Table of
Contents





UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
DC 20549





FORM
10-K


(Mark
One)


x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
fiscal year ended December 31, 2009


or


o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ________ to _______





Commission
File Number:  0-23432





RIDGEWOOD
ELECTRIC POWER TRUST III


(Exact
Name of Registrant as Specified in Its Charter)


Delaware
            
            22-3264565(State
      or Other Jurisdiction of
              Incorporation
      or Organization)
            
            (IRS
      Employer Identification Number)





1314
      King Street, Wilmington, DE 19801(Address
      of Principal Executive Offices, including Zip Code)





(302)
      888-7444(Registrant’s
      telephone number, including area code)





SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


None





SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:


Investor
      Shares of Beneficial Interest(Title
      of Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes o No
þ





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. Yes o    No þ





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 þ      No
o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o    No o




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. þ




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer   o
            Accelerated
      filer  o
            Non-accelerated
      filer   o
            Smaller
      reporting company    þ(Do
      not check if a smaller reporting
company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o    No  þ





There is
no market for the Investor Shares. The number of Investor Shares outstanding at
February 28, 2010 was 391.8444.







Table of Contents





FORM
10-K





TABLE OF CONTENTS





PART
I








PageItem
      1.
            Business
            1Item
      1A.
            Risk
      Factors
            6Item
      1B.
            Unresolved Staff
      Comments
            9Item
      2.
            Properties
            9Item
      3.
            Legal
      Proceedings
            9Item
      4.
            Reserved
            9PART
  IIItem
      5.
            Market for Registrant’s Common Equity, Related Security
      Holder Matters and Issuer Purchases of Equity
    Securities
            10Item
      6.
            Selected Financial
      Data
            10Item
      7.
            Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
            10Item
      7A.
            Quantitative and Qualitative Disclosures About Market
      Risk
            13Item
      8.
            Financial Statements and Supplementary
      Data
            13Item
      9.
            Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure
            13Item
      9A.
            Controls and
      Procedures
            13Item
      9B.
            Other
      Information
            14PART
      IIIItem
      10.
            Directors, Executive Officers and Corporate
      Governance
            14Item
      11.
            Executive
      Compensation
            15Item
      12.
            Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder Matters
            16Item
      13.
            Certain Relationships and Related Transactions, and
      Director
      Independence
            16Item
      14.
            Principal Accountant Fees and
      Services
            17PART
      IVItem
      15.
            Exhibits and Financial Statement
      Schedules
            18SIGNATURES
            21





Table of Contents





Forward-Looking
Statements





Certain
statements discussed in Item 1. “Business”, Item 3. “Legal
Proceedings”, Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and elsewhere in this Annual Report on
Form 10-K constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.





These
forward-looking statements generally relate to the Trust’s plans, objectives and
expectations for future events and include statements about the Trust’s
expectations, beliefs, plans, objectives, intentions, assumptions and other
statements that are not historical facts. These statements are based upon
management’s expectations, opinions and estimates as of the date they are made.
Although management believes that the expectations, opinions and estimates
reflected in these forward-looking statements are reasonable, such
forward-looking statements are subject to known and unknown risks and
uncertainties that may be beyond the Trust’s control, which could cause actual
results, performance and achievements to differ materially from the results,
performance and achievements projected, expected, expressed or implied by the
forward-looking statements. Examples of events that could cause actual results
to differ materially from historical results or those anticipated
include:





·  the
timing or terms of any sale of the Trust’s assets,


· whether
the landfill gas-fired electric generating projects will be able to obtain
financing required to expand and make planned changes to its operations,


·  the
outcome of the matters described in Item 3. “Legal Proceedings” of this
report,


·  the
outcome of a project level dispute with Pacific Gas & Electric Company
(“PG&E”),


·  the
ability to secure a long-term contract for the sale of energy produced by the
landfill project on favorable terms,


·  changes
in political and economic conditions, or federal or state regulatory
structures,


·  government
mandates, including those associated with climate change,


·  the
ability of customers to pay for energy received,


·  supplies
and prices of fuels,


·  operational
status of generating plants, including mechanical breakdowns, and


·  volatility
in the price for electric energy, natural gas or renewable energy.





Additional
information concerning the factors that could cause actual results to differ
materially from those in the forward-looking statements is contained in Item 1A.
“Risk Factors”, Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and elsewhere in this Annual Report on
Form 10-K. Any forward-looking statement that the Trust makes, speaks only
as of the date of this report. The Trust undertakes no obligation to publicly
update or revise any forward-looking statements or cautionary factors, as a
result of new information, future events or otherwise, except as required by
law.





PART I


ITEM 1.  BUSINESS





Overview





Ridgewood
Electric Power Trust III (the “Trust”) is a Delaware trust formed on December 6,
1993 primarily to make investments in projects and businesses in the energy and
infrastructure sectors. The Managing Shareholder of the Trust is Ridgewood
Renewable Power LLC, a New Jersey limited liability company (the “Managing
Shareholder” or “RRP”). As the Managing Shareholder, RRP has direct and
exclusive control over the management and operations of the Trust.





The Trust
focuses primarily on projects fueled by natural gas and renewable sources of
fuel. These projects allowed the Trust to develop long-term positions in
attractive specialty markets for products and services provided by its projects
and companies. As of December 31, 2009, the projects in which the Trust had
investments were located in the United States. As of that date, the Trust had
investments in a landfill gas-fired electric generating project with total
capacity of 20.4 megawatts (“MW”) and in two electric cogeneration projects,
currently not operating, with total capacity of 14.2MW.





The
Managing Shareholder is marketing the Trust’s landfill projects for sale, which
represents the only other remaining investment of the Trust. The Managing
Shareholder cannot predict the timing of the sale process or whether any
sale will occur.





The Trust
initiated its private placement offering in January 1994, selling whole and
fractional investor shares of beneficial interests of $100,000 per share
(“Investor Shares”). There is no public market for Investor Shares and one is
not likely to develop. In addition, Investor Shares are subject to significant
restrictions on transfer and resale and cannot be transferred or resold except
in accordance with the Trust’s Declaration of Trust (“Declaration of Trust”) and
applicable federal and state securities laws. The offering was concluded in May
1995, and after payment of offering fees, commissions and investment fees, the
Trust had $32.9 million available for investments and operating
expenses.




1
 Table of Contents





Managing
Shareholder





RRP, via
a predecessor corporation, was founded in 1991 by Robert E. Swanson. As the
Managing Shareholder, RRP has direct and exclusive control over the management
of the Trust’s operations. With respect to project investments, RRP locates
potential projects, conducts appropriate due diligence and negotiates and
completes the transactions in which the investments are made by the
Trust.





In
addition, RRP performs, or arranges for the performance of, the operation and
maintenance of the projects invested in by the Trust and the management and
administrative services required for Trust operations. Among other services, RRP
administers the accounts, including tax and other financial information, and
handles relations with the shareholders. RRP also provides the Trust with office
space, equipment and facilities and other services necessary for its
operation.





As
compensation for its management services, the Managing Shareholder is entitled
to (i) an annual management fee, payable monthly, equal to 2.5% of
the Trust's prior year net asset value, and (ii) a 20% interest
in the cash distributions made by the Trust in excess of certain threshold
amounts expressed in terms of shareholder returns, which have not been achieved
by the Trust. The Managing Shareholder is also entitled to receive reimbursement
from the Trust for operating expenses incurred by the Trust, or on behalf of the
Trust and paid by RRP, as the Managing Shareholder. RRP has arranged for
administrative functions required to be performed for the Trust to be performed
by an affiliate, Ridgewood Power Management LLC (“RPM”), and at RPM’s
costs, such costs are reimbursed to RPM by the Trust. RRP also serves as
the managing shareholder (or managing member, as appropriate) of a number of
affiliated trusts and investment vehicles similar to the Trust and, through RPM,
provides services to those entities similar to those provided to the
Trust.





Affiliates
of RRP act on behalf of a number of investment vehicles in the oil and gas and
venture capital sectors in a manner similar to that for which RRP serves on
behalf of the Trust.





Projects
and Properties





The
following table is a summary of the Trust’s investment portfolio as of December
31, 2009 detailing the nature of the business and the portion of the
investment owned by the Trust.





Company
            Trust
              Interest
            Leased/
              Owned1
            Purpose
            Structure2San
      Joaquin
            100%
            Leased
            Electricity
      generation
            Steel
      building/
              concrete
      slabByron
            100%
            Leased
            Electricity
      generation
            Steel
      building/
              concrete
      slabRhode
      Island LFG Genco
            19.56%
            Leased
            Electricity
      generation
            Steel
      building/
              concrete
      slab








1
            Refers
      to the locations on which the Trust’s projects are located and not the
      projects themselves.




2
            Describes
      the type of structure in which the projects of the Trust are
      housed.





San
Joaquin and Byron





In
January 1995, the Trust acquired 100% of the existing partnership interests of
JRW Associates, L.P. (“San Joaquin”), which owned and operated an 8.5MW electric
cogeneration facility located in Atwater, California. The aggregate purchase
price was $4.9 million, including transaction costs.





In January 1995, the Trust formed Byron Power Partners,
L.P. (“Byron”), wholly-owned by the Trust, and acquired a 5.7MW electric
cogeneration facility located in Byron, California. The aggregate purchase
price was $2.5 million, including transaction costs.





San
Joaquin and Byron (together the “Norcals”) were fueled by natural gas and sold
their electric output to PG&E under power contracts that expire in 2020.
Thermal energy from the San Joaquin project was used to provide steam to an
adjacent food processing company under a long-term contract that also expires in
2020. Thermal energy from the Byron project was used to evaporate brine from oil
and gas wells under a long-term contract that also expires in 2020.





2
 Table of Contents





The
Norcals are operated and maintained by RPM, on an at-cost basis.





The
Norcals’ contract prices with PG&E were determined pursuant to a contract
formula approved by the California Public Utilities Commission with the energy
payment originally based upon a benchmark energy price adjusted for changes over
time in a natural gas price index.





The
Norcals have agreements with Shell Energy North America (US), L.P.
(“Shell”) to purchase natural gas fuel at market price. The ability of the
Norcals to operate profitably is largely dependent on the price of natural gas.
When natural gas prices are at a level where operating costs exceed the revenues
the plants can generate, the plants have temporarily closed in the past.
Historically, the Norcals have been closed during portions of winter and
spring.





The Norcals suspended their operations beginning
the fourth quarter of 2008 as the estimated incremental cost of production
exceeded the estimated revenues from electricity sales. In 2009, due to
continued projected operating losses, the Managing Shareholder decided to
permanently shut down the operations of the Norcals and is currently in
negotiations to sell the Byron and San Joaquin projects. These negotiations
are still ongoing and the Managing Shareholder cannot predict when or whether a
sale will be consummated or the terms of such a sale.On February 8,
2010, San Joaquin received a notice from PG&E that due to San Joaquin’s
failure to deliver power under the power sale agreement since October 2008,
PG&E is claiming $6.3 million from San Joaquin. If PG&E were to deliver
a similar notice regarding Byron, the Managing Shareholder estimates that
approximately the same amount would be sought. It is the opinion of the Managing
Shareholder that these are not obligations of the Trust. To date, no further
action has been taken by PG&E or the Norcals to resolve this matter, though
it is anticipated that any amounts claimed would be disputed by the Norcals.
Additionally, the Norcals may also be obligated to make termination payments
under their respective operating ground leases. Neither San Joaquin nor Byron
have the ability to pay these amounts, if actually due, and the installed
equipment at these sites have minimal fair value, and zero book accounting
value. While the Trust is not a party to any of
the Norcals’ power sale agreements or ground leases, any termination fees or
payments, or other penalties, if determined to be an obligation of the Trust, or
an obligation for which the Trust is otherwise legally responsible, would have a
material adverse effect on the business, results and financial condition of the
Trust.





Rhode
Island LFG Genco, LLC





Ridgewood Providence Power Partners, L.P. (“Ridgewood
Providence”) was formed in February 1996 as a Delaware limited partnership and,
in April 1996, Ridgewood Providence purchased substantially all of the net
assets of Northeastern Landfill Power Joint Venture. The assets acquired
included a 13.8MW capacity electrical generating station and associated gas
treatment system, located at the Central Landfill in Johnston, Rhode Island (the
“Landfill”). The project included nine reciprocating engine generator sets
(“gensets”) fueled by methane gas produced by and collected from the Landfill.
Prior to the reorganization discussed below, the Trust owned 35.7% of Ridgewood
Providenceand the remaining 64.3% interest was owned by Ridgewood
Electric Power Trust IV (“Trust IV”).





In April
2002, the Managing Shareholder formed Ridgewood Rhode Island Generation LLC
(“RRIG”) through a joint venture between Ridgewood Electric Power Trust I
(“Trust I”) (15%) and the Ridgewood Power B Fund/Providence Expansion (“B Fund”)
(85%) for the purpose of utilizing a portion of the supply of gas from the
Landfill that was in excess of the quantity that could be used by Ridgewood
Providence. The RRIG project currently is a 6.6MW facility and include four
gensets. RRIG’s capacity declined by 2.6MW, from 9.2MW, as two gensets were
decommissioned in the third quarter of 2009. Prior to the reorganization
discussed below, the Trust did not own any interest in RRIG.





Rhode
Island LFG Genco, LLC (“RILG”) was formed in October 2007 as a Delaware limited
liability company which must be dissolved no later than December 31, 2107. On November 17, 2008, the Trust, Trust I, Trust IV and B
Fund entered directly or indirectly, through one or more subsidiaries, into a
series of agreements relating to the operations of Ridgewood Providence and RRIG
at the Landfill.The principal purpose of these agreements was to
consolidate the activities of the Trust, Trust I, Trust IV and B Fund, at the
Landfill under one entity, RILG, for the purposes of developing a new electric
generating facility and consolidating all gas rights under one entity.
References to RILG herein refer to RILG or RILG and its subsidiaries, as the
context requires.





