Exhibit
      99.3







FINANCIAL
                STATEMENTS AND REPORT OF
              INDEPENDENT
                CERTIFIED
              PUBLIC
                ACCOUNTANTS
              
              **RIDGEWOOD
                MAINE HYDRO PARTNERS, L.P.**
              
              December
                31, 2005, 2004 and 2003
              (As
                Restated)






























**C
      O N T E N T S**











PageReport
                of Independent Certified Public
                Accountants
            
            
            3Financial
                StatementsBalance
                Sheets
            
            
            4Statements
                of Operations
            
            
            5Statements
                of Changes in Partners’ Equity
            
            
            6Statements
                of Cash Flows
            
            
            7Notes
                to Financial Statements
            
            
            8
                -
                20








Table
          of Contents


**REPORT
      OF INDEPENDENT CERTIFIED PUBLIC
      ACCOUNTANTS**











The
      Partners


**Ridgewood
      Maine Hydro Partners, L.P.**








We
      have
      audited the accompanying balance sheets of Ridgewood Maine Hydro Partners,
      L.P.
      (a Delaware limited partnership) as of December 31, 2005, 2004 and 2003, and
      the
      related statements of operations, changes in partners’ equity and cash flows for
      the years then ended. These financial statements are the responsibility of
      the
      Partnership’s management. Our responsibility is to express an opinion on these
      financial statements based on our audits.





We
      conducted our audits in accordance with auditing standards generally accepted
      in
      the United States of America as established by the American Institute of
      Certified Public Accountants.**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
      consideration of internal control over financial reporting as a basis for
      designing audit procedures that are appropriate in the circumstances, but not
      for the purpose of expressing an opinion on the effectiveness of the
      Partnership’s internal control over financial
      reporting.**Accordingly, we express no such
      opinion.**An audit also includes examining, on a test basis,
      evidence supporting the amounts and disclosures in the financial statements,
      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 Ridgewood Maine Hydro Partners,
      L.P. as of December 31, 2005, 2004 and 2003, and the results of its operations
      and its cash flows for the years then ended in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying financial statements as of and for the year ended December 31,
      2003
      have been restated as discussed in Note B to the financial
      statements.














/s/
      GRANT
      THORNTON LLP


Edison,
      New Jersey


June
      5,
      2007





-
          3
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**BALANCE
      SHEETS**





December
      31,











**2005**
            
            
            2004
            
            
            2003ASSETS
            
            
            
            
            
            
            
            (Restated)Current
                assetsCash
                and cash equivalents
            
            **$**
            **769,905**
            
            
            $
            77,209
            
            
            $
            186,055Trade
                receivables
            
            ****
            **959,467**
            
            
            
            735,645
            
            
            
            777,948Due
                from affiliates
            
            ****
            **-**
            
            
            
            310,991
            
            
            
            355,945Other
                current assets
            
            ****
            **34,368**
            
            
            
            11,686
            
            
            
            29,165Total
                current assets
            
            ****
            **1,763,740**
            
            
            
            1,135,531
            
            
            
            1,349,113Property,
                plant and equipment, net
            
            ****
            **1,396,992**
            
            
            
            1,420,775
            
            
            
            1,458,801Electricity
                sales agreements, net
            
            ****
            **2,858,494**
            
            
            
            3,881,023
            
            
            
            4,944,886Other
                assets
            
            ****
            **97,629**
            
            
            
            94,496
            
            
            
            121,789Total
                assets
            
            **$**
            **6,116,855**
            
            
            $
            6,531,825
            
            
            $
            7,874,589LIABILITIES
                AND PARTNERS’ EQUITYCurrent
                liabilitiesAccounts
                payable and accrued expenses
            
            **$**
            **177,119**
            
            
            $
            36,830
            
            
            $
            281,891Due
                to affiliates
            
            ****
            **400,506**
            
            
            
            380,404
            
            
            
            832,024Loans
                payable - current portion
            
            ****
            **27,434**
            
            
            
            67,053
            
            
            
            -Deferred
                revenue
            
            ****
            **57,120**
            
            
            
            57,120
            
            
            
            57,120Total
                current liabilities
            
            ****
            **662,179**
            
            
            
            541,407
            
            
            
            1,171,035Loans
                payable - noncurrent portion
            
            ****
            **12,211**
            
            
            
            39,645
            
            
            
            -Deferred
                revenue - noncurrent portion
            
            ****
            **114,200**
            
            
            
            171,320
            
            
            
            228,440Total
                liabilities
            
            ****
            **788,590**
            
            
            
