Exhibit
      99.1


FINANCIAL
      STATEMENTS AND


REPORT
      OF
      INDEPENDENT****CERTIFIED


PUBLIC
      ACCOUNTANTS





**RIDGEWOOD
      PROVIDENCE POWER**


**PARTNERS,
      L.P.**





December
      31, 2005, 2004 and 2003


(As
      restated)






















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













PageReport
                of Independent Certified Public Accountants
            3Financial
                StatementsBalance
                Sheets
            4Statements
                of Operations
            5Statement
                of Changes in Partners’ Equity
            6Statements
                of Cash Flows
            7Notes
                to Financial Statements
            8
                -
                19




















**REPORT
      OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS**











The
      Partners


**Ridgewood
      Providence Power Partners, L.P.**








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





We
      conducted our audits in accordance with auditing standards generally accepted
      in
      the United States of America as established by the American Institute of
      Certified Public Accountants.  Those standards require that we plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement.  An audit includes
      consideration of internal control over financial reporting as a basis for
      designing audit procedures that are appropriate in the circumstances, but not
      for the purpose of expressing an opinion on the effectiveness of the
      Partnership’s internal control over financial reporting.  Accordingly,
      we express no such opinion.  An audit also includes examining, on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements, assessing the accounting principles used and significant estimates
      made by management, as well as evaluating the overall financial statement
      presentation.  We believe that our audits provide a reasonable basis
      for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Ridgewood Providence Power
      Partners, L.P. as of December 31, 2005, 2004 and 2003, and the results of its
      operations and its cash flows for the years then ended in conformity with
      accounting principles generally accepted in the United States of
      America.





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














/s/
      GRANT
      THRONTON LLP


Edison,
      New Jersey


September
      25, 2007





-
          3 -


Ridgewood
      Providence Power Partners, L.P.





**BALANCE
      SHEETS**





December
      31,


(in
      thousands)











ASSETS
            
            **2005**
            
            
            2004
            
            
            2003(Restated)Current
                assetsCash
                and cash equivalents
            
            **$**
            **607**
            
            
            $
            699
            
            
            $
            706Restricted
                cash
            
            ****
            **-**
            
            
            
            -
            
            
            
            757Trade
                receivables
            
            ****
            **1,956**
            
            
            
            1,356
            
            
            
            937Due
                from affiliates
            
            ****
            **20**
            
            
            
            -
            
            
            
            206Other
                current assets
            
            ****
            **92**
            
            
            
            96
            
            
            
            66Total
                current assets
            
            ****
            **2,675**
            
            
            
            2,151
            
            
            
            2,672Plant
                and equipment, net
            
            ****
            **9,349**
            
            
            
            10,232
            
            
            
            11,027Electric
                power sales contract, net
            
            ****
            **2,460**
            
            
            
            3,064
            
            
            
            3,667Security
                deposit
            
            ****
            **405**
            
            
            
            300
            
            
            
            -Total
                assets
            
            **$**
            **14,889**
            
            
            $
            15,747
            
            
            $
            17,366LIABILITIES
                AND PARTNERS’ EQUITYLiabilitiesAccounts
                payable and accrued expenses
            
            **$**
            **270**
            
            
            $
            140
            
            
            $
            142Accrued
                royalties
            
            ****
            **409**
            
            
            
            357
            
            
            
            222Due
                to affiliates
            
            ****
            **1,233**
            
            
            
            1,049
            
            
            
            760Notes
                payable
            
            ****
            **-**
            
            
            
            -
            
            
            
            867Total
                liabilities
            
            ****
            **1,912**
            
            
            
            1,546
            
            
            
            1,991Commitments
                and contingenciesPartners’
                equity
            
            ****
            **12,977**
            
            
            
            14,201
            
            
            
            15,375Total
                liabilities and partners’ equity
            
            **$**
            **14,889**
            
            
            $
            15,747
            
            
            $
            17,366




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






-
          4 -




Ridgewood
      Providence Power Partners, L.P.





