UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2005
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _________________
Commission File No. 0-13510
ZOND-PANAERO WINDSYSTEM PARTNERS I, A CALIFORNIA LIMITED
PARTNERSHIP
State or other jurisdiction of incorporation or organization: California
I.R.S. Employer Identification No: 77-0035358
Address of principal executive offices: 1221 Lamar Street, Suite 1600,
Houston, Texas
Zip Code: 77010
Registrant's telephone number, including area code: (713) 853-0530
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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES NO X
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). YES NO X
1
ZOND-PANAERO WINDSYSTEM PARTNERS I,
A CALIFORNIA LIMITED PARTNERSHIP
For the nine months ended September 30, 2005
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets at September 30, 2005 (Unaudited) and December 31,
2004.
Unaudited Condensed Statements of Operations for the nine months ended
September 30, 2005 and September 30, 2004.
Unaudited Condensed Statements of Operations for the three months ended
September 30, 2005 and September 30, 2004.
Condensed Statements of Changes in Partners' Capital (Deficit) at
September 30, 2005 (Unaudited) and December 31, 2004.
Unaudited Statements of Cash Flows for the nine months ended
September 30, 2005 and September 30, 2004.
Notes to Unaudited Condensed Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II
OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
Item 5. Other Information
Item 6. Exhibits
2
Item 1. FINANCIAL STATEMENTS
ZOND-PANAERO WINDSYSTEM PARTNERS I,
A CALIFORNIA LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30, 2005 December 31, 2004
--------------------- -------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 2,180 $ 2,603
Accounts receivable from related party 423 401
Other current assets 94 44
--------------------- -------------------
Total current assets 2,697 3,048
--------------------- -------------------
Property, Plant and Equipment
Buildings 98 98
Plant and Equipment 49,561 49,561
Less - accumulated depreciation (49,341) (49,305)
--------------------- -------------------
Property, Plant and Equipment, net 318 354
--------------------- -------------------
Total assets $ 3,015 $ 3,402
===================== ===================
Liabilities and partners' capital (deficit)
Current liabilities:
Accounts payable and accrued expenses $ 288 $ 243
Accounts payable to related party 120 296
Accrued interest to related party 2,365 4,265
--------------------- -------------------
Total current liabilities 2,773 4,804
--------------------- -------------------
Partners' capital (deficit):
General partner 2 (6)
Limited partners (343) (1,971)
Substituted limited partner (Note 2) 2 (6)
Contributed capital 581 581
-------------------- -------------------
Total partners' capital (deficit) 242 (1,402)
-------------------- -------------------
Total liabilities and partners' -------------------- -------------------
capital (deficit) $ 3,015 3,402
==================== ===================
The accompanying notes are an integral part of the unaudited condensed
financial statements
2
ZOND-PANAERO WINDSYSTEM PARTNERS I,
A CALIFORNIA LIMITED PARTNERSHIP
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per Unit value, which is in whole dollars)
For the Nine Months Ended,
September 30, 2005 September 30, 2004
------------------------ -----------------------
Revenue:
Sale of electricity $ 2,800 $ 2,963
Interest income 26 -
------------------------ -----------------------
Total revenue 2,826 2,963
Costs and expenses:
Depreciation 36 1,871
Interest expense - 2
Property taxes 65 63
Easement fees to related party 137 163
Management fees to
related party 55 65
Maintenance and other operating costs
to related and other parties 669 662
Insurance costs 91 131
Other operating costs 129 149
------------------------ -----------------------
Total costs and expenses 1,182 3,106
------------------------ -----------------------
Net income (loss) $ 1,644 $ (143)
======================== =======================
Net income (loss) per Unit $ 1,382 $ (120)
======================== =======================
Number of outstanding Limited
Partner Units 1,190 1,190
======================== =======================
The accompanying notes are an integral part of the unaudited condensed
financial statements.
3
ZOND-PANAERO WINDSYSTEM PARTNERS I,
A CALIFORNIA LIMITED PARTNERSHIP
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per Unit value, which is in whole dollars)
For the Three Months Ended,
September 30, 2005 September 30, 2004
------------------------ -----------------------
Revenue:
Sale of electricity $ 681 $ 1,094
Interest income 12 -
------------------------ -----------------------
Total revenue 693 1,094
Costs and expenses:
Depreciation 12 624
Property taxes 21 (28)
Easement fees to related party 62 85
Management fees to
related party 25 34
Maintenance and other operating costs
to related and other parties 260 202
Insurance costs 31 44
Other operating costs 40 41
------------------------ -----------------------
Total costs and expenses 451 1,002
------------------------ -----------------------
Net income $ 242 $ 92
======================== =======================
Net income per Unit $ 203 $ 77
======================== =======================
Number of outstanding Limited
Partner Units 1,190 1,190
======================== =======================
The accompanying notes are an integral part of the unaudited condensed
financial statements.
4
ZOND-PANAERO WINDSYSTEM PARTNERS I,
A CALIFORNIA LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Dollars in thousands)
Substituted
Limited Contributed
General Limited Partner Capital
Total Partner Partners (Note 2) (Note 5)
----------- ----------- ----------- -------------- -----------------
Profit and loss allocation 100.00% 0.50% 99.00% 0.50%
----------- ----------- ----------- -------------- -----------------
Balance at December 31, 2003 $ (1,382) $ (6) $ (1,951) $ (6) $ 581
Net loss (20) - (20) - -
----------- ----------- ----------- -------------- -----------------
Balance at December 31, 2004 $ (1,402) $ (6) $ (1,971) $ (6) $ 581
Net income (Unaudited) 1,644 8 1,628 8 -
----------- ----------- ----------- -------------- -----------------
Balance at September 30, 2005 (Unaudited) $ 242 $ 2 $ (343) $ 2 $ 581
=========== =========== =========== ============== =================
The accompanying notes are an integral part of the unaudited condensed
financial statements.