            752,372
            
            
            
            1,399,475Commitments
                and contingenciesPartners’
                equity
            
            ****
            **5,328,265**
            
            
            
            5,779,453
            
            
            
            6,475,114Total
                liabilities and partners’ equity
            
            **$**
            **6,116,855**
            
            
            $
            6,531,825
            
            
            $
            7,874,589














*The
      accompanying notes are an integral part of these
      statements.*


-
          4
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**STATEMENTS
      OF OPERATIONS**





Years
      ended December 31,











**2005**
            
            
            2004
            
            
            2003(Restated)Power
                generation revenue
            
            **$**
            **4,806,517**
            
            
            $
            3,429,321
            
            
            $
            3,533,060Cost
                of revenues
            
            ****
            **3,116,771**
            
            
            
            2,869,518
            
            
            
            3,343,612Gross
                profit
            
            ****
            **1,689,746**
            
            
            
            559,803
            
            
            
            189,448Operating
                expensesGeneral
                and administrative expenses
            
            ****
            **198,808**
            
            
            
            216,274
            
            
            
            640Impairment
                of electricity generating assets
            
            ****
            **119,298**
            
            
            
            158,033
            
            
            
            530,376Impairment
                of electricity sales agreements
            
            ****
            **190,864**
            
            
            
            197,098
            
            
            
            913,703Total
                operating expenses
            
            ****
            **508,970**
            
            
            
            571,405
            
            
            
            1,444,719Income
                (loss) from operations
            
            ****
            **1,180,776**
            
            
            
            (11,602
            )
            
            
            (1,255,271
            )Other
                income (expense)Interest
                (expense) income, net
            
            ****
            **(5,421**
            **)**
            
            
            (4,133
            )
            
            
            209Other
                income
            
            ****
            **57,121**
            
            
            
            1,074,623
            
            
            
            162,532Total
                other income, net
            
            ****
            **51,700**
            
            
            
            1,070,490
            
            
            
            162,741Net
                income (loss)
            
            **$**
            **1,232,476**
            
            
            $
            1,058,888
            
            
            $
            (1,092,530
            )








*The
      accompanying notes are an integral part of these
      statements.*


-
          5
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**STATEMENTS
      OF CHANGES IN PARTNERS’ EQUITY**





Years
      ended December 31, 2003, 2004 and 2005














Totalpartners’
                equityPartners’
                equity, January 1, 2003, as restated
            
            $
            8,773,316Cash
                distributions
            
            
            (1,205,672
            )Net
                loss
            
            
            (1,092,530
            )Partners’
                equity, December 31, 2003, as restated
            
            
            6,475,114Cash
                distributions
            
            
            (1,754,549
            )Net
                income
            
            
            1,058,888Partners’
                equity, December 31, 2004
            
            
            5,779,453Cash
                distributions
            
            
            (1,683,664
            )Net
                income
            
            
            1,232,476**Partners’
                equity, December 31, 2005**
            
            **$**
            **5,328,265**








*The
      accompanying notes are an integral part of these
      statements.*


-
          6
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**STATEMENTS
      OF CASH FLOWS**





Years
      ended December 31,







**2005**
            
            
            2004
            
            
            2003(Restated)Cash
                flows from operating activitiesNet
                income (loss)
            
            **$**
            **1,232,476**
            
            
            $
            1,058,888
            
            
            $
            (1,092,530
            )Adjustments
                to reconcile net income (loss) tonet
                cash provided by operating activitiesDeferred
                revenue
            
            ****
            **(57,120**
            **)**
            
            
            (57,120
            )
            
            
            (57,120
            )Depreciation
                and amortization
            
            ****
            **910,434**
            
            
            
            922,913
            
            
            
            1,144,161Impairment
                of electricity generating assets
            
            ****
            **119,298**
            
            
            
            158,033
            
            
            
            530,376Impairment
                of electricity sales agreements
            
            ****
            **190,864**
            
            
            
            197,098
            
            
            
            913,703Changes
                in operating assets and liabilitiesTrade
                receivables
            
            ****
            **(223,822**
            **)**
            
            
            42,303
            
            
            
            (183,629
            )Due
                to/from affiliates, net
            
            ****
            **331,093**
            
            
            
            (406,666
            )
            
            
            224,350Other
                current assets
            
            ****
            **(15,607**
            **)**
            
            
            17,479
            
            
            
            129,066Other
                assets
            
            ****
            **(10,208**
            **)**
            
            
            27,293
            
            
            
            (127,839
            )Accounts
                payable and accrued expenses
            
            ****
            **140,289**
            
            
            
