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
For the fiscal year ended December 31, 1998

Commission file number   0-24240

RIDGEWOOD ELECTRIC POWER TRUST I
(Exact Name of Registrant as Specified in Its Charter)

               Delaware                                22-3105824
(State or Other Jurisdiction        (I.R.S. Employer Identification No.)
of Incorporation or Organization)


c/o Ridgewood Power Corporation, 947 Linwood Avenue,
Ridgewood, New Jersey 07450-2939

(Address of Principal Executive Offices)                           (Zip Code)

Registrant's Telephone Number, including Area Code:  (201) 447-9000

Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities Registered Pursuant to Section 12(g) of the Act:

Shares of Beneficial Interest(Title of Class)

     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 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 or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ X ]

     There is no market for the Shares. The aggregate capital contributions made
for the Registrant's  voting Shares held by  non-affiliates of the Registrant at
April 9, 1999 was $10,550,000.

Exhibit index is at page ____.



<PAGE>


<PAGE>
PART I

Item 1.  Business.

Forward-looking statement advisory

     This Annual Report on Form 10-K, as with some other  statements made by the
Trust  from  time to time,  has  forward-looking  statements.  These  statements
discuss business trends, year 2000 remediation and other matters relating to the
Trust's  future  results and the  business  climate  and are found,  among other
places, at Items 1(c)(2)(iv),  1(c)(3), 1(c)(4),  1(c)(6)(ii) and 7. In order to
make these  statements,  the Trust has had to make assumptions as to the future.
It has also had to make  estimates  in some cases about events that have already
happened,  and to rely on data  that may be found  to be  inaccurate  at a later
time.  Because  these  forward-looking  statements  are  based  on  assumptions,
estimates and changeable  data, and because any attempt to predict the future is
subject  to  other  errors,  what  happens  to the  Trust in the  future  may be
materially different from the Trust's statements here.

     The Trust  therefore  warns  readers of this  document that they should not
rely on these  forward-looking  statements without considering all of the things
that could make them  inaccurate.  The Trust's other filings with the Securities
and Exchange  Commission and its Confidential  Memorandum  discuss many (but not
all) of the risks and  uncertainties  that might  affect  these  forward-looking
statements.

     Some of these are changes in political and economic conditions,  federal or
state  regulatory  structures,   government  taxation,  spending  and  budgetary
policies,  government  mandates,  demand for electricity and thermal energy, the
ability of customers to pay for energy received,  supplies of fuel and prices of
fuels, operational status of plant, mechanical breakdowns, availability of labor
and the  willingness  of electric  utilities to perform  existing power purchase
agreements in good faith.  Some of the  cautionary  factors that readers  should
consider are  described  below at Item 1(c)(4) - Trends in the Electric  Utility
and Independent Power Industries.

     By making these  statements  now, the Trust is not making any commitment to
revise these forward-looking  statements to reflect events that happen after the
date of this document or to reflect unanticipated future events.


(a)  General Development of Business.

     Ridgewood  Electric Power Trust I (the "Trust") was organized as a Delaware
business  trust on May 9, 1994. It was organized to acquire all of the assets of
and to carry on the business of  Ridgewood  Energy  Electric  Power,  L.P.  (the
"Partnership").  The Partnership was a Delaware  limited  partnership  which was
organized in March 1991 to  participate  in the  development,  construction  and
operation of independent power generating facilities  ("Projects").  On June 15,
1994,  with the approval of the partners,  the Partnership was combined into the
Trust,  which acquired all of the  Partnership's  assets and which became liable
for all of the Partnership's obligations. In exchange for their interests in the
Partnership,  the investors in the Partnership  received an equivalent number of
Investor Shares in the Trust. The Partnership has been dissolved.

     The  predecessor  Partnership  raised  $10.5  million  in a single  private
offering conducted in 1991 and early 1992. Substantially all of those funds were
applied  prior  to 1995 to the  purchase  of  interests  in the  three  Projects
described  below, to funding  business  ventures that were  unsuccessful  and to
paying the fees and expenses of the Partnership's offering and the Partnership.

     The  Trust  made an  election  to be  treated  as a  "business  development
company" under the Investment Company Act of 1940, as amended ( the "1940 Act").
On May 26, 1994 the Trust  notified the  Securities  and Exchange  Commission of
that election and  registered  its shares of beneficial  interest (the "Investor
Shares") under the Securities Exchange Act of 1934, as amended (the "1934 Act").
On June 25, 1994 the  election  and  registration  became  effective.  The Trust
currently has 240 holders of record of Investor Shares.


     The Trust is organized similarly to a limited partnership.  Ridgewood Power
Corporation  (the  "Managing  Shareholder"),  a  Delaware  corporation,  is  the
Managing  Shareholder  of the Trust.  See Item 10(b) - Directors  and  Executive
Officers of the Registrant - Managing Shareholder.

     In general, the Managing Shareholder has the powers of a general partner of
a limited  partnership.  It has complete  control of the day to day operation of
the Trust and as to most acquisitions. The Managing Shareholder is not regularly
elected by the owners of the  Investor  Shares (the  "Investors").  The Managing
Shareholder and the Independent Trustees of the Trust meet together and take the
actions  that the 1940 Act  requires a board of directors to take for a business
development  company.  The Board of the Trust also provides general  supervision
and  review  of the  Managing  Shareholder  but does not have the  power to take
action  on its own.  The  Independent  Trustees  do not have any  management  or
administrative  powers over the Trust or its  property  other than as  expressly
authorized  or  required  by  the   Declaration  of  Trust  of  the  Trust  (the
"Declaration") or the 1940 Act.


         Ridgewood Energy Holding Corporation  ("Ridgewood Holding"), a Delaware
corporation,  is the Corporate  Trustee of the Trust. The Corporate Trustee acts
on the  instructions  of the Managing  Shareholder and is not authorized to take
independent  discretionary action on behalf of the Trust. See Item 10. Directors
and Executive Officers of the Registrant below for a further  description of the
management of the Trust.

(b)  Financial Information about Industry Segments.

     The Trust operates in only one industry segment: independent electric power
generation.

(c)  Narrative Description of Business.

     (1)  General Description.

     The Trust was formed to participate in the  development,  construction  and
operation of independent  electric power projects that generate  electricity for
sale to utilities  and other users.  The Trust owns the Olinda  Project,  a five
megawatt capacity  electric  generating plant fueled by methane gas from a local
landfill in Brea,  Orange County,  California.  It also owns a preferred limited
partnership  interest in the Stillwater  Project,  a 3.5 megawatt  hydroelectric
facility  located on the Hudson River north of Albany,  New York.  In 1997,  the
Trust sold its South Boston  Project  (previously  designated as the  "Lynchburg
Project"),  a three megawatt capacity electric generating plant at South Boston,
Virginia  that burns  waste fuel oil  prepared  in part by an on-site  waste oil
processing facility.  It retained the right to 2% of the gross revenues, if any,
earned by that Project in the future.

     These Projects are Qualifying  Facilities,  which are generally exempt from
federal and state regulations which apply to investor-owned  electric utilities.
As  described  below,  under  current  law,  utilities  are required to purchase
electricity  generated by Qualifying  Facilities under terms generally favorable
to the Qualifying  Facilities.  This essentially means that the Projects are not
subject to competition for the lives of their current  long-term power contracts
with the electric utility purchasers ("Power Contracts"). When or if those Power
Contracts  end, the Projects  will have to sell their output on the  competitive
electric power market and there is no assurance that they can do so at a profit.

     Historically, producers of electric power in the United States consisted of
regulated utilities and of industrial users that produced electricity to satisfy
their own needs. The independent power industry in the United States was created
by federal legislation passed in response to the energy crises of the 1970s. The
Public Utility Regulatory  Policies Act of 1978, as amended ("PURPA"),  requires
utilities to purchase electric power from "Qualifying Facilities" (as defined in
PURPA),  including  "cogeneration  facilities" and "small power  producers," and
also  exempts  these   Qualifying   Facilities  from  most  utility   regulatory
requirements. Under PURPA, Projects that are Qualifying Facilities are generally
not subject to federal regulation,  including the Public Utility Holding Company
Act of 1935, as amended,  and state  regulation.  Furthermore,  PURPA  generally
requires  electric  utilities  to purchase  electricity  produced by  Qualifying
Facilities at the utility's  avoided cost of producing  electricity  (i.e.,  the
incremental  costs the utility  would  otherwise  face to  generate  electricity
itself or purchase electricity from another source).

         The utility is not  required to enter into a long-term  Power  Contract
and can buy the output  from  Qualifying  Facilities  on a  short-term  basis at
varying rates set by state  regulators.  In the past,  many  utilities  chose to
enter into long-term Power Contracts with rates set by contract formula. In many
cases,  those  contract  formula  rates are today much higher  than  competitive
rates.  The  Olinda  and  Stillwater  Projects  have  existing  long-term  Power
Contracts with rates significantly above current competitive rates. As described
below,  the long-term  Power Contract for the South Boston Project was cancelled
in exchange for a settlement payment.

     The  electricity  produced  by each  Project is sold to the local  electric
utility  company  under  Power  Contracts,  or is used in part on site to  power
equipment.

     As discussed below, the Trust is a "business development company" under the
Investment  Company Act of 1940. In accounting for its Projects,  it treats each
Project as a  portfolio  investment  that is not  consolidated  with the Trust's
accounts.  Accordingly,  the  revenues  and  expenses  of each  Project  are not
reflected in the Trust's  financial  statements and only cash  distributions are
included,  as revenue,  when received.  Accordingly,  the recognition of revenue
from Projects by the Trust is dependent  upon the timing of  distributions  from
Projects by the Managing Shareholder.  As discussed below and at Item 5 - Market
for Registrant's  Common Equity and Related Stockholder  Matters,  distributions
from Projects may include both income and capital components.

     (2) Projects.

                  (i) Olinda  Project.  In October 1994, the Trust purchased for
$3.1 million an equity  interest in Brea Power  Partners,  L.P.,  a  partnership
which owns and  operates a 5 megawatt  landfill  gas-fired  electric  generating
plant known as Olinda and located in Brea, California (the "Olinda Project").  A
landfill  gas plant  takes  methane  and other  burnable  gases  created  by the
decomposing of garbage in a landfill and uses them as fuel,  converting  them to
carbon  dioxide,  water and some residual  waste.  Otherwise,  those gases would
escape to the atmosphere.  Among other problems, methane is a potent "greenhouse
gas" that increases global warming by significantly more than the carbon dioxide
and water vapor produced when it is burned.

     The Trust's original limited partnership  interest essentially was designed
to allow it to recover its initial  investment of $3.1 million and to provide an
internal  rate of return  of  approximately  15% per year,  and to yield a small
residual amount thereafter. The limited partnership interest was entitled to 98%
of all profits and losses of the  Partnership and of all  distributions  of cash
flow up to a scheduled amount per year ($726,000 for 1997);  thereafter,  it was
entitled to 25% of any excess cash available for distribution in that year. When
cumulative  distributions  to the Trust in  respect of the  limited  partnership
interest,  discounted to present value at 1.17% per month,  reached $3.1 million
(which was expected to occur no later than 2004), the Trust's annual interest in
profits and losses would be reduced to 5%.

     As of January  1,  1997,  the owner of the  remaining  limited  partnership
interest in the Partnership was GSF Energy,  LLC, an indirect  subsidiary of DQE
Corporation.  DQE is a holding company for Duquesne Light Company of Pittsburgh,
Pennsylvania. GSF Energy, LLC also owned the general partner of the Partnership,
which had a 1% interest in the Partnership's profits and losses.


     On June 1,  1997,  the Trust  through  subsidiaries  acquired  the  general
partnership  interest and the limited partnership  interest owned by GSF Energy,
LLC for a base price of  $3,000,000,  and thus  acquired  the entire  beneficial
interest in the  Partnership.  The parties  agreed that the base price was to be
adjusted for operating  cash flow generated and cash  distributions  made by the
Partnership  from the effective date of January 1, 1997 through May 31, 1997 and
for the Partnership's  current assets at the closing date. The purchase price as
so adjusted was  $2,813,000,  inclusive of a cash payment of  $2,257,000  to the
seller,  assumed  liabilities of $441,000 and acquisition costs of approximately
$116,000.  In the second half of 1997 the Trust invested an additional  $661,000
to provide working capital.


     Neither GSF Energy,  LLC nor DQE Corporation was affiliated with or had any
material  relationship  with  the  Trust,  its  Managing  Shareholder  or  their
affiliates,  directors,  officers or associates of their directors and officers,
other  than their  prior  relationships  with the  Partnership  and the  ongoing
responsibility of the corporate  successor to GSF Energy, LLC to operate the gas
collection  system as  described  below.  The  sales  price and the terms of the
acquisition  were determined in arm's length  negotiations  between the Managing
Shareholder of the Trust and  representatives of DQE Corporation.  The source of
the  Trust's  funds  was cash  reserves  derived  from the  previously  reported
settlement of litigation  with Virginia  Electric Power Company  relating to the
South Boston Project, described below.

     All   electricity   generated  by  the  Project  over  and  above  its  own
requirements  is sold to Southern  California  Edison  Company under a long-term
power purchase contract which may be terminated by the purchaser no earlier than
the end of 2004 on five years' advance notice. The contract price is the greater
of 5.8 cents per kilowatt-hour or 85% of the utility's avoided cost.  Currently,
avoided cost is computed  under a formula  prescribed by the  California  Public
Utility Commission  consisting of a fixed payment for the plant's capacity and a
payment per unit of energy  delivered  that is tied to the cost of natural  gas,
the fuel used at the  plant.  The  capacity  payments  vary  seasonally  and are
significantly higher during the summer peak season.

         California implemented a competitive power market beginning on April 1,
1998 in which generators will eventually auction capacity and energy output that
is not  committed  for sale under  long-term  contracts.  In  November  1998 the
California  Public  Utilities  Commission  changed the payment  formula for many
long-term  contracts  (including the Olinda Project's) to use the auction prices
for capacity and energy output. Although this change in the formula might result
in a reduction in the formula prices paid by Southern  California Edison Company
for the Project's  electric output,  the Commission's  action did not change the
5.8 cent per kwh floor price,  which is  significantly in excess of both the old
and new formula prices.  Accordingly the Trust does not believe that the formula
change will have an adverse effect on it.

     The Trust's purchase  includes only the electric power  generating  station
located at the landfill.  Ecogas Corporation ("Ecogas"),  which is the corporate
successor to GSF Energy,  LLC and which is an affiliate of DQE Corporation,  has
retained  ownership  of the landfill gas  collection  system and the  processing
units  located  outside the  Project  building  and will  continue to supply the
Project  with  landfill  gas fuel  under an  amended  gas  purchase  and  supply
agreement. Under that agreement,  Ecogas will sell gas to the Project at a price
of  approximately  $.70 per million  British  Thermal  Units of heat  equivalent
(escalating at 3.7% per year) plus an additional fixed payment,  effective as of
January 1, 1997, of $12,500  annually  (escalated at 3.7% per year).  If the gas
supplied  is  insufficient  to operate the  generators  at assumed  levels,  the
Partnership may take action to remedy the deficiency.  Further, in that instance
Ecogas would be liable to the Partnership for damages of up to $3.1 million on a
cumulative  basis. The gas supply agreement expires on the later of December 31,
2004 or the stated term of the power contract. The landfill gas is produced from
a  landfill  owned  by the  County  of  Orange,  California,  under a gas  lease
agreement  that expires no earlier than the end of 2004.  The County is entitled
to a royalty payable by GSF Energy, Inc.

         Congress has created a $3 per barrel of oil  equivalent  mcf tax credit
as  an  incentive  for  burning  landfill  gas  (with  numerous  exceptions  and
phase-outs).  The credit can only be obtained,  however, by a seller of landfill
gas to an unaffiliated generating facility.  Accordingly,  neither the Trust nor
its Investors are entitled to any tax credit for landfill gas. The profitability
of the gas collection  system to Ecogas and thus possibly the supply of landfill
gas to the Olinda  Project is dependent  upon whether the credit  continues  and
whether Ecogas meets the credit's requirements.

     The Project is liable to Southern  California Edison Company for liquidated
damages  of up to $3.8  million  if it does not  meet  defined  performance  and
availability  standards.  Further,  if the Project is not operating for at least
80% of  peak  hours  (excluding  periods  of  scheduled  maintenance  and  other
exceptions) it may lose a portion or all of its entitlement to capacity payments
from Southern  California  Edison,  which could materially  impact the Project's
ability to operate.  Therefore,  if Ecogas is unable to provide landfill gas for
an extended  period of time, the Project would be at risk of losing payments for
energy  and  capacity,  and  in the  event  of a  major  failure,  of  incurring
liquidated damages to Southern California Edison.

     In Spring 1998 Ecogas sustained  repeated  short-term  compressor  failures
that interrupted  delivery of gas to the Project.  Although Ecogas obtained used
replacement  compressors,  those  replacements  in turn  failed  during July and
August 1998,  causing a material revenue loss to the Project.  The Trust claimed
$389,000 as liquidated  damages (which  approximates the Trust's actual damages)
under the amended gas  purchase and supply  agreement in September  1998 and has
been offsetting the claims against the Trust's  obligations to Ecogas to pay for
delivered gas. Ecogas obtained used  replacement  equipment since September 1998
Ecogas has not had any extended failures to deliver gas. The Trust is monitoring
Ecogas's  actions to remedy the  compressor  problems  but has not yet reached a
conclusion as to the extent of any risk of supply failures in the future.