5
ZOND-PANAERO WINDSYSTEM PARTNERS I,
A CALIFORNIA LIMITED PARTNERSHIP
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the Nine Months Ended,
September 30, 2005 September 30, 2004
---------------------- ----------------------
Cash Flow From Operating Activities:
Net income (loss) $ 1,644 $ (143)
Reconciliation of net income (loss) to net cash provided by
(used in) operating activities:
Depreciation 36 1,871
Changes in operating assets and liabilities:
Accounts receivable from related party (22) 263
Other current assets (50) (67)
Accounts payable and accrued expenses 45 (144)
Amount payable to related party (176) (46)
Accrued interest payable to related party (1,900) (1,539)
---------------------- ----------------------
Net cash provided by (used in) operating activities $ (423) 195
Cash flows used in financing activities:
Principal payments on notes payable to related party - (458)
---------------------- ----------------------
Net decrease in cash and cash equivalents (423) (263)
Cash and cash equivalents at beginning of the period 2,603 2,125
---------------------- ----------------------
Cash and cash equivalents at end of period $ 2,180 $ 1,862
====================== ======================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 1,900 $ 1,539
The accompanying notes are an integral part of the unaudited condensed financial
statements.
6
ZOND-PANAERO WINDSYSTEM PARTNERS I,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The condensed financial statements included herein for the quarterly periods
ended September 30, 2005 and 2004 have been prepared by Zond-PanAero Windsystem
Partners I, a California Limited Partnership (the "Partnership") without audit
pursuant to the rules and regulations of the Securities and Exchange Commission
(the "SEC"). Accordingly, these statements reflect all adjustments (consisting
only of normal recurring entries), which are, in the opinion of the Partnership,
necessary for a fair statement of the financial results for the interim periods.
Certain information and notes normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted pursuant to such accounting
principals. The Partnership believes that the information and notes included in
the financial information are adequate to make the information presented not
misleading. Operating results for the interim period presented are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2005.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 those estimates.
NOTE 2 - THE PARTNERSHIP
Introduction
The Partnership was formed on June 29, 1984 to purchase, own and operate a
system of 300 Vestas Energy A/S Model V-15 wind turbine electric generators (the
"Turbines"). The electricity generated by the Turbines is sold by the
Partnership to its sole customer, Southern California Edison Company ("SCE").
Each Turbine has a rated capacity of 65 kilowatts, and the Turbines have an
aggregate rated capacity of 19.5 megawatts. The Turbines, together with certain
infrastructural improvements (the "Infrastructural Improvements"), which are
owned by Mesa Wind Developers ("Mesa"), a joint venture between Enron Wind
Systems, LLC ("EWS") and an affiliate of PanAero Corporation ("PanAero"), form
an integrated electric power generating facility (the "Windsystem"). The
Windsystem is located in the San Gorgonio Pass area of the San Bernardino
Mountains near Palm Springs, California (the "Operating Site").
The Turbines are interconnected by a system of transformers and power transfer
lines to a substation and SCE's transmission grid. The individual power lines
from each of the Turbines are fed into step-up transformers, which increase the
voltage from 480 volts to 12.5 kilovolts. Additional 12.5 kilovolt power
transfer lines carry electricity to a substation, which steps up the electric
power to 115 kilovolts for delivery to SCE.
7
EWS is an operator of commercial wind-powered electric generating facilities and
PanAero is a wind resources development company. On January 3, 1997, EWS's
parent, Zond Corporation, became a wholly-owned subsidiary of Enron Renewable
Energy Corp., which is wholly-owned by Enron Corp. ("Enron"). In May 1997, the
name of Zond Corporation was changed to Enron Wind Corp. ("EWC").
The general partner (the "General Partner") of the Partnership is Zond
Windsystems Management LLC ("ZWM"), a California limited liability company
wholly-owned by EWS. See "Bankruptcy and Mergers" regarding certain affiliated
mergers and name changes affecting ZWM, EWS and EWC. The business of the
Partnership and the respective rights of its partners, including the
Partnership's limited partners (the "Limited Partners" and together with the
General Partner, the "Partners"), are governed by the First Amended and Restated
Certificate and Agreement of Limited Partnership of Zond-PanAero Windsystem
Partners I, a California Limited Partnership, entered into on November 29, 1984,
as amended (the "Partnership Agreement").
The Windsystem, which became operational in November 1984, was constructed by
Mesa Construction Company ("MCC"), a joint venture between an affiliate of EWS
and an affiliate of PanAero. The Partnership paid MCC a total of $48.9 million
for the purchase, construction and installation of the Turbines, comprised of
$22.4 million in cash and $26.5 million in the form of eighteen-year, 13% notes
payable in equal semi-annual installments of principal and interest totaling
$1.9 million (the "Purchase Notes"). As of September 30, 2005, the Partnership
was in default of the Purchase Notes. As of such date, the Partnership owed MCC
approximately $2.4 million of accrued and unpaid interest under the Purchase
Notes. See Notes 3 and 4 below.
The term of the Partnership ends on December 31, 2005, unless terminated earlier
in accordance with the terms of the Partnership Agreement. The Partnership will
dissolve effective on the day on which the term of the Partnership ends. Upon
the dissolution of the Partnership, the General Partner will liquidate the
assets of the Partnership, apply and distribute the proceeds thereof as
contemplated by the Partnership Agreement, and cause the cancellation of the
Partnership's Certificate of Limited Partnership with the Secretary of State of
the State of California. The Partnership will then terminate and the General
Partner will file with the SEC a Form 15 to terminate registration of the Units
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
anticipation of the dissolution of the Partnership on December 31, 2005, the
General Partner is evaluating the options in connection with the liquidation of
the Partnership's assets. The primary liquidation options that the General
Partner is evaluating are (i) the sale of the Turbines to a third party or to
Mesa or one of its affiliates and (ii) the abandonment of the Turbines to Mesa
under the Wind Park Easement Agreement (as defined in "Substantial Transactions
and Operating Agreements" below). In connection with the evaluation of the
Turbine sale alternative, the General Partner is reviewing the potential sale of
only the Turbines by the Partnership, as well as assessing if the Turbines can
be packaged for sale with other related assets. In connection with the
evaluation of the Turbine abandonment option, the General Partner has obtained
two appraisals of the value of the Turbines from independent third party
appraisal companies. See "Substantial Transactions and Operating Agreements"
below.
