**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, 2005
 
 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:  0-21304
 
 **RIDGEWOOD
      ELECTRIC POWER TRUST II**
 ****(Exact
      Name of Registrant as Specified in Its Charter)
 Delaware
            
            22-3206429(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 oNo x
  Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or 15(d) of the Act.      Yes oNo x
  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 oNo x
  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. o
  Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):
  Large
                accelerated filer  o
              
              Accelerated
                filer o
              
              Non-accelerated
                filer x
 
 Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.    Yes  oNo x
  There
      is
      no market for the Investor Shares. The number of Investor Shares outstanding
      at
      September 30, 2007 was 235.3775.
 
 
 
  **EXPLANATORY
      NOTE**
  This
      Annual Report on Form 10-K for the year ended December 31, 2005 (this “Form
      10-K”) being filed by Ridgewood Electric Power Trust II (the “Trust”) contains
      complete audited financial statements of the Trust for the years ended December
      31, 2005, 2004 and 2003 and interim financial information presented for each
      quarter during those periods. The financial information for the years ended
      December 31, 2003 and 2004 and for the quarterly periods ended March 31, 2003,
      June 30, 2003, September 30, 2003, March 31, 2004, June 30, 2004, September
      30,
      2004 and March 31, 2005 is presented on a restated basis. This Form 10-K is
      being filed by the Trust in lieu of the Trust separately filing with the United
      States Securities and Exchange Commission (the “SEC”) (i) its delinquent Annual
      Report on Form 10-K for the year ended December 31, 2005,  and
      Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2005
      and
      September 30, 2005, and (ii) restatements of its Annual Report on Form 10-K
      and
      Quarterly Reports on Form 10-Q filed with the SEC for periods commencing on
      or
      after January 1, 2003 (the foregoing quarterly and annual reports of the Trust
      herein collectively are referred to as the “Reports for the Historical Periods”
and each such report is referred to herein as a “Report for a Historical
      Period”). This Form 10-K does not contain financial information, or discussion
      in Management’s Discussion and Analysis of Financial Condition and Results of
      Operations, for periods ended prior to January 1, 2003.
  This
      Form
      10-K includes the financial and other disclosures required to be made by the
      Trust in each of the Reports for the Historical Periods. To the extent that
      a
      Report for a Historical Period was previously filed with the SEC, the
      information contained in this Form 10-K amends, restates and supersedes in
      its
      entirety the information contained in such report for periods commencing on
      or
      after January 1, 2003. Except as noted above, this Form 10-K also includes
      the
      financial and other information that would have otherwise been required to
      have
      been provided in the Trust’s delinquent Annual Report on Form 10-K for the year
      ended December 31, 2005 and the Quarterly Reports on Form 10-Q for the periods
      ended June 30, 2005 and September 30, 2005, had such reports been filed with
      the
      SEC.
  As
      previously disclosed in its Form 8-K filed October 10, 2007, (i) the
      consolidated financial statements of the Trust included in the Trust’s Quarterly
      Reports on Form 10-Q and the Trust’s Annual Reports on Form 10-K for each of the
      periods beginning with the three-month period ended March 31, 2003 and
      continuing through the three-month period ended March 31, 2005 filed with the
      SEC (the “Previously Issued Financial Statements”) should no longer be relied
      upon and (ii) the Previously Issued Financial Statements should be restated
      to
      conform to generally accepted accounting principles (“GAAP”). The determination
      to restate these financial statements and selected financial data was made
      by
      the Trust and Ridgewood Renewable Power LLC, the Managing Shareholder of the
      Trust (the “Managing Shareholder”), as a result of the identification of
      accounting errors as more fully described in Note 2 to the accompanying
      consolidated financial statements. The Trust has discussed these matters with
      its independent registered public accounting firm. As these errors were material
      to the Trust’s consolidated financial statements and selected financial
      information filed with the SEC, the Trust has concluded that it must restate
      the
      consolidated financial statements of such prior periods to correct misstatements
      therein.
  
     
 **FORM
                  10-K****TABLE
                  OF CONTENTS****PART
                  I**Item
                  1.
              Business
              1Item
                  1A.
              Risk
                  Factors
              4Item
                  1B.
              Unresolved
                  Staff Comments
              7Item
                  2.
              Properties
              7Item
                  3.
              Legal
                  Proceedings
              7Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              8**PART
                  II**Item
                  5.
              Market
                  for Registrant’s Common Equity, Related Security Holder
                  Matters andIssuer
                  Purchases of Equity Securities
              8Item
                  6.
              Selected
                  Financial Data
              8Item
                  7.
              Management’s
                  Discussion and Analysis of Financial Condition and
                  Results of Operations
              10Item
                  7A.
              Quantitative
                  and Qualitative Disclosures About Market
                  Risk
              19Item
                  8.
              Financial
                  Statements and Supplementary Data
              19Item
                  9.
              Changes
                  in and Disagreements with Accountants on Accounting and
                  Financial Disclosure
              19Item
                  9A.
              Controls
                  and Procedures
              20Item
                  9B.
              Other
                  Information; Unregistered Sales of Equity Securities and
                  Use of Proceeds;Defaults
                  Upon Senior Securities
              21**PART
                  III**Item
                  10.
              Directors
                  and Executive Officers of the
                  Registrant
              21Item
                  11.
              Executive
                  Compensation
              23Item
                  12.
              Security
                  Ownership of Certain Beneficial Owners and Management
                  andRelated
                  Security Holder Matters
              23Item
                  13.
              Certain
                  Relationships and Related
                  Transactions
              23Item
                  14.
              Principal
                  Accountant Fees and Services
              24**PART
                  IV**Item
                  15.
              Exhibits
                  and Financial Statement Schedules
              25SIGNATURES
              
              27
  
  **Forward-Looking
        Statements**
 
  Certain
      statements discussed in Part I, Item 1. “Business”, Part I, Item 3. “Legal
      Proceedings”, Part II, 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 opinions and estimates as of the date they are
      made.  Although management believes that the expectations 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 outcome of litigation described in
      Item
      3. "Legal Proceedings", changes in political and economic conditions, federal
      or
      state regulatory structures, government mandates, the ability of customers
      to
      pay for energy received, supplies and prices of fuels, operational status of
      generating plants, mechanical breakdowns, 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 Part I,
      Item 1A. “Risk Factors” and Part II, Item 7. “Management’s
      Discussion and Analysis of Financial Condition and Results of Operations”, and
      elsewhere in this Annual report on Form 10-K.  The Trust undertakes no
      obligation to publicly revise any forward-looking statements or cautionary
      factors, except as required by law.
  
  **PART
      I**
  **ITEM
      1.  BUSINESS**
 
 **Overview**
 
 The
      Trust
      is a Delaware trust formed on November 20, 1992 to primarily make investments
      in
      projects and businesses in the energy and infrastructure sectors. Ridgewood
      Renewable Power LLC (“RRP” or the “Managing Shareholder”), a New Jersey limited
      liability company, is the Managing Shareholder. As the Managing Shareholder,
      RRP
      has direct and exclusive control over the management and operations of the
      Trust.
  The
      Trust
      has focused primarily on small-scale electricity generation projects. These
      projects allow the Trust to develop secure long-term positions in attractive
      specialty markets for products and services provided by its projects and
      companies. As
      of
      December 31, 2005, the Trust had two operating investments, both located in
      California and 100% owned by the Trust.  One investment is a 5.5
      megawatt (“MW”) cogeneration project which suspended operations in early 2006
      due to a contract dispute with its customer. See Item 3. “Legal Proceedings” for
      further discussion. The other investment is a collection of irrigation service
      engines with a production capacity of 2MW, which was sold in January 2006 for
      $1. Additionally, at December 31, 2005, the Trust had a long-term note
      receivable, which was paid in full on October 31, 2007.
  Based
      on
      the status of these assets, the operating results of the Trust for future
      periods is expected to be materially reduced from current levels.
  The
      Trust
      initiated its private placement offering in November 1992 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
      January 1994 and after payment of offering fees, commissions and investment
      fees, the Trust had $19.4 million available for investments and operating
      expenses. As of September 30, 2007, the Trust had 235.3775 Investor Shares
      outstanding, held by 534 shareholders.
 
 **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 investment, RRP locates
      potential projects, conducts appropriate due diligence and
      negotiates and completes the transactions in which the investments are made
      by
      the Trust.
  1
  In
      addition, RRP performs (or arranges for the performance of) the operation and
      maintenance of the projects owned by the Trust and the management and
      administrative services required for Trust operations. Among other services,
      RRP
      administers the accounts and handles relations with the shareholders, including
      tax and other financial information. 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 1.5% of the net
      asset
      value of the Trust 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. 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,
      which 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.
  **Business
      Strategy**
  The
      Trust’s primary investment objective is to generate cash flow for distribution
      to shareholders and capital appreciation from one or more of the acquisition,
      development, ownership and operation of interests in electricity generation
      and
      other infrastructure projects and companies. The Trust generally seeks to invest
      in projects and companies that provide products or services through a number
      of
      small facilities and that offer opportunities for expansion either through
      increasing production at existing sites or through the establishment of
      additional sites. These projects often involve development, construction and
      operating risk but, once established, may be able to effectively “lock-in” the
      customer (or customers) served by the project, which would prevent competitors
      from dislodging the Trust’s project. The Trust focuses on markets in which
      projects can be developed and built quickly and can be standardized as to their
      design, equipment and construction. By following this strategy, the Trust seeks
      to take advantage of attractive market opportunities while streamlining the
      development process and diversifying across a number of projects in order to
      contain the exposure of the Trust to the risks inherent in such projects. As
      of
      December 31, 2005, all of the Trust’s projects are 100% owned through investment
      vehicles managed by the Managing Shareholder.
  **Projects
      and Properties**
  **Monterey**
  In
      January 1995, the Trust purchased 100% of the equity interests in Sunnyside
      Cogeneration Partners, L.P., which owns a 5.5-megawatt cogeneration project
      located in Salinas, Monterey County, California (“Monterey"). The aggregate
      purchase price was $5.2 million.  Monterey began operations in 1991
      using natural gas fired reciprocating engines to generate electricity for sale
      to Pacific Gas and Electric Company ("PG&E") under a long term contract
      expiring in 2020 (the "Power Contract"). PG&E is also obligated to pay
      Monterey capacity payments based on its net electrical output or its available
      capacity. Thermal energy from Monterey’s operations provides warm water to an
      adjacent greenhouse under a long-term contract that also terminates in 2020.
      Monterey is operated on behalf of the Trust by RPM on an at-cost
      basis.
 
 Monterey’s
      contract prices with PG&E were determined pursuant to a contract formula
      approved by the California Public Utilities Commission ("CPUC") with the energy
      payment originally based upon a benchmark energy price adjusted for changes
      over
      time in a natural gas price index; referred to as the "Short Run Avoided Cost
      Methodology" or SRAC.  At December 31, 2005, however, Monterey was
      operating pursuant to a 2001 amendment to the Power Contract with PG&E,
      which provided, among other things, that Monterey would receive a fixed energy
      payment (as well as the required capacity payment) for a term of five years,
      until approximately August 2006.  Upon expiration of the amendment,
      through the remainder of the term of the contact, the formula contained in
      the
      original contract was to be used to determine the energy price paid by
      PG&E.
 
 Monterey
      has a non-cancelable operating lease covering its site, which expires in May
      2021 with minimum annual lease payments, including the delivery of cogeneration
      steam.
 
 In
      August
      2001, Monterey entered into an agreement with Coral Energy Services, Inc.
      (“Coral”), a subsidiary of Shell Oil, to procure its natural gas fuel at a fixed
      price through August 2006.  Coral and Monterey also had a master
      re-sale agreement, which also expired
      in August 2006.  Such agreement enabled Monterey to not take delivery
      of, and sell back to Coral, certain amounts of natural gas once predetermined
      prices have been established. During 2004, 2005 and 2006, Monterey re-sold
      gas
      back to Coral. 2
 Monterey
      received notice on December 1, 2005 from PG&E directing Monterey to increase
      its operations from 13 hours, 5 days a week to 24 hours, 7 days a week. However,
      PG&E had been operating or "dispatching" Monterey on a 5 by 13 basis for
      over 15 years.  Monterey determined that it could not operate
      profitably on such a schedule and was concerned that if it Monterey only
      operated on a 5 by 13 basis, PG&E might refuse to pay for delivered
      electricity. Monterey requested from PG&E to limit its operations to the 5
      by 13 basis, but this request was denied. As a result, effective January 9,
      2006, Monterey ceased its operations. Monterey and PG&E have filed lawsuits
      against the other for breach of contract. For further discussion, see Item
      3.
“Legal Proceedings”. The Monterey project remains closed as of the date of this
      filing.  Additionally, as a result of the shut down, the project has
      not delivered by-product steam since it was shut down in January 2006. As a
      result, it may be subject to penalties from the lessor.
 
 **Pumping
      Project**
 
 In
      1995,
      the Trust purchased a package of irrigation service engines (the “Pumping
      Project") located in Ventura County, California.  The purchase price
      was $952,000.  RPM operated and managed the Pumping Project. The
      Pumping Project had been operating since 1992 and had 10 natural-gas-fired
      reciprocating engines with a maximum rated equivalent capacity of 2MW to provide
      power for irrigation wells that furnish water for citrus orchards. The power
      was
      purchased by local farmers and farmers' co-operatives pursuant to electric
      services contracts. In January 2006, the engines were sold for $1 to its prior
      customers.
 
  **Other
      Investments**
 
 The
      Trust
      acquired an 80% interest in a water chilling facility in San Diego, California
      in March 1994 for a purchase price of $2.3 million.  The Trust made
      additional capital contributions, totaling $1.2 million, to the facility to
      fund
      working capital and to purchase various leased equipment.  In June
      1997, the Trust sold its entire interest in the facility to subsidiaries of
      NRG
      Energy, Inc. The sale price was $6.2 million in cash and notes. The notes were
      paid in full in 2003.
 
 In
      January 1994, the Trust made an equity investment of $2.3 million in Pittsfield
      Investors Limited Partnership (“PILP”), which was formed to acquire a
      waste-to-energy project designed and built to burn municipal solid waste
      supplied by the City of Pittsfield, Massachusetts, surrounding communities
      and
      other waste providers as well as to supply steam to a nearby paper
      mill.  The PILP project originally began operating in 1981 and was
      operated and co-owned with the Trust by subsidiaries of Energy Answers
      Corporation (“EAC”). The Trust made an additional investment with affiliates of
      EAC in August 1994 when it purchased an interest in the B-3 Limited Partnership
      (“B-3”) for $4 million.  The business of B-3 was the construction and
      operation of a municipal waste transfer station in Columbia County, New
      York.  In September 2002, the Trust sold its interests in PILP and B-3
      to EAC for $1.2 million in cash and $5 million of promissory notes. The notes
      bore interest at a rate of 10% per annum, and were to be repaid over a 17-year
      term. The notes were collateralized solely by the assets of the projects and
      are
      without recourse to EAC. The note payments remained current until the notes
      were
      paid in full on October 31, 2007.
 
 **Significant
      Customers and Supplier**
 
 During
      2005, 2004 and 2003, the Trust’s largest customer, Pacific Gas and Electric
      Company, accounted for 88%, 87% and 80%, respectively of total revenues. During
      2005, 2004 and 2003, Monterey purchased 100% of its natural gas from
      Coral.
 
 **Business
      Segments**
 
 Power
      generation is the only business
      segment within which the Trust manages and evaluates its
      operations.
 
 **Competition**
 
 Monterey
      is currently bound under a long-term sale contract. Based on this, the Trust
      does not generally face direct competition in the sale of the electricity it
      generates.
 
 **Government
      Incentives and Regulation**
  Projects
      of the Trust have been subject to energy and environmental laws and regulations
      at the federal, state and local levels in connection with development,
      ownership, operation, geographical location, zoning and land use of a project
      and emissions and other substances produced by a project. These energy and
      environmental laws and regulations generally require that a wide variety of
      permits and other approvals be obtained before the commencement of construction
      or operation of an energy-producing facility and that the facility then operates
      in compliance with such permits and approvals. Monterey also operates under
      the
      terms of the Federal Energy Regulatory Commission (“FERC”)
      licenses issued to it. The Trust considers these regulations to be routine
      and
      does not consider the cost of compliance to be material.  3
 **Insurance**
  The
      Trust has in place, either directly
      or through investee companies, insurance typical for activities such as those
      conducted by the Trust. 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, its affiliates or those of the specific
      investments of the Trust.
  **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 947
      Linwood Avenue, Ridgewood, New Jersey, 07450 and its phone number is
      201-447-9000.
  **Available
      Information**
  The
      Trust’s shares are registered under
      Section 12(g) of the Exchange Act. The Trust must therefore comply with, among
      other things, the periodic reporting requirements of Section 13(a) of the
      Exchange Act. As a result, the Trust prepares and files annual reports with
      the
      SEC on Form 10-K, quarterly reports on Form 10-Q and, from time to time, current
      reports on Form 8-K. Moreover, the Managing Shareholder maintains a website
      at
      http://www.ridgewoodpower.com that contains important information about the
      Managing Shareholder, including biographies of key management personnel, as
      well
      as information about the investments made by the Trust and the other investment
      programs managed by the Managing Shareholder.
  **Where
      You Can Get More Information**
  The
      Trust
      files annual, quarterly and current reports and certain other information with
      the SEC. Persons may read and copy any documents the Trust files at the SEC’s
      public reference room at 100 F Street, NE, Washington D.C. 20549. You may obtain
      information on the operation at the public reference room by calling the SEC
      at
      1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy
      and information statements, and other information regarding issuers that file
      electronically with the SEC at http://www.sec.gov. A copy of any such filings
      will be provided free of charge to any shareholder upon written request to
      the
      Managing Shareholder at its business address - 947 Linwood Avenue, Ridgewood,
      New Jersey 07450, ATTN: General Counsel.
  **Reports
      to Shareholders**
  The
      Trust
      does not anticipate providing annual reports to shareholders but will make
      available upon request copies of the Trust’s periodic reports to the SEC on Form
      10-K and on Form 10-Q.
  **ITEM
      1A. RISK FACTORS**
  In
      addition to the other information
      set forth elsewhere in this report, you should carefully consider the following
      factors when evaluating the Trust:
  **RISKS
      INHERENT IN THE BUSINESSES OF THE TRUST**
  **The
      Trust has material weaknesses in its disclosure controls and
      procedures.**
  Material
      weaknesses in disclosure
      controls and procedures have been identified by management of the Trust. These
      weaknesses primarily relate to the Trust’s inability to complete its reporting
      obligations on a timely basis as a result of deficient disclosure controls
      and
      procedures. See Item 9A. “Controls and Procedures” in this report. The inability
      of the Trust to timely report its results could impact the ability of an
      investor to adequately understand its investment, restrict the Trust’s ability
      to conduct its activities and subject the Trust to fines and penalties. Upon
      further review, the Trust may also determine that it has material weaknesses
      in
      its internal control over financial reporting.  4
 **The
      Trust’s remaining operating asset, Monterey, has not operated since January
      2006.**
  If
      Monterey is unable to satisfactorily
      resolve its dispute with PG&E, its only customer, it is likely that the
      plant will remain closed. Other than the Trusts’ collection of its long-term
      notes receivable in October 2007, the Monterey project is the only remaining
      productive asset of the Trust. Continued closure of the Monterey project
      significantly reduces revenue and cash flows to the Trust. See Item 3. “Legal
      Proceedings” for a description of the dispute with PG&E.
  **The
      project of the Trust depends on the near-continuous operation of its equipment.
      Should the productivity of some or all of this equipment be compromised or
      should the equipment fail altogether, the Trust would be adversely affected.
      The
      Trust may also experience difficulty in hiring qualified operating
      personnel.**
  The
      primary equipment of the Trust 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 from delivering its electricity. In
      addition, the Trust may experience price increases for, or difficulty in
      obtaining, spare parts for its projects and in identifying and hiring personnel
      qualified to operate, maintain and repair the specialized equipment that make
      up
      parts of its projects.
  **The
      project of the Trust is subject to regulatory changes (including changes in
      environmental regulations) that could significantly reduce revenues or increase
      expenses of the Trust.**
  This
      area of risk is inherently
      difficult to predict but could include matters such as emission control changes.
      Such changes could increase costs at the Trust’s project or prevent the project
      from operating.
  **The
      Trust may become involved in litigation.**
  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. Also, a subsidiary of the Trust, Monterey, is
      involved in litigation as discussed in Item 3. “Legal Proceedings”. Although it
      is not possible to predict the timing, nature or outcome of such claims or
      lawsuits, we believe the chances that any claims or lawsuits arising and
      resulting, individually or in the aggregate, in a material impact on the Trust
      to be remote. However, the Trust could in the future incur judgments or enter
      into settlements of lawsuits and claims that could have a material adverse
      effect on the results of the Trust. 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 severe 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. However, if the Trust were to attempt to sell any such interest,
      a
      successful sale would depend upon, among other things, the operating history
      and
      prospects for the project or interest being sold, the number of potential
      purchasers and the economics of any bids made by them. 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, 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.  5
 **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 rising 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 1.5% of the prior years' 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 the Trust’s 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.  6
 ·
            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.
  ·
            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, 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.**
  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**
  As
      discussed in Item 1. “Business” under the heading *Projects and Properties -
      Monterey*, for the first 15 years of operation, PG&E “dispatched” the
      Monterey facility to produce and deliver electricity up to its contract capacity
      on a 13 hour per day, five day per week basis (“13x5”).  However, on
      December 1, 2005, PG&E dispatched Monterey on a 24 hour per day, seven day
      per week basis (“24x7”) for an indefinite period, effective January 1,
      2006.  Monterey advised PG&E that its 24x7 dispatch order was a breach
      of the parties’ power purchase agreement.  Management of Monterey was also
      concerned that if Monterey continued to produce and supply power consistent
      with
      the parties’ prior course of performance, PG&E would refuse to pay. 
Accordingly, Monterey demanded that PG&E provide adequate assurances that it
      would continue to pay Monterey for its capacity and its electricity produced
      and
      delivered in accordance with the parties’ longstanding 13x5 operations. 
PG&E did not provide such assurances.  In the absence of such
      assurances, Monterey suspended operations on or about January 9, 2006. 
Monterey filed a Complaint against PG&E in the San Francisco Superior Court
      on May 16, 2006 (the “Monterey Complaint”).  The Monterey Complaint seeks
      damages for breach of contract, damages for PG&E’s breach of the implied
      covenant of good faith and fair dealing, and a claim for declaratory relief
      against PG&E, seeking a judicial determination that PG&E’s conduct
      materially breached the parties’ agreement and justified Monterey’s suspension
      of performance.  Monterey is seeking damages against PG&E
      estimated at approximately $5 million. A Jury Trial with regard to this matter
      is currently set for February 8, 2008.
  7
  On
      May
      14, 2007, PG&E filed a Complaint in San Francisco Superior Court against
      Monterey (the “PG&E Complaint”).  The PG&E Complaint arises out of
      the same transactions and occurrences that gave rise to the Monterey Complaint
      against PG&E.  PG&E asserted claims for compensatory damages for
      breach of contract and breach of the implied covenant of good faith and fair
      dealing as well as “restitution” of capacity payments made to Monterey on a
      theory of unjust enrichment, and declaratory relief for repayment of capacity
      payments made to Monterey.  PG&E is seeking restitution damages against
      Monterey estimated at approximately $4.8 million.
 
