of Independent Registered Public Accounting Firm

Balance Sheets at
December 31, 2005 and 2004                                                   F-1

Statements of Operations for the years ended
December 31, 2005, 2004 and 2003                                             F-2

Statements of Changes in Partners' Capital (Deficit) for the years ended
December 31, 2005, 2004 and 2003                                             F-3

Statements of Cash Flows for the years ended
December 31, 2005, 2004 and 2003                                             F-4

Notes to Financial Statements                                                F-5

                                       26
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To Zond-PanAero Windsystem Partners I:

We have audited the accompanying balance sheets of Zond-PanAero Windsystem
Partners I (the "Partnership") as of December 31, 2005 and 2004 and the related
statements of operations, changes in partners' capital (deficit) and cash flows
for the years ended December 31, 2005, 2004 and 2003. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit 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, 2005 and 2004, and the results of its operations and its cash flows for the
years ended December 31, 2005, 2004 and 2003 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 interest in arrears on outstanding debt and
certain agreements relating to the Partnership's ability to generate electricity
expire in 2006. The Partnership is expected to liquidate and terminate in 2006.
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
March 1, 2006

                                       27

<PAGE>

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

<TABLE>
<CAPTION>
                                                       December 31, 2005   December 31, 2004
                                                       -----------------   -----------------
<S>                                                    <C>                 <C>
Assets
Current assets:
  Cash and cash equivalents                            $             843   $           2,603
  Accounts receivable from related party                             354                 401
  Other current assets                                                45                  44
                                                       -----------------   -----------------
Total current assets                                               1,242               3,048
                                                       -----------------   -----------------
Property, plant and equipment:
  Buildings                                                           98                  98
  Plant and equipment                                             49,561              49,561
  Less - accumulated depreciation                                (49,353)            (49,305)
                                                       -----------------   -----------------
Property, plant and equipment, net                                   306                 354
                                                       -----------------   -----------------
  Total assets                                         $           1,548   $           3,402
                                                       =================   =================
Liabilities and partners' capital (deficit)
Current liabilities:
  Accounts payable and accrued expenses                $             266   $             243
  Accounts payable to related party                                  197                 296
  Accrued interest to related party                                  565               4,265
                                                       -----------------   -----------------
Total current liabilities                                          1,028               4,804
                                                       -----------------   -----------------
Partners' capital(deficit):
  Generalpartner                                                       4                  (6)
  Limited partners                                                   (69)             (1,971)
  Substituted limited partner (Note 1)                                 4                  (6)
  Contributed capital                                                581                 581
                                                       -----------------   -----------------
    Total partners' capital (deficit)                                520              (1,402)
                                                       -----------------   -----------------
    Total liabilities and partners'
     capital (deficit)                                 $           1,548   $           3,402
                                                       =================   =================
</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>
                                                              For the years ended,
                                          ------------------------------------------------------------
                                          December 31, 2005      December 31, 2004   December 31, 2003
                                          -----------------      -----------------   -----------------
<S>                                       <C>                    <C>                 <C>
Revenue:
  Sale of electricity                     $           3,394      $           3,611   $           3,858
  Other income                                           45                      5                   6
                                          -----------------      -----------------   -----------------
Total revenue                                         3,439                  3,616               3,864

Costs and expenses:
  Depreciation                                           48                  2,087               2,495
  Interest expense                                        -                      2                  86
  Property taxes                                         88                     86                  79
  Easement fees to related party                        170                    209                 188
  Management fees to related party                       68                     84                  75
  Maintenance and other operating costs
   to related and other parties                         887                    840                 927
  Insurance costs                                       124                    174                 269
  Other operating costs                                 132                    154                 151
                                          -----------------      -----------------   -----------------
Total costs and expenses                              1,517                  3,636               4,270
                                          -----------------      -----------------   -----------------
Net income (loss)                         $           1,922      $             (20)  $            (406)
                                          =================      =================   =================
Net income (loss) per Unit                $           1,615      $             (17)  $            (341)
                                          =================      =================   =================
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' CAPITAL (DEFICIT)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                             For the years ended December 31, 2005, 2004 and 2003
                                      ------------------------------------------------------------------
                                                                              Substituted
                                                                               Limited      Contributed
                                                    General      Limited       Partner        Capital
                                         Total      Partner      Partners      (Note 1)       (Note 5)
                                      ----------   ----------   ----------   ------------   ------------
<S>                                   <C>          <C>          <C>          <C>            <C>
Profit and loss allocation                100.00%        0.50%       99.00%          0.50%
                                      ----------   ----------   ----------   ------------   ------------
Balance at December 31, 2002                (976)          (4)      (1,549)            (4)           581