The General Partner also is evaluating the possibility of continuing the
operation of the Windsystem during the liquidation period of the Partnership if
the Partnership in unable to complete the sale or abandonment of the Turbines
immediately upon the dissolution of the Partnership. The Reservation of Rights
Agreement, Wind Park Easement Agreement and Management Agreement (as defined in
"Operation and Maintenance Services" and "Substantial Transactions and Operating
Agreements" below) each expire on December 31, 2005, and the General Partner is
exploring
8
various opportunities to extend the term of these contracts during the
liquidation period of the Partnership. However, if the Partnership cannot obtain
extensions of these existing agreements, the Partnership will not have a
contractual right to generate power at the Operating Site or to sell any power
that it may generate after December 31, 2005. In that case, the Partnership
expects to cease operation of the Windsystem on or about December 31, 2005 and
arrange for minimal maintenance services for the Partnership's Turbines during
the period commencing on such date and ending on the date of disposition or
abandonment of the Turbines by the Partnership.
Under the terms of the Partnership Agreement, the proceeds of the liquidation of
the assets of the Partnership are to be distributed in the following order: (i)
first, for the payment of any Partnership liquidation expenses and Partnership
debts (other than those owing to any of the Partners), such as the Purchase
Notes; (ii) second, for the payment of any Partnership debts owing to any of the
Partners; and (iii) third, for distributions to the Partners in proportion to
their Partnership adjusted capital accounts, after giving effect to all
contributions, distributions and allocations for all taxable years of the
Partnership, including the taxable year during which the final liquidating
distribution occurs. There is no assurance that, following the payment of the
liquidation expenses relating to the Partnership and the payment of the
Partnership's debts, including the unpaid interest due under the Purchase Notes,
there will be any remaining proceeds from the liquidation of the Partnership's
assets available for distribution to the Partners.
Bankruptcy and Mergers
Commencing on December 2, 2001, and periodically thereafter, Enron and certain
of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the
United States Bankruptcy Code (the "Bankruptcy Code"). This matter is referred
to herein as the "Enron Bankruptcy". On February 20, 2002, EWC and Enron Wind
Systems, Inc. ("EWSI") each filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code. Additionally, two California limited liability
companies formed on February 19, 2002 for the purposes of merging with EWC and
EWSI in anticipation of the sale of Enron's wind turbine manufacturing business
also filed voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code.
EWC merged with and into one of such limited liability companies on April 19,
2002 and the surviving limited liability company changed its name to Enron Wind
LLC ("EW"). EWSI merged with and into the other limited liability company, also
on April 19, 2002, and the surviving limited liability company changed its name
to Enron Wind Systems, LLC.
On April 12, 2002, Zond Windsystems Management Corporation ("ZWMC"), the general
partner of the Partnership at such time, merged with and into a third California
limited liability company, formed on March 12, 2002, and the surviving limited
liability company changed its name to Zond Windsystems Management LLC. On May 3,
2002, Zond Construction Corp. merged with and into a fourth California limited
liability company, formed on March 21, 2002, and the surviving limited liability
company changed its name to Zond Construction LLC ("ZC"). ZC is a joint venture
partner in MCC. Neither ZWM nor ZC has filed for bankruptcy.
On November 17, 2004, the Chapter 11 Plan (the "Plan") relating to the Enron
bankruptcy became effective. The Plan provides for Enron and its affiliated
debtor companies (including EWS and EW) to sell most of their assets and
distribute to their creditors the proceeds of such sales. In connection with the
Plan, EWS assumed the Management Agreement (as defined in "Operation and
Maintenance Services" below) and that agreement remains in effect.
9
Substituted Limited Partner
PanAero Management Corporation ("PAMC"), a California corporation wholly-owned
by PanAero, formerly served as a general partner of the Partnership. In June
1988, the Partnership solicited a vote by proxy of the Limited Partners to
remove PAMC as a general partner. Pursuant to that vote, PAMC was converted to a
substituted limited partner. Although the term "Substituted Limited Partner" is
defined in the Partnership Agreement as any individual, partnership,
corporation, trust or other entity admitted to the Partnership as a Limited
Partner pursuant to transfer provisions under the Partnership Agreement, the
term substituted limited partner is used in the accompanying Condensed Balance
Sheets at September 30, 2005 (Unaudited) and December 31, 2004 and the Unaudited
Condensed Statements of Changes in Partners' Capital (Deficit) for the nine
months ended September 30, 2005 in reference to the substituted limited partner
interest created by the removal of PAMC as a general partner. Under an Agreement
of Settlement and Mutual Releases executed on June 26, 2000, PAMC agreed to
transfer its substituted limited partner interest in the Partnership to ZWMC.
Sale to General Electric
On April 10, 2002, Enron, EWC and certain of its subsidiaries, including EWSI,
entered into an Amended and Restated Purchase and Sale Agreement in which such
entities agreed to sell in an asset sale (the "GE Sale") their wind turbine
manufacturing, operation and maintenance and construction businesses to General
Electric Company, acting through its GE power systems business ("GEPS"). The GE
Sale was consummated on May 10, 2002. EW and its subsidiary companies retained
its existing wind power projects including the indirect ownership of the general
partnership interest in the Partnership. However, effective as of the sale,
substantially all of the employees who had been involved in the management of
the Partnership transferred to GEPS.
Following the sale to GEPS, certain Enron personnel who were not formerly
involved with the management of operations of the Partnership were appointed to
manage and operate the Partnership, and ZWM's principal executive offices were
moved to 1400 Smith Street, Houston, Texas 77002. In March 2004, the principal
executive offices were moved to 1221 Lamar Street, Suite 1600, Houston, Texas
77010.