 The
      claims made by PG&E have been made solely against Monterey and do not
      involve any claims against the Trust. Both of the above litigation matters
      are
      currently in discovery.  Monterey intends to vigorously prosecute its
      claims and defend against PG&E’s claims and management believes it will
      ultimately prevail.
 
 On
      August
      16, 2006, the Trust and several affiliated entities, including the Managing
      Shareholder, filed a lawsuit 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 the other plaintiffs by Perelson
      Weiner. On October 20, 2006, Perelson Weiner filed a counterclaim against the
      Trust and the other plaintiffs, alleging breach of contract due to unpaid
      invoices in the total amount of approximately $1,188,000. Discovery is ongoing
      and no trial date has been set.
  **ITEM
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**
 None.
 
 **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
      September 30, 2007 and December 31, 2005, 2004 and 2003, there were 534, 527,
      525 and 525 holders of Investor Shares, respectively.
 
 **Dividends**
 
 Trust
      distributions for the three years ended December 31, 2005 were as follows (in
      thousands, except per share data):
 
 **2005**
            
            
            **2004**
            
            
            **2003**Distributions
                to Investors
            
            $
            1,177
            
            
            $
            1,412
            
            
            $
            1,412Distributions
                per Investor Share
            
            
            5,000
            
            
            
            6,000
            
            
            
            6,000Distributions
                to Managing Shareholder
            
            
            12
            
            
            
            14
            
            
            
            14
 
 **ITEM
      6.  SELECTED FINANCIAL DATA**
 
 The
      following selected consolidated
      financial data should be read in conjunction with the Trust’s consolidated
      financial statements and related notes and Item 7. “Management’s Discussion and
      Analysis of Financial Condition and Results of Operations” of this Form
      10-K.
 
 The
      consolidated statement of
      operations data for the years ended December 31, 2005, 2004 and 2003 and the
      consolidated balance sheet data as of December 31, 2005, 2004 and 2003, are
      derived from audited financial statements included in this Form
      10-K.
  8
  The
      consolidated statement of operations data for the years ended December 31,
      2002
      and 2001 and the consolidated balance sheet data as of December 31, 2002 and
      2001 are derived from audited consolidated financial statements that have not
      been restated, and as a result, may not be comparable to subsequent periods.
      For
      further discussion, see Note 2 to the Trust’s Consolidated Financial Statements
      included in this Form 10-K.
 
 (in
                  thousands, except per share data)
              
              **December
                  31,****2005**
              
              
              **2004**
              
              
              **2003**
              
              
              **2002**
              
              
              **2001**(Restated)
              
              
              (Restated)**Consolidated
                  Statement of Operations Data:**Revenues
              
              $
              2,817
              
              
              $
              2,826
              
              
              $
              3,009
              
              
              $
              3,075
              
              
              $
              2,374Net
                  income (loss)
              
              
              265
              
              
              
              361
              
              
              
              340
              
              
              
              256
              
              
              
              (1,089
              )Net
                  income (loss) per Investor Share
              
              
              1,116
              
              
              
              1,516
              
              
              
              1,432
              
              
              
              1,086
              
              
              
              (4,626
              )**Consolidated
                  Balance Sheet Data:**Plant
                  and equipment, net
              
              $
              1,132
              
              
              $
              1,258
              
              
              $
              1,381
              
              
              $
              1,798
              
              
              $
              2,003Total
                  assets
              
              
              4,384
              
              
              
              4,964
              
              
              
              6,060
              
              
              
              7,561
              
              
              
              8,216Shareholders'
                  equity
              
              
              3,878
              
              
              
              4,802
              
              
              
              5,867
              
              
              
              7,227
              
              
              
              7,804
 
 Quarterly
      financial information is derived from unaudited financial data, which, in the
      opinion of management, reflects all adjustments, which are necessary to present
      fairly the results for such interim periods. It is suggested that the quarterly
      financial data be read in conjunction with the financial statements and the
      notes thereto included in this Form 10-K.
  (in
                  thousands, except per share data)
              
              **Nine
                  months ended September 30,**
              
              
              **Three
                  months ended September 30,****2005**
              
              
              **2004**
              
              
              **2003**
              
              
              **2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)
              
              
              
              
              
              (Restated)
              
              
              (Restated)**Consolidated
                  Statement of Operations Data:**Revenues
              
              $
              2,107
              
              
              $
              2,154
              
              
              $
              2,261
              
              
              $
              792
              
              
              $
              746
              
              
              $
              835Net
                  income (loss)
              
              
              893
              
              
              
              634
              
              
              
              345
              
              
              
              819
              
              
              
              158
              
              
              
              (369
              )Net
                  income (loss) per Investor Share
              
              
              3,758
              
              
              
              2,669
              
              
              
              1,453
              
              
              
              3,446
              
              
              
              663
              
              
              
              (1,551
              )
  **September
                  30,**(in
                  thousands)
              
              **2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)**Consolidated
                  Balance Sheet Data:**Plant
                  and equipment, net
              
              $
              1,165
              
              
              $
              1,288
              
              
              $
              1,628Total
                  assets
              
              
              5,016
              
              
              
              5,578
              
              
              
              6,388Shareholders'
                  equity
              
              
              4,743
              
              
              
              5,432
              
              
              
              6,228
 
 (in
                  thousands, except per share data)
              
              **Six
                  months ended June 30,**
              
              
              **Three
                  months ended June 30,****2005**
              
              
              **2004**
              
              
              **2003**
              
              
              **2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)
              
              
              
              
              
              (Restated)
              
              
              (Restated)**Consolidated
                  Statement of Operations Data:**Revenues
              
              $
              1,315
              
              
              $
              1,408
              
              
              $
              1,426
              
              
              $
              651
              
              
              $
              708
              
              
              $
              682Net
                  income (loss)
              
              
              74
              
              
              
              476
              
              
              
              714
              
              
              
              (244
              )
              
              
              153
              
              
              
              346Net
                  income (loss) per Investor Share
              
              
              314
              
              
              
              2,001
              
              
              
              3,007
              
              
              
              (1,028
              )
              
              
              642
              
              
              
              1,457
  **June
                  30,**(in
                  thousands)
              
              **2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)**Consolidated
                  Balance Sheet Data:**Plant
                  and equipment, net
              
              $
              1,196
              
              
              $
              1,319
              
              
              $
              1,683Total
                  assets
              
              
              4,254
              
              
              
              5,819
              
              
              
              7,134Shareholders'
                  equity
              
              
              4,163
              
              
              
              5,630
              
              
              
              6,955
  9
  (in
                  thousands, except per share data)
              
              **Three
                  months ended March 31,****2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)
              
              
              (Restated)**Consolidated
                  Statement of Operations Data:**Revenues
              
              $
              664
              
              
              $
              700
              
              
              $
              744Net
                  income
              
              
              318
              
              
              
              323
              
              
              
              368Net
                  income per Investor Share
              
              
              1,344
              
              
              
              1,362
              
              
              
              1,549
   **March
                  31,**(in
                  thousands)
              
              **2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)
              
              
              (Restated)**Consolidated
                  Balance Sheet Data:**Plant
                  and equipment, net
              
              $
              1,227
              
              
              $
              1,350
              
              
              $
              1,741Total
                  assets
              
              
              4,933
              
              
              
              6,030
              
              
              
              7,152Shareholders'
                  equity
              
              
              4,764
              
              
              
              5,834
              
              
              
              6,965
  **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 Part I,
        Item 1A. “Risk Factors” and elsewhere in this Annual Report on
        Form 10-K.*
 
 **Restatement
      of Financial Statements**
  As
      previously disclosed in its Form 8-K
      filed with the SEC on October 10, 2007, the consolidated financial statements
      of
      the Trust included in the Trust’s Quarterly Reports on Form 10-Q and the Trust’s
      Annual Reports on Form 10-K for each of the periods beginning with the
      three-month period ended March 31, 2003 and continuing through the three-month
      period ended March 31, 2005 previously filed by the Trust with the SEC should
      no
      longer be relied upon and that those financial statements should be restated
      to
      conform to generally accepted accounting principles as more fully described
      in
      Note 2 to the accompanying consolidated financial statements. The determination
      to restate these financial statements and selected financial data was made
      by
      the Trust and the Managing Shareholder of the Trust, as a result of the
      identification of accounting errors. Accordingly, this Annual Report on Form
      10-K contains restated financial statements for the periods mentioned
      above.
  **Overview**
 
 The
      Trust
      is a Delaware trust formed on November 20, 1992 to primarily make investments
      in
      projects and businesses in the energy and infrastructure sectors. Ridgewood
      Renewable Power LLC (“RRP” or the “Managing Shareholder”), a New Jersey limited
      liability company, is the Managing Shareholder. As the Managing Shareholder,
      RRP
      has direct and exclusive control over the management and operations of the
      Trust.
  The
      Trust
      has focused primarily on small-scale electricity generation projects. These
      projects allow the Trust to develop secure long-term positions in attractive
      specialty markets for products and services provided by its projects and
      companies. As
      of
      December 31, 2005, the Trust had two operating investments, both located in
      California and 100% owned by the Trust.  One investment, Monterey, is
      a 5.5MW cogeneration project which suspended operations in early 2006 due to
      a
      contract dispute with its customer. See Item 3. “Legal Proceedings” for further
      discussion. The other investment is a collection of irrigation service engines
      with a production capacity of 2MW, which was sold in January 2006 for $1.
      Additionally, the Trust has a long-term note receivable, which was paid in
      full
      on October 31, 2007.
  Based
      on
      the status of these assets, the financial statement results for future periods
      is expected to be materially different than historical periods. Since the
      closing of the Monterey facility in January 2006, the Trust has not had any
      operating revenues, though it continued to have contractual obligations through
      August 2006 related to the gas purchase agreement with Coral. Upon the repayment
      of the Trust’s long term receivable in October 2007, the Trust no longer had any
      cash producing assets and may not in the future, subject
      to the resolution of litigation relating to the Monterey facility. During the
      first quarter of 2006, the Trust intends to record an asset impairment of
      Monterey’s remaining net book value. Monterey remains closed as of the date of
      this filing.
  10
  **Critical
      Accounting Policies and Estimates**
 
 The
      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. In
      preparing these financial statements, the Trust is required to make certain
      estimates, judgments and assumptions. These estimates, judgments and assumptions
      affect the reported amounts of the Trust’s assets and liabilities, including the
      disclosure of contingent assets and liabilities, at the date of the financial
      statements and the reported amounts of the Trust’s revenues and expenses during
      the periods presented. 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 financial statements.
      The Trust believes the following critical accounting policies affect the more
      significant estimates and judgments in the preparation of the Trust’s
      consolidated financial statements.
 
 *Revenue
      Recognition*
 
 Power
      generation revenue is recorded in the month of delivery, based on the estimated
      volumes sold to customers at rates stipulated in the electric power sales
      contract. Adjustments are made to reflect actual volumes delivered when the
      actual volumetric information subsequently becomes available. Final billings
      do
      not vary significantly from estimates.
 
 *Accounts
      Receivable*
 
 Accounts
      receivable are recorded at invoice price in the period the related revenues
      are
      earned, and do not bear interest. No allowance for bad debt expense was provided
      based upon historical write-off experience, evaluation of customer credit
      condition and the general economic status of the customers.
 
 *Plant
      and Equipment*
 
 Plant
      and
      equipment, consisting principally of electrical generating equipment, is stated
      at cost less accumulated depreciation. Renewals and betterments that increase
      the useful lives of the assets are capitalized. Repair and maintenance
      expenditures are expensed as incurred. Upon retirement or disposal of assets,
      the cost and related accumulated depreciation are removed from the consolidated
      balance sheets. The difference, if any, between the net asset value and any
      proceeds from such retirement or disposal is recorded as a gain or loss in
      the
      statement of operations.
 
 Depreciation
      is recorded using the straight-line method over the useful lives of the assets,
      which ranges from 3 to 20 years.
 
 *Impairment
      of Intangibles and Long-Lived Assets*
 
 The
      Trust
      evaluates intangible assets and long-lived assets, such as plant and equipment,
      when events or changes in circumstances indicate that the carrying value of
      such
      assets may not be recoverable. The determination of whether impairment has
      occurred is made by comparing the carrying value of an asset to the estimated
      undiscounted cash flows attributable to that asset. If impairment has occurred,
      the impairment loss recognized is the amount by which the carrying value exceeds
      the estimated fair value of the asset, which is based on the estimated future
      cash flows discounted at the estimated cost of capital. The analysis requires
      estimates of the amount and timing of projected cash flows and, where
      applicable, judgments associated with, among other factors, the appropriate
      discount rate. Such estimates are critical in determining whether any impairment
      charge should be recorded and the amount of such charge if an impairment loss
      is
      deemed to be necessary.
 
 *Gas Contract*
 
 In
        August
        2001, Monterey entered into an agreement to purchase natural gas, at fixed
        prices, over a five-year term in connection with entering into an amendment
        fixing the sales price of electric power sales contracts for a similar term.
        This contract was entered into in order to minimize the impact of fluctuating
        energy prices. The Trust has determined that this contract is a derivative
        as
        defined under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
        Activities", as amended. The Trust has designated the derivative as a non-hedge
        instrument. Accordingly, the value of the contract based on the differences
        between contract prices and market value prices is recognized as an asset
        or a
        liability in the balance sheet. Changes in the carrying value of the contract
        is
        reflected as a component of cost of revenues in the consolidated statements
        of
        operations.
  11
  *Notes
      Receivable*
 
 Recovery
      of interest and principal under the promissory notes issued in connection with
      the sale of the Trust’s interest in PILP and B-3 were dependent upon the
      operations of the partnership investment transferred. Consequently, the Trust
      deferred its gain on the sale of its ownership interest until the carrying
      value
      of the investments was fully recovered. The cash proceeds received for the
      interest and principal were recorded as a reduction of the Trust’s investment in
      the partnership transferred under contractual agreement through June 30,
      2005.  Subsequent payments were recorded as a component of other
      income.
 
 **Results
      of Operations and Changes in Financial Condition**
 
 *Year
      ended December 31, 2005 compared to the year ended December 31,
      2004*
 
 Revenues
      of $2.8 million in 2005 was comparable to the same period in 2004.
 
 Cost
      of
      revenues increased approximately $0.5 million, or 18.2%, from $2.2 million
      for
      the year ended December 31, 2004 to $2.7 million for the year ended December
      31,
      2005. This increase was primarily attributable to the impact of the Monterey
      gas
      supply contract as by the decrease in natural gas prices decreased during
      2005.
 
 Gross
      profit decreased by $0.4 million, or 71.4%, from $0.6 million in 2004 to $0.2
      million in 2005. This decrease was primarily due to lower natural gas
      prices.
 
 In
      2005,
      the Trust recorded gains of $0.3 million from collection on notes from the
      sale
      of its investment in B-3 and PILP.
 
 Net
      income for 2005 totaled $0.3 million, a decrease of approximately $0.1 million
      from $0.4 million in 2004. This decrease was due to the decrease in gross
      profit, offset by the gains recorded during 2005 from collection of notes
      receivable.
 
 Total
      assets at December 31, 2005 decreased by $0.6 million, from $5.0 million at
      December 31, 2004 to $4.4 million at December 31, 2005, primarily due to
      decreases of $0.4 million in payments received in the investment in partnership
      transferred under contractual agreement and $0.2 million in cash and cash
      equivalents. Total liabilities increased $0.3 million from $0.2 million at
      December 31, 2004 to $0.5 million at December 31, 2005, primarily due to
      affiliated short-term borrowings of $0.3 million.
 
 *Year
      ended December 31, 2004 compared to the year ended December 31,
      2003*
 
 Revenues
      decreased by $0.2 million, or
      6.1%, to $2.8 million in 2004 as compared to $3 million in 2003. This decrease
      was primarily due to a decrease of $0.2 million in revenues from the Pumping
      Project in 2003, due to decreased usage. See below for a discussion of the
      impairment recorded in 2004 relating to the Pumping Project.
 
 Gross
      profit decreased by $0.2 million to $0.6 million in 2004 as compared to $0.8
      million in 2003.  Gross profit decreased primarily due to a decline in
      revenues from the Pumping Project of $0.2 million.
 
 In
      2003,
      the Trust recorded an impairment of $0.2 million related to the Pumping Project.
      The Trust records impairment of plant and equipment when events or changes
      in
      circumstances indicate that the carrying value of such assets may not be
      recoverable.
 
 Total
      assets decreased $1.1 million from $6.1 million at December 31, 2003 to $5
      million at December 31, 2004. This decrease was primarily due to decreases
      of
      $0.8 million in cash and cash equivalents and $0.4 million in investments in
      partnership transferred under contractual agreement, partially offset by an
      increase of $0.4 million in the gas forward contract.  Total
      liabilities were $0.2 million at both December 31, 2004 and December 31,
      2003.
  *Nine
      months ended September 30, 2005 compared to the nine months ended September
      30,
      2004*
 
 Revenues
      decreased approximately $0.1 million, or 2.2%, from $2.2 million for the nine
      months ended September 30, 2004 to $2.1 million for the same period in 2005.
      This decrease was primarily due to a decrease in Pumping Project revenues for
      the 2005 period as compared to the 2004 period.
 
 Gross
      profit increased approximately $0.1 million to $0.9 million for the nine months
      ended September 30, 2005 as compared to $0.8 million for the same period in
      2004. This increase was primarily attributable to lower cost of revenues due
      to
      the impact of price changes for natural gas.
  12
  During
      the nine months ended September 30, 2005, the Trust recorded a gain on sale
      of
      investments of $0.2 million from its investment in B-3 and PILP.
 
 Total
      assets of $5 million at September 30, 2005 were comparable to the balance at
      December 31, 2004. Total liabilities were $0.3 million at September 30, 2005
      as
      compared to $0.2 million at December 31, 2004, an increase of $0.1 million.
      This
      increase was primarily due to an increase in borrowings from
      affiliates.
  *Nine
      months ended September 30, 2004 compared to the nine months ended September
      30,
      2003*
 
 Revenues
      decreased $0.1 million, or
      4.7%, to $2.2 million for the nine months ended September 30, 2004 as compared
      to $2.3 million for the nine months ended September 30, 2003.  This
      decrease was primarily due to a decrease of $0.1 million in revenues from the
      Pumping Project.
 
 Cost
      of
      revenues for the first nine months of 2004 was $1.3 million as compared to
      $1.7
      million for the comparable 2003 period, a decrease of $0.4 million. This
      decrease was primarily due to higher natural gas prices.
 
 Gross
      profit increased by approximately $0.2 million from $0.6 million for the nine
      months ended September 30, 2003 to $0.8 million for the same period in 2004.
      This increase was primarily due to lower cost of revenues resulting from
      increased natural gas prices.
 
 Total
      assets at September 30, 2004 were $5.6 million, a decrease of $0.5 million
      from
      the December 31, 2003 balance of $6.1 million. This decrease was primarily
      due
      to decreases of $0.7 million in cash and cash equivalents and $0.3 million
      in an
      investment in partnership transferred under contractual agreement, partially
      offset by an increase of $0.6 million in the gas forward contract. Total
      liabilities decreased by approximately $0.1 million from $0.2 million at
      December 31, 2003 to $0.1 million at September 30, 2004, primarily due to
      reduced amounts due to affiliates.
 
 *Three
      months ended September 30, 2005 compared to the three months ended September
      30,
      2004*
 
 Revenues
      increased approximately $0.1 million, or 6.3%, to $0.8 million for the three
      months ended September 30, 2005 as compared to $0.7 million for the same period
      in 2004. This increase was primarily due to an increase in Pumping Project
      revenues.
 
 Cost
      of
      revenues for the three months ended September 30, 2005 was $0.1 million, a
      decrease of approximately $0.4 million, or 83.3%, as compared to $0.5 million
      for the same period in 2004. The decrease was primarily due to higher
      natural gas prices.
 
 Gross
      profit increased by $0.5 million from $0.2 million for the three months ended
      September 30, 2004 to $0.7 million for the same period in 2005.  This
      increase was primarily due to the increase in natural gas prices.
 
 For
      the
      three months ended September 30, 2005, the Trust recorded a gain of $0.2 million
      from the collection of notes receivable relating to the sale of its investment
      in B-3 and PILP. *Three
      months ended September 30, 2004 compared to the three months ended September
      30,
      2003*
 
 Revenues
      decreased approximately $0.1 million, or 10.8%, to $0.7 million for the three
      months ended September 30, 2004 as compared to $0.8 million for the same period
      in 2003. This decrease was primarily due to a decrease in Pumping Project
      revenues.
 
 Cost
      of
      revenues for the third quarter of 2004 was $0.5 million as compared to $1.2
      million for the third quarter of 2003, a decrease of $0.7 million, or 52.8%.
      The
      decrease was primarily due to higher natural gas prices.
 