     An  affiliate  of  DQE  operated  the  Project  under  an  operations   and
maintenance  agreement.  For the first five  months of 1997,  the base fees paid
were  $1,375,000  and incentive  payments  totalled an additional  $85,000.  The
operations and  maintenance  agreement was terminated in June 1997 and Ridgewood
Power Management Corporation,  an affiliate of the Trust's Managing Shareholder,
operates  the  Project.  It is  reimbursed  by the  Trust for its  actual  costs
incurred and allocable overhead expenses but will not otherwise be compensated.

     Distributions  from  the  Olinda  Project  to the  Trust  in 1998  totalled
$2,050,000.  Until  June 1, 1997,  substantially  all of the  Trust's  rights to
distributions from its limited partnership  interest in the Olinda Project would
terminate at the end of 2004.  Therefore,  until June 1, 1997 the Trust  treated
distributions in respect of that limited  partnership  interest in excess of the
15% annual  return  target as returns of capital.  Beginning  June 1, 1997,  the
Trust   beneficially   owns  the  entire  interest  in  the  Project,   and  all
distributions are being treated as revenues to the Trust.

     (ii) Stillwater Project. In October 1991, the Trust acquired certain equity
rights with respect to a 3.5 megawatt (nominal capacity)  hydroelectric facility
which  was  then  under  construction  on the  Hudson  River in the  village  of
Stillwater, New York (approximately 30 miles northeast of Albany) at the site of
a pre-existing  800 foot wide masonry dam structure (the  "Stillwater  Project")
for a purchase price of $750,000.  The Stillwater  Project commenced  commercial
operation in May 1993.

         The Trust and  affiliates of the general  contractor  and affiliates of
the  equipment  supplier  formed  Stillwater  Hydro  Partners,  L.P.  ("SHP") to
continue development of the Stillwater Project. The Trust's total investment was
$1,162,000. Debt financing for the Project was provided by the CIT Group/Capital
Equipment Financing Inc. ("CIT"). The CIT financing is a fixed rate 15-year term
loan in the principal amount of approximately $8,995,000, with the final payment
due in 2009. In addition to the fixed interest payments, CIT is also entitled to
receive,  as  additional  interest,  22.5%  of the  available  cash  flow of the
Stillwater Project. The term loan is payable only by SHP, and is non-recourse to
the  Trust.  The  projections  furnished  by SHP to CIT and the Trust  indicated
sufficient annual cash flow to permit SHP to meet its payment obligations to CIT
and the Trust.

         Please  refer to the  Trust's  prior  Annual  Reports  on Form 10-K for
additional information on the financing history of the Project.

         The Trust now owns a fixed preferred  partnership interest entitling it
to aggregate  distributions of $1 million,  plus a compound annual return of 12%
thereon until paid in full. Over the nine year schedule of annual payments,  the
Trust  was  to  receive  total  payments,   including  the  annual  return,   of
approximately  $1,720,000.  SHP is required to apply  substantially all of SHP's
available  cash flow after funding of debt service (up to a maximum  amount each
year) to satisfy the payment  obligation to the Trust, with any shortfalls to be
carried forward with interest into subsequent years.

         The Trust has only  received a single  partial  payment of  $126,000 in
1994 and does not expect to receive any  additional  payments for an  indefinite
period of time. The Stillwater  Project has been unable to earn  sufficient cash
flow to cover its fixed debt service  obligations and to pay all of the 22.5% of
available  cash  flow  that CIT is  entitled  to.  The  Project's  revenues  are
dependent  upon  water  levels  in  the  Hudson  River,  which  have  fluctuated
significantly  in the last five years.  During low flow  periods,  generation is
curtailed.  The Project's ability to reach projected  generation levels requires
the use of flashboards during high water periods.  The flashboards are removable
wood and metal planks that fit over spillways and that increase the level of the
water behind the dam by up to two feet.  The extra water  height  behind the dam
increases  the force of the  water  through  the  generation  turbines  and thus
increases power output.  However, the flashboards as installed have consistently
been ripped from their  moorings by high water flows and  floating  debris,  and
they  cannot  be  reinstalled   during  high  water  periods.   Further,   state
environmental  requirements limit the times during which repairs can be made. As
a result,  power  output  during high flow  periods  has not  reached  projected
levels.  In  addition,  even if water flow  levels are  optimal,  the Project is
unable to generate the full  projected  output of 3.5  megawatts of  electricity
because of a design defect.

         For these  reasons,  the  Trust  reviewed  the value of the  Stillwater
Project in 1997 on the  assumption  that the  Project  will be able to meet debt
service  obligations  to CIT as scheduled but that the Project will be unable to
make any  distributions  to the Trust until the CIT loan is retired in 2009.  On
those  assumptions  and  discounting  post-2009  payments at the rate of 18% per
year, the Trust's  investment in the Stillwater Project was revalued to $600,000
as of December 31, 1997 and the Trust took an investment  writedown of $400,000,
charged against income.

     Electricity  generated by the Stillwater  Project is sold to Niagara Mohawk
Power  Corporation  under a long-term Power Contract with a remaining term of 29
years.  Although  Niagara Mohawk has entered into a settlement  with a number of
independent power producers to buy out their Power Contracts, it has not made an
offer to SHP.

     (iii) South Boston Project.  The Trust made an  approximately  $3.9 million
equity investment  (including  without  limitation  construction  costs and cash
advances)in a 3 megawatt electrical  generating facility that was constructed in
an  industrial  park near South  Boston,  Halifax  County,  Virginia (the "South
Boston Project").  From time to time the Trust has also referred to this Project
as the "Lynchburg" or the "Halifax" projects. The facility used waste oil as its
primary fuel source for three refurbished reciprocating diesel engine generators
and also included a waste oil treatment facility. The Trust's investment covered
all development and construction costs of the facility.

         In July 1995,  Virginia  Electric  Power and Light Co.  ("VEPCO"),  the
utility  which  purchased  electricity  from the South  Boston  Project  under a
long-term  Power Contract,  sent a notice to the Trust  purporting to cancel the
Power  Contract for alleged  failures by the project to comply with the terms of
the Power Contract.  After  negotiations with VEPCO to rescind the notice proved
unsuccessful, the Trust sued VEPCO in the Federal District Court for the Eastern
District of Virginia to compel VEPCO to continue to honor the terms of the Power
Contract.  On September 15, 1995, the judge hearing the case entered an order in
favor of the Trust  compelling VEPCO to continue to honor the terms of the Power
Contract.  VEPCO appealed the judge's decision but made payments under the Power
Contract.

     On January 17, 1997, the Trust and VEPCO settled the lawsuit and VEPCO paid
the  Trust's  subsidiary  $3,750,000  in cash and  waived  substantial  capacity
payments that might have been due to VEPCO in the event of an early  termination
of the Power  Contract.  The subsidiary  surrendered the Power Contract to VEPCO
and agreed to the entry of an order  dismissing its lawsuit  against VEPCO.  The
settlement  permits the Trust or buyers of the Project to continue operating the
generating station and the associated waste oil treatment plant, but not to sell
electricity  except  to  investor-owned  electric  utilities  for  resale or use
outside  VEPCO's  service area or to meet the  facility's own load. The facility
may be operated for non-generating purposes such as waste oil treatment.

     The net proceeds from the settlement (after deduction of shutdown and other
costs for the  Project)  and the return of security  for a letter of credit were
approximately $3.4 million,  substantially all of which was used to purchase the
remaining equity interest in the Olinda Project.

     The Trust shut down the South Boston Project in January 1997 and sold it to
an  unaffiliated  third party in December  1997 for a $700,000  promissory  note
secured by the Project  property and the right to receive 2% of any future gross
revenues from the Project.  The Trust also financed  $123,000 of improvements to
the Project to enhance its ability to process waste oil.

         Additional  information regarding the Projects is found in the Notes to
the Financial Statements.

     (3) Project Operation

     The  success of a Project is  dependent  on the  ability of the  Project to
perform  efficiently  under  its  Power  Contract  and is  also  dependent  upon
obtaining a necessary fuel supply at reasonable  prices (or obtaining  rights or
licenses in the case of hydropower or geothermal resources).  The Olinda Project
has a long-term  gas supply  agreement  providing  for 100% of its  requirements
(subject to actual  availability  of landfill gas) at a fixed price escalated by
3.7% annually through the term. The Stillwater Project has the necessary permits
to use  hydroelectric  resources and thus may use those  resources to the extent
available.  Use of those  resources is limited  seasonally by the New York State
Department of  Environmental  Conservation to protect fish spawning  populations
and river  quality  and is  subject to  unpredictable  local  drought  and flood
conditions.

     The major costs of a Project  while in  operation  will be debt service (if
applicable), fuel, taxes, maintenance and operating labor. The ability to reduce
operating  interruptions and to have a Project's  capacity available at times of
peak demand are critical to the profitability of a Project. Accordingly, skilled
management is a major factor in the Trust's business.

     The  Managing   Shareholder  has  organized   Ridgewood  Power   Management
Corporation  ("RPMCoo") to provide operating  management for facilities operated
by its investment programs, and has assigned day-to-day management of the Olinda
Project to RPMCo. Like the Managing Shareholder, RPMCo is wholly owned by Robert
E. Swanson.  It entered into an "Operation  Agreement,"  effective June 1, 1997,
under which RPMCo provides all management, purchasing, engineering, planning and
administrative  services for the Olinda  Project.  These services are charged to
the Project at RPMCo's cost.  See Item 10 - Directors and Executive  Officers of
the Registrant and Item 13 Certain  Relationships and Related Party Transactions
for further information  regarding the Operation Agreement and RPMCo and for the
cost reimbursements received by RPMCo.

         The Stillwater  Project is managed by its remaining equity partners and
the Trust has no management responsibility for the Project.

     Electricity  produced by a Project is  delivered  to the  electric  utility
purchaser   through   transmission   lines  and  equipment  that  are  built  to
interconnect with the utility's existing power grid. The Power Contracts for the
Projects  require  the  utility  to take  all  electricity  generated  up to the
Projects' rated capacity and accordingly seasonal  fluctuations in demand do not
affect  the  Projects.  The price  payable to the Olinda  Project  increases  in
daylight hours of the summer months when demand peaks,  so the Trust attempts to
perform maintenance during off-peak periods.

     The  technology  involved  in  conventional  power plant  construction  and
operations  as well as electric  and heat energy  transfers  and sales is widely
known  throughout the world.  There are usually a variety of vendors  seeking to
supply the necessary  equipment  for any Project.  So far as the Trust is aware,
there are no  limitations  or  restrictions  on the  availability  of any of the
components  which would be  necessary  to  complete  construction  and  commence
operations of either Project. Generally,  working capital requirements are not a
significant  item  for the  Trust.  See  Item 7 -  Management's  Discussion  and
Analysis.

     Most  Projects   require  a  variety  of  permits,   including  zoning  and
environmental permits. Such permits must usually be kept in force in order for a
Project to continue its operations.  The Trust is currently  updating air, water
and storm water discharge permits for the Olinda Project and has filed a Title V
application under the Clean Air Act Amendments of 1990. If future  environmental
standards  require that a Project spend increased  amounts for compliance,  such
increased  expenditures  could have an adverse effect on the Trust to the extent
it is a  holder  of such  Project's  equity  securities.  See  Item  1(c)(6)  --
Business-Narrative Description of Business -- Regulatory Matters.

     (4)  Developments Affecting Power Contracts.

         The Trust is somewhat insulated from recent  deregulatory trends in the
electric  industry  because  the  Olinda  Project  and  Stillwater  Project  are
Qualifying Facilities with long-term formula-price Power Contracts.  Those Power
Contracts  now  provide  for  rates in excess of  current  short-term  rates for
purchased  power.  There  has  been  much  speculation  that  in the  course  of
deregulating  the  electric  power  industry,  federal  or state  regulators  or
utilities would attempt to invalidate these power purchase  contracts as a means
of throwing some of the costs of deregulation on the owners of independent power
plants.

     To date, the Federal Energy Regulatory  Commission and each state regulator
that has addressed the issue have ruled that existing  Power  Contracts will not
be  affected  by their  deregulation  initiatives.  The  regulators  have so far
rejected the requests of a few utilities to invalidate existing Power Contracts.
Instead,  most state plans for deregulation of the electric power industry treat
the value of long-term  Power  Contracts that are above current and  anticipated
market  prices as "stranded  costs" of the  utilities.  The  utilities are to be
allowed to recover  those costs  during a transition  period.  This is typically
done by  imposing a  transition  fee or  surcharge  on rates that is paid to the
utility. This alternative,  which is being implemented in California, may reduce
incentives to invalidate the Olinda  Project's Power  Contract.  In some states,
utilities  are being  encouraged  or ordered to issue  bonds or other  financial
instruments to retire stranded cost assets or contracts, supported by transition
charges.

     No action has yet been taken by  federal  or state  legislators  to date to
impair Independent Power Projects' existing power sales contracts, and there are
federal  constitutional   provisions  restricting  actions  to  impair  existing
contracts.  There can not be any  assurance,  however,  that the  rapid  changes
occurring in the industry and the economy as a whole would not cause  regulators
or  legislative  bodies to attempt to change the  regulatory  structure  in ways
harmful  to  Independent  Power  Projects  or  to  attempt  to  impair  existing
contracts.  In  particular,  some  regulatory  agencies have urged  utilities to
construe  Power  Contracts  strictly and to police  Independent  Power  Projects
compliance with those Power Contracts vigorously. Predicting the consequences of
any legislative or regulatory  action is inherently  speculative and the effects
of any  action  proposed  or  effected  in the future may harm or help the Fund.
Because of the consistent position of the regulatory authorities to date and the
other factors  discussed  here,  the Trust believes that so long as the Projects
perform their obligations under the Power Contracts,  it will be entitled to the
benefits of those contracts.

     In recent years,  many  electric  utilities  have  attempted to exploit all
possible means of terminating  Power Contracts with independent  power projects,
including  requests to  regulatory  agencies  and  alleging  violations  of even
immaterial terms of the Power Contracts as justification  for terminating  those
contracts.  If such an attempt  were to be made,  the Trust might face  material
costs in contesting those utility actions.  As described above, this occurred at
the  Trust's  former  South  Boston  Project.  Substantially  all of the cost of
litigation was voluntarily  paid by the Managing  Shareholder,  but the Managing
Shareholder  has not agreed to pay  litigation  or dispute  costs for any future
dispute.

     Other  utilities  have  from  time to time  made  offers  to  purchase  and
terminate  Power  Contracts for lump sums. As discussed  above,  Niagara  Mohawk
Power  Corporation  has done so for some other  Qualifying  Facilities.  No such
offer  has  been  suggested  or made to the  Trust  for  either  the  Olinda  or
Stillwater  Project Power Contracts,  although the Trust would entertain such an
offer.

     Finally,  the Power  Contracts are subject to  modification or rejection in
the  event  that  the  utility  purchaser  enters  bankruptcy.  There  can be no
assurance that the utility purchasers will not declare bankruptcy.

     After  the  Power  Contracts  expire  (in  2004  for  Olinda  and  2028 for
Stillwater)  or  terminate  for other  reasons,  the  Projects  under  currently
anticipated  conditions  would be free to sell their  output on the  competitive
electric supply market,  either in spot,  auction or short-term  arrangements or
under long-term  contracts if those Power Contracts could be obtained.  There is
no assurance that the Projects could sell their output or do so profitably.  The
Trust is unable to  anticipate  whether the fuel cost  advantages  the  Projects
currently have as balanced  against their relatively high costs of operation and
maintenance would allow the Projects to operate profitably.

         (5)  Competition

     The Olinda and Stillwater  Projects,  as described above, are not currently
subject to  competition  because  those  Projects  have entered  into  long-term
agreements  to sell their  output at  specified  prices.  However,  a particular
Project could be subject to future  competition to market its electricity output
if its Power Contract  expires or is terminated  because of a default or failure
to pay by the  purchasing  utility  or other  purchaser;  due to  bankruptcy  or
insolvency of the purchaser;  because of the failure of a Project to comply with
the terms of the Power  Contract;  regulatory  changes;  or other  reasons.  The
Olinda  Project would then face  significant  competition to market its capacity
and energy output in the newly developing  competitive  market in California and
would face material cost  pressures.  The process of  deregulation  in New York,
where the Stillwater Project is located,  is still uncertain and it is difficult
to estimate  the level of marketing  competition  that it would face in any such
event.

     (6)  Regulatory Matters.

     Projects are subject to energy and  environmental  laws and  regulations at
the federal,  state and local levels in connection with development,  ownership,
operation, geographical location, zoning and land use of a Project and emissions
and other substances produced by a Project.  These energy and environmental laws
and  regulations  generally  require  that a wide  variety of permits  and other
approvals be obtained before the commencement of construction or operation of an
energy-producing  facility and that the facility then operate in compliance with
such permits and approvals.  Since the Trust operates as a "business development
company"  under the 1940  Act,  it is also  subject  to  provisions  of that act
pertaining to such companies.

     (i)  Energy Regulation.

     (A) PURPA.  The enactment in 1978 of PURPA and the adoption of  regulations
thereunder by FERC  provided  incentives  for the  development  of  cogeneration
facilities  and small power  production  facilities  meeting  certain  criteria.
Qualifying  Facilities  under PURPA are generally  exempt from the provisions of
the Public Utility Holding Company Act of 1935, as amended (the "Holding Company
Act"), the Federal Power Act, as amended (the "FPA"),  and, except under certain
limited  circumstances,  state laws regarding rate or financial  regulation.  In
order to be a Qualifying Facility, a cogeneration  facility must (a) produce not
only  electricity  but also a certain  quantity of heat  energy  (such as steam)
which is used for a purpose other than power generation, (b) meet certain energy
efficiency  standards  when  natural gas or oil is used as a fuel source and (c)
not be  controlled  or more than 50% owned by an  electric  utility or  electric
utility holding  company.  Other types of Independent  Power Projects,  known as
"small power production  facilities," can be Qualifying  Facilities if they meet
regulations  respecting  maximum size (in certain cases),  primary energy source
and utility  ownership.  Recent federal  legislation  has eliminated the maximum
size  requirement for solar,  wind,  waste and geothermal small power production
facilities (but not for hydroelectric or biomass) for a fixed period of time.