Operation and Maintenance Services
EWS manages the Windsystem pursuant to a windsystem management agreement with
the Partnership executed on July 27, 1988 (the "Management Agreement"). The
Management Agreement by its terms was to terminate on June 23, 2005; however,
the Partnership and EWS entered into a Fourth Amendment to Windsystem Management
Agreement (the "Management Agreement Amendment") which was effective as of June
23, 2005 and which extended the termination date of the Management Agreement
from June 23, 2005 to December 31, 2005. See Note 3 for additional information.
Prior to May 10, 2002, Enron Wind Maintenance LLC, an affiliate of EWS, provided
operation and maintenance services for the Windsystem. On May 10, 2002, EWS
contracted with GE Wind Energy, LLC to perform certain operation and maintenance
services relating to the Windsystem for a period of one year ending on May 10,
2003.
In April 2003, EWS entered into an agreement (the "O&M Agreement") with SeaWest
Asset Management Services, LLC ("SeaWest") to provide certain operation and
maintenance services relating to the Windsystem for a 5-year period ending on
10
May 10, 2008. If EWS terminates the O&M Agreement prior to the end of its stated
term, EWS may be required to pay certain agreed demobilization fees to SeaWest.
If EWS is required to pay such fees, EWS may attempt to seek recovery from the
Partnership of some, or all, of the amount of such fees pursuant to the terms of
the Management Agreement. Management currently estimates that the amount of the
demobilization fee, if any, for which EWS may seek recovery from the Partnership
would not be in excess of approximately $72,000.
Substantial Transactions and Operating Agreements
The accompanying unaudited condensed financial statements include substantial
transactions with related parties. These transactions are further described in
Notes 4 and 5.
A summary of the major operating agreements entered into by the Partnership,
directly or indirectly, is set forth below:
(1) Through June 23, 2005 the Partnership sold the electricity produced by the
Turbines to SCE pursuant to a power purchase and sales agreement (the
"Power Agreement") that was originally entered into between SCE and PanAero
in April 1982 and covered an aggregate of 29.9 megawatts of generating
capacity. PanAero assigned the Power Agreement to Mesa in July 1984. Mesa
subsequently assigned the portion of the Power Agreement that covers the
aggregate rated capacity of the Turbines (19.5 megawatts) to the
Partnership pursuant to that certain Partial Assignment of Wind Park Power
Purchase and Sales Agreement dated September 28, 1984 (the "Partial
Assignment"). Each of the Partial Assignment and the Power Agreement
terminated by its terms on or about June 23, 2005.
On or about June 23, 2005, the Partnership and PAMC entered into a
Reservation of Rights Agreement dated as of June 23, 2005 (the
"Reservation of Rights Agreement") pursuant to which the Partnership
is permitted to (i) sell power to SCE from the Windsystem under a
Reformed Standard Offer 1 As-Available Capacity and Energy Power
Purchase Agreement dated June 23, 2005 between SCE and PAMC (the "RSO1
Power Agreement"), and (ii) interconnect the Windsystem with SCE's
transmission system under an Interconnection Facilities Agreement
between SCE and PAMC which was effective as of June 23, 2005 (the
"Interconnection Agreement").
Under the Reservation of Rights Agreement, the Partnership is permitted and
has agreed to deliver up to 19.5 megawatts of energy to SCE under the RSO1
Power Agreement and to interconnect the Partnership's Windsystem to SCE's
transmission system under the Interconnection Agreement. The Reservation of
Rights Agreement terminates on December 31, 2005, unless terminated earlier
by the Partnership upon 30 days advance notice to PAMC. The Partnership is
not required under the Reservation of Rights Agreement to pay to PAMC a fee
for the Partnership's use of the RSO1 Power Agreement or the
Interconnection Agreement. The Partnership is required to pay for a portion
of all fees, costs and expenses incurred by PAMC under the RSO1 Power
Agreement and the Interconnection Agreement, including, without limitation,
interconnection fees, back feed electricity costs and maintenance costs.
The portion of such fees, costs and expenses to be paid by the Partnership
is based on the ratio of (x) the aggregate installed name-plate capacity of
the Partnership's Windsystem to (y) the aggregate installed name-plate
capacity of all the wind power projects delivering power to SCE under the
RSO1 Power Agreement.
11
PAMC also concurrently entered into a separate reservation of rights
agreement with Zond-PanAero Windsystem Partners II, a California limited
partnership ("ZWP II") and an affiliate of the Partnership, pursuant to
which PAMC granted ZWP II the right to sell to SCE under the RSO1 Power
Agreement up to 10.4 megawatts of energy from its wind turbine electric
power generation facility and to interconnect such wind power generation
facility to SCE's transmission grid under the Interconnection Agreement.
Under the RSO1 Power Agreement, SCE is required to purchase from PAMC, and
PAMC is required to sell to SCE, the output from the Partnership's
Windsystem and ZWP II's wind power facility, provided that the aggregate
name-plate capacity of all such generating facilities may not exceed 30
megawatts at any one time. The RSO1 Power Agreement has a five-year term,
but may be terminated by PAMC upon 30 days advance notice to SCE. The price
to be paid by SCE for the energy delivered under the RSO1 Power Agreement
is equal to the short run avoided cost to SCE for energy during the
delivery period of such energy. Under the RSO1 Power Agreement, SCE will
also pay an annual capacity payment for the installed capacity of such
generation facilities that is based on SCE's avoided cost for capacity.
Unlike the Power Agreement, which terminated on or about June 23, 2005,
the RSO1 Power Agreement does not contain a minimum energy price payable by
SCE. The minimum price for energy that was paid by SCE under the Power
Agreement was $0.102 per kilowatt hour of energy. As a result, the
Partnership expects that the price received by the Partnership for the sale
of energy under the RSO1 Power Agreement will be more volatile as compared
with the price that would have been received by the Partnership under the
Power Agreement during the same period of time.
Under the Interconnection Agreement, PAMC and the other sellers under the
RSO1 Power Agreement are permitted to interconnect up to an aggregate of 30
megawatts of generating capacity to SCE's transmission grid at the existing
SCE substation located at the Windsystem site. The Interconnection
Agreement requires PAMC to pay to SCE a monthly interconnection fee of
$8,265. The Interconnection Agreement terminates upon the termination of
the RSO1 Power Agreement.