Pursuant
to terms and conditions of a contribution agreement, the Trust, Trust I, Trust
IV and B Fund each contributed certain membership, partnership and economic
interests that they held in Ridgewood Providence, RRIG, Rhode Island Gas
Management LLC (“RIGM”) and Ridgewood Providence Power Corporation (“RPPC”) to
RILG, in exchange for their allocable interests in RILG.  As a result
of the reorganization, the Trust, Trust I, Trust IV and B Fund directly or
indirectly own all of the equity interests in RILG. The Trust contributed its
35.7% interest in Ridgewood Providence in exchange for its 19.56% interest in
RILG.





The
assets owned by Ridgewood Providence and RRIG currently have a combined 20.4MW
of electrical generating capacity and are operated under contract by RPM on an
at-cost basis.





3
 Table of Contents


The
electricity produced by Ridgewood Providence was historically sold to
New England Power Service Company (“NEP”) under a long-term electric power
sales contract which would have expired in 2020. In July 2009, NEP under the
long-term contract elected to exercise its one-time option to terminate its
contract with RILG, effective January 2010. RILG currently sells all of its
electrical output in the spot or day-ahead wholesale electricity market. RILG is
currently seeking alternate arrangements for the sale of its output of its
electricity generating capacity in lieu of selling the output at open market
spot prices. Whether this effort will be successful and what the results to RILG
will be if successful cannot be determined at this time.


Under the site lease and gas rights agreement entered
into in connection with the transaction, Rhode Island Resource Recovery
Corporation (“RIRRC”), the owner and operator of the Landfill, transferred 100%
of the current and future landfill gas produced at the Landfill to
RILG. Effective with the commercial operation of the new generating
facility, RILG will pay a royalty of 15% of gross revenue to RIRRC, net of
certain credits, from all sources including electricity, capacity and Renewable
Portfolio Standards Attributes (“RPS Attributes”). RILG will also pay
monthly rent of $3,400 (escalated for inflation beginning in 2010) for the land
on which the treatment facility is intended to be built. The payment
arrangements under the previously existing arrangements will continue in place
until the new generating facility begins commercial operation. Under
the prior existing RPS Attribute agreement between Ridgewood
Providence and RIRRC, Ridgewood Providence is required to pay 15% net revenue
royaltiesfrom the sale of its RPS Attributes to each of RIRRC and Ridgewood Gas Services LLC. Inaddition, Ridgewood Providence is also required to pay, as royalty, 18%
of power generation revenue to RIRRC. Similarly,
RRIG is required to pay 15% net revenue royalties derived from the sale of its
RPS Attributes to RIRRC, net of certain
adjustments.





The site
lease and gas rights agreement also requires that Ridgewood Providence terminate
operation of its existing facility, decommission the facility and turn it over
to RIRRC, if requested, but no earlier than December 31, 2011 (subject to
acceleration with a payment by RIRRC). RILG may also need to relocate a portion
of RRIG’s plant and will split any cost of such relocation with RIRRC (subject
to a $250,000 cap on RIRRC’s share).





RILG is also obligated, under the terms of the various
agreements with RIRRC, to construct a new electric generating facility at the
Landfill and to assume primary responsibility for costs associated with the
landfill gas collection system at the Landfill as of the first to occur of the
commencement of operation ofa new electric generating facility or June 1, 2013.RILG is also responsible
for the development and construction of a sulfur treatment facility on the
Landfill and the construction of new pipes and headers. The cost of
building and operating the sulfur treatment facility and the pipes and headers
is estimated to be approximately $5 million. The cost of the sulfur
treatment facility will be split equally between RILG and RIRRC and the entire
cost associated with the construction of pipes and headers will be paid by
RILG.  In addition, the cost of new flares on the Landfill will be
borne by RIRRC, but in certain circumstances, the costs may be shared with RILG.
If RILG fails to comply with these obligations, it
could be subject to monetary damages and could also forfeit its contracted gas
rights as discussed in Item 7. “Management’s Discussion and Analysis of
Financial Condition and Result of Operations - Contractual Obligations and
Commitments”.





On
November 3, 2009, RILG received notice from the United States Department of
Energy (“DOE”) that it had been awarded a grant of $15 million towards the
purchase of equipment relating to RILG expansion. The final detail of the award
is subject to final contract negotiations between RILG and the DOE. As a result,
the exact amount, and timing of the receipt of any award, cannot currently be
predicted.





Massachusetts law
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 renewable generation units powered by one of several renewable
fuels, such as solar, biomass or landfill methane gas.  Beginning
in 2009, each such retail supplier must obtain at least approximately
four percent of its supply from qualified new renewable
generation units and approximately four percent from qualified older
renewable generation units. The regulations providing for certain of these
provisions are currently being reviewed by the Massachusetts Department of
Energy Resources (“DOER”) and could be modified as a result of that
review.





In
January 2003, Ridgewood Providence received a “Statement of Qualification” from
the DOER pursuant to the Renewable Portfolio Standards (“RPS”) adopted by
Massachusetts. Since Ridgewood Providence became qualified, it has been
able to sell to retail electric suppliers the RPS Attributes associated with its
electrical energy, subject to “vintage” provisions, which disqualifies the
amount of a facility’s generation of electric energy measured by its average
output during the period 1995 through 1997. Retail electric suppliers may
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.





During 2004, Ridgewood Providence became qualified to
sell RPS Attributes in Connecticut under a similar RPS program, except that the
Connecticut program does not have “vintage” provisions. Thus, Ridgewood
Providence can sell the 86,000 megawatt hours that are ineligible under
Massachusetts standardsinto the Connecticut market. During 2009 and
2008, Ridgewood Providence sold its “vintage” RPS Attributes pursuant to
agreements with various power marketers.





The
output from Ridgewood Providence and RRIG qualifies for renewable energy
incentives in Massachusetts, New Hampshire, Rhode Island and Connecticut. The
output of RRIG electrical generating capacity also qualifies for Section 45
federal tax credits. The federal tax credits are expected to continue until
October 2015, the tenth anniversary of the commissioning of the
gensets.





4
 Table of Contents





RILG and
several of its affiliates had an agreement with a power marketer for which they
were committed to sell RPS Attributes derived from their electric generation.
The agreement provided such power marketer with six separate annual options to
purchase such attributes from 2004 through 2009 at fixed prices, as defined in
the agreement. The power marketer did not exercise its option to purchase 2009
RPS Attributes, and a deposit provided by RILG and its affiliates to secure
their obligations under the agreement was returned by April 2009. All required
RPS Attributes were supplied by April 2009 and the contract expired according to
its terms on June 15, 2009. RILG currently has no long-term agreements for the
sale of RPS Attributes.





Other
Investments





On
February 19, 2008, the Trust received a distribution of $0.5 million related to
the bankruptcy of Globe Manufacturing Corporation (“Globe”), which occurred in
January 2001. The Trust had filed a claim against Globe totaling $4 million and
does not anticipate that any of the remaining claim will be
satisfied.





Project
Raw Materials





The
Trust’s investments convert a raw material into a finished product and the
arrangements for obtaining these raw materials are a key element in the business
of the Trust. The landfill electricity generating facilities consist of gensets
that use methane-containing landfill gas as fuel. Gas is collected from the
Landfill as it is produced through natural anaerobic digestion of the waste.
RILG does not own or operate the Landfill but has arrangements with RIRRC which
give the project certain rights, including the right to build the project,
occupy the compound and use the gas from the Landfill. These arrangements are
set out in long-term agreements that include provisions for royalty payments
from the project to RIRRC as compensation for granting these
rights.





Competition





Prior to
January 2010, power generated by RILG was partly sold pursuant to long-term
contract and partly at prevailing market prices. Effective January 2010, all of
the power generated by RILG is sold at prevailing market prices. RILG competes
with other renewable energy producers for the sale of the electricity and RPS
Attributes.





Government
Incentives and Regulation





Projects
of the Trust 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 the projects and
emissions and other substances produced by the projects. 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.





RILG
qualifies for incentives because of the use of renewable fuel.





All of
the Trust’s projects have operated under Qualifying Facility Certifications
issued by the Federal Energy Regulatory Commission. Even though these projects
have no employees, they are affected by general employment regulations in the
jurisdictions in which they operate through the RPM operations and maintenance
agreements. The Trust considers these regulations to be routine and does not
consider the cost of compliance to be material.





Insurance





The Trust
has in place, either directly or through investee companies, insurance typical
for activities such as those conducted by the Trust or its investee companies.
These policies include property and casualty, business interruption and
workman’s compensation insurance, which the Trust believes to be
appropriate.





Employees





The Trust
does not have employees. The activities of the Trust are performed either by
employees of the Managing Shareholder or its affiliates.




5
 Table of Contents




Offices





The
principal office of the Trust is located at 1314 King Street, Wilmington,
Delaware, 19801 and its phone number is 302-888-7444. The Managing Shareholder’s
principal office is located at 14 Philips Parkway, Montvale, New Jersey, 07645
and its phone number is 201-447-9000.





ITEM 1A. RISK FACTORS





In
addition to the other information set forth elsewhere in this report, you should
carefully consider the factors discussed below.





RISKS
INHERENT IN THE BUSINESSES OF THE TRUST





RILG
depends on the production of landfill methane gas from the Landfill site on
which they operate and access to that gas production.





A number
of factors influence the amount and quality of landfill methane gas produced by
a landfill site, including the quantity and makeup of the waste deposited into
the site by RIRRC, the manner and sequence of the waste deposition, the
non-waste materials used to support the landfill structure and the amount of
liquid in the landfill. A number of factors also affect access to gas that is
being produced by a landfill including the land filling strategy and practices
of the landfill site operator. To the extent that these factors limit the
production of landfill methane gas or the ability of the project to collect and
use that gas, RILG may not maintain profitable output levels.





RILG
is subject to monetary damages and forfeiture of its gas rights if the
facilities at the Landfill are not expanded as contractually
required.





The terms of RILG’s site lease and gas rights agreement
will continue so long as RILG or an affiliate has electricity generating
facilities on the Landfill capable of using the landfill gas on an economic
basis or otherwise making economic use of the landfill gas products, including,
without limitation, sales to third parties. RILG is also obligated, under
the terms of the various agreements with RIRRC, to construct a new electric
generating facility at the Landfill and to assume primary responsibility for
costs associated with the landfill gas collection system at the Landfill as of
the first to occur of the commencement of operation ofthe new electric
generating facility or June 1, 2013. RILG is
also responsible for the development and construction of a sulfur treatment
facility on the Landfill and the construction of new pipes and headers. If RILG
fails to comply with these obligations, it could be subject to monetary damages
and could also forfeit its contracted gas rights. While the full cost of the
expansion activities is not yet known, it is the opinion of the Managing
Shareholder that RILG has insufficient capital to meet all of its obligations to
expand its Landfill operations. As a result,for the development efforts
to be completed, RILG must either be sold to
entities that can invest in the development of these projects or obtain
third-party financing to perform its duties under the various agreements. While
the Managing Shareholder believes a portion of such financing will be available,
there can be no assurance whether or when RILG can obtain sufficient financing
or obtain it on satisfactory terms.  The current condition of the
capital markets may make selling or obtaining financing for these projects very
difficult.





The
Norcals could be faced with penalties for breaching their contracts with
PG&E and could be required to make termination payments under their
operating ground leases.





On
February 8, 2010, San Joaquin received a notice from PG&E that due to San
Joaquin’s failure to deliver power under the power sale agreement since October
2008, PG&E is claiming $6.3 million from San Joaquin. If PG&E were to
deliver a similar notice regarding Byron, the Managing Shareholder estimates
that approximately the same amount would be sought. Additionally, the Norcals
may also be obligated to make termination payments under their respective
operating ground leases. Neither San Joaquin nor Byron have the ability to pay
these amounts, if actually due, and the installed equipment at these sites have
minimal fair value, and zero book accounting value. The Trust is not a party to
any of the Norcals’ power sale agreements or ground leases and, in the opinion
of the Managing Shareholder, not an obligor of these potential obligations.
However, if these amounts are determined to be obligations of the Trust, or
obligations for which the Trust is otherwise legally responsible, they would
have a material adverse effect on the business, results and financial condition
of the Trust.





The
projects of the Trust are subject to regulatory changes (including changes in
environmental regulations) that could significantly reduce revenues or increase
expenses of the Trust.





Regulatory
changes, such as emission control changes and climate change regulations could
impact the operations of the Trust’s projects. Such changes could increase their
costs, prevent them from operating or alternatively, increase their
value.





6
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The
Trust’s projects sell their electricity output and RPS Attributes at open market
prices and could be adversely impacted by unfavorable changes in market
prices.





Historically,
RILG sold electricity partly at fixed prices pursuant to a long-term contract
and partly at prevailing market prices. However, effective January 2010, RILG
started selling all of its electricity at market prices.  If market
prices for electricity fall sufficiently, RILG may not be able to operate
profitably.  Effective January 2009, all RPS Attributes generated by
RILG’s operations are sold at market prices. These market prices are highly
dependent on the available supply of RPS Attributes. The supply of available RPS
Attributes in the region has been increasing and is expected to continue to
increase in the coming years. Additionally, the price for RPS Attributes has
been declining since 2008. If the market prices for RPS Attributes continue to
decline, such a decline would adversely impact the profitability of RILG, and,
if severe enough or if coupled with a decrease in electricity prices, could
result in a suspension of operations.





