SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 1999

                         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            (I.R.S. Employer Identification No.)
of Incorporation or Organization)

c/o Ridgewood Power LLC, 947 Linwood Avenue, Ridgewood, New Jersey  07450
 (Address of Principal Executive Offices)               (Zip Code)

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

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

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

Shares of Beneficial Interest (Title of Class)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

     There is no market for the Shares. The aggregate capital contributions made
for the Registrant's  voting Shares held by  non-affiliates of the Registrant at
March 30, 2000 was $23,426,700.

Exhibit Index is located on Page __.

<PAGE>
PART I

Item 1.  Business.

Forward-looking statement advisory

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

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

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

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

(a)  General Development of Business.

     Ridgewood Electric Power Trust II (the "Trust") was organized as a Delaware
business  trust  on  November  20,  1992  to  participate  in  the  development,
construction   and  operation  of  independent   power   generating   facilities
("Independent   Power  Projects"  or  "Projects").   Ridgewood   Energy  Holding
Corporation  ("Ridgewood  Holding"),  a Delaware  corporation,  is the Corporate
Trustee of the Trust.

     The  Trust  sold  shares of  beneficial  interest  in the Trust  ("Investor
Shares")in a private placement  offering (the "Offering") which ended on January
31,  1994,  at which  time it had raised  approximately  $23.5  million.  Net of
offering fees,  commissions and expenses,  the Offering  provided  approximately
$19.4 million of net funds  available for  investments  in the  development  and
acquisition of Independent  Power Projects.  The Trust has 478 record holders of
Investor Shares (the "Investors"). As described below in Item 1(c)(2), the Trust
(and its subsidiaries)  owns equity interests in four Independent Power Projects
and a debt interest in another.

     The Trust is organized similarly to a limited partnership.  Ridgewood Power
LLC (the "Managing  Shareholder"),  a Delaware limited liability company, is the
Managing Shareholder of the Trust. For information about the merger of the prior
Managing Shareholder, Ridgewood Power Corporation, into Ridgewood Power LLC, see
Item 10(b) -  Directors  and  Executive  Officers of the  Registrant  - Managing
Shareholder.

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

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

The following chart summarizes some of these relationships.

<PAGE>
 Ridgewood Electric Power Trust II and certain affiliates
(some entities and relationships omitted)

              Robert E. Swanson         Family trusts
                         x                  x (Mr. Swanson has
 Sole manager            x                  x  sole voting and
 Chief executive officer x                  x  investment power)
 Owner of 46% of equity  x                  x Owners of 54% of equity
        _________________X__________________X______________________________
       x             x                x        x            x             x
       x             x                x        x            x             x
       x             x                x        x            x             x
Ridgewood   Ridgewood Power   Ridgewood    Ridgewood    Ridgewood   Ridgewood
Securities   Management LLC   Power LLC    Energy       Power VI     Capital
Corporation                                Holding        LLC       Management
                                          Corporation                  LLC

             Operates power                Corporate                  Manager
Placement    plants for five  Managing     Trustee       Co-Managing  of two
agent        power trusts     Shareholder  for all      Shareholder   venture
("Ridgewood    ("RPMCo")       of six      six trusts    (dormant)    capital
 Securities")                  trusts          x          of the     funds &
                            ("Ridgewood        x        Growth Fund   marketing
                               Power")         x     ("Power VI Co")  affiliate
                                  x            x                x   ("Ridgewood
                                  x            x                x     Capital")
                                  x            x                x         x
    ______________________________x____________x_____________   x         x
    x           x          x           x            x        x  x         x
    x           x          x           x            x        x  x         x
Ridgewood   Ridgewood   Ridgewood   Ridgewood   Ridgewood  The Ridgewood  x
Electric    Electric    Electric    Electric    Electric   Power Growth   x
Power Trust Power Trust Power Trust Power Trust Power Trust   Fund        x
    I          II         III          IV           V         (the        x
("Power I") (the "Trust") ("Power   ("Power IV") ("Power V") " Growth     x
                           III")                                Fund")    x
                                                                          x
                                          ________________________________X__
                                          x                                  x
                                          x                                  x
                                        Ridgewood Capital    Ridgewood Capital
                                        Venture Partners     Venture Partners II

                                              (the "Venture Capital Funds")

     The  Trust  made an  election  to be  treated  as a  "business  development
company" under the Investment Company Act of 1940, as amended ( the "1940 Act").
On February 27, 1993, the Trust notified the Securities and Exchange  Commission
of such  election  and  registered  the  Investor  Shares  under the  Securities
Exchange  Act of 1934,  as amended  (the "1934  Act").  On April 29,  1993,  the
election and registration became effective.

(b)  Financial Information about Industry Segments.

     The Trust operates in only one industry  segment:  investing in independent
power generation and similar energy projects.

(c)  Narrative Description of Business.

(1)  General Description.

     The Trust was formed to participate in the  development,  construction  and
operation of  independent  power  projects that generate  electricity or related
forms of energy for sale to manufacturers,  utilities and other users. The Trust
also may invest in facilities related to those projects.

     The Trust has made equity investments totaling  approximately $10.6 million
in  four  Projects:  (i)  a  waste-to-energy   generating  facility  located  in
Pittsfield,  Massachusetts  (the  "Berkshire  Project");  (ii) a municipal waste
transfer  station  located in  Columbia  County,  New York,  near the  Berkshire
Project  (the  "Columbia  Project");  (iii)  a  natural  gas-fired  cogeneration
facility  located in Monterey  County,  California (the "Monterey  Project") and
(iv) various natural  gas-fueled  engines used to power irrigation well pumps in
Ventura County, California (the "California Pumping Project").

     The Trust also invested $3.5 million in a district cooling facility located
in  downtown  San Diego,  California,  that  supplies  chilled  water for office
building central air conditioning  systems (the "San Diego Project").  The Trust
sold its interest in the San Diego  Project in June 1997 for $6.15  million to a
subsidiary of a  Minnesota-based  utility.  A portion ($2.7 million) of the sale
price is  represented  by an 8%  secured  promissory  note of the buyer  payable
monthly through June 25, 2003.

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

(2)  The Trust's Investments.

     (i)  Berkshire Project.

     On January 4, 1994,  the Trust made an  approximately  $2.3 million  equity
investment in a limited  partnership,  Pittsfield Investors Limited Partnership,
formed to acquire the  Berkshire  Project,  including the assets and business of
Pittsfield Resource Recovery Facility, from Vicon Recovery Associates ("Vicon"),
the developer and former  operator of the facility.  The Berkshire  Project is a
waste to energy  plant  located in  Pittsfield,  Massachusetts,  which is in the
Berkshire Mountains,  approximately 150 miles west of Boston and 175 miles north
of New York City.  The  facility,  which has been  operating  since 1981,  burns
municipal  solid  waste  supplied  by the  City  of  Pittsfield  ("Pittsfield"),
surrounding communities and other providers.

     Distributions from the Berkshire Project, after continuing at approximately
the 1997 levels for the first six months of 1998, ceased in the third quarter of
1998 and  have not  resumed.  In the  third  quarter  of  1998,  Energy  Answers
Corporation  ("EAC")  informed the Trust that  significant and undisclosed  cost
overruns in the construction of an ash handling system for the Berkshire Project
had depleted  the  Project's  funds,  including  reserve  funds for closure of a
landfill and other cash reserves. EAC believed that Berkshire could not continue
operations without significant capital injections from its two limited partners,
one of whom is the Trust. EAC further advised the Trust that even if the Project
were to continue operations with additional  contributed  capital, in that event
distributions  from Berkshire to the Trust would cease for an indefinite period.
In  large  part  this  would  result  from the 1998  closure  of the  Pittsfield
landfill, which forced the Project to transport ash to a distant landfill site.

         The  Trust  requested  detailed  additional  information  and a revised
operating  plan from EAC.  The  Trust  also  conducted  on-site  reviews  by its
financial and engineering personnel. In early November 1998, EAC installed a new
financial  team  for the  Project  and  contributed  additional  capital  to the
Project.  EAC has proposed to the Trust that EAC would contribute the additional
capital  necessary  to keep  the  Project  solvent  and  that  the  Trust  would
subordinate  its rights to  distributions  from the Project until the additional
capital  contributed  by EAC was  recouped.  The  Trust  has not  agreed  to the
proposal.

     The Project remains in operation but has ceased  distributions to the Trust
and EAC. Based on EAC's business plan and  projections  for the Project and also
on higher  costs for  transporting  the  Project's  unprocessed  ash to  distant
landfills rather than the Pittsfield landfill,  it is unlikely that any material
amounts will be received by the Trust until 2004, which is the year in which the
solid waste supply agreement and the steam sales agreement expire.  Accordingly,
as  described  at Item 7  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of  Operations,  the Trust wrote down the  estimated  fair
value of the Project to zero as of December 31, 1998.

     The Berkshire  Project receives  "tipping fees" paid by the waste suppliers
based on the number of tons of waste  delivered  to the  facility.  Tipping fees
paid by Pittsfield are determined under a long-term waste supply agreement which
will remain in effect  until  November  2004.  Tipping  fees paid by other waste
suppliers  are based on the spot  market  (i.e.,  current  market  prices).  The
facility  generates  additional revenue by selling steam produced from the waste
burning  process to a nearby  paper mill  owned by Crane & Co.,  Inc.  ("Crane")
under a long-term  contract which will remain in effect until November 2004. The
Crane  paper mill is  currently  the only  facility in the United  States  which
manufactures  currency paper stock used to print United States currency (as well
as  currency  paper  stock for other  governments).  Crane has had an  exclusive
currency  contract for 114 years,  although the U.S. Treasury is taking steps to
create a competing supplier under legislation  requiring the U.S.  Government to
create competition wherever possible.

     The Trust's partners in the Berkshire  Project are subsidiaries of EAC. EAC
made an  equity  investment  of  approximately  $1.3  million  in the  Berkshire
Partnership and also serves as manager and operator of the facility.

     The investment  structure  afforded the Trust a preferred 15% annual return
on its  investment  plus a potential  share of any  additional  cash flow.  More
specifically,  the Trust is  entitled  to an annual  preferred  distribution  of
available cash flow,  representing  revenue from the Berkshire  Project,  (after
funding debt  service,  debt  service  reserves and  operating  and  maintenance
expenses)  in an  amount  equal  to 15% of its  investment.  In the  event  that
distributions  are  insufficient  to pay the 15% preferred  distribution  in any
given  year,  the  shortfall  will be payable out of  distributions,  if any, in
subsequent years. After the Trust has received its 15% preferred distribution in
any given year,  EAC is entitled to an annual  management  fee for operating and
managing the facility in an amount equal to $300,000, escalating with inflation.
After  these  initial  distributions  have been made,  the Trust is  entitled to
receive  an  additional  amount  equal to 5% of its  investment  and then EAC is
entitled to receive an additional  amount equal to 10% of the amount  previously
distributed  to it. Any remaining  distributable  cash flow for the year will be
shared equally by the Trust and EAC.

     Ownership rights to the Berkshire  Project are held under a long term lease
purchase  agreement and related non recourse  industrial  revenue bond financing
agreements  among the Berkshire  Project,  Pittsfield's  industrial  development
authority  and  others.  The  remaining   principal  amount  of  the  bonds  was
approximately  $3,200,000  at December 31,  1999.  In  addition,  the  Berkshire
Project is subject to additional  subordinated debt obligations of approximately
$850,000  which were issued to Vicon in connection  with the acquisition of the
facility.

     No distributions to the Trust were made from the Berkshire Project in 1999.
Distributions  to the Trust from the Project in 1998  totalled  $176,000 (a 7.5%
annual  return based on the  pre-writedown  investment  level).

     (ii)  Columbia  Project.

     On August 31,  1994,  the Trust  entered  into a  partnership,  B-3 Limited
Partnership,  with  affiliates  of EAC,  the same  firm  with  which  the  Trust
participates  in  the  Berkshire  Project.  The  Trust  made  an  investment  of
approximately  $4  million  into the B-3  Limited  Partnership  to  construct  a
municipal waste transfer station located in Columbia County, New York.

     The purpose of a transfer station like the Columbia Project is to provide a
facility where  municipal  waste  collected from nearby towns by smaller,  short
haul trucks can be  transferred  to larger,  long haul trucks for more efficient
transportation of the waste to distant landfills.  The primary customers for the
Columbia Project are local waste haulers who dispose of waste at local landfills
scheduled for closing under state and federal requirements.

     During  the  construction  period,  the  Trust  received  interest  on  its
investment  at the  rate  of 12%  per  annum.  The  Columbia  Project  commenced
operations  in January  1995.  The Trust is  entitled  to  receive a  cumulative
priority  return on the Trust  investment of 18% per annum,  with any shortfalls
being carried forward into subsequent years. Thereafter,  EAC affiliates will be
entitled to receive a management fee of $175,000 escalating with inflation.  Any
additional  cash flow will be split 50/50 between the Trust and EAC  affiliates.
Distributions  to the Trust  from the  Columbia  Project  during  1999  totalled
$100,000 (a 2.5% annual  return),  down from $250,000 (a 6.2% annual  return) in
1998.

     Returns at the  Columbia  Project have been  impaired by repeated  one-year
extensions of the closing  deadlines for some local  landfills.  If waste can be
cheaply deposited at local landfills, there is less demand for consolidating the
waste for transfer to distant sites.  See Item 7 -  Management's  Discussion and
Analysis  of  Financial  Condition  and  Results of  Operations  for  additional
information.

(iii)  Monterey Project.

     On January 9, 1995, the Trust purchased 100% of the equity interests in the
Monterey  Project,  which is an  operating  5.5  megawatt  cogeneration  project
located in the City of Salinas, Monterey County, California, for a cash purchase
price  of   approximately   $3.8   million   plus  the   contribution   of  four
engine/generator sets, valued at $1.3 million, which were owned by the Trust and
cost approximately  $1.6 million.  The Monterey Project has been operating since
1991 and uses natural gas fired  reciprocating  engines to generate  electricity
for sale to Pacific Gas and Electric Company under a long term contract expiring
in 2020 (the "Power Contract"). Thermal energy from the Monterey Project is used
to provide warm water to an adjacent  greenhouse under a long term contract that
also terminates in 2020. In 1999, the Monterey  Project made no distributions to
the Trust because of the costs of the lawsuit by Pacific Gas & Electric  Company
described  below  at  Item  3  -  Litigation.   For  1998,  the  Trust  received
approximately $515,000 (a 10.1% annual return).

     The Monterey  Project is operated on behalf of the Trust by Ridgewood Power
Management LLC, a New Jersey limited  liability  company  ("RPMCo").  RPMCo is a
service company affiliated with the Managing  Shareholder,  as further described
at Item 10(g) - Directors and Executive Officers of the Registrant RPMCo.