 Gross
      profit of $0.2 million for the three months ended September 30, 2004 increased
      $0.5 million from a loss $0.3 million loss for the same period in
      2003.  The gross profit increased primarily due to increases in
      natural gas prices.
 
 *Six
      months ended June 30, 2005 compared to the six months ended June 30,
      2004*
 
 Revenues
      decreased $0.1 million, or 6.6%, from $1.4 million for the six months ended
      June
      30, 2004 to $1.3 million for the six months ended June 30, 2005.  This
      decrease was primarily due to a decrease of $0.1 million in Pumping Project
      revenues.
 
 Cost
      of
      revenues increased $0.4 million, or 47.4%, from $0.8 million for the six months
      ended June 30, 2004 to $1.2 million for the six months ended June 30,
      2005.  The increase was primarily due to lower natural gas
      prices.
 
 Gross
      profit decreased $0.4 million to $0.2 million for the six months ended June
      30,
      2005 as compared to $0.6 million for the same period in 2004.  The
      decrease was primarily due to lower natural gas prices.
  13
  Total
      assets at June 30, 2005 were $4.3 million, a decrease of $0.7 million from
      $5
      million at December 31, 2004. The decrease was caused by decreases in cash
      and
      cash equivalents of $0.3 million and investment in partnership transferred
      under
      contractual agreement of $0.4 million. Total liabilities decreased $0.1 million
      from $0.2 million at December 31, 2004 to $0.1 million at June 30, 2005. This
      decrease was primarily the result of decreases of in accounts payable and
      accrued expenses and amounts due to affiliates.
  *Six
      months ended June 30, 2004 compared to the six months ended June 30,
      2003*
 
 Revenues
      of $1.4 million for the six
      months ended June 30, 2004 was comparable to the same period in
      2003.
 
 Cost
      of
      revenues increased $0.2 million to $0.8 million for the six months ended June
      30, 2004 from $0.6 million for the same period in 2003.  The increase
      was primarily due to lower natural gas prices.
 
 Gross
      profit decreased approximately $0.3 million to $0.6 million for the six months
      ended June 30, 2004 as compared to $0.9 million for the same period in 2003.
      This decrease was primarily due to lower natural gas prices in 2004 as compared
      to 2003.
 
 Total
      assets at June 30, 2004 were $5.8 million, a decrease of approximately $0.3
      million from the December 31, 2003 balance of $6.1 million. The decrease was
      caused by decreases of $0.4 million in cash and cash equivalents million and
      $0.2 million in investment in partnership transferred under contractual
      agreement, partially offset by increases of $0.5 million in the gas forward
      contract. Total liabilities of $0.2 million at June 30, 2004 was comparable
      to
      the balance at December 31, 2003.
 
 *Three
      months ended June 30, 2005 compared to the three months ended June 30,
      2004*
 
 Revenues
      of $0.7 million for the second quarter of 2005 was comparable to the second
      quarter of 2004.
 
 Cost
      of
      revenues for the quarter ended June 30, 2005 increased $0.4 million, to $0.9
      million from $0.5 million for the same period in 2004. The increase was
      primarily due to a temporary decline in natural gas prices during the 2005
      quarter.
 
 Gross
      profit decreased $0.4 million to a $0.2 million loss for the three months ended
      June 30, 2005 as compared to a $0.2 million profit for the same period in
      2004.  This decrease was primarily due to the decline in natural gas
      prices in 2005 as compared to 2004.
 
 *Three
      months ended June 30, 2004 compared to the three months ended June 30,
      2003*
 
 Revenues
      of $0.7 million for the second
      quarter of 2004 was comparable to the second quarter of 2003.
 
 Cost
      of
      revenues for the three months ended June 30, 2004 was $0.5 million as compared
      to $0.3 million for the same period in 2003. The increase of $0.2 million was
      primarily due to an increase in the price of natural gas.
 
 Gross
      profit decreased $0.2 million to $0.2 million for the three months ended June
      30, 2004 as compared to $0.4 million for the same period in
      2003.  This decrease was primarily due to the effect of change in the
      market price of natural gas.
 
 *Three
      months ended March 31, 2005 compared to the three months ended March 31,
      2004*
 
 Revenues
      totaled $0.7 million for the
      three months ended March 31, 2005 and March 31, 2004.
 
 Gross
      profit was $0.4 million for the three months ended March 30, 2005 and
      2004.
 
 General
      and administrative expenses decreased $35,000, or 43.8%, to $45,000 in the
      first
      quarter of 2005 from $80,000 for the same period in 2004, primarily due to
      lower
      professional fees.
 
 Total
      assets at March 31, 2005 were $4.9 million, a decrease of approximately $31,000
      from $5 million at December 31, 2004. Total liabilities remained flat at $0.2
      million at March 31, 2005 and December 31, 2004.
 
 *Three
      months ended March 31, 2004 compared to the three months ended March 31,
      2003*
 
 Revenues
      were $0.7 million for the
      three months ended March 31, 2005 and 2004.
 
 14
  Gross
        profit decreased approximately $0.1 million to $0.4 million for the three
        months
        ended March 30, 2004 as compared to $0.5 million for the same period in 2003.
        This decrease was primarily due to a decrease in Pumping Project
        revenues.
 Total
      assets at March 31, 2004 were $6 million, a decrease of approximately $30,000
      from $6.1 million at December 31, 2003. Total liabilities remained flat at
      $0.2
      million at March 31, 2004 and December 31, 2003.
 
 **Liquidity
      and Capital Resources**
 
 *Year
      ended December 31, 2005 compared to the year ended December 31,
      2004*
 
 At
      December 31, 2005, the Trust had cash and cash equivalents of $0.2 million,
      a
      decrease of $0.2 million from December 31, 2004. The cash flows for 2005
      consisted of $0.6 million provided by operating activities, $0.4 million
      provided by investing activities and $1.2 million used in financing
      activities.
 
 In
      2005,
      the Trust’s operating activities provided cash of $0.6 million as compared to
      $0.2 million in 2004, an increase of $0.4 million, primarily due to increased
      cash flows from ongoing operations.
 
 In
      2005
      and 2004, investing activities provided $0.4 million and $0.4 million from
      collection of notes receivable related to the sale of investments in B-3 and
      PILP, respectively.
 
 In
      2005,
      the Trust used $1.2 million in financing activities as compared to $1.4 million
      in 2004, both of which were cash distributions to shareholders.
 
 *Year
      ended December 31, 2004 compared to the year ended December 31,
      2003*
 
 At
      December 31, 2004, the Trust had cash and cash equivalents of $0.4 million,
      a
      decrease of $0.8 million from December 31, 2003. The cash flows for the year
      2004 consisted of $0.2 million provided by operating activities, $0.4 million
      provided by investing activities and $1.4 million used in financing
      activities.
 
 In
      2004,
      the Trust’s operating activities provided cash of $0.2 million as compared to
      $0.6 million in 2003, a decrease of approximately $0.4 million. This decrease
      was primarily due to an increase in restricted cash of $0.6 million, offset
      by a
      gain on gas purchase contract.
 
 In
      2004
      the Trust’s investing activities provided cash of $0.4 million as compared to
      $0.7 million in 2003. Both amounts relate to the collection of payments
      received from the sale of investments.
 
 In
      2004
      and 2003, the Trust used cash of $1.4 million in financing activities, which
      in
      both cases represents cash distributions to shareholders.
 
 *Nine
      months ended September 30, 2005 compared to the nine months ended September
      30,
      2004*
 
 At
      September 30, 2005, the Trust had cash and cash equivalents of $0.1 million,
      a
      decrease of $0.3 million from December 31, 2004. The cash flows for the first
      nine months of 2005 were $0.3 million provided by operating activities, $0.4
      million provided in investing activities and $1 million used in financing
      activities.
 
 Cash
      provided by operating activities for the nine months ended September 30, 2005
      was $0.3 million as compared to $81,000 for the nine months ended September
      30,
      2004. This increase in cash flow from operating activities in the first nine
      months of 2005 as compared to the same period in 2004 was primarily due to
      an
      increase of $0.1 million in net amounts due to affiliates and $0.2 million
      of
      gain from sale of investments.
 
 Cash
      provided by investing activities provided cash of $0.4 million during the first
      nine months of 2005 as compared to $0.3 million in the same period 2004, an
      increase of $0.1 million. This increase in cash provided was primarily due
      to the collection of payments received from the sale of
      investments.
 
 Cash
      used
      in financing activities was $1 million in the nine months ended September
      30, 2005 and $1.1 million in the same period in 2004, which in each case was
      comprised of cash distributions to shareholders.
 
 *Nine
      months ended September 30, 2004 compared to the nine months ended September
      30,
      2003*
 
 At
      September 30, 2004, the Trust had cash and cash equivalents of $0.5 million,
      a
      decrease of $0.7 million from December 31, 2003. The cash flows for the first
      nine months of 2004 were $0.1 million provided by operating activities, $0.3
      million used in investing activities and $1.1 million used in financing
      activities.
  15
  Cash
      provided by operating activities for the nine months ended September 30, 2004
      was $81,000 as compared to $0.4 million for the nine months ended September
      30,
      2003. The decrease in cash flow was primarily due to the elimination of
      restricted cash of $0.6 million in the 2004 period.
 
 Cash
      provided by investing activities was $0.3 million during the first nine months
      of 2004 as compared to $0.6 million in the first nine months of
      2003.  The decrease in cash was primarily due to a note receivable
      that was fully recovered in 2003.
 
 Cash
      used
      in financing activities for the first nine months of 2004 and 2003 was $1.1
      million, which in each case represents cash distributions to
      shareholders.
  *Six
      months ended June 30, 2005 compared to the six months ended June 30,
      2004*
 
 At
      June
      30, 2005, the Trust had cash and cash equivalents of $0.1 million, a decrease
      of
      approximately $0.3 from December 31, 2004. The decrease was the result of
      $33,000 provided by operating activities, $0.4 million provided by investing
      activities and $0.7 million used in financing activities.
 
 Cash
      provided by operating activities for the six months ended June 30, 2005 was
      $33,000 as compared to $69,000 for the six months ended June 30, 2004. The
      decrease in cash flow was primarily due to payments in accounts payable and
      accrued expenses for the 2005 period.
 
 Cash
      provided by investing activities was $0.4 million during the first six months
      of
      2005 as compared to $0.2 million in the first six months of
      2004.  This increase in cash provided was primarily due to an increase
      in proceeds related to the collection of payments received from the sale of
      investments for the 2005 period.
 
 Cash
      used
      in financing activities for the first six months of 2005 and 2004 was $0.7
      million, which in each case represents cash distributions to
      shareholders.
 
 *Six
      months ended June 30, 2004 compared to the six months ended June 30,
      2003*
 
 At
      June
      30, 2004, the Trust had cash and cash equivalents of $0.8 million, a decrease
      of
      $0.4 million from December 31, 2003. The decrease was the result of $69,000
      provided by operating activities, $0.2 million provided by investing activities
      and $0.7 million used in financing activities.
 
 Cash
      provided by operating activities for the six months ended June 30, 2004 was
      $69,000 as compared to cash used of $31,000 for the six months ended June 30,
      2003. The increase in cash provided by operating activities was primarily
      due to an increase in a gain on gas forward contract of $0.3 million and a
      decrease of $0.1 million to pay accounts payable and accrued
      expenses.
 
 Cash
      provided by investing activities was $0.2 million for the first six months
      of 2004 and $0.4 million for the first six months of 2003. The decrease in
      cash
      was primarily due to collection of a note receivable that was fully collected
      in
      the 2003 period.
 
 Cash
      used
      in financing activities for the first half of 2004 and 2003 was $0.7 million,
      each of which represented cash distributions to shareholders.
 
 *Three
      months ended March 31, 2005 compared to the three months ended March 31,
      2004*
 
 At
      March
      31, 2005, the Trust had cash and cash equivalents of $0.4 million, a decrease
      of
      $28,000 from December 31, 2004. The decrease was primarily the result of $0.1
      million provided by operating activities. $0.2 million provided by investing
      activities and $0.3 million used in financing activities.
 
 Cash
      provided by operating activities for the three months ended March 31, 2005
      was
      $0.1 million as compared to cash provided of $27,000 for the three months ended
      March 31, 2004. This increase in cash flow in the 2005 period as compared to
      the
      2004 period was primarily due to an increase in accounts payable and accrued
      expenses.
 
 Cash
      provided by investing activities was $0.2 million during the first three months
      of 2005 as compared to $0.1 million in the first three months of
      2004.  This increase in cash provided was primarily due to an increase
      in the collection of payments received from the sale of
      investments.
 
 Cash
      used
      in financing activities for each of the first quarter of 2005 and 2004 was
      $0.4
      million, which represents cash distributions to shareholders.
  16
  *Three
      months ended March 31, 2004 compared to three months ended March 31,
      2003*
 
 At
      March
      31, 2004, the Trust had cash and cash equivalents of $1 million, a decrease
      of $0.2 million from December 31, 2003. The decrease was the result of $27,000
      provided by operating activities and $0.1 million provided by investing
      activities, which was offset by $0.4 million used in financing
      activities.
 
 Cash
      provided by operating activities for the three months ended March 31, 2004
      was
      $27,000 as compared to cash used of $74,000 for the three months ended March
      31,
      2003. The increase of $0.1 million in cash flows from operating activities
      was
      primarily the result of increases in accounts payable and accrued
      expenses.
 
 Cash
      provided by investing activities was $0.1 million during the first three months
      of 2004 and $0.3 million for the three months of 2003. This decrease in cash
      was
      primarily due to a note receivable that was fully recovered in the 2003
      period.
 
 Cash
      used
      in financing activities for the first quarter of 2004 and 2003 was $0.4 million,
      which in each case represents cash distributions to shareholders.
 
 **Off-Balance
      Sheet Arrangements**
 
 In
      connection with the gas supply
      contract at Monterey, the Trust has issued a standby letter of credit totaling
      $230,000 at December 31, 2005. The letter of credit expired in August
      2006.
 
 **Contractual
      Obligations and Commitments**
 
 At
      December 31, 2005, the Trust’s contractual obligations are as
      follows:
 
 Payments
                  due by periodContractual
                  obligations
              
              Total
              
              
              Less
                  than 1 year
              
              
              1
                  -
                  3 years
              
              
              4
                  -
                  5 years
              
              
              More
                  than 5 yearsGround
                  lease *
              
              $
              189
              
              
              $
              12
              
              
              $
              36
              
              
              $
              24
              
              
              $
              117Gas
                  forward contract, net**
              
              
              570
              
              
              
              570
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
              
              $
              759
              
              
              $
              582
              
              
              $
              36
              
              
              $
              24
              
              
              $
              117
 *    Excludes
                  payments for delivered steam per contract.**
                  Amounts presented are net of forward sales
                  commitments.
 The
      gas
      forward contract requires Monterey to purchase minimum quantities of natural
      gas
      through August 2006. Amounts reflected above are net of agreements to resell
      the
      purchased gas back to Monterey’s supplier.
 
 In
      connection with the ground lease, Monterey has not delivered by-product steam
      since it was shut down in January 2006. As a result, it may be subject to
      penalties from the lessor.
 
 **Recent
      Accounting Pronouncements**
 
 *SFAS
      143 and FIN 47*
 
 In
      June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      143, *Accounting for Asset Retirement Obligations*, on the accounting for
      obligations associated with the retirement of long-lived assets. SFAS No. 143
      requires a liability to be recognized in the consolidated financial statements
      for retirement obligations meeting specific criteria. Measurement of the initial
      obligation is to approximate fair value, with an equivalent amount recorded
      as
      an increase in the value of the capitalized asset. The asset will be depreciated
      in accordance with normal depreciation policy and the liability will be
      increased for the time value of money, with a charge to the income statement,
      until the obligation is settled. SFAS No. 143 is effective for fiscal years
      beginning after June 15, 2002. Furthermore, in March 2005, the FASB issued
      FASB Interpretation No. 47 (“FIN 47”), *Accounting for Conditional Asset
      Retirement Obligations, an interpretation of FASB Statement No. 143*,
      which clarifies the term “conditional asset retirement obligation” as used in
      SFAS No. 143. Specifically, FIN 47 provides that an asset retirement
      obligation is conditional when the timing and/or method of settling the
      obligation is conditioned on a future event. Accordingly, an entity is required
      to recognize a liability for the fair value of a conditional asset retirement
      obligation if the fair value of the liability can be reasonably estimated.
      Uncertainty about the timing and/or method of settlement of a conditional asset
      retirement obligation should be factored into the measurement of the
      liability when sufficient information exists. This interpretation also clarifies
      when an entity would have sufficient information to reasonably estimate the
      fair
      value of an asset retirement obligation. FIN 47 is effective for fiscal years
      ending after December 15, 2005. The Trust adopted SFAS No. 143 effective
      January 1, 2003, with no material impact on its consolidated financial
      statements.
 17
 *SFAS
      145*
 
 In
      April
      2002, the FASB issued SFAS No. 145, *Rescission of FASB Statements
      No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
      Corrections*. SFAS No. 145 eliminates extraordinary accounting
      treatment for reporting gain or loss on debt extinguishment, and amends other
      existing authoritative pronouncements to make various technical corrections,
      clarify meanings, or describe their applicability under changed conditions.
      SFAS
      No. 145 is effective for interim periods beginning after May 15, 2002. The
      Trust
      adopted SFAS No. 145 effective January 1, 2003, with no material impact on
      its
      consolidated financial statements.
 
 *SFAS
      146*
 
 In
      June
      2002, the FASB issued SFAS No. 146, *Accounting for Costs Associated
      with Exit or Disposal Activities*. SFAS No. 146 requires recording
      costs associated with exit or disposal activities at their fair values when
      a
      liability has been incurred. SFAS No. 146 is effective for fiscal years ending
      after December 31, 2002. The Trust adopted SFAS No. 146 effective January 1,
      2003, with no material impact on its consolidated financial
      statements.
 
 *FIN
      45*
 
 In
      November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
*Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
      Indirect Guarantees and Indebtedness of Others*. FIN 45 elaborates on the
      disclosures to be made by the guarantor in its interim and annual financial
      statements about its obligations under certain guarantees that it has issued.
      It
      also requires that a guarantor recognize, at the inception of a guarantee,
      under
      certain circumstances a liability for the fair value of the obligation
      undertaken in issuing the guarantee. The initial recognition and measurement
      provisions of this interpretation are applicable on a prospective basis to
      guarantees issued or modified after December 31, 2002; while the provisions
      of
      the disclosure requirements are effective for financial statements of interim
      or
      annual reports ending after December 15, 2002. The Trust adopted FIN 45 during
      the fourth quarter of 2002 with no material impact to the consolidated financial
      statements.
 
 *FIN
      46R*
 
 In
      January 2003, the FASB issued FASB Interpretation No. 46, *Consolidation of
      Variable Interest Entities* ("FIN 46") which changes the criteria by which
      one company includes another entity in its consolidated financial statements.
      FIN 46 requires a variable interest entity to be consolidated by a company
      if
      that company is subject to a majority of the risk of loss from the variable
      interest entity's activities or entitled to receive a majority of the entity's
      residual returns or both. The consolidation requirements of FIN 46 apply
      immediately to variable interest entities created after December 31, 2003,
      and
      apply in the first fiscal period ending after March 15, 2004, for variable
      interest entities created prior to January 1, 2004. The Trust adopted the
      disclosure provisions of FIN 46 effective December 31, 2003, with no material
      impact to the consolidated financial statements. In December 2003, the FASB
      issued a revision to FIN 46 (“FIN 46R”) to clarify some of the provisions and to
      exempt certain entities from its requirements. The Trust implemented the full
      provisions of FIN 46R effective January 1, 2004, with no material impact on
      its
      consolidated financial statements.
 
 *SFAS
      149*
 
 In
      April
      2003, the FASB issued SFAS No. 149, *Amendment of Statement 133 on Derivative
      Instruments and Hedging Activities*. SFAS No. 149 amends and clarifies the
      accounting for derivative instruments, including certain derivative instruments
      embedded in other contracts, and for hedging activities under SFAS No. 133,
      "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149
      is
      generally effective for contracts entered into or modified after June 30, 2003
      and for hedging relationships designated after June 30, 2003. The Trust adopted
      SFAS No. 149 effective July 1, 2003, with no material impact on its consolidated
      financial statements.
 
 *SFAS
      150*
 
 In
      May
      2003, the FASB issued SFAS No. 150, *Accounting for Certain Financial
      Instruments with Characteristics of both Liabilities and Equity*. SFAS
      No. 150 establishes standards for classifying and measuring certain
      financial instruments with characteristics of both liabilities and equity.
      SFAS
      No. 150 is effective for interim periods beginning after June 15, 2003. The
      Trust adopted SFAS No. 150 effective July 1, 2003, with no material impact
      on
      its consolidated financial statements.
  18
  *SFAS
      153*
 
 In
      December 2004, the FASB issued SFAS No. 153, *Exchanges of Nonmonetary
      Assets—an amendment of APB Opinion No. 29.*The guidance in APB Opinion No.
      29, *Accounting for Nonmonetary Transactions*(“Opinion 29”)*,* is
      based on the principle that exchanges of nonmonetary assets should be measured
      based on the fair value of the assets exchanged. The guidance in Opinion 29,
      however, included certain exceptions to that principle. This Statement amends
      Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. A nonmonetary exchange
      has commercial substance if the future cash flows of the entity are expected
      to
      change significantly as a result of the exchange. The Trust adopted SFAS No.
      153
      effective June 15, 2005, with no material impact on its consolidated financial
      statements.
 
 *SFAS
      154*
 
 In
      May
      2005, the FASB issued SFAS No. 154, *Accounting Changes and Error
      Corrections*. SFAS No. 154 replaces APB Opinion No. 20, *Accounting
      Changes*, and SFAS No. 3, *Reporting Accounting Changes in Interim
      Financial Statements*. This statement changes the requirements for the
      accounting for, and reporting of, a change in accounting principle and applies
      to all voluntary changes in accounting principle, as well as changes pursuant
      to
      accounting pronouncements that do not include transition rules. Under SFAS
      No.
      154, changes in accounting principle must be applied retrospectively to prior
      periods’ financial statements, or the earliest practicable date, as the required
      method for reporting a change in accounting principle. The Trust adopted SFAS
      No. 154 effective December 15, 2005, and accordingly restated the consolidated
      financial statements as described in Note 2 to the consolidated financial
      statements.
 