            (245,061
            )
            
            
            43,600Total
                adjustments
            
            ****
            **1,385,221**
            
            
            
            656,272
            
            
            
            2,616,668Net
                cash provided by operating activities
            
            ****
            **2,617,697**
            
            
            
            1,715,160
            
            
            
            1,524,138Cash
                flows from investing activitiesCapital
                expenditures
            
            ****
            **(174,284**
            **)**
            
            
            (28,648
            )
            
            
            (143,723
            )Cash
                flows from financing activitiesRepayments
                of loan payable
            
            ****
            **(67,053**
            **)**
            
            
            (40,809
            )
            
            
            -Cash
                distributions to partners
            
            ****
            **(1,683,664**
            **)**
            
            
            (1,754,549
            )
            
            
            (1,205,672
            )Net
                cash used in financing activities
            
            ****
            **(1,750,717**
            **)**
            
            
            (1,795,358
            )
            
            
            (1,205,672
            )Net
                increase (decrease) in cash and cashequivalents
            
            ****
            **692,696**
            
            
            
            (108,846
            )
            
            
            174,743Cash
                and cash equivalents, beginning of year
            
            ****
            **77,209**
            
            
            
            186,055
            
            
            
            11,312Cash
                and cash equivalents, end of year
            
            **$**
            **769,905**
            
            
            $
            77,209
            
            
            $
            186,055Supplemental
                disclosure of cash flow information:Cash
                paid during the year forInterest
            
            **$**
            **5,421**
            
            
            $
            4,133
            
            
            $
            -Supplemental
                disclosure of noncash investing andfinancing
                activities:Vehicles
                acquired under finance agreement
            
            **$**
            **-**
            
            
            $
            147,507
            
            
            $
            -





*The
      accompanying notes are an integral part of these
      statements.*


-
          7
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS**





December
      31, 2005, 2004 and 2003











**NOTE
      A - DESCRIPTION OF BUSINESS**





On
      August
      15, 1996, Ridgewood Maine Hydro Partners, L.P. was formed as a Delaware limited
      partnership (“Partnership”).  Ridgewood Maine Hydro Corporation, a
      Delaware corporation (“RMHCorp”), is the sole general partner of the Partnership
      and is owned equally by Ridgewood Electric Power Trust IV (“Trust IV”) and
      Ridgewood Electric Power Trust V (“Trust V”), both Delaware business trusts
      (collectively, the “Trusts”).  The Trusts are equal limited partners
      in the Partnership and have a common Managing Shareholder, Ridgewood Renewable
      Power LLC (“RRP”). The Partnership shall continue to exist until December 31,
      2046 unless terminated sooner by certain provisions of the Partnership
      Agreement.





On
      December 23, 1996, in a merger transaction, the Partnership acquired 14
      hydroelectric projects located in Maine (the “Maine Hydro Projects”) from CHI
      Energy, Inc. (CHI Energy, Inc. was subsequently acquired by and became a
      subsidiary of Enel North America, Inc.).  Maine Hydro Projects have
      electrical generating capacity of 11.3 megawatts and are operated under contract
      by Ridgewood Power Management LLC (“RPM”), an affiliate of RRP.  The
      electricity generated is sold under long-term electricity sales
      agreements.  All the electricity sales agreements to the Partnership
      are with either Central Maine Power Company (“CMP”) or Bangor Hydro-Electric
      Company (“BHC”).








**NOTE
      B - RESTATEMENT OF FINANCIAL STATEMENTS**





The
      Partnership has identified a series of adjustments that have resulted in the
      restatement of the previously issued financial statements for the year ended
      December 31, 2003.





The
      following table presents the effects of the restatement adjustments upon the
      Partnership’s previously reported balance sheet and statement of operations as
      of December 31, 2003:








-
          8
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      B (continued)**





December
                31, 2003PreviouslyBALANCE
                SHEET
            
            reported
            
            
            Adjustments
            
            
            
            RestatedASSETSCurrent
                assets
            
            $
            1,342,096
            
            
            $
            7,017
            
            (A)
              (G)
            
            $
            1,349,113Noncurrent
                assets
            
            
            7,716,774
            
            
            
            (1,191,298
            )
            (B)
              (C) (D) (F) (G)
            
            
            6,525,476Total
                assets
            
            $
            9,058,870
            
            
            $
            (1,184,281
            )
            
            
            $
            7,874,589LIABILITIES
                AND PARTNERS’ EQUITYCurrent
                liabilities
            
