FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OFTHE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2000
Commission file Number 0-24143
RIDGEWOOD ELECTRIC POWER TRUST V
(Exact name of registrant as specified in its charter.)
Delaware 22-3437351
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 447-9000
----------------
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 [ ]
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Ridgewood Electric Power Trust V
Consolidated Financial Statements
June 30, 2000
<PAGE>
Ridgewood Electric Power Trust V
Consolidated Balance Sheet
--------------------------------------------------------------------------------
June 30, 2000 December 31,
1999
------------ ------------
Assets: (unaudited)
Cash and cash equivalents ................ $ 4,054,945 $ 14,759,184
Due from affiliates ...................... 452,207 675,185
Other current assets ..................... 420,318 404,351
------------ ------------
Total current assets ..................... 4,927,470 15,838,720
Investments:
Maine Hydro Projects ................. 5,825,237 5,663,505
Maine Biomass Projects ............... 5,655,175 5,825,271
MetaSound Systems .................... 354,721 921,163
Quantum Conveyor ..................... 2,715,857 2,810,410
Santee River Rubber Project .......... 7,825,414 8,186,456
Egypt Projects ....................... 6,997,961 4,736,093
Mediterranean Fiber Optic Project/GFG -- 1,497,670
United Kingdom Landfill Projects ..... 16,679,024 16,916,309
Synergics Hydro ...................... 5,182,494 --
------------ ------------
Total assets ............................. $ 56,163,353 $ 62,395,597
------------ ------------
Liabilities and shareholders' equity:
Liabilities:
Accounts payable and accrued expenses .... $ 59,074 $ 174,857
Due to affiliates ........................ -- 449,178
------------ ------------
Total current liabilities ................ 59,074 624,035
------------ ------------
Minority interest ........................ 1,046,220 1,337,769
Commitments and contingencies
Shareholders' equity:
Shareholders' equity (932.8875
investor shares issued and
outstanding) ...................... 55,322,444 60,644,421
Subscription receivable .............. (23,000) (23,000)
------------ ------------
Shareholders' equity, net ....... 55,299,444 60,621,421
Managing shareholder's accumulated
deficit (1 management share
issued and outstanding) ........... (241,385) (187,628)
------------ ------------
Total shareholders' equity ............... 55,058,059 60,433,793
------------ ------------
Total liabilities and shareholders' equity $ 56,163,353 $ 62,395,597
------------ ------------
See accompanying notes to financial statements.
<PAGE>
Ridgewood Electric Power Trust V
Consolidated Statement of Operations (unaudited)
--------------------------------------------------------------------------------
Six Months Ended Three Months Ended
---------------------- ------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------- ---------- ----------- ----------
Revenue:
Interest income ........... $ 322,521 $1,092,329 $ 227,305 $ 478,303
Income from Maine
Hydro Projects ........... 661,732 654,661 406,215 117,526
Loss from Maine
Biomass Projects ......... (170,096) (410,497) (100,280) (242,094)
(Loss) income from
Santee River Rubber
Project .................. (361,042) 129,605 (197,346) 125,571
Loss from Quantum
Conveyor ................. (94,553) (129,752) (96,564) (119,043)
Loss from MetaSound ....... (566,442) (427,463) (184,879) (178,824)
Income from Egypt Projects 61,612 -- 111,052 --
Loss from Mediterranean
Fiber Optic
Project/GFG .............. (49,924) -- -- --
Income from United
Kingdom Landfill Projects 819,985 -- 428,820 --
Income from Synergics Hydro 125,000 -- 125,000 --
----------- ---------- ----------- -----------
Total revenue ............. 748,793 908,883 719,323 181,439
----------- ---------- ----------- -----------
Expenses:
Due diligence costs ....... -- 101,988 -- 101,988
Accounting and legal fees . 152,553 64,869 115,129 44,830
Management fee ............ 1,091,245 1,263,522 583,056 662,320
Research and development .. 662,612 350,284 365,235 118,952
Miscellaneous ............. 21,516 81,274 9,930 21,660
Writedown of investment
in Mediterranean
Fiber Optic Project/GFG .. 1,447,746 -- -- --
----------- ---------- ----------- -----------
Total expenses ............ 3,375,672 1,861,937 1,073,350 949,750
----------- ---------- ----------- -----------
Loss from operations ...... (2,626,879) (953,054) (354,027) (768,311)
Minority interest in
loss of subsidiary ....... 291,549 122,421 173,526 124,125
----------- ---------- ----------- -----------
Net loss .................. $(2,335,330) $ (830,633) $ (180,501) $ (644,186)
----------- ---------- ----------- ----------
See accompanying notes to financial statements.