**STATEMENTS
      OF OPERATIONS**





Year
      ended December 31,


(in
      thousands)











**2005**
            
            
            2004
            
            
            2003(Restated)Power
                generation revenue
            
            **$**
            **7,331**
            
            
            $
            7,457
            
            
            $
            7,227Renewable
                attribute revenue
            
            ****
            **4,014**
            
            
            
            4,177
            
            
            
            804Sublease
                revenue
            
            ****
            **571**
            
            
            
            571
            
            
            
            554Total
                revenues
            
            ****
            **11,916**
            
            
            
            12,205
            
            
            
            8,585Cost
                of revenues
            
            ****
            **8,934**
            
            
            
            8,949
            
            
            
            6,936Gross
                profit
            
            ****
            **2,982**
            
            
            
            3,256
            
            
            
            1,649Operating
                expenses (income)General
                and administrative expenses
            
            ****
            **116**
            
            
            
            23
            
            
            
            83Other
                operating income
            
            ****
            **-**
            
            
            
            -
            
            
            
            (163
            )Total
                operating expenses (income), net
            
            ****
            **116**
            
            
            
            23
            
            
            
            (80
            )Income
                from operations
            
            ****
            **2,866**
            
            
            
            3,233
            
            
            
            1,729Other
                income (expense)Interest
                income
            
            ****
            **8**
            
            
            
            1
            
            
            
            9Interest
                expense
            
            ****
            **(13**
            **)**
            
            
            (14
            )
            
            
            (130
            )Total
                other expense, net
            
            ****
            **(5**
            **)**
            
            
            (13
            )
            
            
            (121
            )Net
                income
            
            **$**
            **2,861**
            
            
            $
            3,220
            
            
            $
            1,608



















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






-
          5 -





Ridgewood
      Providence Power Partners, L.P.





**STATEMENT
      OF CHANGES IN PARTNERS’ EQUITY**





Years
      ended December 31, 2003, 2004 and 2005


(in
      thousands)











Totalpartners’
                equityPartners’
                equity, January 1, 2003, as restated
            
            $
            15,662Cash
                distributions
            
            
            (1,895
            )Net
                income for the year, as restated
            
            
            1,608Partners’
                equity, December 31, 2003, as restated
            
            
            15,375Cash
                distributions
            
            
            (4,394
            )Net
                income for the year
            
            
            3,220Partners’
                equity, December 31, 2004
            
            
            14,201Cash
                distributions
            
            
            (4,085
            )Net
                income for the year
            
            
            2,861Partners’
                equity, December 31, 2005
            
            $
            12,977






















*The
      accompanying notes are an integral part of this statement.*




-
          6 -


Ridgewood
      Providence Power Partners, L.P.





**STATEMENTS
      OF CASH FLOWS**





Year
      ended December 31,


(in
      thousands)











**2005**
            
            
            2004
            
            
            2003(Restated)Cash
                flows from operating activitiesNet
                income
            
            **$**
            **2,861**
            
            
            $
            3,220
            
            
            $
            1,608Adjustments
                to reconcile net income to net cash
              provided
                by operating activitiesDepreciation
                and amortization
            
            ****
            **1,390**
            
            
            
            1,407
            
            
            
            1,406Reduction
                in rotable spare parts
            
            ****
            **97**
            
            
            
            27
            
            
            
            (99
            )Changes
                in assets and liabilitiesTrade
                receivables
            
            ****
            **(600**
            **)**
            
            
            (419
            )
            
            
            283Other
                current assets
            
            ****
            **4**
            
            
            
            (30
            )
            
            
            273Security
                deposit
            
            ****
            **(105**
            **)**
            
            
            (300
            )
            
            
            -Accounts
                payable and accrued expenses
            
            ****
            **130**
            
            
            
            (2
            )
            
            
            (71
            )Accrued
                royalties
            
            ****
            **52**
            
            
            
            135
            
            
            
            130Due
                to/from affiliates, net
            
            ****
            **164**
            
            
            
            495
            
            
            
            36Total
                adjustments
            
            ****
            **1,132**
            
            
            
            1,313
            
            
            
            1,958Net
                cash provided by operating activities
            
            ****
            **3,993**
            
            
            
            4,533
            
            
            