  **ITEM
      7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**
  The
      disclosure required by this Item is omitted pursuant to Item 305(e) of
      Regulation S-K.
  **ITEM
      8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA**
  The
      consolidated financial statements
      of the Trust, including the notes thereto and the report thereon, are presented
      beginning at page F-1 of this Form 10-K.
  **ITEM
      9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE**
  As
      reported on a Form 8-K filed with the SEC on June 14, 2006, the Managing
      Shareholder of the Trust dismissed Perelson Weiner as the Trust’s independent
      registered public accountants effective June 8, 2006. Perelson Weiner was
      engaged as the independent accountants of the Trust as of January 14, 2004
      after
      the Trust dismissed PricewaterhouseCoopers LLP (“PWC”) as its independent
      accountants, as reported on a Form 8-K filed by the Trust with the SEC on
      January 20, 2004.
  For
      the
      period January 14, 2004 through June 8, 2006, there were no
      (1) disagreements with Perelson Weiner on any matter of accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedures, which disagreements if not resolved to their satisfaction would
      have
      caused them to make reference to the subject matter of the disagreements in
      their report on the Trust’s financial statements, or (2) “reportable events,” as
      defined in Item 304(a)(1)(v) of Regulation S-K, other than as
      follows:
  Perelson
      Weiner identified the following material deficiencies in disclosure controls
      and
      procedures, which are reportable events: (i) a lack of automation and
      integration in the Trust’s accounting and financial reporting software, which
      caused the Trust to be unable to timely comply with its financial reporting
      responsibilities, (ii) a lack of sufficient personnel with relevant experience
      to maintain and operate the Trust’s accounting and financial reporting software
      and to develop and administer additional disclosure controls and procedures
      to
      enable the Trust to comply on a timely basis with its financial reporting
      obligations, and (iii) disclosure controls and procedures that were insufficient
      to enable the Trust to meet its financial reporting and disclosure obligations
      in an accurate and timely manner.
  For
      the
      year ended December 31, 2002 and for the period through January 14, 2004, there
      were no (1) disagreements with PWC on any matter of accounting principles
      or practices, financial statement disclosure, or auditing scope or procedures,
      which disagreements if not resolved to their satisfaction would have caused
      them
      to make reference to the subject matter of the disagreements in their report
      on
      the Trust’s financial statements, or (2) “reportable events,” as defined in Item
      304(a)(1)(v) of Regulation S-K.  19
 As
      reported on a Form 8-K filed on July 13, 2006, the Managing Shareholder of
      the
      Trust appointed Grant Thornton LLP as the Trust’s independent registered public
      accounting firm effective July 12, 2006.
  **ITEM
      9A.  CONTROLS AND PROCEDURES**
  In
      accordance with Rule 13a-15(b) of the Exchange Act, the Trust’s Chief Executive
      Officer and Chief Financial Officer evaluates the effectiveness of the Trust’s
      disclosure controls and procedures. A system of disclosure controls and
      procedures is designed to ensure that information required to be disclosed
      by a
      registrant in reports filed with the Exchange Act are recorded, processed,
      summarized and reported within the time periods specified in the applicable
      rules and forms. This includes disclosure controls and procedures designed
      to
      ensure that information required to be disclosed by a registrant is accumulated
      and communicated to senior management so as to allow timely decisions regarding
      required disclosure. A review of these controls and procedures was done by
      the
      Trust as of December 31, 2003 and for each quarter through March 31, 2005 and
      such reviews revealed no material weaknesses in the Trust’s disclosure controls
      and procedures. Additional reviews were conducted as of the end of each of
      the
      periods ended June 30, 2005, September 30, 2005 and December 31, 2005. These
      additional reviews indicated material weaknesses, of which the following
      continue to exist as material weaknesses:
  (i)
            a
                lack of sufficient personnel with relevant experience to develop,
                administer and monitor disclosure controls and procedures to enable
                the
                Trust to comply efficiently, or on a timely basis, with its financial
                reporting obligations,
  (ii)
            inadequate
                disclosure controls and procedures, including inadequate record retention
                and review policies, over both foreign and US operations, that would
                enable the Trust to meet its financial reporting and disclosure
                obligations in an efficient and timely
                manner.
  As
      a
      result of these weaknesses, the Trust has not timely met its reporting
      obligations under the Exchange Act. Additionally, upon further examination
      of
      the Trust’s previously issued financial statements, various accounting errors
      were identified. As reported under Item 4.02 of the Form 8-K filed by the Trust
      on October 10, 2007, management of the Trust concluded that the Trust’s
      previously issued financial statements for the period ended March 31, 2003
      through the period ended March 31, 2005 should no longer be relied upon and
      should be restated to correct for identified errors detected by
      management.
  The
      primary cause of the above weaknesses was a lack of sufficiently qualified
      personnel. The Trust has implemented the following to address the above
      weaknesses:
  ·
            Increased
                the number of degreed accountants. Additional staff expansion is
                underway.
  ·
            Engaged
                a national accounting firm to evaluate procedures and controls over
                financial reporting. The firm made a report to the Managing Shareholder
                in
                May 2006, which has implemented some of the firm’s recommendations, and is
                in the process of evaluating the remaining
                recommendations.
  ·
            In
                August 2006, engaged a national accounting firm to supply accounting
                personnel to assist while personnel hiring is underway. The work
                performed
                by the firm is under the direct supervision of the Trust’s Chief Financial
                Officer and Controller.
  ·
            In
                May 2007, the Trust appointed a new Chief Financial Officer who is
                a
                Certified Public Accountant with approximately 29 years of professional
                accounting experience, including prior experiences as a financial
                officer
                of publicly traded companies.
  The
      Trust
      believes that the completion of the expansion of the accounting and financial
      reporting staff and implementation of recommended procedures will mitigate
      the
      above weaknesses. However, due to the Trust’s delinquencies in meeting its
      filing deadlines under the Exchange Act, the Trust expects these deficiencies
      to
      continue to be material weaknesses at least until such time as the Trust is
      no
      longer delinquent in its Exchange Act filings.
  The
      Trust
      also concluded as part of the reviews subsequent to March 31, 2005, that it
      had
      material weaknesses regarding system automation and identification of material
      transactions. The Trust also believes that as of December 31, 2005, it has
      implemented changes in internal control to address those weaknesses. As a result
      of the implemented controls, the Trust no longer considers those items to be
      material weaknesses.
  The
      Trust’s Chief Executive Officer and Chief Financial Officer have evaluated the
      effectiveness of the Trust’s disclosure controls and procedures as of the end of
      each of the periods covered by this report pursuant to Rule 13a-15(b) under
      the
      Exchange Act and concluded that, as of the end of each of
      the periods covered by this report, because of the material weaknesses noted
      above, the Trust’s disclosure controls and procedures were not
      effective.  20
  **ITEM
      9B.  OTHER INFORMATION; UNREGISTERED SALES OF EQUITY
      SECURITIES AND USE OF PROCEEDS; DEFAULTS UPON SENIOR
      SECURITIES**
  None.
 
 **PART
      III**
  **ITEM
      10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE
      REGISTRANT**
  The
      Trust’s Managing Shareholder, Ridgewood Renewable Power, LLC, 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
                Since**Randall
                D. Holmes, 60President
                and Chief Executive Officer
            2004Robert
                E. Swanson, 60Chairman
            1997Jeffrey
                H. Strasberg, 50Executive
                Vice President and Chief Financial Officer (1)
            2007Daniel
                V. Gulino, 47Senior
                Vice President, General Counsel and Secretary
            2000Douglas
                R. Wilson, 48Executive
                Vice President and Chief Financial Officer (1)
            2005
 (1)
      Mr.
      Strasberg replaced Mr. Wilson as Executive Vice President and Chief Financial
      Officer on May 2, 2007.
  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 since January 2006 and served as Chief Operating Officer of the Trust
      from
      January 2004 until January 2006. Mr. Holmes has also served as the President
      and
      Chief Operating Officer of the Managing Shareholder, and affiliated Power Trusts
      and LLCs since January 2004. 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. He has maintained a minor consulting relationship with DRM in which
      he may act as a paid advisor to DRM on certain matters that are unrelated to
      Ridgewood. Such relationship will not require a significant amount of Mr.
      Holmes’ time and it is expected that such relationship will not adversely affect
      his duties as President and Chief Executive Officer. 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 Power Trusts and LLCs 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 President
      and 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 of the Trust, the
      Managing Shareholder, and affiliated Power Trusts and LLCs since May 2007.
      Mr.
      Strasberg also serves as Senior Vice President and Chief Financial Officer
      of
      Ridgewood Capital and affiliated LLCs 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.  21
 **Daniel
      V. Gulino** has served as Senior Vice President and General Counsel of
      the Trust, the Managing Shareholder and affiliated Power Trusts and LLCs since
      2000 and was appointed Secretary in February 2007. Mr. Gulino also serves as
      Senior Vice President, General Counsel and Secretary of Ridgewood Energy,
      Ridgewood Capital, Ridgewood Securities and affiliated Trusts and LLCs 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.
  **Douglas
      R. Wilson** served as Executive Vice President and Chief Financial
      Officer of the Trust, the Managing Shareholder and affiliated Power Trusts
      and
      LLCs from April 2005 until May 2007. Mr. Wilson continues to serve the Managing
      Shareholder as Executive Vice President and Chief Development Officer. Mr.
      Wilson has been associated with the Ridgewood group of companies as a consultant
      and advisor since 1996 performing investment evaluation, structuring and
      execution services for the trusts and entities managed by Ridgewood Capital
      LLC.
      From May of 2002, until its sale in 2007, Mr. Wilson has served as a Director,
      CEO and Finance Director for CLPE Holdings. Mr. Wilson is a graduate of the
      University of Texas at Arlington and has an MBA from the Wharton School at
      the
      University of Pennsylvania.
 
 **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 to not 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 (the “Management Agreement”). 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 is also 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”.
  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 Securities Exchange Act of 1934, as amended, 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. Based on a review of the copies of
      reports furnished or otherwise available to the Trust, the Trust believes that
      the filing requirements were not met by Randall D. Holmes, Robert E. Swanson,
      Douglas R. Wilson, Daniel V. Gulino and Robert L. Gold during the years ended
      December 31, 2005, 2004 and 2003 as they each failed to timely file Form 3.
      All
      such required reports have since been filed with the SEC.
  22
 
 **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**
  The
      executive officers of the Trust do not receive compensation directly from the
      Trust or any of its subsidiaries. They provide managerial services to the Trust.
      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
      Managing Shareholder is entitled to receive management fees from the Trust
      and
      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” for more information regarding Managing
      Shareholder compensation and payments to affiliated entities.
  **ITEM
      12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED SECURITY HOLDER MATTERS**
  The
      following table sets forth information with respect to the beneficial ownership
      of the Trust’s Investor Shares as of December 31, 2005 (no person owns more than
      5%) by:
  ·
            each
                executive officer (there are no directors) of the Trust;
                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 235.3775 Investor
      Shares outstanding at December 31, 2005. 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)**
            **Percent**Ridgewood
                Renewable Power LLC (Managing Shareholder)
              Robert
                E. Swanson,  controlling member
            1.45
            *Executive
                officers as a group
            1.45
            *
 
 *             
      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”. Its beneficial interest
                in cash distributions of the Trust and its allocable share of the
                Trust’s
                net profits and net losses and other items attributable to the Management
                Share are described in further detail below at Item 13. “Certain
                Relationships and Related
                Transactions”.
 
 **ITEM
      13.  CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS**
 
 Under
      the
      terms of the Trust’s Management Agreement, the Managing Shareholder provides
      certain management, administrative and advisory services, and office space
      to
      the Trust. In return, the Trust is obligated to pay the Managing Shareholder
      an
      annual management fee equal to 1.5% of the Trusts’ prior year net asset value,
      which equals $72, $91 and $109 for the years ended December 31, 2005, 2004
      and
      2003, respectively, as compensation for such services. 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.
  23
  Under
        the
        Management Agreement with the Managing Shareholder, Ridgewood Power Management
        (“RPM”), an entity related to the Managing Shareholder through common ownership,
        provides management, purchasing, engineering, planning and administrative
        services to the projects operated by the Fund. 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. During the years
        ended December 31, 2005, 2004 and  2003, RPM charged the projects
        approximately $133,000, $138,000 and $140,000, respectively, for overhead
        items
        allocated in proportion to the amount invested in projects managed. In addition,
        RPM charged the projects approximately $2,407,000, $2,012,000 and $1,903,000,
        respectively, for all of the direct operating and non-operating expenses
        incurred during such periods.
  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%
      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. Distributions to the Managing Shareholder
      were $12,000, $14,000 and $14,000 for each of the three years ended December
      31,
      2005, 2004 and 2003, respectively. 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.
 
 On
      June
      26, 2003, the Managing Shareholder entered into a Revolving Credit and Security
      Agreement with Wachovia Bank, National Association. The agreement, as amended,
      allows the Managing Shareholder to obtain loans and letters of credit of up
      to
      $6,000,000 for the benefit of the Trust and other trusts that it manages. As
      part of the agreement, the Trust agreed to limitations on its ability to incur
      indebtedness, liens and to provide guarantees.
 
 **ITEM
      14.  PRINCIPAL ACCOUNTANT FEES AND
      SERVICES**
  The
      following table presents fees and services rendered by Grant Thornton LLP,
      the
      Trust’s principal accountant, for the years ended December 31, 2005, 2004 and
      2003 (in thousands).
  2005
            
            2004
            
            
            2003Audit
                Fees*
            
            $
            116
            
            
            $
            94
            
            
            $
            94Audit-Related
                Fees
            
            
            -
            
            
            
            -
            
            
            
            -Tax
                Fees
            
            
            -
            
            
            
            -
            
            
            
            -All
                Other Fees
            
            
            -
            
            
            
            -
            
            
            
            -Total
            
            $
            116
            
            
            $
            94
            
            
            $
            94*
              These fees are being borne by the Managing Shareholder.
  The
      above
      table excludes fees for services rendered by Perelson Weiner, the Trust’s
      original principal accountant for the Trust’s 2004 and 2003 audits. Total fees
      for services rendered by Perelson Weiner for the Trust’s original 2004 audit and
      for 2004 tax services totaled $31,000 and $25,000, respectively. Total Perelson
      Weiner fees for services for the Trust’s 2003 audit and for 2003 tax services
      totaled $26,000 and $25,000, respectively.
 24
 **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.
  **PART
      IV**
  **ITEM
      15. EXHIBITS AND FINANCIAL STATEMENT
      SCHEDULES**
  (a)           **Financial
      Statements**
  See
      the
      Index to Financial Statements on page F-1 of this report.
  (b)           **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 on Form 10 filed with the SEC on February
                27,
                1993).3
            (i)(B)
            *
            Certificate
                of Amendment to the Certificate of Trust of the Registrant filed
                with the
                Delaware Secretary of State on December 18, 2003.3
            (ii)(A)
            
            Amended
                and Restated Declaration of Trust of the Registrant (incorporated
                by
                reference to Exhibit 4 to the Registrant’s Report on Form 10-Q-A for the
                quarter ended September 30, 1993 filed with the SEC on November 17,
                1993,
                SEC File No. 000-21034).3
            (ii)(B)
            *
            January
                2000 Amendment to Declaration of Trust by Consent of the
                Registrant.3
            (ii)(C)
            
            Amendment
                No. 1 to the Declaration of Trust of the Registrant (incorporated
                by
                reference to Exhibit A to the Registrant’s Proxy Statement filed with the
                SEC on November 5, 2001, SEC File No. 000-21304).10.1
            
            #
            Management
                Agreement between the Trust and Managing Shareholder (incorporated
                by
                reference to the Registrant’s Registration Statement on Form 10 filed with
                the SEC on February 27, 1993).10.2
            
            *
            Long-Term
                Energy and Capacity Power Purchase Agreement between Sunnyside
                Cogeneration Partners L.P. and Pacific Gas and Electric Company dated
                May
                1984 (as amended).10.3
            
            *
            Limited
                Recourse Term Note issued by EAC Operations, Inc. to the Registrant
                dated
                September 20, 2002 for $3,000,000 as payment for the B-3 Limited
                Partnership interests.10.4
            
            *
            Limited
                Recourse Term Note issued by EAC Operations, Inc. to the Registrant
                dated
                September 20, 2002 for $2,000,000 as payment for the Pittsfield Investors
                Limited Partnership interests.
  25
 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.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.
 
 
 (c)           **Financial
      Statement Schedules**
 
 See
      Financial Statements and accompanying notes included in this
      report.
  26
  **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 II**Date:
                December
                13, 2007
            By:
            /s/ Randall
              D.
              HolmesRandall
              D. HolmesChief
              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
            
            Chief
                Executive
                Officer
            
            December
                  13, 2007Randall
                  D. Holmes
            
            (Principal
                Executive Officer)/s/
                Jeffrey H.
                Strasberg
            
            Executive
                Vice
                President and Chief Financial Officer
            
            December
                  13, 2007Jeffrey
                  H. Strasberg
            
            (Principal
                Financial and Accounting Officer)**RIDGEWOOD
              RENEWABLE POWER LLC**(Managing
              Shareholder)By:
                /s/ Randall
                D. Holmes
            
            Chief
                  Executive Officer of Managing Shareholder
            
            December
                  13, 2007Randall
                D.
                Holmes
 27
 **RIDGEWOOD
                  ELECTRIC POWER TRUST II****INDEX
                  TO CONSOLIDATED FINANCIAL STATEMENTS**Report
                  of Independent Registered Public Accounting
                  Firm
              F-2Consolidated
                  Balance Sheets at December 31, 2005, 2004 and
                  2003
              F-3Consolidated
                  Statements of Operations for the three years ended
                  December 31, 2005
              F-4Consolidated
                  Statements of Changes in
                  Shareholders’ Equity(Deficit)for
                  the three years ended December 31, 2005
              F-5Consolidated
                  Statements of Cash Flows for the three years ended
                  December 31, 2005
              F-6Consolidated
                  Balance Sheets (unaudited) at September 30, 2005,
                  June 30, 2005,March
                  31, 2005
              F-7Consolidated
                  Balance Sheets (unaudited) at September 30, 2004,
                  June 30, 2004, March 31, 2004
              F-8Consolidated
                  Balance Sheets (unaudited) at September 30, 2003,
                  June 30, 2003, March 31, 2003
              F-9Consolidated
                  Statements of Operations (unaudited) for the nine
                  and three months endedSeptember
                  30, 2005, 2004 and 2003
              F-10Consolidated
                  Statements of Operations (unaudited) for the six
                  and three months endedJune
                  30, 2005, 2004 and 2003
              F-11Consolidated
                  Statements of Operations (unaudited) for the
                  three months endedMarch
                  31, 2005, 2004 and 2003
              F-12Consolidated
                  Statements of Changes in Shareholders’ Equity
                  (Deficit) (unaudited)for
                  the three months, six months and nine months ended March
                  31, June 30, and September
                  30,                                                          
                     for 2003, 2004 and
                  2005
              F-13Consolidated
                  Statements of Cash Flows (unaudited) for the nine
                  months endedSeptember
                  30, 2005, 2004 and 2003
              F-14Consolidated
                  Statements of Cash Flows (unaudited) for the six
                  months ended June 30, 2005,2004
                  and 2003
              F-15Consolidated
                  Statements of Cash Flows (unaudited) for the
                  three months ended March 31, 2005,2004
                  and 2003
              F-16Notes
                  to Consolidated Financial Statements
              F-17
 F-1
 **REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM**
 
 
 The
      Managing Shareholder and Shareholders
 **Ridgewood
      Electric Power Trust II**
 
 
 We
      have
      audited the accompanying consolidated balance sheets of Ridgewood Electric
      Power
      Trust II (a Delaware trust) and subsidiaries as of December 31, 2005, 2004
      and
      2003, and the related consolidated statements of operations, changes in
      shareholders’ equity (deficit), and cash flows for each of the three years in
      the period ended December 31, 2005.  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 audits
      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 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 II as of December 31, 2005, 2004, and 2003, and the results of its
      operations and its cash flows for each of the three years in the period ended
      December 31, 2005 in conformity with accounting principles generally accepted
      in
      the United States of America.
 
 The
      accompanying consolidated financial statements as of and for the years ended
      December 31, 2004 and 2003 have been restated as discussed in Note 2 to the
      consolidated financial statements.
 
 As
        discussed in Note 10 to the consolidated financial statements, Sunnyside
        Cogeneration Partners, L.P. ceased operations in January 2006 and recognized
        an
        impairment of the remaining net book value of its assets during the first
        quarter of 2006.
 