The
projects of the Trust depend on the near-continuous operation of their
equipment. Should the productivity of some or all of this equipment be
compromised or should the equipment fail altogether, the projects and the Trust
would be adversely affected. The Managing Shareholder may also experience
difficulty in hiring qualified operating personnel.





The
primary equipment of the projects is gensets. This equipment is subject to
mechanical failure that the Trust may not be able to predict and that can render
specific projects inoperable for considerable periods of time. This risk also
extends to failures of the electricity grid near the Trust’s projects that could
prevent the affected project or projects from delivering its electricity. In
addition, the Managing Shareholder may experience price increases for, or
difficulty in obtaining, spare parts for the Trust’s projects and in identifying
and hiring personnel qualified to operate, maintain and repair the specialized
equipment that make up parts of the Trust’s projects.





The
Trust is, and may in the future become, involved in litigation that may be
resolved unfavorably.





The Trust
faces an inherent business risk of exposure to various types of claims and
lawsuits that may arise in the ordinary course of business. Although it is not
possible to predict the timing, nature or outcome of such claims or lawsuits
should they arise, any such claims or proceedings, or any claim or proceeding
discussed herein under Item 3. “Legal Proceedings”, may be disposed of
unfavorably to the Trust. An unfavorable ruling could include money damages or
injunctive relief and could result in a material adverse impact on the Trust's
business, results or financial condition. Generally, for accounting purposes,
the Trust's results of operations would be impacted for the period in which the
matter is ultimately resolved unfavorably to the Trust or an unfavorable outcome
becomes probable and reasonably estimable. In addition, while the Trust
maintains insurance coverage with respect to certain claims, the Trust may not
be able to obtain such insurance on acceptable terms in the future, if at all,
and any such insurance may not provide adequate coverage against any such
claims.





RISKS
RELATED TO THE NATURE OF THE TRUST’S SHARES





The
Trust’s shares have significant restrictions on transferability and liquidity
and shareholders are required to hold the shares indefinitely.





The
Trust’s shares are illiquid investments. There is currently no market for these
shares and one is not likely to develop. Because there may be only a limited
number of persons who purchase shares and because there are significant
restrictions on the transferability of such shares under the Trust’s Declaration
of Trust and under applicable federal and state securities laws, it is expected
that no public market will develop. Moreover, neither the Trust nor the Managing
Shareholder will provide any market for the shares. Shareholders are generally
prohibited from selling or transferring their shares except in the circumstances
permitted under the Declaration of Trust and applicable law, and all such sales
or transfers require the Trust’s consent, which it may withhold at its sole
discretion. Accordingly, shareholders have no assurance that an investment can
be transferred and must be prepared to bear the economic risk of the investment
indefinitely.





Shareholders
are not permitted to participate in the Trust’s management or operations and
must rely exclusively on the Managing Shareholder.





Shareholders
have no right, power or authority to participate in the Trust’s management or
decision making or in the management of the Trust’s projects. The Managing
Shareholder has the exclusive right to manage, control and operate the Trust’s
affairs and business and to make all decisions relating to its
operation.





The
Trust’s assets are generally illiquid and any disposition of Trust assets is at
the discretion of the Managing Shareholder.





The
Trust’s interest in projects is illiquid. The Managing Shareholder has full
discretion to determine whether any project, or any partial interest, should be
sold and the terms and conditions under which such project would be sold.
Consequently, subject to shareholder approvals as detailed in the Declaration of
Trust, shareholders will depend on the Managing Shareholder for the
decision to sell all or a portion of an asset, or retain it, for the benefit of
the shareholders and for negotiating and completing the sale
transaction.





7
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The
Trust indemnifies its officers, as well as the Managing Shareholder and its
employees, for certain actions taken on its behalf. Therefore, the Trust has
limited recourse relative to these actions.





The
Declaration of Trust provides that the Trust’s officers and agents, the Managing
Shareholder, the affiliates of the Managing Shareholder and their respective
directors, officers and agents when acting on behalf of the Managing Shareholder
or its affiliates on the Trust’s behalf, will be indemnified and held harmless
by the Trust from any and all claims arising out of the Trust’s management,
except for claims arising out of bad faith, gross negligence or willful
misconduct or a breach of the Declaration of Trust. Therefore, the Trust may
have difficulty sustaining an action against the Managing Shareholder, or its
affiliates and their officers, based on breach of fiduciary responsibility or
other obligations to the shareholders.





The
Managing Shareholder is entitled to receive a management fee regardless of the
Trust’s profitability and also receives cash distributions.





The
Managing Shareholder is entitled to receive an annual management fee from the
Trust regardless of whether the Trust is profitable in that year. The annual
fee, payable monthly, is equal to 2.5% of the Trust's prior year’s net asset
value. In addition to its annual management fee, the Managing Shareholder, as
compensation for its management services, will receive 20% of the Trust’s cash
distributions to shareholders upon the shareholders having received a certain
minimum level of distributions as set out in the Declaration of Trust, even
though the Managing Shareholder has not contributed any cash to the Trust.
Accordingly, shareholders contribute all of the cash utilized for the Trust’s
investments and activities. If the Trust’s projects are unsuccessful, the
shareholders may lose 100% of their investment while the Managing Shareholder
will not suffer any investment losses because it did not contribute any capital.
None of the compensation to be received by the Managing Shareholder has been
derived as a result of arm’s length negotiations.





Cash
distributions are not guaranteed and may be less than anticipated or
estimated.





Distributions
depend primarily on available cash from project operations. At times,
distributions have been delayed to repay the principal and interest on project
or Trust borrowings, if any, or to fund other costs. The Trust’s taxable income
will be taxable to the shareholders in the year earned, even if cash is not
distributed.





Because
the Managing Shareholder manages other electricity generation and infrastructure
trusts, it may have conflicts of interest in its management of the Trust’s
operations.





Shareholders
will not be involved in the management of the Trust’s operations. Accordingly,
they must rely on the Managing Shareholder’s judgment in such matters. Inherent
with the exercise of its judgment, the Managing Shareholder will be faced with
conflicts of interest. While neither the Trust nor the Managing Shareholder have
specific procedures in place in the event of any such conflicting
responsibilities, the Managing Shareholder recognizes that it has fiduciary
duties to the Trust in connection with its position and responsibilities as
Managing Shareholder and it intends to abide by such fiduciary responsibilities
in performing its duties. Therefore, the Managing Shareholder and its affiliates
will attempt, in good faith, to resolve all conflicts of interest in a fair and
equitable manner with respect to all parties affected by any such conflicts of
interest. However, the Managing Shareholder is not liable to the Trust for how
conflicts of interest are resolved unless it has acted in bad faith, or engaged
in gross negligence or willful misconduct.





TAX
RISKS ASSOCIATED WITH AN INVESTMENT IN SHARES





The Trust
is organized as a Delaware trust and the Managing Shareholder has qualified the
Trust as a partnership for federal tax purposes. The principal tax risks to
shareholders are that:





·
            The
      Trust may recognize income taxable to the shareholders but may not
      distribute enough cash to cover the income taxes owed by shareholders on
      the Trust’s taxable income.





·
            The
      allocation of Trust items of income, gain, loss, and deduction may not be
      recognized for federal income tax
purposes.





·
            All
      or a portion of the Trust’s expenses could be considered either investment
      expenses (which would be deductible by a shareholder only to the extent
      the aggregate of such expenses exceeded 2% of such shareholder’s adjusted
      gross income) or as nondeductible items that must be
      capitalized.




8
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·
            All
      or a substantial portion of the Trust’s income could be deemed to
      constitute unrelated business taxable income, such that tax-exempt
      shareholders could be subject to tax on their respective portions of such
      income.





·
            If
      any Trust income is deemed to be unrelated business taxable income, a
      shareholder that is a charitable remainder trust could have all of its
      income from any source deemed to be
taxable.





·
            All
      or a portion of the losses, if any, allocated to the shareholders will be
      passive losses and thus deductible by the shareholder only to the extent
      of passive income.





·
            The
      shareholders could have capital losses in excess of the amount that is
      allowable as a deduction in a particular
year.





Although
the Trust has obtained an opinion of counsel regarding the matters described in
the preceding paragraph when it was established, it will not obtain a ruling
from the IRS as to any aspect of the Trust’s tax status. The tax consequences of
investing in the Trust could be altered at any time by legislative, judicial, or
administrative action.





If
the IRS audits the Trust, it could require investors to amend or adjust their
tax returns or result in an audit of their tax returns.





The IRS
may audit the Trust’s tax returns. Any audit issues will be resolved at the
Trust level by the Managing Shareholder.


If
adjustments are made by the IRS, corresponding adjustments will be required to
be made to the federal income tax returns of the shareholders, which may require
payment of additional taxes, interest, and penalties. An audit of the Trust’s
tax return may result in the examination and audit of a shareholder’s return
that otherwise might not have occurred, and such audit may result in adjustments
to items in the shareholder’s return that are unrelated to the Trust’s
operations. Each shareholder bears the expenses associated with an audit of that
shareholder’s return.





In the
event that an audit of the Trust by the IRS results in adjustments to the tax
liability of a shareholder, such shareholder will be subject to interest on the
underpayment and may be subject to substantial penalties.





The tax
treatment of the Trust cannot be guaranteed for the life of the Trust. Changes
in laws or regulations may adversely affect any such tax treatment.





Deductions,
credits or other tax consequences may not be available to shareholders.
Legislative or administrative changes or court decisions could be forthcoming
which would significantly change the statements herein. In some instances, these
changes could have substantial effect on the tax aspects of the Trust. Any
future legislative changes may or may not be retroactive with respect to
transactions prior to the effective date of such changes. Bills have been
introduced in Congress in the past and may be introduced in the future which, if
enacted, would adversely affect some of the tax consequences of the
Trust.





ITEM 1B.  UNRESOLVED STAFF COMMENTS





Not
applicable.





ITEM 2.  PROPERTIES





Information
regarding the Trust’s properties is contained in Item 1. “Business”, under the
heading “Projects and Properties”.





ITEM 3.  LEGAL PROCEEDINGS





On August 16, 2006, the Trust and several affiliated
entities, including the Managing Shareholder, filed lawsuits against the former
independent registered public accounting firm for the Trust and several
affiliated entities, Perelson Weiner LLP (“Perelson Weiner”), in New Jersey
Superior Court. The suit alleged professional malpractice and breach of contract
in connection with audit and accounting services performed for the Trust and
other plaintiffs by Perelson Weiner. On October 20, 2006, Perelson Weiner filed
a counterclaim against the Trust and other plaintiffs, alleging breach of
contract due to unpaid invoices with a combined total of approximately $1.2
million. Discovery is ongoing anda trial date is currently scheduled for
May 17, 2010. The costs and expenses of this
litigation, including adverse judgments, if any, are being paid by the Managing
Shareholder and affiliated management companies and not the underlying
investment funds.





ITEM 4.  RESERVED





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 Table of Contents





PART II





ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
SECURITY HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES





Market
Information





There has
never been an established public trading market for the Trust’s Investor
Shares.





Holders





As of
February 28, 2010, there were 857 holders of Investor Shares.





Dividends





The Trust
made no distributions for the year ended December 31, 2009. Trust distributions for the year ended December 31, 2008
were as follows (in thousands, except per share data):





Distributions
      to Investors
            
            $
            51Distributions
      per Investor Share
            
            
            130Distributions
      to Managing Shareholder
            
            
            1





While the
remaining operating projects of the Trust are for sale, the Trust does not
expect to make distributions.





ITEM 6.  SELECTED FINANCIAL DATA





Not
required.





ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





The
following discussion and analysis should be read in conjunction with the Trust’s
Consolidated Financial Statements and Notes which appear elsewhere in this
Annual Report on Form 10-K. This discussion contains forward-looking
statements that involve risks, uncertainties and assumptions. The Trust’s actual
results could differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth in
“Forward-Looking Statements”, Item 1A. “Risk Factors” and elsewhere in this
Annual Report on Form 10-K.





Overview





The Trust
is a Delaware trust formed on December 6, 1993, primarily to make investments in
projects and businesses in the energy and infrastructure sectors. RRP, a New
Jersey limited liability company, is the Managing Shareholder of the Trust and
has direct and exclusive control over the management and operations of the
Trust.





The Trust
focuses primarily on small scale projects fueled by natural gas and renewable
sources of fuel. These projects allowed the Trust to develop long-term positions
in attractive specialty markets for products and services provided by its
projects and companies. As of December 31, 2009, the projects in which the Trust
had investments were located in the United States. As of that date, the Trust
had investments in a landfill gas-fired electric generating project with total
capacity of 20.4MW and in two electric cogeneration projects, currently not
operating, with total capacity of 14.2MW. RRIG’s capacity
declined by2.6MW, from9.2MW, as two gensets were decomissioned in the third
quarter of 2009.





The
Trust’s accompanying consolidated financial statements include the accounts of
the Trust and its wholly-owned subsidiaries, San Joaquin and Byron. The Trust’s
consolidated financial statements also include the Trust’s 19.56% interest in
RILG, effective November 17, 2008, which is accounted for under the equity
method of accounting, as the Trust has the ability to exercise significant
influence but does not control the operating and financial policies of the
investment.





Prior to
November 17, 2008, the Trust owned a 35.7% noncontrolling interest in Ridgewood
Providence and the remaining 64.3% of Ridgewood Providence was owned by Trust
IV. On November 17, 2008, the Trust and other affiliated entities agreed to
contribute their interest in Ridgewood Providence, RRIG, RIGM and RPPC to a new
entity, RILG. The Trust contributed its 35.7% interest in Ridgewood Providence
in exchange for a 19.56% interest in RILG. The Trust’s interest in Ridgewood
Providence was accounted for using the equity method of accounting.