            3,566Cash
                flows from investing activitiesCapital
                expenditures
            
            ****
            **-**
            
            
            
            (36
            )
            
            
            (5
            )Cash
                flows from financing activitiesRestricted
                cash
            
            ****
            **-**
            
            
            
            757
            
            
            
            (7
            )Cash
                distributions to partners
            
            ****
            **(4,085**
            **)**
            
            
            (4,394
            )
            
            
            (1,895
            )Repayments
                of notes payable
            
            ****
            **-**
            
            
            
            (867
            )
            
            
            (955
            )Net
                cash used in financing activities
            
            ****
            **(4,085**
            **)**
            
            
            (4,504
            )
            
            
            (2,857
            )Net
                (decrease) increase in cash and cashequivalents
            
            ****
            **(92**
            **)**
            
            
            (7
            )
            
            
            704Cash
                and cash equivalents, beginning of year
            
            ****
            **699**
            
            
            
            706
            
            
            
            2Cash
                and cash equivalents, end of year
            
            **$**
            **607**
            
            
            $
            699
            
            
            $
            706Supplemental
                disclosure of cash flow information:Cash
                paid during the year for interest
            
            **$**
            **13**
            
            
            $
            14
            
            
            $
            130










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




-
          7 -




Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)











**NOTE
      A - DESCRIPTION OF BUSINESS**





In
      February 1996, Ridgewood Providence Power Partners, L.P. was formed as a
      Delaware limited partnership (the “Partnership”).  Ridgewood
      Providence Power Corporation, a Delaware corporation, is the sole general
      partner of the Partnership and is owned by Ridgewood Electric Power Trust III
      (“Trust III”) and Ridgewood Electric Power Trust IV (“Trust IV”), both Delaware
      business trusts (collectively, the “Trusts”).  The Trusts are also the
      limited partners in the Partnership and have a common Managing Shareholder,
      Ridgewood Renewable Power, LLC (“RRP”).  The Partnership shall
      continue to exist until April 1, 2036, unless terminated sooner by certain
      provisions of the Partnership Agreement.





In
      April
      1996, the Partnership purchased substantially all of the net assets of
      Northeastern Landfill Power Joint Venture.  The assets acquired
      include a 13.8 megawatt capacity electrical generating station, located at
      the
      Central Landfill in Johnston, Rhode Island (the “Providence
      Project”).  The Providence Project includes nine reciprocating engine
      generator sets which are fueled by methane gas produced by and collected from
      the Central Landfill.  The electricity produced by the Providence
      Project is sold to New England Power Service Company (“NEP”) under a
      long-term electric power sales contract.





The
      cash
      distributions and profits and losses of the Partnership are allocated 1% to
      the
      general partner and 99% to the limited partners in accordance with their capital
      contribution (63.7% to Trust IV and 35.3% to Trust III).








**NOTE
      B - RESTATEMENT OF FINANCIAL STATEMENTS**





The
      Partnership has identified a series of adjustments, including proper recognition
      of renewable attribute revenue, amortization of the electric power sales
      contract, recognition of royalty expense and accounting for professional
      services, which have resulted in restatement of the previously issued financial
      statements for the year ended December 31, 2003.















-
          8 -


Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)











**NOTE
      B (continued)**





The
      following table represents the effects of the restatement adjustments upon
      the
      Partnership’s previously reported balance sheet and statement of operations as
      of and for the year ended December 31, 2003.





Balance
      Sheet


December
                  31, 2003AdjustmentsAssets
              
              Previously
                reported
              
              
              Reclass
              
              
              Other
                adjustments
              
              
              
              RestatedCurrent
                  assets
              
              $
              2,634
              
              
              $
              5
              
              
              $
              33
              
              (A)
              
              $
              2,672Noncurrent
                  assets
              
              
              15,084
              
              
              
              -
              
              
              
              (390
              )
              (B)
              
              
              14,694Total
                  assets
              
              $
              17,718
              
              
              $
              5
              
              
              $
              (357
              )
              
              
              $
              17,366Liabilities
                  and partners’ equityCurrent
                  liabilities
              