<PAGE>
Ridgewood Electric Power Trust V
Consolidated Statement of Changes in Shareholders' Equity (unaudited)
--------------------------------------------------------------------------------
Subscription Managing
Shareholders Receivable Shareholder Total
----------- --------- --------- ------------
Shareholders' equity,
December 31, 1999 ... $60,644,421 $ (23,000) $(187,628) $ 60,433,793
Cash distributions ... (1,963,303) -- (19,831) (1,983,134)
Cumulative translation
adjustment .......... (1,046,697) -- (10,573) (1,057,270)
Net loss for the year (2,311,977) -- (23,353) (2,335,330)
----------- --------- --------- ------------
Shareholders' equity,
June 30, 2000 ....... $55,322,444 $ (23,000) (241,385) $ 55,058,059
----------- --------- --------- ------------
Ridgewood Electric Power Trust V
Consolidated Statement of Comprehensive Loss (unaudited)
-------------------------------------------------------------------------------
Six Months Ended Three Months Ended
-------------------------- ----------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------ --------- ----------- ----------
Net loss ............. $(2,335,330) $(830,633) $ (180,501) $ (644,186)
Cumulative translation
adjustment .......... (1,046,697) -- (1,046,697) --
----------- --------- ----------- -----------
Comprehensive loss ... $(3,382,027) $(830,633) $(1,227,198) $ (644,186)
----------- --------- ----------- -----------
See accompanying notes to financial statements.
<PAGE>
Ridgewood Electric Power Trust V
Consolidated Statement of Cash Flows (unaudited)
--------------------------------------------------------------------------------
Six Months Ended
----------------------------
June 30, 2000 June 30, 1999
------------ ------------
Cash flows from operating activities:
Net loss ................................ $ (2,335,330) $ (830,633)
------------ ------------
Adjustments to reconcile net
income to net cash flows from
operating activities:
Income from Maine Hydro Projects ....... (661,732) (654,661)
Loss from Maine Biomass Projects ....... 170,096 410,496
Loss from MetaSound Systems ............ 566,442 427,463
Loss from Quantum Conveyor ............. 94,553 129,752
Loss (income) from Santee River
Rubber Project ........................ 361,042 (129,605)
Income from Egypt Projects ............. (61,612) --
Loss from Mediterranean Fiber
Optic Project/GFG ..................... 49,924 --
Income from United Kingdom
Landfill Projects ..................... (819,985) --
Income from Synergics Hydro ............ (125,000) --
Writedown of investment in
Mediterranean Fiber Optic
Project/GFG ........................... 1,447,746 --
Minority interest in loss
of consolidated subsidiary ............ (291,549) (122,421)
Changes in assets and liabilities:
Decrease in due from affiliates ....... 222,978 1,155,427
Increase in other current assets ...... (15,967) (76,074)
Increase in other assets .............. -- (46,218)
Decrease in accounts payable and
accrued expenses ..................... (115,783) (18,572)
Decrease in due to affiliates ......... (449,178) (374,450)
------------ ------------
Total adjustments ....................... 371,975 701,137
------------ ------------
Net cash used in operating activities ... (1,963,355) (129,496)
------------ ------------
Cash flows from investing activities:
Loans to Maine Biomass Projects ......... -- (225,000)
Investment in UK Landfill Projects ...... -- (16,104,987)
Investment in MetaSound Systems ......... -- (53,412)
Investment in Quantum Conveyor .......... -- (7,784)
Investments in Egypt Projects ........... (2,200,256) --
Investments in Synergics Hydro .......... (5,057,494) --
Distributions from Maine Hydro Projects . 500,000 540,007
Distributions from Santee River
Rubber Project ......................... -- 373,089
Deferred due diligence costs ............ -- (797,611)
------------ ------------
Net cash used in investing activities ... (6,757,750) (16,275,698)
------------ ------------
Cash flows from financing activities:
Proceeds from shareholders' contributions -- 128,250
Selling commissions and offering
costs paid ............................. -- (12,150)
Cash distributions to shareholders ...... (1,983,134) (1,967,295)
------------ ------------
Net cash used in financing activities ... (1,983,134) (1,851,195)
------------ ------------
Net decrease in cash and cash equivalents (10,704,239) (18,256,389)
Cash and cash equivalents, beginning
of year ................................ 14,759,184 42,832,241
------------ ------------
Cash and cash equivalents, end of period $ 4,054,945 $ 24,575,852
------------ ------------
See accompanying notes to financial statements.