     In addition,  PURPA  requires  electric  utilities to purchase  electricity
generated by Qualifying  Facilities at a price equal to the purchasing utility's
full  "avoided  cost" and to sell back-up  power to  Qualifying  Facilities on a
non-discriminatory basis. Avoided costs are defined by PURPA as the "incremental
costs to the electric  utility of electric energy or capacity or both which, but
for the purchase from the  Qualifying  Facility or Qualifying  Facilities,  such
utility would  generate  itself or purchase from another  source."  While public
utilities are not required by PURPA to enter into long-term  Power  Contracts to
meet their obligations to purchase from Qualifying  Facilities,  PURPA helped to
create a regulatory  environment  in which it was more common for such contracts
to be negotiated until recent years.

     The exemptions  from  extensive  federal and state  regulation  afforded by
PURPA to Qualifying  Facilities are important to the Trust and its  competitors.
The Trust  believes  that each of its  Projects is a Qualifying  Facility.  If a
Project loses its Qualifying  Facility status,  the utility can reclaim payments
it made for the Project's non-qualifying output to the extent those payments are
in excess of current avoided costs (which are generally  substantially below the
Power Contract  rates) or the Project's  Power Contract can be terminated by the
electric utility.

     (B) The 1992 Energy Act. The  Comprehensive  Energy Policy Act of 1992 (the
"1992  Energy  Act")  empowered  FERC  to  require  electric  utilities  to make
available their transmission facilities to and wheel power for Independent Power
Projects  under  certain  conditions  and  created  an  exemption  for  electric
utilities,  electric  utility  holding  companies  and other  independent  power
producers  from  certain  restrictions  imposed by the Holding  Company Act. The
Trust's  Projects  will not be  directly  affected by the 1992 Energy Act unless
they were to attempt to sell  electricity to another  customer rather than under
the Power Contracts. The Trust does not anticipate that that would happen.

     (C) The  Federal  Power Act.  The FPA  grants  FERC  exclusive  rate-making
jurisdiction over wholesale sales of electricity in interstate commerce.  Again,
this will not affect the Trust's  Projects  unless they were to attempt sales to
other customers.

     (D) State  Regulation.  The  Trust's  Projects  are not subject to material
state economic  regulation except for requirements in California and New York to
supply the  purchasing  utility  with  information  to confirm  compliance  with
Qualifying  Facility  fuel  use and  efficiency  requirements  and to  make  the
Projects  available  for audit and  inspection  to confirm  Qualifying  Facility
compliance.  The Olinda  Project as  operated by the Trust  complies  with these
requirements and the Trust believes that both the Olinda and Stillwater Projects
meet  Qualifying  Facility  standards.  States also have  authority  to regulate
certain environmental, health and siting aspects of Qualifying Facilities.

     (ii)  Environmental Regulation.

     The operation of Independent Power Projects and the exploitation of natural
resource  properties are subject to extensive federal,  state and local laws and
regulations  adopted for the protection of human health and the  environment and
to  regulate  land use.  The laws and  regulations  applicable  to the Trust and
Projects in which it invests  primarily  involve the discharge of emissions into
the  water  and air  and the  disposal  of  waste,  but  also  include  wetlands
preservation,  fisheries  protection  (at  the  Stillwater  Project)  and  noise
regulation.  These  laws and  regulations  in many cases  require a lengthy  and
complex  process of renewing or obtaining  licenses,  permits and approvals from
federal,  state and local agencies.  Obtaining necessary approvals regarding the
discharge  of  emissions  into  the  air is  critical  to a  Project  and can be
time-consuming  and difficult.  Each Project requires  technology and facilities
which comply with federal, state and local requirements,  which sometimes result
in extensive negotiations with regulatory agencies.  Meeting the requirements of
each   jurisdiction   with  authority  over  a  Project  may  require  extensive
modifications to existing Projects.

     The Clean Air Act Amendments of 1990 contain  provisions which regulate the
amount of sulfur  dioxide  and  oxides of  nitrogen  which may be emitted by the
Olinda Project.  (The Stillwater Project,  which is a hydroelectric  plant, does
not burn  fuel.)  These  emissions  may be a cause of "acid  rain."  The  Olinda
Project,  which is fueled by landfill  gas,  does emit some  sulfur  dioxide and
nitrogen oxides, but to the extent its fuel is methane, it is not expected to be
materially burdened by the acid rain provisions of the Clean Air Act Amendments.

     In any case,  Qualifying Facilities are currently exempt from the acid rain
control  program  of the  Clean  Air  Act  Amendments.  Non-Qualifying  Facility
Projects will require  "allowances"  to emit sulfur dioxide after the year 2000.
Under the Amendments,  these allowances may be purchased from utility  companies
then entitled to emit sulfur dioxide or from the Environmental Protection Agency
("EPA"). Further, an Independent Power Project subject to the requirements has a
priority over utilities in obtaining  allowances directly from the EPA if (a) it
is a new facility or unit used to generate  electricity;  (b) 80% or more of its
output  is sold at  wholesale;  (c) it does  not  generate  electricity  sold to
affiliates  (as  determined  under  the  Holding  Company  Act) of the  owner or
operator (unless the affiliate  cannot provide  allowances in certain cases) and
(d) it is non-recourse project-financed. The market price of an allowance cannot
be predicted  with certainty at this time and there is no assurance that a broad
market for those allowances will develop or continue, although efforts have been
made by certain commodities exchanges to create a market.

     Title IV of the Clean Air Act Amendments requires significant reductions in
nitrogen oxide  emissions from power plants.  The first set of standards  became
applicable  in 1996 for  large-scale  steam boilers and large coal and oil-fired
plants.  The  standards  require  reductions  of 25% to  50% in  nitrogen  oxide
emissions.  Standards for other large generating plants become effective in 2000
and  would  require  40% to  50%  reductions.  States  are  imposing  additional
restrictions.   Nitrogen  oxide  emissions  can  be  particularly  difficult  or
expensive to reduce  because  nitrogen  oxides are produced at higher  operating
temperatures,   while  plant   efficiencies  tend  to  increase  with  operating
temperatures.  Although  engines  of the size  used at the  Olinda  Project  are
currently not subject to the new Title IV  requirements,  the Trust  anticipates
that  eventually  additional  nitrogen oxide  regulations  may be applied to the
Olinda  Project.   Those  might  materially  increase  the  operating  costs  of
generating plants.

     In July 1997 the  Environmental  Protection  Agency  adopted more stringent
standards for levels of ozone and small particulate  matter (particles less than
25 microns in diameter) in geographic  areas.  These new standards may cause the
area in which the Olinda Project is located to be classified as a non-attainment
area. If so, California might be required to impose additional  requirements for
industries  to reduce  emissions of  ozone-forming  pollutants  (in  particular,
nitrogen oxides) if its existing  requirements  are inadequate.  It is uncertain
whether or how any reductions  would be applied to small  facilities such as the
Olinda  Project.  If  reductions  were  required,  the Trust  might have to make
significant  capital investments to install new control technology or might have
to reduce operations. Nitrogen oxide reductions can be difficult to achieve with
add-on equipment and often require  decreases in operating  efficiency,  both of
which could cause material cost to the Trust. It is not possible at this time to
estimate whether or not any potential regulatory changes would materially affect
the Trust.

    Title V of the Clean  Air Act  Amendments  requires  states to create a new,
ongoing  licensing  system for existing  sources of air emissions.  The Trust is
currently  preparing an application  under Title V for the Olinda  Project.  The
Title V requirements are not currently  materially  different from the Project's
existing   limitations   but  the  process  of  preparing  the   application  is
time-consuming and extremely technical.

     The Clean Air Act  Amendments  empower  states to impose  annual  operating
permit  fees of at  least  $25 per ton of  regulated  pollutants  emitted  up to
$100,000 per  pollutant.  To date, no state in which the Trust operates has done
so. If a state were to do so,  such fees  might  have a  material  effect on the
Trust's  costs  of  generation,  in light of the  relatively  small  size of the
Trust's  facilities  as opposed to large  utility  generation  plants that might
benefit from the cap on fees.

     The  Trust's  Projects  must  comply  with many  federal and state laws and
regulations  governing  wastewater and stormwater  discharges from the Projects.
These are generally  enforced by states under "NPDES"  permits for point sources
of  discharges  and by  stormwater  permits.  The Olinda  Project  is  currently
revising its stormwater  discharge  permit  application  but does not anticipate
material  adverse  action.  Under the Clean  Water Act,  NPDES  permits  must be
renewed  every five years and permit limits can be reduced at that time or under
re-opener clauses at any time. The Projects have not had material  difficulty in
complying with their permits or obtaining renewals. The Projects use closed-loop
engine cooling  systems which do not require large  discharges of coolant except
for periodic  flushing to local sewer systems under permit and do not make other
material discharges.

     In 1998, the Trust's Projects became subject to the reporting  requirements
of the  Emergency  Planning  and  Community  Right-to-Know  Act that require the
Projects to prepare toxic release inventory release forms. These forms will list
all toxic  substances on site that are used in excess of threshold  levels so as
to allow  governmental  agencies  and the public to learn about the  presence of
those substances and to assess potential hazards and hazard responses. The Trust
does not anticipate that this will result in any material adverse effect on it.

     Based  on  current   trends,   the   Managing   Shareholder   expects  that
environmental and land use regulation will become more stringent.  The Trust and
the Managing  Shareholder  have  developed  limited  expertise and experience in
obtaining  necessary licenses,  permits and approvals.  The Trust will rely upon
co-owners  of  the  Stillwater  Project  and  as to all  Projects  on  qualified
environmental  consultants and environmental counsel retained by it to assist in
evaluating the status of Projects regarding such matters.

     (iii) The 1940 Act.

     Since its Shares are  registered  under the 1934 Act, the Trust is required
to file with the Commission certain periodic reports (such as Forms 10-K (annual
report), 10-Q (quarterly report) and 8-K (current reports of significant events)
and to be subject to the proxy rules and other  regulatory  requirements of that
act that are applicable to the Trust. The Trust has no intention to and will not
permit the creation of any form of a trading  market in the Shares in connection
with this registration.

     On May 26, 1994, the Trust notified the Securities and Exchange  Commission
(the  "Commission") of its election to be a "business  development  company" and
registered  its Shares  under the 1934 Act. On June 25,  1994,  the election and
registration became effective. As a "business development company," the Trust is
a closed-end  company  (defined by the 1940 Act as a company that does not offer
for sale or have  outstanding  any redeemable  security) that is regulated under
the  1940  Act  only  as  a  business  development  company.  The  act  contains
prohibitions  and  restrictions on  transactions  between  business  development
companies  and their  affiliates  as defined in that act,  and  requires  that a
majority of the board of the company be persons other than "interested  persons"
as defined in the act. The Board of the Trust is  comprised  of Ridgewood  Power
and two individuals,  John C. Belknap and Dr. Richard D. Propper, who also serve
as  independent  trustees  of  Ridgewood  Electric  Power  Trust IV, a  business
development  company  sponsored  by the  Managing  Shareholder,  but who are not
otherwise affiliated with the Trust, Ridgewood Power or any of their affiliates.
See Item 10 -- Directors and Executive Officers below.

     Under  the  1940  Act,   Commission   approval  is  required   for  certain
transactions   involving   certain  closely   affiliated   persons  of  business
development companies, including many transactions with the Managing Shareholder
and the other investment programs sponsored by the Managing  Shareholder.  There
can be no  assurance  that such  approval,  if required,  would be obtained.  In
addition,  a  business  development  company  may not  change  the nature of its
business  so as to cease to be,  or to  withdraw  its  election  as, a  business
development  company  unless  authorized to do so by at least a majority vote of
its outstanding voting securities.

     The 1940 Act  restricts  the kind of  investments  a  business  development
company may make. A business development company may not acquire any asset other
than a  "Qualifying  Asset"  unless,  at  the  time  the  acquisition  is  made,
Qualifying  Assets comprise at least 70% of the company's total assets by value.
The principal  categories of Qualifying  Assets that are relevant to the Trust's
activities are:

     (A) Securities issued by "eligible portfolio  companies" that are purchased
by the Trust from the issuer in a transaction  not involving any public offering
(i.e.,  private placements of securities).  An "eligible  portfolio company" (1)
must be  organized  under the laws of the United  States or a state and have its
principal  place of business in the United States;  (2) may not be an investment
company other than a small  business  investment  company  licensed by the Small
Business  Administration  and  wholly-owned  by the  Trust  and (3) may not have
issued any class of  securities  that may be used to obtain margin credit from a
broker or dealer in securities.  The last requirement  essentially  excludes all
issuers  that have  securities  listed on an exchange or quoted on the  National
Association of Securities  Dealers,  Inc.'s national  market system,  along with
other  companies  designated  by the  Federal  Reserve  Board.  The  Olinda  and
Stillwater Projects are Qualifying Assets under this provision.

     (B)  Securities  received in exchange for or distributed on or with respect
to securities  described in paragraph (A) above,  or on the exercise of options,
warrants or rights relating to those securities.

     (C) Cash,  cash items,  U.S.  Government  securities  or high  quality debt
securities maturing not more than one year after the date of investment.

     A business development company must make available "significant  managerial
assistance" to the issuers of Qualifying  Assets described in paragraphs (A) and
(B)  above,  which may  include  without  limitation  arrangements  by which the
business  development  company  (through its  directors,  officers or employees)
offers to provide (and, if accepted,  provides) significant guidance and counsel
concerning  the  issuer's  management,  operation  or  business  objectives  and
policies.

     A business development company also must be organized under the laws of the
United  States or a state,  have its  principal  place of business in the United
States and have as its purpose the making of  investments  in Qualifying  Assets
described in paragraph (A) above.

     The Managing  Shareholder  believes  that it may no longer be necessary for
the Trust to continue its status as a business development  company,  because of
the Managing  Shareholder's active involvement in operating Projects through the
Trust and other investment programs.  Although the Managing Shareholder believes
it would be  beneficial  to the Trust to end the  election  and reduce  costs of
legal  compliance  that do not contribute to income,  the process of withdrawing
the business  development  company election requires a proxy  solicitation and a
special  vote of  investors,  which is also  costly.  Accordingly,  the Managing
Shareholder  does not intend at this time to request the  Investors'  consent to
withdrawing the business development company election. Any change in the Trust's
status will be effected only with the Investors' consent.

     As required  by the  business  development  company  election,  the Trust's
Shares are currently  registered under the 1934 Act, which requires the Trust to
make periodic reports to the Securities and Exchange Commission,  to comply with
proxy  solicitation  and insider trading  restrictions and to take other actions
required  of  most  publicly  traded  companies.  The  Trust  currently  has 218
Investors  of record,  which is less than the  minimum  number  (300) that would
require  the Trust to  maintain  registration  if the Trust  were not a business
development company. Because the Trust is not currently withdrawing its business
development  company election,  it will continue to be required to be registered
and report under the 1934 Act.

     (iv)  Potential Legislation and Regulation.

     All  federal,  state  and local  laws and  regulations,  including  but not
limited to PURPA,  the Holding Company Act, the 1992 Energy Act and the FPA, are
subject to amendment or repeal.  Future legislation and regulation is uncertain,
and could have material effects on the Trust.

(d)     Financial Information about Foreign and Domestic Operations and Export 
Sales.

     The Trust has  invested in  Projects  located in  California,  New York and
Virginia and has no foreign operations.

(e)     Employees.


     The  employees of the Olinda  Project are  employed by RPMCo,  the Trust is
administered  by the  Managing  Shareholder  and  accordingly  the  Trust has no
employees.  The persons  described  below at Item 10 -- Directors  and Executive
Officers of the Registrant serve as executive officers of the Trust and have the
duties  and  powers  usually  applicable  to  similar  officers  of  a  Delaware
corporation in carrying out the Trust business.


Item 2.  Properties.

     Pursuant to the  Management  Agreement  between the Trust and the  Managing
Shareholder  (described  at Item 10(c) -- Directors  and  Executive  Officers --
Management  Agreement),  the Managing Shareholder provides the Trust with office
space at the Managing  Shareholder's  principal office at The Ridgewood Commons,
947 Linwood Avenue, Ridgewood, New Jersey 07450.

     The following  table shows the material  properties  (relating to Projects)
owned or leased by the Trust's  subsidiaries  or partnerships in which the Trust
has an interest.  All of the Projects  are  described in further  detail at Item
1(c)(2).

                                   Approximate
                                     Square
                  Ownership  Ground   Approximate  Footage of      Description
                  Interests  Lease      Acreage    Project (Actual    of
Project  Location  in Land  Expiration   of Land  or Projected)     Project


Olinda   Olinda,    Leased     2004          2        6,000          Landfill
        California                                                   gas-fired
                                                                     generating
                                                                     facility

Still- Stillwater,  Leased     2029          .75        N/A             Hydro-
water   New York    and                                               electric
                   Licensed                                             plant

Item 3.  Legal Proceedings.


     From time to time,  the Trust and its  subsidiaries  are  engaged  in legal
proceedings  incident to the normal course of their  businesses  which primarily
involve claims for damages, or other immaterial actions.

Item 4.  Submission of Matters to a Vote of Security Holders.

     The Trust did not submit any matters to a vote of the Investors  during the
fourth quarter of 1998.

PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

(a)  Market Information.