            $
            1,105,647
            
            
            $
            65,388
            
            (E)
              (D)
            
            $
            1,171,035Noncurrent
                liabilities
            
            
            -
            
            
            
            228,440
            
            (D)
            
            
            228,440Partners’
                equity
            
            
            7,953,223
            
            
            
            (1,478,109
            )
            (A)
              (B) (C) (E) (F)
            
            
            6,475,114Total
                liabilities and partners’ equity
            
            $
            9,058,870
            
            
            $
            (1,184,281
            )
            
            
            $
            7,874,589





Year
                  ended December 31, 2003PreviouslySTATEMENT
                  OF OPERATIONS
              
              reported
              
              
              Adjustments
              
              
              
              RestatedPower
                  generation revenue
              
              $
              3,504,496
              
              
              $
              28,564
              
              (A)
              
              $
              3,533,060Cost
                  of revenues
              
              
              3,244,782
              
              
              
              98,830
              
              (C)(D)
                (F)
              
              
              3,343,612Gross
                  profit (loss)
              
              
              259,714
              
              
              
              (70,266
              )
              
              
              
              189,448Operating
                  expenses
              
              
              16,993
              
              
              
              1,427,726
              
              (B)
                (E)
              
              
              1,444,719Income
                  (loss) from operations
              
              
              242,721
              
              
              
              (1,497,992
              )
              
              
              
              (1,255,271
              )Other
                  income, net
              
              
              105,620
              
              
              
              57,121
              
              (D)
              
              
              162,741Net
                  income (loss)
              
              $
              348,341
              
              
              $
              (1,440,871
              )
              
              
              $
              (1,092,530
              )










-
          9
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      B (continued)**





(A)
            The
                Partnership’s accounts receivable sub-ledger originally did not reconcile
                to the general ledger by $28,564. The Partnership adjusted the difference
                by increasing trade receivables and power generation revenue by the
                same
                amount.





(B)
            The
                Partnership previously performed an impairment test at the entity
                level.
                As a result of performing a revised SFAS No. 144 impairment test
                at the
                project level, an impairment of $530,376 and $913,703 was recorded
                by
                decreasing property, plant and equipment and electricity sales agreements,
                respectively, and increasing impairment expense for these
                amounts.





(C)
            The
                Partnership was unable to provide supporting documentation for certain
                property, plant and equipment previously capitalized in 2003 and
                2002.
                This resulted in the write-off of property, plant and equipment purchased
                in 2003 by $28,337, a reduction in the related accumulated depreciation
                by
                $787 and an increase in cost of revenues by $27,550.  In
                addition, as a result of the 2002 adjustments, property, plant and
                equipment decreased by $21,420, related accumulated depreciation
                decreased
                by $714 and beginning partners’ equity decreased by
                $20,706.




(D)
              The
                  Partnership originally netted a deferred gain of $285,560 relating
                  to
                  lease buy-outs with electricity sales agreements. The amount was
                  reclassified to current and noncurrent portions of deferred revenue
                  of
                  $57,120 and $228,440, respectively.  As a result, electricity
                  sales agreements increased by $495,864 and the related accumulated
                  amortization account increased by $210,304.  In addition, the
                  recognition of the deferred revenue of $57,121 has been reclassified
                  from
                  cost of revenues to other income in the statement of
                  operations.


(E)
            The
                Partnership overaccrued $16,353 and underaccrued $24,621 of accounting
                fees for the years ended December 31, 2003 and 2002, respectively.
                The
                2003 overaccrual of $16,353 was recorded as a reduction to accounts
                payable and general and administrative expenses. The 2002 underaccrual
                increased accounts payable and decreased beginning partners’ equity by
                $24,621.





(F)
            The
                Partnership incorrectly recognized depreciation expense of $8,089
                in 2002
                that should have been recognized in 2003. The correction of the error
                in
                2003 resulted in increased depreciation expense and beginning partners’
                equity.  In addition, in 2003, the Partnership’s depreciation
                expense was understated by $6,071. The Partnership recorded the adjustment
                of $6,071 by increasing depreciation expense and accumulated
                depreciation.


-
          10
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      B (continued)**





(G)
            The
                Partnership originally recorded $21,547 of Federal Energy Regulatory
                Commission license in current assets.  The amount was
                reclassified to noncurrent assets.





The
      Partnership restated 2002 amounts by decreasing partners’ equity as of January
      1, 2003 by $37,238.  Following is the summary of adjustments recorded
      to partners’ equity as of January 1, 2003: (a) write-off of property, plant and
      equipment, net of accumulated depreciation of $20,706, (b) depreciation expense
      of $8,089 incorrectly recorded in 2002 instead of 2003, and (c) underaccrual
      of
      accounting fees of $24,621.