10
 Table of Contents





Based on
the Trust’s accounting for its investments, revenues and cost of revenues of the
Trust for the years ended December 31, 2009 and 2008 have been derived from the
operations of the Norcals.





The Norcals suspended their
operations beginning the fourth quarter of 2008 as the estimated incremental
cost of production exceeded the estimated revenues from electricity
sales. In 2009, due to continued projected operating losses, the Managing
Shareholder decided to permanently shut down the operations of the Norcals and
is currently in negotiations to sell the Byron and San Joaquin
projects. These negotiations are still ongoing and the Managing Shareholder
cannot predict when or whether a sale will be consummated or the terms of such a
sale.





RILG’s revenue isderived from the sale of
electricity generated and the sale of related RPS Attributes. For the year ended
December 31, 2009, RILG derived $4.4 million, or 31%, of its annualrevenues from the sale of RPS Attributes. As discussed
in Item 1A. "Risk Factors", the supply of RPS Attributes has been increasing and
is expected to continue to increase in coming years, which has resulted in a
decrease in the price of RPS Attributes.





On
November 3, 2009, RILG received notice from the DOE that it had been awarded a
grant of $15 million towards the purchase of equipment relating to RILG
expansion. The final detail of the award is subject to final contract
negotiations between RILG and the DOE. As a result, the exact amount, and timing
of the receipt of any award, cannot currently be predicted.





The
Managing Shareholder is marketing RILG and the Norcals for sale, which represent
the only remaining investments of the Trust. The Managing Shareholder cannot
predict the timing of the sales process or whether any sales will
occur.





Critical
Accounting Policies and Estimates





The
following discussion and analysis of the Trust’s financial condition and results
of operations are based upon the Trust’s consolidated financial statements,
which have been prepared in conformity with accounting principles generally
accepted in the United States of America (“GAAP”). In preparing these financial
statements, the Trust is required to make certain estimates and assumptions that
affect the reported amounts of the Trust’s assets, liabilities, revenues and
expenses, including the disclosure of contingent assets and liabilities. The
Trust evaluates these estimates and assumptions on an ongoing basis. The Trust
bases its estimates and assumptions on historical experience and on various
other factors that the Trust believes to be reasonable at the time the estimates
and assumptions are made. However, future events and their effects cannot be
predicted with absolute certainty. Therefore, the determination of estimates
requires the exercise of judgment. Actual results may differ from these
estimates and assumptions under different circumstances or conditions, and such
differences may be material to the consolidated financial statements. The Trust
believes the following critical accounting policies affect the more significant
estimates and assumptions used in the preparation of the Trust’s consolidated
financial statements.





Revenue
Recognition





Power
generation revenue, if any, 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. Billings to
customers for power generation generally occurs during the month following
delivery. Final billings do not vary significantly from estimates.





Income
Taxes





No
provision is made for income taxes in the Trust’s consolidated financial
statements as the net income or losses of the Trust are passed through and
included in the income tax returns of the individual shareholders of the
Trust.





Results
of Operations





The
Norcals did not operate in 2009. The Trust recorded revenues of $3.6 million
during 2008.





Cost of
revenues decreased $3.6 million, or 78.9%, from $4.6 million in 2008 to $1
million in 2009. This decrease was primarily due to lower fuel and repair
and maintenance expenses as the Norcals were not in operation during 2009. The
Norcals continue to incur certain expenses such as rent and property taxes, even
when not operating.





The Trust
recorded equity loss of $1.5 million from its
investment in RILG in the 2009 period.In 2008, the Trust recorded equity
loss of $0.6 million from its investment in Ridgewood Providence and equity loss
of $0.1 million from its investment in RILG. The
increase in equity loss of $0.8 million in the 2009 period was primarily due to
an increase in depreciation expense resulting from a change in estimated useful
lives of a portion of the remaining plant assets as of November 2008 and also
due to an impairment charge recorded in the third quarter of 2009 when
decommissioned gensets were fully impairedas the Managing Shareholder
made the decision of not repairing them and their having nominal salvage value.
Operating results includes $0.5 million and $1
million of engineering development and legal fees relating to planned plant
expansion for the years ended December 31, 2009 and 2008,
respectively.





11
 Table of Contents





In July
2009, the purchaser to whom RILG sold the output from approximately 60% of its
installed capacity under a long-term electric power sales contract, elected to
exercise its one-time option to terminate its agreement, effective January 2010.
The aggregate price for the output sold under this long-term contract exceeds
current open market prices. RILG is currently seeking alternate arrangements for
the sale of the output of its electricity generating capacity. Whether this
effort will be successful and what the results to RILG will be if successful
cannot be determined at this time.





In 2008,
the Trust recorded other income of $0.7 million, which represents a property tax
reassessment refund of $0.2 million for San Joaquin and $0.5 million received
during the first quarter of 2008 as a result of the bankruptcy claim filed
against an on-site cogeneration facility owned by
Globe.





Liquidity
and Capital Resources





At
December 31, 2009, the Trust had cash and cash equivalents of approximately $0.1
million, a decrease of $1.3 million from $1.4 million at December 31, 2008. The
cash flows for the year ended December 31, 2009 were $1.3 million used in
operating activities.





Cash used in operating activities for the year
ended December 31, 2009 was $1.3 million compared to $0.4 million in 2008. The
increase in cash flow used in operating activities of $0.9 million was primarily
due to$0.5 million received as a result of the Globe bankruptcy claim in
the 2008 period with no comparable receipt in 2009 and also due to a decrease in
cash distributions from RILG in 2009.




In 2008,
the Trust used cash of $0.1 million in financing activities, which represent
cash distributions to shareholders. In 2009, there were no cash distributions to
shareholders.





Future
Liquidity and Capital Resource Requirements





The Trust
expects cash flows from its equity investments, along with existing cash, cash
equivalents and borrowing capabilities will be sufficient to provide working
capital and fund capital expenditures for the next 12 months. If the Trust
does not have sufficient cash balances, the Managing Shareholder has the ability
to make cash advances to the Trust or waive management fees that the Trust is
obligated to pay. During 2009, $0.1 million has been advanced by the Managing
Shareholder to the Trust but no management fees have been waived.





Off-Balance
Sheet Arrangements





None.





Contractual
Obligations and Commitments





At
December 31, 2009, the Norcals have two long-term non-cancelable operating
ground leases with total commitments of $1.8 million; $0.2 million of which is
due in 2010.





On
February 8, 2010, San Joaquin received a notice from PG&E that due to San
Joaquin’s failure to deliver power under the power sale agreement since October
2008, PG&E is claiming $6.3 million from San Joaquin. If PG&E were to
deliver a similar notice regarding Byron, the Managing Shareholder estimates
that approximately the same amount would be sought. It is the opinion of the
Managing Shareholder that these are not obligations of the Trust. To date, no
further action has been taken by PG&E or the Norcals to resolve this matter,
though it is anticipated that any amounts claimed would be disputed by the
Norcals. Additionally, the Norcals may also be
obligated to make termination payments under their respective operating ground
leases.Neither San Joaquin nor Byron have the ability to pay these
amounts, if actually due, and the installed equipment at these sites have
minimal fair value, and zero book accounting value.While the Trust is not a party to any of the Norcals’
power sale agreements or ground leases, any termination fees or payments, or
other penalties, if determined to be an obligation of the Trust, or an
obligation for which the Trust is otherwise legally responsible, would have a
material adverse effect on the business, results and financial condition of the
Trust.





12
 Table of Contents


RILG
is obligated, under the terms of various agreements with RIRRC, to construct a new electric generating
facility at the Landfill and to assume primary responsibility for costs
associated with the landfill gas collection system at the Landfill as of the
first to occur of the commencement of operation of a new electric generating
facility or June 1, 2013. RILG is also responsible for the development and
construction of a sulfur treatment facility on the Landfill and the construction
of new pipes and headers. The cost of building and operating the sulfur
treatment facility and the pipes and headers is estimated to be approximately $5
million. The cost of the sulfur treatment facility will be split equally
between RILG and RIRRC and the entire cost associated with the construction of
pipes and headers will be paid by RILG.  In addition, the cost of new
flares on the Landfill will be borne by RIRRC, but in certain circumstances, the
costs may be shared with RILG. If RILG fails to comply with these obligations,
it could be subject to monetary damages and also forfeit its contracted gas
rights. While the full cost
of the expansion activities is not yet known, it is the opinion of the Managing
Shareholder thatRILG has insufficient capital to meet all of its
obligations to expand its Landfill operations. As a result, for the development
efforts to be completed, RILG must either be sold to entities that can invest in
the development of these projects or obtain third-party financing to perform its
duties under the various agreements. While the Managing Shareholder believes a
portion of such financing will be available, there can be no assurance whether
or when RILG can obtain sufficient financing or obtain it on satisfactory
terms.




Recent
Accounting Pronouncements





For
information related to recent accounting pronouncements, see Note 2. “Summary of
Significant Accounting Policies”, of the Notes to Consolidated Financial
Statements, beginning on page F-1 of this Form 10-K.





ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
required.





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA





The
consolidated financial statements of the Trust, including the notes thereto and
the report of the Trust’s Independent Registered Public Accounting Firm thereon,
are presented beginning on page F-1 of this Form 10-K.





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





None.





ITEM 9A.  CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





In
accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), the Trust’s management, with the participation of
the Trust’s Chief Executive Officer and Chief Financial Officer, has evaluated
the effectiveness of the Trust’s disclosure controls and procedures, as defined
in Exchange Act Rule 13a-15(e). Based on this evaluation, the Trust’s Chief
Executive Officer and Chief Financial Officer concluded that the Trust’s
disclosure controls and procedures were effective as of the end of the period
covered by this report to ensure that information required to be disclosed by
the Trust in reports filed pursuant to Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the United States
Securities and Exchange Commission (“SEC”) rules and forms and that information
required to be disclosed by the Trust is accumulated and communicated to senior
management so as to allow timely decisions regarding required
disclosure.





Management’s
Annual Report on Internal Control over Financial Reporting





The
Trust’s management is responsible for establishing and maintaining adequate
internal control over financial reporting for the Trust. The Trust’s internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with policies or procedures may deteriorate.





Management of the Trust, including its Chief Executive
Officer and Chief Financial Officer, assessed the effectiveness of the Trust’s
internal control over financial reporting as of December 31, 2009.  In
making this assessment, management of the Trust used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) inInternal Control over
Financial Reporting — Guidance for Smaller Public Companies.Based on this evaluation, the Trust’s management
concluded that as of December 31, 2009, the Trust’s internal controls over
financial reporting were effective.





This
Annual Report on Form 10-K does not include an attestation report of the Trust’s
independent registered public accounting firm regarding internal control over
financial reporting.  Management’s report was not subject to attestation by
the Trust’s independent registered public accounting firm pursuant to temporary
rules of the SEC that permit the Trust to provide only management’s report in
this Annual Report.





13
 Table of Contents





Changes
in Internal Control over Financial Reporting





The
Trust’s Chief Executive Officer and Chief Financial Officer have concluded that
there was no change in the Trust's internal control over financial reporting
that occurred during the fiscal quarter ended December 31, 2009 that has
materially affected, or is reasonably likely to materially affect, the Trust’s
internal control over financial reporting.





ITEM 9B.  OTHER INFORMATION





None.





PART
III





ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





The
Trust’s Managing Shareholder, RRP, was originally founded in 1991. The Managing
Shareholder has very broad authority, including the authority to elect executive
officers of the Trust.





Each of
the executive officers of the Trust also serves as an executive officer of the
Managing Shareholder. The executive officers of the Trust are as
follows:





Name, Age and Position with
      Registrant
            Officer SinceRandall
      D. Holmes, 62President
      and Chief Executive Officer
            2004Robert
      E. Swanson, 63Chairman
            1997Jeffrey
      H. Strasberg, 52Executive
      Vice President and Chief Financial Officer
            2007Daniel
      V. Gulino, 49Senior
      Vice President, General Counsel and Secretary
            2000





Set forth
below is the name of and certain biographical information regarding the
executive officers of the Trust:





Randall D. Holmes has served
as President and Chief Executive Officer of the Trust, the Managing Shareholder
and other trusts and limited liability companies since January 2006 and served
as Chief Operating Officer of the Trust, the Managing Shareholder and affiliated
Ridgewood Power trusts and limited liability companies from January 2004 until
January 2006. Prior to such time, Mr. Holmes served as the primary outside
counsel to and has represented the Managing Shareholder and its affiliates since
1991. Immediately prior to being appointed Chief Operating Officer,
Mr. Holmes was counsel to Downs Rachlin Martin PLLC (“DRM”). DRM is one of
the primary outside counsel to the Trust, the Managing Shareholder and its
affiliates.  Mr. Holmes is a graduate of
Texas Tech University and the University of Michigan Law School. He is
a member of the New York State Bar.





Robert E. Swanson has served
as Chairman of the Trust, the Managing Shareholder and affiliated trusts and
limited liability companies since their inception. From their inception until
January 2006, Mr. Swanson also served as their Chief Executive Officer.
Mr. Swanson is the controlling member of the Managing Shareholder, as well
as Ridgewood Energy and Ridgewood Capital, affiliates of the Trust.
Mr. Swanson has been President and registered principal of Ridgewood
Securities since its formation in 1982, has served as the Chairman of the Board
of Ridgewood Capital since its organization in 1998 and has served as Chief
Executive Officer of Ridgewood Energy since its inception in 1982.
Mr. Swanson is a member of the New York State and New Jersey State
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.