              $
              1,837
              
              
              $
              5
              
              
              $
              149
              
              (C)(D)(E)
              
              $
              1,991Partners’
                  equity
              
              
              15,881
              
              
              
              -
              
              
              
              (506
              )
              (B)(D)
              
              
              15,375Total
                  liabilities and partners’ equity
              
              $
              17,718
              
              
              $
              5
              
              
              $
              (357
              )
              
              
              $
              17,366Statement
                  of OperationsRevenues
              
              $
              8,553
              
              
              $
              -
              
              
              $
              32
              
              (A)
              
              $
              8,585Cost
                  of revenues
              
              
              6,024
              
              
              
              713
              
              
              
              199
              
              (B)(C)(E)
              
              
              6,936Gross
                  profit
              
              
              2,529
              
              
              
              (713
              )
              
              
              (167
              )
              
              
              
              1,649Operating
                  expenses (income)
              
              
              647
              
              
              
              (713
              )
              
              
              (14
              )
              (D)
              
              
              (80
              )Income
                  from operations
              
              
              1,882
              
              
              
              -
              
              
              
              (153
              )
              
              
              
              1,729Other
                  income (expense), net
              
              
              (121
              )
              
              
              -
              
              
              
              -
              
              
              
              
              (121
              )Net
                  income
              
              $
              1,761
              
              
              $
              -
              
              
              $
              (153
              )
              
              
              $
              1,608




(A)
            The
                Partnership did not recognize renewable attribute revenue properly
                in
                2003.  As a result, the Partnership increased trade receivables
                and renewable attribute revenue by $33 and
                $32,  respectively.





(B)
            Amortization
                of the electric power sales contract was not recognized over the
                proper
                useful life.  The Partnership recorded an adjustment by
                increasing amortization expense and accumulated amortization by $47
                and
                $390, respectively, and decreasing beginning partners’ equity by
                $343.







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          9 -




Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)




**NOTE
      B (continued)**





(C)
            The
                Partnership did not recognize royalty expense properly in
                2003.  As a result, the Partnership increased royalty expense
                and accrued royalties by $127,
                respectively.





(D)
            The
                Partnership overaccrued $14 and underaccrued $9 of accounting fees
                for the
                years ended December 31, 2003 and 2002, respectively.  The 2003
                overaccrual was recorded as an adjustment to accrued expenses and
                general
                and administrative expenses.  The 2002 underaccrual increased
                accrued expenses and decreased beginning partners’ equity by
                $9.





(E)
            The
                Partnership underaccrued operating expenses of $25 for the year ended
                December 31, 2003.  The underaccrual was recorded as an increase
                to cost of revenues and an increase to accrued expenses.
              
              The
                  Partnership restated 2002 amounts by decreasing partners’ equity as of
                  January 1, 2003 by $352.  The following is the summary of
                  adjustments recorded that were made to partners’ equity as of
                  January 1, 2003: (a) understatement of accumulated amortization of
                  electric power sales contract of $343 and (b) underaccrual of accounting
                  fees of $9.





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




*1.     *Use
        of Estimates**




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





-
          10 -


Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)




**NOTE
      C (continued)**





*2.*
            *Cash
                and Cash Equivalents*





The
      Partnership considers all highly liquid investments with maturities when
      purchased of three months or less as cash and cash equivalents.  Cash
      balances with banks as of December 31, 2005, 2004
      and
      2003 exceeded insured limits by $507, $599 and $606,
      respectively.  Restricted cash as of December 31, 2003 exceeded
      insured limits by $657.





*3.*
            *Trade
                Receivables*





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





*4.*
            *Revenue
                Recognition*





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





Renewable
      attribute revenue is derived from the sale of the renewable portfolio standard
      attributes (“RPS Attributes”).  As discussed in Note H, qualified
      renewable electric generation facilities produce RPS Attributes when they
      generate electricity.  Renewable attribute revenue is recorded in the
      month in which the RPS Attributes are produced as the Partnership has
      substantially completed its obligations for entitled benefits, represented
      by
      the underlying generation of power within specific environmental
      requirements.





Sublease
      revenue is recorded monthly in accordance with the terms of the sublease
      agreement.