**NOTE
      C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





*1.    Use
      of Estimates*





The
      preparation of financial statements in accordance with accounting principles
      generally accepted in the United States of America requires the Partnership
      to
      make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenue and expenses, and related disclosure of contingent assets
      and liabilities. On an ongoing basis, the Partnership evaluates its estimates,
      including bad debts, recoverable value of property, plant and equipment,
      electricity sales agreements and recordable liabilities for litigation and
      other
      contingencies. The Partnership bases its estimates on historical experience,
      current and expected conditions and various other assumptions that are believed
      to be reasonable under the circumstances, the results of which form the basis
      for making judgments about the carrying values of assets and liabilities that
      are not readily apparent from other sources. Actual results may differ from
      these estimates under different assumptions or conditions.





*2.    Cash
      and Cash Equivalents*





The
      Partnership considers all highly liquid investments with maturities when
      purchased of three months or less as cash and cash equivalents. Cash balances
      with banks as of December 31, 2005, 2004 and 2003, exceed insured limits by
      approximately $668,000, $0 and $77,000, respectively.





*3.    Trade
      Receivables*





Trade
      receivables are recorded at invoice price in the period in which the related
      revenues are earned and do not bear interest. No allowance for bad debt expense
      was provided based upon historical write-off experience, evaluation of customer
      credit condition and the general economic status of the
      customer.


-
          11
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      C (continued)**





*4.    Revenue
      Recognition*





Power
      generation revenue is recorded in the month of delivery, based on the estimated
      volumes sold to customers at rates stipulated in the electricity sales
      agreement. Adjustments are made to reflect actual volumes delivered when the
      actual volumetric information subsequently becomes available. Final billings
      did
      not vary significantly from estimates.





*5.    Impairment
      of Long-Lived Assets and Intangibles*





The
      Partnership evaluates intangibles and long-lived assets, such as property,
      plant
      and equipment, when events or changes in circumstances indicate that the
      carrying value of such assets may not be recoverable. The determination of
      whether an impairment has occurred is made by comparing the carrying value
      of an
      asset to the estimated undiscounted cash flows attributable to that
      asset.  If an impairment has occurred, the impairment loss recognized
      is the amount by which the carrying value exceeds the estimated fair value
      of
      the asset, which is based on the estimated future cash flows discounted at
      the
      estimated cost of capital.





*6.    Property,
      Plant and Equipment*





Property,
      plant and equipment, consisting of hydro-electric generation facilities
      (“HEGFs”), equipment, vehicles and construction in progress are stated at cost.
      Renewals and betterments that increase the useful lives of the assets are
      capitalized.  Repair and maintenance expenditures are expensed as
      incurred.





The
      Partnership uses the straight-line method of depreciation over the estimated
      useful life of the assets:





HEGFs
            30
                - 50 yearsEquipment
            5
                yearsVehicles
            5
                years








-
          12
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      C (continued)**





*7.    Significant
      Customers*





During
      2005, 2004 and 2003, the Partnership’s one largest customer accounted for 84.1%,
      84.8% and 82.2% of total revenue, respectively.





*8.    Income
      Taxes*





No
      provision is made for income taxes in the accompanying financial statements
      as
      the net income (loss) of the Partnership is passed through and included in
      the
      income tax returns of the respective partners.





*9.     Reclassification*





Certain
      items in previously issued financial statements have been reclassified for
      comparative purposes. This had no effect on net income or loss.





*10.     New
      Accounting Standards and Disclosures*





*FIN
      45*





In
      November 2002, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees and Indebtedness
      of
      Others.”  FIN 45 elaborates on the disclosures to be made by the
      guarantor in its interim and annual financial statements about its obligations
      under certain guarantees that it has issued. It also requires that a guarantor
      recognize, at the inception of a guarantee, a liability for the fair value
      of
      the obligation undertaken in issuing the guarantee.  The
      initial recognition and measurement provisions of this interpretation are
      applicable on a prospective basis to guarantees issued or modified after
      December 31, 2002, while the provisions of the disclosure requirements are
      effective for financial statements of interim or annual reports ending after
      December 15, 2002.  The Partnership adopted FIN 45 during the fourth
      quarter of 2002, with no material impact to the financial
      statements.