     The Trust has 105.5  Investor  Shares of  beneficial  interest in the Trust
resulting from the merger with the  Partnership  which was effective on June 15,
1994.  There is currently no established  public trading market for the Investor
Shares  and the  Trust  does not  intend  to allow a public  trading  market  to
develop.  As of the date of this Form 10-K,  all such Investor  Shares have been
issued and are  outstanding.  There are no  outstanding  options or  warrants to
purchase or securities  convertible  into  Investor  Shares and the Trust has no
intention to make any public offering of its Investor Shares.

     Investor Shares are restricted as to transferability under the Declaration.
In addition,  under federal laws regulating  securities the Investor Shares have
restrictions  on  transferability  when  they are held by  persons  in a control
relationship  with the Trust.  Investors  wishing to transfer Shares should also
consider the  applicability  of state  securities laws. The Investor Shares have
not been and are not expected to be registered under the Securities Act of 1933,
as amended (the "1933 Act"), or under any other similar law of any state (except
for certain  registrations that do not permit free resale) in reliance upon what
the Trust believes to be exemptions from the registration requirements contained
therein.  Because  the  Investor  Shares  have  not  been  registered,  they are
"restricted securities" as defined in Rule 144 under the 1933 Act.

     The Managing Shareholder is considering the possibility of a combination of
the Trust and five  subsequent  investment  programs  sponsored  by the Managing
Shareholder  (Ridgewood  Electric  Power  Trusts II through V and the  Ridgewood
Power  Growth  Fund) into a publicly  traded  entity.  This  would  require  the
approval  of the  Investors  in the  Trust and the other  programs  after  proxy
solicitations  complying  with  requirements  of  the  Securities  and  Exchange
Commission,  compliance  with the "rollup"  rules of the Securities and Exchange
Commission and other regulations,  and a change in the federal income tax status
of the Trust from a partnership  (which is not subject to tax) to a corporation.
The process of considering and effecting a combination,  if the decision is made
to do so,  will be  very  lengthy.  There  is no  assurance  that  the  Managing
Shareholder  will  recommend a  combination,  that the Investors of the Trust or
other programs will approve it, that economic conditions or the business results
of the  participants  will be favorable for a combination,  that the combination
will be effected or that the  economic  results of a  combination,  if effected,
will be favorable to the Investors of the Trust or other programs.

(b)  Holders.

     As of the date of this Form 10-K,  there are 240 record holders of Investor
Shares.

(c)  Dividends.

     The Trust made distributions as follows for the years 1997 and 1998:

                                       Year ended      Year ended
                                     December 31,     December 31,
                                          1997           1998

Total distributions to Investors       $919,012        $1,310,319
Distributions per Investor Share          8,711            12,420
Total distributions to
 Managing Shareholder                     9,283            13,326


     While the Trust expects to make monthly distributions,  the Trust's ability
to make future  distributions  to the  Investors and their timing will depend on
the net  cash  flow  of the  Trust  and  retention  of  reasonable  reserves  as
determined by the Trust to cover its anticipated expenses.


     The Trust's cash flow comes  primarily  from  distributions  from Projects.
Those distributions are from cash flow of the Projects, which includes income of
Projects plus funds representing  depreciation and amortization charges taken by
the Projects.  Because the Trust's  objective is to distribute  net cash flow, a
substantial  portion of many  distributions  by the Trust will include cash flow
derived from depreciation and amortization charges against assets at the Project
level.  Nevertheless,  because the Projects are not consolidated  with the Trust
for accounting purposes, all funds received from Projects after June 1, 1997 are
considered to be revenue to the Trust for accounting purposes. Distributions may
also include cash  released  from  operating  or debt service  reserves,  or for
periods before June 1, 1997 at the Olinda  Project,  amounts treated as a return
of capital.  Investors should be aware that the Trust is organized to return net
cash flow rather than accounting income to Investors.


Item 6.  Selected Financial Data.

     The following data is qualified in its entirety by the financial statements
presented elsewhere in this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
Selected                  As of and     As of and     As of and       As of and        As of and
Financial                for the year  for the year  for the year    for the year    for the year
Data                        ended         ended        ended           ended            ended
                         December 31, December 31,   December 31,    December 31,    December 31,
                            1998          1997          1996            1995             1994
Total Fund Information:

<S>                     <C>          <C>            <C>              <C>            <C>
Net operating revenues    $2,049,728     $ 1,851,763    $606,863        $552,769      $1,014,963
Net income (loss)          1,963,215       1,316,797     496,802       $ 418,417        ($46,821)

Net assets (share-
 holders' equity)          7,632,803       6,993,143   6,604,641      $6,916,437      $7,352,807
Investments in power
 generation limited
 partnerships              6,560,616       6,515,771   7,177,875      $7,207,846       7,159,755
Total assets              $7,710,882      $7,668,271  $7,505,197      $7,531,306      $7,469,945
Per Investor Share
  Revenues                   $19,999         $18,398      $5,778          $5,240          $9,621
  Expenses                     1,390           5,917       1,069          $1,273         (10,064)
  Net income (loss)           18,609          12,481       4,709           3,966           $(443)
  Net asset value            $72,349         $66,286     $62,832         $65,559         $69,695

</TABLE>

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation.

Introduction

     The following  discussion and analysis  should be read in conjunction  with
the Trust's  financial  statements  and the notes  thereto  presented  elsewhere
herein.  The Trust's financial  statements are prepared under generally accepted
accounting principles applicable to business development companies. Accordingly,
the Trust carries its  investment in the Projects it owns at fair value and does
not  consolidate its financial  statements with the financial  statements of the
Projects. Revenue is recorded by the Trust as cash distributions are declared by
the Projects.  Trust revenues may fluctuate  from period to period  depending on
the  operating  cash  flow  generated  by the  Projects  and the  amount of cash
retained to fund capital  expenditures.  Dollar  amounts in this  discussion are
generally rounded to the nearest $1,000.

Outlook

     The U.S.  electricity  markets are being  restructured and there is a trend
away from regulated electricity systems towards deregulated,  competitive market
structures.  The States that the Trust's  Projects operate in have passed or are
considering new legislation that would permit utility  customers to choose their
electricity  supplier  in a  competitive  electricity  market.  The  Olinda  and
Stillwater  Projects  are  "Qualified  Facilities"  as defined  under the Public
Utility Regulatory Policies Act of 1978 and currently sell their electric output
to utilities under long-term contracts expiring in 2004 and 2029,  respectively.
During the term of the  contracts,  the  utilities may or may not attempt to buy
out the contracts prior to expiration. At the end of the contracts, the Projects
will become  merchant plants and may be able to sell the electric output at then
current market prices.  There can be no assurance that future market prices will
be sufficient to allow the Trust's Projects to operate profitably.

     All available cash flow from the  Stillwater  Project is being used to meet
debt  service  requirements.  Distributions  to  the  Trust  will  resume  after
repayment of bonds and partner loan obligations. Assuming normal water flows and
no  operational  failures,  the bonds and partner  loans  should be repaid in or
after 2010.

     Additional  trends affecting the independent  power industry  generally are
described at Item 1 - Business.

Results of Operations
Year ended December 31, 1998 compared to year ended December 31, 1997

     Total revenue increased 8.7% to $2,110,000 in 1998 from $1,941,000 in 1997,
due to a 19.2%  increase in income from the Olinda Project to $2,050,000 in 1998
from  $1,720,000 in 1997.  The increase is a result of the Trust  increasing its
investment in the Olinda Project on June 1, 1997 from a 15% cumulative  priority
return on its original investment of $3,103,000 to 100% ownership.  The increase
in revenue  from the  Olinda  Project  was  partially  offset by the  absence of
revenue from the South Boston Project(also known as the Lynchburg Project) which
was sold in 1997.  The Trust  recorded  income of $132,000 from the South Boston
Project in 1997.

     Total  expenses  decreased  by  $477,000  (76.4%) to  $147,000 in 1998 from
$624,000 in 1997.  The primary  cause of the decrease was the absence in 1998 of
the  Trust's  1997 write down of its  $1,000,000  investment  in the  Stillwater
Project by $400,000 to its net realizable value of $600,000.  Project cash flows
from  operating  activities at Stillwater  have been applied to service  project
debt which is senior to the amount due to the Trust.  Accounting  and legal fees
decreased  $95,000  (69.9%) to $41,000 in 1998 from  $136,000 in 1997 due to the
reduction  in  legal  fees  relating  to the  Virginia  Electric  Power  Company
("VEPCO") settlement.  All other 1998 Trust expenses were comparable to those of
1997.

Results of Operations
Year ended December 31, 1997 compared to year ended December 31, 1996

     The 1997 investment  activity of the Trust resulted from RW Power Partners,
L.P.'s  ("RWPP")  receipt  of  $3,750,000  in  cash  for the  settlement  of the
litigation  with VEPCO  involving the South Boston Project  (described at Part I
Item  3 -  Legal  Proceedings),  the  related  shutdown  of the  Project  at the
beginning  of 1997 and the sale of the  Project  at the end of 1997.  The  VEPCO
settlement proceeds were used to repay $391,000 of RWPP's intercompany  payables
and  $3,237,000  was  distributed  to the  Trust.  An  additional  $154,000  was
distributed to the Trust upon the return to RWPP of a deposit  securing a letter
of credit and other  revenues of RWPP.  The Trust used a substantial  portion of
the RWPP distribution to acquire additional  partnership interests in Brea Power
Partners,  L.P. ("Brea"),  which owns the Olinda Project, a landfill  gas-fueled
electric generating station, located in Orange County,  California.  As a result
of the  acquisition,  the  Trust  owns 100% of Brea and is the  operator  of the
Olinda Project.

     Total revenue increased 218.2% to $1,941,000 in 1997 from $610,000 in 1996,
primarily  due to a 331.1%  increase  in  income  from  the  Olinda  Project  of
$1,720,000 in 1997 from $399,000 in 1996. On June 1, 1997,  the Trust  increased
its investment in the Olinda Project from a 15%  cumulative  priority  return on
its original  investment of $3,103,000 to 100%  ownership.  The  investment  was
increased prior to the peak earnings  period of June through  September when the
Project generates approximately 45% of its annual cash flow from operations. The
increase in revenue from the Olinda  Project was partially  offset by a decrease
in revenue  from the South  Boston  Project to  $132,000  in 1997 as compared to
$208,000 in 1996.  Although the Trust  received  distributions  of $3,391,000 in
1997, primarily as a result of the VEPCO settlement,  $3,237,000 was recorded as
a reduction in the Trust's investment in South Boston.

     The South Boston  Project  assets were sold in December  1997 for $782,000,
which was received in the form of an 8%, seven year promissory note,  secured by
the Project's assets. The sales price was $491,000 in excess of the South Boston
net book value of $291,000.  Due to uncertainty  surrounding the Trust's ability
to  collect  the  note,  no  income  will be  recorded  by the  Trust  until the
promissory  note payments are collected and  distributed to the Trust.  Interest
and dividend income  increased to $89,000 in 1997 as compared to $3,000 in 1996.
The increase  resulted from  investment  interest on higher balances of cash and
cash equivalents in 1997 as compared to 1996.

     Total  expenses  increased  by  $511,000  (452.2%) to $624,000 in 1997 from
$113,000  in 1996.  In the  fourth  quarter  of 1997,  the Trust  wrote down its
$1,000,000  investment  in  the  Stillwater  Project  by  $400,000  to  its  net
realizable  value of $600,000.  Project cash flows from operating  activities at
Stillwater  have been  applied  to service  project  debt which is senior to the
amount due to the Trust. Accounting and legal fees increased $88,000 (183.3%) to
$136,000  in 1997 from  $48,000 in 1996 due to legal fees  relating to the VEPCO
settlement.  Management fee expense increased $18,000 (36.7%) to $67,000 in 1997
from $49,000 in 1996 due to the Managing Shareholder's decision not to waive any
management  fees in 1997. All other 1997 Trust expenses were comparable to those
of 1996.

Liquidity and Capital Resources

     In 1998,  the  balance  of cash and cash  equivalents  increased  slightly,
reflecting the excess of cash from operations of $1,419,000  over  distributions
to  shareholders  of  $1,324,000.  Distributions  to  shareholders  increased by
$396,000  (42.7%)  from  $928,000  in 1997.  The  monthly  distribution  rate to
shareholders  was  increased  to $1,000 per share in the second half of 1997 and
$1,060 per share in June 1998.

     On June 6, 1997, Brea entered into a revolving  credit agreement with Fleet
Bank,  N.A. (the "Bank") whereby the Bank provided a five year committed line of
credit facility of $750,000 which  decreases by $100,000 on each  anniversary of
the facility.  Outstanding borrowings bear interest at the Bank's prime rate or,
at Brea's choice,  at LIBOR plus 2.5%. At December 31, 1998 and 1997, there were
no  borrowings  outstanding  under the credit  facility.  The  credit  agreement
requires Brea to maintain a ratio of total debt to tangible net worth of no more
than 1 to 1. The Trust  guaranteed  the  obligations  of Brea  under the  credit
facility. Other than investments of available cash in power generation Projects,
obligations  of the Trust are  generally  limited  to  making  distributions  to
shareholders  of available  operating  cash flow  generated by its  investments,
payment of the management fee to the Managing Shareholder and payment of certain
accounting  and  legal  services  to third  parties.  The  Trust's  policy is to
distribute to shareholders as much cash as is prudent.

Year 2000 Remediation.

     The  Managing  Shareholder  and its  affiliates  began year 2000 review and
planning  in  early  1997.  After  initial  remediation  was  completed,  a more
intensive review discovered additional issues and the Managing Shareholder began
a formal remediation program in late 1997. The Managing Shareholder has assessed
problems, has a written plan for remediation and is implementing the plan.

     The accounting,  network and financial packages for the Ridgewood companies
are basically  off-the-shelf packages that will be remediated,  where necessary,
by obtaining patches or updated versions.  The Managing Shareholder expects that
updating  will be  complete  before  the end of April  1999 with  ample time for
implementation,  testing  and  custom  changes  to  some  modifications  made by
Ridgewood to those programs.  To a large extent,  these software  packages would
have been upgraded within a three to five year time frame,  even absent the Year
2000 problem.  The Managing  Shareholder  estimates  that the Trust's  allocable
portion of the cost of upgrades that were  accelerated  because of the Year 2000
problem is approximately $200.

     The Managing  Shareholder  has identified  two major systems  affecting the
Trust that rely on custom-written software, the subscription/investor  relations
and investor  distribution  systems,  which maintain individual investor records
and effect  disbursement  of  distributions  to  Investors.  In late  1998,  the
Managing  Shareholder's  outside  computer  consultant  reviewed the remediation
completed for those systems and advised the Managing  Shareholder  that material
additional work was required for these systems to work  efficiently  after 1999.
The Managing  Shareholder  accordingly  employed a new  specialist for Year 2000
remediation  of those  systems and other  software and for  information  systems
support generally. Changes to the distribution system and testing of that system
were  completed by the end of the first quarter of 1999,  on schedule.  The plan
also  targets  completion  by the end of the  second  quarter  of 1999 of  minor
changes to the elements of the subscription/investor  relations system that will
allow it to handle individual  investors'  records,  and of all testing of those
modifications.  Elements of that system used to generate  internal sales reports
and other  internal  reports (but which do not affect  investors'  records) will
require  major  remediation.  Remediation  of  the  internal  report  generating
programs  is expected to be  completed  by the end of the third  quarter of 1999
with testing and any additional  modifications to be completed no later than the
end of 1999.


     The Managing  Shareholder is confident that all software systems  necessary
to maintain  investor  records will be remediated and tested well before the end
of  1999.   If  the  systems  used  to  generate   internal   reports  from  the
subscription/investor  relations  system are not  remediated by the end of 1999,
the Managing  Shareholder  is developing a contingency  plan to use the existing
systems  together  with  manual  entry of data and  checking  of  results  until
remediation is complete. The Managing Shareholder has done this in the past when
system  problems  have  occurred  and it thus  believes  that  there  will be no
material or  noticeable  effect on the accuracy of its records or  generation of
internal  reports,  although it may  experience  delays in  generating  internal
reports of a few days.

     Some systems are being remediated using the "sliding window" technique,  in
which two digit  years less than a  threshold  number  are  assumed to be in the
2000's and higher two digit  numbers are  assumed to be in the 1900's.  Although
this will allow  compliance  for several years beyond the year 2000,  eventually
those  systems  will  have to be  rewritten  again  or  replaced.  The  Managing
Shareholder expects that the ordinary course of system upgrading will eventually
cure this problem.

     The Trust's share of the incremental cost for Year 2000 remediation of this
custom written  software and related items for 1998 and prior years is estimated
at $3,000 and is estimated to be approximately $2,800 for 1999.

     The Olinda electric generating facilities will be reviewed during the first
and second quarters of 1999 by an outside consultant or by personnel from RRPMCo
to determine if its electronic  control systems contain software affected by the
Year 2000 problem or contain  embedded  components that contain Year 2000 flaws.
The facility uses small  mechanical  and analog  systems,  many of which are not
expected to be vulnerable to Year 2000 problems,  and personal computers running
packaged software for routine  recordkeeping  and data logging,  which have been
upgraded as described  above. To date the Trust has discovered no systems having
a material  impact on output,  environmental  compliance,  recordkeeping  or any
other  material  impact that have Year 2000  concerns.  The Trust's share of the
estimated  costs  of  the  consultant's  review  and of any  minor  upgrades  or
rehabilitation is estimated at less than $25,000.