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

Net loss                                     (20)           -          (20)             -              -
                                      ----------   ----------   ----------   ------------   ------------
Balance at December 31, 2004              (1,402)          (6)      (1,971)            (6)           581

Net income                                 1,922           10        1,902             10              -
                                      ----------   ----------   ----------   ------------   ------------
Balance at December 31, 2005          $      520   $        4   $      (69)  $          4   $        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, 2005   December 31, 2004   December 31, 2003
                                                           -----------------   -----------------   -----------------
<S>                                                        <C>                 <C>                 <C>
Cash Flow From Operating Activities:

Net income (loss)                                          $           1,922   $             (20)  $            (406)

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

Depreciation                                                              48               2,087               2,495

Changes in operating assets and liabilities:
  Accounts receivable                                                      -                   -                 105
  Accounts receivable from related party                                  47                 520                (108)
  Other current assets                                                    (1)                 (4)                 (1)
  Accounts payable and accrued expenses                                   23                (149)                324
  Amount payable to related party                                        (99)                 41                (292)
  Accrued interest payable to related party                           (3,700)             (1,539)                 86
                                                           -----------------   -----------------   -----------------
Net cash (used in) provided by operating activities                   (1,760)                936               2,203

Cash flows used in financing activities:
  Principal payments on notes payable to related party                     -                (458)               (550)
                                                           -----------------   -----------------   -----------------
  Net (decrease) increase in cash and cash equivalents                (1,760)                478               1,653

Cash and cash equivalents at beginning of the period                   2,603               2,125                 472
                                                           -----------------   -----------------   -----------------
Cash and cash equivalents at end of period                 $             843   $           2,603   $           2,125
                                                           =================   =================   =================

Supplemental disclosure of cash flow information:
  Cash paid during the year for interest                   $           3,700   $           1,541   $               -
</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 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"), 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"). 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 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 December 31, 2005, the Partnership
was in default of the Purchase Notes. See Notes 2, 4 and 9 below for additional
information.

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"). 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"). See
"Bankruptcy and Mergers" regarding certain affiliated mergers and name changes
affecting ZWM, EWS and EWC.

DISSOLUTION OF THE PARTNERSHIP

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

                                       F-5

                                       32

<PAGE>

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 term of the
Partnership ended on December 31, 2005 in accordance with the provisions of the
Partnership Agreement. The Partnership dissolved effective on the day on which
the term of the Partnership ended. The General Partner will liquidate the assets
of the Partnership, apply and distribute the proceeds thereof as contemplated by
the Partnership Agreement, and plans to cause the cancellation of the
Partnership's Certificate of Limited Partnership with the Secretary of State of
the State of California. The Partnership will then terminate and the General
Partner plans to file with the Securities and Exchange Commission ("Commission")
a Form 15 to terminate registration of the Units under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The General Partner is currently
evaluating the options in connection with the liquidation of the Partnership's
assets. The primary liquidation options that the General Partner is evaluating
are (i) the sale of the Turbines to a third party or to Mesa or one of its
affiliates and (ii) the abandonment of the Turbines to Mesa under the Wind Park
Easement Agreement (as defined in "Substantial Transactions and Operating
Agreements" below). In connection with the evaluation of the Turbine sale
alternative, the General Partner is reviewing the potential sale of only the
Turbines by the Partnership, as well as assessing if the Turbines can be
combined for sale with other related assets held by third parties. In connection
with the evaluation of the Turbine abandonment option, the General Partner has
obtained two appraisals of the value of the Turbines from independent third
party appraisal companies.

The General Partner is continuing the operation of the Windsystem during the
liquidation period of the Partnership. The Reservation of Rights Agreement, Wind
Park Easement Agreement and Management Agreement (as defined in "Operation and
Maintenance Services" and "Substantial Transactions and Operating Agreements")
each were due to expire on December 31, 2005. The General Partner extended the
term of the Reservation of Rights Agreement and Wind Park Easement Agreement
through March 31, 2006, and extended the term of the Management Agreement
through May 31, 2006. The General Partner is seeking to further extend the
Reservation of Rights Agreement and Wind Park Easement Agreement. However, if
the Partnership cannot obtain extensions of these existing agreements on or
prior to March 31, 2006, the Partnership will not have a contractual right to
generate power at the Operating Site or to sell any power that it may generate
after March 31, 2006. See Note 9 for additional information.