-
          13
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      C (continued)**





*SFAS
      No. 154*





In
      May
      2005, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
      154, “Accounting Changes and Error Corrections.”  SFAS No. 154
      replaces APB Opinion No. 20, “Accounting Changes,” and SFAS No. 3, “Reporting
      Accounting Changes in Interim Financial Statements.”  This statement
      changes the requirements for the accounting for, and reporting of, a change
      in
      accounting principle and applies to all voluntary changes in accounting
      principle, as well as changes pursuant to accounting pronouncements that do
      not
      include transition rules.  Under SFAS No. 154, changes in accounting
      principle must be applied retrospectively to prior periods’ financial
      statements, on the earliest practicable date, as the required method for
      reporting a change in accounting principle.  The Partnership adopted
      SFAS No. 154 effective December 15, 2005, with no material impact to the
      financial statements.








**NOTE
      D - IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLES**





The
      Partnership performed annual impairment assessments for each of the years ended
      December 31, 2005, 2004 and 2003 and noted that the carrying value exceeded
      the
      estimated fair value of the asset. As a result, the Partnership recorded
      impairments of property, plant and equipment of $119,298, $158,033 and $530,376
      and impairments of electricity sales agreements of $190,864, $197,098 and
      $913,703, for the years ended December 31, 2005, 2004 and 2003,
      respectively.








-
          14
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      E - PROPERTY, PLANT AND EQUIPMENT**





At
      December 31, 2005, 2004 and 2003, property, plant and equipment at cost and
      accumulated depreciation were:





**2005**
            
            
            2004
            
            
            2003(Restated)HEGFs
            
            **$**
            **1,475,709**
            
            
            $
            1,595,007
            
            
            $
            1,596,692Equipment
            
            ****
            **75,894**
            
            
            
            56,610
            
            
            
            36,361Vehicles
            
            ****
            **147,507**
            
            
            
            147,507
            
            
            
            -Construction
                in progress
            
            ****
            **155,000**
            
            
            
            -
            
            
            
            147,949****
            **1,854,110**
            
            
            
            1,799,124
            
            
            
            1,781,002Less:  Accumulated
                depreciation
            
            ****
            **(457,118**
            **)**
            
            
            (378,349
            )
            
            
            (322,201
            )**$**
            **1,396,992**
            
            
            $
            1,420,775
            
            
            $
            1,458,801





For
      the
      years ended December 31, 2005, 2004 and 2003, the Partnership recorded
      depreciation expense of $78,769, $56,148 and $79,485, respectively, which is
      included in cost of revenues.








**NOTE
      F - ELECTRICITY SALES AGREEMENTS**





At
      December 31, 2005, 2004 and 2003, the gross and net amounts of intangible assets
      were:





**2005**
            
            
            2004
            
            
            2003(Restated)Electricity
                sales agreements - gross
            
            **$**
            **12,009,709**
            
            
            $
            12,200,573
            
            
            $
            12,397,671Less:  Accumulated
                amortization expense
            
            ****
            **(9,151,215**
            **)**
            
            
            (8,319,550
            )
            
            
            (7,452,785
            )Electricity
                sales agreements - net
            
            **$**
            **2,858,494**
            
            
            $
            3,881,023
            
            
            $
            4,944,886


A
      portion
      of the purchase price of the Maine Hydro Projects was assigned to the
      electricity sales agreements and is being amortized over the duration of the
      contracts (11 to 21 years) on a straight-line basis. During the years ended
      December 31, 2005, 2004 and 2003, the Partnership recorded amortization expense
      of $831,665, $866,765 and $1,064,676, respectively, which is included in cost
      of
      revenues.





-
          15
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      F (continued)**





The
      Partnership expects to record amortization expense during the next five years
      as
      follows:







Year
                ended December 31,2006
            
            $
            765,9942007
            
            
            762,2832008
            
            
            601,8702009
            
            
            103,9972010
            
            
            103,997








**NOTE
      G - LOANS PAYABLE**





During
      2004, the Partnership entered into various loan agreements aggregating $147,507
      at terms of two to four years and interest rates from 4.99% to 6.99% for the
      purchase of vehicles.  Payments of principal and interest are made
      monthly. Following is the summary of the loans payable at December 31, 2005
      and
      2004:





**2005**
            
            
            2004Loans
                payable
            
            **$**
            **39,645**
            
            
            $
            106,698Less:  Current
                portion
            
            ****
            **(27,434**
            **)**
            
            
            (67,053
            )Total
                noncurrent portion
            
            **$**
            **12,211**
            
            
            $
            39,645




Remaining
      scheduled repayments of the loans payable at December 31, 2005 are as
      follows:





