Ridgewood Providence Power Partners, L.P.

                              Financial Statements

                        December 31, 2003, 2002 and 2001




























<PAGE>


                        Report of Independent Accountants

Partners'
Ridgewood Providence Power Partners, L.P.



We have audited the  accompanying  balance sheet of Ridgewood  Providence  Power
Partners, L.P. as of December 31, 2003 and the related consolidated statement of
operations,  changes in partners' equity and cash flows for the year 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 audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  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. at December 31, 2003,  and the results of their  operations  and
their  cash  flows for the year  ended  December  31,  2003 in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ Perelson Weiner, LLP

New York, NY
March 26, 2004









<PAGE>


                        Report of Independent Accountants


To the Partners of
Ridgewood Providence Power Partners, L.P.:

In our opinion,  the accompanying  balance sheets and the related  statements of
operations, changes in partners' equity and of cash flows present fairly, in all
material  respects,   the  financial  position  of  Ridgewood  Providence  Power
Partners,  L.P. (the "Partnership") at December 31, 2002, and the results of its
operations and its cash flows for the two years in the period ended December 31,
2002 in conformity with accounting  principles  generally accepted in the United
States of America.  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 of these
statements  in  accordance  with auditing  standards  generally  accepted in the
United  States of America,  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 our opinion.

/s/ Pricewaterhouse Coopers LLP
Florham Park, NJ
March 28, 2003



<PAGE>



Ridgewood Providence Power Partners, L.P.
Balance Sheets
--------------------------------------------------------------------------------
                                                           December 31,
                                                   -----------------------------
                                                        2003            2002
                                                   ------------    -------------
Assets:
Cash and cash equivalents ......................   $    705,600    $      2,257
Accounts receivable, trade .....................        905,414       1,220,285
Due from affiliates ............................        200,272         266,285
Debt reserve fund ..............................        756,928             ---
Other current assets ...........................         65,733         338,328
                                                   ------------    ------------
     Total current assets ......................      2,633,947       1,827,155

Plant and equipment ............................     15,933,314      15,928,000
Accumulated depreciation .......................     (5,729,128)     (4,925,939)
                                                   ------------    ------------
                                                     10,204,186      11,002,061
                                                   ------------    ------------

Electric power sales contract ..................      8,338,040       8,338,040
Accumulated amortization .......................     (4,281,401)     (3,725,557)
                                                   ------------    ------------
                                                      4,056,639       4,612,483
                                                   ------------    ------------

Spare parts ....................................        823,464         724,615
Debt reserve fund ..............................            ---          749,82
                                                   ------------    ------------

     Total assets ..............................   $ 17,718,236    $ 18,916,135
                                                   ------------    ------------


Liabilities and Partners' Equity:

Liabilities:
Current maturities of long-term debt ...........   $    867,223    $    955,202
Accounts payable and accrued expenses ..........        215,440         294,480
Due to affiliates ..............................        754,204         784,710
                                                   ------------    ------------
     Total current liabilities .................      1,836,867       2,034,392

Long-term debt, less current portion ...........            ---         867,223
Commitments and contingencies
                                                            ---             ---

Partners' equity:
General partner ................................        158,812         160,144
Limited partners ...............................     15,722,557      15,854,376
                                                   ------------    ------------
     Total partners' equity ....................     15,881,369      16,014,520
                                                   ------------    ------------

     Total liabilities and partners' equity ....   $ 17,718,236    $ 18,916,135
                                                   ------------    ------------









               See accompanying notes to the financial statements.