Under the terms of the Partnership Agreement, the proceeds of the liquidation of
the assets of the Partnership are to be distributed in the following order: (i)
first, for the payment of any Partnership liquidation expenses and Partnership
debts (other than those owing to any of the Partners), such as the Purchase
Notes; (ii) second, for the payment of any Partnership debts owing to any of the
Partners; and (iii) third, for distributions to the Partners in proportion to
their Partnership adjusted capital accounts, after giving effect to all
contributions, distributions and allocations for all taxable years of the
Partnership, including the taxable year during which the final liquidating
distribution occurs. There is no assurance that, following the payment of the
liquidation expenses relating to the Partnership and the payment of the
Partnership's debts, there will be any remaining proceeds from the liquidation
of the Partnership's assets available for distribution to the Partners.

                                       33
<PAGE>

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"). This matter is referred
to herein as the "Enron Bankruptcy". 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 anticipation of the sale
of Enron's wind turbine manufacturing 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.

On November 17, 2004, the Chapter 11 Plan (the "Plan") relating to the Enron
Bankruptcy became effective. The Plan provides for Enron and its affiliated
debtor companies (including EWS and EW) to sell most of their assets and
distribute to their creditors the proceeds of such sales. In connection with the
Plan, EWS assumed the Management Agreement (as defined in "Operation and
Maintenance Services" below) and that agreement remains in effect.

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.

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 by its term was due to terminate on December 31, 2005;
however, the Partnership and

                                       34
<PAGE>

EWS extended the termination date of the Management Agreement from December 31,
2005 to May 31, 2006. See Note 9 for additional information.

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, 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 $50,000.

SUBSTANTIAL TRANSACTIONS AND OPERATING AGREEMENTS

The accompanying financial statements include substantial transactions with
related parties. These transactions are further described in Note 5.

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

(1)      Through June 23, 2005 the Partnership sold the electricity produced by
         the Turbines to SCE pursuant to a power purchase and sales agreement
         (the "Power Agreement") that was originally entered into between SCE
         and PanAero in April 1982 and covered 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 pursuant to that certain Partial
         Assignment of Wind Park Power Purchase and Sales Agreement dated
         September 28, 1984 (the "Partial Assignment"). Each of the Partial
         Assignment and the Power Agreement terminated by its terms on or about
         June 23, 2005.

         On or about June 23, 2005, the Partnership and PAMC entered into a
         Reservation of Rights Agreement dated as of June 23, 2005 (the
         "Reservation of Rights Agreement") pursuant to which the Partnership is
         permitted to (i) sell power to SCE from the Windsystem under a Reformed
         Standard Offer 1 As-Available Capacity and Energy Power Purchase
         Agreement dated June 23, 2005 between SCE and PAMC (the "RSO1 Power
         Agreement"), and (ii) interconnect the Windsystem with SCE's
         transmission system under an Interconnection Facilities Agreement
         between SCE and PAMC which was effective as of June 23, 2005 (the
         "Interconnection Agreement").

         Under the Reservation of Rights Agreement, the Partnership is permitted
         and has agreed to deliver up to 19.5 megawatts of energy to SCE under
         the RSO1 Power Agreement and to interconnect the Partnership's
         Windsystem to SCE's transmission system under the Interconnection
         Agreement. The Reservation of Rights Agreement was due to terminate on
         December 31, 2005; however, the Partnership and PAMC extended the
         termination

                                       35
<PAGE>

         date of the Reservation of Rights Agreement from December 31, 2005 to
         March 31, 2006. See Note 9 for additional information. The Partnership
         is not required under the Reservation of Rights Agreement to pay to
         PAMC a fee for the Partnership's use of the RSO1 Power Agreement or the
         Interconnection Agreement. The Partnership is required to pay for a
         portion of all fees, costs and expenses incurred by PAMC under the RSO1
         Power Agreement and the Interconnection Agreement, including, without
         limitation, interconnection fees, back feed electricity costs and
         maintenance costs. The portion of such fees, costs and expenses to be
         paid by the Partnership is based on the ratio of (x) the aggregate
         installed name-plate capacity of the Partnership's Windsystem to (y)
         the aggregate installed name-plate capacity of all the wind power
         projects delivering power to SCE under the RSO1 Power Agreement.