 
 
 /s/**GRANT
      THORNTON LLP
 Edison,
      New Jersey
 December
      13, 2007
   F-2
  **RidgewoodElectric
                  Power Trust II****Consolidated
                  Balance Sheets***(in
                  thousands, except share data)***December
                  31,****2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)**ASSETS**Current
                  assetsCash
                  and cash equivalents
              
              $
              196
              
              
              $
              430
              
              
              $
              1,218Accounts
                  receivable
              
              
              420
              
              
              
              216
              
              
              
              224Due
                  from affiliates
              
              
              1
              
              
              
              -
              
              
              
              15Gas
                  forward contract - current portion
              
              
              898
              
              
              
              494
              
              
              
              223Other
                  current assets
              
              
              39
              
              
              
              52
              
              
              
              42Total
                  current assets
              
              
              1,554
              
              
              
              1,192
              
              
              
              1,722Plant
                  and equipment, net
              
              
              1,132
              
              
              
              1,258
              
              
              
              1,381Intangibles,
                  net
              
              
              1,698
              
              
              
              1,819
              
              
              
              1,940Investment
                  in partnership transferred under contractual agreement
              
              
              -
              
              
              
              363
              
              
              
              808Gas
                  forward contract - noncurrent portion
              
              
              -
              
              
              
              332
              
              
              
              209**Total
                  assets**
              
              $
              4,384
              
              
              $
              4,964
              
              
              $
              6,060**LIABILITIES
                  AND SHAREHOLDERS' EQUITY**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              152
              
              
              $
              100
              
              
              $
              111Due
                  to affiliates
              
              
              354
              
              
              
              62
              
              
              
              82Total
                  current liabilities
              
              
              506
              
              
              
              162
              
              
              
              193Commitments
                  and contingenciesShareholders'
                  equity (deficit):Shareholders'
                  equity (235.3775 Investor Sharesissued
                  and outstanding)
              
              
              4,040
              
              
              
              4,955
              
              
              
              6,010Managing
                  shareholder's accumulated deficit(1
                  management share issued and outstanding)
              
              
              (162
              )
              
              
              (153
              )
              
              
              (143
              )Total
                  shareholders' equity
              
              
              3,878
              
              
              
              4,802
              
              
              
              5,867**Total
                  liabilities and shareholders' equity**
              
              $
              4,384
              
              
              $
              4,964
              
              
              $
              6,060
 
 *The
      accompanying notes are an integral part of these financial
      statements.*
 *.*
 F-3
 
 **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Operations***(in
                  thousands, except per share data)***Years
                  Ended December 31,****2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)Revenues
              
              $
              2,817
              
              
              $
              2,826
              
              
              $
              3,009Cost
                  of revenues
              
              
              2,650
              
              
              
              2,242
              
              
              
              2,226Gross
                  profit
              
              
              167
              
              
              
              584
              
              
              
              783Operating
                  expenses:General
                  and administrative expenses
              
              
              138
              
              
              
              152
              
              
              
              166Impairment
                  of equipment and intangibles
              
              
              -
              
              
              
              -
              
              
              
              190Management
                  fee to the Managing Shareholder
              
              
              72
              
              
              
              91
              
              
              
              109Total
                  operating expenses
              
              
              210
              
              
              
              243
              
              
              
              465(Loss)
                  income from operations
              
              
              (43
              )
              
              
              341
              
              
              
              318Other
                  income:Interest  income
              
              
              4
              
              
              
              6
              
              
              
              22Gain
                  on sale of investments
              
              
              304
              
              
              
              -
              
              
              
              -Other
                  income
              
              
              -
              
              
              
              14
              
              
              
              -Total
                  other income
              
              
              308
              
              
              
              20
              
              
              
              22Net
                  income
              
              $
              265
              
              
              $
              361
              
              
              $
              340Managing
                  Shareholder - Net income
              
              $
              3
              
              
              $
              4
              
              
              $
              3Shareholders
                  - Net income
              
              
              262
              
              
              
              357
              
              
              
              337Net
                  income per Investor Share
              
              
              1,116
              
              
              
              1,516
              
              
              
              1,432
 *The
      accompanying notes are an integral part of these financial
      statements.*
  F-4
  **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Changes in Shareholders' Equity
                  (Deficit)****Years
                  Ended December 31, 2005, 2004 and 2003***(in
                  thousands)***Shareholders**
              
              
              **ManagingShareholder**
              
              
              **Total
                  Shareholders' Equity**Shareholders’
                  balance January 1, 2003,  restated
              
              $
              7,085
              
              
              $
              (132
              )
              
              $
              6,953Net
                  income,  restated
              
              
              337
              
              
              
              3
              
              
              
              340Distributions
              
              
              (1,412
              )
              
              
              (14
              )
              
              
              (1,426
              )Shareholders’
                  balance December 31, 2003,  restated
              
              
              6,010
              
              
              
              (143
              )
              
              
              5,867Net
                  income,  restated
              
              
              357
              
              
              
              4
              
              
              
              361Distributions
              
              
              (1,412
              )
              
              
              (14
              )
              
              
              (1,426
              )Shareholders’
                  balance December 31, 2004,  restated
              
              
              4,955
              
              
              
              (153
              )
              
              
              4,802Net
                  income
              
              
              262
              
              
              
              3
              
              
              
              265Distributions
              
              
              (1,177
              )
              
              
              (12
              )
              
              
              (1,189
              )Shareholders’
                  balance December 31, 2005
              
              $
              4,040
              
              
              $
              (162
              )
              
              $
              3,878
 *The
      accompanying notes are an integral part of these financial
      statements.*
 F-5
 **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Cash Flows***(in
                  thousands)***Years
                  Ended December 31,****2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)Cash
                  flows from operating activities:Net
                  income
              
              $
              265
              
              
              $
              361
              
              
              $
              340Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              
              
              247
              
              
              
              245
              
              
              
              349Impairment
                  of equipment and intangibles
              
              
              -
              
              
              
              -
              
              
              
              190Gas
                  forward contract
              
              
              (72
              )
              
              
              (395
              )
              
              
              (750
              )Changes
                  in operating assets and liabilties:Restricted
                  cash
              
              
              -
              
              
              
              -
              
              
              
              550Accounts
                  receivable
              
              
              (204
              )
              
              
              9
              
              
              
              31Other
                  current assets
              
              
              14
              
              
              
              (11
              )
              
              
              6Accounts
                  payable and accrued expenses
              
              
              51
              
              
              
              (10
              )
              
              
              (133
              )Due
                  to/from affiliates, net
              
              
              291
              
              
              
              (6
              )
              
              
              34Total
                  adjustments
              
              
              327
              
              
              
              (168
              )
              
              
              277Net
                  cash provided by operating activities
              
              
              592
              
              
              
              193
              
              
              
              617Cash
                  flows from investing activities:Proceeds
                  from notes receivable
              
              
              -
              
              
              
              -
              
              
              
              278Proceeds
                  from investment in partnershiptransferred
                  under contractual agreement
              
              
              363
              
              
              
              445
              
              
              
              400Net
                  cash provided by investing activities
              
              
              363
              
              
              
              445
              
              
              
              678Cash
                  flows from financing activities:Cash
                  distributions to shareholders
              
              
              (1,189
              )
              
              
              (1,426
              )
              
              
              (1,426
              )Net
                  decrease in cash and cash equivalents
              
              
              (234
              )
              
              
              (788
              )
              
              
              (131
              )Cash
                  and cash equivalents, beginning of year
              
              
              430
              
              
              
              1,218
              
              
              
              1,349Cash
                  and cash equivalents, end of year
              
              $
              196
              
              
              $
              430
              
              
              $
              1,218
 
  *The
      accompanying notes are an integral part of these financial
      statements.*
 F-6
 **RidgewoodElectric
                  Power Trust II****Consolidated
                  Balance Sheets (unaudited)***(in
                  thousands, except share data)***2005****September
                  30**
              
              
              **June
                  30**
              
              
              **March
                  31****ASSETS**
              
              
              
              
              
              
              
              (Restated)Current
                  assets:Cash
                  and cash equivalents
              
              $
              138
              
              
              $
              113
              
              
              $
              402Accounts
                  receivable
              
              
              319
              
              
              
              247
              
              
              
              197Due
                  from affiliates
              
              
              -
              
              
              
              5
              
              
              
              -Gas
                  forward contract - current portion
              
              
              1,616
              
              
              
              646
              
              
              
              736Other
                  current assets
              
              
              50
              
              
              
              13
              
              
              
              49Total
                  current assets
              
              
              2,123
              
              
              
              1,024
              
              
              
              1,384Plant
                  and equipment, net
              
              
              1,165
              
              
              
              1,196
              
              
              
              1,227Intangibles,
                  net
              
              
              1,728
              
              
              
              1,759
              
              
              
              1,789Investment
                  in partnership transferred under contractual agreement
              
              
              -
              
              
              
              -
              
              
              
              141Gas
                  forward contract - noncurrent portion
              
              
              -
              
              
              
              275
              
              
              
              392**Total
                  assets**
              
              $
              5,016
              
              
              $
              4,254
              
              
              $
              4,933**LIABILITIES
                  AND SHAREHOLDERS' EQUITY**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              112
              
              
              $
              48
              
              
              $
              148Due
                  to affiliates
              
              
              161
              
              
              
              43
              
              
              
              21Total
                  current liabilities
              
              
              273
              
              
              
              91
              
              
              
              169Commitments
                  and contingenciesShareholders'
                  equity (deficit):Shareholders'
                  equity (235.3775 investor sharesissued
                  and outstanding)
              
              
              4,897
              
              
              
              4,323
              
              
              
              4,918Managing
                  shareholder's accumulated deficit(1
                  management share issued and outstanding)
              
              
              (154
              )
              
              
              (160
              )
              
              
              (154
              )Total
                  shareholders' equity
              
              
              4,743
              
              
              
              4,163
              
              
              
              4,764**Total
                  liabilities and shareholders' equity**
              
              $
              5,016
              
              
              $
              4,254
              
              
              $
              4,933
 
 *The
      accompanying notes are an integral part of these financial
      statements.*
 F-7
 **RidgewoodElectric
                  Power Trust II****Consolidated
                  Balance Sheets (unaudited)***(in
                  thousands, except share data)***2004****September
                  30**
              
              
              **June
                  30**
              
              
              **March
                  31**(Restated)
              
              
              (Restated)
              
              
              (Restated)**ASSETS**Currents
                  assets:Cash
                  and cash equivalents
              
              $
              530
              
              
              $
              774
              
              
              $
              1,022Accounts
                  receivable
              
              
              266
              
              
              
              290
              
              
              
              231Due
                  from affiliates
              
              
              1
              
              
              
              15
              
              
              
              40Gas
                  forward contract - current portion
              
              
              587
              
              
              
              434
              
              
              
              333Other
                  current assets
              
              
              64
              
              
              
              14
              
              
              
              46Total
                  current assets
              
              
              1,448
              
              
              
              1,527
              
              
              
              1,672Plant
                  and equipment, net
              
              
              1,288
              
              
              
              1,319
              
              
              
              1,350Intangibles,
                  net
              
              
              1,849
              
              
              
              1,880
              
              
              
              1,910Investment
                  in partnership transferred under contractual agreement
              
              
              508
              
              
              
              608
              
              
              
              675Gas
                  forward contract- noncurrent portion
              
              
              485
              
              
              
              485
              
              
              
              423**Total
                  assets**
              
              $
              5,578
              
              
              $
              5,819
              
              
              $
              6,030**LIABILITIES
                  AND SHAREHOLDERS' EQUITY**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              99
              
              
              $
              104
              
              
              $
              99Due
                  to affiliates
              
              
              47
              
              
              
              85
              
              
              
              97Total
                  current liabilities
              
              
              146
              
              
              
              189
              
              
              
              196Commitments
                  and contingenciesShareholders'
                  equity (deficit):Shareholders'
                  equity (235.3775 investor sharesissued
                  and outstanding)
              
              
              5,579
              
              
              
              5,775
              
              
              
              5,977Managing
                  shareholder's accumulated deficit(1
                  management share issued and outstanding)
              
              
              (147
              )
              
              
              (145
              )
              
              
              (143
              )Total
                  shareholders' equity
              
              
              5,432
              
              
              
              5,630
              
              
              
              5,834**Total
                  liabilities and shareholders' equity**
              
              $
              5,578
              
              
              $
              5,819
              
              
              $
              6,030
 
 
 *The
      accompanying notes are an integral part of these financial
      statements.*
  F-8
  **RidgewoodElectric
                  Power Trust II****Consolidated
                  Balance Sheets (unaudited)***(in
                  thousands, except share data)***2003****September
                  30**
              
              
              **June
                  30**
              
              
              **March
                  31**(Restated)
              
              
              (Restated)
              
              
              (Restated)**ASSETS**Currents
                  assets:Cash
                  and cash equivalents
              
              $
              1,316
              
              
              $
              1,036
              
              
              $
              1,189Restricted
                  cash
              
              
              -
              
              
              
              550
              
              
              
              550Accounts
                  receivable
              
              
              322
              
              
              
              292
              
              
              
              256Due
                  from affiliates
              
              
              15
              
              
              
              15
              
              
              
              15Notes
                  receivable
              
              
              -
              
              
              
              47
              
              
              
              140Gas
                  forward contract - current portion
              
              
              102
              
              
              
              206
              
              
              
              121Other
                  current assets
              
              
              64
              
              
              
              24
              
              
              
              35Total
                  current assets
              
              
              1,819
              
              
              
              2,170
              
              
              
              2,306Plant
                  and equipment, net
              
              
              1,628
              
              
              
              1,683
              
              
              
              1,741Intangibles,
                  net
              
              
              1,971
              
              
              
              2,001
              
              
              
              2,031Investment
                  in partnership transferred under contractual agreement
              
              
              879
              
              
              
              1,008
              
              
              
              1,074Gas
                  forward contract- noncurrent portion
              
              
              91
              
              
              
              272
              
              
              
              -**Total
                  assets**
              
              $
              6,388
              
              
              $
              7,134
              
              
              $
              7,152**LIABILITIES
                  AND SHAREHOLDERS' EQUITY**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              102
              
              
              $
              122
              
              
              $
              89Due
                  to affiliates
              
              
              58
              
              
              
              57
              
              
              
              47Total
                  current liabilities
              
              
              160
              
              
              
              179
              
              
              
              136Gas
                  forward contract
              
              
              -
              
              
              
              -
              
              
              
              51Total
                  liabilities
              
              
              160
              
              
              
              179
              
              
              
              187Commitments
                  and contingenciesShareholders'
                  equity (deficit):Shareholders'
                  equity (235.3775 investor sharesissued
                  and outstanding)
              
              
              6,367
              
              
              
              7,087
              
              
              
              7,097Managing
                  shareholder's accumulated deficit(1
                  management share issued and outstanding)
              
              
              (139
              )
              
              
              (132
              )
              
              
              (132
              )Total
                  shareholders' equity
              
              
              6,228
              
              
              
              6,955
              
              
              
              6,965**Total liabilities and shareholders' equity**
              
              $
              6,388
              
              
              $
              7,134
              
              
              $
              7,152
 
 
 *The
      accompanying notes are an integral part of these financial
      statements.*
  F-9
  **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Operations (unaudited)***(in
                  thousands, except per share data)***Nine
                  Months Ended September 30,**
              
              
              **Three
                  Months Ended September 30,****2005**
              
              
              **2004**
              
              
              **2003**
              
              
              **2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)
              
              
              
              
              
              (Restated)
              
              
              (Restated)Revenues
              
              $
              2,107
              
              
              $
              2,154
              
              
              $
              2,261
              
              
              $
              792
              
              
              $
              746
              
              
              $
              835Cost
                  of revenues
              
              
              1,250
              
              
              
              1,334
              
              
              
              1,713
              
              
              
              89
              
              
              
              547
              
              
              
              1,152Gross
                  profit (loss)
              
              
              857
              
              
              
              820
              
              
              
              548
              
              
              
              703
              
              
              
              199
              
              
              
              (317
              )Operating
                  expenses:General
                  and administrative expenses
              
              
              106
              
              
              
              143
              
              
              
              142
              
              
              
              34
              
              
              
              21
              
              
              
              33Management
                  fee to the Managing Shareholder
              
              
              54
              
              
              
              68
              
              
              
              81
              
              
              
              18
              
              
              
              22
              
              
              
              27Total
                  operating expenses
              
              
              160
              
              
              
              211
              
              
              
              223
              
              
              
              52
              
              
              
              43
              
              
              
              60Income
                  (loss) from  operations
              
              
              697
              
              
              
              609
              
              
              
              325
              
              
              
              651
              
              
              
              156
              
              
              
              (377
              )Other
                  income:Interest
                  income
              
              
              3
              
              
              
              4
              
              
              
              20
              
              
              
              1
              
              
              
              2
              
              
              
              8Gain
                  on sale of investments
              
              
              193
              
              
              
              -
              
              
              
              -
              
              
              
              167
              
              
              
              -
              
              
              
              -Other
                  income
              
              
              -
              
              
              
              21
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
                  other income
              
              
              196
              
              
              
              25
              
              
              
              20
              
              
              
              168
              
              
              
              2
              
              
              
              8Net
                  income (loss)
              
              $
              893
              
              
              $
              634
              
              
              $
              345
              
              
              $
              819
              
              
              $
              158
              
              
              $
              (369
              )Managing
                  Shareholder - Net income (loss)
              
              $
              9
              
              
              $
              6
              
              
              $
              3
              
              
              $
              8
              
              
              $
              2
              
              
              $
              (4
              )Shareholders
                  - Net income (loss)
              
              
              884
              
              
              
              628
              
              
              
              342
              
              
              
              811
              
              
              
              156
              
              
              
              (365
              )Net
                  income (loss) per Investor Share
              
              
              3,758
              
              
              
              2,669
              
              
              
              1,453
              
              
              
              3,446
              
              
              
              663
              
              
              
              (1,551
              )
 
 *The
      accompanying notes are an integral part of these
      financial statements.*
  F-10
  **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Operations (unaudited)***(in
                  thousands, except per share data)***Six
                  Months Ended June 30,**
              
              
              **Three
                  Months Ended June 30,****2005**
              
              
              **2004**
              
              
              **2003**
              
              
              **2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)
              
              
              
              
              
              (Restated)
              
              
              (Restated)Revenues
              
              $
              1,315
              
              
              $
              1,408
              
              
              $
              1,426
              
              
              $
              651
              
              
              $
              708
              
              
              $
              682Cost
                  of revenues
              
              
              1,161
              
              
              
              787
              
              
              
              561
              
              
              
              877
              
              
              
              498
              
              
              
              285Gross
                  profit (loss)
              
              
              154
              
              
              
              621
              
              
              
              865
              
              
              
              (226
              )
              
              
              210
              
              
              
              397Operating
                  expenses:General
                  and administrative expenses
              
              
              72
              
              
              
              122
              
              
              
              109
              
              
              
              27
              
              
              
              42
              
              
              
              28Management
                  fee to the Managing Shareholder
              
              
              36
              
              
              
              46
              
              
              
              54
              
              
              
              18
              
              
              
              23
              
              
              
              27Total
                  operating expenses
              
              
              108
              
              
              
              168
              
              
              
              163
              
              
              
              45
              
              
              
              65
              
              
              
              55Income
                  (loss) from operations
              
              
              46
              
              
              
              453
              
              
              
              702
              
              
              
              (271
              )
              
              
              145
              
              
              
              342Other
                  income:Interest
                  income
              
              
              2
              
              
              
              2
              
              
              
              12
              
              
              
              1
              
              
              
              1
              
              
              
              4Gain
                  on sale of investments
              
              
              26
              
              
              
              -
              
              
              
              -
              
              
              
              26
              
              
              
              -
              
              
              
              -Other
                  income
              
              
              -
              
              
              
              21
              
              
              
              -
              
              
              
              -
              
              
              
              7
              
              
              
              -Total
                  other income
              
              
              28
              
              
              
              23
              
              
              
              12
              
              
              
              27
              
              
              
              8
              
              
              
              4Net
                  income (loss)
              
              $
              74
              
              
              $
              476
              
              
              $
              714
              
              
              $
              (244
              )
              
              $
              153
              
              
              $
              346Managing
                  Shareholder - Net income (loss)
              
              $
              -
              
              
              $
              5
              
              
              $
              6
              
              
              $
              (2
              )
              
              $
              2
              
              
              $
              3Shareholders
                  - Net income (loss)
              
              
              74
              
              
              
              471
              
              
              
              708
              
              
              
              (242
              )
              
              
              151
              
              
              
              343Net
                  income (loss) per Investor Share
              
              
              314
              
              
              
              2,001
              
              
              
              3,007
              
              
              
              (1,028
              )
              
              
              642
              
              
              
              1,457
 *The
      accompanying notes are an integral part of these financial
      statements.*
 F-11
 **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Operations (unaudited)***(in
                  thousands, except per share data)***Three
                  Months Ended March 31,****2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)
              
              
              (Restated)Revenues
              
              $
              664
              
              
              $
              700
              
              
              $
              744Cost
                  of revenues
              
              
              284
              
              
              
              289
              
              
              
              275Gross
                  profit
              
              
              380
              
              
              
              411
              
              
              
              469Operating
                  expenses:General
                  and administrative expenses
              
              
              45
              
              
              
              80
              
              
              
              82Management
                  fee to the Managing Shareholder
              
              
              18
              
              
              
              23
              
              
              
              27Total
                  operating expenses
              
              
              63
              
              
              
              103
              
              
              
              109Income
                  from operations
              
              
              317
              
              
              
              308
              
              
              
              360Other
                  income:Interest
                  income
              
              
              1
              
              
              
              1
              
              
              
              8Other
                  income
              
              
              -
              
              
              
              14
              
              
              
              -Total
                  other income
              
              
              1
              
              
              
              15
              
              
              
              8Net
                  income
              
              $
              318
              
              
              $
              323
              
              
              $
              368Managing
                  Shareholder - Net income
              
              $
              2
              
              
              $
              3
              
              
              $
              3Shareholders
                  - Net income
              
              
              316
              
              
              
              320
              
              
              
              365Net
                  income per Investor Share
              
              
              1,344
              
              
              
              1,362
              
              
              
              1,549
 *The
      accompanying notes are an integral part of these financial
      statements.*
  F-12
  **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Changes in Shareholders' Equity
                  (Deficit)****Three
                  Months, Six Months and Nine Months Ended March, June and September
                  for
                  2003, 2004 and 2005 (unaudited)*****(in
                  thousands)*****Shareholders**
              
              
              **Managing
                  Shareholder**
              
              
              **Total
                  Shareholders' Equity****Three
                  months ended 03/31/03:**Shareholders’
                  balance January 1, 2003,  restated
              
              $
              7,085
              
              
              $
              (132
              )
              
              $
              6,953Net
                  income,  restated
              
              
              365
              
              
              
              3
              
              
              
              368Distributions
              
              
              (353
              )
              
              
              (3
              )
              
              
              (356
              )Shareholders’
                  balance March 31, 2003,  restated
              
              $
              7,097
              
              
              $
              (132
              )
              
              $
              6,965**Six
                  months ended 06/30/03:**Shareholders’
                  balance January 1, 2003,  restated
              