     The Monterey  Project is a "Qualifying  Facility"  under the Public Utility
Regulatory  Policies  Act  of  1978,  as  amended  ("PURPA"),  because  it  is a
cogeneration  facility that meets PURPA  standards.  Historically,  producers of
electric  power in the United  States  consisted of regulated  utilities  and of
industrial  users that produced  electricity  to satisfy their own needs.  Under
PURPA,  Projects  that are  Qualifying  Facilities  are generally not subject to
federal regulation, including the Public Utility Holding Company Act of 1935, as
amended,  and state regulation.  Furthermore,  PURPA generally requires electric
utilities  to purchase  electricity  produced by  Qualifying  Facilities  at the
utility's avoided cost of producing electricity (i.e., the incremental costs the
utility  would  otherwise  face  to  generate  electricity  itself  or  purchase
electricity  from  another  source).  The Monterey  Project  sells its output to
Pacific Gas & Electric  Company under the long-term  contract at a formula price
set  by  the  California  Public  Utilities  Commission  that  approximates  the
utility's avoided cost.  Currently,  the formula consists of a fixed payment for
the plant's  capacity and a payment per unit of energy delivered that is tied to
85% of the  cost of  natural  gas,  the fuel  used at the  plant.  The  capacity
payments vary  seasonally  and are  significantly  higher during the summer peak
season.

     California  implemented a competitive power market beginning April 1, 1998,
in which  generators will eventually  auction capacity and energy output that is
not committed for sale under long-term contracts. It is expected that eventually
the California  Public Utilities  Commission will change the payment formula for
many long-term  contracts  (including the Monterey Project's) to use the auction
prices for capacity and energy output.  This would have effects on the Project's
revenues  that are not  predictable  at this  time but that  might  result  in a
reduction  in the prices paid by Pacific Gas and  Electric  Company for off-peak
periods.

         See Item 1(a)(3) - Project  Operations  and Item 3 - Legal  Proceedings
below for additional  information concerning the potential adverse effect of the
Pacific Gas & Electric Company  litigation.

(iv) California Pumping Project

     In March 1995,  the Trust  purchased  100% of the equity  interests  in the
California  Pumping Project,  which is an irrigation  service Project located in
Ventura County, California, for a cash purchase price of approximately $732,000.
The Trust has made  additional  investments  of $220,000 to purchase  additional
engines  and  expand  the  Project.  The  California  Pumping  Project  has been
operating since 1992 and uses natural gas fired reciprocating engines to provide
power for  irrigation  wells which furnish water for orchards of lemon and other
citrus trees. The power is purchased by local farmers and farmers' co-operatives
at a price which  represents a discount from the equivalent  price the customers
would have paid to purchase  electric  power.  The  California  Pumping  Project
provides power equivalent to approximately 3 megawatts.

     Until  October  1998,  the Trust had a management  contract  with the prior
operator of the Project.  The prior operator  received a fee based on the amount
of  pumping  power  provided  by  each  engine,  computed  on the  basis  of the
equivalent  amount of  kilowatt-hours of electricity that would have been needed
to provide that amount of pumping power.  Until January 1998, the Trust received
all cash flow from the engines up to $.02 per equivalent  kilowatt-hour  for the
first 3,000  kilowatt-hours  per year, and $.01 per additional  kilowatt-hour in
that year. The operator,  which is responsible for all operating costs, received
the  remainder.  Beginning  in January  1998,  the Trust  received  one-half  of
revenues after deduction of a 6/10 cent per equivalent kilowatt-hour maintenance
fee and  costs of fuel for the  engines.  In  October  1998,  the  Trust and the
operator  terminated the management  agreement and the Project paid the operator
$105,840 to reimburse it for installation costs advanced by the operator.  RPMCo
has operated  the project  since that time and the Trust  reimburses  it for its
costs and expenses.

     In 1999 the Project  paid $32,000 to the Trust (a 2.9% annual  return),  up
from $12,000 in 1998 (a 1.1% annual return).

     Power IV owns a package of similar  engines  located on different sites and
operated  under  identical  terms  by the same  operator.  The  engines  operate
independently  of each  other  and  revenues  and  expenses  for each  Trust are
segregated from those of the other.

 (v)  San Diego Project.

     On June 25,  1997 the  Trust  sold its  entire  interest  in its San  Diego
Project to subsidiaries of NRG Energy,  Inc. of Minneapolis,  Minnesota ("NRG").
The San Diego  Project is a district  cooling  system  located in  downtown  San
Diego, California,  that generated and supplied chilled water through sub-street
piping to approximately 10 large office  buildings.  The sale took the form of a
sale  of  all  of the  Trust's  limited  partnership  interest  in  the  limited
partnership that owned the Project and its interest in the general partner.  The
sale price was $6,200,000,  of which $3,500,000 was paid in cash at the closing.
The  remaining  $2,700,000  was paid by  delivery of a secured,  purchase  money
promissory note of the principal NRG subsidiary purchasing the Project. The note
bears  interest at 8% per year and is payable in equal monthly  installments  of
principal  and  interest  through  its  maturity on June 25,  2003.  The note is
secured by the partnership interests sold by the Trust to the NRG subsidiaries.

     NRG  and  its  subsidiaries  participating  in  the  transaction  were  not
affiliated with and had no material  relationships  with the Trust, its Managing
Shareholder  or their  affiliates,  directors,  officers or  associates of their
directors and officers.  The sales price and the terms of the  acquisition  were
determined in arm's length negotiations  between the Managing Shareholder of the
Trust and NRG. In late 1997,  a subsidiary  of NRG and the Managing  Shareholder
entered into negotiations for the investment by Ridgewood  Electric Power Trusts
IV and V (which are also  managed by the  Managing  Shareholder)  of up to $32.5
million in up to 17 landfill-gas fueled generating plants being developed by the
NRG subsidiary.  No binding agreement has been reached. The Trust is not a party
to the proposed transaction and will have no interest therein.

     The Trust acquired its interest in the San Diego Project on March 21, 1994,
when it made an  investment  of  approximately  $2.3  million  to acquire an 80%
interest  in the  Project.  The Trust  made  additional  capital  contributions,
totaling  approximately $1.2 million, to the Project to fund working capital and
to  purchase  various  leased  equipment.  The Trust was  entitled  to an annual
cumulative  preferred  distribution  of available cash flow  attributable to the
facility (after funding,  operating and maintenance expenses and reserves) equal
to 25% of its investment. Any additional cash flow went first to the operator of
the  Project  until it  received  20% of the  annual  distribution  and then the
remainder, if any, would go to the Trust. The operator also managed the facility
on a turnkey basis for a fixed payment of $100,000 per year, terminable annually
by the Trust if performance targets were not met.

     The San Diego  Project  has been in  continuous  operation  since  1972 and
currently  sells  chilled  water to over 10  commercial,  retail and  government
office buildings connected to the facility by a closed underground pipeline loop
owned and used  exclusively by the facility.  The San Diego Project has 22 years
remaining on its  franchise  with the City of San Diego for the continued use of
the space  beneath the city streets for the  pipeline  system.  The  underground
pipeline  loop,  which is  approximately  2.5 miles in  length,  is  capable  of
providing chilled water to 25 customers or more in a 50 block area.

     Principal  payments  on the note to the  Trust  in 1999  were  $411,685  as
compared to $380,135 in 1998.

 (3) Project Operations.

     The  Monterey  Project's  revenue from its Power  Contract  consists of two
components,  energy payments and capacity payments. Energy payments are based on
a facility's net electric output, with payment rates usually indexed to the fuel
costs of the  purchasing  utility  or to  general  inflation  indices.  Capacity
payments are based on either a facility's  net electric  output or its available
capacity.  Capacity  payment  rates  vary  over  the  term of a  Power  Contract
according to various schedules.

     The  Berkshire  Project  obtains  waste for fuel under a long term contract
providing it with revenues  from tipping fees,  which are subject to the default
risks of dealing with municipalities and small trash haulers, and sells steam to
Crane under a long-term contract. The Columbia Project obtains its revenues from
spot and contract  sales of transfer  station  services which are dependent upon
the volume of waste  delivered  to it and which are  sensitive  to the prices of
alternative disposal methods and local economic activity.

     The California Pumping Project sells its power to the farmers on whose land
its engines are  situated  under  contracts  terminable  at any time on 60 days'
prior notice to the Trust.  Although the Trust thus is at risk if many customers
concurrently  terminate  contracts,  as might  happen if an electric  utility or
other supplier were to offer substantially  discounted rates, the Trust believes
that  it  is  currently  a  competitive   supplier  even  as  California  begins
deregulation of electricity rates and that alternate customers can be secured in
the event contracts are terminated.

     The San Diego Project sells its output to private customers under long-term
contracts  that have  similarities  to Power  Contracts in that they provide for
continuous  sales and earnings  over a sustained  period of time.  However,  the
Project may be at  somewhat  greater  risk of default  from these  customers  as
compared to sales to utilities,  which until  recently had a relatively low risk
of  default.  Further,  because  customers  have the  option  of  installing  or
continuing  to operate their own air  conditioning  and heating  equipment,  and
because customers often prefer to operate  themselves to assure control,  it can
be difficult to obtain new customers.

     The major costs of a Project  while in  operation  will be debt service (if
applicable), fuel, taxes, maintenance and operating labor. The ability to reduce
operating  interruptions and to have a Project's  capacity available at times of
peak demand are critical to the profitability of a Project. Accordingly, skilled
management  is a major  factor  in the  Trust's  business.  The  Berkshire,  and
Columbia Projects are managed by the development companies that were responsible
for developing those Projects, as described above. Each development company also
has an equity or an income  interest in its Project  (which at the Berkshire and
Columbia Projects are subordinated to the Trust's preferred  rights),  which may
create  an  additional  incentive  for the  manager.  The Trust  monitors  their
performance using RPMCo personnel and outside consultants.

     The Trust has owned and managed the Monterey  Project  through a subsidiary
since its  acquisition  in 1994.  The costs of  operating  this Project had been
wholly borne by the Trust as  operating  expenses and have not been borne by the
Managing  Shareholder.  Since  January  1996,  RPMCo  has  provided  operations,
management,  purchasing,  engineering,  planning and administrative services for
the Monterey and  California  Pumping  Projects and it also assisted in managing
the San Diego  Project  during the first six  months of 1997 prior to sale.  The
Managing Shareholder believes that for these Projects, where RPMCo has necessary
skills,  having RPMCo manage the Projects  benefits the Trust by creating  clear
responsibilities  and by  capturing  the  profit  component  of  the  management
contract for the Trust.

     See Item 10 - Directors and Executive  Officers of the  Registrant and Item
13 - Certain  Relationships  and Related  Transactions  for further  information
regarding RPMCo and for the cost reimbursements received by RPMCo.

     Electricity  produced by a Project is typically  delivered to the purchaser
through  transmission  lines which are built to interconnect  with the utility's
existing  power  grid.  Steam  produced  by the  Berkshire  Project is  conveyed
directly to the user by pipeline  and the energy  produced by the engines in the
California Pumping Project is applied directly to pumps.

     The overall demand for electrical energy is somewhat seasonal,  with demand
usually  peaking  in the  summertime  as a result  of the  increased  use of air
conditioning. Greenhouse demand for hot water from the Monterey Project peaks in
the winter and spring months,  while demand for the San Diego Project's  chilled
water for  building  cooling  peaks in the summer and early fall.  The impact of
fluctuations in the demand or supply of electrical or thermal products generated
upon the revenues of any particular Project is usually dependent on the terms of
the Power Contract pursuant to which the energy is purchased.

     Generally,  revenues from the sales of electric  energy from a cogeneration
facility will represent the most  significant  portion of the  facility's  total
revenue.  However,  to maintain its status as a Qualifying Facility under PURPA,
it  is  imperative  that  the  Monterey   Project   continue  to  satisfy  PURPA
cogeneration  requirements as to the amount of thermal products  generated.  See
Item 1(c)(6) - Regulatory  Matters,  for an explanation  of these  requirements.
Therefore,  since the  Monterey  Project has only two  customers  (the  electric
energy  purchaser and the thermal products  purchaser),  loss of either of these
customers would have a material adverse effect on the Project.

         From time to time since 1992  Pacific  Gas and  Electric  Company,  the
purchaser of the electricity  generated at the Monterey Project,  has questioned
whether the Project is delivering  sufficient  thermal  energy to its greenhouse
customer to meet PURPA efficiency  requirements  for Qualifying  Facility status
and has installed metering devices to provide data. These inquiries are in large
part based on data from the  monitoring  program  that  Pacific Gas and Electric
Company undertakes as required by the California Public Utilities Commission for
data on thermal deliveries.

         In February 1999,  Pacific Gas and Electric  Company notified the Trust
that it had  concluded  that the Monterey  Project had not met those  efficiency
requirements  by an  unspecified  amount and on April 1, 1999 it  brought  legal
proceedings in California  state court against the Trust's  subsidiary that owns
the Project,  as described at Item 3 - Legal  Proceedings.  The  complaint  only
requested that the Project refund the gas price discounts  received from 1991 to
1998, but an adverse decision might affect subsequent years and might also serve
as the basis for an action to invalidate the Power Contract.

     The Trust has  vigorously  defended  the lawsuit and expects that the legal
proceedings  will be  moved  to the  Federal  Energy  Regulatory  Commission  in
Washington,  D.C.,  which can issue a definitive  ruling on the Power  Contract.
After an exhaustive  investigation,  the Trust believes that the Project has met
and continues to meet the PURPA  requirements  and that Pacific Gas and Electric
Company  is  relying  on an  incorrect  legal  theory  and  incorrect  data.  In
particular,  the Trust believes that Pacific Gas and Electric Company has chosen
the wrong  location  for  metering  and  computing  efficiency  standards.  That
location is  materially  different  from the  location at which  efficiency  was
measured  from the  inception  of the  Project  and is located at a point  where
efficiency  measurements  necessarily  would be materially lower. The Trust also
believes that the utility's  gas meter was out of  adjustment  during 1998.  The
Trust has incurred over $350,000 in defending this  proceeding and preparing for
action before FERC and expects that legal  expenses for 2000 will be comparable.
The  legal  expenses  are being  paid by the  Trust's  subsidiary  that owns the
Monterey  Project and  accordingly  they do not appear on the Trust's  financial
statements.

         If it is determined  that the Project did not meet PURPA and California
efficiency  standards,  the Project  would be required to refund the discount to
Pacific Gas and Electric Company. Further, the electric company would be able to
exclude a proportionate  part of its purchases of electricity from the long-term
power  contract and pay at  substantially  lower spot rates for that part of its
purchases.  This  would  require  the  Project  to refund  substantial  amounts.
Finally,  it is possible that the Power  Contract  could be  invalidated,  which
might make the Project  uneconomic to operate.  See Item 1(c)(4) - Trends in the
Electric Utility and Independent Power Industries for further information.

Customers of Projects that  accounted for more than 10% of annual  distributions
to the Trust from operating sources in each of the last three fiscal years are:

                             Calendar year
                                   1999         1998          1997

Crane & Co., Inc.                   0.0%         18.0%         21.0%
Pacific Gas & Electric Co.          0.0%*        54.0%         45.7%

* All of the $326,000 of net cash flow earned by the  Monterey  Project in 1999
was retained to defray legal expenses.

         In 1999,  all  distributions  received by the Trust from  Projects came
from the  Columbia  and  California  Pumping  Projects,  each of which  has many
customers.  No one  customer  accounted  for 10% or more of the total  $132,000
received by the Trust.