Jeffrey H. Strasberg has
served as Executive Vice President and Chief Financial Officer of the Trust, the
Managing Shareholder and affiliated trusts and limited liability companies since
May 2007. Mr. Strasberg also serves as Senior Vice President and Chief
Financial Officer of Ridgewood Capital and affiliated limited liability
companies and Ridgewood Securities and has done so since April 2005.
Mr. Strasberg joined Ridgewood Capital in 1998 where his initial
responsibilities were to serve as interim Chief Financial Officer of various
portfolio companies in which Ridgewood Capital trusts had interests.
Mr. Strasberg is a Certified Public Accountant and a graduate of the
University of Florida.





Daniel V. Gulino has served as
Senior Vice President and General Counsel of the Trust, the Managing Shareholder
and affiliated trusts and limited liability companies since 2000 and was
appointed Secretary in February 2007. Mr. Gulino also serves as Senior Vice
President and General Counsel of Ridgewood Energy, Ridgewood Capital, Ridgewood
Securities and affiliated trusts and limited liability companies and has done so
since 2000. Mr. Gulino is a member of the New Jersey State and
Pennsylvania State Bars. He is a graduate of
Fairleigh Dickinson University and Rutgers University School of
Law.





14
 Table of Contents





Board
of Directors and Board Committees





The Trust
does not have its own board of directors or any board committees. The Trust
relies upon the Managing Shareholder to perform the function that a board of
directors or its committees would otherwise perform. Officers of the Trust are
not directly compensated by the Trust, and all compensation matters are
addressed by the Managing Shareholder, as described in Item 11. “Executive
Compensation”. Because the Trust does not maintain a board of directors and
because officers of the Trust are compensated by the Managing Shareholder, the
Managing Shareholder believes that it is appropriate for the Trust not to have a
nominating or compensation committee.





Managing
Shareholder





The
Trust’s Management Agreement with the Managing Shareholder details how the
Managing Shareholder is to render management, administrative and investment
advisory services to the Trust. Specifically, the Managing Shareholder performs
(or may arrange for the performance of) the management and administrative
services required for the operation of the Trust. Among other services, the
Managing Shareholder administers the accounts and handles relations with
shareholders, provides the Trust with office space, equipment and facilities and
other services necessary for its operation, and conducts the Trust’s relations
with custodians, depositories, accountants, attorneys, brokers and dealers,
corporate fiduciaries, insurers, banks and others, as required.





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





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 in Item 13. “Certain Relationships and Related
Transactions, and Director Independence”.





Each
investor in the Trust consented to the terms and conditions of the Management
Agreement by subscribing to acquire Investor Shares in the Trust. The Management
Agreement is subject to termination at any time on 60 days prior notice by a
majority in interest of the shareholders or the Managing Shareholder. The
Management Agreement is subject to amendment by the parties upon the approval of
a majority in interest of the investors.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Exchange Act, requires the Trust’s executive officers and
directors, and persons who own more than 10% of a registered class of the
Trust’s equity securities, to file reports of ownership and changes in ownership
with the SEC. During the past fiscal year, the Managing Shareholder believes
that all filings required to be made by the Trust’s executive officers pursuant
to Section 16(a) of the Exchange Act have been timely filed with the SEC. The
Trust has no directors or 10% shareholders.





Code
of Ethics





In March
2004, the Managing Shareholder, for itself and for the Trust and its affiliates,
adopted a Code of Ethics applicable to the principal executive officer,
principal financial officer, principal accounting officer or controller (or any
persons performing similar functions) of each such entity. A copy of the Code of
Ethics is filed as Exhibit 14 to this Annual Report on Form 10-K.





ITEM 11.  EXECUTIVE COMPENSATION





During
2009, the executive officers of the Trust did not receive compensation directly
from the Trust or any of its subsidiaries. They provide managerial services to
the Trust in accordance with the terms of the Trust’s Declaration of Trust and
the Operating Agreement. The Managing Shareholder or affiliated management
companies, determines and pays the compensation of these officers. Each of the
executive officers of the Trust also serves as an executive officer of the
Managing Shareholder and other trusts managed by the Managing Shareholder and
its affiliates.





The Trust
does, however, pay the Managing Shareholder a management fee and the Managing
Shareholder may determine to use a portion of the proceeds from the management
fee to pay compensation to executive officers of the Trust. See Item 13.
“Certain Relationships and Related Transactions, and Director Independence” for
more information regarding Managing Shareholder compensation and payments to
affiliated entities.





15
 Table of Contents





As part
of the sale of various assets of the Trust, affiliated trusts and assets of the
Managing Shareholder, the Managing Shareholder has adopted the Senior Executive
Bonus Plan (“Plan”), which provides for incentive payments to the participants
in the Plan. Any payments made pursuant to this Plan will be borne entirely by
the Managing Shareholder and not by any of the trusts managed by the
Managing Shareholder. Pursuant to the Plan:





· Once a
relevant trust reaches payout, three officers of the Managing Shareholder,
including Randall D. Holmes, President and Chief Executive Officer of the Trust
and the Managing Shareholder will receive, in the aggregate, depending on the
trust, 25% to 30% (25% in regards to the Trust) of any payments received by the
Managing Shareholder from the various trusts it manages resulting from the sale
of assets by the trusts.
  · Participants
in the Plan will receive bonus payments in the aggregate at the rate of 30% of
any payment received by the Managing Shareholder for sales of assets owned by it
and not a trust.
  · The
Managing Shareholder will generally fund the Plan as it receives any payments
from a trust from the sale of its assets once that trust reaches
payout.





As of the
date of this filing, no payment has been made pursuant to this
Plan.





Under the
Plan, the three officers have also agreed to be employed by any purchasers of
assets from the trusts as requested by the Managing Shareholder, for up to one
year. To the extent that the compensation received by any of them from any such
purchase is less than the base salary that officer currently receives from the
Managing Shareholder, the Managing Shareholder has agreed to pay to that officer
75% of the difference, if any, for one year, even if such officer leaves the
employ of the purchaser prior to the end of such one year period, except in the
event of death or disability.





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The
following table sets forth information with respect to the beneficial ownership
of the Trust’s Investor Shares as of February 28, 2010 (no person owns more than
5%) by:





· each
executive officer of the Trust (there are no directors); and
 · all of
the executive officers of the Trust as a group.





Beneficial
ownership is determined in accordance with SEC rules and includes voting or
investment power with respect to the securities. Except as indicated by
footnote, and subject to applicable community property laws, the persons named
in the table below have sole voting and investment power with respect to all
Investor Shares shown as beneficially owned by them. Percentage of beneficial
ownership is based on 391.8444 Investor Shares outstanding at February 28, 2010.
Other than as set forth below, no officer of the Trust owns any shares of the
Trust.





Name
      of beneficial owner
            Number
              of
      shares(1)
            
            PercentRidgewood
      Renewable Power LLC (Managing Shareholder)
              Robert
      E. Swanson,  controlling member
            
            1
            
            
            *Executive
      officers as a group
            
            1
            
            
            *


__________________________________


*    
Represents less than one percent.





(1)
            Does not include a management
      share in the Trust representing the beneficial interests and management
      rights of the Managing Shareholder in its capacity as the Managing
      Shareholder. The management share owned by the Managing Shareholder is the
      only issued and outstanding management share of the Trust. The management
      rights of the Managing Shareholder are described in further detail in Item
      1. “Business – Managing Shareholder”. The Managing Shareholder’s
      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
      in Item 13. “Certain Relationships and Related Transactions, and Director
      Independence”.





ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE





Under the
terms of the Trust’s Management Agreement, the Trust paid the Managing
Shareholder an annual management fee of $0.1 million and $0.2 million for the
years ended December 31, 2009 and 2008, respectively, as compensation for
the services the Managing Shareholder provides to the Trust, which was equal to
2.5% of the Trust’s prior year net asset value. The management fee is to be paid
in monthly installments and, to the extent that the Trust does not pay the
management fee on a timely basis, the Trust accrues interest at an annual rate
of 10% on the unpaid balance.





16
 Table of Contents





Under the
Operating Agreement with the Trust, RPM provides management, purchasing,
engineering, planning and administrative services to the projects operated by
the Trust. RPM charges the projects 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 RPM.  For the years ended December 31, 2009 and
2008, RPM charged the projects $0.3 million and $0.4 million, respectively, for
overhead items allocated in proportion to the amount invested in projects
managed.  In addition, for the years ended December 31, 2009 and 2008,
RPM charged the projects $3.9 million and $7.8 million, respectively, for direct
expenses allocated in proportion to the amount invested in projects managed.
These charges may not be indicative of costs incurred if the projects were not
operated by RPM.





Under the
Declaration of Trust, the Managing Shareholder is entitled to receive,
concurrently with the shareholders of the Trust other than the Managing
Shareholder, 1% of all distributions from operations made by the Trust in a year
until the shareholders have received distributions in that year equal to 14% per
annum 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 property until the shareholders other than the Managing Shareholder,
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 did not
receive any distributions for the year ended December 31, 2009 and distributions
to the Managing Shareholder for the year ended December 31, 2008
were $1,000. The Trust has not yet reached Payout.





Income is
allocated to the Managing Shareholder until the profits so allocated equal
distributions to the Managing Shareholder. Thereafter, income is allocated among
the shareholders other than the Managing Shareholder in proportion to their
ownership of Investor Shares. If the Trust has net losses for a fiscal period,
the losses are allocated 99% to the shareholders other than the Managing
Shareholder and 1% to the Managing Shareholder, subject to certain limitations
as set forth in the Declaration of Trust. Amounts allocated to shareholders
other than the Managing Shareholder are apportioned among them in proportion to
their capital contributions.





Under the
terms of the Declaration of Trust, if the Adjusted Capital Account (as defined
in the Declaration of Trust) of a shareholder other than the Managing
Shareholder would become negative using General Allocations (as defined in the
Declaration of Trust), losses and expenses will be allocated to the Managing
Shareholder. Should the Managing Shareholder’s Adjusted Capital Account become
negative and items of income or gain occur, then such items of income or gain
will be allocated entirely to the Managing Shareholder until such time as the
Managing Shareholder’s Adjusted Capital Account becomes positive. This mechanism
does not change the allocation of cash, as discussed above.





In
accordance with the  Declaration of Trust, upon or prior to the first
distribution by the Trust in liquidation, the Managing Shareholder is required
to contribute to the capital of the Trust an amount equal to any deficit in the
tax basis capital account of the Managing Shareholder calculated just prior to
the date of such distribution. As of December 31, 2008, the last date such
calculation was made, the Managing Shareholder would have been required to
contribute $0.1 million to the Trust prior to the Trust making any
liquidating distributions.





ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND
SERVICES





The following table presents fees and
services rendered by Grant Thornton LLP, the Trust’s principal independent
registered public accounting firm, for the years ended December 31, 2009 and
2008 (in thousands).


2009
            
            
            2008Audit
      fees
            
            $
            153
            
            
            $
            160Tax
      fees1
            
            
            19
            
            
            
            21Total
            
            $
            172
            
            
            $
            181





1Tax fees consisted
principally of tax compliance, planning and advisory services as well as tax
examination services.





Audit
Committee Pre-Approval Policy





The
Managing Shareholder pre-approves on an annual basis all audit and permitted
non-audit services that may be performed by the Trust’s independent registered
public accounting firm, including the audit engagement terms and fees, and also
pre-approves any detailed types of audit-related and permitted tax services to
be performed during the year. The Managing Shareholder pre-approves permitted
non-audit services on an engagement-by-engagement basis. All of the services
listed in the table above were pre-approved by the Managing
Shareholder.




17
 Table of Contents





PART IV





ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES





(a)(1)           Consolidated Financial
Statements





See the
Index to Consolidated Financial Statements on page F-1 of this
report.





(a)(2)           Consolidated Financial Statement
Schedules





Not
applicable.





(a)(3)           Exhibits





Exhibits
required by Section 601 of Regulation S-K:





Exhibit No.
            Description3
            (i)(A)
            Certificate
      of Trust of the Registrant (incorporated by reference to the Registrant’s
      Registration Statement filed with the SEC on February 15,
      1994)3
            (i)(B)
            Certificate
      of Amendment to the Certificate of Trust of the Registrant filed with
      Delaware Secretary of State on December 18, 2003 (incorporated by
      reference to the Registrant’s Annual Report on Form 10-K filed with the
      SEC on December 14, 2007)3
            (ii)(A)
            Declaration
      of Trust of the Registrant (incorporated by reference to the Registrant’s
      Registration Statement filed with the SEC on February 15,
      1994)3
            (ii)(B)
            Declaration
      of Trust of the Registrant (as amended and restated) (incorporated by
      reference to the Registrant’s Annual Report on Form 10-K filed with the
      SEC on December 14, 2007)3
            (ii)(C)
            First
      Amendment to the Declaration of Trust of the Registrant (incorporated by
      reference to Exhibit A of the Registrant’s Proxy Statement filed with the
      SEC on November 5, 2001, SEC File No. 814-00134)3
            (ii)(D)
            Amendment
      to the Amended Declaration of Trust of the Registrant effective January 1,
      2005 (incorporated by reference to the Registrant’s Annual Report on Form
      10-K filed with the SEC on December 14, 2007)10.1
            #
            Management
      Agreement between the Trust and Managing Shareholder, dated January 3,
      1994 (incorporated by reference to the Registrant’s Registration Statement
      filed with the SEC on February 15,
1994)




10.2
            
            Contribution
      Agreement dated as of November 17, 2008 by and among Ridgewood Olinda,
      LLC, Ridgewood Electric Power Trust III, Ridgewood Electric Power Trust
      IV, Ridgewood Power B Fund/Providence Expansion, Ridgewood Providence
      Power Corporation, Rhode Island Gas Management, LLC, Ridgewood Management
      Corporation, Rhode Island LFG Genco, LLC and Ridgewood Renewable Power LLC
      (incorporated by reference to Exhibit 10.1 to the Current Report on Form
      8-K filed by the Registrant with the SEC on November 20,
    2008)10.3
            
            Amended
      and Restated Limited Liability Company Agreement of Rhode Island LFG
      Genco, LLC dated as of November 17, 2008 by Rhode Island LFG Genco, LLC,
      Ridgewood Olinda, LLC, Ridgewood Electric Power Trust III, Ridgewood
      Electric Power Trust IV, Ridgewood Power B Fund/Providence Expansion and
      Ridgewood Renewable Power LLC (incorporated by reference to Exhibit 10.2
      to the Current Report on Form 8-K filed by the Registrant with the SEC on
      November 20, 2008)10.4
            
            Amended
      and Restated Site Lease and Landfill Gas Delivery Agreement dated as of
      November 17, 2008 between Rhode Island LFG Genco, LLC and Rhode Island
      Resource Recovery Corporation (incorporated by reference to Exhibit 10.3
      to the Current Report on Form 8-K filed by the Registrant with the SEC on
      November 20, 2008)  18
 Table of Contents
  Exhibit No.
            