              $
              7,085
              
              
              $
              (132
              )
              
              $
              6,953Net
                  income,  restated
              
              
              708
              
              
              
              6
              
              
              
              714Distributions
              
              
              (706
              )
              
              
              (6
              )
              
              
              (712
              )Shareholders’
                  balance June 30, 2003,  restated
              
              $
              7,087
              
              
              $
              (132
              )
              
              $
              6,955**Nine
                  months ended 09/30/03:**Shareholders’
                  balance January 1, 2003,  restated
              
              $
              7,085
              
              
              $
              (132
              )
              
              $
              6,953Net
                  income,  restated
              
              
              342
              
              
              
              3
              
              
              
              345Distributions
              
              
              (1,060
              )
              
              
              (10
              )
              
              
              (1,070
              )Shareholders’
                  balance September 30, 2003,  restated
              
              $
              6,367
              
              
              $
              (139
              )
              
              $
              6,228**Three
                  months ended 03/31/04:**Shareholders’
                  balance January 1, 2004,  restated
              
              $
              6,010
              
              
              $
              (143
              )
              
              $
              5,867Net
                  income,  restated
              
              
              320
              
              
              
              3
              
              
              
              323Distributions
              
              
              (353
              )
              
              
              (3
              )
              
              
              (356
              )Shareholders’
                  balance March 31, 2004,  restated
              
              $
              5,977
              
              
              $
              (143
              )
              
              $
              5,834**Six
                  months ended 06/30/04:**Shareholders’
                  balance January 1, 2004,  restated
              
              $
              6,010
              
              
              $
              (143
              )
              
              $
              5,867Net
                  income,  restated
              
              
              471
              
              
              
              5
              
              
              
              476Distributions
              
              
              (706
              )
              
              
              (7
              )
              
              
              (713
              )Shareholders’
                  balance June 30, 2004,  restated
              
              $
              5,775
              
              
              $
              (145
              )
              
              $
              5,630**Nine
                  months ended 09/30/04:**Shareholders’
                  balance January 1, 2004,  restated
              
              $
              6,010
              
              
              $
              (143
              )
              
              $
              5,867Net
                  income,  restated
              
              
              628
              
              
              
              6
              
              
              
              634Distributions
              
              
              (1,059
              )
              
              
              (10
              )
              
              
              (1,069
              )Shareholders’
                  balance September 30, 2004,  restated
              
              $
              5,579
              
              
              $
              (147
              )
              
              $
              5,432**Three
                  months ended 03/31/05:**Shareholders’
                  balance January 1, 2005,  restated
              
              $
              4,955
              
              
              $
              (153
              )
              
              $
              4,802Net
                  income,  restated
              
              
              316
              
              
              
              2
              
              
              
              318Distributions
              
              
              (353
              )
              
              
              (3
              )
              
              
              (356
              )Shareholders’
                  balance March 31, 2005,  restated
              
              $
              4,918
              
              
              $
              (154
              )
              
              $
              4,764**Six
                  months ended 06/30/05:**Shareholders’
                  balance January 1, 2005,  restated
              
              $
              4,955
              
              
              $
              (153
              )
              
              $
              4,802Net
                  income
              
              
              74
              
              
              
              -
              
              
              
              74Distributions
              
              
              (706
              )
              
              
              (7
              )
              
              
              (713
              )Shareholders’
                  balance June 30, 2005
              
              $
              4,323
              
              
              $
              (160
              )
              
              $
              4,163**Nine
                  months ended 09/30/05:**Shareholders’
                  balance January 1, 2005,  restated
              
              $
              4,955
              
              
              $
              (153
              )
              
              $
              4,802Net
                  income
              
              
              884
              
              
              
              9
              
              
              
              893Distributions
              
              
              (942
              )
              
              
              (10
              )
              
              
              (952
              )Shareholders’
                  balance September 30, 2005
              
              $
              4,897
              
              
              $
              (154
              )
              
              $
              4,743
 
 *The
      accompanying notes are an integral part of these financial
      statements.*
  F-13
  **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Cash Flows (unaudited)***(in
                  thousands)***Nine
                  Months Ended September 30,****2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)Cash
                  flows from operating activities:Net
                  income
              
              $
              893
              
              
              $
              634
              
              
              $
              345Adjustments
                  to reconcile net income to net cash providedby
                  operating activities:Depreciation
                  and amortization
              
              
              183
              
              
              
              183
              
              
              
              262Gas
                  forward contract
              
              
              (789
              )
              
              
              (640
              )
              
              
              (510
              )Changes
                  in operating assets and liabilities:Restricted
                  cash
              
              
              -
              
              
              
              -
              
              
              
              550Accounts
                  receivable
              
              
              (103
              )
              
              
              (41
              )
              
              
              (67
              )Other
                  current assets
              
              
              2
              
              
              
              (22
              )
              
              
              (17
              )Accounts
                  payable and accrued expenses
              
              
              12
              
              
              
              (13
              )
              
              
              (141
              )Due
                  to/from affiliates, net
              
              
              99
              
              
              
              (20
              )
              
              
              9Total
                  adjustments
              
              
              (596
              )
              
              
              (553
              )
              
              
              86Net
                  cash provided by operating activities
              
              
              297
              
              
              
              81
              
              
              
              431Cash
                  flows from investing activities:Proceeds
                  from notes receivable
              
              
              -
              
              
              
              -
              
              
              
              278Proceeds
                  from investment in partnershiptransferred
                  under contractual agreement
              
              
              363
              
              
              
              300
              
              
              
              328Net
                  cash provided by investing activities
              
              
              363
              
              
              
              300
              
              
              
              606Cash
                  flows from financing activities:Cash
                  distributions to shareholders
              
              
              (952
              )
              
              
              (1,069
              )
              
              
              (1,070
              )Net
                  decrease in cash and cash equivalents
              
              
              (292
              )
              
              
              (688
              )
              
              
              (33
              )Cash
                  and cash equivalents, beginning of period
              
              
              430
              
              
              
              1,218
              
              
              
              1,349Cash
                  and cash equivalents, end of period
              
              $
              138
              
              
              $
              530
              
              
              $
              1,316
 
 *The
      accompanying notes are an integral part of these financial
      statements.*
  F-14
 
 **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Cash Flows (unaudited)***(in
                  thousands)***Six
                  Months Ended June 30,****2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)Cash
                  flows from operating activities:Net
                  income
              
              $
              74
              
              
              $
              476
              
              
              $
              714Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              
              
              122
              
              
              
              122
              
              
              
              176Gas forward
                  contract
              
              
              (93
              )
              
              
              (487
              )
              
              
              (794
              )Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (31
              )
              
              
              (65
              )
              
              
              (37
              )Other
                  current assets
              
              
              39
              
              
              
              28
              
              
              
              23Accounts
                  payable and accrued expenses
              
              
              (53
              )
              
              
              (7
              )
              
              
              (122
              )Due
                  to/from affiliates, net
              
              
              (25
              )
              
              
              2
              
              
              
              9Total
                  adjustments
              
              
              (41
              )
              
              
              (407
              )
              
              
              (745
              )Net
                  cash provided by operating activities
              
              
              33
              
              
              
              69
              
              
              
              (31
              )Cash
                  flows from investing activities:Proceeds
                  from notes receivable
              
              
              -
              
              
              
              -
              
              
              
              230Proceeds
                  from investment in partnershiptransferred
                  under contractual agreement
              
              
              363
              
              
              
              200
              
              
              
              200Net
                  cash provided by investing activities
              
              
              363
              
              
              
              200
              
              
              
              430Cash
                  flows from financing activities:Cash
                  distributions to shareholders
              
              
              (713
              )
              
              
              (713
              )
              
              
              (712
              )Net
                  (decrease) increase in cash and cash equivalents
              
              
              (317
              )
              
              
              (444
              )
              
              
              (313
              )Cash
                  and cash equivalents, beginning of period
              
              
              430
              
              
              
              1,218
              
              
              
              1,349Cash
                  and cash equivalents, end of period
              
              $
              113
              
              
              $
              774
              
              
              $
              1,036
 
 *The
      accompanying notes are an integral part of these financial
      statements.*
  F-15
  **RidgewoodElectric
                  Power Trust II****Consolidated
                  Statements of Cash Flows (unaudited)***(in
                  thousands)***Three
                  Months Ended March 31,****2005**
              
              
              **2004**
              
              
              **2003**(Restated)
              
              
              (Restated)
              
              
              (Restated)Cash
                  flows from operating activities:Net
                  income
              
              $
              318
              
              
              $
              323
              
              
              $
              368Adjustments
                  to reconcile net income to net cashprovided
                  by (used in) operating activities:Depreciation
                  and amortization
              
              
              61
              
              
              
              61
              
              
              
              88Gas
                  forward contract
              
              
              (302
              )
              
              
              (323
              )
              
              
              (386
              )Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              19
              
              
              
              (7
              )
              
              
              (1
              )Other
                  current assets
              
              
              4
              
              
              
              (5
              )
              
              
              12Accounts
                  payable and accrued expenses
              
              
              47
              
              
              
              (12
              )
              
              
              (154
              )Due
                  to/from affiliates, net
              
              
              (41
              )
              
              
              (10
              )
              
              
              (1
              )Total
                  adjustments
              
              
              (212
              )
              
              
              (296
              )
              
              
              (442
              )Net
                  cash provided by (used in) operating activities
              
              
              106
              
              
              
              27
              
              
              
              (74
              )Cash
                  flows from investing activities:Proceeds
                  from notes receivable
              
              
              -
              
              
              
              -
              
              
              
              137Proceeds
                  from investment in partnershiptransferred
                  under contractual agreement
              
              
              222
              
              
              
              133
              
              
              
              133Net
                  cash provided by investing activities
              
              
              222
              
              
              
              133
              
              
              
              270Cash
                  flows from financing activities:Cash
                  distributions to shareholders
              
              
              (356
              )
              
              
              (356
              )
              
              
              (356
              )Net
                  decrease in cash and cash equivalents
              
              
              (28
              )
              
              
              (196
              )
              
              
              (160
              )Cash
                  and cash equivalents, beginning of period
              
              
              430
              
              
              
              1,218
              
              
              
              1,349Cash
                  and cash equivalents, end of period
              
              $
              402
              
              
              $
              1,022
              
              
              $
              1,189
  
 *The
      accompanying notes are an integral part of these financial
      statements.*
 F-16
 **RidgewoodElectric
          Power Trust II**
 **Notes
          To Consolidated Financial Statements**
 (dollar
          amounts in thousands, except per share data)
 
 **1.**
            **DESCRIPTION
                OF BUSINESS**
 
 Ridgewood
      Electric Power Trust II (the “Trust”) was formed as a Delaware trust on November
      20, 1992.  The Trust began offering shares on January 4, 1993 and
      concluded its offering on January 31, 1994. 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 (“RRP” or the “Managing Shareholder”). 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
      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 and handles relations with the
      shareholders, including tax and other financial information. The Managing
      Shareholder also provides the Trust with office space, equipment and facilities
      and other services necessary for its operation.
 
 Subsequent
      to December 31, 2005, the operations of the Trust have significantly changed
      as
      more fully described in Note 10.
 
 **2.     RESTATEMENT
      OF FINANCIAL STATEMENTS**
 
 The
      Trust
      has identified a series of adjustments, including adjustments related to an
      impairment of assets, accounting for professional service fees, value of the
      steam by-product generated at one of its plants, and accounting for derivatives,
      which have resulted in the restatement of the previously issued financial
      statements of the Trust for the quarter ended March 31, 2005, for the
      quarters ended March 31, June 30 and September 30 of 2004 and 2003, and for
      the
      years ended December 31, 2004 and 2003.
 
 The
      tables below present the changes in financial statement line items between
      the
      Trust’s previously reported and restated balance sheets and statements of
      operations.  These restatements did not have a significant impact on
      the Trust’s statements of cash flows.  Explanatory comments follow the
      tables.
 
 **Balance
                  Sheets****December
                  31,****2004**
              
              
              **2003**ASSETSGas
                  forward contract
              
              $
              60
              
              
              $
              (56
              )
              (A)Plant
                  and equipment, net
              
              
              (114
              )
              
              
              (190
              )
              (B)Total
                  assets
              
              $
              (54
              )
              
              $
              (246
              )LIABILITIES
                  AND SHAREHOLDERS' EQUITYAccrued
                  expenses
              
              
              (41
              )
              
              
              (40
              )
              (C)Shareholders'
                  equity
              
              
              (13
              )
              
              
              (206
              )
              (A)
                  (B) (C)Total
                  liabilities and shareholders' equity
              
              $
              (54
              )
              
              $
              (246
              )
  F-17
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share
            data)
 **Statements
                  of Operations**
              
              **Years
                  ended December 31,****2004**
              
              
              **2003**Revenues,
                  increase
              
              $
              325
              
              
              $
              302
              
              (D)Cost
                  of revenues, decrease
              
              
              153
              
              
              
              452
              
              (A)
                  (B) (D) (E)General
                  and administrative expenses, (increase)
              
              
              (7
              )
              
              
              (25
              )
              (C)
                  (E)Impairment
                  of equipment and intangibles, (increase)
              
              
              -
              
              
              
              (190
              )
              (B)Income
                  from operations, increase
              
              
              471
              
              
              
              539Other
                  income, (decrease)
              
              
              (278
              )
              
              
              (488
              )
              (A)(E)Other
                  expense, decrease
              
              
              -
              
              
              
              16
              
              (E)Net
                  income
              
              $
              193
              
              
              $
              67Managing
                  Shareholder - Net income, increase
              
              $
              2
              
              
              $
              1Shareholders-
                  Net income, increase
              
              
              191
              
              
              
              66Net
                  income per Investor Share, increase
              
              
              812
              
              
              
              282
  **(A)**
                Originally, the Trust did not properly recognize the market value
                related
                to its gas purchase contract. As a result, the Trust recorded a
                liability value of $316 at the beginning of 2003 with a corresponding
                decrease to beginning shareholders’ equity. Additionally, the Trust did
                not properly record the changes in the value of the contract that
                occurred
                during 2003 and 2004 and as a result, the Trust recorded a gain of
                $748
                and $393, respectively as a component of cost of revenues. Previously,
                the
                Trust recorded the changes in the value of the contract that occurred
                during 2003 and 2004 to other income.  Accordingly in this
                restatement, the gain of $488 and $278 was reclassified to cost of
                revenues during 2003 and 2004,
                respectively.
 
 **(B)**
                In the previously issued financial statements, the Trust failed to
                recognize an impairment of equipment for irrigation service engines.
                An
                impairment was determined, and restated by the Trust, based on projected
                cash flows to be required effective December 31, 2003.  As a
                result, the Trust recorded an impairment in 2003 of approximately
                $190;
                offset by a decrease to the recorded net book value of the
                engines.  Furthermore, in 2004, as a result of the impairment,
                depreciation expense subsequent to the impairment was overstated
                by
                $104.  As a result, the Trust decreased depreciation expense and
                decreased accumulated depreciation by
                $104.
 
 **(C)**
                In the previously issued financial statements, the Trust incorrectly
                accrued professional service fees in the period to be audited or
                reviewed
                rather than during the period in which the services were
                performed.   As a result, the Trust overaccrued $41 and $40
                of professional fees for the years ended December 31, 2004 and 2003,
                respectively.  The 2004 over accrual was adjusted by recording a
                decrease to accrued expenses of $41, and decreases to general and
                administrative expenses and beginning shareholders’ equity of $2 and $41,
                respectively.  On December 31, 2003, the overaccrual was
                adjusted by recording a decrease to accrued expenses of $40, and
                an
                increase to general and administrative expenses and beginning
                shareholders’ equity of $2 and $40,
                respectively.
 
 **(D)**
                In the previously issued financial statements, the Trust failed to
                value
                the steam by-product generated at one of its plants that is provided
                to
                its site landlord.  Although there was no affect on the Trust’s
                net operating results, the Trust recorded the value of this by-product
                as
                an increase to revenue of $302 and $325 with corresponding increases
                to
                cost of revenues in the years ending December 31, 2003 and 2004,
                respectively.
 
 **(E)**
                Certain items in the previously issued financial statements for the
                years
                ended December 31, 2003 and 2004 have been reclassified to conform
                to the
                current year presentation.  These reclassifications had no
                material effect on net income.
 
 The
      Trust
      restated 2002 amounts by decreasing the Trust’s beginning shareholders’ equity
      as of January 1, 2003 by
      $274.
      The adjustments recorded that were made to the Trust’s equity as of
      January 1, 2003, was an overstatement of accrued professional service
      fees of $42 offset by a decrease in its gas purchase contract of
      $316.
  F-18
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
  **Quarterly
                  Balance Sheets (unaudited)****March
                  31****2005**ASSETSGas
                  forward contract
              
              $
              (20
              )
              (A)Plant
                  and equipment, net
              
              
              (87
              )
              (B)Total
                  assets
              
              $
              (107
              )LIABILITIES
                  AND SHAREHOLDERS' EQUITYAccrued
                  expenses
              
              $
              (16
              )
              (C)Shareholders'
                  equity
              
              
              (91
              )
              (A)
                  (B) (C)Total
                  liabilities and shareholders' equity
              
              $
              (107
              )
  **2004****September
                    30**
                
                
                **June
                    30**
                
                
                **March
                    31**ASSETSGas
                    forward contract
                
                $
                (247
                )
                
                $
                (95
                )
                
                $
                36
                
                (A)Due
                    from affiliates
                
                
                -
                
                
                
                (2
                )
                
                
                (1
                )
                (E)Plant
                    and equipment, net
                
                
                (129
                )
                
                
                (139
                )
                
                
                (164
                )
                (B)Total
                    assets
                
                $
                (376
                )
                
                $
                (236
                )
                
                $
                (129
                )LIABILITIES
                    AND SHAREHOLDERS' EQUITYAccrued
                    expenses
                
                $
                (4
                )
                
                $
                9
                
                
                $
                -
                
                (C)Due
                    to affiliates
                
                
                -
                
                
                
                (2
                )
                
                
                (1
                )
                (E)Shareholders'
                    equity
                
                
                (372
                )
                
                
                (243
                )
                
                
                (128
                )
                (A)
                    (B)Total
                    liabilities and shareholders' equity
                
                $
                (376
                )
                
                $
                (236
                )
                
                $
                (129
                )
  **2003****September
                  30**
              
              
              **June
                  30**
              
              
              **March
                  31**ASSETSGas
                  forward contract
              
              $
              (60
              )
              
              $
              478
              
              
              $
              121
              
              (A)Due
                  from affiliates
              
              
              (1
              )
              
              
              (2
              )
              
              
              (3
              )
              (E)Plant
                  and equipment, net
              
              
              -
              
              
              
              -
              
              
              
              -Total
                  assets
              
              $
              (61
              )
              
              $
              476
              
              
              $
              118LIABILITIES
                  AND SHAREHOLDERS' EQUITYAccrued
                  expenses
              
              $
              (16
              )
              
              $
              (9
              )
              
              $
              (1
              )
              (C)Due
                  to affiliates
              
              
              (1
              )
              
              
              (2
              )
              
              
              (3
              )
              (E)Loss
                  on Gas forward contract
              
              
              -
              
              
              
              -
              
              
              
              51
              
              (A)Shareholders'
                  equity
              
              
              (44
              )
              
              
              487
              
              
              
              71
              
              (A)
                  (C)Total
                  liabilities and shareholders' equity
              
              $
              (61
              )
              
              $
              476
              
              
              $
              118
 F-19
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
  **Quarterly
                  Statements of Operations (unaudited)**
              
              **Nine
                  Months Ended September 30,**
              
              
              **Three
                  Months Ended September 30,****2004**
              
              
              **2003**
              
              
              **2004**
              
              
              **2003**Revenues,
                  increase
              
              $
              244
              
              
              $
              227
              
              
              $
              81
              
              
              $
              76
              
              (D)Cost
                  of revenues, decrease  (increase)
              
              
              455
              
              
              
              292
              
              
              
              83
              
              
              
              (351
              )
              (A)
                  (B) (D) (E)General
                  and administrative expenses,
                  (increase)  decrease
              
              
              (36
              )
              
              
              (39
              )
              
              
              13
              
              
              
              (3
              )
              (C)
                  (E)Income
                  (loss) from operations
              
              
              663
              
              
              
              480
              
              
              
              177
              
              
              
              (278
              )Other
                  income, (decrease)
              
              
              (831
              )
              
              
              (254
              )
              
              
              (305
              )
              
              
              (254
              )
              (A)Other
                  expense, decrease (increase)
              
              
              2
              
              
              
              4
              
              
              
              (1
              )
              
              
              1
              
              (E)Net
                  (loss) income
              
              $
              (166
              )
              
              $
              230
              
              
              $
              (129
              )
              
              $
              (531
              )Managing
                  Shareholder - Net (loss) income, (decrease) increase
              
              $
              (2
              )
              
              $
              2
              
              
              $
              (1
              )
              
              $
              (5
              )Shareholders-
                  Net (loss) income, (decrease) increase
              
              
              (164
              )
              
              
              228
              
              
              
              (128
              )
              
              
              (526
              )Net
                  (loss) income per Investor Share, (decrease) increase
              
              
              (698
              )
              
              
              967
              
              
              
              (543
              )
              
              
              (2,233
              )
  **Six
                  Months Ended June 30,**
              
              
              **Three
                  Months Ended June 30,****2004**
              
              
              **2003**
              
              
              **2004**
              
              
              **2003**Revenues,
                  increase
              
              $
              163
              
              
              $
              151
              
              
              $
              82
              
              
              $
              75
              
              (D)Cost
                  of revenues, decrease
              
              
              372
              
              
              
              643
              
              
              
              106
              
              
              
              335
              
              (A)
                  (B) (D) (E)General
                  and administrative expenses, (increase) decrease
              
              
              (49
              )
              
              
              (36
              )
              
              
              (9
              )
              
              
              6
              
              (C)
                  (E)Income
                  from operations
              
              
              486
              
              
              
              758
              
              
              
              179
              
              
              
              416Other
                  income, (decrease)
              
              
              (526
              )
              
              
              -
              
              
              
              (293
              )
              