*5.*
            *Plant
                and Equipment*





Plant
      and
      equipment, consisting principally of electrical generating equipment, are stated
      at cost less accumulated depreciation.  Major renewals and betterments
      that increase the useful lives of the assets are capitalized.  Repair
      and maintenance expenditures are expensed as incurred.  Upon
      retirement or disposal of assets, the cost and the related accumulated
      depreciation are removed from the balance sheets.  The difference, if
      any, between the net asset value and any proceeds from such retirement of
      disposal is recorded as a gain or loss in the statement of
      operations.




-
          11 -




Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)






**NOTE
      C (continued)**





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





Power
                generation facility
            20
                yearsEquipment
            5
                -
                20 yearsVehicles
            5
                years





Rotable
      spare parts inventory primarily consists of parts and materials that are
      infrequently used in the Partnership’s operation.  An allowance is
      established for obsolesence on the basis of management’s review and
      assessment.





*6.*
            *Significant
                Customers*





During
      2005, 2004 and 2003, the Partnership’s two largest customers accounted for
      81.8%, 81.2% and 84.2% of total revenues, respectively.





*7.*
            *Income
                Taxes*





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





*8.*
            *Fair
                Value of Financial Instruments*





For
      the
      years ended December 31, 2005, 2004 and 2003, the carrying value of the
      Partnership’s cash and cash equivalents, trade receivables, accounts payable and
      accrued expenses, and notes payable approximates their fair value.





*9.*
            *New
                Accounting Standards and
                Disclosures*





FIN
      45





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


-
          12 -




Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)







**NOTE
      C (continued)**




*SFAS
      No.  154*





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








**NOTE
      D - PLANT AND EQUIPMENT**





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





**2005**
            
            
            2004
            
            
            2003(Restated)Power
                generation facility
            
            **$**
            **1,905**
            
            
            $
            1,905
            
            
            $
            1,905Equipment
            
            ****
            **14,032**
            
            
            
            14,032
            
            
            
            13,996Rotable
                spare parts
            
            ****
            **699**
            
            
            
            796
            
            
            
            823Vehicles
            
            ****
            **32**
            
            
            
            32
            
            
            
            32****
            **16,668**
            
            
            
            16,765
            
            
            
            16,756Less:
                Accumulated depreciation
            
            ****
            **(7,319**
            **)**
            
            
            (6,533
            )
            
            
            (5,729
            )**$**
            **9,349**
            
            
            $
            10,232
            
            
            $
            11,027





During
      the years ended December 31, 2005, 2004 and 2003, the Partnership recorded
      depreciation expense of $786, $804, and $803, respectively, which is included
      in
      cost of revenues.


-
          13 -


Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)







**NOTE
      E - ELECTRIC POWER SALES CONTRACT**





The
      Partnership is committed to sell all of the electricity it produces to NEP
      for
      prices as specified in the Power Purchase Agreement.  The agreement
      with NEP expires in the year 2020 and can be terminated by NEP under certain
      conditions in 2010.  As defined, the Prices are adjusted annually for
      changes in the Consumer Price Index through 2010, and become market prices
      thereafter.





A
      portion
      of the purchase price of the Providence Project was assigned by the Partnership
      to the electric power sales contract and is being amortized through its early
      termination date of 2010 (a period of approximately 14 years) on a straight-line
      basis.  At December 31, 2005, 2004 and 2003, the gross and net
      carrying amounts of the electric power sales contract were:





**2005**
            
            
            2004
            
            
            2003(Restated)Electricity
                power sales contract - gross
            
            **$**
            **8,338**
            
            
            $
            8,338
            
            
            $
            8,338Less:
                Accumulated amortization
            
            ****
            **(5,878**
            **)**
            
            
            (5,274
            )
            
            
            (4,671
            )Electricity
                power sales contract - net
            
            **$**
            **2,460**
            
            
            $
            3,064
            
            
            $
            3,667





For
      the
      years ended December 31, 2005, 2004 and 2003, the Partnership recorded
      amortization expense of $603, which is included in cost of
      revenues.  The Partnership expects to record amortization expense
      during the next five years as follows:





Year
                endedDecember
                31,2006
            $6032007
            6032008
            6032009
            6032010
            48





-
          14 -


Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)







**NOTE
      F - NOTES PAYABLE**





The
      Partnership did not have any outstanding debt at December 31, 2005 and
      2004.  At December 31, 2003, the Partnership owed $867 under senior
      collateralized non-recourse notes which were due in monthly installments of
      $91,
      including interest at 9.6%.  Although the final payment was due on
      October 15, 2004, the Partnership made a payment of $813 on February 13, 2004
      to
      pay off the remaining balance of the note.  The final payment
      consisted of cash and the transfer of the balance in the restricted debt service
      fund at February 13, 2004.  The notes provided for additional interest
      equal to 5% of the annual net cash flow of the Partnership, as
      defined.  No additional interest was due.  Prior to their
      retirement, the notes were collateralized by a leasehold mortgage on
      substantially all of the assets of the Partnership.  The loan
      agreement also required a funded debt service reserve.  At December
      31, 2003, the cash balance in the restricted debt service reserve was $757,
      which was used as part of the 2004 repayment.








**NOTE
      G - LANDFILL LEASE AND SUBLEASE**





The
      Partnership leases its site on the Central Landfill, located in Johnston, Rhode
      Island from Rhode Island Resource Recovery Corporation (“RIRRC”) under a lease
      which expires in 2020 and can be extended for an additional 10 years by mutual
      agreement of the parties under certain conditions.  The lease requires
      the Partnership to pay a contingent rent in the form of a royalty equal to
      15%
      of net revenue, as defined, until 2006.  For subsequent years, the
      royalty is 15% of net revenues for each month in which the average daily
      kilowatt hour production is less than 180,000, and 18% of net revenues for
      each
      month in which the average daily kilowatt hour production exceeds
      180,000.  For the years ended December 31, 2005, 2004 and 2003,
      royalty expense relating to the RIRRC lease amounted to $1,090, $1,102, and
      $1,069, respectively.  The royalty expense has been included in the
      cost of revenues in the statements of operations.





The
      Partnership subleases a portion of the Central Landfill to the Central Gas
      Limited Partnership (“Gasco”), an unaffiliated entity.  Gasco operates
      and maintains a portion of the landfill gas collection system and supplies
      landfill gas to the Providence Project.  The sublease agreement is
      effective through December 31, 2010 and provides for the following:





Sublease
      Revenue - Effective January 1, 2001, Gasco is to pay the Partnership an annual
      amount equal to the product of $45 (adjusted annually for inflation from January
      1, 2001) times the assumed output capacity of each original engine generator
      set
      in megawatts installed and operated by the joint venture.  The
      Partnership recognized sublease revenue of $571, $571 and $554 for the years
      ended December 31, 2005, 2004 and 2003, respectively.





-
          15 -


Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)







**NOTE
      G (continued)**





Fuel
      Expense - The Partnership is to purchase all the landfill gas produced by Gasco
      and pay Gasco on a monthly basis approximately $.05 to $.005 per kilowatt hour
      based on the kilowatt hours generated.  The price is adjusted annually
      for changes in the Consumer Price Index, as defined.  Purchases from
      Gasco for the years ended December 31, 2005, 2004 and 2003 amounted to $1,008,
      $1,020, and $993, respectively.  Fuel expenses have been included in
      the cost of revenues in the statements of operations.








**NOTE
      H - RENEWABLE ATTRIBUTE REVENUE**





In
      1997,
      Massachusetts enacted the Electric Restructuring Act of 1997 (the “Restructuring
      Act”).  Among other things, the Restructuring Act requires that all
      retail electricity suppliers in Massachusetts (i.e., those entities supplying
      electric energy to retail end-use customers in Massachusetts) purchase a minimum
      percentage of their electricity supplies from qualified new renewable generation
      units powered by one of several renewable fuels, such as solar, biomass or
      landfill gas.  Beginning in 2003, each such retail supplier must
      obtain at least one (1%) percent of its supply from qualified new renewable
      generation units.  Each year thereafter, the requirement increases
      one-half of one percentage point until 2009, when the requirement equals four
      (4%) percent of each retail supplier’s sales in that year.  Subsequent
      to 2009, the increase in the percentage requirement will be determined and
      set
      by the Massachusetts Division of Energy Resources (“DOER”).