            Description10.5
            
            Amended
      and Restated Landfill Gas Services Agreement dated as of November 17, 2008
      among Ridgewood Gas Services LLC, Rhode Island Resource Recovery
      Corporation and, solely as to Sections 3.2 and 3.3, Rhode Island LFG
      Genco, LLC (incorporated by reference to Exhibit 10.4 to the Current
      Report on Form 8-K filed by the Registrant with the SEC on November 20,
      2008)10.6
            
            Purchase
      and Sale Agreement dated as of November 17, 2008 between Ridgewood Gas
      Services LLC and Rhode Island Resource Recovery Corporation (incorporated
      by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by
      the Registrant with the SEC on November 20, 2008)10.7
            
            Backup
      Certificate Agreement, dated as of August 19, 2008, by and among
      Indeck Maine Energy, LLC, Ridgewood Providence Power Partners, L.P.,
      Ridgewood Rhode Island Generation, LLC, Linwood 0708 LLC, Rhode Island LFG
      Genco, LLC, and for certain limited purposes, Ridgewood Power Management
      LLC, and Covanta Energy Corporation (incorporated by reference to Exhibit
      10.1 to the Current Report on Form 8-K filed by Ridgewood Electric Power
      Trust IV with the SEC on August 25, 2008)10.8
            
            First
      Amendment to the Backup Certificate Agreement, dated as of November 11,
      2008, by and among Indeck Maine Energy, LLC, Ridgewood Providence Power
      Partners, L.P., Ridgewood Rhode Island Generation, LLC, Linwood 0708 LLC,
      Rhode Island LFG Genco, LLC, and for certain limited purposes, Ridgewood
      Power Management LLC and Covanta Energy Corporation (incorporated by
      reference to Exhibit 10.1 to the Current Report on Form 8-K filed by
      Ridgewood Electric Power Trust IV with the SEC on November 14,
      2008)10.9
            
            Certificate
      Sale Support Agreement, dated as of July 31, 2008, by and among
      Linwood 0708 LLC, Ridgewood Rhode Island Generation, LLC, Ridgewood
      Providence Power Partners, L.P., Rhode Island LFG Genco, LLC, Indeck
      Energy Services, Inc., Ridgewood Electric Power Trust I, Ridgewood
      Electric Power Trust III, Ridgewood Electric Power Trust IV,
      Ridgewood Electric Power Trust V, Ridgewood Power B Fund/Providence
      Expansion, and Ridgewood Renewable Power, LLC (incorporated by
      reference to Exhibit 10.4 to the Current Report on Form 8-K filed by
      Ridgewood Electric Power Trust IV with the SEC on August 25,
      2008)10.10
            
            First
      Amendment to the Certificate Sale Support Agreement, dated as of
      November 11, 2008, by and among Linwood 0708 LLC, Ridgewood Rhode
      Island Generation, LLC, Ridgewood Providence Power Partners, L.P., Rhode
      Island LFG Genco, LLC, Indeck Energy Services, Inc., Ridgewood Electric
      Power Trust I, Ridgewood Electric Power Trust III, Ridgewood Electric
      Power Trust IV, Ridgewood Electric Power Trust V, Ridgewood Power B
      Fund/Providence Expansion and Ridgewood Renewable Power, LLC (incorporated
      by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by
      Ridgewood Electric Power Trust IV with the SEC on November 14,
      2008)





10.11
            
            Agency
      Agreement, dated as of August 19, 2008, among Ridgewood Providence Power
      Partners, L.P., Ridgewood Rhode Island Generation, LLC, Linwood 0708 LLC,
      Ridgewood Power Management, LLC and Indeck Maine Energy, LLC. This Agency
      Agreement is also acknowledged by Ridgewood Electric Power Trust III,
      Ridgewood Electric Power Trust IV, Ridgewood Electric Power
      Trust V and Ridgewood Power B Fund/Providence Expansion (incorporated
      by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by
      Ridgewood Electric Power Trust IV with the SEC on August 25,
      2008)10.12
            
            First
      Amendment to the Agency Agreement, dated as of November 11, 2008,
      among Ridgewood Providence Power Partners, L.P., Ridgewood Rhode Island
      Generation, LLC, Linwood 0708 LLC, Ridgewood Power Management, LLC and
      Indeck Maine Energy, LLC. This First Amendment to Agency Agreement is also
      acknowledged by Ridgewood Electric Power Trust III, Ridgewood
      Electric Power Trust IV, Ridgewood Electric Power Trust V and
      Ridgewood Power B Fund/Providence Expansion (incorporated by reference to
      Exhibit 10.5 to the Current Report on Form 8-K filed by Ridgewood Electric
      Power Trust IV with the SEC on November 14, 2008)10.13
            #
            Senior
      Executive Bonus Plan (incorporated by reference to Exhibit 10.3 to the
      Quarterly Report on Form 10-Q filed by the Registrant with the SEC on
      November 7, 2008)10.14
            #
            Amendment
      to Senior Executive Bonus Plan (incorporated by reference to Exhibit 10.1
      to the Quarterly Report on Form 10-Q filed by the Registrant with the SEC
      on November 6, 2009)   19
 Table of Contents
  Exhibit No.
            
            Description14
            
            Code
      of Ethics, adopted on March 1, 2004 (incorporated by reference to the
      Annual Report on Form 10-K filed by The Ridgewood Power Growth Fund with
      the SEC on March 1, 2006)21
            
            Subsidiaries
      of the Registrant (incorporated by reference
      to the Registrant’s Annual Report on Form 10-K filed with the SEC on March
      20, 2009)31.1
            *
            Certification
      of Randall D. Holmes, Chief Executive Officer of the Registrant, pursuant
      to Securities Exchange Act Rule 13a-14(a)31.2
            *
            Certification
      of Jeffrey H. Strasberg, Chief Financial Officer of the Registrant,
      pursuant to Securities Exchange Act Rule 13a-14(a)32
            *
            Certifications
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      The Sarbanes-Oxley Act of 2002, signed by Randall D. Holmes, Chief
      Executive Officer of the Registrant, and Jeffrey H. Strasberg, Chief
      Financial Officer of the Registrant


_____________________


*
            Filed
      herewith.





#
            A
      management contract or compensatory plan or arrangement required to be
      filed as an exhibit pursuant to Item 15(a)(3) of Form
  10-K.









20
 Table of Contents








SIGNATURES





Pursuant
to the requirements 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.





RIDGEWOOD
      ELECTRIC POWER TRUST IIIDate: 
      March 25, 2010
            By:
            /s/ Randall
      D. HolmesRandall
      D. HolmesPresident
      and Chief Executive Officer(Principal
      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.





Signature
            
            Capacity
            
            Date/s/
      Randall D. Holmes
            
            President
      and Chief Executive Officer
            
            March
      25, 2010Randall
      D. Holmes
            
            (Principal
      Executive Officer)/s/
      Jeffrey H. Strasberg
            
            Executive
      Vice President and Chief Financial Officer
            
            March
      25, 2010Jeffrey
      H. Strasberg
            
            (Principal
      Financial and Accounting Officer)RIDGEWOOD
      RENEWABLE POWER LLC(Managing
      Shareholder)By:
      /s/ Randall D. Holmes
            
            President
      and Chief Executive Officer of Managing Shareholder
            
            March
      25, 2010Randall
      D. Holmes








Table of Contents





RIDGEWOOD ELECTRIC POWER TRUST III





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS








PageReport of Independent Registered Public Accounting Firm
            F-2Consolidated Balance Sheets at December 31, 2009 and 2008
            F-3Consolidated Statements of Operations for the years
      ended December 31, 2009 and 2008
            F-4Consolidated Statements of Changes in Shareholders’ Equity
      (Deficit) for the years ended December 31, 2009 and
      2008
            F-5Consolidated Statements of Cash Flows for the years ended
      December 31, 2009 and 2008
            F-6Notes to Consolidated Financial
      Statements
            F-7









F-1
 Table of Contents





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








The
Managing Shareholder and Shareholders


Ridgewood
Electric Power Trust III








We have
audited the accompanying consolidated balance sheets of Ridgewood Electric Power
Trust III (a Delaware trust) and subsidiaries as of December 31, 2009 and 2008,
and the related consolidated statements of operations, changes in shareholders’
equity (deficit), and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included 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 Trust’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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Ridgewood Electric Power
Trust III and subsidiaries as of December 31, 2009 and 2008, and the results of
their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of
America.

















/s/ GRANT
THORNTON LLP


Edison,
New Jersey


March 25,
2010









F-2
 Table of Contents





RIDGEWOOD ELECTRIC POWER TRUST III


CONSOLIDATED
BALANCE SHEETS




(in
thousands, except share data)


December
      31,2009
              
              
              2008ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              49
              
              
              $
              1,378Due
      from affiliates
              
              
              334
              
              
              
              259Prepaid
      expenses and other current assets
              
              
              65
              
              
              
              137Total
      current assets
              
              
              448
              
              
              
              1,774Investment
              
              
              1,087
              
              
              
              2,714Other
      assets
              
              
              -
              
              
              
              56Total
      assets
              
              $
              1,535
              
              
              $
              4,544LIABILITIES
      AND SHAREHOLDERS' EQUITY (DEFICIT)Current
      liabilities:Accounts
      payable and accrued expenses
              
              $
              82
              
              
              $
              51Due
      to affiliates
              
              
              75
              
              
              
              12Total
      liabilities
              
              
              157
              
              
              
              63Commitments
      and contingenciesShareholders’
      equity (deficit):Shareholders’
      equity (391.8444 Investor Shares issued andoutstanding)
              
              
              1,696
              
              
              
              4,768Managing
      shareholder’s accumulated deficit(1
      management share issued and outstanding)
              
              
              (318
              )
              
              
              (287
              )Total
      shareholders’ equity
              
              
              1,378
              
              
              
              4,481Total
      liabilities and shareholders’ equity
              
              $
              1,535
              
              
              $
              4,544


The
accompanying notes are an integral part of these consolidated financial
statements.




F-3
 Table of Contents





RIDGEWOOD ELECTRIC POWER TRUST III


CONSOLIDATED
STATEMENTS OF OPERATIONS
 (in
thousands, except per share data)


Years
      Ended December 31,2009
              
              
              2008Revenues
              
              $
              -
              
              
              $
              3,559Cost
      of revenues
              
              
              968
              
              
              
              4,593Gross
      loss
              
              
              (968
              )
              
              
              (1,034
              )Operating
      expenses:General
      and administrative expenses
              
              
              530
              
              
              
              582Management
      fee to Managing Shareholder
              
              
              112
              
              
              
              159Total
      operating expenses
              
              
              642
              
              
              
              741Loss
      from operations
              
              
              (1,610
              )
              
              
              (1,775
              )Other
      (expense) income:Equity
      in loss of RILG
              
              
              (1,499
              )
              
              
              (145
              )Equity
      in loss of Ridgewood Providence
              
              
              -
              
              
              
              (603
              )Interest
      income
              
              
              -
              
              
              
              18Other
      income
              
              
              6
              
              
              
              681Total
      other expense, net
              
              
              (1,493
              )
              
              
              (49
              )Net
      loss
              
              $
              (3,103
              )
              
              $
              (1,824
              )Managing
      Shareholder - Net loss
              
              $
              (31
              )
              
              $
              (18
              )Shareholders
      - Net loss
              
              
              (3,072
              )
              
              
              (1,806
              )Net
      loss per Investor Share
              
              
              (7,840
              )
              
              
              (4,610
              )


The
accompanying notes are an integral part of these consolidated financial
statements.




F-4
 Table of Contents


RIDGEWOOD ELECTRIC POWER TRUST III


CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
 YEARS
ENDED DECEMBER 31, 2009 AND 2008
 (in
thousands)







Shareholders'
                Equity
              
              
              Managing
                Shareholder
                Deficit
              
              
              Total
                Shareholders'
                EquityBalance
      at December 31, 2007
              
              $
              6,625
              
              
              $
              (268
              )
              
              $
              6,357Net
      loss
              
              
              (1,806
              )
              
              
              (18
              )
              
              
              (1,824
              )Cash
      distributions
              
              
              (51
              )
              
              
              (1
              )
              
              
              (52
              )Balance
      at December 31, 2008
              
              
              4,768
              
              
              
              (287
              )
              
              
              4,481Net
      loss
              
              
              (3,072
              )
              
              
              (31
              )
              
              
              (3,103
              )Balance
      at December 31, 2009
              
              $
              1,696
              
              
              $
              (318
              )
              
              $
              1,378
 
 The
accompanying notes are an integral part of these consolidated financial
statements.