Year
                ended December 31,2006
            
            $
            27,4342007
            
            
            7,1542008
            
            
            5,057$
            39,645





-
          16
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003














**NOTE
      H - LEASE COMMITMENTS**





The
      Partnership leases land on the sites of two of its projects under non-cancelable
      operating leases expiring in June 2078.  In the case of the Upper
      Barker project, both the expected life of the project and the term of the ground
      lease associated with the project extend for a significant period beyond the
      termination date of the Partnership.  Management believes that, prior
      to the termination of the Partnership, it will have ample opportunity to provide
      for the ownership of the project and the satisfaction of the lease obligation
      during the period following the termination of the Partnership.  Total
      monthly payments are the greater of $1,396 or a percentage of the revenue
      generated from the hydroelectric project.  At December 31, 2005, the
      future minimum rental payments required under these leases are as
      follows:





Year
                ended December 31,2006
            
            $
            16,7522007
            
            
            16,7522008
            
            
            16,7522009
            
            
            16,7522010
            
            
            16,752Thereafter
            
            
            1,130,760$
            1,214,520




Rent
      expense pursuant to these agreements for the years ended December 31, 2005,
      2004
      and 2003 was $168,328, $80,418 and $81,926, respectively.








**NOTE
      I - FAIR VALUE OF FINANCIAL INSTRUMENTS**





At
      December 31, 2005, 2004 and 2003, the carrying value of the Partnership’s cash
      and cash equivalents, trade receivables, due to/from affiliates, accounts
      payable and accrued expenses and loans payable approximates their fair
      value.  The fair value of the letter of credit does not differ
      materially from its carrying value.





-
          17
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      J - MANAGEMENT AGREEMENT**





Following
      their purchase by the Partnership, the Maine Hydro Projects were operated by
      a
      subsidiary of Enel North America, Inc. (“Enel Subsidiary”) under an Operation,
      Maintenance and Administrative Agreement (“OM&A Agreement”) dated December
      23, 1996 and expiring on June 30, 2006.  Under the terms of the
      OM&A Agreement, the Enel Subsidiary agreed to provide certain services to
      the Partnership and the Partnership agreed to pay the Enel Subsidiary (i) a
      fixed fee for certain administration and management services, (ii) an amount
      for
      certain services at hourly rates for actual hours worked by the Enel Subsidiary
      employees and (iii) an amount equal to the out-of-pocket expenses incurred
      by
      the Enel Subsidiary in performing the services specified in the OM&A
      Agreement.





The
      fixed
      fee for administration and management services was adjusted on June 30 of each
      year for inflation. The Partnership recorded $356,754 of expense for
      administration and management services under this arrangement for the year
      ended
      December 31, 2003.  The Partnership was also subject to an annual
      incentive fee equal to 50% of the net cash flow in excess of a target
      amount.  The maximum incentive fee payable in any year was
      $112,500.  No incentive fee was paid for the year ended December 31,
      2003.





In
      early
      2004, a dispute arose with respect to the services performed by the Enel
      Subsidiary pursuant to the OM&A Agreement.  On April 30, 2004, the
      Partnership and the Enel Subsidiary agreed to a settlement of the dispute under
      which: (a) the OM&A Agreement was terminated effective April 30, 2004
      without further obligation or liability, (b) the Enel Subsidiary agreed to
      pay
      $500,000 in damages to the Partnership, and (c) the Enel Subsidiary agreed
      to
      cancel $405,109 in outstanding amounts owed by the Partnership to the Enel
      Subsidiary at the time of the settlement.  In 2004, the Partnership
      recognized the $500,000 in damages and the $405,109 in cancelled liabilities
      as
      other income in the statements of operations.








**NOTE
      K - RELATED PARTY TRANSACTIONS**





Effective
      May 1, 2004, pursuant to an Operating Agreement with the Partnership (the
“Operating Agreement”), RPM began to provide management, purchasing,
      engineering, planning and administrative services to the Partnership. RPM
      charges the Partnership at its cost for these services and for the allocable
      amount of certain overhead items.  Allocations of costs are on the
      basis of identifiable direct costs, time records or in proportion to amounts
      invested in projects managed by RPM.  During the years ended December
      31, 2005 and 2004, RPM charged the Partnership $349,100 and $354,321,
      respectively, for overhead items allocated in proportion to the amount invested
      in projects managed.  RPM also charged the Partnership for all direct
      operating and nonoperating expenses incurred during the periods under the term
      of the Operating Agreement.