On
      January 17, 2003, the Partnership received a “Statement of Qualification” from
      the DOER pursuant to the renewable portfolio standards (“RPS”) adopted by
      Massachusetts.  Since the Partnership has now become qualified, it is
      able to sell to retail electric suppliers the RPS Attributes associated with
      its
      electrical energy.  Retail electric suppliers need to purchase RPS
      Attributes associated with renewable energy and not necessarily the energy
      itself.  Thus, electrical energy and RPS Attributes are separable
      products and need not be sold or purchased as a bundled
      product.  Retail electric suppliers in Massachusetts will then use the
      purchase of such RPS Attributes to demonstrate compliance with the Restructuring
      Act and RPS regulations.





During
      2004, the Partnership became qualified to sell RPS Attributes in Connecticut
      under a similar RPS program, except that the Connecticut program does not have
      a
“vintage” prohibition, which in Massachusetts disqualifies the amount of a
      facility’s generation measured by its average output during the period 1995
      through 1997.  Thus, the Partnership can sell the 86,000 megawatt
      hours (“MWhs”) that
      are
      ineligible under Massachusetts standards into the Connecticut
      market.  During 2004, the Partnership sold its “vintage” RPS
      Attributes pursuant to agreements with various power
      marketers.


-
          16 -


Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)





**NOTE
      H (continued)**





Similar
      agreements have committed the Partnership to sell its 2005 and 2006 “vintage”
RPS Attributes to such designated parties at certain fixed quantities and
      prices.  Pursuant to the terms of the agreement, the Partnership is
      only required to deliver the specified RPS Attributes it generates and is not
      obligated to produce, nor is it subject to penalty if it is unable to produce,
      contracted quantities.








**NOTE
      I - ROYALTY EXPENSE**





On
      August
      1, 2003, the Partnership entered into an Environmental Attribute Agreement
      with
      RIRRC and Ridgewood Gas Services, LLC (“RGS”), an affiliate of the Partnership
      that provides management services to RIRRC.  Pursuant to the terms of
      the agreement, the Partnership is required to pay certain royalties to RIRRC
      and
      RGS which are derived from the sale of RPS Attributes and are the only direct
      costs of the renewable attribute revenue.  The term of the agreement
      coincides with the Central Landfill lease agreement, which expires in 2020
      and
      provides for an extension of an additional ten years.  During the
      years ended December 31, 2005, 2004, and 2003, the Partnership recognized
      royalty expense of $1,181, $1,245 and $127, respectively, related to this
      agreement which is included in cost of revenues in the accompanying statements
      of operations.  The royalty expenses recognized above include 50% of
      royalty expenses to RGS for each of the years ended December 31, 2005, 2004
      and
      2003.








**NOTE
      J - RELATED PARTY TRANSACTIONS**





Under
      an
      Operating Agreement with the Trusts, Ridgewood Power Management LLC (“Ridgewood
      Management”), an entity related to the Managing Shareholder of the Trusts
      through common ownership, provides management, purchasing, engineering, planning
      and administrative services to the Partnership.  Ridgewood Management
      charges the Partnership at its cost for these services and for the allocable
      amount of certain overhead items.  Allocations of costs are on the
      basis of identifiable direct costs, time records or in proportion to amounts
      invested in projects managed by Ridgewood Management.  During the
      years ended December 31, 2005, 2004 and 2003, Ridgewood Management charged
      the
      Partnership $500, $439 and $452, respectively, for overhead items allocated
      in
      proportion to the amount invested in projects managed, which is included in
      cost
      of revenues in the accompanying statements of operations.  Ridgewood
      Management also charged the Partnership for all of the remaining direct
      operating and non-operating expenses attributable to the activities of the
      Partnership incurred during the periods. These charges may not be indicative
      of
      costs incurred if the Partnership were not operated by Ridgewood
      Management.