<PAGE>
Ridgewood Electric Power Trust V
Notes to Consolidated Financial Statements (unaudited)
1. General
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments which consist of normal recurring
adjustments, necessary for the fair presentation of the results for the interim
periods. Additional footnote disclosure concerning accounting policies and other
matters are disclosed in Ridgewood Electric Power Trust V's (the "Trust")
consolidated financial statements included in the 1999 Annual Report on Form
10-K, which should be read in conjunction with these financial statements.
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. Writedown of investment in Mediterranean Fiber Optic Project/GFG
In September 1999, the Trust and The Ridgewood Power Growth Fund (the "Growth
Fund") made a joint investment of $3,000,000 in Global Fiber Group ("GFG"),
which was in the process of developing an underwater fiber optic cable in the
Western Mediterranean (the "Mediterranean Fiber Optic Project"). The investment,
which was funded equally by the Growth Fund and the Trust, provided for a 25%
ownership interest in GFG and the right to invest in projects developed by GFG.
In the first quarter of 2000, the Trust determined that GFG would probably not
be able to develop the Mediterranean Fiber Optic Project or any other project.
As a result, the Trust determined that it would be unlikely to recover its
investment in GFG. As a result, the Trust recorded a writedown of $1,447,746 in
the first quarter of 2000 to reduce the estimated fair value of the investment
to zero.
3. Synergics, Inc. Acquisition
Beginning in late 1999, Ridgewood Power LLC, the Managing Shareholder of the
Trust, began negotiations to buy nine existing hydroelectric generating plants
from Synergics, Inc. ("Synergics"). In the course of negotiations and due
diligence, Ridgewood Power learned that one of Synergics' lenders had declared a
payment default against Synergics and that the lender had agreed to discharge
the debt at a substantial discount from the face amount if payment were made by
the end of April 2000. In order to preserve the benefit of the lender's offer
and to allow completion of the acquisition on favorable terms, the Trust and the
Growth Fund, through a joint venture, acquired the debt from the lender on April
28, 2000 for a payment of $17 million to the lender. The debt remains in
default, but the joint venture is not exercising its remedies against Synergics
or the Synergics subsidiaries pending the proposed acquisition described below.
The joint venture intends to acquire the Synergics hydroelectric generation
business by forgiving the $17 million of outstanding debt and paying an
additional $1 million to the shareholders of Synergics and paying up to an
additional $1.7 million of Synergics' tax liabilities that might be incurred as
a result of the sale of its assets. In addition, if a project lease for
Synergics' Box Canyon, California hydroelectric plant is extended beyond the
year 2010, the joint venture will pay the Synergics shareholders the lesser of
$500,000 or one-half of the agreed present value derived from the lease
extension. The structuring and closing of the acquisition is to be determined
after a review of certain financial, contractual and tax considerations and
termination of the Hart-Scott-Rodino Act antitrust waiting period.