     The  technology  involved  in  conventional  power plant  construction  and
operations  as well as electric  and heat energy  transfers  and sales is widely
known  throughout the world.  There are usually a variety of vendors  seeking to
supply the necessary  equipment  for any Project.  So far as the Trust is aware,
there are no  limitations  or  restrictions  on the  availability  of any of the
components  which would be  necessary  to  complete  construction  and  commence
operations of any Project.  Generally,  working capital  requirements  are not a
significant  item in the  independent  power  industry.  The cost of maintaining
adequate  supplies  of fuel  sources is usually the most  significant  factor in
determining working capital needs.

     Hydrocarbon  fuels,  such as  natural  gas,  coal and fuel  oil,  have been
generally  available  in recent  years for use by  Independent  Power  Projects,
although there have been serious supply impairments for both oil and natural gas
at times during the last 20 years.  Market prices for natural gas, oil and, to a
lesser extent, coal have fluctuated  significantly over the last few years. [See
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operation  for  additional  information  regarding the effects of natural gas
price increases on certain  Projects owned by the Trust.] Such  fluctuations may
directly inhibit the development of Projects because of the anticipated  effects
on Project  profitability  and may deter lenders to Projects or result in higher
costs of financing.  The Berkshire Project uses municipal wastes as fuel and the
Columbia  Project charges on the basis of volume of waste.  The  availability of
spot waste (waste delivered  otherwise than under contract) depends on the costs
of other disposal alternatives.

     In  general,  cogeneration,  due  to its  higher  efficiency,  tends  to be
relatively more profitable as energy costs (including  natural gas) increase and
relatively less  profitable as such costs  decrease.  Projects which use natural
gas as a fuel source bear the risk of gas price fluctuations adversely affecting
their economics.

     In order to  commence  operations,  most  Projects  require  a  variety  of
permits,  including zoning and environmental  permits.  Inability to obtain such
permits will likely mean that a Project will not be able to commence operations,
and even if  obtained,  such  permits must usually be kept in force in order for
the Project to continue its operations.

     Compliance  with  environmental  laws  is  also a  material  factor  in the
independent power industry. The Trust believes that capital expenditures for and
other costs of environmental  protection have not materially  disadvantaged  its
activities  relative to other competitors and will not do so in the future.  The
Trust  currently  does  not  anticipate  that  it will  have  to  make  material
additional  investments for environmental  compliance.  The process of preparing
the new Title V applications for air pollution licensing of existing facilities,
however,   is  protracted  and  requires  modest  additional   expenditures  for
consultants.  If future  environmental  standards  require that a Project  spend
increased  amounts for  compliance,  such increased  expenditures  could have an
adverse  effect  on the Trust to the  extent  it is a holder  of such  Project's
equity  securities.  See Item  1(c)(6) - Business  -  Narrative  Description  of
Business - Regulatory Matters.

 (4) Trends in the Electric Utility and Independent Power Industries

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

     To  date,   the  Federal  Energy   Regulatory   Commission  and  California
authorities  have ruled that existing  Power  Contracts  will not be affected by
their deregulation initiatives. The regulators have so far rejected the requests
of a few utilities to invalidate existing Power Contracts.  Instead,  most state
plans  for  deregulation  of the  electric  power  industry  treat  the value of
long-term Power  Contracts that are above current and anticipated  market prices
as "stranded costs" of the utilities. The utilities are to be allowed to recover
those costs during a  transition  period.  This is typically  done by imposing a
transition  fee or  surcharge  on  rates  that  is  paid  to the  utility.  This
alternative has been implemented in California.

     No action has yet been taken by  federal  or state  legislators  to date to
impair Independent Power Projects' existing power sales contracts, and there are
federal  constitutional   provisions  restricting  actions  to  impair  existing
contracts.  There can not be any  assurance,  however,  that the  rapid  changes
occurring in the industry and the economy as a whole would not cause  regulators
or  legislative  bodies to attempt to change the  regulatory  structure  in ways
harmful  to  Independent  Power  Projects  or  to  attempt  to  impair  existing
contracts.  In  particular,  some  regulatory  agencies have urged  utilities to
construe  Power  Contracts  strictly and to police  Independent  Power  Projects
compliance with those Power Contracts vigorously.

     Predicting the  consequences  of any  legislative  or regulatory  action is
inherently speculative and the effects of any action proposed or effected in the
future may harm or help the Trust.  Because of the  consistent  position  of the
regulatory  authorities to date and the other factors  discussed here, the Trust
believes  that  so  long as it  performs  its  obligations  under  the  Monterey
Project's Power Contract, it will be entitled to the benefits of the contract.

     In recent years,  many  electric  utilities  have  attempted to exploit all
possible means of terminating  Power Contracts with independent  power projects,
including requests to regulatory  agencies and alleging  violations of the Power
Contracts as  justification  for terminating  those  contracts.  Pacific Gas and
Electric  Company is attempting to do that at the Monterey  Project.  Even if an
attempt to invalidate a Power Contract were unsuccessful, the Trust is likely to
face material costs in contesting  those utility  actions.  Other utilities have
from time to time made offers to purchase and terminate Power Contracts for lump
sums. The Managing  Shareholder  has indicated its interest in selling the Power
Contract for the Monterey  Project and Power Contracts for two other  California
cogeneration  facilities owned by Ridgewood Power III, and preliminary  contacts
have been made with  Pacific Gas and  Electric  Company.  No  negotiations  have
resulted and none are expected  unless the Monterey  Project  legal  actions are
resolved in the Trust's favor.

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

     After the Power  Contract  expires in 2020 or terminates for other reasons,
the Monterey  Project under currently  anticipated  conditions  would be free to
sell its  output on the  competitive  electric  supply  market,  either in spot,
auction or short-term  arrangements or under long-term  contracts if those Power
Contracts  could be obtained.  There is no assurance that the Project could sell
its output or do so  profitably.  Because  the  Project is fueled by natural gas
purchased at market prices and because the Projects is  relatively  small-scale,
it might have cost  disadvantages in competing  against larger  competitors that
would  enjoy  economies  of scale.  The Trust is  unable to  anticipate  whether
thermal sales from cogeneration  would offset any possible cost disadvantages in
electric generation or whether in fact the Project would have cost disadvantages
after the Power  Contract  ends in 2020.  It is thus  impossible  to predict the
profitability  of the  Project  after  the  scheduled  termination  of the Power
Contract.  If the Power Contract were to be terminated now, the short-term rates
available in California's  competitive electricity market are substantially less
than the costs of  operation  of the  Monterey  Project  and the  Project  would
probably be forced to close.

     The  Berkshire  Project's  contract  to supply  steam  terminates  in 2004.
Because it is normally  inefficient to transport steam over long distances,  the
Trust  believes  that so long as the cost of suitable  municipal  waste does not
substantially  increase or the costs of  alternate  fuels does not  decrease far
below current levels, the Berkshire Project should be able to renew its contract
at a price  comparable  to or lower than the cost to Crane & Co. of running  its
own boilers or using a new cogeneration facility. There is no assurance that the
Project can do so or that the customer will be financially capable of doing so.

     The  Columbia  and  California  Pumping  Projects  do  not  have  long-term
contracts  with any of  their  customers  and are thus  exposed  to  short-  and
long-term market fluctuations.

(5)  Competition

     The Monterey and Berkshire Projects,  as described above, are not currently
subject to  competition  because  those  Projects  have entered  into  long-term
agreements  to sell their  output at  specified  prices.  However,  the Monterey
Project could be subject to future  competition to market its electricity output
if its Power Contract  expires or is terminated  because of a default or failure
to pay by the  purchasing  utility  or other  purchaser;  due to  bankruptcy  or
insolvency of the purchaser;  because of the failure of a Project to comply with
the terms of the Power  Contract;  regulatory  changes;  or other  reasons.  The
Monterey Project would then face significant  competition to market its capacity
and energy output in the newly developing  competitive  market in California and
would face material cost pressures.  The Berkshire  Project may face competition
after 2004 from fuel suppliers  offering  alternative  means of providing energy
and possibly from other cogeneration or waste-to-energy providers.

     There are a large number of participants in the independent power industry.
Several  large  corporations  specialize in  developing,  building and operating
Independent  Power  Projects.  Equipment  manufacturers,  including  many of the
largest  corporations in the world,  provide equipment and planning services and
provide  capital  through  finance  affiliates.  Many  regulated  utilities  are
preparing for a  competitive  market,  and a significant  number of them already
have  organized   subsidiaries  or  affiliates  to  participate  in  unregulated
activities such as planning, development, construction and operating services or
in  owning  exempt  wholesale  generators  or up to  50%  of  Independent  Power
Projects.  In  addition,  there are many  smaller  firms  whose  businesses  are
conducted  primarily on a regional or local basis. Many of these companies focus
on limited segments of the  cogeneration  and independent  power industry and do
not  provide  a wide  range of  products  and  services.  There  is  significant
competition among non-utility producers, subsidiaries of utilities and utilities
themselves  in  developing  and  operating   energy-producing  projects  and  in
marketing the power produced by such projects.

     The Trust is unable to accurately  estimate the number of  competitors  but
believes that there are many competitors at all levels and in all sectors of the
industry.  Many of those  competitors,  especially  affiliates  of utilities and
equipment manufacturers, may be far better capitalized than the Trust.

     The Columbia Project, as described above, faces competition from a national
waste management company much larger than itself,  from local landfill operators
(if their permits to receive  waste are again  extended) and possibly from other
local  entrepreneurs.  There are few barriers to entry in the waste transfer and
management  industry.  The California  Pumping Project is subject to competition
from the local electric  utility,  which serves much of Southern  California and
which offers  electricity at discounted  rates to operate  electric pumps rather
than the natural  gas-fueled  pumps operated by the Project.  As deregulation of
the  electricity  market  proceeds in  California,  the  Project  will also face
competition from power marketers and independent generating companies.  Barriers
to entry into the electric or gas-fueled  irrigation  pumping  industry are also
low.

(6)  Regulatory Matters.

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

(i)  Energy Regulation.

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

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

     The exemptions  from  extensive  federal and state  regulation  afforded by
PURPA to Qualifying  Facilities are important to the Trust and its  competitors.
The Trust believes that the Monterey Project,  which sells electricity to public
utilities,  is a  Qualifying  Facility.  The San  Diego  Project,  which did not
ordinarily sell  electricity,  was also a Qualifying  Facility.  Maintaining the
Qualified  Facility  status  of an  electric  generating  Project  is of  utmost
importance to the Trust.  Such status may be lost if a Project does not meet the
operational   requirements  of  PURPA,  such  as  minimum  operating  efficiency
standards  and  minimum use of thermal  energy by  customers  of a  cogeneration
Project. The Trust endeavors to comply with these requirements, but there can be
no assurance that a Project will maintain its Qualified  Facility  status.  If a
Project loses its Qualifying  Facility status,  the utility can reclaim payments
it made for the Project's non-qualifying output to the extent those payments are
in excess of current avoided costs (which are generally  substantially below the
Power Contract  rates) or the Project's  Power Contract can be terminated by the
electric  utility.   In  California,   the  state  regulator  has  authorized  a
comprehensive  monitoring  system under which  electric  utilities  continuously
meter a Project's performance. Many California utilities,  including Pacific Gas
and Electric Company, the utility that purchases the Monterey Project's electric
output,  aggressively  use this  data to press  for  termination  of  Qualifying
Facility  status or  reduction  of rates  payable  for  output,  and there is an
ongoing  risk that the utility will assert that the Project does not qualify for
any given year. As discussed above, the Trust believes that the Monterey Project
has  qualified  and will  continue  to qualify.  The other  Projects do not sell
electricity  to utilities  or off-site  customers;  therefore,  they need not be
Qualifying Facilities.

(B) The 1992 Energy Act. The Comprehensive  Energy Policy Act of 1992 (the "1992
Energy Act")  empowered  FERC to require  electric  utilities to make  available
their transmission  facilities to and wheel power for Independent Power Projects
under  certain  conditions  and created an  exemption  for  electric  utilities,
electric utility holding  companies and other  independent  power producers from
certain  restrictions  imposed by the Holding  Company  Act.  Although the Trust
believes  that  the  exemptive  provisions  of the  1992  Energy  Act  will  not
materially  and  adversely  affect  its  business  plan,  the act may  result in
increased competition in the sale of electricity.

     The 1992 Energy Act created the "exempt wholesale  generator"  category for
entities certified by FERC as being exclusively  engaged in owning and operating
electric  generation   facilities  producing   electricity  for  resale.  Exempt
wholesale  generators remain subject to FERC regulation in all areas,  including
rates,  as well  as  state  utility  regulation,  but  electric  utilities  that
otherwise would be precluded by the Holding Company Act from owning interests in
exempt wholesale generators may do so. Exempt wholesale generators, however, may
not sell  electricity to affiliated  electric  utilities  without  express state
approval  that  addresses  issues of fairness to consumers  and utilities and of
reliability.

(C)  The  Federal  Power  Act.  The  FPA  grants  FERC   exclusive   rate-making
jurisdiction over wholesale sales of electricity in interstate commerce. The FPA
provides  FERC with ongoing as well as initial  jurisdiction,  enabling  FERC to
revoke  or  modify  previously  approved  rates.  Such  rates  may be based on a
cost-of-service   approach  or  determined   through   competitive   bidding  or
negotiation.  While  Qualifying  Facilities  under  PURPA  are  exempt  from the
rate-making and certain other provisions of the FPA,  non-Qualifying  Facilities
are subject to the FPA and to FERC rate-making jurisdiction.

     Companies whose  facilities are subject to regulation by FERC under the FPA
because  they  do  not  meet  the  requirements  of  PURPA  may  be  limited  in
negotiations  with power purchasers.  However,  since such projects would not be
bound by PURPA's heat energy use requirement for cogeneration  facilities,  they
may have greater  latitude in site  selection  and facility  size. If any of the
Trust's  electric power Projects  failed to be a Qualifying  Facility,  it would
have to comply with the FPA.

(D) Fuel Use Act. Projects may also be subject to the Fuel Use Act, which limits
the ability of power producers to burn natural gas in new generation  facilities
unless such facilities are also coal-capable  within the meaning of the Fuel Use
Act. The Trust  believes  that the  Monterey  Project is  coal-capable  and thus
qualifies for exemption from the Fuel Use Act.

(E) State  Regulation.  State public utility  regulatory  commissions have broad
jurisdiction over Independent Power Projects which are not Qualifying Facilities
under PURPA, and which are considered public utilities in many states. In states
where the wholesale or retail  electricity  market remains  regulated,  Projects
that are not  Qualifying  Facilities  may be  subject to state  requirements  to
obtain  certificates of public convenience and necessity to construct a facility
and could have their organizational,  accounting,  financial and other corporate
matters  regulated on an ongoing  basis.  Although FERC  generally has exclusive
jurisdiction  over  the  rates  charged  by a  non-Qualifying  Facility  to  its
wholesale  customers,  state  public  utility  regulatory  commissions  have the
practical  ability to  influence  the  establishment  of such rates by asserting
jurisdiction over the purchasing utility's ability to pass through the resulting
cost of purchased power to its retail customers. In addition,  states may assert
jurisdiction over the siting and construction of non-Qualifying  Facilities and,
among other things, issuance of securities,  related party transactions and sale
and transfer of assets.  The actual scope of  jurisdiction  over  non-Qualifying
Facilities by state public utility  regulatory  commissions varies from state to
state.