<PAGE>



Ridgewood Providence Power Partners, L.P.
Statements of Operations
--------------------------------------------------------------------------------

                                     For the Year Ended December 31,
                               -------------------------------------------------
                                   2003           2002           2001
                               -----------    -----------    -----------

Power generation revenue ...   $ 7,226,823    $ 6,791,676    $ 6,925,308
Renewable attribute revenue        772,370            ---            ---
Sublease income ............       553,764        552,444        547,000
                               -----------    -----------    -----------
     Total revenue .........     8,552,957      7,344,120      7,472,308

Cost of sales, including
     depreciation
     and amortization of
     $1,359,033,
     $1,354,476 and
     $1,349,003 in
     2003, 2002 and 2001 ...     6,023,645      5,885,503      5,840,911
                               -----------    -----------    -----------

Gross profit ...............     2,529,312      1,458,617      1,631,397
                               -----------    -----------    -----------

General and administrative
  expenses .................       809,697        797,485        797,283
Other operating income .....      (162,991)      (197,284)           ---
                               -----------    -----------    -----------
   Total other operating
     expense ...............       646,706        600,201        797,283
                               -----------    -----------    -----------

Income from operations .....     1,882,606        858,416        834,114
                               -----------    -----------    -----------

Other income (expense):
     Interest income .......         8,630         15,842         48,701
     Interest expense ......      (129,829)      (217,210)      (472,479)
     Other income ..........           ---         13,231            ---
                               -----------    -----------    -----------
         Other income
           (expense), net ..      (121,199)      (188,137)      (423,778)
                               -----------    -----------    -----------

Net income .................   $ 1,761,407    $   670,279    $   410,336
                               -----------    -----------    -----------
























               See accompanying notes to the financial statements.

<PAGE>



Ridgewood Providence Power Partners, L.P.
Statements of Changes In Partners' Equity
For the Years Ended December 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------

                                   Limited           General
                                   Partners          Partner           Total
                                 ------------     ------------     -------------

Partners' equity,
   January 1, 2001 ..........    $ 15,774,790     $    159,340     $ 15,934,130

Distributions ...............        (990,223)         (10,002)      (1,000,225)

Net income for the year .....         406,233            4,103          410,336
                                 ------------     ------------     ------------
Partners' equity,
  December 31, 2001 .........      15,190,800          153,441       15,344,241

Net income for the year .....         663,576            6,703          670,279
                                 ------------     ------------     ------------
Partners' equity,
  December 31, 2002 .........      15,854,376          160,144       16,014,520

Distributions ...............      (1,875,612)         (18,946)      (1,894,558)

Net income for the year .....       1,743,793           17,614        1,761,407
                                 ------------     ------------     ------------
Partners' equity,
December 31, 2003 ...........    $ 15,722,557     $    158,812     $ 15,881,369
                                 ------------     ------------     ------------





























               See accompanying notes to the financial statements.

<PAGE>



Ridgewood Providence Power Partners, L.P.
Statements of Cash Flows
--------------------------------------------------------------------------------

                                             For the Year Ended December 31,
                                       -----------------------------------------
                                           2003           2002           2001
                                       -----------    -----------    -----------
Cash flows from
  operating activities:
Net income ........................   $ 1,761,407    $   670,279    $   410,336
                                       -----------    -----------    -----------
Adjustments to reconcile
  net income to cash flows
  from operating activities:
   Depreciation and amortization ..     1,359,033      1,354,476      1,349,003
   Changes in assets and liabilities:
     Decrease (increase)
      in accounts receivable,
      trade .......................       314,871       (627,116)        (8,652)
     Decrease (increase)
      in other current assets .....       272,595       (288,204)          (533)
     (Increase) decrease in
       spare parts ................       (98,849)       (60,118)        18,215
     Decrease in accounts payable
       and accrued expenses .......       (79,040)       (41,013)        (8,092)
     Increase (decrease) in
      due to/from
      affiliates, net .............        35,507       (897,713)       (25,099)
                                       -----------    -----------    -----------

       Total adjustments ..........     1,804,117       (559,688)     1,324,842
                                       -----------    -----------    -----------
       Net cash provided by
        operating activities ......     3,565,524        110,591      1,735,178
                                       -----------    -----------    -----------
Cash flows from
  investing activities:
Capital expenditures ..............        (5,314)       (44,239)       (45,104)
                                       -----------    -----------    -----------
       Net cash used in
         investing activities .....        (5,314)       (44,239)       (45,104)
                                       -----------    -----------    -----------