         PAMC also concurrently entered into a separate reservation of rights
         agreement with Zond-PanAero Windsystem Partners II, a California
         limited partnership ("ZWP II") and an affiliate of the Partnership,
         pursuant to which PAMC granted ZWP II the right to sell to SCE under
         the RSO1 Power Agreement up to 10.4 megawatts of energy from its wind
         turbine electric power generation facility and to interconnect such
         wind power generation facility to SCE's transmission grid under the
         Interconnection Agreement.

         Under the RSO1 Power Agreement, SCE is required to purchase from PAMC,
         and PAMC is required to sell to SCE, the output from the Partnership's
         Windsystem and ZWP II's wind power facility, provided that the
         aggregate name-plate capacity of all such generating facilities may not
         exceed 30 megawatts at any one time. The RSO1 Power Agreement has a
         five-year term, but may be terminated by PAMC upon 30 days advance
         notice to SCE. The price to be paid by SCE for the energy delivered
         under the RSO1 Power Agreement is equal to the short run avoided cost
         to SCE for energy during the delivery period of such energy. Under the
         RSO1 Power Agreement, SCE will also pay an annual capacity payment for
         the installed capacity of such generation facilities that is based on
         SCE's avoided cost for capacity.

         Unlike the Power Agreement, which terminated on or about June 23, 2005,
         the RSO1 Power Agreement does not contain a minimum energy price
         payable by SCE. The minimum price for energy that was paid by SCE under
         the Power Agreement was $0.102 per kilowatt hour of energy, and SCE
         generally paid to the Partnership such minimum price for energy during
         the term of the Power Agreement. As a result, the Partnership expects
         that the price received by the Partnership for the sale of energy under
         the RSO1 Power Agreement will be more volatile as compared with the
         price that would have been received by the Partnership under the Power
         Agreement during the same period of time.

(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 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 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

                                       36
<PAGE>

         incurs in the performance of services, including services performed by
         third parties. The Management Agreement was to terminate by its terms
         on December 31, 2005; however, the Partnership and EWS extended the
         termination date of the Management Agreement from December 31, 2005 to
         May 31, 2006. See Note 9 for additional information.

(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 owns the Turbines,
         including the supporting towers and related concrete support pads and
         controllers. The Partnership uses the Infrastructural Improvements and
         a portion of the Operating Site pursuant to an 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, power transfer
         system, 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.

         The Wind Park Easement Agreement as previously amended was due to
         terminate on December 31, 2005; however, the Partnership and Mesa
         extended the termination date of the Wind Park Easement Agreement from
         December 31, 2005 to March 31, 2006. See Note 9 for additional
         information.

         At the termination of the Wind Park Easement Agreement, the Partnership
         may: (1) elect to abandon the Turbines, with Mesa becoming the owner,
         (2) at its own expense, remove the Turbines, or (3) elect to sell the
         Turbines. If the Partnership elects to sell the Turbines at any time,
         the Partnership must first offer the Turbines to Mesa on the same terms
         and conditions. If the Partnership abandons the Turbines, neither Mesa
         nor any affiliate shall have the right to operate the Turbines unless
         Mesa pays to the Partnership the appraised fair market value (as
         defined) of the Turbines. The General Partner is in the process of
         evaluating the Partnership's options under the Wind Park Easement
         Agreement upon termination. If the Partnership does not decide to
         abandon the Turbines, under the Wind Park Easement Agreement, the
         Partnership is required to remove the Turbines from the Operating Site
         on or before May 31, 2006.

         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
         easement fees for the use of the Operating Site and Infrastructural
         Improvements in an amount equal to the greater of (a) with respect to
         periods ending on or prior to December 31, 2005, 5% of Gross Operating
         Proceeds and, with respect to periods ending after December 31, 2005,
         55% of the net operating proceeds of the Partnership or (b) the
         Partnership's pro rata

                                      37
<PAGE>

         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. See Notes 5 and 9 for additional information.

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 2005.