F-5
 Table of Contents




RIDGEWOOD ELECTRIC POWER TRUST III


CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (in
thousands)


Years
      Ended December 31,2009
              
              
              2008Cash
      flows from operating activities:Net
      loss
              
              $
              (3,103
              )
              
              $
              (1,824
              )Adjustments
      to reconcile net loss to net cash used in by operating
      activities:Equity
      in loss of RILG
              
              
              1,499
              
              
              
              145Equity
      in loss of Ridgewood Providence
              
              
              -
              
              
              
              603Cash
      distributions from investment
              
              
              128
              
              
              
              499Changes
      in operating assets and liabilities:Accounts
      receivable
              
              
              -
              
              
              
              294Due
      to/from affiliates, net
              
              
              (12
              )
              
              
              17Prepaid
      expenses and other current assets
              
              
              72
              
              
              
              4Other
      assets
              
              
              56
              
              
              
              (56
              )Accounts
      payable and accrued expenses
              
              
              31
              
              
              
              (115
              )Total
      adjustments
              
              
              1,774
              
              
              
              1,391Net
      cash used in operating activities
              
              
              (1,329
              )
              
              
              (433
              )Cash
      flows from financing activities:Cash
      distributions to shareholders
              
              
              -
              
              
              
              (52
              )Net
      decrease in cash and cash equivalents
              
              
              (1,329
              )
              
              
              (485
              )Cash
      and cash equivalents, beginning of year
              
              
              1,378
              
              
              
              1,863Cash
      and cash equivalents, end of year
              
              $
              49
              
              
              $
              1,378Supplemental
      disclosures of noncash financing activities:Noncash
      exchange of Ridgewood Providence interests for RILG
    interests
              
              $
              -
              
              
              $
              2,858
  The
accompanying notes are an integral part of these consolidated financial
statements.





F-6
 Table of Contents





RIDGEWOOD ELECTRIC POWER TRUST III
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)




1.           DESCRIPTION
OF BUSINESS





Ridgewood
Electric Power Trust III (the “Trust”) is a Delaware trust formed on December 6,
1993. The Trust began offering shares in January 1994 and concluded its offering
in May 1995. The objective of the Trust is to provide benefits to its
shareholders through a combination of distributions of operating cash flow and
capital appreciation. The Managing Shareholder of the Trust is Ridgewood
Renewable Power LLC, a New Jersey limited liability company (the “Managing
Shareholder” or “RRP”). The Trust has been organized to invest primarily in
power generation facilities located in the US. The projects of the Trust have
characteristics that qualify the projects for government
incentives.





The
Trust’s accompanying consolidated financial statements include the accounts of
the Trust and its wholly-owned subsidiaries, Byron Power Partners, L.P.
(“Byron”) and JRW Associates, L.P. (“San Joaquin”, collectively with Byron, the
“Norcals”). Effective November 17, 2008, the Trust’s consolidated financial
statements also include the Trust’s 19.56% interest in Rhode Island LFG Genco,
LLC (“RILG”), which is accounted for under the equity method of accounting, as
the Trust has the ability to exercise significant influence but does not control
the operating and financial policies of the investment.





Prior to
November 17, 2008, the Trust owned a 35.7% noncontrolling interest in Ridgewood
Providence Power Partners, L.P. (“Ridgewood Providence”) and the remaining
64.3% interest was owned by Ridgewood Electric Power Trust IV (“Trust IV”). On
November 17, 2008, the Trust contributed its 35.7% interest in Ridgewood
Providence in exchange for a 19.56% interest in RILG, as discussed in Note
3.





The Norcals suspended their operations beginning
the fourth quarter of 2008 as the estimated incremental cost of production
exceeded the estimated revenues from electricity sales. In 2009, due to
continuedprojected operating losses, the Managing Shareholder decided to
permanently shut down the operations of the Norcals and is currently in
negotiations to sell the Byron and San Joaquin projects. These negotiations
are still ongoing and the Managing Shareholder cannot predict when or whether a
sale will be consummated or the terms of such sale. On February 8, 2010,
San Joaquin received a notice from Pacific Gas & Electric Company
(“PG&E”), the party to whom the Norcals sold electric energy, that due to
San Joaquin’s failure to deliver power under the power sale agreement since
October 2008, PG&E is claiming $6,329 from San Joaquin. Additionally, the
Norcals may also be obligated to make termination payments under their
respective operating ground leases as discussed in Note 6.





The
Managing Shareholder is also marketing RILG for sale, which represents the only
other remaining investment of the Trust. The Managing Shareholder cannot predict
the timing of the sale process or whether any sale will occur.





The Trust
has recorded net losses and decrease in cash for both 2009 and 2008. If the
Trust does not have sufficient cash balances to continue its operations, the
Managing Shareholder has the ability to make cash advances to the Trust or waive
management fees that the Trust is obligated to pay. As a result, the Trusts
expects cash flows from operating activities, along with existing cash, cash
equivalents and borrowing capabilities will be sufficient to provide working
capital and fund capital expenditures through March 2011.





The
Managing Shareholder performs, or arranges for the performance of, the operation
and maintenance of the projects invested in by the Trust and the management and
administrative services required for Trust operations. Among other services, the
Managing Shareholder administers the accounts, including tax and other financial
information, and handles relations with the shareholders. The Managing
Shareholder also provides the Trust with office space, equipment and facilities
and other services necessary for its operation.





The Trust
has evaluated subsequent events and transactions through the date of the
issuance of its financial statements and has made
disclosure of a material subsequent event in Note 6.





2.           SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





a)
Principles of Consolidation





The
consolidated financial statements include the accounts of the Trust and its
wholly-owned subsidiaries. All material intercompany transactions have been
eliminated in consolidation.





The Trust
uses the equity method of accounting for its investments in affiliates, which
are 50% or less owned, as the Trust has the ability to exercise significant
influence over the operating and financial policies of the affiliates but does
not control the affiliate. The Trust’s share of the earnings or losses of the
affiliates is included in the consolidated financial statements.





F-7
 Table of Contents





RIDGEWOOD
ELECTRIC POWER TRUST III
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)


b)
Use of Estimates





The
preparation of consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) requires
the Trust to make estimates and assumptions that affect the reported amounts of
the Trust’s assets, liabilities, revenues and expenses, including the disclosure
of contingent assets and liabilities. The Trust evaluates these estimates and
assumptions on an ongoing basis. The Trust evaluates its estimates of assets,
including investments, prepaid expenses and other current assets and recordable
liabilities for litigation and other contingencies. The Trust bases its
estimates and assumptions on historical experience, current and expected
conditions and various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different circumstances or conditions.





c)
Revenue Recognition





Power
generation revenue, if any, 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. Billings to
customers for power generation generally occurs during the month following
delivery. Final billings do not vary significantly from estimates.





d)
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. At December 31, 2009, cash and cash equivalents did not exceed
insured limits.At December 31, 2008, cash and cash equivalents exceeded
federal insured limits by $881, all of which was invested either in US Treasury
bills or money market accounts that invest primarily in US government
securities.





e)
Fair Value of Financial Instruments





At
December 31, 2009 and 2008, the carrying value of the Trust’s cash and cash
equivalents, prepaid expenses and other current assets, accounts payable and
accrued expenses approximates their fair value due to their short-term
nature.





f)
Comprehensive Loss





The
Trust's comprehensive loss consists only of net loss.





g)
Income Taxes





No
provision is made for income taxes in the Trust’s consolidated financial
statements as the net income or losses of the Trust are passed through and
included in the income tax returns of the individual shareholders of the
Trust.





h)
Recent Accounting Pronouncements





Fair
Value Measurements





In
February 2008, the Financial Accounting Standards Board (“FASB”) issued guidance
which delayed the effective date of fair value measurements for non-financial
assets and non-financial liabilities for the Trust until January 1, 2009, except
for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis. The Trust adopted this guidance effective
January 1, 2009, with no material impact on its consolidated financial
statements.





In April
2009, the FASB issued additional guidance relating to factors to consider in
estimating fair value when there has been a significant decrease in market
activity for a financial asset. The Trust adopted this guidance effective June
30, 2009, with no material impact on its consolidated financial
statements.





In August
2009, the FASB amended its previous guidance regarding the fair value
measurements and disclosures in order to reduce potential uncertainty in
financial reporting when measuring the fair value of liabilities. The Trust
adopted this guidance effective September 30, 2009, with no material impact on
its consolidated financial statements.





In
January 2010, the FASB amended its previous guidance to clarify and provide
additional disclosure requirements relating to recurring and non-recurring fair
value measurements and employers’ disclosures about postretirement benefit plan
assets in order to provide greater level of disaggregated information and more
robust disclosures about valuation techniques and inputs to fair value
measurements. This guidance will become effective for interim and annual
reporting periods beginning after December 15, 2009, except for certain kind of
disclosures for which effective date is for fiscal year beginning after December
15, 2010. The Trust is currently evaluating the impact of adopting this guidance
on its consolidated financial statements.





F-8
 Table of Contents





RIDGEWOOD
ELECTRIC POWER TRUST III
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)





Subsequent
Events





In May
2009, the FASB issued guidance regarding subsequent events which establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. It requires the disclosure of the date through which an
entity has evaluated subsequent events and the basis for that date. The Trust
adopted this guidance effective June 30, 2009, with no material impact on its
consolidated financial statements. In February 2010, the FASB amended its
previous guidance regarding subsequent events by removing the requirement for a
registrant to disclose a date through which subsequent events have been
evaluated.





Consolidation
of Variable Interest Entities





In June
2009, the FASB amended previous guidance regarding the consolidation of variable
interest entities (“VIE”). This guidance eliminates exceptions to consolidating
qualifying special-purpose entities, contains new criteria for determining the
primary beneficiary, and increases the frequency of required reassessments to
determine whether a company is the primary beneficiary of a VIE. This guidance
also contains a new requirement that any term, transaction, or arrangement that
does not have a substantive effect on an entity’s status as a VIE, a company’s
power over a VIE, or a company’s obligation to absorb losses or its right to
receive benefits of an entity must be disregarded in applying the guidance to
consolidation of VIE. The Trust adopted this guidance effective January 1, 2010,
with no material impact on its consolidated financial statements.





In
December 2009, the FASB amended its previous guidance issued in June 2009
regarding the consolidation of VIE whichreplace
the quantitative-based risks and rewards calculation for determining which
reporting entity, if any, has a controlling financial interest in a VIE with an
approach focused on identifying which reporting entity has the power to direct
the activities of a VIE that most significantly impact the entity’s economic
performance and (1) the obligation to absorb losses of the entity or
(2) the right to receive benefits from the entity. This amendment also
requires additional disclosures about a reporting entity’s involvement with
VIEs.  This guidance will become effective for the fiscal year
beginning after November 15, 2009, for interim periods within that first
annual reporting period and for interim and annual reporting periods thereafter.The Trust is currently evaluating the impact of adopting this guidance on
its consolidated financial statements.





FASB
Accounting Standards Codification





In June 2009, the
FASB announced the FASB Accounting Standards Codification (the “Codification”)
as the single source of authoritative non-governmental GAAP superseding
existing codification from the FASB, American Institute of Certified Public
Accountants, Emerging Issues Task Force, and related accounting literature.
Effective September 30, 2009, the Codification superseded all existing non-SEC
accounting and reporting standards and all other non-grandfathered non-SEC
accounting literature not included in the Codification became
non-authoritative. The Trust adopted the Codification with no
material impact on its consolidated financial statements.





3.           INVESTMENT





RILG





In October 2007, RILG was formed as a Delaware limited
liability company which must be dissolved no later than December 31,
2107.  RILG has electrical generating
capacity of 20.4 megawatts and associated gas treatment systems, located at the
Central Landfill in Johnston, Rhode Island (the “Landfill”). The project
includes reciprocating engine generator sets which are fueled by methane gas
produced by and collected from the Landfill. RILG is operated under contract by
Ridgewood Power Management LLC (“RPM”), an affiliate of the Managing
Shareholder, on an at-cost basis.





On November 17, 2008, the Trust, Ridgewood Electric
Power Trust I (“Trust I”), Trust IV and Ridgewood Power B Fund/Providence
Expansion (“B Fund”) entered directly or indirectly, through one or more
subsidiaries, into a series of agreements relating to the operations of
Ridgewood Providence and Ridgewood Rhode Island Generation LLC (“RRIG”) at the
Landfill.The principal purpose of these agreements was to
consolidate the activities of the Trust, Trust I, Trust IV and B Fund, at the
Landfill under one entity, RILG, for the purposes of developing a new electric
generating facility and consolidating all gas rights under one
entity.





F-9
 Table of Contents





RIDGEWOOD
ELECTRIC POWER TRUST III


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(dollar amounts in thousands, except
per share data)


Pursuant
to terms and conditions of a contribution agreement, the Trust, Trust I, Trust
IV and B Fund each contributed certain membership, partnership and economic
interests that they held in Ridgewood Providence, RRIG, Rhode Island Gas
Management LLC and Ridgewood Providence Power Corporation to RILG, in exchange
for their allocable interests in RILG.  As a result of the
reorganization, the Trust, Trust I, Trust IV and B Fund directly or indirectly
own all of the equity interests in RILG. The Trust contributed its 35.7%
interest in Ridgewood Providence in exchange for its 19.56% interest in RILG.
The Trust’s interest in Ridgewood Providence was accounted for using the equity
method of accounting.




RILG and
several of its affiliates had an agreement with a power marketer for which they
were committed to sell Renewable Portfolio Standards Attributes (“RPS
Attributes”) derived from their electric generation. The agreement provided such
power marketer with six separate annual options to purchase such attributes from
2004 through 2009 at fixed prices, as defined in the agreement. The power
marketer did not exercise its option to purchase 2009 RPS Attributes, and a
deposit provided by RILG and its affiliates to secure their obligations under
the agreement was returned by April 2009. All required RPS Attributes were
supplied by April 2009 and the contract expired according to its terms on June
15, 2009. RILG currently has no long-term agreements for the sale of RPS
Attributes.