              
              -
              
              (A)Other
                  expense, decrease
              
              
              3
              
              
              
              3
              
              
              
              -
              
              
              
              -
              
              (E)Net
                  (loss) income
              
              $
              (37
              )
              
              $
              761
              
              
              $
              (114
              )
              
              $
              416Managing
                  Shareholder - Net (loss) income, (decrease) increase
              
              $
              (1
              )
              
              $
              8
              
              
              $
              (1
              )
              
              $
              4Shareholders-
                  Net (loss) income, (decrease) increase
              
              
              (36
              )
              
              
              753
              
              
              
              (113
              )
              
              
              412Net
                  (loss) income per Investor Share, (decrease) increase
              
              
              (153
              )
              
              
              3,201
              
              
              
              (479
              )
              
              
              1,750
  **Quarterly
                  Statements of Operations (unaudited)**
              
              **Three
                  Months Ended March 31,****2004**
              
              
              **2003**Revenues,
                  increase
              
              $
              81
              
              
              $
              76
              
              (D)Cost
                  of revenues, decrease
              
              
              266
              
              
              
              308
              
              (A)
                  (B) (D) (E)General
                  and administrative expenses, (increase)
              
              
              (40
              )
              
              
              (42
              )
              (C)
                  (E)Income
                  from operations
              
              
              307
              
              
              
              342Other
                  income, (decrease)
              
              
              (233
              )
              
              
              -
              
              (A)Other
                  expense, decrease
              
              
              3
              
              
              
              3
              
              (E)Net
                  income
              
              $
              77
              
              
              $
              345Managing
                  Shareholder - Net income, increase
              
              $
              1
              
              
              $
              3Shareholders-
                  Net income, increase
              
              
              76
              
              
              
              342Net
                  income per Investor Share, increase
              
              
              324
              
              
              
              1,451
 F-20
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
 **(A)**
      The Trust did not properly account for the changes in the value of its gas
      purchase contract. As a result, the Trust recorded the following adjustments
      (unaudited):
 
 **2005**
              
              
              **2004**
              
              
              **2003**3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31Gas
                  forward contract, (decrease) increase
              
              $
              (20
              )
              
              $
              (247
              )
              
              $
              (94
              )
              
              $
              36
              
              
              $
              (51
              )
              
              $
              478
              
              
              $
              70Beginning
                  shareholders' equity, decrease  (increase)
              
              
              20
              
              
              
              247
              
              
              
              94
              
              
              
              (36
              )
              
              
              51
              
              
              
              (478
              )
              
              
              (70
              )Cost
                  of revenues, (decrease)
              
              
              (304
              )
              
              
              (640
              )
              
              
              (487
              )
              
              
              (324
              )
              
              
              (510
              )
              
              
              (794
              )
              
              
              (386
              )Other
                  income, decrease
              
              
              383
              
              
              
              831
              
              
              
              526
              
              
              
              233
              
              
              
              254
              
              
              
              -
              
              
              
              -
  **(B)**
            The
                Trust did not properly recognize an impairment of equipment for irrigation
                service engines.  As a result, the Trust recorded the following
                adjustments (unaudited):
 
 **2005**
              
              
              **2004**
              
              
              **2003**3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31Plant
                  and equipment, net (decrease)
              
              $
              (87
              )
              
              $
              (129
              )
              
              $
              (139
              )
              
              $
              (164
              )
              
              $
              -
              
              
              $
              -
              
              
              $
              -Beginning
                  shareholders' equity, decrease
              
              
              87
              
              
              
              129
              
              
              
              139
              
              
              
              164
              
              
              
              -
              
              
              
              -
              
              
              
              -Depreciation
                  expense, (decrease)
              
              
              (26
              )
              
              
              (77
              )
              
              
              (51
              )
              
              
              (26
              )
              
              
              -
              
              
              
              -
              
              
              
              -
  **(C)**
            The
                Trust corrected the method of recording professional service fees
                to
                record the fees in the periods during which the services were performed.
                As a result, the Trust recorded the following adjustments
                (unaudited):
 
 **2005**
              
              **2004**
              
              
              **2003**3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31Accrued
                  professional fees, decrease (increase)
              
              $
              16
              
              
              $
              4
              
              
              $
              (9
              )
              
              $
              -
              
              
              $
              16
              
              
              $
              9
              
              
              $
              1Beginning
                  shareholders' equity , (increase) decrease
              
              
              (16
              )
              
              
              (4
              )
              
              
              9
              
              
              
              -
              
              
              
              (16
              )
              
              
              (9
              )
              
              
              (1
              )General
                  and administrative expenses, increase
              
              
              26
              
              
              
              36
              
              
              
              49
              
              
              
              40
              
              
              
              26
              
              
              
              33
              
              
              
              41
  **(D)**
            The
                Trust failed to value the steam by-product generated at one of its
                plants
                that is provided to its site landlord.  Although there was no
                affect on its net operating results, the Trust recorded the value
                of this
                by-product as an increase to revenue with corresponding increases
                to cost
                of revenues.  As a result, the Trust recorded the following
                adjustments (unaudited):
  **2005**
              
              **2004**
              
              
              **2003**3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31Revenues,
                  increase
              
              $
              101
              
              
              $
              244
              
              
              $
              163
              
              
              $
              81
              
              
              $
              227
              
              
              $
              151
              
              
              $
              76Cost
                  of revenues, increase
              
              
              101
              
              
              
              244
              
              
              
              163
              
              
              
              81
              
              
              
              227
              
              
              
              151
              
              
              
              76
  **(E)**
            Originally,
                the Trust did not properly classify general and administrative expenses.
                 As a result, the Trust recorded the following adjustments
                (unaudited):
 
 **2004**
              
              
              **2003**9/30
              
              
              
              6/30
              
              
              
              3/31
              
              
              
              9/30
              
              
              
              6/30
              
              
              
              3/31Cost
                  of revenues, increase (decrease)
              
              $
              2
              
              
              $
              2
              
              
              $
              3
              
              
              $
              (9
              )
              
              $
              1
              
              
              $
              2General
                  and administrative expenses, increase
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              13
              
              
              
              3
              
              
              
              1Other
                  expense, (decrease)
              
              
              (2
              )
              
              
              (2
              )
              
              
              (3
              )
              
              
              (4
              )
              
              
              (4
              )
              
              
              (3
              )
  F-21
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
 **3.      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.
 
 *b*)
      *Use of Estimates*
 
 The
      preparation of consolidated financial statements in accordance with accounting
      principles generally accepted in the United States of America requires the
      Trust
      to make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses, and related disclosure of contingent assets
      and liabilities. On an ongoing basis, the Trust evaluates its estimates,
      including accounts receivable, investments, recoverable value of plant and
      equipment, intangibles and recordable liabilities for litigation and other
      contingencies. The Trust bases its estimates on historical experience, current
      and expected conditions and various other assumptions that are believed to
      be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.
 
 *c)
      Revenue Recognition*
 
 Power
      generation revenue is recorded in the month of delivery, based on the estimated
      volumes sold to customers at rates stipulated in the power sales contract.
      Adjustments are made to reflect actual volumes delivered when the actual
      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.  Cash and cash
      equivalents at December 31, 2005 consist of funds deposited in bank accounts.
      Cash balances with banks as of December 31, 2005, 2004 and 2003 exceed insured
      limits by approximately $96, $330 and $1,118, respectively.
 
 *e)
      Accounts Receivable*
 
 Accounts
      receivable are recorded at invoice price in the period the related revenues
      are
      earned, and do not bear interest. No allowance for bad debt expense was provided
      based upon historical write-off experience, evaluation of customer credit
      condition and the general economic status of the customers.
 
 *f)
      Plant and Equipment*
 
 Plant
      and
      equipment, consists of equipment, leasehold improvements, and building
      which are stated at cost less accumulated depreciation. Renewals and betterments
      that increase the useful lives of the assets are capitalized.  Repair
      and maintenance expenditures are expensed as incurred.  Upon
      retirement or disposal of assets, the cost and related accumulated depreciation
      are removed from the consolidated balance sheets.  The difference, if
      any, between the net asset value and any proceeds from such retirement or
      disposal is recorded as a gain or loss in the statement of
      operations.
  Depreciation
      is recorded using the straight-line method over the estimated useful lives
      of
      the assets.
 
 Equipment
            3
                -
                20 yearsLeasehold
                improvements
            15
                yearsBuilding
            20
                years
  F-22
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
  g)
      Impairment of Long-Lived Assets and Intangibles
  The
      Trust
      evaluates intangible assets and long-lived assets, such as plant and equipment,
      when events or changes in circumstances indicate that the carrying value of
      such
      assets may not be recoverable. The determination of whether impairment has
      occurred is made by comparing the carrying value of an asset to the estimated
      undiscounted cash flows attributable to that asset. If impairment has occurred,
      the impairment loss recognized is the amount by which the carrying value exceeds
      the estimated fair value of the asset, which is based on the estimated future
      cash flows discounted at the estimated cost of capital.  The analysis
      requires estimates of the amount and timing of projected cash flows and, where
      applicable, judgments associated with, among other factors, the appropriate
      discount rate.  Such estimates are critical in determining whether any
      impairment charge should be recorded and the amount of such charge if an
      impairment loss is deemed to be necessary.
 
 *h)
      Gas Contract*
 
 In
        August
        2001, Monterey entered into an agreement to purchase natural gas, at fixed
        prices, over a five-year term in connection with entering into an amendment
        fixing the sales price of electric power sales contracts for a similar term.
        This contract was entered into in order to minimize the impact of fluctuating
        energy prices. The Trust has determined that this contract is a derivative
        as defined under SFAS No. 133, "Accounting for Derivative Instruments and
        Hedging Activities", as amended. The Trust has designated the derivatives
        as a
        non-hedge instrument. Accordingly, the value of the contract based on the
        differences between contract prices and market value prices is recognized
        as an
        asset or a liability in the balance sheet. Changes in the carrying value
        of the
        contract is reflected as a component of cost of revenues in the consolidated
        statements of operations.
 
 *i)
      Income Taxes*
 
 No
      provision is made for income taxes in the accompanying consolidated financial
      statements as the income or losses of the Trust are passed through and included
      in the income tax returns of the individual shareholders of the
      Trust.
 
 *j)
      Comprehensive Income (Loss)*
 
 The
      Trust’s comprehensive income (loss) consists only of net income
      (loss).
 
 *k)
      Significant Customer and Supplier*
 
 During
      2005, 2004, and 2003, the Trust’s largest customer, Pacific Gas and Electric
      Company (“PG&E”), accounted for 88%, 87%, and 80%, respectively, of total
      revenues.  During 2005, 2004 and 2003, the Trust purchased
      substantially all of its gas supply from one supplier.
 
 *l)
      Fair Value of Financial Instruments*
 
 At
      December 31, 2005, 2004 and 2003, the carrying value of the Trust’s cash and
      cash equivalents, accounts receivable, and accounts payable and accrued expenses
      approximates their fair value.
 
 *m)
      Unaudited Interim Results*
  The
      unaudited interim consolidated financial statements included herein have been
      prepared on the same basis as the annual consolidated statements and, in the
      opinion of management, reflect all adjustments, which include only normal
      recurring adjustments, necessary to present fairly the Trust’s financial
      position and its results of operations and cash flows for each of the interim
      periods presented. The financial data and other information disclosed in these
      notes to the consolidated financial statements related to such interim periods
      are also unaudited.
 
 **Recent
      Accounting Pronouncements**
 
 *SFAS
      143 and FIN 47*
 
 In
      June
      2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143,
*Accounting for Asset Retirement Obligations*, on the accounting for
      obligations associated with the retirement of long-lived assets. SFAS No. 143
      requires a liability to be recognized in the consolidated financial statements
      for retirement obligations meeting specific criteria. Measurement of the initial
      obligation is to approximate fair value, with an equivalent amount recorded
      as
      an increase in the value of the capitalized asset. The asset will be depreciated
      in accordance with normal depreciation policy and the liability will be
      increased for the time value of money, with a charge to the income
      statement, until the obligation is settled. SFAS No. 143 is effective for fiscal
      years beginning after June 15, 2002. Furthermore, in March 2005, the FASB
      issued FASB Interpretation No. 47 (“FIN 47”), *Accounting for
      Conditional Asset Retirement Obligations, an interpretation of FASB Statement
      No. 143*, which clarifies the term “conditional asset retirement
      obligation” as used in SFAS No. 143. Specifically, FIN 47 provides that an
      asset retirement obligation is conditional when the timing and/or method of
      settling the obligation is conditioned on a future event. Accordingly, an entity
      is required to recognize a liability for the fair value of a conditional asset
      retirement obligation if the fair value of the liability can be reasonably
      estimated. Uncertainty about the timing and/or method of settlement of a
      conditional asset retirement obligation should be factored into the measurement
      of the liability when sufficient information exists. This interpretation also
      clarifies when an entity would have sufficient information to reasonably
      estimate the fair value of an asset retirement obligation. FIN 47 is effective
      for fiscal years ending after December 15, 2005.  The Trust
      adopted SFAS No. 143 effective January 1, 2003, with no material impact on
      the
      consolidated financial statements.
 F-23
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
 SFAS
      145
 
 In
      April
      2002, the FASB issued SFAS No. 145, *Rescission of FASB Statements
      No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
      Corrections*. SFAS No. 145 eliminates extraordinary accounting
      treatment for reporting gain or loss on debt extinguishment, and amends other
      existing authoritative pronouncements to make various technical corrections,
      clarify meanings, or describe their applicability under changed conditions.
      SFAS
      No. 145 is effective for interim periods beginning after May 15,
      2002.  The Trust adopted SFAS No. 145 effective January 1, 2003, with
      no material impact on the consolidated financial statements.
 
 *SFAS
      146*
 
 In
      June
      2002, the FASB issued SFAS No. 146, *Accounting for Costs Associated
      with Exit or Disposal Activities*. SFAS No. 146 requires recording
      costs associated with exit or disposal activities at their fair values when
      a
      liability has been incurred.  SFAS No. 146 is effective for fiscal
      years ending after December 31, 2002.  The Trust adopted SFAS No. 146
      effective January 1, 2003, with no material impact on the consolidated financial
      statements.
 
 *FIN
      45*
 
 In
      November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
*Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
      Indirect Guarantees and Indebtedness of Others*. FIN 45 elaborates on the
      disclosures to be made by the guarantor in its interim and annual financial
      statements about its obligations under certain guarantees that it has issued.
      It
      also requires that a guarantor recognize, at the inception of a guarantee,
      under
      certain circumstances, a liability for the fair value of the obligation
      undertaken in issuing the guarantee. The initial recognition and measurement
      provisions of this interpretation are applicable on a prospective basis to
      guarantees issued or modified after December 31, 2002; while the provisions
      of
      the disclosure requirements are effective for financial statements of interim
      or
      annual reports ending after December 15, 2002. The Trust adopted FIN 45 during
      the fourth quarter of 2002 with no material impact to the consolidated financial
      statements.
 
 *FIN
      46R*
 
 In
      January 2003, the FASB issued FASB Interpretation No. 46, *Consolidation of
      Variable Interest Entities* ("FIN 46") which changes the criteria by which
      one company includes another entity in its consolidated financial statements.
      FIN 46 requires a variable interest entity to be consolidated by a company
      if
      that company is subject to a majority of the risk of loss from the variable
      interest entity's activities or entitled to receive a majority of the entity's
      residual returns or both. The consolidation requirements of FIN 46 apply
      immediately to variable interest entities created after December 31, 2003,
      and
      apply in the first fiscal period ending after March 15, 2004, for variable
      interest entities created prior to January 1, 2004. The Trust adopted the
      disclosure provisions of FIN 46 effective December 31, 2003, with no material
      impact to the consolidated financial statements.  In
      December 2003, the FASB issued a revision to FIN 46 (“FIN 46R”) to clarify
      some of the provisions and to exempt certain entities from its
      requirements.  The Trust implemented the full provisions of FIN 46R
      effective January 1, 2004, with no material impact on the consolidated financial
      statements.
  F-24
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
  *SFAS
      149*
 
 In
      April
      2003, the FASB issued SFAS No. 149, *Amendment of Statement 133 on Derivative
      Instruments and Hedging Activities*. SFAS No. 149 amends and clarifies the
      accounting for derivative instruments, including certain derivative instruments
      embedded in other contracts, and for hedging activities under SFAS No. 133,
      "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149
      is
      generally effective for contracts entered into or modified after June 30, 2003
      and for hedging relationships designated after June 30, 2003. The Trust adopted
      SFAS No. 149 effective July 1, 2003, with no material impact on the consolidated
      financial statements.
 
 *SFAS
      150*
 
 In
      May
      2003, the FASB issued SFAS No. 150, *Accounting for Certain Financial
      Instruments with Characteristics of both Liabilities and Equity*. SFAS
      No. 150 establishes standards for classifying and measuring certain
      financial instruments with characteristics of both liabilities and
      equity.  SFAS No. 150 is effective for interim periods beginning
      after June 15, 2003.  The Trust adopted SFAS No. 150 effective
      July 1, 2003, with no material impact on the consolidated financial
      statements.
 
 *SFAS
      153*
 
 In
      December 2004, the FASB issued SFAS No. 153, *Exchanges of Nonmonetary
      Assets—an amendment of APB Opinion No. 29.*The guidance in APB Opinion No.
      29, *Accounting for Nonmonetary Transactions*(“Opinion 29”)*,* is
      based on the principle that exchanges of nonmonetary assets should be measured
      based on the fair value of the assets exchanged. The guidance in Opinion 29,
      however, included certain exceptions to that principle. This Statement amends
      Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. A nonmonetary exchange
      has commercial substance if the future cash flows of the entity are expected
      to
      change significantly as a result of the exchange. The Trust adopted SFAS No.
      153
      effective June 15, 2005, with no material impact on the consolidated financial
      statements.
 
 *SFAS
      154*
 
 In
      May
      2005, the FASB issued SFAS No. 154, *Accounting Changes and Error
      Corrections*.  SFAS No. 154 replaces APB Opinion No. 20,
*Accounting Changes*, and SFAS No. 3, *Reporting Accounting Changes in
      Interim Financial Statements*. This statement changes the requirements for
      the accounting for, and reporting of, a change in accounting principle and
      applies to all voluntary changes in accounting principle, as well as changes
      pursuant to accounting pronouncements that do not include transition
      rules.   Under SFAS No. 154, changes in accounting principle must
      be applied retrospectively to prior periods’ financial statements, or the
      earliest practicable date, as the required method for reporting a change in
      accounting principle.  The Trust adopted SFAS No. 154 effective
      December 15, 2005, and accordingly restated the consolidated financial
      statements, as described in Note 2.
 
 **4.  PROJECTS
      AND IMPAIRMENT OF LONG-LIVED ASSETS**
 
 **Sunnyside
      Cogeneration Partners,  L.P.**
 
 On
      January 9, 1995, the Trust acquired 100% of the existing partnership interests
      of Sunnyside Cogeneration Partners, L.P., which owns and operates a 5.5 megawatt
      (“MW”) electric cogeneration facility, located in Monterey County, California
      (“Monterey”). The aggregate purchase price was $5,198 including transaction
      costs. Electricity is sold to PG&E under a long term contract expiring in
      2020.
 
 The
      acquisition of Monterey was accounted for as a purchase and the results of
      operations of Monterey have been included in the Trust’s consolidated financial
      statements since the acquisition date.  The purchase price was
      allocated to the net assets acquired, based on their respective fair
      values.  Of the purchase price, $3,032 was allocated to the electric
      power sales contract and is being amortized over the life of the contract of
      25
      years.
 
 Monterey
      suspended operations in January 2006. See Note 10 for further
      discussion.
  F-25
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
 **Pump
      Services Company, LP**
 
 In
      1995,
      the Trust purchased a package of irrigation service engines (the “Pumping
      Project") located in Ventura County, California.  The purchase price
      was $952.  The Trust performed an impairment assessment in 2003 using
      a discounted cash flow valuation methodology, and noted the carrying value
      of
      the Pumping Project exceeded its estimated fair value. As a result, the Trust
      recorded an impairment of the remaining net book value of the equipment for
      $190
      in 2003.  The engines were sold in January 2006 for $1.
 
 **B-3
      Limited Partnership and Pittsfield Investor Limited
      Partnership**
 
 In
      January 1994, the Trust made an equity investment of $2,300 in Pittsfield
      Investors Limited Partnership (“PILP”), which was formed to acquire a
      waste-to-energy project designed and built to burn municipal solid waste
      supplied by the City of Pittsfield, Massachusetts, surrounding communities
      and
      other waste providers as well as to supply steam to a nearby paper
      mill.  The PILP project originally began operating in 1981 and was
      operated and co-owned with the Trust by subsidiaries of Energy Answers
      Corporation (“EAC”). The Trust made an additional investment with affiliates of
      EAC in August 1994 when it purchased an interest in the B-3 Limited Partnership
      (“B-3”) for $3,975.  The business of B-3 was the construction and
      operation of a municipal waste transfer station in Columbia County, New
      York.  In September 2002, the Trust sold its interests in PILP and B-3
      to EAC for $1,200 in cash and $5,000 of promissory notes. The notes bore
      interest at a rate of 10% per annum, and were to be paid over a 17-year term.
      The notes were collateralized solely by the assets of the projects and are
      without recourse to EAC.
 
 Recovery
      of interest and principal under the promissory notes were dependent upon the
      operations of the partnership investment transferred. Consequently, the Trust
      deferred its gain on the sale of its ownership interest until the carrying
      value
      of the investments were fully recovered. The cash proceeds received for the
      interest and principal were recorded as a reduction of its investment in
      partnership transferred under contractual agreement through June 30,
      2005.  The note payments remained current until the notes were paid in
      full on October 31, 2007.
 