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 1, the term of the Partnership ended on December
31, 2005. The Partnership dissolved effective on the day on which the term of
the Partnership ended. The General Partner is currently evaluating opportunities
to liquidate the assets of the Partnership. Upon liquidation of the assets of
the Partnership, the General Partner will apply and distribute the proceeds
thereof as contemplated by the Partnership Agreement, and plans to cause the
cancellation of the Partnership's Certificate of Limited Partnership with the
Secretary of State of the State of California. The Partnership will then
terminate and the General Partner plans to file with the Commission a Form 15 to
terminate registration of the Units under the Exchange Act.

2.       As discussed in Notes 1 and 9, the term of the Reservation of Rights
Agreement and the Wind Park Easement Agreement end on March 31, 2006. The
General Partner is seeking to extend the Reservation of Rights Agreement and the
Wind Park Easement Agreement. However, if the Partnership cannot obtain
extensions of these existing agreements on or prior to March 31, 2006, the
Partnership will not have a contractual right to generate power at the Operating
Site or to sell any power that it may generate after March 31, 2006, and there
is no assurance that the Partnership will receive payment under the RSO1 Power
Agreement or otherwise with respect to any deliveries of energy to SCE made
after March 31, 2006.

3.       As discussed in Note 4, the Partnership has not had sufficient cash
flows from operations to make scheduled payments of interest in arrears on the
outstanding Purchase Notes. Accordingly, as of December 31, 2005, the
Partnership was in default of the Purchase Notes. Upon notice of default, MCC
had a right to foreclose against its security interests in the assets of the
Partnership, including the Turbines. As of December 31, 2005, MCC had 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. See Note 9
for additional information.

                                      38
<PAGE>

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
Commission, the accounting records have been adjusted to reflect accounting
principles generally accepted in the United States of America ("GAAP").

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. The Turbines were fully depreciated as of
December 31, 2004. The Turbines were 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.

                                      39
<PAGE>

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.

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 March 31, 2006. 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.

The Partnership has not had sufficient cash flows from operations to make all
payments of interest on the outstanding Purchase Notes. The principal on the
Purchase Notes was paid off in January 2004. As of December 31, 2005, the amount
in default was $0.6 million, which was comprised solely of interest in arrears.
Accordingly, as of December 31, 2005, the Partnership was in default of the
Purchase Notes. Upon notice of default, MCC had a right to foreclose against its
security interests in the assets of the Partnership, including the Turbines. As
of December 31, 2005, MCC had 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. See Note 9 for additional information.

NOTE 5 - TRANSACTIONS WITH RELATED PARTIES

In addition to the Purchase Notes (See Note 4 above) the Partnership had amounts
payable to Mesa and EWS, respectively. Amounts payable to Mesa include easement
fees and other miscellaneous expenses related to Windsystem operations. Amounts
payable to EWS include management fees, maintenance costs and other
miscellaneous expenses related to Windsystem operations.

                                      40
<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 in easement fees during each of
         2005 and 2004 pursuant to the Wind Park Easement Agreement.

(2)      The Partnership has a contract with EWS 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 $1.0 million and $0.9 million during 2005 and
         2004, 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

None.

NOTE 7 - ACCOUNTING PRONOUNCEMENTS

None.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

LEASES PAYABLE

Future annual minimum payments under non-cancelable obligations as of December
31, 2005 are $0.05 million.

NOTE 9 - SUBSEQUENT EVENTS

DIRECTORS AND EXECUTIVE OFFICERS

Effective December 31, 2005, Eric D. Gadd resigned from his positions as
President and Chief Executive Officer of the General Partner. Effective January
3, 2006, Jesse E. Neyman was elected President and Chief Executive Officer of
the General Partner.

Effective December 31, 2005, Robert Semple resigned from his position as a
director of EREC. Effective January 3, 2006, Richard Lydecker and K. Wade Cline
were elected as the directors of EREC.

PURCHASE NOTES

In March 2006, the Partnership paid the remaining $0.6 million of interest in
arrears due under the Purchase Notes. As a result, the Purchase Notes have been
paid in full. Prior to the date of the payment of such remaining interest in
arrears under the Purchase Notes, the Partnership was in default of the Purchase
Notes. During such period and upon notice of default, MCC had a right
to foreclose against its security interest in all the assets of the Partnership,
including the Turbines. However, MCC did not elect to foreclose on its security
interest.