     The Managing  Shareholder and its affiliates do not  significantly  rely on
computer input from  suppliers and customers and thus are not directly  affected
by other companies' year 2000 compliance. However, if customers' payment systems
or suppliers' systems were adversely  affected by year 2000 problems,  the Trust
could be  affected.  For  example,  if the utility  that  purchases  the Trust's
electricity  output  were  unable  to  accept  electricity   because  of  system
malfunctions or transmission  failures caused by Year 2000  non-compliance by it
or other persons,  the Trust would lose revenues that could not be recouped at a
later date.  Similarly,  if utility  payment  systems were to  malfunction,  the
Trust's revenues might be delayed. Based on published reports the Trust believes
that it is now very unlikely that utilities will fail to accept  electricity for
more than a very short  time  because  of  malfunctions  caused by the Year 2000
problem.  Although the Trust also  believes  that utility  payment  problems are
unlikely  and,  if they occur,  will not exceed a month or two,  there can be no
assurance  that  payments  to  the  Trust  will  not  be  interrupted.  Southern
California  Edison,  the  purchaser  of the Olinda  facility's  output,  has not
identified  computer  systems  used to pay  its  suppliers,  such as the  Olinda
Project, as "mission critical" systems for Year 2000 remediation. Therefore, the
Trust   anticipates   that  there  is  a  material   possibility   that  payment
interruptions  from  Southern  California  Edison  will  occur.  The  Trust  has
established  a line  of  credit,  described  above  at  "Liquidity  and  Capital
Resources," to cover this contingency and others.

     The Olinda plant burns landfill gas collected by GSF Energy,  Inc. From the
Trust's  observations GSF Energy,  Inc. is unlikely to have Year 2000 compliance
problems  at the  Olinda  site that would be likely to  interrupt  the supply of
landfill  gas. GSF Energy,  Inc.,  like all other  companies,  is exposed to the
possibility  that failures of other persons to remediate their Year 2000 systems
may adversely  affect GSF Energy,  Inc. and in that event the supply of landfill
gas to the Olinda  Plant might be  interrupted.  In that event the Olinda  plant
would not be able to operate. Availability of other supplies such as spare parts
and consumables may be affected by Year 2000 problems; the Trust purchases these
items from many different sources,  no single one or group of which could have a
material effect on the Trust if it or they were not Year 2000 compliant.

     Because the Trust and the Managing Shareholder are extremely small relative
to the size of most of their  material  customers  and suppliers and are paid or
supplied  using the same  systems  as larger  companies,  requests  for  written
assurances   of   compliance   from  those   customers  or  suppliers   are  not
cost-effective.  Instead, the Managing Shareholder is monitoring industry trends
and  compliance  and is  working  to assure the  Trust's  continued  operations.
Similarly,  as  described  above,  in most  cases  there  are no  cost-effective
contingency measures that can be taken against the major risks to the Trust that
utilities will fail to take or fail to pay for the Trust's electricity output as
the result of Year 2000 problems.  The Trust believes that in the event that any
embedded components or other systems are found to have Year 2000 problems at the
Olinda facility it will be able to remediate them promptly and before the end of
1999. It is preparing  contingency  plans to operate the facility with manual or
analog control systems if Year 2000 problems  cannot be remediated.  Because the
facility is small and uses simple technologies  (diesel engines and conventional
generators) that are not dependent on computers or  date-sensitive  electronics,
the Trust  believes  that it is  unlikely  that it would be  unable  to  operate
because of Year 2000 problems at the facility.

       Based on its internal  evaluations and the risks and contexts  identified
by the Commission in its rules and interpretations, the Trust believes that Year
2000  issues  relating  to its assets and  remediation  program  will not have a
material effect on its facilities,  financial  position or operations,  and that
the costs of addressing the Year 2000 issues will not have a material  effect on
its future  consolidated  operating results,  financial condition or cash flows.
However,  this  belief is based upon  current  information,  and there can be no
assurance that unanticipated problems will not occur or be discovered that would
result in material adverse effects on the Trust.

     The Trust is unable to predict  reliably  what,  if  anything,  will happen
after  December  31,  1999  with  regard  to Year  2000  problems  caused by the
inability of other  businesses  and  government  agencies to complete  Year 2000
remediation.  The Trust knows of no specific problems identified by customers or
suppliers that would have a material adverse effect on the Trust.

     The  reasonable  worst case scenario  anticipated  by the Trust is that the
Olinda plant will be able to operate on and after January 1, 2000 but that there
may be some short-term  inability of its utility purchaser to accept or transmit
electricity  and that the utility  purchaser may not be able to pay promptly for
the  electricity it does accept.  In that event,  the Trust's  revenues could be
materially  reduced  for a  temporary  period and it might have to draw upon its
credit line to fund  operating  expenses  until the utility makes up any payment
arrears.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

     Qualitative Information About Market Risk.

     The Trust's investments in financial instruments are short-term investments
of working capital or excess cash. Those  short-term  investments are limited by
its  Declaration of Trust to investments in United States  government and agency
securities  or to  obligations  of banks  having at least $5  billion in assets.
Because the Trust invests only in short-term  instruments  for cash  management,
its exposure to interest rate changes is low. The Trust has limited  exposure to
trade accounts  receivable and believes that their carrying amounts  approximate
fair value.

     The Trust's  primary  market risk  exposure is limited  interest  rate risk
caused  by  fluctuations  in  short-term  interest  rates.  The  Trust  does not
anticipate  any changes in its primary market risk exposure or how it intends to
manage it. The Trust does not trade in market risk sensitive instruments.

     Quantitative Information About Market Risk

         This table provides information about the Trust's financial instruments
that are  defined by the  Securities  and  Exchange  Commission  as market  risk
sensitive instruments.  These include only short-term U.S. government and agency
securities and bank  obligations.  The table  includes  principal cash flows and
related weighted average interest rates by contractual maturity dates.

                              December 31, 1998

                             Expected Maturity Date
                                      1999
                                    (U.S. $)

Bank Deposits and Certificates
  of Deposit                             $     800,000
  Average interest rate                         5.225%



Item 8.  Financial Statements and Supplementary Data.

Index to Financial Statements

Report of Independent Accountants                      F-2
Statement of Operations for the three years ended
  December 31, 1998                                    F-3
Balance Sheet at December 31, 1998 and 1997            F-4
Statement of Changes in Shareholders' Equity
  for the three years ended December 31, 1998          F-5
Statement of Cash Flows for the three years
  ended December 31, 1998                              F-6
Notes to Financial Statements                   F-7 to F-11

     All schedules are omitted  because they are not  applicable or the required
information is shown in the financial statements or notes thereto.

     The  financial  statements  are  presented  in  accordance  with  generally
accepted accounting  principles and Securities and Exchange Commission positions
applicable  to  business  investment   companies,   which  require  the  Trust's
investments  in Projects to be presented on the cash method,  rather than on the
equity method.

Item 9.  Changes in and Disagreements with Accountants on Accounting and 
Financial Disclosure.

     Neither  the  Trust nor the  Managing  Shareholder  has had an  independent
accountant  resign  or  decline  to  continue  providing  services  since  their
respective inceptions and neither has dismissed an independent accountant during
that period.  During that period of time no new independent  accountant has been
engaged by the Trust or the Managing Shareholder, and the Managing Shareholder's
current accountants, PricewaterhouseCoopers LLP, have been engaged by the Trust.

PART III

Item 10.  Directors and Executive Officers of the Registrant.

(a)  General.

     As Managing  Shareholder  of the Trust,  Ridgewood  Power  Corporation  has
direct and exclusive  discretion in management and control of the affairs of the
Trust (subject to the general supervision and review of the Independent Trustees
and the Managing  Shareholder  acting  together as the Board of the Trust).  The
Managing  Shareholder will be entitled to resign as Managing  Shareholder of the
Trust  only  (i)  with  cause   (which  cause  does  not  include  the  fact  or
determination  that  continued  service  would be  unprofitable  to the Managing
Shareholder) or (ii) without cause with the consent of a majority in interest of
the  Investors.  It may be removed from its capacity as Managing  Shareholder as
provided in the Declaration.

Ridgewood  Holding,  which was  incorporated  in April  1992,  is the  Corporate
Trustee of the Trust.

(b)  Managing Shareholder.

     Ridgewood Power Corporation was incorporated in February 1991 as a Delaware
corporation  for the  primary  purpose  of acting as a managing  shareholder  of
business trusts and as a managing general partner of limited  partnerships which
are organized to participate in the  development,  construction and ownership of
Independent  Power  Projects.  It  organized  the  Trust  and  is  its  managing
shareholder.

     Robert  E.  Swanson  has  been  the  President,   sole  director  and  sole
stockholder of Ridgewood Power Corporation since its inception in February 1991.

     The Managing  Shareholder has also organized Ridgewood Electric Power Trust
II ("Ridgewood Power II"),  Ridgewood  Electric Power Trust II ("Ridgewood Power
II"),  Ridgewood  Electric  Power Trust IV  ("Ridgewood  Power  IV"),  Ridgewood
Electric Power Trust V ("Ridgewood Power V") and The Ridgewood Power Growth Fund
(the  "Growth  Fund")  as  Delaware   business  trusts  to  participate  in  the
independent power industry.  Ridgewood Power Corporation now also their managing
shareholder.  The business  objectives of these five trusts are similar to those
of the Trust.

     A number of other  companies are  affiliates  of Mr.  Swanson and Ridgewood
Power.  Each of these also was organized as a corporation  that was wholly-owned
by Mr. Swanson.

     The Managing  Shareholder is an affiliate of Ridgewood  Energy  Corporation
("Ridgewood  Energy"),  which has organized and operated 48 limited  partnership
funds  and  one  business  trust  over  the  last 17  years  (of  which  25 have
terminated) and which had total capital contributions in excess of $190 million.
The programs  operated by Ridgewood  Energy have invested in oil and natural gas
drilling and completion and other related  activities.  Other  affiliates of the
Managing  Shareholder  include  Ridgewood  Securities  Corporation   ("Ridgewood
Securities"),  an NASD member which has been the placement agent for the private
placement offerings of the six trusts sponsored by the Managing  Shareholder and
the  funds  sponsored  by  Ridgewood  Energy;   Ridgewood  Capital   Corporation
("Ridgewood  Capital"),   which  assists  in  offerings  made  by  the  Managing
Shareholder  and which is the sponsor of two privately  offered  venture capital
funds  (Ridgewood  Capital  Venture  Partners,  LLC and Ridgewood  Institutional
Venture Partners,  LLC); and Ridgewood Power VI Corporation  ("Power VI"), which
is a managing shareholder of the Growth Fund, and RPMCo. Each of these companies
is controlled by Robert E.
Swanson, who is their sole director or manager.

     Set forth below is certain  information  concerning  Mr.  Swanson and other
executive officers of the Managing Shareholder.

     Robert E. Swanson,  age 52, has also served as President of the Trust since
its inception in 1991 and as President of RPMCo,  Ridgewood Power II,  Ridgewood
Power III,  Ridgewood  Power IV,  Ridgewood  Power V and the Growth Fund,  since
their  respective  inceptions.  Mr.  Swanson has been  President and  registered
principal  of  Ridgewood  Securities  and  became the  Chairman  of the Board of
Ridgewood  Capital on its organization in 1998. He also is Chairman of the Board
of Ridgewood Capital Venture Partners,  LLC and Ridgewood  Institutional Venture
Partners,  LLC. In  addition,  he has been  President  and sole  stockholder  of
Ridgewood Energy since its inception in October 1982. Prior to forming Ridgewood
Energy in 1982,  Mr.  Swanson  was a tax  partner at the former New York and Los
Angeles  law firm of Fulop & Hardee and an  officer in the Trust and  Investment
Division of Morgan Guaranty Trust Company.  His specialty is in personal tax and
financial  planning,  including  income,  estate and gift tax. Mr.  Swanson is a
member of the New York State and New Jersey bars, the  Association of the Bar of
the City of New York and the New York State Bar Association. He is a graduate of
Amherst College and Fordham University Law School.

     Robert L. Gold,  age 40,  has served as  Executive  Vice  President  of the
Managing Shareholder, RPMCo, the Trust, Ridgewood Power II, Ridgewood Power III,
Ridgewood Power IV, Ridgewood Power V and the Growth Fund since their respective
inceptions,  with primary responsibility for marketing and acquisitions.  He has
been President of Ridgewood Power Capital  Corporation since its organization in
1998. As such, he is President of Ridgewood  Capital Venture  Partners,  LLC and
Ridgewood  Institutional Venture Partners,  LLC. He has served as Vice President
and General Counsel of Ridgewood Securities Corporation since he joined the firm
in December  1987.  Mr.  Gold has also served as  Executive  Vice  President  of
Ridgewood  Energy since October  1990. He served as Vice  President of Ridgewood
Energy from December  1987 through  September  1990.  For the two years prior to
joining Ridgewood Energy and Ridgewood  Securities  Corporation,  Mr. Gold was a
corporate attorney in the law firm of Cleary,  Gottlieb, Steen & Hamilton in New
York  City  where  his  experience   included  mortgage  finance,   mergers  and
acquisitions, public offerings, tender offers, and other business legal matters.
Mr.  Gold is a member of the New York  State bar.  He is a  graduate  of Colgate
University and New York University School of Law.

     Thomas R. Brown,  age 44, joined the Managing  Shareholder in November 1994
as Senior Vice  President and holds the same position with the Trust,  RPMCo and
each of the other trusts sponsored by the Managing Shareholder.  He became Chief
Operating Officer of the Managing  Shareholder,  RPMCo and the Ridgewood Power I
through V trusts in  October  1996,  and is the Chief  Operating  Officer of the
Growth Fund.  He is also Senior Vice  President of Ridgewood  Capital and of the
two venture capital funds it manages. Mr. Brown has over 20 years' experience in
the development and operation of power and industrial projects.  From 1992 until
joining the Managing Shareholder he was employed by Tampella Services,  Inc., an
affiliate of Tampella, Inc., one of the world's largest manufacturers of boilers
and related equipment for the power industry.  Mr. Brown was Project Manager for
Tampella's  Piney Creek  project,  a $100  million  bituminous  waste coal fired
circulating  fluidized  bed power  plant.  Between  1990 and 1992 Mr.  Brown was
Deputy Project  Manager at Inter-Power of  Pennsylvania,  where he  successfully
developed a 106 megawatt  coal fired  facility.  Between 1982 and 1990 Mr. Brown
was employed by  Pennsylvania  Electric  Company,  an integrated  utility,  as a
Senior Thermal  Performance  Engineer.  Prior to that, Mr. Brown was an Engineer
with  Bethlehem  Steel  Corporation.  He has an  Bachelor  of Science  degree in
Mechanical  Engineering from Pennsylvania State University and an MBA in Finance
from the University of  Pennsylvania.  Mr. Brown  satisfied all  requirements to
earn the Professional Engineer designation in 1985.

     Martin V. Quinn,  age 51, assumed the duties of Chief Financial  Officer of
the Managing Shareholder, the Trust, four other trusts organized by the Managing
Shareholder and RPMCo in November 1996 under a consulting arrangement. He became
a full-time  officer of the Managing  Shareholder and RPMCo in April 1997 and is
now also  Chief  Financial  Officer  of the  Growth  Fund.  He is also the Chief
Financial  Officer  of  Ridgewood  Capital  and  of  Ridgewood  Capital  Venture
Partners, LLC and Ridgewood Institutional Venture Partners, LLC.

     Mr. Quinn has 30 years of experience in financial  management and corporate
mergers and acquisitions,  gained with major,  publicly-traded  companies and an
international  accounting  firm. He formerly served as Vice President of Finance
and Chief Financial Officer of NORSTAR Energy, an energy services company,  from
February 1994 until June 1996.  From 1991 to March 1993,  Mr. Quinn was employed
by  Brown-Forman  Corporation,  a  diversified  consumer  products  company  and
distiller, where he was Vice President-Corporate Development. From 1981 to 1991,
Mr. Quinn held various  officer-level  positions with NERCO,  Inc., a mining and
natural  resource  company,  including  Vice  President-  Controller  and  Chief
Accounting  Officer  for  his  last  six  years  and  Vice   President-Corporate
Development.  Mr.  Quinn's  professional  qualifications  include his  certified
public  accountant  qualification in New York State,  membership in the American
Institute of Certified  Public  Accountants,  six years of  experience  with the
international  accounting  firm of Price  Waterhouse,  and a Bachelor of Science
degree in Accounting and Finance from the University of Scranton (1969).

     Mary Lou  Olin,  age 46,  has  served  as Vice  President  of the  Managing
Shareholder,  RPMCo, Ridgewood Capital, the Trust, Ridgewood Power II, Ridgewood
Power III, Ridgewood Power IV, Ridgewood Power V and the Growth Fund since their
respective inceptions. She has also served as Vice President of Ridgewood Energy
since   October  1984,   when  she  joined  the  firm.   Her  primary  areas  of
responsibility are investor relations, communications and administration.  Prior
to her employment at Ridgewood Energy, Ms. Olin was a Regional  Administrator at
McGraw-Hill  Training  Systems  where she was employed  for two years.  Prior to
that,  she was  employed  by RCA  Corporation.  Ms.  Olin has a Bachelor of Arts
degree from Queens College.

 (c)  Management Agreement.

     The  Trust  has  entered  into a  Management  Agreement  with the  Managing
Shareholder,  its Managing  Shareholder,  detailing how the Managing Shareholder
will render management,  administrative and investment  advisory services to the
Trust.  Specifically,  the Managing Shareholder will perform (or arrange for the
performance  of) the management  and  administrative  services  required for the
operation of the Trust.  Among other  services,  it will administer the accounts
and handle  relations with the  Investors,  provide the Trust with office space,
equipment  and  facilities  and other  services  necessary for its operation and
conduct  the  Trust's  relations  with  custodians,  depositories,  accountants,
attorneys,  brokers and  dealers,  corporate  fiduciaries,  insurers,  banks and
others, as required.