(ii)  Environmental Regulation.

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

     The Clean Air Act Amendments of 1990 contain  provisions which regulate the
amount of sulfur  dioxide  and  oxides of  nitrogen  which may be  emitted  by a
Project.  These emissions may be a cause of "acid rain."  Qualifying  Facilities
are  currently  exempt from the acid rain  control  program of the Clean Air Act
Amendments.  However, non-Qualifying Facility Projects will require "allowances"
to emit  sulfur  dioxide  after  the year  2000.  Under  the  Amendments,  these
allowances may be purchased from utility  companies then emitting sulfur dioxide
or from the  Environmental  Protection Agency ("EPA").  Further,  an Independent
Power  Project  subject to the  requirements  has a priority  over  utilities in
obtaining  allowances  directly from the EPA if (a) it is a new facility or unit
used  to  generate  electricity;  (b)  80% or  more  of its  output  is  sold at
wholesale;  (c)  it  does  not  generate  electricity  sold  to  affiliates  (as
determined  under the Holding Company Act) of the owner or operator  (unless the
affiliate cannot provide allowances in certain cases) and (d) it is non-recourse
project-financed.  The market  price of an allowance  cannot be  predicted  with
certainty at this time.  In recent  years,  supply of  allowances  has tended to
exceed  demand,  primarily  because of  improved  control  technologies  and the
increased use of natural gas.

     The  Berkshire  Project is not a Qualifying  Facility and does not generate
electricity.  However,  it was operating  prior to November 15, 1990 and is thus
currently exempt from the requirement to obtain sulfur dioxide allowances.

     Title V of the Clean Air Act Amendments added a new permitting  requirement
for existing  sources that requires all significant  sources of air pollution to
submit new applications to state agencies.  Title V implementation by the states
generally does not impose  significant  additional  restrictions  on the Trust's
Projects,  other than requirements to continually  monitor certain emissions and
document compliance. The permitting process is voluminous and protracted and the
costs of fees for Title V applications,  of testing and of engineering  firms to
prepare the necessary documentation have increased. [The Trust has filed a Title
V application  for the Monterey  Project and has been informed that the operator
of the  Berkshire  Project has done so.] No Title V filing is  required  for the
California Pumping Project or the Columbia Project.  The Trust believes that all
of its  facilities  will be in compliance  with Title V  requirements  with only
minor  modifications  such  as  the  installation  of  an  additional  catalytic
converter on some engines.

     In July 1997 the  Environmental  Protection  Agency  adopted more stringent
standards for levels of ozone and small particulate  matter (particles less than
25 microns in diameter) in geographic areas.  These new standards may cause some
areas in which Projects are located to be classified as non-attainment areas. If
so, states will be required to impose additional  requirements for industries to
reduce emissions. It is uncertain whether or how any reductions would be applied
to small facilities such as the Trust's  Projects.  If reductions were required,
the Trust  might have to make  significant  capital  investments  to install new
control technology or might have to reduce operations. In addition, many eastern
states,  including  Massachusetts  and New  York,  have  organized  in the Ozone
Transport  Assessment  Group to require  further  restrictions  on  emissions of
nitrogen oxides. The Environmental  Protection Agency is considering the Group's
recommendations  as well as other  proposals  to reduce  emissions  of  nitrogen
oxides and other  ozone-forming  chemicals.  If adopted,  new regulations  could
required the Trust to install additional  equipment to reduce those emissions or
to change operations. Nitrogen oxide reductions can be difficult to achieve with
add-on equipment and often require  decreases in operating  efficiency,  both of
which could cause material cost to the Trust. It is not possible at this time to
estimate whether or not any potential regulatory changes would materially affect
the Trust.

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

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

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

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

(iii)  The 1940 Act

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

     On February  27,  1993,  the Trust  notified  the  Securities  and Exchange
Commission  (the  "Commission")  of its  election to be a "business  development
company" and  registered  its Shares under the 1934 Act. On April 29, 1993,  the
election and registration became effective. As a "business development company,"
the Trust is a  closed-end  company  (defined by the 1940 Act as a company  that
does not offer for sale or have  outstanding  any  redeemable  security) that is
regulated  under the 1940 Act only as a business  development  company.  The act
contains   prohibitions  and  restrictions  on  transactions   between  business
development  companies and their affiliates as defined in that act, and requires
that a majority  of the board of the company be persons  other than  "interested
persons" as defined in the act. The board of the Trust is comprised of Ridgewood
Power and three individuals,  Ralph O. Hellmold,  Jonathan C. Kaledin and Joseph
Ferrante,  Jr., who also serve as  independent  trustees of  Ridgewood  Electric
Power Trust III, and who are  Independent  Panel Members for Ridgewood  Electric
Power Trust V but who are not  otherwise  affiliated  with the Trust,  Ridgewood
Power or any of their affiliates. See Item 10 - Directors and Executive Officers
of the Registrant.

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

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

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

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

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

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

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

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

(iv)  Potential Legislation and Regulation.

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

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

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

(e)  Employees.

     The operating personnel of the Monterey and California Pumping Projects are
employed  by RPMCo  and  accordingly  the Trust has no  employees.  The  persons
described below at Item 10 - Directors and Executive  Officers of the Registrant
serve as executive  officers of the Trust and have the duties and powers usually
applicable  to similar  officers of a Delaware  corporation  in carrying out the
Trust business.

Item 2.  Properties.

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

     The following  table shows the material  properties  (relating to Projects)
owned or leased by the Trust's  subsidiaries  or partnerships in which the Trust
has an interest.  Ownership rights to the property associated with the Berkshire
Project  are  held  under  a  long-term  lease-purchase  agreement  and  related
non-recourse  industrial  revenue bond financing  agreements among  Pittsfield's
industrial development authority and others. Upon repayment of the bonds and the
satisfaction of other  conditions,  the partnership  which operates the facility
and in which the Trust owns an  interest,  will have the  option to acquire  the
facility for nominal consideration.  The other properties are not subject to any
mortgages,  liens or encumbrances.  All of the Projects are described in further
detail at Item 1(c)(2).

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

Berkshire   Pittsfield,
             Massachusetts  Leased  2004      5      30,000    Waste-to energy
                                                                  facility
Columbia    Columbia,
             New York       Owned   N/A      44       25,000    Municipal waste
                                                               transfer station
Monterey    Monterey,
             California     Leased  2020      2       10,000    Gas-fired
                                                               cogeneration
                                                                facility

Cal. Pumping Ventura County, Leased N/A       N/A       N/A   Natural gas fired
              California       or                             engines powering
                            licensed                          irrigation pumps
                                                              located on various
                                                                    farms
Item 3.  Legal Proceedings.

         On April 1, 1999,  Pacific Gas and Electric  Company,  the purchaser of
the  electricity  generated by the Trust's  Monterey  Project,  sued the Trust's
subsidiary  that owns the Project in the Superior  Court of  California  for the
City and County of San  Francisco.  Pacific Gas and  Electric  alleged  that the
Project  did not  meet  federal  and  state  efficiency  requirements  and  that
accordingly  the Project was not entitled to the benefit of  discounted  natural
gas fuel rates  allowable to  qualifying  cogeneration  facilities.  The lawsuit
claimed an  unspecified  amount of damages.  The Trust has  defended the lawsuit
vigorously  and discovery is underway.  A tentative  trial date of July 2000 has
been set.

         The  California  lawsuit  technically  is  limited to the  question  of
whether the Monterey Project is entitled to natural gas transportation discounts
that the Trust  believes are less than $20,000 per year. In July 1999, the Trust
offered to forego the discounts and return past discounts  received  rather than
incur the expense of litigation  Pacific Gas and Electric Company  refused.  The
Trust believes that Pacific Gas and Electric  Company wished to proceed with the
litigation  to deplete the Trust's  resources  and obtain  evidence for use in a
proceeding at FERC.

         In February 2000,  Pacific Gas and Electric  Company in fact offered to
dismiss the California lawsuit without prejudice, provided that it could use the
evidence in a proceeding at FERC in which Pacific Gas and Electric Company would
claim that the Monterey  Project is not a Qualifying  Facility.  The parties are
currently negotiating the terms of a dismissal of the California lawsuit and the
Trust expects that proceedings at FERC will begin shortly.  A description of the
potential  issues at FERC and the possible  effects on the  Monterey  Project is
included at Item 1(c)(3) above.

     On  December  31,  1998  the  Trust,  through  subsidiaries,  filed a legal
complaint in the  Superior  Court of  California  for  Monterey  County  against
Waukesha-Pierce,  Inc. and subsidiaries,  alleging that the subsidiaries had not
disclosed the existence of an obligation of the Monterey  Project to Pacific Gas
and  Electric  Company  and  therefore  breached a warranty  in the  acquisition
agreement.  The claim was for approximately $273,000 plus interest and expenses.
Waukesha-Pierce, Inc. was included in the proceeding as a contractual guarantor.
On January 17, 1999, a separate action against  Waukesha-Pierce,  Inc. was filed
by the Trust's subsidiaries in the United States District Court for the Northern
District of Texas to enforce  the  guaranty.  The parties  agreed to dismiss the
Texas  case  without  prejudice  before  material  proceedings   resulted.   The
California  case was settled in March 2000;  Waukesha-Pierce  Inc. agreed to pay
the Project  $175,000 and to cooperate  with the Project in the  potential  FERC
proceedings  involving  the  Monterey  Project and the Trust agreed to cooperate
with Waukesha-Pierce in releasing funds due from PG&E to Waukesha-Pierce.

     Item 4. Submission of Matters to a Vote of Security Holders.  The Trust did
not submit any matters to a vote of the Investors  during the fourth  quarter of
1999.

PART  II

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

(a)  Market Information.

     The Trust sold 235.3775 Investor Shares of beneficial interest in the Trust
in its private placement offering of Investor Shares which closed on January 31,
1994.  There is currently no established  public trading market for the Investor
Shares  and the  Trust  does not  intend  to allow a public  trading  market  to
develop.  As of the date of this Form 10-K,  all such Investor  Shares have been
issued and are  outstanding.  There are no  outstanding  options or  warrants to
purchase,  or securities  convertible into, Investor Shares and the Trust has no
intention to make any public offering of Investor Shares.

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

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

(b)  Holders

     As of the date of this Form 10-K, there are 482 record holders of Investor
Shares.

(c)  Dividends

     The Trust made distributions as follows for the years 1998 and 1999:

                                          Year ended             Year ended
                                          December 31,           December 31,
                                             1998                   1999

Total distributions to Investors           $1,412,273             $282,456
Distributions per Investor Share           $    6,000             $  1,200
Distributions to Managing Shareholder      $   14,265             $  2,853

     The Trust suspended  distributions in April 1999 to create a reserve at the
Monterey Project level for the costs of the Monterey Project legal  proceedings.
The  Managing   Shareholder  has  announced  its  intention  to  resume  limited
distributions  from the Trust  beginning in April 2000 and to continue them on a
quarterly basis in July,and  October and January.  The anticipated  distribution
rate for 2000 is 4% annually.  The Trust's ability to make future  distributions
to Investors and their timing will depend on the net cash flow of the Trust, the
expenses of the legal  proceedings  for the  Monterey  Project and  retention of
reasonable  reserves  as  determined  by the  Trust  to  cover  its  anticipated
expenses. See Item 7 Management's Discussion and Analysis.

      The Trust's cash flow comes  primarily from  distributions  from Projects.
Those distributions are from cash flow of the Projects, which includes income of
Projects plus funds representing  depreciation and amortization charges taken by
the Projects.  Nevertheless,  because the Projects are not consolidated with the
Trust for accounting  purposes,  all funds received from Projects are considered
to be revenue to the Trust for accounting purposes. Occasionally,  distributions
may also include funds derived from operating or debt service  reserves or other
non-cash charges against  earnings.  Investors should be aware that the Trust is
organized to return net cash flow rather than accounting income to Investors.

Item 6.  Selected Financial Data.

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

Supplemental Information Schedule

Selected Financial Data         As of and for the years ended December 31,
                             1999      1998       1997      1996        1995
Total Fund Information:
Net revenue from
 operating projects     $   131,859 $  953,576 $1,715,860 $2,371,208 $2,696,578
Net income (loss)            94,608 (1,704,811) 3,591,765  1,970,401  2,149,184
Net assets
 (shareholders' equity)  11,941,704 12,132,405 15,263,754 16,353,759 16,477,149
Investments in Project
 development and power
 generation limited
 partnerships            10,274,790 10,594,402 12,733,179 16,116,582 16,056,151
Note receivable           1,729,181  2,140,866  2,521,001          0          0
Total assets             12,544,818 12,747,675 15,432,434 16,466,241 16,521,944
Per Investor Share:
  Revenues                  $   560    $ 4,051   $  7,289    $10,074    $11,456
  Expenses                      849     12,129      3,415      1,705      2,473
  Net income (loss)             402     (7,243)    15,260      8,371      9,131
  Net asset value            51,082     51,884     65,054     69,639     70,158
Distributions per
  Investor Share             $1,200    $ 6,000    $19,692     $8,849    $10,440


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

Introduction

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

Outlook

The U.S.  electricity  markets are being  restructured and there is a trend away
from regulated  electricity  systems  towards  deregulated,  competitive  market
structures.  California, where the Trust's Monterey Project operates, has passed
new  legislation  that permits  utility  customers  to choose their  electricity
supplier  in  a  competitive  electricity  market.  The  Monterey  Project  is a
"Qualified Facility" as defined under the Public Utility Regulatory Policies Act
of 1978 and currently  sells its electric  output to a utility under a long-term
contract expiring in 2021.  During the term of the contract,  the utility may or
may not attempt to buy out the contract prior to  expiration.  At the end of the
contract,  the Monterey  Project will become a merchant plant and may be able to
sell  the  electric  output  at then  current  market  prices.  There  can be no
assurance  that future  market  prices will be  sufficient to allow the Monterey
Project  to  operate  profitably.  See  Item  1(c)(3)  -  Plant  Operations  for
information concerning a potential challenge to the Project's Power Contract.

The  Berkshire  Project  receives  revenue in the form of tipping fees for waste
delivered to the facility and from steam sold under a long-term  contract  which
expires  in  2004.  Tipping  fees are  based on spot  market  prices  which  may
fluctuate from time to time. The Project's  steam customer may or may not extend
its purchases beyond the year 2004.

The  Columbia  Project  receives  revenue in the form of tipping  fees for waste
delivered to the facility by local waste  haulers and  transferred  to long haul
trucks for  delivery to distant  landfills.  The  Project's  profit  margins are
affected by the level of competition  from national waste  management  companies
operating  in the same  region and the  availability  of other  sources of waste
disposal.

The California  Pumping  Project owns  irrigation  well pumps in Ventura County,
California  which  supply  water to farmers.  The demand for water pumped by the
project varies inversely with rainfall in the area.

