UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
Commission File Number 0-21304
RIDGEWOOD ELECTRIC POWER TRUST II
(Exact name of registrant as specified in its charter.)
Delaware, U.S.A. 22-3206429
(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)
Registrant's telephone number, including area code:
(201) 447-9000
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 I - FINANCIAL STATEMENTS
RIDGEWOOD ELECTRIC POWER TRUST II
BALANCE SHEETS
(Unaudited)
[CAPTION]
September 30, December 31,
1997 1996
[S] [C] [C]
Assets
Investments in project
development and power
generation projects $12,609,151 $16,116,582
Cash and cash equivalents 202,170 0
Electric power equipment 54,125 331,018
Short-term portion of
notes receivable 372,582 0
Long-term portion of
notes receivable 2,238,810 0
Due from affiliates 103,771 0
Other assets 3,424 18,641
Total assets $15,584,033 $ 16,466,241
Liabilities and Share-
holders' Equity
Accounts payable and
accrued expenses $ 134,456 $ 112,482
Due to affiliates 44,505 0
178,961 112,482
Shareholders' equity:
Shareholders' equity
(235.3775 shares issued
and outstanding) 15,452,264 16,391,464
Managing shareholder's
accumulated deficit (47,192) (37,705)
Total shareholders'
equity 15,405,072 16,353,759
Total liabilities and
shareholders' equity $ 15,584,033 $ 16,466,241
[FN]
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
RIDGEWOOD ELECTRIC POWER TRUST II
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND QUARTERS
ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Nine months Quarter Nine months Quarter
ended ended ended ended
September 30, September 30, September 30, September 30,
1997 1997 1996 1996
<S> <C> <C> <C> <C>
Revenue:
Income from power
generating projects $1,330,418 $ 346,918 $ 1,755,375 $ 538,114
Gain on sale of RSD
Power Partners, L.P. 2,553,433 (40,883) 0 0
Interest and dividend
income 77,744 71,044 432 231
Total revenues 3,961,595 377,079 1,755,807 538,345
Expenses:
Project due diligence costs 5,046 0 0 0
Management fee 281,710 111,347 200,728 (729)
Accounting and legal fees 35,722 18,342 24,000 7,500
Insurance 3,101 1,431 22,645 3,502
Writedown of electric power
equipment 281,018 0 0 0
Miscellaneous 14,768 3,893 11,844 4,281
621,365 135,013 259,217 14,554
Net income (loss) $ 3,340,230 $ 242,066 $ 1,496,590 $ 523,791
Allocation to:
Shareholders $ 3,306,828 $ 239,645 $ 1,481,624 $ 518,553
Managing shareholder 33,402 2,421 14,966 5,238
$ 3,340,230 $ 242,066 $ 1,496,590 $ 523,791
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
RIDGEWOOD ELECTRIC POWER TRUST II
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
(Unaudited)
[CAPTION]
Nine months Nine months
ended September 30, ended September 30,
1997 1996
[S] [C] [C]
Cash flows from operating
activities:
Net income (loss) $3,340,230 $1,496,590
Adjustments to
reconcile net income
(loss) to net cash provided
by (used in) in
operating activities:
Sale of investment in
RSD Power Partners, L.P. 3,507,275 0
Writedown of electric
power equipment 276,893 0
Purchase of investments in
electric power projects 0 (60,431)
Changes in assets &
liabilities:
Decrease in
other assets 15,373 8,996
Increase in
accounts payable and
accrued expenses 21,974 45,762
(Increase) in due
from affiliates (103,771) 0
Increase in due to affiliates 44,505 0
(Increase) in notes receivable (2,611,392) 0
Total adjustments 1,150,857 (5,673)
Net cash provided by (used in)
operating activities 4,491,087 1,490,917
Cash flows provided by
(used in) financing
activities:
Cash distributions to
shareholders (4,288,917) (1,591,092)
Net cash provided by (used
in) financing activities (4,288,917) (1,591,092)
Net increase (decrease) in
cash and cash equivalents 202,170 (100,175)
Cash and cash equivalents
beginning of period 0 101,975
Cash and cash equivalents
end of period $ 202,170 $ 1,800
[FN]
See Accompanying Notes to Financial Statements
<PAGE>
Ridgewood Electric Power Trust II
Notes to Financial Statements
1. Organization and Purpose
Nature of business
Ridgewood Electric Power Trust II (the "Trust") was formed as a Delaware
business trust on November 20, 1992, by Ridgewood Energy Holding Corporation
acting as the Corporate Trustee. The managing shareholder of the Trust is
Ridgewood Power Corporation. The Trust began offering shares on January 4,
1993. The Trust commenced operations on April 29, 1993 and discontinued its
offering of Trust shares on January 31, 1994.