     The Managing Shareholder will also be responsible for making investment and
divestment decisions, subject to the provisions of the Declaration. The Managing
Shareholder  will be obligated to pay the  compensation of the personnel and all
administrative   and  service  expenses   necessary  to  perform  the  foregoing
obligations.  The Trust  will pay all other  expenses  of the  Trust,  including
transaction  expenses,  valuation  costs,  expenses of  preparing  and  printing
periodic  reports for Investors and the Commission,  postage for Trust mailings,
Commission  fees,  interest,  taxes,  legal,  accounting  and  consulting  fees,
litigation  expenses and other expenses properly payable by the Trust. The Trust
will reimburse the Managing Shareholder for all such Trust expenses paid by it.

     As  compensation  for the  Managing  Shareholder's  performance  under  the
Management Agreement,  the Trust is obligated to pay the Managing Shareholder an
annual  management fee described below at Item 13 -- Certain  Relationships  and
Related Transactions.

     The Board of the Trust (including both initial  Independent  Trustees) have
approved  the initial  Management  Agreement  and its  renewals.  Each  Investor
consented to the terms and  conditions  of the initial  Management  Agreement by
subscribing to acquire  Investor Shares in the Trust.  The Management  Agreement
will remain in effect until January 4, 2000 and year to year  thereafter as long
as it is  approved  at least  annually by (i) either the Board of the Trust or a
majority  in interest of the  Investors  and (ii) a majority of the  Independent
Trustees.  The agreement is subject to termination at any time on 60 days' prior
notice by the Board,  a majority in interest of the  Investors  or the  Managing
Shareholder.  The  agreement  is subject to  amendment  by the parties  with the
approval of (i) either the Board or a majority in interest of the  Investors and
(ii) a majority of the Independent Trustees.

(d) Executive Officers of the Trust.

     Pursuant  to  the  Declaration,  the  Managing  Shareholder  has  appointed
officers of the Trust to act on behalf of the Trust and sign documents on behalf
of the Trust as authorized  by the Managing  Shareholder.  Mr.  Swanson has been
named the President of the Trust and the other  principal  officers of the Trust
are identical to those of the Managing Shareholder.

     The  officers  have the  duties and powers  usually  applicable  to similar
officers of a Delaware  business  corporation  in carrying  out Trust  business.
Officers  act under the  supervision  and control of the  Managing  Shareholder,
which is entitled to remove any officer at any time. Unless otherwise  specified
by the Managing Shareholder, the President of the Trust has full power to act on
behalf of the Trust. The Managing Shareholder expects that most actions taken in
the name of the  Trust  will be taken by Mr.  Swanson  and the  other  principal
officers in their capacities as officers of the Trust under the direction of the
Managing Shareholder rather than as officers of the Managing Shareholder.

(e)  The Trustees.

     The 1940 Act requires the  Independent  Trustees to be individuals  who are
not "interested  persons" of the Trust as defined under the 1940 Act (generally,
persons who are not affiliated  with the Trust or with affiliates of the Trust).
There must always be at least two Independent  Trustees;  a larger number may be
specified  by the  Board  from time to time.  Each  Independent  Trustee  has an
indefinite term. Vacancies in the authorized number of Independent Trustees will
be filled by vote of the  remaining  Board  members so long as there is at least
one Independent Trustee; otherwise, the Managing Shareholder must call a special
meeting of Investors to elect  Independent  Trustees.  Vacancies  must be filled
within 90 days. An Independent  Trustee may resign  effective on the designation
of a  successor  and may be  removed  for  cause by at least  two-thirds  of the
remaining  Board members or with or without cause by action of the holders of at
least  two-thirds  of  Shares  held by  Investors.  Under the  Declaration,  the
Independent  Trustees are authorized to act only where their consent is required
under the 1940 Act and to  exercise a general  power to review and  oversee  the
Managing Shareholder's other actions. They are under a fiduciary duty similar to
that of  corporation  directors  to act in the  Trust's  best  interest  and are
entitled to compel action by the Managing Shareholder to carry out that duty, if
necessary,  but ordinarily  they have no duty to manage or direct the management
of the Trust outside their enumerated responsibilities.

     The Independent Trustees of the Trust are John C. Belknap and Dr. Richard 
D. Propper.  Mr. Belknap and Dr. Propper also serve as independent trustees for 
Ridgewood Power IV and the Growth Fund.  Set forth below is certain information
concerning these individuals, who are not otherwise affiliated with the Trust, 
the Managing Shareholder or their directors, officers or agents.

     John C. Belknap, age 52, has been chief financial officer of three national
retail chains and their parent companies. Since July 1997, he has been Executive
Vice  President  and Chief  Financial  Officer of  Richfood  Holdings,  Inc.,  a
Virginia-based  food  manufacturer.  From December 1995 to June 1997 Mr. Belknap
was Executive Vice President and Chief Financial  Officer of OfficeMax,  Inc., a
national chain of office supply stores. From February 1994 to February 1995, Mr.
Belknap  was  Executive  Vice  President  and Chief  Financial  Officer  of Zale
Corporation,  a 1,200 store jewelry  retain chain.  From January 1990 to January
1994 and from February 1995 to December  1995,  Mr.  Belknap was an  independent
financial  consultant.  From  January  1989  through May 1993 he aso served as a
director of and  consultant to Finlay  Enterprises,  Inc., an operator of leased
fine jewelry  departments in major department stores nationwide.  Prior to 1989,
Mr.  Belknap  served  as  Chief  Financial  Officer  of  Seligman  &  Latz,  Kay
Corporation and its subsidiary, Kay Jewelers, Inc.

     From January 1990 until February  1994, Mr. Belknap  consulted in a variety
of  strategic  corporate  transactions,   including  mergers  and  acquisitions,
divestitures and refinancing. One such transaction involved the recapitalization
and  change of  control of Finlay in May 1993.  From 1979 to 1985,  Mr.  Belknap
served as Chief Financial Officer of Kay Corporation  ("Kay"), the parent of Kay
Jewelers,  Inc.  ("KJI"),  a national chain of jewelry stores and leased jewelry
departments in major department  stores. He served as Chief Financial Officer of
KJI from 1974 to 1979 and as its Assistant Controller from 1973 to 1974. Between
1970 and 1973,  Mr.  Belknap was a senior auditor at Arthur Young & Company (now
Ernst & Young),  a  national  accounting  firm.  Mr.  Belknap  earned BA and MBA
degrees from Cornell University.

     Dr. Richard D. Propper,  age 50,  graduated from McGill  University in 1969
and received his medical  degree from Stanford  University in 1972. He completed
his internship  and residency in Pediatrics in 1974,  and then attended  Harvard
University  for  post  doctoral  training  in   hematology/oncology.   Upon  the
completion of such training,  he joined the staff of the Harvard  Medical School
where he served as an assistant  professor until 1983. In 1983, Dr. Propper left
academic  medicine  to found  Montgomery  Medical  Ventures,  one of the largest
medical  technology  venture  capital firms in the United  States.  He served as
managing general partner of Montgomery Medical Ventures until 1993.

     Dr. Propper is currently a consultant to a variety of companies for medical
matters,  including  international  opportunities in medicine.  In June 1996 Dr.
Propper agreed to an order of the  Commission  that required him to make filings
under  Sections  13(d)  and (g) and 16 of the 1934 Act and that  imposed a civil
penalty of $15,000.  In entering into that agreement,  Dr. Propper did not admit
or deny any of the alleged  failures to file recited in that order.  Dr. Propper
is also an acquisition  consultant for Ridgewood Capital Venture  Partners,  LLC
and Ridgewood Institutional Venture Partners, LLC, the two venture capital funds
sponsored by Ridgewood  Capital.  He receives a fixed  consulting fee from those
funds and contingent compensation from Ridgewood Capital.

     The  Corporate  Trustee of the Trust is Ridgewood  Holding.  Legal title to
Trust Property will be in the name of the Trust if possible or Ridgewood Holding
as trustee. Ridgewood Holding is also a trustee of Ridgewood Power II, Ridgewood
Power III and Ridgewood  Power IV and of an oil and gas business trust sponsored
by Ridgewood  Energy and is expected to be a trustee of other  similar  entities
that may be organized by the Managing  Shareholder  and  Ridgewood  Energy.  The
President and sole  stockholder of Ridgewood  Holding is Robert E. Swanson;  its
other executive officers are identical to those of the Managing Shareholder. See
-Managing  Shareholder.  The  principal  office of Ridgewood  Holding is at 1105
North Market Street, Suite 1300, Wilmington, Delaware 19899.

     The  Trustees  are not liable to persons  other than  Shareholders  for the
obligations of the Trust.

     The Trust has relied and will continue to rely on the Managing  Shareholder
and engineering,  legal,  investment banking and other professional  consultants
(as needed) and to monitor and report to the Trust  concerning the operations of
Projects in which it invests, to review proposals for additional  development or
financing,  and to represent the Trust's interests.  The Trust will rely on such
persons to review proposals to sell its interests in Projects in the future.

(f)  Section 16(a) Beneficial Ownership Reporting Compliance

All individuals  subject to the requirements of Section 16(a) have complied with
those reporting requirements during 1998.

(g)  RPMCo.

     As  discussed  above  at  Item  1  -  Business,  RPMCo  assumed  day-to-day
management  responsibility for the Olinda Project,  effective June 1, 1997. Like
the Managing Shareholder, RPMCo is wholly owned by Robert E. Swanson. It entered
into an "Operation Agreement" with the Trust's subsidiary that owns the Project,
effective June 1, 1997, under which RPMCo, under the supervision of the Managing
Shareholder, will provide the management, purchasing,  engineering, planning and
administrative  services for the Olinda Project.  RPMCo will charge the Trust at
its cost for these  services  and for the  Trust's  allocable  amount of certain
overhead items. RPMCo shares space and facilities with the Managing  Shareholder
and its  affiliates.  To the  extent  that  common  expenses  can be  reasonably
allocated to RPMCo, the Managing Shareholder may, but is not required to, charge
RPMCo at cost for the allocated amounts and such allocated amounts will be borne
by the Trust and other programs.  Common expenses that are not so allocated will
be borne by the Managing Shareholder.

     Initially,  the Managing Shareholder does not anticipate charging RPMCo for
the full amount of rent,  utility  supplies  and office  expenses  allocable  to
RPMCo.  As a  result,  both  initially  and on an  ongoing  basis  the  Managing
Shareholder  believes  that  RPMCo's  charges for its  services to the Trust are
likely to be materially  less than its economic  costs and the costs of engaging
comparable third persons as managers. RPMCo will not receive any compensation in
excess of its costs.

     Allocations  of costs  will be made  either  on the  basis of  identifiable
direct costs,  time records or in proportion to each  program's  investments  in
Projects managed by RPMCo;  and allocations will be made in a manner  consistent
with generally accepted accounting principles.

     RPMCo will not provide any services  related to the  administration  of the
Trust, such as investment, accounting, tax, investor communication or regulatory
services,  nor will it  participate  in  identifying,  acquiring or disposing of
Projects.  RPMCo will not have the power to act in the  Trust's  name or to bind
the Trust,  which will be exercised by the Managing  Shareholder  or the Trust's
officers.

     The  Operation  Agreement  does not have a fixed term and is  terminable by
RPMCo,  by the  Managing  Shareholder  or by vote of a majority  in  interest of
Investors,  on 60 days' prior notice. The Operation  Agreement may be amended by
agreement of the Managing  Shareholder  and RPMCo;  however,  no amendment  that
materially  increases the obligations of the Trust or that materially  decreases
the  obligations  of RPMCo shall become  effective  until at least 45 days after
notice of the amendment,  together with the text thereof,  has been given to all
Investors.

     The executive officers of RPMCo are Mr. Swanson (President), Mr. Gold 
(Executive Vice President), Mr. Brown (Senior Vice President and Chief Operating
Officer), Mr. Quinn (Senior Vice President and Chief Financial Officer) and Ms. 
Olin (Vice President).  Douglas V. Liebschner, Vice President - Operations, is a
key employee.

     Douglas V. Liebschner,  age 52, joined RPMCo in June 1996 as Vice President
of  Operations.  He has  over  28  years  of  experience  in the  operation  and
maintenance of power plants.  From 1992 until joining RPMCo,  he was employed by
Tampella  Services,  Inc.,  an affiliate of Tampella,  Inc.,  one of the world's
largest  manufacturers of boilers and related  equipment for the power industry.
Mr. Liebschner was Operations  Supervisor for Tampella's Piney Creek project,  a
$100 million bituminous waste coal fired circulating fluidized bed ("CFB") power
plant.  Between 1989 and 1992,  he  supervised  operations  of a waste to energy
plant  in  Poughkeepsie,  N.Y.  and  an  anthracite-waste-coal-burning   CFB  in
Frackville,  Pa.  From 1969 to 1989,  Mr.  Liebschner  served in the U.S.  Navy,
retiring  with the rank of  Lieutenant  Commander.  While in the Navy, he served
mainly in billets  dealing with the  operation,  maintenance  and repair of ship
propulsion plants,  twice serving as Chief Engineer on board U.S. Navy combatant
ships.  He has a  Bachelor  of  Science  degree  from  the U.S.  Naval  Academy,
Annapolis, Md.


Item 11.  Executive Compensation.


     Through  1995,  the  executive  officers  of the  Trust  and  the  Managing
Shareholder were compensated by Ridgewood Energy.  The Trust was not charged for
their compensation; the Managing Shareholder remitted a portion of the fees paid
to it by the Trust to reimburse  Ridgewood  Energy for employment costs incurred
on  Ridgewood  Power's  business.   In  1996  and  future  years,  the  Managing
Shareholder  compensates its officers without  additional  payments by the Trust
and will be  reimbursed  by  Ridgewood  Energy for costs  related  to  Ridgewood
Energy's business.  The Trust will reimburse RPMCo at cost for services provided
by RPMCo's  employees;  no such  reimbursement  per employee exceeded $60,000 in
1997 and 1998.  Information  as to the fees payable to the Managing  Shareholder
and certain  affiliates  is  contained  at Item 13 - Certain  Relationships  and
Related Transactions.

     As  compensation  for  services  rendered  to the  Trust,  pursuant  to the
Declaration,  each  Independent  Trustee is entitled to be paid by the Trust the
sum of $5,000  annually and to be reimbursed  for all  reasonable  out-of-pocket
expenses  relating to attendance at Board  meetings or otherwise  performing his
duties to the Trust.  Accordingly in January 1995 and following  years the Trust
paid each Independent Trustee $5,000 for his services. The Board of the Trust is
entitled to review the compensation payable to the Independent Trustees annually
and  increase  or  decrease  it as the Board sees  reasonable.  The Trust is not
entitled to pay the Independent  Trustees  compensation for consulting  services
rendered  to the Trust  outside the scope of their  duties to the Trust  without
prior Board approval.

     Ridgewood  Holding,  the Corporate Trustee of the Trust, is not entitled to
compensation for serving in such capacity,  but is entitled to be reimbursed for
Trust  expenses  incurred  by it  which  are  properly  reimbursable  under  the
Declaration.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

     The Trust sold 105.5 Investor Shares  (approximately $10.5 million of gross
proceeds) of beneficial  interest in the Trust  pursuant to a private  placement
offering under Rule 506 of Regulation D under the  Securities  Act. The offering
closed on March 31, 1992.  Further details concerning the offering are set forth
above  at Item  1--  Business.  No  person  beneficially  owns 5% or more of the
Investor Shares.

     Ridgewood Power, the Managing Shareholder of the Trust,  purchased for cash
in the offering 1 Investor Share, equal to .9 of 1% of the outstanding  Investor
Shares,  and Mr. Swanson  purchased an additional 2.1 Investor Shares. By virtue
of its purchase of that Investor Share,  Ridgewood Power is entitled to the same
ratable  interest in the Trust as all other  purchasers of Investor  Shares.  No
other Trustees or executive  officers of the Trust acquired  Investor  Shares in
the Trust's offering.

     Ridgewood Power was issued one Management  Share in the Trust  representing
the  beneficial  interests  and  management  rights  of  Ridgewood  Power in its
capacity  as the  Managing  Shareholder  (excluding  its  interest  in the Trust
attributable  to Investor  Shares it acquired in the  offering).  The management
rights of  Ridgewood  Power are  described  in  further  detail  above at Item 1
Business and in Item 10 - Directors  and Executive  Officers of the  Registrant.
Its  beneficial  interest in cash  distributions  of the Trust and its allocable
share of the Trust's net profits and net losses and other items  attributable to
the  Management  Share are described in further detail below at Item 13. Certain
Relationships and Related Transactions.

Item 13.  Certain Relationships and Related Transactions.

     The  Declaration  provides  that cash flow of the  Trust,  less  reasonable
reserves which the Trust deems necessary to cover anticipated Trust expenses, is
to be distributed to the Investors and the Managing  Shareholder  (collectively,
the "Shareholders"),  from time to time as the Trust deems appropriate. Prior to
Payout (the point at which  Investors  have  received  cumulative  distributions
equal to the amount of their capital contributions), each year all distributions
from the Trust,  other than  distributions of the revenues from  dispositions of
Trust Property,  are to be allocated 99% to the Investors and 1% to the Managing
Shareholder until Investors have received annual  distributions  equal to 15% of
their Capital  Contributions (a "15% Priority  Distribution") and thereafter any
remaining  distributions  will be allocated  80% to the Investors and 20% to the
Managing  Shareholder.  Revenues from  dispositions  of Trust Property are to be
distributed 99% to Investors and 1% to the Managing Shareholder until Payout. In
all cases, after Payout,  Investors are to be allocated 80% of all distributions
and the Managing Shareholder 20%.