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

Results of Operations

Year ended December 31, 1999 compared to year ended December 31, 1998

Total  revenue  decreased  74.3% to $295,000 in 1999  compared to  $1,150,000 in
1998, due to lower income from power  generation.  As summarized  below,  income
from power generation  projects  decreased 86.2% to $132,000 in 1999 compared to
$954,000 in 1998:

Project                                               1999                1998
                                                    ---------           --------
Monterey .................................           $   --             $515,000
Berkshire ................................               --              176,000
Columbia .................................            100,000            250,000
California Pumping .......................             32,000             13,000
                                                     --------           --------
Total ....................................           $132,000           $954,000
                                                     --------           --------

The  decline  from  the  Monterey  Project  was  attributable  to the  Project's
increased legal costs associated with the litigation with Pacific Gas & Electric
- see Item 3 - Legal Proceedings.

The  decline in  revenue at  Berkshire  was a result of  distributions  from the
project  ceasing in the third quarter of 1998. In the third quarter of 1998, the
manager of Berkshire  informed the Trust that  significant  cost overruns in the
construction  of an ash handling  system for the Berkshire  project had depleted
Berkshire's  funds,  including reserve funds for closure of a landfill and other
reserves.  The project  manager  believed that Berkshire could not continue long
term  operations  without  significant  capital  injections from its two limited
partners,  one of whom is the Trust.  The project  manager  further  advised the
Trust that  distributions  from Berkshire to the Trust would cease.  The Trust's
managing  shareholder  requested detailed  additional  information and a revised
operating  plan from the project  manager and conducted  on-site  reviews by its
financial and engineering  personnel.  The Trust has reviewed the short-term and
long-term  viability of the Berkshire  project and wrote down the carrying value
of the investment from $2,347,000 to zero.

Distributions from the California Pumping Project increased from $13,000 in 1998
to $32,000 in 1999.  The  increase  was a result of  increased  demand for water
pumping  due to the  absence of the  extraordinary  rainfall  that  occurred  in
California in the first half of 1998. In addition,  1998 results were negatively
impacted by the cost of terminating the operating agreement with the third party
manager.  The Trust paid  $106,000 to the third party  manager to terminate  the
operating  agreement.  However, the increased revenue in 1999 and absence of the
1998 contract  termination  cost were partially offset by increased costs caused
by rising fuel prices.

Although 1999 operating  results at the Columbia  Project were  consistent  with
1998 results,  cash received from the project decreased to $100,000 in 1999 from
$250,000 in 1998 because the project manager reduced  distributions  to increase
the project's cash reserves.

Total  expenses  decreased  $2,658,000  (93.0%) to $200,000 in 1999  compared to
$2,858,000 in 1998,  primarily  due to the absence of a $2,347,000  writedown of
the Berkshire  Project in 1998. In addition,  the  management fee decreased from
$382,000 in 1998 to $56,000 in 1999 because the Manager  Shareholder  waived its
management fee beginning in April 1999.  Interest expense  increased from $7,000
in 1998  to  $27,000  in  1999  as a  result  of a  higher  average  outstanding
borrowings  under its line of credit  agreement.  All other 1999 Trust  expenses
were comparable to 1998.

Year ended December 31, 1998 compared to year ended December 31, 1997

Total  revenue  decreased  73.8% to $1,150,000 in 1998 compared to $4,395,000 in
1997,  primarily  due to lower  income from power  generation  projects  and the
absence of a $2,546,000 gain from the sale of the San Diego Project. The Project
was sold in June 1997 for $6,150,000  and the Trust received  $3,450,000 in cash
and $2,700,000 in the form of an 8% promissory  note payable over six years.  In
July 1997, the Trust made a special distribution to shareholders of $2,942,000.

     As summarized below,  income from power generation projects decreased 44.4%
to $954,000 in 1998 compared to $1,716,000 in 1997:


Project                                             1998                  1997
-------
                                                 ----------           ----------
Monterey .............................           $  515,000           $  784,000
Berkshire ............................              176,000              360,000
Columbia .............................              250,000              265,000
San Diego ............................                 --                 50,000
California Pumping ...................               13,000              184,000
Other ................................                 --                 73,000
                                                 ----------           ----------
Total ................................           $  954,000           $1,716,000
                                                 ----------           ----------

The decline from the Monterey Project was attributable to increased  maintenance
costs from a periodic overhaul of its engines and reduced revenues caused by the
scheduled shutdown.

The  decline  in  revenue  at  Berkshire  was  a  result  of  the  cessation  of
distributions from the project in the third quarter of 1998, discussed above.

As noted above, the California  Pumping Project suffered from the  extraordinary
rainfall  that  occurred in California in the first half of 1998 and the cost of
terminating the operating agreement with the third party manager the project.

The  Columbia  Project's  1998  and  1997  operating  results  were  consistent.
Operating  cash flow from the San  Diego  Project  ended as a result of the 1997
sale of the Project,  but  interest  income on the note was earned in the latter
portion  of 1997 and all of 1998.  In  addition,  in 1997 the Trust  received  a
$73,000  distribution from a project  development  limited partnership for which
the Trust had previously written off its investment.

Total expenses increased  $2,054,000  (255.7%) to $2,858,000 in 1998 compared to
$804,000 in 1997,  primarily  due to the  $2,347,000  writedown of the Berkshire
Project in 1998,  partially  offset by the 1997 writedown of $331,000 of certain
electric power equipment. In 1998, the Trust recorded $7,000 of interest expense
on its borrowings  under its line of credit.  All other 1998 Trust expenses were
comparable to 1997.

Liquidity and Capital Resources

During  1999,  the  Trust's  operating  activities  generated  $723,000  of cash
compared to $951,000 of cash during 1998.  The change is primarily  attributable
to the lower project  distributions in 1999 compared to 1998. Cash distributions
to shareholders decreased to $285,000 in 1999 from $1,427,000 in 1998 due to the
cessation of  distributions  in April 1999.  Distributions  to shareholders  are
expected to resume in the second quarter of 2000.

In 1997,  the Trust and Fleet Bank,  N.A. (the "Bank")  entered into a revolving
line of credit agreement,  whereby the Bank provides a three year committed line
of credit  facility of $750,000.  Outstanding  borrowings  bear  interest at the
Bank's  prime rate or, at the  Trust's  choice,  at LIBOR plus 2.5%.  The credit
agreement  requires  the Trust to maintain a ratio of total debt to tangible net
worth of no more than 1 to 1 and a minimum debt service  coverage  ratio of 2 to
1. The credit facility was obtained in order to allow the Trust to operate using
a minimum amount of cash,  maximize the amount invested in Projects and maximize
cash  distributions to shareholders.  The Trust borrowed $300,000 in 1998 and an
additional  $100,000 in 1999.  The Trust repaid the  outstanding  borrowings  in
March 2000.

Obligations of the Trust are generally limited to payment of the management fee,
unless waived by the Managing  Shareholder,  payments for certain accounting and
legal services to third persons and  distributions  to shareholders of available
operating cash flow generated by the Trust's investments.  The Trust's policy is
to distribute as much cash as is prudent to shareholders. Accordingly, the Trust
has not found it necessary to retain a material amount of working  capital.  The
amount of working capital retained is further reduced by the availability of the
line of credit facility.

The Trust anticipates that its cash flow from operations during 2000 and line of
credit facility will be adequate to fund its obligations.

Year 2000 Remediation.

     The  Managing  Shareholder  and its  affiliates  began year 2000 review and
Shrink planning in early 1997. After initial  remediation was completed,  a more
intensive review discovered additional issues and the Managing Shareholder began
a formal  remediation  program in late 1997.  All  remediation  and testing were
completed by October 31, 1999 and no material malfunctions have occurred or been
discovered through March 10, 2000.

     The accounting,  network and financial packages for the Ridgewood companies
were basically off-the-shelf packages that were remediated,  where necessary, by
obtaining patches or updated versions.  The Managing Shareholder  estimates that
the  Trust's  allocable  portion of the cost of upgrades  that were  accelerated
because of the Year 2000 problem was approximately $300.

     The Managing  Shareholder  has two major  systems  affecting the Trust that
rely  on  custom-written  software,  the  subscription/investor   relations  and
investor  distribution  systems,  which maintain individual investor records and
effect disbursement of distributions to Investors.  These were remediated during
1999,  including the elements of those systems used to generate  internal  sales
reports  and  other  internal  reports.   Although  these  were  not  designated
mission-critical,  they were also successfully remediated by October 31, 1999. (
Some sub-systems were remediated using the "sliding window" technique,  in which
two digit years less than a threshold number are assumed to be in the 2000's and
higher two digit  numbers are assumed to be in the  1900's.  Although  this will
allow  compliance  for  several  years  beyond the year 2000,  eventually  those
systems will have to be rewritten  again or replaced.  The Managing  Shareholder
expects that the ordinary  course of system  upgrading will eventually cure this
problem.

     The Trust's share of the incremental cost for Year 2000 remediation of this
custom written software and related items for 1998 and prior years was less than
$5,000 and was approximately $4,500 for 1999.

     The Monterey and California  Pumping Projects were reviewed by personnel of
RPMCo to  determine  if their  electronic  control  systems  contained  software
affected by the Year 2000 problem or contained embedded  components that contain
Year 2000 flaws.  These assets rely on mechanical  and analog  systems that were
not  vulnerable to Year 2000 problems.  The  facilities  use personal  computers
running packaged software for routine recordkeeping and data logging, which were
upgraded as described  above.  To date the Trust has discovered no other systems
having a material impact on output,  environmental compliance,  recordkeeping or
any other material impact that have Year 2000 concerns. The Trust's share of the
estimated  costs of the review and of any minor  upgrades or  rehabilitation  is
estimated  at less than  $25,000.  The  operator of the  Berkshire  and Columbia
Projects  has advised the Trust that there were no material  year 2000  problems
affecting  those Projects and that no material costs were incurred for year 2000
remediation.

     The Managing  Shareholder and its affiliates do not  significantly  rely on
computer input from  suppliers and customers and thus are not directly  affected
by other  companies'  year 2000  compliance.  No material  adverse  effects from
customers' or suppliers year 2000 non-compliance have occurred.

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

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

Qualitative Information About Market Risk.

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

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

     Quantitative Information About Market Risk

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

                              December 31, 1999

                             Expected Maturity Date
                                      2003
                                                                  (U.S. $)

Note receivable from NRG                  $  1,729,181
  Interest rate                                      8%

Item 8.  Financial Statements and Supplementary Data.

Index to Financial Statements

Report of Independent Accountants                            F-2
Balance Sheet at December 31, 1999 and 1998                  F-3
Statement of Operations For the Three Years
  Ended December 31, 1999                                    F-4
Statement of Changes in Shareholders' Equity For
  the Three Years Ended December 31, 1999                    F-5
Statement of Cash Flows For the Three Years
  Ended December 31, 1999                                    F-6
Notes to Financial Statements                         F-7 to F-13

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

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

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

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

PART III

Item 10.  Directors and Executive Officers of the Registrant.

(a)  General.

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

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

(b)  Managing Shareholder.

     Ridgewood Power Corporation was incorporated in February 1991 as a Delaware
corporation  for the  primary  purpose  of acting as a managing  shareholder  of
business trusts and as a managing general partner of limited  partnerships which
are organized to participate in the development, construction and ownership of
Independent  Power  Projects.  It  organized  the Trust  and  acted as  managing
shareholder  until April 1999. On or about April 21, 1999 it was merged into the
current  Managing  Shareholder,  Ridgewood  Power LLC.  Ridgewood  Power LLC was
organized  in early  April 1999 and has no  business  other  than  acting as the
successor to Ridgewood Power Corporation.

     Robert  E.  Swanson  has  been  the  President,   sole  director  and  sole
stockholder of Ridgewood Power  Corporation since its inception in February 1991
and is now the  controlling  member,  sole manager and President of the Managing
Shareholder.  All of the equity in the Managing  Shareholder is or will be owned
by Mr. Swanson or by family trusts. Mr. Swanson has the power on behalf of those
trusts to vote or dispose of the membership equity interests owned by them.

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

     A number of other  companies are  affiliates  of Mr.  Swanson and Ridgewood
Power.  Each of these also was organized as a corporation  that was wholly-owned
by Mr. Swanson.  In April 1999, most of them were merged into limited  liability
companies  with  similar  names and Mr.  Swanson  became  the sole  manager  and
controlling  owner of each  limited  liability  company.  For  convenience,  the
remainder of this Memorandum will discuss each limited liability company and its
corporate predecessor as a single entity.

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

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

     Robert E. Swanson,  age 53, has also served as President of the Trust since
its inception in 1991 and as President of RPMCo,  Power I, Power III,  Power IV,
Power V and the Growth Fund, since their respective inceptions.  Mr. Swanson has
been President and registered  principal of Ridgewood  Securities and became the
Chairman of the Board of Ridgewood  Capital on its organization in 1998. He also
is  Chairman of the Board of the  Ridgewood  Capital  Venture  Partners I and II
venture capital funds. In addition,  he has been President and sole  stockholder
of  Ridgewood  Energy  since its  inception  in October  1982.  Prior to forming
Ridgewood  Energy in 1982,  Mr. Swanson was a tax partner at the former New York
and Los  Angeles  law firm of Fulop & Hardee  and an  officer  in the  Trust and
Investment  Division of Morgan  Guaranty  Trust  Company.  His  specialty  is in
personal tax and financial planning,  including income, estate and gift tax. Mr.
Swanson is a member of the New York State and New Jersey bars,  the  Association
of the Bar of the City of New York and the New York State Bar Association. He is
a graduate of Amherst College and Fordham University Law School.

     Robert L. Gold,  age 41,  has served as  Executive  Vice  President  of the
Managing  Shareholder,  RPMCo, the Trust,  Power I, Power III, Power IV, Power V
and  the  Growth  Fund  since  their   respective   inceptions,   with   primary
responsibility  for  marketing  and  acquisitions.  He  has  been  President  of
Ridgewood  Capital since its  organization  in 1998. As such, he is President of
the Ridgewood  Capital  Venture  Partners I and II funds.  He has served as Vice
President  and General  Counsel of  Ridgewood  Securities  Corporation  since he
joined the firm in December  1987.  Mr. Gold has also served as  Executive  Vice
President of Ridgewood Energy since October 1990. He served as Vice President of
Ridgewood  Energy from December 1987 through  September  1990. For the two years
prior to joining Ridgewood Energy and Ridgewood Securities Corporation, Mr. Gold
was a corporate attorney in the law firm of Cleary,  Gottlieb,  Steen & Hamilton
in New York City where his experience  included  mortgage  finance,  mergers and
acquisitions, public offerings, tender offers, and other business legal matters.
Mr.  Gold is a member of the New York  State bar.  He is a  graduate  of Colgate
University and New York University School of Law.