(2) Since July 1988, the Partnership has contracted with EWS (or its
predecessor) for the operation and maintenance of the Turbines and the
performance of certain ancillary management services, such as collection of
revenues from SCE and the administration and payment of all Partnership
expenses. Under the provisions of the Management Agreement, the Partnership
pays a management fee of 2% of the Partnership's Gross Operating Proceeds.
"Gross Operating Proceeds" is defined as all gross receipts from the sale
of electricity generated by the Turbines and all amounts paid in lieu of
receipts from the sale of electricity, including, without limitation, any
proceeds of systems performance or wind resource insurance, casualty loss
and business interruption insurance paid in reimbursement of lost revenues
and warranty payments in reimbursement of lost revenues. Under the
Management Agreement, EWS is entitled to be reimbursed for 115% of the
maintenance costs, including labor and material costs that it incurs in the
performance of maintenance services, including maintenance services
performed by third parties relating to the Windsystem. The term of the
Management Agreement ends on December 31, 2005. See Note 5 for additional
information.
12
(3) The Operating Site is situated on two adjoining parcels of land, consisting
of approximately 440 acres, located in the San Gorgonio Pass area of the
San Bernardino Mountains approximately 16 miles northwest of Palm Springs,
California. The Partnership owns the Turbines, including the supporting
towers and related concrete support pads and controllers. The Partnership
uses the Infrastructural Improvements and a portion of the Operating Site
pursuant to an easement granted by Mesa under the terms of a Wind Park
Easement Agreement dated as of September 7, 1984, as amended (the "Wind
Park Easement Agreement"). The Infrastructural Improvements include roads,
fences, power transfer system, substation and maintenance facilities. Mesa
has title to the Infrastructural Improvements, but has granted the
Partnership a security interest in such assets under the Wind Park Easement
Agreement. The Infrastructural Improvements are also utilized by ZPII under
a similar arrangement with Mesa.
Mesa has rights to develop wind energy resources at the Operating Site,
which includes the Infrastructural Improvements, under a right-of-way
grant (the "Right-of-Way Grant") from the United States Bureau of Land
Management ("BLM"). The Right-of-Way Grant was originally issued to PanAero
on January 26, 1983, and was assigned by PanAero to Mesa in April 1984. The
primary term of the Right-of-Way Grant expired on January 26, 2003. On
December 19, 2002, the Right-of-Way Grant was extended for a ten-year
period commencing on January 27, 2003.
The Wind Park Easement Agreement, as previously amended, was to terminate
on June 23, 2005. The Partnership and Mesa entered into the Amendment to
Wind Park Easement Agreement (the "Easement Amendment") which was
effective as of June 23, 2005 and which extended the termination date of
the Wind Park Easement Agreement from June 23, 2005 to December 31, 2005.
At the termination of the Wind Park Easement Agreement, the Partnership
may: (1) elect to abandon the Turbines, with Mesa becoming the owner, (2)
at its own expense, remove the Turbines, or (3) elect to sell the
Turbines. If the Partnership elects to sell the Turbines at any time, the
Partnership must first offer the Turbines to Mesa on the same terms and
conditions. If the Partnership abandons the Turbines, neither Mesa nor any
affiliate shall have the right to operate the Turbines unless Mesa pays to
the Partnership the appraised fair market value (as defined) of the
Turbines. The General Partner is in the process of evaluating the
Partnership's options under the Wind Park Easement Agreement upon
termination. See "Note 2 - THE PARTNERSHIP - Introduction".
EWSI, PanAero, and their affiliates have developed and sold additional
wind turbines on the Operating Site to ZPII and Mesa has granted a
similar easement to ZPII.
Under the Wind Park Easement Agreement, Mesa charges the Partnership
easement fees for the use of the Operating Site and Infrastructural
Improvements in an amount equal to the greater of 5% of Gross Operating
Proceeds or the Partnership's pro rata share (with the other producers
of electric energy from wind power on the Operating Site) of the payments
due the BLM under the Right-of-Way Grant. See Note 5 for additional
information.
Cash Distributions
The Partnership distributes cash in accordance with the terms of the Partnership
Agreement. Due to less-than-projected operating results, the Partnership has not
13
distributed any cash during any fiscal year other than 1985, in which the
Partnership distributed an aggregate of approximately $158,000 to the Limited
Partners and $2,000 to the then General Partners. Under the Purchase Notes, the
Partnership cannot make cash distributions to its partners unless certain cash
reserve balances are maintained, no events of default exist, and certain ratio
tests are met. The Partnership has not met these criteria since 1985 and did not
make cash distributions to its partners during the nine month periods ended
September 30, 2005 or September 30, 2004.
SCE Curtailment
SCE substantially curtailed the Partnership's electrical production from the
Windsystem from April 13, 2004 through May 17, 2004 (the "SCE Curtailment").
During this period, SCE curtailed the Partnership's production of electric power
by approximately 75% resulting in the Partnership's inability to produce and
sell a significant portion of electric power. By letter dated June 22, 2004,
Enron Wind LLC, on behalf of the sellers under the Power Agreement, issued for
payment an invoice to SCE in the amount of approximately $750,000 to compensate
the Partnership and ZP II for their estimated losses during the SCE Curtailment.
Of the approximately $750,000 invoiced to SCE, approximately $482,000 represents
lost revenue that otherwise would have been paid to the Partnership. By letter
dated September 22, 2004, SCE informed Enron Wind LLC that the SCE Curtailment
was in compliance with all applicable power purchase agreements, and that SCE
would not reimburse any projects, including the Partnership, for any revenues
that may have been lost during the SCE Curtailment. As a result, none of the
amount invoiced to SCE has been recorded as revenue for the Partnership.