                                      41
<PAGE>


MANAGEMENT AGREEMENT

The Partnership and EWS entered into a Fifth Amendment to Windsystem Management
Agreement dated as of January 5, 2006 which extended the termination date of the
Management Agreement from December 31, 2005 to March 31, 2006. The Partnership
and EWS entered into a Sixth Amendment to Windsystem Management Agreement dated
as of March 29, 2006 which further extended the termination date of the
Management Agreement from March 31, 2006 to May 31, 2006.

RESERVATION OF RIGHTS AGREEMENT

On March 8, 2006, the Partnership and PAMC, which is an affiliate of Mesa,
entered into the Amendment to Reservation of Rights Agreement (the "Reservation
of Rights Agreement Amendment"), which amendment was effective as of December
31, 2005. Pursuant to the Reservation of Rights Agreement, the Partnership has
contractual rights to (i) deliver power from the Windsystem to SCE under the
RSO1 Power Agreement and (ii) interconnect the Windsystem with SCE's
transmission system under the Interconnection Agreement.

The Reservation of Rights Agreement Amendment extended the termination date of
the Reservation of Rights Agreement from December 31, 2005 to March 31, 2006.
The Partnership currently intends to continue to operate the Windsystem and
deliver power to SCE after March 31, 2006. The Partnership is seeking to extend
the term of the Reservation of Rights Agreement beyond March 31, 2006. However,
there is no assurance that PAMC will grant any such extension. Unless an
extension is executed, the Partnership will not have contractual rights to
deliver power to SCE under the RSO1 Power Agreement or to interconnect the
Partnership's Windsystem with the SCE transmission system, and there is no
assurance that the Partnership will receive payment under the RSO1 Power
Agreement or otherwise with respect to its deliveries of energy to SCE made
after March 31, 2006.

WIND PARK EASEMENT AGREEMENT

On March 3, 2006, the Partnership and Mesa entered into the Amendment to Wind
Park Easement Agreement (the "Easement Agreement Amendment"), which amendment
was effective as of December 31, 2005. Pursuant to the Wind Park Easement
Agreement, Mesa has granted to the Partnership the right to use a portion of the
Operating Site and the Infrastructural Improvements in connection with the
operation of the Windsystem. The Wind Park Easement Agreement provides that the
royalty payment payable by the Partnership to Mesa equals 5% of Gross Operating
Proceeds (as defined in the Easement Agreement). The Easement Agreement
Amendment provides that after December 31, 2005, the royalty payment payable by
the Partnership to Mesa shall equal 55% of Net Operating Proceeds (as defined in
the Easement Agreement Amendment).

The Easement  Agreement  Amendment  also  extended the  termination  date of the
Easement  Agreement from December 31, 2005 to March 31, 2006. The Partnership is
seeking to extend the term of the Wind Park Easement  Agreement beyond March 31,
2006.  However,  there is no assurance that Mesa will grant any such  extension.
Unless an extension  is  executed,  the  Partnership  will not have  contractual
rights to use a portion of the Operating  Site for the production of electricity
or to use the  Infrastructural  Improvements in connection with the operation of
the Windsystem after March 31, 2006.


                                      42
<PAGE>


NOTE 10 - 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' 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>
                                             For the years ended December 31,
                                           ------------------------------------
                                              2005         2004         2003
                                           ----------   ----------   ----------
<S>                                        <C>          <C>          <C>
Tax basis income                           $    1,968   $    2,036   $    2,082
Tax basis depreciation less than
 GAAP depreciation                                (45)      (2,084)      (2,492)
Other                                              (1)          28            4
                                           ----------   ----------   ----------
GAAP basis income (loss)                   $    1,922   $      (20)  $     (406)
                                           ==========   ==========   ==========

Tax basis partners' income                 $      271   $   (1,697)  $   (3,733)
Cumulative tax basis losses
 in excess of cumulative GAAP losses              251          296        2,380
Other                                              (2)          (1)         (29)
                                           ----------   ----------   ----------
GAAP basis partners' capital (deficit)     $      520   $   (1,402)  $   (1,382)
                                           ==========   ==========   ==========

Tax basis total assets                     $    1,297   $    3,107   $    3,147
Cumulative tax depreciation
 in excess of GAAP depreciation                   251          295        2,380
                                           ----------   ----------   ----------
GAAP basis total assets                    $    1,548   $    3,402   $    5,527
                                           ==========   ==========   ==========
</TABLE>