     Thomas R. Brown,  age 45, joined the Managing  Shareholder in November 1994
as Senior Vice  President and holds the same position with the Trust,  RPMCo and
each of the other trusts sponsored by the Managing Shareholder.  He became Chief
Operating Officer of the Managing  Shareholder,  RPMCo and the Power I through V
trusts in October 1996, and is the Chief  Operating  Officer of the Growth Fund.
Mr. Brown has over 20 years'  experience  in the  development  and  operation of
power and industrial projects.  From 1992 until joining the Managing Shareholder
he was employed by Tampella Services,  Inc., an affiliate of Tampella, Inc., one
of the world's largest  manufacturers  of boilers and related  equipment for the
power  industry.  Mr.  Brown was  Project  Manager  for  Tampella's  Piney Creek
project,  a $100 million  bituminous waste coal fired circulating  fluidized bed
power  plant.  Between  1990 and 1992 Mr.  Brown was Deputy  Project  Manager at
Inter-Power of Pennsylvania, where he successfully developed a 106 megawatt coal
fired  facility.  Between 1982 and 1990 Mr.  Brown was employed by  Pennsylvania
Electric  Company,  an  integrated  utility,  as a  Senior  Thermal  Performance
Engineer.  Prior to  that,  Mr.  Brown  was an  Engineer  with  Bethlehem  Steel
Corporation. He has an Bachelor of Science degree in Mechanical Engineering from
Pennsylvania  State  University  and an MBA in Finance  from the  University  of
Pennsylvania.  Mr. Brown  satisfied all  requirements  to earn the  Professional
Engineer designation in 1985.

     Martin V. Quinn,  age 53, assumed the duties of Chief Financial  Officer of
the Managing Shareholder, the Trust, four other trusts organized by the Managing
Shareholder and RPMCo in November 1996 under a consulting arrangement. He became
a full-time  officer of the Managing  Shareholder and RPMCo in April 1997 and is
now also  Chief  Financial  Officer  of the  Growth  Fund.  He is also the Chief
Financial  Officer of Ridgewood  Capital and of the  Ridgewood  Capital  Venture
Partners I and II funds.

     Mr. Quinn has 32 years of experience in financial  management and corporate
mergers and acquisitions,  gained with major,  publicly-traded  companies and an
international  accounting  firm. He formerly served as Vice President of Finance
and Chief Financial Officer of NORSTAR Energy, an energy services company,  from
February 1994 until June 1996.  From 1991 to March 1993,  Mr. Quinn was employed
by  Brown-Forman  Corporation,  a  diversified  consumer  products  company  and
distiller, where he was Vice President-Corporate Development. From 1981 to 1991,
Mr. Quinn held various  officer-level  positions with NERCO,  Inc., a mining and
natural  resource  company,  including  Vice  President-  Controller  and  Chief
Accounting  Officer  for  his  last  six  years  and  Vice   President-Corporate
Development.  Mr.  Quinn's  professional  qualifications  include his  certified
public  accountant  qualification in New York State,  membership in the American
Institute of Certified  Public  Accountants,  six years of  experience  with the
international accounting firm of  PricewaterhouseCoopers  LLP, and a Bachelor of
Science degree in Accounting and Finance from the University of Scranton (1969).

     Mary Lou  Olin,  age 47,  has  served  as Vice  President  of the  Managing
Shareholder,  RPMCo, Ridgewood Capital, the Trust, Power I, Power III, Power IV,
Power V and the Growth  Fund since  their  respective  inceptions.  She has also
served as Vice President of Ridgewood Energy since October 1984, when she joined
the  firm.  Her  primary  areas  of  responsibility   are  investor   relations,
communications and administration.  Prior to her employment at Ridgewood Energy,
Ms. Olin was a Regional  Administrator at McGraw-Hill Training Systems where she
was employed for two years.  Prior to that, she was employed by RCA Corporation.
Ms. Olin has a Bachelor of Arts degree from Queens College.

(c)  Management Agreement.

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

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

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

     The Board of the Trust (including both initial  Independent  Trustees) have
approved  the initial  Management  Agreement  and its  renewals.  Each  Investor
consented to the terms and  conditions  of the initial  Management  Agreement by
subscribing to acquire  Investor Shares in the Trust.  The Management  Agreement
will remain in effect until January 4, 2001 [assumes approval by board] and year
to year thereafter as long as it is approved at least annually by (i) either the
Board  of the  Trust or a  majority  in  interest  of the  Investors  and (ii) a
majority of the Independent Trustees. The agreement is subject to termination at
any time on 60 days'  prior  notice by the Board,  a majority in interest of the
Investors or the Managing Shareholder.  The agreement is subject to amendment by
the parties  with the approval of (i) either the Board or a majority in interest
of the Investors and (ii) a majority of the Independent Trustees.

(d) Executive Officers of the Trust.

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

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

(e)  The Trustees.

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

     The  Independent  Trustees of the Trust are Ralph O. Hellmold,  Jonathan C.
Kaledin  and  Joseph  Ferrante,  Jr..  Set forth  below is  certain  information
concerning the Independent  Trustees,  who also serve as independent trustees of
Ridgewood Power III and as independent  panel members of Ridgewood Power V. Both
are independent power programs  sponsored by Ridgewood Power.  Independent panel
members  must  approve  transactions  between  their  program  and the  Managing
Shareholder or companies affiliated with the Managing  Shareholder,  but have no
other responsibilities. Neither Mr. Hellmold nor Mr. Kaledin nor Mr. Ferrante is
otherwise  affiliated with the Trust, any of the Trust's officers or agents, the
Managing  Shareholder,  any  other  Trustee,  any  affiliates  of  the  Managing
Shareholder and any other Trustees, or any director,  officer or agent of any of
the foregoing.

     Ralph O. Hellmold,  age 59, is founder,  sole  shareholder and President of
Hellmold  Associates,  Inc., an investment  banking firm and investment  adviser
specializing  in working with  troubled  companies  or their  creditors to raise
capital,  divest businesses and restructure  liabilities,  whether in or outside
bankruptcy.  Other financial advisory services provided by Hellmold  Associates,
Inc. include mergers and acquisitions advice, valuations,  fairness opinions and
expert  witness  testimony.  In addition to working with  troubled  companies or
their creditors, Hellmold Associates, Inc. also acts as general partner of funds
which invest in the securities of financially distressed companies.

     From 1987 to 1990, when he formed Hellmold  Associates,  Inc., Mr. Hellmold
was a Managing Director at Prudential-Bache  Capital Funding, where he served as
co-head  of the  Corporate  Finance  Group,  co-head of the  Investment  Banking
Committee and head of the Financial  Restructuring Group. From 1974 to 1987, Mr.
Hellmold was a partner at Lehman Brothers and its successors, where he worked in
the General Corporate  Finance Group and co-founded the Financial  Restructuring
Group.  Prior  thereto,  he was a  research  analyst at Lehman  Brothers  and at
Francis I. du Pont & Company.  He received  his  undergraduate  degree magna cum
laude from  Harvard  College and an M.B.A.  from  Columbia  University.  He is a
Chartered  Financial  Analyst  and a member of the New York  Society of Security
Analysts.  Mr.  Hellmold  is the holder of one-half  share in each of  Ridgewood
Power I and Ridgewood  Power III, a shareholder  of one-half  Share in the Trust
and a limited  partner or shareholder  in numerous  limited  partnerships  and a
business  trust  sponsored  by  Ridgewood  Energy  to  invest  in  oil  and  gas
development and related businesses. Mr. Hellmold is a director of Core Materials
Corporation,  Columbus, Ohio and of International Aircraft Investors,  Torrance,
California.

     Jonathan  C.  Kaledin,  age 42, has been New York  Regional  Counsel of The
Nature  Conservancy,  the international  land conservation  organization,  since
September  1995.  From 1990 to June 1995, he was the  Executive  Director of the
National  Water  Funding  Council  ("NWFC"),  an  advocacy  and  public  affairs
organization representing municipalities, businesses, financial institutions and
others on the financial aspects of clean water infrastructure  projects required
by the federal Clean Water Act and the federal Safe Drinking  Water Act..  Prior
to running the NWFC,  Mr.  Kaledin  practiced law in both the private and public
sectors,  specializing in  environmental  and real estate  matters.  Mr. Kaledin
received his undergraduate degree magna cum laude from Harvard College and a law
degree from New York University.

         The  Independent  Trustees  and the Managing  Shareholder  expanded the
number of  Independent  Trustees  to three in January  2000 and  elected  Joseph
Ferrante, Jr. as the additional Independent Trustee. Mr. Ferrante, age [55], has
been a lawyer in private  practice in  Ridgewood,  New Jersey for more than five
years specializing in business and taxation matters.  He received a Juris Doctor
degree  in  law  from  the  George  Washington  University  in  [1970]  and  his
undergraduate  degree  from the Johns  Hopkins  University.  He  advises a large
number of start-up and entrepreneurial companies.

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

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

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

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

     To the  knowledge of the Trust,  there were no  violations of the reporting
requirements  of section  16(a) of the 1934 Act by officers and directors of the
Trust in the last fiscal year.

(g)  RPMCo.

     As  discussed  above at Item 1 -  Business,  RPMCo has  assumed  day-to-day
management  responsibility  for the Monterey Project,  effective January 1, 1996
and operating  responsibility for the California Pumping Project in October 1998
and had assumed certain responsibilities for the San Diego Project in early 1997
until its sale. Like the Managing Shareholder,  RPMCo is controlled by Robert E.
Swanson.  It has  entered  into an  "Operation  Agreement"  with  certain of the
Trust's  subsidiaries,  effective January 1, 1996, under which RPMCo,  under the
supervision of the Managing  Shareholder,  provides the management,  purchasing,
engineering,  planning and administrative  services for those Projects that were
previously furnished by employees of the Trust or by unaffiliated  professionals
or  consultants  and that  were  borne by the  Trust or  Projects  as  operating
expenses.  To the extent  that those  services  were  provided  by the  Managing
Shareholder and related directly to the operation of the Project,  RPMCo charges
the Trust at its cost for these services and for the Trust's allocable amount of
certain  overhead  items.  RPMCo shares space and  facilities  with the Managing
Shareholder  and its  Affiliates.  To the extent  that  common  expenses  can be
reasonably allocated to RPMCo, the Managing Shareholder may, but is not required
to, charge RPMCo at cost for the allocated  amounts and such  allocated  amounts
will be borne by the Trust and other  programs.  Common expenses that are not so
allocated are borne by the Managing Shareholder.

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

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

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

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

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

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

Item 11.  Executive Compensation.

     Through  1995,  the  executive  officers  of the  Trust  and  the  Managing
Shareholder were compensated by Ridgewood Energy.  The Trust was not charged for
their compensation; the Managing Shareholder remitted a portion of the fees paid
to it by the Trust to reimburse  Ridgewood  Energy for employment costs incurred
on  the  Managing  Shareholder's  business.  Beginning  in  1996,  the  Managing
Shareholder  compensates these persons without additional  payments by the Trust
and will be  reimbursed  by  Ridgewood  Energy for costs  related  to  Ridgewood
Energy's  business.  The Trust  reimburses  RPMCo at allocable cost for services
provided by RPMCo's  employees;  no such  reimbursement  per  employee  exceeded
$60,000 in 1998 or 1999.  Information  as to the fees  payable  to the  Managing
Shareholder  and  certain   affiliates  is  contained  at  Item  13  --  Certain
Relationships and Related Transactions.

     As  compensation  for  services  rendered  to the  Trust,  pursuant  to the
Declaration,  each  Independent  Trustee is entitled to be paid by the Trust the
sum of $5,000  annually and to be reimbursed  for all  reasonable  out-of-pocket
expenses  relating to attendance at Board  meetings or otherwise  performing his
duties  to  the  Trust.  Accordingly,  in  January  1996  the  Trust  paid  each
Independent Trustee $5,000 for his services.  The Board of the Trust is entitled
to review the  compensation  payable to the  Independent  Trustees  annually and
increase or decrease it as the Board sees reasonable.  The Trust is not entitled
to pay the Independent Trustees compensation for consulting services rendered to
the Trust  outside the scope of their  duties to the Trust  without  prior Board
approval.

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

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

     The Trust sold 235.3775  Investor  Shares  (approximately  $23.5 million of
gross  proceeds)  of  beneficial  interest  in the Trust  pursuant  to a private
placement  offering under Rule 506 of Regulation D under the Securities Act. The
offering closed on January 31, 1994. Further details concerning the offering are
set forth above at Item 1 -- Business.

     The Managing  Shareholder  purchased for cash in the offering 1.45 Investor
Shares (.6 of 1% of the  outstanding  Investor  Shares).  Ralph O. Hellmold,  an
Independent Trustee of the Trust, purchased for cash in the offering one-half of
a full Investor  Share.  By virtue of their  purchases of Investor  Shares,  the
Managing  Shareholder and Mr. Hellmold are entitled to the same ratable interest
in the Trust as all other  purchasers of Investor  Shares.  No other Trustees or
executive  officers  of the  Trust  acquired  Investor  Shares  in  the  Trust's
offering.

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

Item 13.  Certain Relationships and Related Transactions.

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

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

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

     In 1998 and  1999,  as stated at Item 5 - Market  for  Registrant's  Common
Equity and Related  Stockholder  Matters,  as well as in prior years,  the Trust
made  distributions to the Managing  Shareholder (which is a member of the Board
of the Trust) as stated at Item 5 - Market for  Registrant's  Common  Equity and
Related Stockholder  Matters.  In addition,  the Trust and its subsidiaries paid
fees and  reimbursements  to the  Managing  Shareholder  and its  affiliates  as
follows:


Fee              Paid to          1999     1998       1997       1996      1995

Management       Managing

 fee             Shareholder  $  55,607 $ 381,594 $  401,085    328,952 $494,000
Cost reimburse-
 ments*          RPMCo       2,841,952  1,470,207  1,610,806  1,207,252       0



* Prior to  1996,  these  costs  were  either  absorbed  by the  Trust or by the
Projects  directly.  These  include  all  payroll,  fuel and other  expenses  of
operating  Projects  that are not operated by  non-affiliated  managers,  and an
allocation of RPMCo's overhead costs. These costs are almost exclusively paid by
the Projects and do not appear in the Trust's financial statements.

     The  investment  fee equaled 2% of the proceeds of the offering of Investor
Shares and was payable for the Managing  Shareholder's services in investigating
and evaluating investment  opportunities and effecting investment  transactions.
The placement agent fee (1% of the offering proceeds) and sales commissions were
also paid from proceeds of the offering, as was the organizational, distribution
and offering fee (5% of offering  proceeds) for legal,  accounting,  consulting,
filing, printing,  distribution,  selling, closing and organization costs of the
offering.

     The management fee,  payable monthly under the Management  Agreement at the
annual rate of 2.5% of the Trust's net asset value,  began on the date the first
Project was  acquired  and  compensates  the  Managing  Shareholder  for certain
management,  administrative  and  advisory  services  for the  Trust.  Under the
Declaration of Trust,  the annual rate fell to 1.5% per year beginning  February
1, 1999.  Beginning April, 1999, the Managing Shareholder waived the fee for the
period  in which  distributions  were  suspended.  If the  Managing  Shareholder
resumes  distributions to Investors from the Trust, as it expects to do in April
2000,  it intends to resume  payment  of the  management  fee at the 1.5% of net
asset value annual rate.

     In addition to the foregoing, the Trust reimbursed the Managing Shareholder
at cost for expenses and fees of  unaffiliated  persons  engaged by the Managing
Shareholder  for Trust  business  and in years before 1996 for payroll and other
costs of operation of the Monterey and California Pumping Projects.  In 1996 and
1997,  these  reimbursements  were paid to RPMCo. The  reimbursements  to RPMCo,
which do not exceed its actual costs and  allocable  overhead,  are described at
Item 10(g) - Directors and Executive Officers of the Registrant -- RPMCo.

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

PART IV

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

(a)  Financial Statements.

     See the Index to Financial Statements in Item 8 hereof.