Until the acquisition closes, Synergics has agreed to retain all working capital
for the account of the joint venture and to allow the joint venture to approve
all operational decisions and expenditures. Synergics is cooperating closely
with the joint venture in making operational decisions. However, although the
joint venture currently intends to acquire the Synergics hydroelectric
generation business as promptly as possible, neither the joint venture nor the
Trust and the Growth Fund are obligated to acquire Synergics or any of its
assets. Wayne L. Rogers, the president of Synergics, agreed to vote the stock of
Synergics, Inc. beneficially owned by him (approximately 69% of the voting
stock) in favor of a merger or other corporate reorganization as specified by
the Trust and the Growth Fund that materially complies with the provisions
outlined above.
Although the joint venture now owns $17 million of the senior debt of Synergics,
there is approximately $11.725 million of debt owed to Fleet Bank, N.A. The
Trust and the Growth Fund are in discussions with Fleet Bank concerning the
assumption of the Fleet debt in connection with the acquisition.
The Trust supplied $5 million of the capital used by the joint venture to
acquire the debt and the Growth Fund supplied the remaining $12 million. Any
additional capital needed for the acquisition will be supplied to the joint
venture by the Growth Fund. The Trust and the Growth Fund will own the joint
venture in proportion to the capital each supplies and neither will have
preferred rights over the other.
Until the joint venture acquires the hydroelectric generation business,
Synergics and the joint venture have agreed that the debt of Synergics will bear
interest equal to the lesser of 15% or the cash flows generated by the
hydroelectric generation business. For the two months ended June 30, 2000, the
Trust recorded $125,000 of income related to the debt of Synergics.
4. Summary Results of Operations for Selected Investments
Summary results of operations for the Maine Hydro Projects, which are accounted
for under the equity method, were as follows:
Six Months Ended June 30,
2000 1999
---- ----
Total revenue ............... $2,855,000 $2,861,000
Depreciation and amortization 561,000 551,000
Net income .................. 1,323,000 1,309,000
Summary results of operations for the Maine Biomass Projects, which are
accounted for under the equity method, were as follows:
Six Months Ended June 30,
2000 1999
---- ----
Total revenue ............... $ 1,312,000 $ 575,000
Depreciation and amortization 118,000 90,000
Net loss .................... (340,000) (821,000)
Summary results of operations for the Santee River Rubber Project, which is
accounted for under the equity method, were as follows:
Six Months Ended June 30,
2000 1999
---- ----
Total revenue ............... $ 601,000 --
Depreciation and amortization -- --
Net loss .................... (2,166,000) (668,000)
Summary results of operations for MetaSound Systems, which is accounted for
under the equity method, were as follows:
Six Months Ended June 30,
2000 1999
---- ----
Total revenue ... $ 423,000 456,000
Net loss ........ (2,438,000) (1,987,000)
Summary results of operations for the Egypt Projects, which are accounted for
under the equity method, were as follows:
Six Months Ended June 30,
2000
----
Total revenue .... $644,000
Net income ....... 166,000
Summary results of operations for the UK Landfill Gas Projects, which are
accounted for under the equity method, were as follows:
Six Months Ended June 30,
2000
----
Total revenue .... $2,825,000
Net income ....... 820,000
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Dollar amounts in this discussion are generally rounded to the nearest $1,000.
Introduction
The consolidated financial statements include only the accounts of the Trust and
its majority owned subsidiary, Ridgewood WaterPure Corporation. The Trust uses
the equity method of accounting for its investments in the Maine Hydro Projects,
the Maine Biomass Projects, the United Kingdom Landfill Projects, Egypt
Projects, Mediterranean Fiber Optic Project/GFG, the Santee River Rubber
Project, Quantum Conveyors and MetaSound Systems, which are owned 50% or less by
the Trust.
Results of Operations
In the second quarter of 2000, the Trust had total revenue of $719,000, an
increase of $538,000 from total revenue of $181,000 in the same period in 1999.