NOTE 3 - GOING CONCERN
The following matters raise substantial doubt about the Partnership's ability to
continue as a going concern:
1. The Purchase Notes matured on December 31, 2002 and all of the accrued
and unpaid interest and outstanding principal on the Purchase Notes
was due on that date. As discussed in Note 4 below, the Partnership
has not had sufficient cash flows from operations to make scheduled
payments of interest in arrears on the Purchase Notes. Accordingly,
the Partnership is in default of the Purchase Notes. Upon notice of
default, MCC has a right to foreclose against its security interests
in the assets of the Partnership. As of the date of this filing, MCC
has not notified the Partnership of its intent to foreclose on its
security interest. Any such foreclosure by MCC on its security
interests in the assets of the Partnership would have a material
adverse effect on the Partnership.
2. As discussed in Note 2 above, the term of the Partnership ends on
December 31, 2005, unless terminated earlier in accordance with the
terms of the Partnership Agreement. The Partnership will dissolve
effective on the day on which the term of the Partnership ends. Upon
the dissolution of the Partnership, the General Partner will liquidate
the assets of the Partnership, apply and distribute the proceeds
thereof as contemplated by the Partnership Agreement, and cause the
cancellation of the Partnership's Certificate of Limited Partnership
with the Secretary of State of the State of California. The
Partnership will then terminate and the General Partner will file with
the Commission a Form 15 to terminate registration of the Units under
the Exchange Act.
14
NOTE 4 - PURCHASE NOTES
Under an agreement reached in April 1989, MCC reduced the interest rate on the
Purchase Notes from 13% to 11% per annum effective in January 1990. The
Partnership secured its payment obligations under the Purchase Notes by granting
MCC security interests in the Turbines and other collateral, including the
rights, title and interests of the Partnership under several of the
Partnership's major operating agreements.
The Purchase Notes matured in December 31, 2002. The Partnership has not had
sufficient cash flows from operations to make all payments of interest due under
the Purchase Notes. The Partnership is in default under the terms of the
Purchase Notes. During the first nine months of 2005, the Partnership made
payments of $1.9 million to MCC under the Purchase Notes, which were applied
towards the accrued and unpaid interest. As of September 30, 2005, the amount in
default was $2.4 million, which was comprised solely of interest in arrears. The
terms of the Purchase Notes do not require that the Partnership pay additional
interest on the accrued and unpaid interest due under the Purchase Notes. Upon
notice of default, MCC has a right to foreclose against its security interest in
all the assets of the Partnership, including the Turbines. As of the date of
this filing, MCC has not notified the Partnership of its intent to foreclose on
its security interests. Any such foreclosure by MCC on its security interests in
the assets of the Partnership would have a material adverse effect on the
Partnership.
NOTE 5 - TRANSACTIONS WITH RELATED PARTIES
In addition to the Purchase Notes (See Note 4 above) the Partnership had amounts
payable to Mesa and EWS, respectively as of September 30, 2005. Amounts payable
to Mesa include easement fees and other miscellaneous expenses related to
Windsystem operations. Amounts payable to EWS include management fees,
maintenance costs and other miscellaneous expenses related to Windsystem
operations.
The Partnership has the following related party transactions and relationships:
(1) Mesa assigned easement rights to a portion of the Operating Site and
granted rights to use the Infrastructural Improvements to the
Partnership under the Wind Park Easement Agreement (See Note 2 above).
The Partnership incurred $0.06 million in easement fees during the
third quarter of 2005 as compared to $0.09 million during the third
quarter of 2004 pursuant to the Wind Park Easement Agreement. The
Partnership incurred $0.1 million in easement fees during the first
nine months of 2005 as compared to $0.2 million during the first nine
months of 2004 pursuant to the Wind Park Easement Agreement.
(2) The Partnership has a contract with EWS to operate and maintain the
Turbines and to perform certain management and administrative services
under the Management Agreement (See Note 2 above). The Partnership
incurred expenses of $0.3 million and $0.2 million during the third
quarter of 2005 and the third quarter of 2004, respectively, pursuant
to the Management Agreement. The Partnership incurred expenses of $0.7
million during both the first nine months of 2005 and the first nine
months of 2004 pursuant to the Management Agreement.
In 1988, Mesa assigned $581,000 of receivables from the Partnership to each of
its partners, EWS and an affiliate of PanAero. EWS subsequently forgave its
15
$581,000 of receivables from the Partnership. This forgiveness was treated as a
capital contribution in the accompanying financial statements.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Future annual minimum payments under non-cancelable obligations as of September
30, 2005 are $0.1 million. There are no lease obligations subsequent to December
31, 2005.
NOTE 7 - SUBSEQUENT EVENTS
SCE Curtailment
The Partnership is currently considering its options relating to SCE's refusal
to compensate the Partnership for its lost revenues resulting from the SCE
Curtailment. See "NOTE 2 - THE PARTNERSHIP - SCE Curtailment" above.
16
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Going Concern
The following matters raise substantial doubt about the Partnership's ability to
continue as a going concern:
1. The Purchase Notes matured on December 31, 2002 and all of the accrued
and unpaid interest and outstanding principal on the Purchase Notes
was due on that date. As discussed in Note 4 to the Financial
Statements, the Partnership has not had sufficient cash flows from
operations to make scheduled payments of interest in arrears on the
Purchase Notes. Accordingly, the Partnership is in default of the
Purchase Notes. Upon notice of default, MCC has a right to foreclose
against its security interests in all the assets of the Partnership.
As of the date of this filing, MCC has not notified the Partnership of
its intent to foreclose on its security interest. Any such foreclosure
by MCC on its security interests in the assets of the Partnership
would have a material adverse effect on the Partnership.
2. As discussed in Note 2 to the Financial Statements, the term of the
Partnership ends on December 31, 2005, unless terminated earlier in
accordance with the terms of the Partnership Agreement. The
Partnership will dissolve effective on the day on which the term of
the Partnership ends. Upon the dissolution of the Partnership, the
General Partner will liquidate the assets of the Partnership, apply
and distribute the proceeds thereof as contemplated by the Partnership
Agreement, and cause the cancellation of the Partnership's Certificate
of Limited Partnership with the Secretary of State of the State of
California. The Partnership will then terminate and the General
Partner will file with the Commission a Form 15 to terminate
registration of the Units under the Exchange Act.