(b) Reports on Form 8-K.


     No Forms 8-K were filed with the  Commission by the  Registrant  during the
quarter ending December 31, 1999.

(c)  Exhibits

     3A.   Certificate of Trust of the Registrant,  is incorporated by reference
           to Exhibit 3A to the Registrant's  Registration  Statement on Form 10
           filed with the Commission on February 27, 1993.

     3B.   Amended  and  Restated  Declaration  of Trust of the  Registrant,  is
           incorporated  by  reference to Exhibit 4 to the  Quarterly  Report on
           Form 10Q of the Registrant for the quarter ended September 30, 1993.

     10A.   Management  Agreement  dated  as of  January  4,  1993  between  the
            Registrant  and Ridgewood  Power  Corporation,  is  incorporated  by
            reference to Exhibit 10 to the Registrant's  Registration  Statement
            on Form 10 filed with the Commission on February 27, 1993.

     10B.   Limited  Partnership   Agreement  of  Pittsfield  Investors  Limited
            Partnership  (without  exhibits),  is  incorporated  by reference to
            Exhibit 2(i) to the Form 8-K of Registrant filed with the Commission
            on January 19, 1994.

     10C.   Asset  Purchase  Agreement  between  EAC  Systems,  Inc.  and  Vicon
            Recovery  Associates  ("Vicon")  dated as of December  23, 1992 (the
            "Asset Purchase Agreement")  (without exhibits),  is incorporated by
            reference to Exhibit 2(ii) to the Form 8-K of Registrant  filed with
            the Commission on January 19, 1994.

     10D.   First Amendment of Asset Purchase Agreement dated as of December 30,
            1993 (without  exhibits),  is  incorporated  by reference to Exhibit
            2(ii) to the Form 8-K of  Registrant  filed with the  Commission  on
            January 19, 1994.

     10E.   Lease dated as of September 1, 1979 between the City of  Pittsfield,
            Massachusetts  (acting by and  through  its  Industrial  Development
            Financing Authority),  is incorporated by reference to Exhibit 2(iv)
            to the Form 8-K of Registrant filed with the Commission on
            January 19, 1994.

     10F.   Amended and Restated  Solid Waste  Disposal  and  Resource  Recovery
            Agreement  dated August 6, 1979 by and among the City of Pittsfield,
            Vicon and others  (together with amendments  dated October 26, 1984,
            July 28, 1989 and December 29, 1993),  is  incorporated by reference
            to  Exhibit  2(v) to the  Form  8-K of  Registrant  filed  with  the
            Commission on January 19, 1994.

     10G.   Steam Purchase  Agreement by and between Crane & Co., Inc. and Vicon
            dated as of February 1, 1979 (with  amendments),  is incorporated by
            reference to Exhibit 2(vi) to the Form 8-K of Registrant  filed with
            the Commission on January 19, 1994.

     The Registrant is no longer a party to former Exhibits 10H
through 10M because of its sale of the San Diego Project.  See
Exhibits 10P-R.

     10N.   Acquisition  Agreement  dated as of January 9, 1995 among  Sunnyside
            Cogen, Inc., and NorCal Sunnyside Inc., as Sellers, and RW Monterey,
            Inc.  and  Ridgewood  Electric  Power  Trust II, as  Purchasers,  is
            incorporated  by  reference  to  Exhibit  2(i)  to  the  Form  8K of
            Registrant filed with the Commission on February 16, 1995.

     10O.   Acquisition Agreement,  dated as of March 31, 1995, by and among the
            Trust and its subsidiary,  Pump Services Corporation,  as purchasers
            and Donald C. Stewart,  Union Energy Corp.  and Donald A. Sherman as
            sellers.  Incorporated  by  reference  to Exhibit  10O to the Annual
            Report on Form 10-K of the  Registrant  for the year ended  December
            31, 1995.

     10P.  Partnership Interest Purchase Agreement, dated as of
            June 25, 1997, by and among the Trust, RSD Power
            Corp., NRG San Diego, Inc., and NRG del Coronado,
            Inc.  Incorporated by reference to Exhibit 2.A. of
            the Current Report on Form 8-K of the Registrant,
            dated June 25, 1997.  Exhibits and schedules are
            omitted, and a list of the omitted documents is found
            at page 20 of the Agreement.  The Registrant agrees
            to furnish supplementally a copy of any omitted
            exhibit or schedule to the Partnership Interest
            Purchase Agreement to the Commission upon request.

     10Q.  Purchase Money Promissory Note.  Incorporated by
            reference to Exhibit 2.B. of the Current Report
            on Form 8-K of the Registrant, dated June 25, 1997.

     10R.   Security and Pledge  Agreement,  dated as of June 25,  1997,  by and
            among the Trust, RSD Power Corp.,  NRG San Diego,  Inc., and NRG del
            Coronado,  Inc.  Incorporated  by  reference  to Exhibit 2.C. of the
            Current Report on Form 8-K of the Registrant, dated June 25, 1997.


     21.   Subsidiaries of the Registrant.           Page 66

     24.   Powers of Attorney                        Page 67

     27.   Financial Data Schedule                   Page 69

<PAGE>

SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Signature                         Title                     Date

RIDGEWOOD ELECTRIC POWER TRUST II (Registrant)

By: /s/Robert E. Swanson    President and Chief         March 30, 2000
      Robert E. Swanson      Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

By: /s/Robert E. Swanson    President and Chief          March 30, 2000
       Robert E. Swanson      Executive Officer

By: /s/Martin V. Quinn      Senior Vice President        March 30, 2000
      Martin V. Quinn      and Chief Financial Officer

By: /s/Christopher I. Naunton   Director of Accounting   March 30, 2000
      Christopher I. Naunton

RIDGEWOOD POWER LLC        Managing Shareholder          March 30, 2000

By: /s/Robert E. Swanson    President
      Robert E. Swanson

/s/Robert E. Swanson   *    Independent Trustee    March 30, 2000
   Ralph O. Hellmold

 /s/Robert E. Swanson  *    Independent Trustee    March 30, 2000
    Jonathan C. Kaledin

 /s/Robert E. Swanson  *    Independent Trustee    March 30, 2000
    Joseph Ferrante, Jr.

*  Robert E. Swanson, as attorney-in-fact for the Independent Trustee

<PAGE>
                        Ridgewood Electric Power Trust II

                              Financial Statements

                        December 31, 1999, 1998 and 1997


                                      (F1)
<PAGE>


                        Report of Independent Accountants


To the Shareholders and Trustees of
Ridgewood Electric Power Trust II:

In our opinion,  the accompanying  balance sheets and the related  statements of
operations, changes in shareholders' equity and of cash flows present fairly, in
all material respects,  the financial position of Ridgewood Electric Power Trust
II (the  "Trust")  at  December  31,  1999  and  1998,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1999, in conformity with accounting  principles  generally accepted
in the United States.  These financial  statements are the responsibility of the
Trust's  management;  our  responsibility  is to  express  an  opinion  on these
financial  statements  based on our  audits.  We  conducted  our audits of these
statements  in  accordance  with auditing  standards  generally  accepted in the
United  States,  which  require  that we plan and  perform  the  audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.

As explained in Note 3, the financial  statements include  investments valued at
$10,274,790 and $10,594,402 (86% and 87% of shareholders' equity,  respectively)
as of December 31, 1999 and 1998, respectively, whose values have been estimated
by management in the absence of readily  ascertainable  market  values.  We have
reviewed the  procedures  used by  management  in arriving at their  estimate of
value and have inspected underlying documentation, and, in the circumstances, we
believe  the  procedures  are  reasonable  and  the  documentation  appropriate.
However,  because of the inherent  uncertainty  of  valuation,  those  estimated
values may differ  significantly from the values that would have been used had a
ready market for the investments  existed, and the differences could be material
to the financial statements.



PricewaterhouseCoopers LLP
New York, NY
March 24, 2000

                                      (F2)

<PAGE>

Ridgewood Electric Power Trust II
Balance Sheet
--------------------------------------------------------------------------------

                                                       December 31,
                                               ----------------------------
                                                   1999           1998
                                               ------------    ------------

Assets:
Investments in power generation projects ...   $ 10,274,790    $ 10,594,402
Cash and cash equivalents ..................        537,541            --
Notes receivable from sale of investment ...      1,729,181       2,140,866
Due from affiliates ........................           --             8,819
Other assets ...............................          3,306           3,588
                                               ------------    ------------

  Total assets .............................   $ 12,544,818    $ 12,747,675
                                               ------------    ------------

Liabilities and Shareholders' Equity:

Liabilities:
Accounts payable and accrued expenses ......   $     49,923    $    100,897
Borrowings under line of credit facility ...        400,000         300,000
Due to affiliates ..........................        153,191         214,373
                                               ------------    ------------

  Total liabilities ........................        603,114         615,270
                                               ------------    ------------

Commitments and contingencies

Shareholders' equity:
Shareholders' equity (235.3775 shares
 issued and outstanding)
                                                 12,023,530      12,212,324
Managing shareholder's accumulated deficit .        (81,826)        (79,919)
                                               ------------    ------------

  Total shareholders' equity ...............     11,941,704      12,132,405
                                               ------------    ------------

  Total liabilities and shareholders' equity   $ 12,544,818    $ 12,747,675
                                               ------------    ------------






                 See accompanying notes to financial statements.

                                      (F3)
<PAGE>

Ridgewood Electric Power Trust II
Statement of Operations
--------------------------------------------------------------------------------

                                            Year Ended December 31,
                                  ----------------------------------------
                                     1999          1998           1997
                                  -----------   -----------    -----------
Revenue:
  Income from power generation
   projects ...................   $   131,859   $   953,576    $ 1,715,860
  Gain on sale of RSD Power
   Partners, L.P. .............          --            --        2,545,846
  Interest income .............       162,686       196,480        133,770
                                  -----------   -----------    -----------
    Total revenue .............       294,545     1,150,056      4,395,476
                                  -----------   -----------    -----------
Expenses:
  Writedown of investment in
   Pittsfield Investors Limited
   Partnership ................          --       2,347,330           --
  Writedown of electric power
   equipment ..................          --            --          331,018
  Management fee ..............        55,607       381,594        401,085
  Accounting and legal fees ...        52,721        75,111         39,853
  Interest ....................        27,378         7,081           --
  Miscellaneous ...............        64,231        43,751         31,755
                                  -----------   -----------    -----------
    Total expenses ............       199,937     2,854,867        803,711
                                  -----------   -----------    -----------

    Net income (loss) .........   $    94,608   $(1,704,811)   $ 3,591,765
                                  -----------   -----------    -----------






                 See accompanying notes to financial statements.
                                      (F4)
<PAGE>

Ridgewood Electric Power Trust II
Statement of Changes in Shareholders' Equity
For the Years Ended December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

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

Shareholders' equity,
 January 1, 1997 ....   $ 16,391,464    $    (37,705)   $ 16,353,759

Cash distributions ..     (4,634,952)        (46,818)     (4,681,770)

Net income ..........      3,555,848          35,917       3,591,765
                        ------------    ------------    ------------

Shareholders' equity,
 December 31, 1997 ..     15,312,360      15,263,754         (48,606)

Cash distributions ..     (1,412,273)        (14,265)     (1,426,538)

Net loss ............     (1,687,763)        (17,048)     (1,704,811)
                        ------------    ------------    ------------

Shareholders' equity,
 December 31, 1998 ..     12,212,324         (79,919)     12,132,405

Cash distributions ..       (282,456)         (2,853)       (285,309)

Net income ..........         93,662             946          94,608
                        ------------    ------------    ------------

Shareholders' equity,
 December 31, 1999 ..   $ 12,023,530    $    (81,826)   $ 11,941,704
                        ------------    ------------    ------------




                 See accompanying notes to financial statements.

                                      (F5)
<PAGE>

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

                                                 Year Ended December 31,
                                      -----------------------------------------
                                         1999            1998         1997
                                      -----------    -----------    -----------
Cash flows from operating
 activities:
Net income (loss) .................   $    94,608    $(1,704,811)   $ 3,591,765
                                      -----------    -----------    -----------
Adjustments to  reconcile
 net income (loss) to cash
 flows from  operating activities
 Writedown of investment in
  Pittsfield Investors Limited
  Partnership .....................          --        2,347,330           --
 Writedown of electric power
  equipment .......................          --             --          331,018
 Gain on sale of RSD Power
  Partners, L.P. ..................          --             --       (2,545,846)
 Proceeds from sale of investment
  in RSD Power Partners, L.P.,
  net .............................          --             --        3,353,121
 Proceeds from note receivable ....       411,685        380,135        178,999
 Investments in power generation
  projects ........................          --         (208,553)      (123,872)
 Return of investments in power
  generation projects .............       319,612           --             --
 Changes in assets and liabilities:
  Decrease (increase) in other
   assets .........................           282         (1,152)        16,205
  Decrease (increase) in due from
   affiliates .....................         8,819         (8,819)          --
  (Decrease) increase in accounts
   payable and accrued expenses ...       (50,974)        68,711        (80,296)
  (Decrease) increase in due to
   affiliates .....................       (61,182)        77,879        136,494
                                      -----------    -----------    -----------

   Total adjustments ..............       628,242      2,655,531      1,265,823
                                      -----------    -----------    -----------

Net cash provided by operating
 activities .......................       722,850        950,720      4,857,588
                                      -----------    -----------    -----------

Cash flows from financing
 activities:
Borrowings under line of
 credit facility ..................       550,000        300,000           --
Repayments under line of
 credit facility ..................      (450,000)          --             --
Cash distributions to
 shareholders .....................      (285,309)    (1,426,538)    (4,681,770)
                                      -----------    -----------    -----------

Net cash used in financing
 activities .......................      (185,309)    (1,126,538)    (4,681,770)
                                      -----------    -----------    -----------

Net increase (decrease)  in
 cash and cash  equivalents .......       537,541       (175,818)       175,818

Cash and cash equivalents,
 beginning of year ................          --          175,818           --
                                      -----------    -----------    -----------

Cash and cash equivalents,
 end of year ......................   $   537,541    $      --      $   175,818
                                      -----------    -----------    -----------

Non-cash activities:
Note received from sale of
 RSD Power Partners, L.P. .........
                                      $      --      $      --      $ 2,700,000
                                      -----------    -----------    -----------



                 See accompanying notes to financial statements.

                                      (F6)
<PAGE>
Ridgewood Electric Power Trust II
Notes to Financial Statements
--------------------------------------------------------------------------------


1.       Organization and Purpose

     Nature of business
     Ridgewood  Electric  Power Trust II (the  "Trust") was formed as a Delaware
     business   trust  on  November  20,  1992,  by  Ridgewood   Energy  Holding
     Corporation  acting as the Corporate Trustee.  The managing  shareholder of
     the Trust is Ridgewood Power LLC (formerly  Ridgewood  Power  Corporation).
     The Trust began  offering  shares on January 4, 1993 and  discontinued  its
     offering of shares on January 31, 1994.

     The  Trust  was  organized  to  invest  in  independent   power  generation
     facilities and in the development of these  facilities.  These  independent
     power generation  facilities include cogeneration  facilities which produce
     electricity and thermal energy and other power plants that use various fuel
     sources (except  nuclear).  The power plants sell  electricity and, in some
     cases,  thermal  energy to utilities and industrial  users under  long-term
     contracts.