Cash flows from
  financing activities:
Cash distributions to partners ....    (1,894,558)           ---     (1,000,225)
Payments of long-term debt ........      (955,202)      (868,098)      (788,937)
Increase in debt reserve fund .....        (7,107)       (11,595)       (27,713)
                                       -----------    -----------    -----------
       Net cash used in
          financing activities ....    (2,856,867)      (879,693)    (1,816,875)
                                       -----------    -----------    -----------

Net increase (decrease) in
   cash and cash equivalents ......       703,343       (813,341)      (126,801)

Cash and cash equivalents,
   beginning of year ..............         2,257        815,598        942,399
                                       -----------    -----------    ----------
Cash and cash equivalents,
   end of year ....................   $   705,600    $     2,257    $   815,598
                                       -----------    -----------    -----------


















               See accompanying notes to the financial statements.


<PAGE>



Ridgewood Providence Power Partners, L.P.
Notes to Financial Statements
--------------------------------------------------------------------------------

1. Organization and Business Activity

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 the  limited  partners  in the
Partnership.

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  electric  generator  engines,  which are fueled by
methane  gas  produced  by and  collected  from the  landfill.  The  electricity
generated  is  sold to New  England  Power  Service  Company  under a  long-term
contract.

The  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).

2. Summary of Significant Accounting Policies

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 on-going  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  judgements  about the  carrying  values  of assets  and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

New Accounting Standards and Disclosures

SFAS 143
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 143,
Accounting for Asset Retirement  Obligations,  on the accounting for obligations
associated  with the  retirement  of  long-lived  assets.  SFAS 143  requires  a
liability  to  be  recognized  in  the  financial   statements   for  retirement
obligations meeting specific criteria.  Measurement of the initial obligation is
to approximate fair value,  with an equivalent amount recorded as an increase in
the value of the capitalized  asset. The asset will be depreciated in accordance
with normal  depreciation policy and the liability will be adjusted for the time
value of money, with a charge to the income  statement,  until the obligation is
settled.  SFAS 143 is effective for fiscal years  beginning after June 15, 2002.
The  Partnership  adopted SFAS 143 effective  January 1, 2003,  with no material
impact on the financial statements.

SFAS 145
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Correction.
SFAS No. 145 eliminates extraordinary accounting treatment for reporting gain or
loss on debt extinguishment, and amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. The Partnership adopted
SFAS 145 effective January 1, 2003, with no material impact on the financial
statements.

SFAS 146
In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal  Activities.  SFAS No. 146 requires  recording costs associated
with exit or disposal  activities at their fair values when a liability has been
incurred.  The Partnership  adopted SFAS 146 effective  January 1, 2003, with no
material impact on the financial statements.

FIN 45
In  November  2002,  the 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  the  disclosure
provisions of FIN 45 during the fourth  quarter of 2002 with no material  impact
on the financial statements.

SFAS 149
In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  149  amends  and
clarifies  the  accounting  for  derivative   instruments,   including   certain
derivative  instruments embedded in other contracts,  and for hedging activities
under  SFAS  No.  133,  "Accounting  for  Derivative   Instruments  and  Hedging
Activities."  SFAS No. 149 is generally  effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after June
30, 2003.  The  Partnership  adopted SFAS 149  effective  July 1, 2003,  with no
material impact on the financial statements.

SFAS 150
In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity.  SFAS No. 150
establishes   standards  for   classifying  and  measuring   certain   financial
instruments with characteristics of both liabilities and equity. The Partnership
adopted  SFAS  150  effective  July 1,  2003,  with no  material  impact  on the
financial statements.

Significant Accounting Policies

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, 2003,  exceeded  insured  limits by  approximately
$1,260,000.

Trade receivables
Trade  receivables  are recorded at invoice price 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.

