FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2001
Commission file Number 0-24240
RIDGEWOOD ELECTRIC POWER TRUST I
(Exact name of registrant as specified in its charter.)
Delaware 22-3105824
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
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(Address of principal executive offices) (Zip Code)
(201) 447-9000
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Registrant's telephone number, including area code:
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 [ ]
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Ridgewood Electric Power Trust I
Financial Statements
September 30, 2001
Ridgewood Electric Power Trust I
Balance Sheet
(unaudited)
- --------------------------------------------------------------------------------
September 30, December 31,
2001 2000
------------ -------------
Assets:
Investments in power generation projects ....... $ 6,981,626 $ 6,630,024
Cash and cash equivalents ...................... 2,925,850 1,710,744
Other assets ................................... 66,560 15,592
Due from affiliates ............................ 279,344 --
----------- -----------
Total assets ......................... $10,253,380 $ 8,356,360
----------- -----------
Liabilities and Shareholders' Equity:
Accounts payable and accrued expenses .......... $ 40,789 $ 52,772
Due to affiliates .............................. -- 74,836
----------- -----------
Total liabilities ................... 40,789 127,608
----------- -----------
Commitments and contingencies .................. -- --
Shareholders' equity:
Shareholders' equity (105.5 shares
issued and outstanding) ....................... 10,200,624 8,236,623
Managing shareholder's accumulated
earnings (deficit) ............................ 11,967 (7,871)
----------- -----------
Total shareholders' equity ........... 10,212,591 8,228,752
----------- -----------
Total liabilities and shareholders' equity $10,253,380 $ 8,356,360
----------- -----------
See accompanying notes to financial statements.
Ridgewood Electric Power Trust I
Statement of Operations
(unaudited)
- --------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
-------------------------- ---------------------------
September 30, September 30, September 30, September 30,
2001 2000 2001 2000
------------ ------------ ------------- ------------
Revenue:
Income from power
generation projects . $2,120,912 $1,752,986 $ 838,544 $ 882,507
Interest income ...... 84,643 64,564 37,526 22,568
---------- ---------- ---------- ----------
Total revenue ..... 2,205,555 1,817,550 876,070 905,075
---------- ---------- ---------- ----------
Expenses:
Accounting and legal
fees ................ 132,739 54,889 98,683 35,300
Management fee ....... 66,835 67,250 20,571 28,972
Miscellaneous ........ 22,142 14,320 4,517 352
---------- ---------- ---------- ----------
Total expenses .... 221,716 136,459 123,771 64,624
---------- ---------- ---------- ----------
Net income .............. $1,983,839 $1,681,091 $ 752,299 $ 840,451
---------- ---------- ---------- ----------
See accompanying notes to financial statements.
Ridgewood Electric Power Trust I
Statement of Changes in Shareholders' Equity
(unaudited)
- --------------------------------------------------------------------------------
Managing
Shareholders Shareholder Total
------------ ----------- ----------
Shareholders' equity, December 31, 2000 $8,236,623 $(7,871) $8,228,752
Net income for the period 1,964,001 19,838 1,983,839
------------- --------- -----------
Shareholders' equity, September 30, 2001 $10,200,624 $11,967 $10,212,591
------------- --------- -----------
See accompanying notes to financial statements.
Ridgewood Electric Power Trust I
Statement of Cash Flows
(unaudited)
- --------------------------------------------------------------------------------
Nine Months Ended
September 30, September 30,
2001 2000
-------------- -------------
Cash flows from operating activities:
Net income ................................ $ 1,983,839 $ 1,681,091
----------- -----------
Adjustments to reconcile net income
to net cash flows from operating
activities:
Additional investment in power
generation projects ..................... (351,602) (323,205)
Changes in assets and liabilities:
Increase in due from affiliates ........ (279,344) --
(Increase) decrease in other assets .... (50,968) 463
Decrease in accounts payable and
accrued expenses ...................... (11,983) (11,709)
(Decrease) increase in due to affiliates (74,836) 46,420
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Total adjustments .............. (768,733) (288,031)
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Net cash provided by operating activities 1,215,106 1,393,060
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Cash flows from financing activities:
Cash distributions to shareholders ....... -- (1,119,740)
------------ -----------
Net cash used in financing activities .... -- (1,119,740)
------------ -----------
Net increase in cash and cash equivalents ..... 1,215,106 273,320
Cash and cash equivalents, beginning of year .. 1,710,744 1,142,009
------------ -----------
Cash and cash equivalents, end of period ...... $ 2,925,850 $ 1,415,329
------------ ------------
See accompanying notes to financial statements.
Ridgewood Electric Power Trust I
Notes to Financial Statements (unaudited)
1. General
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments, which consist of normal recurring adjustments,
necessary for the fair representation of the results for the interim periods.
The December 31, 2000 financial information has been derived from the audited
financial statements for the year ended December 31, 2000. These financial
statements should be read in conjunction with the audited financial statements
for the year ended December 31, 2000 which were included as part of Ridgewood
Electric Power Trust I's Annual Report on Form 10-K.
The results of operations for an interim period should not necessarily be taken
as indicative of the results of operations that may be expected for a twelve
month period.