     For any fiscal  period,  the Trust's net profits,  if any, other than those
derived from dispositions of Trust Property,  are allocated 99% to the Investors
and 1% to the Managing Shareholder until the profits so allocated offset (1) the
aggregate 15% Priority Distribution to all Investors and (2) any net losses from
prior  periods that had been  allocated to the  Shareholders.  Any remaining net
profits,  other than those  derived from  dispositions  of Trust  Property,  are
allocated 80% to the Investors and 20% to the Managing Shareholder. If the Trust
realizes  net  losses  for the  period,  the  losses  are  allocated  80% to the
Investors  and 20% to the  Managing  Shareholder  until the losses so  allocated
offset any net profits from prior  periods  allocated to the  Shareholders.  Any
remaining  net losses are  allocated 99% to the Investors and 1% to the Managing
Shareholder.  Revenues from  dispositions of Trust Property are allocated in the
same manner as distributions  from such  dispositions.  Amounts allocated to the
Investors   are   apportioned   among  them  in   proportion  to  their  capital
contributions.

     On  liquidation  of the  Trust,  the  remaining  assets of the Trust  after
discharge  of its  obligations,  including  any  loans  owed by the Trust to the
Shareholders, will be distributed, first, 99% to the Investors and the remaining
1% to the  Managing  Shareholder,  until  Payout,  and  any  remainder  will  be
distributed to the Shareholders in proportion to their capital accounts.

     In 1998, 1997, 1996 and 1995, the Trust made  distributions to the Managing
Shareholder  (which is a member  of the Board of the  Trust) as stated at Item 5
Market for  Registrant's  Common  Equity and  Related  Stockholder  Matters.  In
addition,  the Trust and its subsidiaries  paid fees and  reimbursements  to the
Managing Shareholder and its affiliates as follows:

 Fee                 Paid to      1998         1997       1996          1995
Management fee      Managing     $69,931    $67,483     $49,255      $86,510
                    Shareholder

Cost reimbursements*   RPMCo    1,771,554  1,853,994   1,098,910            0

* Prior to 1996,  these  costs were  either  paid by the Trust or by the Project
directly.  These included all payroll,  fuel and other expenses of operating the
South Boston and Olinda  Projects and an  allocable  portion of RPMCo  overhead.
These costs are paid by the Projects and do not appear in the Trust's  financial
statements.

     The management fee,  payable monthly under the Management  Agreement at the
annual  rate of 1% of the  Trust's  net asset  value  (until  June 1994,  of the
Trust's total capital  contributions),  began on the closing of the offering and
compensates the Managing Shareholder for certain management,  administrative and
advisory  services  for the  Trust.  In  addition  to the  foregoing,  the Trust
reimbursed   the  Managing   Shareholder  at  cost  for  expenses  and  fees  of
unaffiliated  persons engaged by the Managing Shareholder for Trust business and
for  payroll  and  other  costs  of  operation  of  the  Trust's  Projects.  The
reimbursements to RPMCo,  which do not exceed its actual costs, are described at
Item 10(f) - Directors and Executive Officers of the Registrant -- RPMCo.

     In addition to the foregoing, the Trust reimbursed the Managing Shareholder
at cost for expenses and fees of  unaffiliated  persons  engaged by the Managing
Shareholder  for Trust  business  and in years before 1996 for payroll and other
costs of operation of the South Boston Project.  In 1996,  these  reimbursements
were paid to RPMCo. The  reimbursements to RPMCo, which do not exceed its actual
costs,  are described at Item 10(f) - Directors  and  Executive  Officers of the
Registrant -- RPMCo.

     Other  information in response to this item is reported in response to Item
11 -- Executive  Compensation,  which  information is  incorporated by reference
into this Item 13.

PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

     (a)  Financial Statements.

     See the Index to Financial Statements in Item 8 hereof.

     (b) Reports on Form 8-K.

     No Forms 8-K were filed with the  Commission by the  Registrant  during the
quarter ending December 31, 1998.

     (c)  Exhibits.

     2A. Acquisition  Agreement,  by and between GSF Energy,  L.L.C. and Olinda,
L.L.C.,  dated as of May 31,  1997.  Incorporated  by reference to Exhibit 2A in
Registrant's Amendment No. 1 to Current Report on Form 8-K dated June 1, 1997.

     2B. Letter, dated as of May 31, 1997, supplementing  Acquisition Agreement.
Incorporated by reference to Exhibit 2B in  Registrant's  Current Report on Form
8-K dated June 1, 1997.

     3A.  Certificate of Trust of the Registrant is incorporated by reference to
Exhibit  3A of  Registrant's  Registration  Statement  which was filed  with the
Commission on May 26, 1994.

     3B.  Declaration  of Trust of  Registrant is  incorporated  by reference to
Exhibit  3B of  Registrant's  Registration  Statement  which was filed  with the
Commission on May 26, 1994.

     3C.  Agreement of Limited  Partnership of Ridgewood  Energy Electric Power,
L.P.  dated as of March 6, 1991 is  incorporated  by  reference to Exhibit 3C of
Registrant's  Registration  Statement which was filed with the Commission on May
26, 1994.

     10A.  Management  Agreement  between the  Registrant  and  Ridgewood  Power
Corporation  is  incorporated  by  reference  to  Exhibit  10A  of  Registrant's
Registration Statement which was filed with the Commission on May 26, 1994.

     10B.  Stillwater  Hydro  Partners  L.P.  Amended and Restated  Agreement of
Limited  Partnership  dated as of July 29, 1991 and letter of amendment  thereof
dated  as of May  16,  1994 is  incorporated  by  reference  to  Exhibit  10B of
Registrant's  Registration  Statement which was filed with the Commission on May
26, 1994.

     10C.  Power  Purchase  Agreement  dated as of  September  19, 1989  between
Stillwater  Hydro  Partners  L.P.  and  Niagara  Mohawk  Power  Corporation  and
amendment  thereof dated as of August 28, 1990 is  incorporated  by reference to
Exhibit  10C of  Registrant's  Registration  Statement  which was filed with the
Commission on May 26, 1994..

     10D. RW Power  Partners L.P.  Agreement  and Restated  Agreement of Limited
Partnership  dated as of October 1, 1992 among Ridgewood  Energy Electric Power,
L.P.,  Ridgewood Power Corporation and WE GEN, Inc. is incorporated by reference
to Exhibit 10D of Registrant's  Registration  Statement which was filed with the
Commission on May 26, 1994.

     10E.  [The Registrant has terminated the agreement designated 10E in its 
prior Annual Reports on Form 10-K.]

     10F.  [The Registrant has terminated the agreement designated 10F in its 
prior Annual Reports on Form 10-K.]

     10G. Agreement of Limited Partnership of Brea Power Partners, L.P. dated as
of October 12, 1994 by and between  Brea Power (I),  Inc.,  GSF Energy Inc.  and
Ridgewood  Electric Power Trust I is  incorporated  by reference to Registrant's
Form 8-K filed with the Commission on October 27, 1994.

     10H.  Agreement,  dated as of January  16,  1997,  by and  between RW Power
Partners, L.P. and Virginia Electric Power Company. Incorporated by reference to
Exhibit 10H in the  Registrant's  Annual  Report on Form 10-K for the year ended
December 31, 1997.

     10I. Amendment to Transaction  Documents,  dated as of May 31, 1997, by and
among GSF Energy, L.L.C., Brea Power Partners, L.P. and Ridgewood Electric Power
Trust I. Incorporated by reference to Exhibit 10I in Registrant's Amendment No.
1 to Current Report on Form 8-K dated June 1, 1997.

     10J.  Parallel  Generation  Agreement,  by and between Southern  California
Edison Company and GSF Energy, Inc. (Brea Power Partners,  L.P.,  assignee),  as
amended. Incorporated by reference to Exhibit 10J in Registrant's Amendment No.
1 to Current Report on Form 8-K dated June 1, 1997.

     10K. Partial Assignment and Assumption Agreement,  dated as of November 29,
1994, by and between GSF Energy, Inc. and Brea Power Partners, L.P. Incorporated
by reference to Exhibit 10K in Registrant's Amendment No. 1 to Current Report on
Form 8-K dated June 1, 1997.

     10L.  Amended and  Restated Gas Lease  Agreement,  dated as of December 14,
1993, by and between the County of Orange,  California and GSF Energy,  Inc., as
modified. Incorporated by reference to Exhibit 10L in Registrant's Amendment No.
1 to Current Report on Form 8-K dated June 1, 1997.

     10M.  Gas Sale and  Purchase  Agreement,  dated  November  29,  1994 by and
between GSF Energy, Inc. and Brea Power Partners, L.P. Incorporated by reference
to Exhibit 10M in  Registrant's  Amendment  No. 1 to Current  Report on Form 8-K
dated June 1, 1997.

     10N.  Support  Agreement,  dated as of November 29, 1994, by and among Brea
Power Partners,  L.P., the Trust and GSF Energy, Inc.  Incorporated by reference
to Exhibit 10N in  Registrant's  Amendment  No. 1 to Current  Report on Form 8-K
dated June 1, 1997.

Exhibits and schedules to these  exhibits are omitted,  and lists of the omitted
documents  are  found in their  tables of  contents.  The  Registrant  agrees to
furnish  supplementally  a copy of any  omitted  exhibit  or  schedule  to these
exhibits to the Commission upon request.

     21.   Subsidiaries of the Registrant.                Page

     24.   Powers of Attorney                             Page

     27.   Financial Data Schedule                        Page



<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.

     Signature                  Title                       Date

RIDGEWOOD ELECTRIC POWER TRUST I (Registrant)


By: /s/Robert E. Swanson        President and Chief          April 14, 1999
     Robert E. Swanson          Executive Officer


     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.


By:  /s/Robert E. Swanson      President and Chief    April 14, 1999
     Robert E. Swanson         Executive Officer

By: /s/Martin V. Quinn         Senior Vice President and
     Martin V. Quinn           Chief Financial Officer April 14, 1999

By: /s/Kathleen P. McSherry    Controller              April 14, 1999
      Kathleen P. McSherry


RIDGEWOOD POWER CORPORATION           Managing Shareholder


By: /s/Robert E. Swanson         President             April 14, 1999
     Robert E. Swanson

  /s/Robert E. Swanson *         Independent Trustee   April 14, 1999
     John C. Belknap

  /s/Robert E. Swanson *         Independent Trustee   April 14, 1999
     Dr. Richard D. Propper


*  As attorney-in-fact for the Independent Trustee


<PAGE>

                        Ridgewood Electric Power Trust I

                              Financial Statements

                        December 31, 1998, 1997 and 1996




                                      -F1-

<PAGE>

PricewaterhouseCoopers LLP
1301 Avenue of the Americas
New York, NY 10036

[Letterhead of PricewaterhouseCoopers LLP]


                        Report of Independent Accountants

March 23, 1999

To the Shareholders and Trustees of
Ridgewood Electric Power Trust I


In our opinion,  the accompanying  balance sheets and the related  statements of
operations, changes in shareholders' equity and of cash flows present fairly, in
all material respects,  the financial position of Ridgewood Electric Power Trust
I (the "Trust") at December 31, 1998 and 1997, and the results of its operations
and its cash flows for each of the three years in the period ended  December 31,
1998,  in  conformity  with  generally  accepted  accounting  principles.  These
financial  statements  are the  responsibility  of the Trust's  management;  our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
generally accepted auditing standards which 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,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audits  provide a reasonable  basis for the opinion  expressed
above.

As explained in Note 3, the financial statements include investments,  valued at
$6,560,616 and $6,515,771 (86% and 93% of shareholders' equity, respectively) as
of December 31, 1998 and 1997, respectively, whose values have been estimated by
management  in the  absence  of readily  ascertainable  market  values.  We have
reviewed the  procedures  used by  management  in arriving at their  estimate of
value and have inspected underlying documentation, and, in the circumstances, we
believe  the  procedures  are  reasonable  and  the  documentation  appropriate.
However,  those estimated values may differ  significantly  from the values that
would have been used had a ready  market for the  investments  existed,  and the
differences could be material to the financial statements.

/s/  PricewaterhouseCoopers LLP
                                      -F2-
<PAGE>



Ridgewood Electric Power Trust I
Balance Sheet
------------------------------------------------------------------------------

                                                            December 31,
                                                    --------------------------
                                                        1998           1997
                                                    -----------    -----------

Assets:

Investments in power generation projects ........   $ 6,560,616    $ 6,515,771
Cash and cash equivalents .......................     1,138,102      1,042,568
Due from affiliates .............................         5,342           --
Other assets ....................................         6,822        109,932
                                                    -----------    -----------

       Total assets .............................   $ 7,710,882    $ 7,668,271
                                                    -----------    -----------




Liabilities and Shareholders' Equity:

Liabilities:
Accounts payable and accrued expenses ...........   $    29,409    $   675,128
Due to affiliates ...............................        48,670           --
                                                    -----------    -----------

       Total liabilities ........................        78,079        675,128
                                                    -----------    -----------

Commitments and contingencies

Shareholders' equity:
Shareholders' equity (105.5 shares issued and
   outstanding) .................................     7,646,634      7,013,370
Managing shareholder's accumulated deficit ......       (13,831)       (20,227)
                                                    -----------    -----------

       Total shareholders' equity ...............     7,632,803      6,993,143
                                                    -----------    -----------

       Total liabilities and shareholders' equity   $ 7,710,882    $ 7,668,271
                                                    -----------    -----------




















                 See accompanying notes to financial statements.
                                      -F3-
<PAGE>

Ridgewood Electric Power Trust I
Statement of
Operations

----------------------------------------------------------------------------

                                              Year Ended December 31,
                                    --------------------------------------
                                        1998         1997         1996
                                     ----------   ----------   ----------

Revenue:
     Income from power generation
                                     $2,049,728   $1,851,763   $  606,863
     Interest income .............       60,153       89,312        2,674
                                     ----------   ----------   ----------
         Total revenue ...........    2,109,881    1,941,075      609,537
                                     ----------   ----------   ----------



Expenses:
     Accounting and legal fees ...       41,176      136,347       47,500
     Management fee ..............       69,931       67,483       49,255
     Writedown of power generation
       project ...................         --        400,000         --
     Miscellaneous ...............       35,559       20,448       15,980
                                     ----------   ----------   ----------
         Total expenses ..........      146,666      624,278      112,735
                                     ----------   ----------   ----------


         Net income ..............   $1,963,215   $1,316,797   $  496,802
                                     ----------   ----------   ----------

























                 See accompanying notes to financial statements.

                                      -F4-
<PAGE>



Ridgewood Electric Power Trust I
Statement of Changes in Shareholders' Equity
-------------------------------------------------------------------

                                                        Managing
                         Shareholders   Shareholder      Total
                          -------------  ----------   ------------

Shareholders' equity,
   January 1, 1996 ....   $ 6,937,431    $   (20,994)   $ 6,916,437

Cash distributions ....      (800,512)        (8,086)      (808,598)

Net income for the year       491,834        496,802          4,968
                          -----------    -----------    -----------

Shareholders' equity,
    December 31, 1996 .     6,628,753        (24,112)     6,604,641

Cash distributions ....      (919,012)        (9,283)      (928,295)

Net income for the year     1,303,629         13,168      1,316,797
                          -----------    -----------    -----------

Shareholders' equity,
     December 31, 1997      7,013,370        (20,227)     6,993,143

Cash distributions ....    (1,310,319)       (13,236)    (1,323,555)

Net income for the year     1,943,583         19,632      1,963,215
                          -----------    -----------    -----------

Shareholders' equity,
     December 31, 1998    $ 7,646,634    $   (13,831)   $ 7,632,803
                          -----------    -----------    -----------





























                 See accompanying notes to financial statements.

                                      -F5-
<PAGE>



Ridgewood Electric Power Trust I
Statement of Cash Flows
--------------------------------------------------------------------------------



                                                Year Ended December 31,
                                       -----------------------------------------
                                          1998           1997           1996
                                       -----------    -----------    -----------

Cash flows from operating activities:
 Net income .......................   $ 1,963,215    $ 1,316,797    $   496,802
                                      -----------    -----------    -----------

 Adjustments  to  reconcile  net  income  to  net  cash  flows  from   operating
  activities:

  Writedown of power generation
    project .......................          --          400,000           --
  Investments in power generation
    projects
                                           (4,129)    (3,260,437)          --
  Return of investment in power
    generation project ............          --        3,259,153        397,638
  Changes in assets and
   liabilities:
   (Increase) decrease in due
    from affiliates ...............        (5,342)       345,454        (49,850)
   Increase in notes receivable
    from the Lynchburg Project ....       (40,716)       (82,066)          --
   Decrease (increase) in other
    assets ........................       103,110       (109,932)          --
  (Decrease) increase in accounts
    payable and accrued expenses ..      (645,719)       603,979         26,337
   Increase (decrease) in due to
    affiliates ....................        48,670       (829,407)       259,350
                                      -----------    -----------    -----------

  Total adjustments ...............      (544,126)       326,744        633,475
                                      -----------    -----------    -----------

   Net cash provided by operating
      activities
                                        1,419,089      1,643,541      1,130,277
                                      -----------    -----------    -----------

Cash flows from financing
  activities:
  Cash distributions
    to shareholders ...............    (1,323,555)      (928,295)      (808,598)
                                      -----------    -----------    -----------

  Net cash used in financing
   activities .....................    (1,323,555)      (928,295)      (808,598)
                                      -----------    -----------    -----------

  Net increase in cash and cash
      equivalents .................        95,534        715,246        321,679
                                      -----------    -----------    -----------

Cash and cash equivalents,
    beginning of year .............     1,042,568        327,322          5,643
                                      -----------    -----------    -----------

Cash and cash equivalents,
    end of year ...................   $ 1,138,102    $ 1,042,568    $   327,322
                                      -----------    -----------    -----------









                 See accompanying notes to financial statements.