For the first six months of 2000, the Trust had total revenue of $748,000, a
decrease of $161,000 from total revenue of $909,000 in the same period in 1999.
Interest income declined by $251,000 from $478,000 in the second quarter of 1999
to $227,000 in the second quarter of 2000 due to lower average cash balances.
Interest income also declined by $769,000 from $1,092,000 in the first six
months of 1999 to $323,000 in the same period of 2000 due to the lower average
cash balances.
Although equity income from the Maine Hydro Projects for the first six months of
2000 of $662,000 was comparable to $655,000 in the same period of 1999, income
in the second quarter of 2000 of $406,000 was substantially higher than the
second quarter 1999 income of $118,000. The river flows were higher in the
second quarter of 2000 compared to the prior year but lower in the first quarter
of 2000 compared to the prior year.
The equity loss from the shut-down Maine Biomass Projects decreased from
$242,000 in the second quarter of 1999 ($410,000 for the first six months of
1999) to $100,000 in the second quarter of 2000 ($170,000 for the first six
months of 2000) due to higher energy revenues and reduced maintenance costs.
The Trust losses from its equity interest in the Santee River Rubber Project in
2000 ($361,000 for the first six months and $197,000 in the second quarter)
compared to income in 1999 ($130,000 for the first six months and $126,000 in
the second quarter) because the project was under construction in 1999, but was
fully staffed and undergoing testing in 2000.
The Trust recorded losses from its equity interest in MetaSound Systems of
$185,000 in the second quarter ($566,000 in the first six months) of 2000
compared to $179,000 in the second quarter ($427,000 in the first six months) of
1999. The increase in the loss is a result of the increased selling and
marketing costs incurred by MetaSound.
The Trust recorded losses from its equity interest in Quantum Conveyors of
$97,000 in the second quarter ($95,000 in the first six months) of 2000 compared
to $130,000 in the second quarter ($119,000 in the first six months) of 1999.
The decrease in the loss is a result of Quantum Conveyors' program of reducing
expenditures due to its poor financial condition.
The Trust recorded income of $429,000 and $820,000 in the second quarter and
first six months of 2000 respectively, from the United Kingdom Landfill
Projects. The Trust acquired the projects at the end of the second quarter of
1999.
The Trust recorded income of $111,000 and $62,000 in the second quarter and
first six months of 2000 respectively, equal to its share of income from the
Egyptian Projects. The first Egyptian Projects began operation in the first
quarter of 2000.
In the second quarter of 2000, the Trust recorded income of $125,000 from its
Synergics, Inc. investment which was acquired in April 2000. The acquisition of
the Synergics investment is discussed in Note 3 to the June 30, 2000 financial
statements
As discussed in Note 2 to the June 30, 2000 financial statements, the Trust
recorded a $1,447,746 writedown of its investment in Mediterranean Fiber Optic
Project/GFG in the first quarter of 2000.
In the second quarter of 2000, the most significant expense was the management
fee of $583,000 ($1,091,000 in the first six months of 2000), which is less than
the $662,000 charged in the second quarter of 1999 ($1,264,000 in the first six
months of 1999).
In the second quarter of 2000, the Trust's Ridgewood WaterPure subsidiary
incurred $365,000 ($663,000 in the first six months of 2000) of research and
development costs related to its water distillation technology, an increase over
the $119,000 incurred in the second quarter of 1999 ($350,000 in the first six
months of 1999). The increase in cost reflects the more intensive development
programs at WaterPure, which was acquired in December 1998.
Liquidity and Capital Resources
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 $1,150,000. 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. There have been no borrowings under the line
of credit in 2000.
As disclosed in the Trust's Annual Report on Form 10-K for the year 1999, the
Santee River Project did not operate at full capacity because of design and
equipment performance problems. The Project's general contractor, as required,
began repairs and modifications at its own cost in January 2000, but the Project
has required additional capital in order to pay for normal operating costs and
to allow the contractor to finish pre-operating testing.