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 power sales
contract.  Adjustments  are made to reflect  actual  volumes  delivered when the
actual  volumetric  information  subsequently  becomes  available.  Billings  to
customers  for power  generation  generally  occurs  during the month  following
delivery. Final billings typically 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 9,  qualified
renewable  electric  generation  facilities  produce  RPS  Attributes  when they
generate  electricity.  RPS  Attributes  have various  classes,  with each class
assigned a limited life.  Renewable  attribute  revenue is recorded in the month
the 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.

Interest income is recorded when earned.

Impairment of Long-Lived Assets and Intangibles
In accordance  with the  provisions of SFAS No. 144, the  Partnership  evaluates
long-lived   assets,   such  as  fixed  assets  and  specifically   identifiable
intangibles,  when events or changes in circumstances indicate that the carrying
value of such assets may not be  recoverable.  The  determination  of whether an
impairment  has occurred is made by comparing the carrying  value of an asset to
the  estimated  undiscounted  cash  flows  attributable  to  that  asset.  If an
impairment has occurred,  the impairment  loss recognized is the amount by which
the carrying value exceeds the discounted  cash flows  attributable to the asset
or the estimated fair value of the asset.

Plant and equipment
Plant and equipment,  consisting principally of electrical generating equipment,
is stated at cost. Major renewals and betterments that increase the useful lives
of the assets are capitalized.  Repair and maintenance expenditures are expensed
as incurred.  The Partnership  periodically assesses the recoverability of plant
and  equipment,  and other  long-term  assets,  whenever  events or  changes  in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.

Depreciation  is recorded  using the  straight-line  method  over the  estimated
useful life of the assets,  which is 20 years.  During the years ended  December
31,  2003,  2002 and 2001,  the  Partnership  recorded  depreciation  expense of
$803,164, $798,607 and $793,134, respectively.

Electric Power Sales Contract
A portion of the purchase  price of the  Providence  Project was assigned to the
Electric  Power  Sales  Contract  and is  being  amortized  over 15  years  on a
straight-line  basis through its early  termination  date of 2010.  The electric
power sales  contract is reviewed for impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of the  asset  may  not be
recoverable.  During 2003, 2002 and 2001, the Partnership recorded  amortization
expense of $555,869 in each year.

Spare Parts
Spare parts  inventory,  consisting of engine parts,  are stated at the lower of
cost or market, with cost being determined on the first-in, first-out method.

Supplemental cash flow information
Total interest paid during the years ended December 31, 2003, 2002 and 2001, was
$129,829, $220,758 and $299,919, respectively.

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
tax returns of the partners.

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



3. Long-Term Debt

Following is a summary of long-term debt at December 31, 2003 and 2002:

                                                       2003           2002
                                                   -----------    -----------
Senior collateralized non recourse notes payable   $   867,223    $ 1,822,425
Less current maturity ..........................      (867,223)      (955,202)
                                                   -----------    -----------
Total long term debt ...........................   $      --      $   867,223
                                                   -----------    -----------

The senior collateralized  non-recourse notes are due in monthly installments of
$90,738,  including  interest  at 9.6%.  Although  the final  payment was due on
October 15,  2004,  the  Partnership  made a payment of $813,257 on February 13,
2004 to pay off its remaining debt. The final payment  consisted of cash and the
transfer of the balance in the  restricted  debt  reserve  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 for the
years ended December 31, 2003, 2002 and 2001. The notes were collateralized by a
leasehold   mortgage  on  the   Partnership's   landfill  lease  agreements  and
substantially  all of the assets of the  Partnership.  The loan  agreement  also
provided for a cash funded debt reserve fund. At December 31, 2003 and 2002, the
cash balance in the  restricted  debt  reserve  fund was $756,928 and  $749,821,
respectively. Additions and reductions to the reserve account are defined in the
loan agreement.  The loan agreement  contained various covenants,  including the
maintenance of a specified debt service ratio.

4. Fair Value of Financial Instruments

At December 31, 2003 and 2002, the carrying values of the Partnership's cash and
cash  equivalents,  accounts  receivable,  debt reserve and accounts payable and
accrued expenses  approximate their fair values. The fair value of the long-term
debt, calculated using current rates for loans with similar maturities, does not
differ materially from its carrying value.