 **5.  PLANT
      AND EQUIPMENT**
 
 At
      December 31, 2005, 2004 and 2003, plant and equipment at cost and accumulated
      depreciation as follows:
 
 2005
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Equipment
              
              $
              2,935
              
              
              $
              2,935
              
              
              $
              2,935Leasehold
                  improvements
              
              
              166
              
              
              
              166
              
              
              
              166Building
              
              
              150
              
              
              
              150
              
              
              
              1503,251
              
              
              
              3,251
              
              
              
              3,251Less:
                  accumulated depreciation
              
              
              (2,119
              )
              
              
              (1,993
              )
              
              
              (1,870
              )$
              1,132
              
              
              $
              1,258
              
              
              $
              1,381
  For
      the
      years ended December 31, 2005, 2004 and 2003, depreciation expense was $126,
      $124 (restated) and $228 (restated), respectively, which is included in cost
      of
      revenues.
 
 F-26
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
 Quarterly
      plant and equipment and related depreciation expense were as follows
      (unaudited):
 2005September
                    30
                
                
                June
                    30
                
                
                March
                    31(Restated)Equipment
                
                $
                2,935
                
                
                $
                2,935
                
                
                $
                2,935Leasehold
                    improvements
                
                
                166
                
                
                
                166
                
                
                
                166Building
                
                
                150
                
                
                
                150
                
                
                
                1503,251
                
                
                
                3,251
                
                
                
                3,251Less:
                    accumulated depreciation
                
                
                (2,086
                )
                
                
                (2,055
                )
                
                
                (2,024
                )$
                1,165
                
                
                $
                1,196
                
                
                $
                1,227
  Depreciation
      expense for the 2005 year-to-date periods ended September 30, June 30 and March
      31 was $92, $62 and $31 (restated), respectively.
 
 2004September
                  30
              
              
              June
                  30
              
              
              March
                  31(Restated)
              
              
              (Restated)
              
              
              (Restated)Equipment
              
              $
              2,935
              
              
              $
              2,935
              
              
              $
              2,935Leasehold
                  improvements
              
              
              166
              
              
              
              166
              
              
              
              166Building
              
              
              150
              
              
              
              150
              
              
              
              1503,251
              
              
              
              3,251
              
              
              
              3,251Less:
                  accumulated depreciation
              
              
              (1,963
              )
              
              
              (1,932
              )
              
              
              (1,901
              )$
              1,288
              
              
              $
              1,319
              
              
              $
              1,350
  Restated
      depreciation expense for the 2004 year-to-date periods ended September 30,
      June
      30 and March 31 was $92, $62 and $31, respectively.
 
 2003September
                30
            
            
            June
                30
            
            
            March
                31(Restated)
            
            
            (Restated)
            
            
            (Restated)Equipment
            
            $
            3,125
            
            
            $
            3,125
            
            
            $
            3,125Leasehold
                improvements
            
            
            166
            
            
            
            166
            
            
            
            166Building
            
            
            150
            
            
            
            150
            
            
            
            1503,441
            
            
            
            3,441
            
            
            
            3,441Less:
                accumulated depreciation
            
            
            (1,813
            )
            
            
            (1,758
            )
            
            
            (1,700
            )$
            1,628
            
            
            $
            1,683
            
            
            $
            1,741
  Restated
      depreciation expense for the 2003 year-to-date periods ended September 30,
      June
      30 and March 31 was $171, $116 and $58, respectively.
 
 **6.  INTANGIBLE
      ASSETS**
 
 A
      portion
      of the purchase price of Monterey was assigned to electric power sales contracts
      and is being amortized over the lives of the contracts on a straight-line basis.
      During 2005, 2004 and 2003, the Trust recorded amortization expense of $121
      per
      year.
 
 Gross
      and
      net amounts of intangible assets and related amortization expense at December
      31, 2005, 2004 and 2003 were as follows:
 
 2005
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Electricity
                  sales contract - gross
              
              $
              3,032
              
              
              $
              3,032
              
              
              $
              3,032Less:
                  accumulated amortization
              
              
              (1,334
              )
              
              
              (1,213
              )
              
              
              (1,092
              )Intangibles,
                net
              
              $
              1,698
              
              
              $
              1,819
              
              
              $
              1,940
 
  F-27
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
 Future
      amortization expenses as of December 31, 2005 are as follows:
 
 **Years
                  ended****December
                  31,**
              
              **Amortization**2006
              
              $
              1212007
              
              
              1212008
              
              
              1212009
              
              
              1212010
              
              
              121Thereafter
              
              
              1,093
  Quarterly
      gross and net amounts of intangible assets and related amortization expense
      were
      asfollows
      (unaudited):
  **2005****September
                  30**
              
              
              **June
                  30**
              
              
              **March
                  31**(Restated)Electricity
                  sales contract- gross
              
              $
              3,032
              
              
              $
              3,032
              
              
              $
              3,032Less:
                  accumulated amortization
              
              
              (1,304
              )
              
              
              (1,273
              )
              
              
              (1,243
              )Intangibles,
                net
              
              $
              1,728
              
              
              $
              1,759
              
              
              $
              1,789
  Amortization
      expense for the 2005 year-to-date periods ended September 30, June 30 and March
      31, was $90, $60 and $30 (restated), respectively.
 
 **2004****September
                30**
            
            
            **June
                30**
            
            
            **March
                31**(Restated)
            
            
            (Restated)
            
            
            (Restated)Electricity
                sales contract- gross
            
            $
            3,032
            
            
            $
            3,032
            
            
            $
            3,032Less:
                accumulated amortization
            
            
            (1,183
            )
            
            
            (1,152
            )
            
            
            (1,122
            )Intangibles,
              net
            
            $
            1,849
            
            
            $
            1,880
            
            
            $
            1,910
  Restated
      amortization expense for the 2004 year-to-date periods ended September 30,
      June
      30 and March 31, was $90, $60 and $30, respectively.
  **2003****September
                30**
            
            
            **June
                30**
            
            
            **March
                31**(Restated)
            
            
            (Restated)
            
            
            (Restated)Electricity
                sales contract- gross
            
            $
            3,032
            
            
            $
            3,032
            
            
            $
            3,032Less:
                accumulated amortization
            
            
            (1,061
            )
            
            
            (1,031
            )
            
            
            (1,001
            )Intangibles,
              net
            
            $
            1,849
            
            
            $
            2,001
            
            
            $
            2,031
  Restated
      amortization expense for the 2003 year-to-date periods ended September 30,
      June
      30 and March 31, was $90, $60 and $30, respectively.
 
 **7.**
            **COMMITMENTS
                AND CONTINGENCIES**
 
 Monterey
      has a non-cancelable operating lease which expires in May 2021. Future minimum
      lease payments as of December 31, 2006 are approximately $12 per annum along
      with the delivery of by-product steam.  Rent expense for the years
      ended December 31, 2005, 2004 and 2003 was $417, $338 and $315, respectively,
      including the value of the by-product steam.
 
 Monterey
      has a long-term agreement to purchase natural gas from its supplier at a fixed
      price throughout the term, which expired in August 2006.  At December
      31, 2005, future minimum purchases under the agreement, net of resale
      agreements, was $473, all of which occurred in 2006.
  F-28
 **RidgewoodElectric
          Power Trust II**
 **Notes
          To Consolidated Financial Statements**
 (dollar
          amounts in thousands, except per share data)
 During
      the years ended December 31, 2005, 2004 and 2003, the Trust recorded, as a
      component of cost of revenues, gains from changes in the fair value of
      its gas supply contract of $72, $393 and $748, respectively.
 
 The
      following table provides the contractual obligations and commitments of the
      Trust for the future minimum payments as of December 31, 2005.
 
 **Years
                  ended December 31,**
              
              **Ground
                  lease ***
              
              
              **Gas
                  forward contract, net ****2006
              
              $
              12
              
              
              $
              5702007
              
              
              12
              
              
              
              -2008
              
              
              12
              
              
              
              -2009
              
              
              12
              
              
              
              -2010
              
              
              12
              
              
              
              -Thereafter
              
              
              129
              
              
              
              -Total
              
              $
              189
              
              
              $
              570
  *    Excludes
                  payments for delivered steam per contract.**
                  Amounts presented are net of forward sales
                  commitments.
 In
      connection with the ground lease, Monterey has not delivered by-product steam
      since it was shut down in January 2006. As a result, it may be subject to
      penalties from the lessor. The Trust considers the likelihood of any claim
      in
      this matter to be remote.
 
 The
      Trust
      is subject to legal proceedings involving ordinary and routine claims related
      to
      its business.  The ultimate legal and financial liability with respect
      to such matters cannot be estimated with certainty and requires the use of
      estimates in recording liabilities for potential litigation
      settlements.  Estimates for losses from litigation are disclosed if
      considered reasonably possible and accrued if considered probable after
      consultation with outside counsel.  If estimates of potential losses
      increase or the related facts and circumstances change in the future, the Trust
      may be required to record additional litigation expense.
 
 **8.**
            **TRANSACTION
                WITH MANAGING SHAREHOLDER AND
                AFFILIATES**
 
 The
      Trust
      operates pursuant to the terms of a Management Agreement with the Managing
      Shareholder, under which the Managing Shareholder renders certain management,
      administrative and advisory services and provides office space and other
      facilities to the Trust. The Trust pays the Managing Shareholder an annual
      management fee, which is payable in equal monthly installments, equal to 1.5%
      of
      the Trust’s shareholders’ equity as of the beginning of the
      year.  During 2005, 2004 and 2003, the Trust paid management fees to
      the Managing Shareholder of $72, $91, and $109, respectively. The management
      fee
      is to be paid in monthly installments and, to the extent that this includes
      the
      amount waived, 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
      Declaration of Trust, the Managing Shareholder receives 100% of current year
      operating profits until cumulative profits equal cumulative losses allocated
      to
      the Managing Shareholder.  The Managing Shareholder then receives 1%
      of operating profits until the shareholders have received 14% per annum of
      their
      equity contribution (“Payout”).  After Payout, the Managing
      Shareholder is entitled to receive 20% of the distributions for the remainder
      of
      the year.  Losses incurred in any given year are allocated 1% to the
      Managing Shareholder, provided the allocation of losses to the shareholders
      shall be limited to prevent the shareholder from having a negative capital
      account. These allocations do not affect the allocation of cash distributions
      discussed below.
 
 The
      Managing Shareholder is also entitled to receive 1% of all annual distributions
      made by the Trust (other than those derived from the disposition of Trust
      property) until Payout.  Once Payout is reached, the Managing
      Shareholder is entitled to receive 20% of all future
      distributions.  During 2005, 2004, and 2003, cash distributions to the
      Managing Shareholder were $12, $14 and $14, respectively. The Trust has not
      yet
      reached Payout.
 
 The
      Managing Shareholder owns 1.45 investor shares. The Trust granted the Managing
      Shareholder a single Management Share representing the Managing Shareholder's
      management rights and rights to distributions of cash flow.
  F-29
  **RidgewoodElectric
        Power Trust II**
 **Notes
        To Consolidated Financial Statements**
 (dollar
        amounts in thousands, except per share data)
  Under
        the
        Management Agreement with the Managing Shareholder, Ridgewood Power Management
        ("RPM"), an entity related to the Managing Shareholder through common ownership,
        provides management, purchasing, engineering, planning and administrative
        services to the projects operated by the Fund. 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. During the years
        ended December 31, 2005, 2004 and 2003, RPM charged the projects $133, $138
        and
        $140, respectively, for overhead items allocated in proportion to the amount
        invested in projects managed. In addition, RPM charged the projects $2,407,
        $2,012 and $1,903, respectively, for all of the direct operating and
        non-operating expenses incurred during such periods.
 
 On
      June
      26, 2003, the Managing Shareholder entered into a Revolving Credit and Security
      Agreement with Wachovia Bank, National Association.  The agreement, as
      amended, allows the Managing Shareholder to obtain loans and letters of credit
      of up to $6,000 for the benefit of the trusts and extended the Managing
      Shareholder’s line of credit, through May 31, 2008.  As part of the
      agreement, the Trust agreed to limitations on its ability to incur indebtedness,
      and liens and to provide guarantees.  In August 2003, the Trust issued
      through its bank a standby letter of credit, in the amount of $504 to secure
      the
      gas purchases for Monterey.  In August of 2004, the supplier of
      natural gas to Monterey agreed to reduce the standby letter of credit to
      $230.  The standby letter of credit remained at $230 on December 31,
      2005 until it expired and was reduced to zero at August 31, 2006.
 
 The
      Trust
      records short-term payables and receivables from other affiliates in the
      ordinary course of business. The amounts payable and receivable with the other
      affiliates do not bear interest. At December 31, 2005, 2004 and 2003 the Trust
      had outstanding payables and receivables as follows:
 
 December
                  31,
              
              
              December
                  31,2005
              
              
              2004
              
              
              2003
              
              
              2005
              
              
              2004
              
              
              2003Due from
              
              
              Due to(Restated)
              
              
              (Restated)
              
              
              
              
              
              (Restated)
              
              
              (Restated)RPM
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              53
              
              
              $
              61
              
              
              $
              82RRP
              
              
              1
              
              
              
              -
              
              
              
              -
              
              
              
              300
              
              
              
              -
              
              
              
              -Trust
                  II
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1
              
              
              
              1
              
              
              
              -Trust
                  III
              
              
              -
              
              
              
              -
              
              
              
              10
              
              
              
              -
              
              
              
              -
              
              
              
              -Trust
                  IV
              
              
              -
              
              
              
              -
              
              
              
              5
              
              
              
              -
              
              
              
              -
              
              
              
              -Other
                  affiliates
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1
              
              
              
              -Total
              
              $
              1
              
              
              $
              -
              
              
              $
              15
              
              
              $
              354
              
              
              $
              63
              
              
              $
              82
  The
      Trust
      had the following quarterly outstanding payables and receivables with the
      following affiliates (unaudited):
 
 2005September
                  30
              
              
              June
                  30
              
              
              March
                  31
              
              
              September
                  30
              
              
              June
                  30
              
              
              March
                  31Due from
              
              
              Due to(Restated)
              
              
              
              
              
              
              
              
              (Restated)RPM
              
              $
              -
              
              
              $
              5
              
              
              $
              -
              
              
              $
              48
              
              
              $
              42
              
              
              $
              20RRP
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              112
              
              
              
              -
              
              
              
              -Trust
                  II
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1
              
              
              
              1
              
              
              
              1Total
              
              $
              -
              
              
              $
              5
              
              
              $
              -
              
              
              $
              161
              
              
              $
              43
              
              
              $
              21
  F-30
  **RidgewoodElectric
            Power Trust II**
 **Notes
            To Consolidated Financial Statements**
 (dollar
            amounts in thousands, except per share data)
 2004September
                  30
              
              
              June
                  30
              
              
              March
                  31
              
              
              September
                  30
              
              
              June
                  30
              
              
              March
                  31Due from
              
              
              Due to(Restated)
              
              
              (Restated)
              
              
              (Restated)
              
              
              (Restated)
              
              
              (Restated)
              
              
              (Restated)RPM
              
              $
              1
              
              
              $
              -
              
              
              $
              25
              
              
              $
              47
              
              
              $
              85
              
              
              $
              97RRP
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Trust
                  II
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Trust
                  III
              
              
              -
              
              
              
              10
              
              
              
              10
              
              
              
              -
              
              
              
              -
              
              
              
              -Trust
                  IV
              
              
              -
              
              
              
              5
              
              
              
              5
              
              
              
              -
              
              
              
              -
              
              
              
              -Other
                  affiliates
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
              
              $
              1
              
              
              $
              15
              
              
              $
              40
              
              
              $
              47
              
              
              $
              85
              
              
              $
              972003September
                  30
              
              
              June
                  30
              
              
              March
                  31
              
              
              September
                  30
              
              
              June
                  30
              
              
              March
                  31Due from
              
              
              Due to(Restated)
              
              
              (Restated)
              
              
              (Restated)
              
              
              (Restated)
              
              
              (Restated)
              
              
              (Restated)RPM
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              58
              
              
              $
              57
              
              
              $
              47RRP
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Trust
                  II
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Trust
                  III
              
              
              10
              
              
              
              10
              
              
              
              10
              
              
              
              -
              
              
              
              -
              
              
              
              -Trust
                  IV
              
              
              5
              
              
              
              5
              
              
              
              5
              
              
              
              -
              
              
              
              -
              
              
              
              -Other
                  affiliates
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
              
              $
              15
              
              
              $
              15
              
              
              $
              15
              
              
              $
              58
              
              
              $
              57
              
              
              $
              47
  **9.**
            **SELECTED
                UNAUDITED QUARTERLY FINANCIAL
                DATA**
 
 2005
                  Quarters1st
              
              
              2nd
              
              
              3rd
              
              
              4th(restated)Revenues
              
              $
              664
              
              
              $
              651
              
              
              $
              792
              
              
              $
              710Gross
                  profit (loss)
              
              
              380
              
              
              
              (226
              )
              
              
              703
              
              
              
              (690
              )Income
                  (loss) from operations
              
              
              317
              
              
              
              (271
              )
              
              
              651
              
              
              
              (740
              )Net
                  income (loss)
              
              
              318
              
              
              
              (244
              )
              
              
              819
              
              
              
              (628
              )Net
                  income (loss) per Investor Share
              
              
              1,344
              
              
              
              (1,028
              )
              
              
              3,446
              
              
              
              (2,646
              )
 
 2004
                  Quarters1st
              
              
              2nd
              
              
              3rd
              
              
              4th(restated)
              
              
              (restated)
              
              
              (restated)
              
              
              (restated)Revenues
              
              $
              700
              
              
              $
              708
              
              
              $
              746
              
              
              $
              672Gross
                  profit (loss)
              
              
              411
              
              
              
              210
              
              
              
              199
              
              
              
              (245
              )Income
                  (loss) from operations
              
              
              308
              
              
              
              145
              
              
              
              156
              
              
              
              (268
              )Net
                  income (loss)
              
              
              323
              
              
              
              153
              
              
              
              158
              
              
              
              (273
              )Net
                  income (loss) per Investor Share
              
              
              1,362
              
              
              
              642
              
              
              
              663
              
              
              
              (1,151
              )
  F-31
 **RidgewoodElectric
        Power Trust II**
 **Notes
        To Consolidated Financial Statements**
 (dollar
        amounts in thousands, except per share data)
 2003
                  Quarters1st
              
              
              2nd
              
              
              3rd
              
              
              4th(restated)
              
              
              (restated)
              
              
              (restated)
              
              
              (restated)Revenues
              
              $
              744
              
              
              $
              682
              
              
              $
              835
              
              
              $
              748Gross
                  profit (loss)
              
              
              469
              
              
              
              397
              
              
              
              (317
              )
              
              
              234Income
                  (loss) from operations
              
              
              360
              
              
              
              342
              
              
              
              (378
              )
              
              
              (6
              )Net
                  income (loss)
              
              
              368
              
              
              
              346
              
              
              
              (369
              )
              
              
              (5
              )Net
                  income (loss) per Investor Share
              
              
              1,549
              
              
              
              1,457
              
              
              
              (1,551
              )
              
              
              (23
              )
  **10.**
            **SUBSEQUENT
                EVENTS**
 
 For
      the
      first 15 years of operation, PG&E “dispatched” Monterey to produce and
      deliver electricity up to its contract capacity on a 13 hour per day, five
      day
      per week basis (“13x5”).  However, on December 1, 2005, PG&E dispatched
      Monterey on a 24 hour per day, seven day per week basis (“24x7”) for an
      indefinite period, effective January 1, 2006. Monterey advised PG&E
      that its 24x7 dispatch order was a breach of the parties’ power purchase
      agreement.  Management of Monterey was also concerned that if the facility
      continued to produce and supply power consistent with the parties’ prior course
      of performance, PG&E would refuse to pay.  Accordingly, Monterey
      demanded that PG&E provide adequate assurances that it would continue to pay
      Monterey for its capacity and its electricity produced and delivered in
      accordance with the parties’ longstanding 13x5 operations.  PG&E did
      not provide such assurances.  In the absence of such assurances, Monterey
      suspended operations on or about January 9, 2006.  Monterey filed a
      Complaint against PG&E in the San Francisco Superior Court on May 16, 2006
      (the “Monterey Complaint”).  The Monterey Complaint seeks damages for
      breach of contract, damages for PG&E’s breach of the implied covenant of
      good faith and fair dealing, and a claim for declaratory relief against
      PG&E, seeking a judicial determination that PG&E’s conduct materially
      breached the parties’ agreement and justified Monterey’s suspension of
      performance. Monterey is seeking damages against PG&E estimated at
      approximately $5,000.  A Jury Trial with regard to this matter is
      currently set for February 8, 2008.
 
 On
      May
      14, 2007, PG&E filed a Complaint in San Francisco Superior Court against
      Monterey (the “PG&E Complaint”).  The PG&E Complaint arises out of
      the same transactions and occurrences that gave rise to the Monterey Complaint
      against PG&E.  PG&E asserted claims for compensatory damages for
      breach of contract and breach of the implied covenant of good faith and fair
      dealing as well as “restitution” of capacity payments made to Monterey on a
      theory of unjust enrichment, and declaratory relief for repayment of capacity
      payments made to the Monterey. PG&E is seeking restitution damages
      against Monterey estimated at approximately $4,800.
  The
      claims made by PG&E have been made solely against Monterey and do not
      involve any claims against the Trust. Both of the above litigation matters
      are
      currently in discovery.  Monterey intends to vigorously prosecute its
      claims and defend against PG&E’s claims and believes it will ultimately
      prevail.
  On
      August
      16, 2006, the Managing Shareholder of the Trust and affiliates of the Trust,
      filed lawsuits against the former independent registered public accounting
      firm
      for the Trust, Perelson Weiner, LLP (“Perelson Weiner”), in New Jersey Superior
      Court.  The suits alleged professional malpractice and breach of contract
      in connection with audit and accounting services performed by Perelson Weiner.
      On October 26, 2006, Perelson Weiner filed a counterclaim against the Trust,
      and
      its affiliates alleging breach of contract due to unpaid invoices. Discovery
      is
      ongoing and no trial date has been set. The costs and expenses of the litigation
      are being paid for by the Managing Shareholder and affiliated management
      companies and not the underlying investment funds, including the
      Trust.
 
 On
      October 31, 2007, the Trust received approximately $5,000 as full payment of
      the
      PILP and B-3 notes.
 
 F-32