Liquidity and Capital Resources
The Partnership continued to experience a lack of liquidity throughout the third
quarter of 2005, primarily due to an ongoing shortfall in revenues from
operations in comparison to the costs and expenses of operations. As a result,
interest payments on the Purchase Notes in the aggregate amount of $2.4 million
were in arrears as of September 30, 2005. The Partnership's failure to make
timely payments on the Purchase Notes gave MCC the right to foreclose against
its security interest in all the assets of the Partnership, including the
Turbines. MCC has not exercised its right to foreclosure under the Purchase
Notes. See "Results of Operations for the Nine Months Ended September 30, 2005
Compared to the Nine Months Ended September 30, 2004".
The Partnership's primary source of revenues and liquidity to fund operations of
the Windsystem, repay debt, administer the Partnership, and make distributions
to its partners is the production and sale of electricity from the Windsystem.
The Partnership's sole customer is SCE. The price paid by SCE for the
electricity is contractually defined under the RSO1 Power Agreement.
As of September 30, 2005, the Partnership had no current or planned commitments
for capital expenditures.
17
Results of Operations for the Nine Months Ended September 30, 2005 Compared
to the Nine Months Ended September 30, 2004
During the first nine months of 2005, the Partnership's electricity revenue was
$2.8 million, and the Windsystem produced 30.1 million kWh of electricity sold
to SCE. This was a decrease of $0.2 million or 6% in revenue and an increase of
1.1 million kWh or 4% of electricity produced as compared to the first nine
months of 2004. The decrease in electricity revenue was primarily due to the
effect of the change in price paid by SCE for the energy delivered by the
Partnership beginning near the end of the second quarter of 2005. See "Note 2 -
THE PARTNERSHIP - Substantial Transactions and Operating Agreements". From
January 1, 2005 through June 23, 2005, the price paid by SCE for energy
delivered by the Partnership was at a rate of $0.102 per kWh. Beginning on June
24, 2005, under the RSO1 Power Agreement, SCE has paid a price equal to its
short-run avoided cost for all energy delivered by the Partnership. During the
period from June 24, 2005 through September 30, 2005, SCE's short-run avoided
cost (and the price paid by SCE for energy delivered by the Partnership during
this period) ranged from $0.058 to $0.126 per kWh. Throughout the nine-month
period ended September 30, 2005, the price paid by SCE for the energy delivered
by the Partnership was an average rate of $0.093 per kWh. Throughout the
nine-month period ended September 30, 2004, the price paid by SCE for the energy
delivered by the Partnership was a higher fixed rate of $0.102 per kWh. Interest
income increased $0.03 million during the first nine months of 2005 as compared
with the first nine months of 2004. Operating cash was invested in an interest
bearing account during the first nine months of 2005 but not during the first
nine months of 2004.
Costs and expenses in the first nine months of 2005 were $1.2 million, a
decrease of $1.9 million or 62%, as compared to the first nine months of 2004.
Depreciation decreased $1.8 million during the first nine months of 2005 as
compared to the first nine months of 2004 as the Turbines were fully depreciated
in 2004. The Partnership is continuing to depreciate other assets, including the
service building and relocation/upgrades on the Turbines. Property taxes
remained constant during the first nine months of 2005 as compared to the first
nine months of 2004. Easement fees and management fees decreased $0.03 and $0.01
million, respectively, during the first nine months of 2005 as compared to the
first nine months of 2004. Easement and management fees are calculated as a
percentage of Gross Operating Proceeds. "Gross Operating Proceeds" is defined as
all gross receipts from the sale of electricity generated by the Turbines and
all amounts paid in lieu of receipts from the sale of electricity, including,
without limitation, any proceeds of systems performance or wind resource
insurance, casualty loss and business interruption insurance paid in
reimbursement of lost revenues and warranty payments in reimbursement of lost
revenues. Maintenance expenses increased $0.007 million in the first nine months
of 2005, as compared to the first nine months of 2004, due to an increase in
unscheduled maintenance. Insurance costs decreased by $0.04 million in the first
nine months of 2005 due to a decrease in premiums as compared with the first
nine months of 2004. Other operating costs decreased $0.02 million in the first
nine months of 2005 due to a decrease in the use of outside consultants as
compared to the same period in 2004.
Overall, the Partnership reported net income of $1.6 million for the first nine
months of 2005 as compared with a net loss of $0.1 million for the first nine
months of 2004. During the first nine months of 2005, the total partners'
capital increased $1.6 million to $0.2 million. The net income per Unit was
$1,382 for the first nine months of 2005 compared with a net loss per Unit of
$120 for the first nine months of 2004.
Cash flows from operations decreased $0.6 million in the first nine months of
2005 as compared to the first nine months of 2004. This decrease was primarily
18
due to unfavorable changes in working capital during the first nine months of
2005 as compared to the first nine months of 2004. Cash flows used in financing
activities decreased by $0.5 million due to principal payments made on the
Purchase Notes during the nine months ended September 30, 2004, while none were
made during the nine months ended September 30, 2005. Excess cash flows from
operations are used primarily to fund payments of the interest in arrears on the
Purchase Notes.
Results of Operations for the Three Months Ended September 30, 2005
Compared to the Three Months Ended September 30, 2004
For the three months ended September 30, 2005, revenues from power sales were
$0.7 million, and the Windsystem produced 8.8 million kWh of electricity for
sale to SCE. This was a decrease of $0.4 million or 38% in revenue and a
decrease of 1.9 million kWh of electricity produced or 18% as compared to the
same period in 2004. The decrease in electricity revenue resulted from a
decrease in production combined with the average lower price paid by SCE for the
energy delivered by the Partnership throughout the three months ended September
30, 2005 as compared to the same period in 2004. See "Note 2 - THE PARTNERSHIP -
Substantial Transactions and Operating Agreements". The Partnership believes
that the decrease in production is due primarily to lower average wind speeds
during the three months ended September 30, 2005 as compared with the three
months ended September 30, 2004. Further, throughout the three months ended
September 30, 2005, SCE paid a price equal to its short-run avoided cost for all
energy delivered by the Partnership. During this period, SCE's short-run avoided
cost (and the price paid by SCE for energy delivered by the Partnership during
this period) ranged from $0.058 to $0.126 per kWh. Throughout the three-month
period ended September 30, 2005, the price paid by SCE for the energy delivered
by the Partnership was an average rate of $0.078 per kWh. Throughout the
three-month period ended September 30, 2004, the price paid by SCE for the
energy delivered by the Partnership was a higher fixed rate of $0.102 per kWh.