-
          18
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003














**NOTE
      K (continued)**





Additionally,
      the Partnership records noninterest-bearing advances from and due to other
      affiliates in the ordinary course of business.  At December 31, 2005,
      2004 and 2003, the Partnership had outstanding payables and receivables, with
      the following affiliates:





December
                31,
            
            
            December
                31,**2005**
            
            
            2004
            
            
            2003
            
            
            **2005**
            
            
            2004
            
            
            2003Due
                from
            
            
            
            
            Due
                toRPM
            
            **$**
            **-**
            
            
            $
            -
            
            
            $
            -
            
            
            **$**
            **283,855**
            
            
            $
            380,404
            
            
            $
            117,619Trust
                IV
            
            ****
            **-**
            
            
            
            164,321
            
            
            
            -
            
            
            ****
            **72,977**
            
            
            
            -
            
            
            
            644,405Trust
                V
            
            ****
            **-**
            
            
            
            146,670
            
            
            
            355,945
            
            
            ****
            **43,674**
            
            
            
            -
            
            
            
            -Other
                affiliates
            
            ****
            **-**
            
            
            
            -
            
            
            
            -
            
            
            ****
            **-**
            
            
            
            -
            
            
            
            70,000**$**
            **-**
            
            
            $
            310,991
            
            
            $
            355,945
            
            
            **$**
            **400,506**
            
            
            $
            380,404
            
            
            $
            832,024








**NOTE
      L - COMMITMENTS AND CONTINGENCIES**





The
      Partnership operates facilities which qualify as small power production
      facilities under the Public Utility Regulatory Policies Act
      (“PURPA”).  PURPA requires that each electric utility company,
      operating at the location of a small power production facility, as defined,
      purchase the electricity generated by such facility at a specified or negotiated
      price.  For the years ended December 31, 2005, 2004 and 2003, the
      Partnership sells substantially all of its electrical output to two public
      utility companies, CMP and BHC, pursuant to long-term electricity sales
      agreements.  The Partnership has twelve contracts with CMP, of which
      one expires in July 2007 (see Note M) and eleven expire in December
      2008.  Each has provisions for renewal or extension subject to
      agreement of both parties.  The Partnership has two electricity sales
      agreements with BHC, which expire in December 2014 and February
      2017.  The Partnership is required to maintain a standby letter of
      credit in the amount of $99,250 under the long-term electricity sales
      agreements, which is provided under and collateralized by an RRP line of credit
      facility.





The
      Partnership is subject to legal proceedings involving ordinary and routine
      claims related to its business.  The ultimate legal and financial
      liability with respect to such matters cannot be estimated with certainty and
      requires the use of estimates in recording liabilities for potential litigation
      settlements.  Estimates for losses from litigation are disclosed if
      considered reasonably possible and accrued if considered probable after
      consultation with outside counsel.  If estimates of potential losses
      increase or the
      related facts and circumstances change in the future, the Partnership may be
      required to record additional litigation expense.








-
          19
          -
 Table
          of Contents


Ridgewood
      Maine Hydro Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003











**NOTE
      M - SUBSEQUENT EVENTS**





The
      Partnership, on behalf of its Pittsfield Project, is a signatory to the Kennebec
      Hydro Developers Group Agreement (“KHDG Agreement”), which is an agreement among
      many diverse parties with similarly diverse interests regarding development
      on
      the Kennebec and Sebasticook Rivers in the State of
      Maine.  Signatories include not only hydroelectric developers, such as
      the Pittsfield Project, but also Federal and State government agencies as well
      as environmental groups. According to the KHDG Agreement, owners of certain
      hydroelectric facilities, including the Pittsfield Project, are required to
      install fish passages at their facilities, which would allow certain species
      of
      fish adequate passage on the river and which must be approved by certain Federal
      and State agencies and other organizations.  The Partnership’s plan
      for a fish passage at the Pittsfield Project was approved by the applicable
      Federal and State agencies.  The Partnership entered into an agreement
      with a contractor on May 24, 2005 to construct the passage.  The terms
      of the agreement provided for progress payments to be made by the Partnership
      in
      the form of cash and construction notes, the latter being secured by a standby
      letter of credit provided by RRP.  The fish passage was completed and
      operational by the second quarter of 2006 at a cost of approximately $1,474,000
      and the Partnership chose to pay the entire cost of the fish ladder in cash
      including repayments of the notes in full.





On
      April
      2, 2007, CMP elected not to extend the electric sales agreement with one of
      the
      Maine Hydro Projects and therefore the electricity sales agreement will
      terminate on July 31, 2007.  The Partnership plans to sell the
      electricity at open market prices after July 31, 2007.






-
      20
      -