Historically, RILG sold electricity it produced partly
at fixed prices pursuant to a long-term contract and partly at prevailing market
prices.In July 2009, the purchaser under the long-term contract elected
to exercise its one-time option to terminate its contract with RILG, effective
January 2010. RILG currently sells all of its electrical output in the spot or
day-ahead wholesale electricity market. RILG is currently seeking alternate
arrangements for the sale of its output of its electricity generating capacity
in lieu of selling the output at open market spot prices. Whether this effort
will be successful and what the results to RILG will be if successful cannot be
determined at this time.





On
November 3, 2009, RILG received notice from the United States Department of
Energy (“DOE”) that it had been awarded a grant of $15,000 towards the purchase
of equipment relating to RILG expansion. The final detail of the award is
subject to final contract negotiations between RILG and the DOE. As a result,
the exact amount, and timing of the receipt of any award, cannot currently be
predicted.





Summarized
balance sheet data for RILG at December 31, 2009 and 2008 is as
follows:





December
      31,2009
            
            
            2008Current
      Assets
            
            $
            3,128
            
            
            $
            4,120Non-current
      assets
            
            
            8,512
            
            
            
            15,004Total
      assets
            
            $
            11,640
            
            
            $
            19,124Current
      liabilities
            
            $
            3,641
            
            
            $
            2,782Members’
      Equity
            
            
            7,999
            
            
            
            16,342Total
      liabilities and equity
            
            $
            11,640
            
            
            $
            19,124Trust
      share of RILG equity
            
            $
            1,087
            
            
            $
            2,714





Summarized
statements of operations data for RILG for the year ended December 31,
2009 and for the period from November 17, 2008 to December 31, 2008 and for
Ridgewood Providence for the period from January 1, 2008 to November 16, 2008 is
as follows:




Year
      Ended
              
              
              November
      17 to
              
              
              January
      1 toDecember
      31,
              
              
              December
      31,
              
              
              November
      16,2009
              
              
              2008
              
              
              2008Revenues
              
              $
              14,296
              
              
              $
              2,200
              
              
              $
              8,352Cost
      of revenues
              
              
              16,973
              
              
              
              2,050
              
              
              
              7,275Other
      expenses
              
              
              4,985
              
              
              
              890
              
              
              
              2,766Total
      expenses
              
              
              21,958
              
              
              
              2,940
              
              
              
              10,041Net
      loss
              
              $
              (7,662
              )
              
              $
              (740
              )
              
              $
              (1,689
              )Trust
      share of equity loss
              
              $
              (1,499
              )
              
              $
              (145
              )
              
              $
              (603
              )





The
Trust’s share of RILG equity is not based on its 19.56% interest in RILG.
Instead, it represents the carrying value of its net investment in Ridgewood
Providence at the time of the reorganization, increased/decreased for its 19.56%
share of earnings, losses and distributions of RILG that occurred subsequent to
the reorganization.





F-10
 Table of Contents





RIDGEWOOD
ELECTRIC POWER TRUST III
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)





During
the third quarter of 2009, RILG recorded an impairment charge of $1,207 due to
the decision made by the Managing Shareholder not to repair certain long-lived
assets that were taken out of service for non-performance. As this equipment has
only nominal salvage value, upon determination that the assets would not be
restored to an operating status, their asset value was written off. The Trust's
share of the impairment charge was included in equity loss in RILG in the
accompanying consolidated statements of operations.





Due to a
change in the estimated useful life of certain assets, RILG recorded additional
depreciation expense of $3,337 and $564 for the years ended December 31, 2009
and 2008, respectively, which was included in equity loss in RILG in the
accompanying consolidated statements of operations.





4.           COMMITMENTS
AND CONTINGENCIES





Norcals
have two long-term operating ground leases with future minimum lease payments
at December 31, 2009 as follows:





Years Ended December 31,2010
            
            $
            1732011
            
            
            1732012
            
            
            1732013
            
            
            1732014
            
            
            173Thereafter
            
            
            924Total
            
            $
            1,789





Rent
expense for the years ended December 31, 2009 and 2008 was $184 and $229,
respectively.





On
February 8, 2010, San Joaquin received a notice from PG&E that due to San
Joaquin’s failure to deliver power under the power sale agreement since October
2008, PG&E is claiming $6,329 from San Joaquin. If PG&E were to deliver
a similar notice regarding Byron, the Managing Shareholder estimates that
approximately the same amount would be sought. It is the opinion of the Managing
Shareholder that these are not obligations of the Trust. To date, no further
action has been taken by PG&E or the Norcals to resolve this matter, though
it is anticipated that any amounts claimed would be disputed by the Norcals.
Additionally, the Norcals may also be obligated to
make termination payments under their respective operating ground leases.Neither San Joaquin nor Byron have the ability to pay these amounts, if
actually due, and the installed equipment at these sites have minimal fair
value, and zero book accounting value.While the
Trust is not a party to any of the Norcals’ power sale agreements or ground
leases, any termination fees or payments, or other penalties, if determined to
be an obligation of the Trust, or an obligation for which the Trust is otherwise
legally responsible, would have a material adverse effect on the business,
results and financial condition of the Trust.





RILG is
obligated, under the terms of various agreements with Rhode Island Resource
Recovery Corporation (“RIRRC”), the owner and operator of the Landfill, to construct a new electric generating facility at the
Landfill andto assume primary responsibility for costs associated with
the landfill gas collection system at the Landfill as of the first to occur of
the commencement of operation of a new electric generating facility or June 1,
2013. RILG is also responsible for the development and construction of a sulfur
treatment facility on the Landfill and the construction of new pipes and
headers. The cost of building and operating the sulfur treatment facility
and the pipes and headers is estimated to be approximately $5,000. The cost
of the sulfur treatment facility will be split equally between RILG and RIRRC
and the entire cost associated with the construction of pipes and headers will
be paid by RILG.  In addition, the cost of new flares on the Landfill
will be borne by RIRRC, but in certain circumstances, the costs may be shared
with RILG. If RILG fails to comply with these obligations, it could be subject
to monetary damages and also forfeit its contracted gas rights. While the full cost of the expansion activities is not
yet known, it is the opinion of the Managing Shareholder thatRILG has
insufficient capital to meet all of its obligations to expand its Landfill
operations. As a result, for the development efforts to be completed, RILG must
either be sold to entities that can invest in the development of these projects
or obtain third-party financing to perform its duties under the various
agreements. While the Managing Shareholder believes a portion of such financing
will be available, there can be no assurance whether or when RILG can obtain
sufficient financing or obtain it on satisfactory terms.





On August 16, 2006, the Trust and several affiliated
entities, including the Managing Shareholder, filed lawsuits against the former
independent registered public accounting firm for the Trust and several
affiliated entities, Perelson Weiner LLP (“Perelson Weiner”), in New Jersey
Superior Court. The suit alleged professional malpractice and breach of contract
in connection with audit and accounting services performed for the Trust and
other plaintiffs by Perelson Weiner. On October 20, 2006, Perelson Weiner filed
a counterclaim against the Trust and other plaintiffs, alleging breach of
contract due to unpaid invoices with a combined total of approximately $1,200.
Discovery is ongoing anda trial date is currently scheduled for May 17,
2010. The costs and expenses of this
litigation, including adverse judgments, if any, are being paid by the Managing
Shareholder and affiliated management companies and not the underlying
investment funds.





F-11
 Table of Contents




RIDGEWOOD
ELECTRIC POWER TRUST III
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)




The Trust
may become subject to legal proceedings involving ordinary and routine claims
related to its business. The ultimate legal and financial liability with
respect to all such matters cannot be estimated with certainty and requires the
use of estimates in recording liabilities for potential litigation settlements.
Estimates for losses from litigation are disclosed if considered reasonably
possible and accrued if considered probable after consultation with outside
counsel. If estimates of potential losses increase or the related facts and
circumstances change in the future, the Trust may be required to record
additional litigation expense.  While it is not possible to predict
the outcome of the litigation discussed in this Note with certainty and some
lawsuits, claims or proceedings may be disposed of unfavorably to the Trust,
based on its evaluation of matters which are pending or asserted, the Trust’s
management believes the disposition of such matters will not have a material
adverse effect on the Trust’s business or its financial condition or
results of operations.





5.           TRANSACTIONS
WITH MANAGING SHAREHOLDER AND AFFILIATES





The Trust
operates pursuant to the terms of a management agreement (“Management
Agreement”).  Under the terms of the Management Agreement, the
Managing Shareholder provides certain management, administrative and advisory
services and office space to the Trust. The Trust paid the Managing Shareholder
an annual management fee of $112 and $159 for the years ended December 31,
2009 and 2008, respectively, as compensation for the services the Managing
Shareholder provides to the Trust, which was equal to 2.5% of the Trust’s prior
year net asset value. The management fee is to be paid in monthly installments
and, to the extent that the Trust does not pay the management fee on a timely
basis, the Trust accrues interest at an annual rate of 10% on the unpaid
balance.





Under the
Operating Agreement with the Trust, RPM provides management, purchasing,
engineering, planning and administrative services to the projects operated by
the Trust. RPM charges the projects 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 RPM. For the years ended December 31, 2009 and 2008,
RPM charged the projects $313 and $394, respectively, for overhead items
allocated in proportion to the amount invested in projects managed.
In addition, for the years ended December 31, 2009 and 2008, RPM
charged the projects $3,854 and $7,798, respectively, for direct expenses
allocated in proportion to the amount invested in projects managed. These
charges may not be indicative of costs incurred if the projects were not
operated by RPM.





Under the
Declaration of Trust, the Managing Shareholder is entitled to receive,
concurrently with the shareholders of the Trust other than the Managing
Shareholder, 1% of all distributions from operations made by the Trust in a year
until the shareholders have received distributions in that year equal to 14% per
annum 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 property until the shareholders other than the Managing Shareholder,
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 did not
receive any distributions for the year ended December 31, 2009 and distributions
to the Managing Shareholder were $1 for the year ended December 31, 2008. The
Trust has not yet reached Payout.





Income is
allocated to the Managing Shareholder until the profits so allocated equal
distributions to the Managing Shareholder. Thereafter, income is allocated among
the shareholders other than the Managing Shareholder in proportion to their
ownership of Investor Shares. If the Trust has net losses for a fiscal period,
the losses are allocated 99% to the shareholders other than the Managing
Shareholder and 1% to the Managing Shareholder, subject to certain limitations
as set forth in the Declaration of Trust. Amounts allocated to shareholders
other than the Managing Shareholder are apportioned among them in proportion to
their capital contributions.





Under the
terms of the Declaration of Trust, if the Adjusted Capital Account (as defined
in the Declaration of Trust) of a shareholder other than the Managing
Shareholder would become negative using General Allocations (as defined in the
Declaration of Trust), losses and expenses will be allocated to the Managing
Shareholder. Should the Managing Shareholder’s Adjusted Capital Account become
negative and items of income or gain occur, then such items of income or gain
will be allocated entirely to the Managing Shareholder until such time as the
Managing Shareholder’s Adjusted Capital Account becomes positive. This mechanism
does not change the allocation of cash, as discussed above.




In
accordance with the  Declaration of Trust, upon or prior to the first
distribution by the Trust in liquidation, the Managing Shareholder is required
to contribute to the capital of the Trust an amount equal to any deficit in the
tax basis capital account of the Managing Shareholder calculated just prior to
the date of such distribution. As of December 31, 2008, the last date such
calculation was made, the Managing Shareholder would have been required to
contribute $146 to the Trust prior to the Trust making any liquidating
distributions.





F-12
 Table of Contents





RIDGEWOOD
ELECTRIC POWER TRUST III
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (dollar amounts in thousands, except
per share data)




RRP owns
one Investor Share of the Trust. The Trust granted the Managing Shareholder a
single Management Share representing the Managing Shareholder’s management
rights and rights to distributions of cash flow.





The Trust records short-term payables to and receivables
from certain of its affiliates in the ordinary course of business. The amounts
payable to and receivable from its affiliates,other than amounts
relating to management fees,do not bear interest.
At December 31, 2009 and 2008, the Trust had outstanding receivables and
payables as follows:





Due
      from
            
            
            Due
      to2009
            
            
            2008
            
            
            2009
            
            
            2008RPM
            
            $
            19
            
            
            $
            252
            
            
            $
            -
            
            
            $
            -RRP
            
            
            -
            
            
            
            -
            
            
            
            75
            
            
            
            -RILG
            
            
            314
            
            
            
            6
            
            
            
            -
            
            
            
            12Other
      affiliates
            
            
            1
            
            
            
            1
            
            
            
            -
            
            
            
            -Total
            
            $
            334
            
            
            $
            259
            
            
            $
            75
            
            
            $
            12





6.        SUBSEQUENT
EVENT





On
February 8, 2010, San Joaquin received a notice from PG&E that due to San
Joaquin’s failure to deliver power under the power sale agreement since October
2008, PG&E is claiming $6,329 from San Joaquin. If PG&E were to deliver
a similar notice regarding Byron, the Managing Shareholder estimates that
approximately the same amount would be sought. Neither San Joaquin nor Byron
have the ability to pay these amounts, if actually due, and the installed
equipment at these sites have minimal fair value, and zero book accounting
value. The Trust is not a party to any of the Norcals’ power sale agreements
and, in the opinion of the Managing Shareholder, not an obligor of these
potential obligations. However, if these amounts are determined to be
obligations of the Trust, or obligations for which the Trust is otherwise
legally responsible, they would have a material adverse effect on the business,
results and financial condition of the Trust.