Interest income increased $0.01 million during the three months ended September
30, 2005 as compared with the three months ended September 30, 2004. Operating
cash was invested in an interest bearing account during the three months ended
September 30, 2005 but not during the three months ended September 30, 2004.
Costs and expenses for the third quarter of 2005 were $0.5 million. This was a
decrease of $0.6 million or 55%, as compared to the third quarter of 2004.
Depreciation decreased $0.6 million during the third quarter of 2005 as compared
to the third quarter of 2004 as the Turbines were fully depreciated in 2004. The
Partnership is continuing to depreciate other assets, including the service
building and relocation/upgrades on the Turbines. Property taxes increased $0.05
million during the third quarter of 2005 as compared to the third quarter of
2004 due to a 2004 adjustment to previously recorded property tax expense. This
adjustment was based on a reimbursement from EWS to the Partnership of penalties
paid by the Partnership in 2004 relating to the late payment of property taxes.
Easement fees and management fees decreased $0.02 and $0.01 million,
respectively, during the third quarter of 2005 as compared to the third quarter
of 2004. Easement and management fees are calculated as a percentage of Gross
Operating Proceeds. Maintenance expenses increased $0.06 million in the third
quarter of 2005, as compared to the third quarter of 2004, due to an increase in
unscheduled maintenance. Insurance costs decreased by $0.01 million in the third
quarter of 2005 due to a decrease in premiums as compared with the third quarter
of 2004. Other operating costs remained constant in the third quarter of 2005 as
compared to the same period in 2004.
19
Overall, the Partnership reported net income of $0.2 million for the third
quarter of 2005, which is an increase of $0.15 million or 163% as compared to
the third quarter of 2004. Net income per Unit was $203 for the third quarter of
2005 compared with a net income per Unit of $77 for the third quarter of 2004.
Contractual Obligations
The Partnership's contractual obligations as of September 30, 2005 are as
follows (in millions):
------------------------------- ---------------- -------------------
2005 Thereafter
------------------------------- ---------------- -------------------
------------------------------- ---------------- -------------------
Debt
------------------------------- ---------------- -------------------
Interest Payable $2.365 *
------------------------------- ---------------- -------------------
------------------------------- ---------------- -------------------
Purchase Obligations:
------------------------------- ---------------- -------------------
Maintenance fees $0.104 *
------------------------------- ---------------- -------------------
*The term of the Partnership ends on December 31, 2005, unless terminated
earlier in accordance with the terms of the Partnership Agreement.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership's management with the participation of the General Partners'
Chief Executive Officer and Chief Financial Officer has evaluated the disclosure
requirements of Item 305 of Regulation S-K "Quantitative and Qualitative
Disclosures about Market Risk," and has concluded that the Partnership currently
has no market risk sensitive instruments for which this disclosure is required.
Item 4. CONTROLS AND PROCEDURES
The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act. This term means controls and other procedures of
a company that are designed to ensure that information required to be disclosed
by the company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the company's
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
The Partnership's management, with the participation of the General Partner's
Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Partnership's disclosure controls and procedures as of
September 30, 2005. Based on these evaluations, the General Partner's Chief
Executive Officer and Chief Financial Officer concluded that the Partnership's
disclosure controls and procedures were effective as of September 30, 2005.
20
During the nine months ended September 30, 2005, the Partnership made no change
in its internal control over financial reporting that materially affected, or is
reasonably likely to materially affect, its internal control over financial
reporting.
21
PART II - OTHER INFORMATION
Item 3. DEFAULTS UPON SENIOR SECURITIES
The Partnership is in default under the Purchase Notes. As of the date of this
filing, the total amount in default is $2.4 million, which is totally comprised
of unpaid interest in arrears. See Notes 3 and 4 to the Financial Statements for
additional information.
Item 5. OTHER INFORMATION
This report contains statements that are forward-looking within the meaning of
Section 27(a) of the Securities Act of 1933 and Section 21(e) of the Exchange
Act. Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and that actual results could differ materially
as a result of known and unknown risks and uncertainties, including general
economic conditions, future trends, and other risks, uncertainties and factors
disclosed in this operating report.
Item 6. EXHIBITS
(a) Exhibits
31.1 Rule 13a-14(a) Certification of Eric D. Gadd
31.2 Rule 13a-14(a) Certification of Mary H. Cilia
32.1 Section 1350 Certification of Eric D. Gadd
32.2 Section 1350 Certification of Mary H. Cilia
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Zond-PanAero Windsystem Partners I
Date: November 14, 2005
By: Zond Windsystems Management LLC,
General Partner
By: /s/ Eric D. Gadd
-----------------------------------
Eric D. Gadd
Chief Executive Officer of Zond Windsystems
Management LLC, the General Partner of Zond-
PanAero Windsystem Partners I, a California
Limited Partnership
By: /s/ Mary H. Cilia
------------------------------------
Mary H. Cilia
Chief Financial Officer of Zond Windsystems
Management LLC, the General Partner of Zond-
PanAero Windsystem Partners I, a California
Limited Partnership
23
Exhibit Index
-------------
Number Description
31.1* Rule 13a-14(a) Certification of Eric D. Gadd
31.2* Rule 13a-14(a) Certification of Mary H. Cilia
32.1* Section 1350 Certification of Eric D. Gadd
32.2* Section 1350 Certification of Mary H. Cilia
* Filed with this report
24