                                       43

<PAGE>

NOTE 11 - UNAUDITED QUARTERLY FINANCIAL INFORMATION (Dollars in thousands):

<TABLE>
<CAPTION>
                                                                 2005
                                           -------------------------------------------------
                                              First       Second        Third       Fourth
                                             Quarter      Quarter      Quarter     Quarter
                                           ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>
Revenue:
  Sale of electricity                      $      680   $    1,439   $      681   $      594
  Other Income                                      7            7           12           19
                                           ----------   ----------   ----------   ----------
Total revenue                                     687        1,446          693          613

Costs and expenses:
  Depreciation                                     12           12           12           12
  Interest expense                                  -            -            -            -
  Property taxes                                   22           22           21           23
  Easement fees                                    26           49           62           33
  Management fees to related party                 11           19           25           13
  Maintenance and other operating costs
   to related and other parties                   209          200          260          218
  Insurance costs                                  30           30           31           33
  Other operating costs                            (2)          91           40            3
                                           ----------   ----------   ----------   ----------
Total costs and expenses                          308          423          451          335
                                           ----------   ----------   ----------   ----------
Net gain (loss)                            $      379   $    1,023   $      242   $      278
                                           ==========   ==========   ==========   ==========
Net gain (loss) per Unit                   $      318   $      860   $      203   $      234
                                           ==========   ==========   ==========   ==========
Number of outstanding Limited
 Partner Units                                  1,190        1,190        1,190        1,190
                                           ==========   ==========   ==========   ==========
</TABLE>



                                       44

<PAGE>

NOTE 11 - UNAUDITED QUARTERLY FINANCIAL INFORMATION (Dollars in thousands):

<TABLE>
<CAPTION>
                                                                 2004
                                           -------------------------------------------------
                                              First       Second        Third       Fourth
                                             Quarter      Quarter      Quarter     Quarter
                                           ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>
Revenue:
  Sale of electricity                      $      632   $    1,238   $    1,094   $      647
  Other Income                                      -            -            -            5
                                           ----------   ----------   ----------   ----------
Total revenue                                     632        1,238        1,094          652

Costs and expenses:
  Depreciation                                    624          623          624          216
  Interest expense                                  2            -            -            -
  Property taxes                                   70           20          (28)          24
  Easement fees                                    46           32           85           46
  Management fees to related party                 18           13           34           19
  Maintenance and other operating costs
   to related and other parties                   274          186          202          178
  Insurance costs                                  44           44           44           42
  Other operating costs                            68           38           41            7
                                           ----------   ----------   ----------   ----------
Total costs and expenses                        1,146          956        1,002          532
                                           ----------   ----------   ----------   ----------
Net gain (loss)                            $     (514)  $      282   $       92   $      120
                                           ==========   ==========   ==========   ==========
Net gain (loss) per Unit                   $     (432)  $      237   $       77   $      101
                                           ==========   ==========   ==========   ==========
Number of outstanding Limited
 Partner Units                                  1,190        1,190        1,190        1,190
                                           ==========   ==========   ==========   ==========
</TABLE>


                                       45

<PAGE>


NOTE 11 - UNAUDITED QUARTERLY FINANCIAL INFORMATION (Dollars in thousands):

<TABLE>
<CAPTION>
                                                                 2003
                                           -------------------------------------------------
                                              First       Second        Third       Fourth
                                             Quarter      Quarter      Quarter     Quarter
                                           ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>
Revenue:
  Sale of electricity                      $      675   $    1,706   $      785   $      692
  Other Income                                      -            -            -            6
                                           ----------   ----------   ----------   ----------
Total revenue                                     675        1,706          785          698

Costs and expenses:
  Depreciation                                    624          624          624          623
  Bad debt expense                                  -            -            -
  Interest expense                                  -            -            -
  Interest expense                                 27           28           17           14
  Property taxes                                   20           19           20           20
  Easement fees                                    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
  Outside services                                  -            -            -
  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 gain (loss)                            $     (354)  $      638   $     (256)  $     (434)
                                           ==========   ==========   ==========   ==========
Net gain (loss) per Unit                   $     (297)  $      536   $     (215)  $     (365)
                                           ==========   ==========   ==========   ==========
Number of outstanding Limited
 Partner Units                                  1,190        1,190        1,190        1,190
                                           ==========   ==========   ==========   ==========
</TABLE>



                                       46