5. Electric Power Sales Contract

The  Partnership is committed to sell all of the  electricity it produces to New
England  Power  Service  Company  ("NEP") for prices as  specified  in the Power
Purchase Agreement. The prices are adjusted annually for changes in the Consumer
Price Index, as defined.  The NEP agreement  expires in the year 2020 and can be
terminated by either party under certain conditions in 2010.

6. Landfill Lease and Sublease

The Partnership leases the Central Landfill,  located in Johnston,  Rhode Island
from Rhode Island Resource Recovery Corporation ("RIRRC").  The lease expires in
2020 and can be  extended  for an  additional  10 years.  This  operating  lease
requires  the  Partnership  to pay a royalty  equal to 15% of net  revenues,  as
defined,  until the year 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,
2003,  2002 and 2001,  royalty  expense  relating to the RIRRC lease amounted to
$1,069,192,  $1,003,182 and  $1,025,448,  respectively.  The royalty expense has
been included in the cost of sales in the Statements of Operations.

The  Partnership  subleases  the  Central  Landfill  to the  Central Gas Limited
Partnership ("Gasco").  Gasco operates and maintains 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 income - Effective  January 1, 2001, Gasco is to pay the Partnership an
annual  amount equal to the product of $44,833,  which is adjusted  annually for
inflation,  times the assumed output capacity of each original engine  generator
set in megawatts  installed and operated by the joint venture.  Income  recorded
under the  sublease  amounted to  $553,764,  $552,444 and $547,000 for the years
ended December 31, 2003, 2002 and 2001, respectively.

Fuel expense - The Partnership  agreed to purchase all the landfill gas produced
by Gasco and pay on a monthly  basis  $.014788 per  kilowatt  hour for the first
4,000,000  kilowatt hours,  $.005 per kilowatt hour for kilowatt hours in excess
of 4,000,000  and $.05 per million  BTU's of excess  landfill  gas. The price is
adjusted annually for changes in the Consumer Price Index, as defined. Purchases
from Gasco for the years ended  December  31,  2003,  2002 and 2001  amounted to
$992,711, $941,605 and $937,731, respectively.

7. Transactions with Affiliates

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,
2003, 2002 and 2001,  Ridgewood  Management  charged the  Partnership  $451,626,
$570,159 and $538,262,  respectively, for overhead items allocated in proportion
to the amount invested in projects  managed.  Ridgewood  Management also charged
the  Partnership  for all of the remaining  direct  operating and  non-operating
expenses incurred during the periods.

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, 2003
and 2002, the  Partnership had outstanding  payables and  receivables,  with the
following affiliates:

                                   As of December 31,
                              Due To               Due From
                       -----------------------------------------
                          2003      2002        2003      2002
                       -------------------   -------------------
Ridgewood Management   $  1,311   $344,216   $   --     $   --
Ridgewood Power ....     98,000       --         --         --
Trust III ..........    570,073       --         --      266,285
Trust IV ...........       --      356,473    200,272       --
Other affiliates ...     84,820     84,021       --         --
                       -------------------   -------------------
Total ..............   $754,204   $784,710   $200,272   $266,285
                       ===================   ===================


The Trusts charged interest on certain amounts payable at 9.6% per annum,  which
resulted in interest  expense of $179,503 for the year ended  December 31, 2001.
The Trusts ceased charging interest effective January 1, 2002.

8. Insurance Claim

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 years ended December 31, 2003 and 2002, the
Partnership had recorded $162,991 and $197,284, respectively, of other operating
income as a result of its claims. The Partnership received the proceeds from its
insurance claims in the first and third quarters of 2003.

9. 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.  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 DOER.

On January 17, 2003,  the  Partnership  received a "Statement of  Qualification"
from the  Massachusetts  Division of Energy Resources  ("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.

For the year  ended  December  31,  2003,  the  Partnership  recorded  Renewable
attribute revenue totaling $772,370.