In late May 2000, Environmental Processing Services, Inc., the Project's
developer, informed the Trust that the Project needed substantial additional
money to pay for its operating expenses while the repairs were completed and
during the testing. Intensive negotiations then began between Environmental
Processing, Ridgewood Power, the Project's bondholders and potential outside
funding sources. While these negotiations continued, the Project informed the
Trust on July 30, 2000 that it had run out of money and would be unable to make
payroll. After further discussions, the bondholders agreed to allow $275,000 to
be drawn from the debt service reserves for operating expenses and the Trust and
Ridgewood Electric Power Trust IV advanced $183,000 and $92,000, respectively,
for that purpose. The Project is operating on an irregular schedule because of
raw material and operating cost delays, but it is possible that the
pre-operating test will be completed during the week of August 14, 2000. The
Project may or may not then shut down for an indefinite period while
negotiations for further financing continue. Although Ridgewood Power has been
informally advised that the Project has obtained an extension of a payment due
date on its bonds, the Project may enter bankruptcy or insolvency proceedings.
Ridgewood Power, the Project's bondholders, outside financing and management
sources and principals of Environmental Processing continue to discuss potential
financing alternatives. Any new financing from sources other than the Trust or
the results of a bankruptcy reorganization might dilute, subordinate or possibly
eliminate the Trust's equity interest. As of the date of this Quarterly Report,
the Trust believes that the Project can be refinanced on a basis that will
eventually allow the Trust to make a profit on the investment.
Other than investments of available cash in power generation Projects,
obligations of the Trust are generally limited to payment of Project operating
expenses, payment of a management fee to 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, during 2000, its cash flow from operations,
unexpended offering proceeds and the line of credit facility will be adequate to
fund its obligations.
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.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On June 2, 2000, Indeck Maine Energy LLC, the owner of the Maine Biomass
Projects, brought a complaint before the Federal Energy Regulatory Commission
(Docket No. EL00-80-000) requesting FERC to remove bid restrictions imposed on
Indeck by ISO-New England, Inc., the operator of the New England Power Pool.
Those restrictions capped the price that the ISO would pay for Indeck's electric
power output at approximately $810 per megawatt-hour, substantially less than
Indeck's own bids. The complaint also challenged the ISO's authority to impose
those restrictions. On July 26, 2000 FERC ordered the ISO "to remove the bid
restrictions previously imposed on Indeck." FERC found that the ISO had not
provided any evidence to support its conclusion that the Indeck power bids
materially affected the markets. That conclusion was a necessary condition for
imposing the restrictions.
Because of their cost structure, the Maine Biomass Projects currently run only
during power shortages in the summer and occasionally at other times when
transmission constraints or local problems require their use. Thus the lifting
of the bid restrictions will not result in revenue increases unless a power
shortage or similar situation occurs in the future. The Trust does not expect
any such situation to occur during the rest of the summer, although the weather
in particular is unpredictable.
The FERC order does not expressly lift the bid restrictions for earlier dates in
2000 and certain dates in 1999 on which the Projects sold power to the ISO and
there is some language in the order that could be read to say that FERC did not
invalidate the prior bid restrictions. The Trust believes that the order clearly
rejected the reasons given by the ISO for capping Indeck's prices on most of
those dates and also discredited the ISO's decision to impose caps retroactively
for the 1999 dates. The Trust intends to bring additional complaints at FERC to
clarify the order, to rescind the price caps for those prior dates on which the
Projects sold power and to recover additional compensation for those sales based
on the prices that Indeck had submitted. Until such proceedings are resolved
favorably to Indeck or unless a settlement with the ISO results, the Trust will
receive no additional revenue from the ISO for those prior dates.
In addition, the ISO has escrowed approximately $287,000 of Indeck's revenues,
based on the ISO's assertion that an overpayment was made for a price-capped
event in October 1999. The Trust expects to bring an additional proceeding in
the appropriate forum to recover the escrowed amount and to invalidate the caps.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RIDGEWOOD ELECTRIC POWER TRUST V
Registrant
August 14, 2000 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)