-
          17 -


Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)





**NOTE
      J (continued)**





The
      Partnership records short-term payables and receivables from other affiliates
      in
      the ordinary course of business.  The amounts payable and receivable
      with the other affiliates do not bear interest.  At December 31, 2005,
      2004 and 2003, the Partnership had outstanding receivables and payables with
      the
      following affiliates:





Due
                from
            
            
            Due
                to**2005**
            
            
            2004
            
            
            2003
            
            
            **2005**
            
            
            2004
            
            
            2003(Restated)
            
            
            
            
            
            
            
            
            (Restated)Ridgewood
                Management
            
            **$**
            **-**
            
            
            $
            -
            
            
            $
            -
            
            
            **$**
            **167**
            
            
            $
            291
            
            
            $
            2RRP
            
            ****
            **-**
            
            
            
            -
            
            
            
            -
            
            
            ****
            **-**
            
            
            
            -
            
            
            
            98Trust
                III
            
            ****
            **-**
            
            
            
            -
            
            
            
            -
            
            
            ****
            **349**
            
            
            
            461
            
            
            
            575Trust
                IV
            
            ****
            **-**
            
            
            
            -
            
            
            
            206
            
            
            ****
            **628**
            
            
            
            208
            
            
            
            -Other
                affiliates
            
            ****
            **20**
            
            
            
            -
            
            
            
            -
            
            
            ****
            **89**
            
            
            
            89
            
            
            
            85**$**
            **20**
            
            
            $
            -
            
            
            $
            206
            
            
            **$**
            **1,233**
            
            
            $
            1,049
            
            
            $
            760








**NOTE
      K - OTHER INCOME**





During
      the first quarter of 2002, the Partnership experienced the failure of one of
      its
      engines.  The Partnership submitted a claim with its insurance carrier
      for the replacement of the engine and lost profits as a result of the business
      interruption it experienced.  For the year ended December 31, 2003,
      the Partnership recorded $160 of other operating income as a result of its
      claim.








**NOTE
      L - COMMITMENTS AND CONTINGENCIES**





The
      Partnership and several of its affiliates have an agreement with a power
      marketer for which they are committed to sell a portion of their RPS Attributes
      derived from their electric generation.  The agreement provides such
      power marketer with six separate annual options to purchase such RPS Attributes
      from 2004 through 2009 at fixed prices, as defined.  If the
      Partnership and its affiliates fail to supply the required number of RPS
      Attributes, penalties may be imposed.  In accordance with the terms of
      the agreement, if the power marketer elects to exercise an annual option and
      the
      Partnership and its affiliates produce no renewable attributes for such option
      year, the Partnership and its affiliates face
      a
      maximum penalty, which is adjusted annually for the change in the consumer
      price
      index, among other things, of approximately $3,300, measured using current
      factors, for that option year and any other year in which an option has been
      exercised and no renewable attributes have been produced.  Pursuant to
      the agreement, the Partnership is liable for 8% of the total
      penalty.  In the fourth quarters of 2006 and 2005, the power marketer
      notified the Partnership and its affiliates that it has elected to purchase
      the
      output for 2007 and 2006, respectively, as specified in the
      agreement.  In 2004, the Partnership incurred a penalty of
      approximately $4 for the shortfall in production of RPS
      Attributes.  In 2006, 2005 and 2003, the Partnership satisfied and
      delivered RPS Attributes as prescribed in the agreements and therefore no
      penalties were incurred.


-
          18 -


Ridgewood
      Providence Power Partners, L.P.





**NOTES
      TO FINANCIAL STATEMENTS (continued)**





December
      31, 2005, 2004 and 2003


(dollar
      amounts in thousands)











**NOTE
      L (continued)**




As
      part
      of the RPS Attribute agreements, the Partnership has assigned and pledged its
      receivables derived from a portion of its renewable attribute revenue to the
      power marketer as well as deposited $300 with the power marketer during
      2004.  In addition to the current security deposit, the Partnership
      deposited an additional $105 with the power marketer in 2005. The affiliates
      of
      the Partnership that are parties to the agreement have also deposited amounts
      with the power marketer in proportion to their obligations under the
      agreement.









-
      19 -