     "Business Development Company" election
     Effective  April 29, 1993,  the Trust  elected to be treated as a "Business
     Development   Company"  under  the  Investment  Company  Act  of  1940  and
     registered its shares under the Securities Exchange Act of 1934.

2.       Summary of Significant Accounting Policies

     Use of estimates
     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities, and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.   Actual  results  could  differ  from  the
     estimates.

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

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

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

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

(F7)
<PAGE>


3.       Investments in Power Generation Projects

     The Trust  had the  following  investments  in power  generation  and other
     projects:

                                        December 31,  December 31,
                                           1999          1998
                                        -----------   -----------
B-3 Limited Partnership .............   $ 4,001,843   $ 4,001,843
Sunnyside Cogeneration Partners, L.P.     5,170,812     5,425,020
California Pumping Project ..........     1,102,135     1,167,539
                                        -----------   -----------
                                        $10,274,790   $10,594,402
                                        -----------   -----------

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

                                              For the Year Ended December 31,
                                           ------------------------------------
                                               1999        1998          1997
                                           ----------   ----------   ----------
Pittsfield Investors Limited Partnership   $     --     $  175,725   $  359,494
B-3 Limited Partnership ................      100,000      250,000      265,000
Sunnyside Cogeneration Partners, L.P. ..         --        515,403      784,449
California Pumping Project .............       31,859       12,448      183,623
RSD Power Partners, L.P. ...............         --           --         50,000
Project development limited partnerships         --           --         73,294
                                           ----------   ----------   ----------
                                           $  131,859   $  953,576   $1,715,860
                                           ----------   ----------   ----------

     Pittsfield Investors Limited Partnership (known as the Berkshire project)
     On January 4, 1994, the Trust made a limited partnership investment in this
     partnership,  which was formed to acquire an operating facility, located in
     Pittsfield,  Massachusetts.  The facility,  which has been operating  since
     1981,  burns  municipal  solid waste supplied by the City of Pittsfield and
     surrounding communities. The facility has a long-term supply agreement with
     the City of  Pittsfield,  which expires in November  2004,  under which the
     City makes  payments to the facility for receiving the waste.  The facility
     generates  additional  revenue by  selling  steam  produced  from the waste
     burning  process to a nearby paper mill under a long-term  contract,  which
     also expires in November 2004.

     In exchange for its investment, the Trust is entitled to receive annually a
     preferred  distribution  from available cash from the facility equal to 15%
     of its  investment.  In the event that in any given year available net cash
     flow from the project  does not at least equal the amount of the  preferred
     minimum return, the amount of such shortfall is payable on a priority basis
     out of any available net cash flow in subsequent  years. The Trust may also
     be entitled to receive  additional  distributions from any net cash flow in
     excess  of the 15%  return on its  investment.  The  aggregate  cost of the
     Trust's  investment in the partnership  was $2,347,330.  The Trust received
     distributions of $175,725 and $359,494 from the project for the years ended
     December 31, 1998 and 1997, respectively.

     In 1998,  the City of  Pittsfield  closed the nearby  landfill to which the
     project had sent the ash residue  from the burning of the  municipal  solid
     waste.  The additional cost of transporting  the ash to other landfills has
     significantly reduced the cash flows generated by the project. Although the
     project manager is actively seeking ways to enhance the project's  revenue,
     the ability of the project to make distributions to the Trust in the future
     is  questionable.  Accordingly,  in 1998 the Trust  recorded a writedown of
     $2,347,330 to reduce the estimated fair value of the project to zero.

     B-3 Limited Partnership (known as the Columbia project)
     On August 31, 1994, the Trust made a limited partnership investment in this
     partnership,  which was formed to construct  and operate a municipal  waste
     transfer  station,  located  in  Columbia  County,  New York.  The  project
     commenced operations in January 1995.

     In exchange for its investment, the Trust is entitled to receive annually a
     preferred  distribution  of available net cash flow from the facility equal
     to 18% of its investment. In the event that in any given year available net
     cash  flow  from the  project  does not at least  equal  the  amount of the
     preferred  minimum  return,  the amount of such  shortfall  is payable on a
     priority basis out of any available net cash flow in subsequent  years. The
     Trust may also be entitled to receive additional distributions from any net
     cash flow in excess of the 18% return on its investment. The aggregate cost
     of the Trust's  investment in the  partnership  was  $4,001,843.  The Trust
     received distributions of $100,000,  $250,000 and $265,000 from the project
     for the years ended December 31, 1999, 1998 and 1997, respectively.

                                      (F8)
<PAGE>

     Sunnyside Cogeneration Partners, L.P. (known as the Monterey project)
     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 electric cogeneration facility,  located in Monterey County,
     California.  Electricity  is sold to the Pacific Gas and  Electric  Company
     ("PG&E") under a long term contract expiring in 2020. The aggregate cost of
     the Trust's  investment  at December 31, 1999 and 1998 was  $5,170,812  and
     $5,425,020,  respectively. The Trust received distributions of $515,403 and
     $784,449  from the project for the years ended  December 31, 1998 and 1997,
     respectively.

     In February 1999, PG&E notified the Monterey  Project that it had concluded
     that the  Monterey  Project had not met  certain  thermal  energy  delivery
     requirements of a cogeneration facility. On April 1, 1999, it brought legal
     proceedings  against  the Trust's  subsidiary  that owns the  Project.  The
     complaint  only  requests that the Project  refund the gas price  discounts
     received,  but an adverse decision might affect  subsequent years and might
     also serve as the basis for an action to invalidate the power contract. The
     Trust  believes  that  the  Project  has met  and  continues  to  meet  the
     requirements  and that the utility's  conclusion  can be supported  only by
     improper action by the utility. In particular, the Trust believes that PG&E
     has chosen a new location at which it is metering and computing  efficiency
     standards. That location is materially different from the location at which
     efficiency was measured from the inception of the Project and is located at
     a point  where  efficiency  measurements  necessarily  would be  materially
     lower. The Trust also is investigating whether there are systemic and other
     problems  with the utility's  data.  The  proceeding at the Federal  Energy
     Regulatory  Commission  is  expected to begin  shortly.  Although it is too
     early to estimate the precise  impact of this  lawsuit on the Project,  the
     Project may incur  material  costs in defending  this  proceeding and other
     potential action by PG&E.

     On  December  31,  1998  the  Trust,  through  subsidiaries,  filed a legal
     complaint in the Superior Court of California  for Monterey  County against
     Waukesha-Pierce,  Inc. and subsidiaries, alleging that the subsidiaries had
     not disclosed  the  existence of an  obligation of the Monterey  Project to
     Pacific Gas and Electric  Company and therefore  breached a warranty in the
     acquisition  agreement.  The  claim  was for  approximately  $273,000  plus
     interest and expenses. Waukesha-Pierce, Inc. was included in the proceeding
     as a contractual guarantor.  On January 17, 1999, a separate action against
     Waukesha-Pierce,  Inc. was filed by the Trust's  subsidiaries in the United
     States  District  Court for the  Northern  District of Texas to enforce the
     guaranty.  The parties  agreed to dismiss the Texas case without  prejudice
     before material  proceedings  resulted.  The California case was settled in
     March 2000;  Waukesha-Pierce Inc. agreed to pay the Project $175,000 and to
     cooperate with the Project in the potential FERC proceedings  involving the
     Monterey Project and the Trust agreed to cooperate with  Waukesha-Pierce in
     releasing funds due from PG&E to Waukesha-Pierce.

     California Pumping Project
     On March 31, 1995,  the Trust  acquired a package of natural gas and diesel
     engines,  which  drive  deep  irrigation  well  pumps  in  Ventura  County,
     California. The engines' shaft horsepower-hours are sold to the operator at
     a discount from the  equivalent  kilowatt  hours of  electricity.  Prior to
     September  30, 1998,  the project was operated by a third party manager and
     the Trust  received a distribution  of $0.02 per equivalent  kilowatt up to
     3,000  running  hours per year and $0.01 per  equivalent  kilowatt for each
     additional  running hour per year. On October 1, 1998, the Trust terminated
     the operating  agreement  with the third party manager and Ridgewood  Power
     Management LLC ("Ridgewood Management", formerly Ridgewood Power Management
     Corporation), an affiliate of the managing shareholder, began operating the
     project.  The project paid $105,840 to the third party manager to terminate
     the operating  agreement.  The total  investment in the project at December
     31,  1999 and 1998 was  $1,102,135  and  $1,167,539  and the project has an
     equivalent   of  3  megawatts  of  power.   The  operator  pays  for  fuel,
     maintenance,  repair and replacement.  The Trust received  distributions of
     $31,859, $12,448 and $183,623 from the project for the years ended December
     31, 1999, 1998 and 1997, respectively.

     RSD Power Partners, LP (known as the San Diego project)
     On March 21, 1994, the Trust made a limited  partnership  investment in the
     partnership,  which was formed to acquire an operating facility, located in
     San Diego,  California.  The facility, which has been operating since 1972,
     sold  chilled  water used in the central air  conditioning  of  commercial,
     retail and government  office buildings  connected by a closed  underground
     pipeline loop owned and used exclusively by the San Diego project.

     In exchange for its investment,  the Trust was entitled to receive annually
     the greater of either 80% of net profits, as defined, from the project or a
     preferred minimum return of 25% on its total investment. The aggregate cost
     of the  Trust's  investment  in the  partnership  at the  time of sale  was
     $3,507,275.  The Trust received  distributions  of $50,000 from the project
     for the year ended December 31, 1997.

                                      (F9)
<PAGE>

     On June 25,  1997,  the Trust sold its entire  partnership  interest in RSD
     Power  Partners,  LP to  subsidiaries  of NRG Energy,  Inc. of Minneapolis,
     Minnesota  for  $6,150,000.  The  Trust  received  $3,450,000  in cash  and
     $2,700,000  in the form of an 8% promissory  note payable  monthly over six
     years.  The  sale  resulted  in  a  gain  of  $2,545,846,  after  deducting
     transaction costs of $96,879.

     Investments in project development limited partnerships
     In prior years, the Trust made investments in several limited  partnerships
     with other major  participants  in the power  industry to provide access to
     investments in larger projects in which these  participants  would take the
     leading role in the  acquisition or development of such projects.  In 1994,
     the  Trust  wrote  off its  investment  in these  limited  partnerships  of
     $1,065,798.

     In 1997, a major participant  refunded $73,294 to the Trust of its original
     capital  investment  of  $101,850.  The refund was  recorded as income from
     power generating projects for the year ended December 31, 1997.

4.       Electric Power Equipment

     The Trust purchased various used electric power generation  equipment to be
     used in potential  power  generation  projects.  The  equipment was held in
     storage and depreciation was not recorded. In 1997, the Trust wrote-off the
     equipment and recorded a loss of $331,018.

5.       Line of Credit Facility

     During  the  fourth  quarter  of 1997,  the  Trust and its  principal  bank
     executed  a  revolving  line of  credit  agreement,  whereby  the bank will
     provide a three year  committed  line of credit  facility of  $750,000.  At
     December 31, 1997,  there were no borrowings  outstanding  under the credit
     facility.  At  December  31,  1999 and 1998,  borrowings  under this credit
     facility   equaled  $400,000  and  $300,000,   respectively.   The  balance
     outstanding  at December 31, 1999 was repaid on March 6, 2000.  Outstanding
     borrowings  bear  interest  at LIBOR plus 2.5% (7.81% and 7.73% at December
     31, 1999 and 1998, respectively).  The amount outstanding under the line of
     credit  facility must be reduced to zero for a thirty day period each year.
     The credit  agreement  will  require the Trust to maintain a ratio of total
     debt to  tangible  net  worth  of no more  than 1 to 1 and a  minimum  debt
     service coverage ratio of 2 to 1.

6.       Transactions With Managing Shareholder And Affiliates

     The Trust pays to the managing  shareholder a distribution and offering fee
     in an amount up to 5% of each capital  contribution made to the Trust. This
     fee is intended to cover legal, accounting,  consulting,  filing, printing,
     distribution,  selling  and  closing  costs for the  offering of the Trust.
     These  fees  were  recorded  as  a  reduction  in   shareholders'   capital
     contributions.

     The Trust also pays to the managing  shareholder an investment fee of 2% of
     each  capital  contribution  made to the  Trust.  The fee is payable to the
     managing  shareholder  for its  services in  investigating  and  evaluating
     investment  opportunities  and  effecting  transactions  for  investing the
     capital of the Trust.

     The  Trust   entered  into  a  management   agreement   with  the  managing
     shareholder,   under  which  the  managing   shareholder   renders  certain
     management,  administrative and advisory services and provides office space
     and  other  facilities  to the  Trust.  As  compensation  to  the  managing
     shareholder,   the  Trust  paid  to  the  managing  shareholder  an  annual
     management  fee equal to 2.5% of the net asset  value of the Trust  payable
     monthly  upon the closing of the Trust.  Under the terms of the  management
     agreement,  the annual  management  fee  decreased to 1.5% of the net asset
     value of the Trust effective February 1, 1999. For the years ended December
     31, 1999,  1998 and 1997,  the Trust paid  management  fees to the managing
     shareholder of $55,607, $381,594 and $401,085,  respectively.  Beginning in
     April  1999,  the  managing  shareholder  waived the  management  fee it is
     entitled to.

                                     (F10)
<PAGE>


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

     Where  permitted,  in the event the  managing  shareholder  or an affiliate
     performs  brokering  services in respect of an  investment  acquisition  or
     disposition  opportunity  for the Trust,  the managing  shareholder or such
     affiliate may charge the Trust a brokerage  fee. Such fee may not exceed 2%
     of the gross proceeds of any such acquisition or disposition.  No such fees
     have been incurred through December 31, 1999.

     The  managing  shareholder  owns 1.45  shares  of the Trust  with a cost of
     $121,800. In conjunction with the offering of the Trust shares, commissions
     and  placement  fees  of  $248,807  were  earned  by  Ridgewood  Securities
     Corporation, an affiliate of the managing shareholder.

     In 1996, under an Operating Agreement with the Trust,  Ridgewood Management
     provides management,  purchasing,  engineering, planning and administrative
     services to the power generation  project operated by the Trust.  Ridgewood
     Management  charges the project at its cost for these  services and for the
     allocable amount of certain overhead items. Allocations of costs are on the
     basis of identifiable direct costs, time records or in proportion to amount
     invested in projects managed by Ridgewood Management. During the year ended
     December 31, 1999, 1998 and 1997,  Ridgewood  Management  charged Sunnyside
     Cogeneration  Partners $150,711,  $119,823 and $94,516,  respectively,  for
     overhead items  allocated in proportion to the amount  invested in projects
     managed. During the year ended December 31, 1999 and the three month period
     ended  December  31,  1998,  Ridgewood  Management  charged the  California
     Pumping  Project  $75,818 and $25,973,  respectively,  for  overhead  items
     allocated  in  proportion  to the  amount  invested  in  projects  managed.
     Ridgewood Management also charged Sunnyside  Cogeneration  Partners and the
     California  Pumping Project for all of the remaining  direct  operating and
     non-operating expenses incurred during the periods.

                                     (F11)