2. Legal Matters
As reported more fully in the Form 10-K filed by the Trust for the year ended
December 31, 2000, Brea Power Partners, L.P. ("Brea") entered into a long-term
power purchase and sale agreement with Southern California Edison Company
("SCE"), which terminates on March 23, 2005. On January 16, 2001, as a result of
the deregulation of the electric industry in California and its precarious
financial position, SCE, in an effort to conserve what little cash it possessed,
sent the Qualifying Facilities under contract with it, including the Brea
Project (which is owned by Brea), a letter informing them that it was
temporarily suspending payments to Qualifying Facilities. SCE has not paid the
Brea Project for energy and capacity delivered to SCE for the months of November
and December 2000, January, February and March 2001. However, on March 27, 2001,
the California Public Utilities Commission ("CPUC") ordered, among other things,
that electric utilities in California pay on a going forward basis for power
delivered by Qualifying Facilities. Since such order, SCE has paid Brea for the
electric power produced and delivered from March 27, 2001 through September 30,
2001. However, given the developing and continuing crisis in California, there
is no guarantee that such go forward payments will continue. Moreover, despite
going forward payments, SCE has not paid amounts due to Brea for the months of
November 2000 - March 2001. As a result, on April 5, 2001, Brea filed a lawsuit
against SCE in the Superior Court of the State of California, County of Los
Angeles, seeking damages of not less than $12 million based upon, among other
things, SCE's breach of contract for failing to make full payment for November
2000 - March 2001 deliveries. Brea's lawsuit is but one of at least twelve
similar lawsuits filed against SCE. On July 13, 2001, Brea and SCE entered into
an "Agreement Addressing Renewable Energy Pricing and Payment Issues" ("
Renewable Agreement"). While the Renewable Agreement executed between Brea and
SCE did not affect the price SCE paid Brea for electric energy, it did, among
other things, require SCE to make an initial 10% partial payment of the
outstanding balance owed to Brea for the months of November 2000 - March 2001
and, upon the occurrence of certain events, additional partial payments. In
return for such payments, Brea agreed to stay the prosecution of the litigation
against SCE. If SCE fails to make the payments required by the Renewable
Agreement, then the stay is lifted and Brea may prosecute its litigation against
SCE. Since the execution of the Renewable Agreement, SCE has made the first
partial payment and has been making the interest payments required under the
Renewable Agreement. However, the Renewable Agreement provides that SCE will
make further partial payments if the Legislature of the State of California
adopted legislation, which, among other things, would restore SCE to
creditworthiness. Such legislative fix was not adopted by California, but
rather, the California Public Utilities Commission ("CPUC") entered into a
Settlement Agreement with SCE, which SCE has stated publicly has in large part
achieved the same results sought through the legislation. Nonetheless, SCE has
made credible threats that it will now seek to declare the Renewable Agreements
entered into between it and many Qualifying Facilities void because of the lack
of a legislative solution. In such event, Brea should not be financially harmed
in that the Renewable Agreement executed by Brea and SCE did not affect the
price SCE paid Brea for electric energy. However, should SCE declare the
Renewable Agreement void, Brea would be free to pursue its litigation.
3. Subsequent Event
On November 5, 2001, the Managing Shareholder, on behalf of the Trust,
distributed a Proxy Statement to all of the Trust's shareholders. The main
purpose of the Proxy is to seek shareholder approval to terminate the Trust's
current status as a business development company under the Investment Company
Act of 1940 and to amend certain provisions of the Declaration of Trust as it
relates to the Act. The Trust believes, as a result of its current business
operations, that it does not meet the definition of an investment company under
the 1940 Act and in the best interest of its shareholders seeks amendment.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Dollar amounts in this discussion are rounded to the nearest $1,000.
Introduction
The Trust carries its investment in Projects at fair value and does not
consolidate its financial statements with the financial statements of the
Projects. Revenue is recorded by the Trust when 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 by the Projects to fund capital expenditures.
Results of Operations
Total revenue increased 21.3% to $2,206,000 in the first nine months of 2001
from $1,818,000 in the first nine months of 2000 due to a $351,000 increase in
income from the Olinda Project and a $17,000 increase in income from the
Hawthorne engines. Total revenue of $876,000 for the three months ended
September 30, 2001 was comparable to $905,000 for the same period in 2000. The
increased revenue from the Olinda Project reflects higher revenues resulting
from an increase in the price of energy sold under the Project's power contract.
Except for the increase in accounting and legal fees, Trust level expenses for
the nine and three months ended 2001 were comparable to the respective periods
in 2000. The increase in accounting and legal fees are attributable to the
professional fees incurred by the Trust as it seeks to terminate its status as a
Business Development Company under the Investment Company Act of 1940. (See Note
3 under Notes to Financial Statements)
Liquidity and Capital Resources
Obligations of the Trust are generally limited to payment of the management fee
to the Managing Shareholder and payments for certain accounting and legal
services to third persons. The Trust ceased making distributions to its
shareholders in the first quarter of 2001. The Olinda Project currently has two
engines in the process of being installed. These engines are expected to begin
full time operation in the fourth quarter of 2001 and will add 2.5MW of capacity
to the Project. The expansion will be funded by up to $1.5 million of project
based financing and additional investments of cash on hand by the Trust. The
Trust anticipates that its cash flow during 2001 will be adequate to fund its
obligations, notwithstanding Southern California Edison Company's financial
difficulties. (see Legal Proceedings below)
Forward-looking statement advisory
This Quarterly Report on Form 10-Q, as with some other statements made by the
Trust from time to time, contains forward-looking statements. These statements
discuss business trends and other matters relating to the Trust's future results
and the business climate and are found, among other places, in the notes to
financial statements and at Part I, Item 2, Management's Discussion and
Analysis. 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 the cautionary factors that readers should
consider are described in the Trust's most recent Annual Report on Form 10-K. 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 2 under Notes to Financial Statements.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant as duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RIDGEWOOD ELECTRIC POWER TRUST I
Registrant
November 14, 2001 By /s/ Christopher I. Naunton
Date Christopher I. Naunton
Vice President and
Chief Financial Officer
(signing on behalf of the
Registrant and as
principal financial
officer)