                                      -F6-
<PAGE>

Ridgewood Electric Power Trust I
Notes to Financial Statements
--------------------------------------------------------------------------------


1.       Organization and Purpose

     Ridgewood Energy Electric Power, L.P. (the  "Partnership")  was formed as a
     Delaware  limited   partnership  on  March  6,  1991,  by  Ridgewood  Power
     Corporation  acting as the general partner.  On April 30, 1991, Beale Lynch
     Power Partners Inc. was admitted as co-general  partner of the Partnership.
     The Partnership began offering limited partnership units in the Partnership
     on May 1, 1991. The Partnership  commenced operations on September 16, 1991
     and discontinued its offering of units on March 31, 1992.

     On June 15, 1994, with the approval of the partners, the Partnership merged
     all of its  assets  and  liabilities  into a  newly  formed  trust,  called
     Ridgewood  Electric Power Trust I (the  "Trust").  Effective July 25, 1994,
     the Trust elected to be treated as a "Business Development Company" ("BDC")
     under the  Investment  Company Act of 1940 and  registered its shares under
     the Securities Act of 1934. In connection with this transaction,  the Trust
     issued  105.5  shares  in  exchange  for  outstanding   Partnership  units.
     Ridgewood Power Corporation is the sole managing shareholder.

     The Trust has been  organized  to invest in  independent  power  generation
     facilities and in the development of these  facilities.  These  independent
     power generation facilities include small power production facilities which
     produce  electricity  from waste  oil,  landfill  gas and water.  The power
     plants sell electricity to utilities under long-term contracts.

2.       Summary of Significant Accounting Policies

     Use of estimates
     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  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  the
     estimates.

     Investments in power generation projects
     The Trust holds  investments in power generation  projects which are stated
     at fair value.  Due to the  illiquid  nature of the  investments,  the fair
     values of the  investments  are  assumed to equal  cost,  unless  currently
     available  information provides a basis for adjusting the carrying value of
     the investments.

     Revenue recognition
     Income  from  investments  is recorded  when  distributions  are  declared.
     Interest income is recorded as earned.

     Cash and cash equivalents
     The Trust  considers all highly liquid  investments  with  maturities  when
     purchased of three months or less as cash and cash equivalents.

     Due diligence costs relating to potential power project  investments  Costs
     relating  to  the  due  diligence  performed  on  potential  power  project
     investments are initially deferred, until such time as the Trust determines
     whether or not it will make an investment in the project. Costs relating to
     completed  projects are capitalized and costs relating to rejected projects
     are expensed at the time of rejection.

     Income taxes
     No  provision  is made  for  income  taxes  in the  accompanying  financial
     statements  as the  income or losses of the Trust are  passed  through  and
     included in the tax returns of the individual shareholders of the Trusts.
                                      -F7-
<PAGE>

     Reclassification
     Certain  amounts  presented  in prior  years  have  been  reclassified  for
     comparative purposes.

3.       Investments in Power Generation Projects

     The Trust had the following investments in power generation projects:

                         Fair values as of December 31,
                                          -----------------------------------
                                              1998                1997
                                          --------------     ----------------
      Brea Power Partners, L.P.              $5,542,101          $ 5,542,722
      RW Power Partners, L.P.                   418,515              373,049
      Stillwater Hydro Partners, L.P.           600,000              600,000
                                          --------------     ----------------
                                             $6,560,616          $ 6,515,771
                                          --------------     ----------------

     The Trust's distribution income from the projects was as follows:

                                             For the Year Ended December 31,
                                         ------------------------------------
                                             1998         1997         1996
                                         ----------   ----------   ----------
       Brea Power Partners, L.P. .....   $2,049,728   $1,720,252   $  398,863
       RW Power Partners, L.P. .......         --        131,511      208,000
       Stillwater Hydro Partners, L.P.         --           --           --
                                         ----------   ----------   ----------
                                         $2,049,728   $1,851,763   $  606,863
                                         ----------   ----------   ----------

     Brea Power  Partners,  L.P.  (known as the Olinda project) In October 1994,
     the  Trust  made a  $3,103,479  limited  partner  investment  in a  limited
     partnership  ("Brea  Partnership"),  which acquired a 5 megawatt  gas-fired
     electric generating facility and related landfill gas processing  facility.
     The facility has been in  continuous  operation for 10 years and is located
     in Olinda, California.

     In exchange for its investment,  the Trust was entitled to receive,  in any
     year,  the lesser of the preference  amount (as defined in the  Partnership
     Agreement) or 98% of the annual distribution, plus 25% of the excess of the
     annual  distribution  over the  preference  amount of the Brea  Partnership
     until  the Trust has  received  a  cumulative  15%  return on its  original
     investment.  After such time,  the amount the Trust  would be  entitled  to
     would decrease to 5% of net cash flows.

     The Trust  received  distributions  from Brea  Partnership  of $162,938 and
     $796,501  for the five  months  ended May 31,  1997 and for the year  ended
     December 31, 1996,  respectively.  Of the cash distributions,  $397,638 has
     been  treated  as a return of  investment  capital  during  the year  ended
     December 31, 1996.  The Trust's  investment  balance for Olinda at December
     31, 1996 amounted to $2,282,285.

     On June 1,  1997,  the  Trust  purchased  the  general  and  other  limited
     partnership  interests in Brea and now owns 100% of the Olinda Project. The
     purchase  price of  $2,813,400  included a cash  payment to the  sellers of
     $2,256,500, the assumption of liabilities of $441,100 and acquisition costs
     of $115,800.  In the second half of 1997,  the Trust invested an additional
     $661,600 in Brea for working  capital.  At December 31, 1998 and 1997,  The
     Trust's total  investment in Brea was $5,542,101 and $5,542,722 at December
     31, 1998 and 1997, respectively. The Trust received distributions from Brea
     of $2,049,728  and  $1,557,314  during the year ended December 31, 1998 and
     seven  months  ended  December  31,  1997,  respectively,  which  have been
     recorded as income.

     In July  1998,  the  Olinda  project's  gas  compressors  failed  causing a
     significant  loss of  revenue to the  project  in over a two month  period.
     These gas  compressors  were  maintained  by the third party  landfill  gas
     supplier.  The project  claimed damages of $389,000 from the gas compressor
     failure  and  recorded  the amount as a  receivable.  The  project has been
     offsetting  obligations for gas delivered by the gas supplier  against this
     amount.
                                      -F8-
<PAGE>

     RW Power Partners,  L.P. (known as the Lynchburg  project) In October 1992,
     the Trust  acquired a limited  partnership  interest in RW Power  Partners,
     L.P.  ("RWPP")  which was to provide  construction  funding of a 3 megawatt
     project using waste oil as its primary fuel source.  Commercial  operations
     began in June 1993.  Construction of a waste oil processing  facility began
     in 1994 and was completed in 1996.  As of December 31, 1996,  the Trust had
     funded  $3,527,923 of the total cost of the original  project and the waste
     oil  facility,  a portion of which was funded by the managing  shareholder.
     The Trust received  distributions of $208,000 from the limited  partnership
     for the year  ended  December  31,  1996.  The  Trust's  investment  in and
     advances to the limited partnership  amounted to $3,895,590 at December 31,
     1996.

     In exchange for its investment, the Trust had the right to receive annually
     the  greater of either 70% of net  profits,  as  defined,  from the limited
     partnership or a preferred minimum return of 22.5% on its total investment.
     In the  event  that in any  given  year all net  profits  from the  limited
     partnership did not equal the amount of the preferred  minimum return,  the
     amount of such  shortfall  would be payable on a priority  basis out of any
     net profits in subsequent years.

     On January 17, 1997, the Trust settled a pending  lawsuit between RWPP, and
     Virginia Electric Power Company  ("VEPCO").  RWPP had sued VEPCO when VEPCO
     attempted  to cancel the power  purchase  contract  under  which  VEPCO was
     required  to  purchase  electricity  generated  by  RWPP  at the  Lynchburg
     project.  Under the  settlement,  VEPCO  paid RWPP  $3,750,000  in cash and
     waived a claim of $1,800,000 for prepaid capacity payments.

     After  repayment of $390,836 of intercompany  payables,  the Trust received
     total  distributions  of $3,390,664  from the Lynchburg  Project during the
     first quarter of 1997, of which  $3,259,153 was recorded as a return of its
     investment and $131,511 was recorded as income.  RWPP surrendered the power
     purchase  contract to VEPCO and agreed to the entry of an order  dismissing
     its  lawsuit  against  VEPCO.  The  settlement  permits  RWPP  to  continue
     operating the  generating  station and the  associated  waste oil treatment
     plant,  but RWPP may not sell  electricity  to  VEPCO,  except  at  VEPCO's
     request,  and RWPP may only sell  electricity  to  investor-owned  electric
     utilities for resale or use outside VEPCO's service area.

     In addition, the facility may be operated for non-generating  purposes such
     as waste oil treatment and  electricity may be generated for the facility's
     needs. VEPCO may cut the interconnection of the facility with its lines and
     reconnection is permitted only for electricity sales in compliance with the
     settlement agreement. RWPP may remove and sell equipment. These restriction
     apply to any future owner of the Lynchburg facility.

     As a result of the operating  restrictions  and  cancellation  of the power
     purchase contract  included in the VEPCO  settlement,  the operation of the
     Lynchburg Project facilities was suspended in January 1997.

     During the fourth quarter of 1997, the Trust sold the Lynchburg  Project to
     a privately-held,  un-affiliated processor of waste oil for $700,000 in the
     form of an 8%,  seven-year,  promissory note,  secured by a mortgage on the
     Project,  and the right of the Trust to receive 2% of the  Project's  gross
     revenues for an indefinite period.  Due to the uncertainty  surrounding the
     Trust's  ability  to  collect  the note  receivable,  the fair value of the
     Trust's investment was not adjusted from the $290,983 determined during the
     first quarter of 1997.

     The Trust also agreed to provide 8%,  seven-year  debt  financing  of up to
     $125,000 to finance additional capital improvements at the Project, secured
     by the  mortgage.  At December  31, 1998 and 1997,  $122,782  and  $82,066,
     respectively,  of  financing  to the  project  was  outstanding  under this
     arrangement and is included in the respective investment balances.

     Stillwater Hydro Partners, L.P.
     On October 31, 1991, the Trust acquired a 32.5% general partner's  interest
     in a limited partnership whose sole business is the construction, ownership
     and operation of a 3.5 megawatt hydroelectric
-F9-
<PAGE>
     facility,  located on the Hudson River in Stillwater,  New York (the  
     "Stillwater  Project").  At the time of the investment,  the project was 
     under  construction  and commenced operations in May 1993.

     A  distribution  of $126,707 was received by the Trust in 1994.  On May 16,
     1994 the Trust, as stipulated in the limited partnership agreement, elected
     to exchange its general partner interest for a limited partnership interest
     and a priority  distribution of available cash flow from the project in the
     aggregate amount of $1,000,000. Such distribution is payable from available
     cash flows in nine annual  installments  together  with interest at 12% per
     year, which were scheduled to begin in May 1995.

     The ultimate ability of the project to meet its payment  obligations to the
     Trust is dependent on the actual  operating  performance  of the Stillwater
     Project,  which,  in turn,  is largely  dependent  upon water levels in the
     Hudson River. In 1995, the Hudson River basin experienced a severe drought,
     resulting in Hudson River water levels  substantially  below  normal.  As a
     result of the low water levels,  the operating  results of the project were
     insufficient to meet its debt payments,  and accordingly,  no distributions
     were made to the Trust in 1995.  Although  increased  precipitation in late
     1995 and early 1996  brought  flow levels back toward the norm,  high water
     flows  damaged  portions  of the  facility,  including  recently  installed
     modifications for capturing additional water flow.

     As a result,  all available cash flow from the Stillwater  Project is being
     applied to meet debt  service  requirements.  Until water  flows  return to
     expected  levels,  repairs are  completed  and the current  arrears in debt
     servicing  are paid,  it  appears  likely  that  most,  if not all,  of the
     payments  due to the Trust will be carried  forward,  with  interest,  into
     subsequent years.

     Due to uncertainty surrounding the timing of payments to the Trust, in 1997
     the Trust wrote down its  investment in the  Stillwater  Project to the net
     present value of anticipated  payments and recorded a loss of $400,000.  At
     December 31, 1998 and 1997,  the Trust's net  investment in the  Stillwater
     Project was $600,000.

     Electricity  generated by the Stillwater  Project is sold to Niagara Mohawk
     Power Corporation under a long-term Power Contract with a remaining term of
     29 years.  Niagara  Mohawk has argued  before the New York  Public  Service
     Commission,  the state agency that regulates the electric utility industry,
     and the Federal Energy Regulatory Commission ("FERC") that rates it pays to
     purchase  electricity  under long-term  Qualifying  Facility  contracts are
     uneconomic  and that it should be allowed to abrogate those  contracts.  In
     April 1995,  FERC rejected  Niagara  Mohawk's  application and the New York
     State Public  Service  Commission  has also refused the  requested  relief.
     There can be no assurance,  however,  that Niagara Mohawk would not succeed
     in any future efforts to abrogate Qualifying Facility contracts.

4.       Transactions With Managing Shareholder and Affiliates

     Prior  to the BDC  election,  the  Partnership  also  paid  to the  general
     partners a  distribution  and  offering fee in an amount up to 2.5% of each
     capital  contribution  made to the  Partnership.  This fee was intended for
     legal, accounting, consulting, filing, printing, distribution, selling, and
     closing costs for the offering of the Partnership. These fees were recorded
     as a reduction in the partners' capital contributions.

     Prior to the BDC election in July 1994, the Partnership paid to the general
     partners a management  fee not to exceed 4.5% of each capital  contribution
     made to the  Partnership.  The fee was payable to the general  partners for
     their services in investigating and evaluating investment opportunities and
     effecting transactions for investing the capital of the Partnership.

     Prior to the BDC election,  the Partnership paid to the general partners an
     annual administrative and overhead fee equal to 1% of the aggregate capital
     contributions of the Partnership.
                                     -F10-
<PAGE>

     On June 15, 1994,  the Trust entered into a management  agreement  with the
     managing shareholder,  under which the managing shareholder renders certain
     management,  administrative and advisory services and provides office space
     and  other  facilities  to the  Trust.  As  compensation  to  the  managing
     shareholder,  the Trust pays the managing  shareholder an annual management
     fee equal to 1% of the net assets of the Trust  payable  monthly.  In 1996,
     management fees of $43,255 were waived by the managing shareholder.  During
     1998,  1997 and  1996,  the  Trust  paid  management  fees to the  managing
     shareholder of $69,931, $67,483 and $49,255, respectively.

     Under the  Declaration  of Trust,  the managing  shareholder is entitled to
     receive  each year 1% of all  distributions  made by the Trust  (other than
     those  derived  from  the   disposition  of  Trust   property)   until  the
     shareholders  have been  distributed in that year an amount equal to 15% of
     their equity contribution. Thereafter, the managing shareholder is entitled
     to receive 20% of the  distributions  for the  remainder  of the year.  The
     managing  shareholder  is  entitled  to  receive  1% of the  proceeds  from
     dispositions  of Trust  properties  until the  shareholders  have  received
     cumulative  distributions  equal to their original  investment  ("Payout").
     After Payout,  the managing  shareholder  is entitled to receive 20% of all
     remaining distributions of the Trust.

     The managing  shareholder and affiliates own, in the aggregate,  3.0 shares
     of the Trust with a cost of $273,000.

     In  connection  with the  construction  of the  waste oil  facility  at the
     Lynchburg Project,  the managing  shareholder advanced $570,057 in 1995 and
     $259,350 in 1996 to the Trust to fund a portion of the  Trust's  investment
     in the waste oil facility.  No interest was charged on the  advances.  When
     the Trust received the settlement  proceeds described in Note 3 Investments
     in Power  Generation  Limited  Partnerships  in  January  1997,  all of the
     outstanding  advances  were  repaid  to the  managing  shareholder  without
     interest.

     In 1996,  under an  Operating  Agreement  with the Trust,  Ridgewood  Power
     Management Corporation ("Ridgewood  Management"),  an entity related to the
     managing   shareholder  through  common  ownership,   provides  management,
     purchasing,  engineering,  planning  and  administrative  services  to  the
     Lynchburg Project. Ridgewood Management charges the project 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 or in
     proportion to amounts invested in projects managed by Ridgewood Management.
     During the year ended  December  31,  1997 and 1996,  Ridgewood  Management
     charged the  Lynchburg  Project  $78,275 and  $33,948  for  overhead  items
     allocated in proportion  to the amount  invested in projects  managed,  and
     charged the Lynchburg Project for all of the remaining direct operating and
     non-operating  expenses  incurred during the period.  During the year ended
     December  31, 1998 and the seven month  period  ended  December  31,  1997,
     Ridgewood  Management  charged the Olinda  Project  $128,257  and  $30,382,
     respectively,  for overhead  items  allocated in  proportion  to the amount
     invested in projects managed.  Ridgewood Management also charged the Olinda
     Project  for  all of  the  remaining  direct  operating  and  non-operating
     expenses incurred during the period.

5.       Revolving Line of Credit Facility

     On June 6, 1997,  the Brea  Partnership  entered  into a  revolving  credit
     agreement  with its  principal  bank whereby the Bank  provided a five year
     committed line of credit  facility of $750,000 which  decreases by $100,000
     on each  anniversary of the facility.  The Trust guaranteed the obligations
     of the Brea Partnership under the credit facility.  Outstanding  borrowings
     bear  interest  at the  Bank's  prime  rate or,  at the Brea  Partnership's
     choice,  at LIBOR plus 2.5%.  At December 31, 1998 and 1997,  there were no
     borrowings outstanding under the credit facility.
                                     -F11-