The Trust was organized to invest in independent power generation facilities
and
in the development of these facilities. These independent power generation
facilities include cogeneration facilities which produce electricity, thermal
energy and other power plants that use various fuel sources (except nuclear).
The power plants sell electricity and thermal energy to utilities and
industrial
users under long-term contracts.
"Business Development Company" election
Effective April 29, 1993, the Trust elected to be treated as a "Business
Development Company" under the Investment Company Act of 1940 and registered
its
shares under the Securities Exchange Act of 1934.
2. Summary of Significant Accounting Policies
Interim financial statements
The financial statements for the three and nine months ended September 30,
1997
and 1996, included herein have been prepared by the Trust without audit
pursuant
to the rules and regulations of the Securities and Exchange Commission.
Accordingly, these statements reflect all adjustments (consisting only of
normal
recurring entries) which are, in the opinion of management, 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
generally accepted accounting principles have been condensed or omitted
pursuant
to such rules and regulations, although the Trust believes that the
disclosures
are adequate to make the information presented not misleading. These
financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the Trust's Annual Report on Form 10-K for the year
ended December 31, 1996 (Form 10-K).
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from the estimates.
Investments in project development and power generation limited projects
The Trust holds investments in power generation projects, which are stated at
fair value. Due to the non-liquid nature of the investments, the fair values
of
the investments are assumed to equal cost unless current available information
provides a basis for adjusting the carrying value of the investments.
Revenue recognition
Income from investments is recorded when received. Interest and dividend
income
are recorded as earned.
<PAGE>
Ridgewood Electric Power Trust II
Notes to Financial Statements
Offering costs
Costs associated with offering Trust shares (selling commissions, distribution
and offering costs) are recorded as a reduction of the shareholders' capital
contributions.
Cash and cash equivalents
The Trust considers all highly liquid investments with maturities when
purchased of three months or less as cash and cash equivalents.
Due diligence costs relating to potential power project investments
Costs relating to the due diligence performed on potential power project
investments are initially deferred, until such time the Trust determines
whether
or not it will make an investment in the respective project. Costs relating
to
completed projects are capitalized and costs relating to rejected projects are
expensed at the time of rejection.
Income taxes
No provision is made for income taxes in the accompanying financial statements
as the income or losses of the Trust are passed through and included in the
tax
returns of the individual shareholders of the Trusts.
Reclassification
Certain items in previously issued financial statements have been reclassified
for comparative purposes.
3. Electric Power Equipment
The Trust purchased various used electric power generation equipment to
be
used in potential power generation projects. In January 1995, power
generating
equipment with a fair value of $1,300,000 was transferred to the Sunnyside
(Monterey) project as part of its purchase price. In October 1995, the Trust
sold to a related party power generating equipment with a cost of $438,855 for
$455,182. The remaining equipment is held in storage and depreciation is not
recorded. As of December 31, 1996, the cost of the remaining equipment was
$331,018. In 1997, the Trust wrote-down the remaining equipment to its
estimated net realizable value of $54,125.
4. Investments in Project Development and Power Generation Limited
Projects
The following investments in power generation and waste transfer projects are
stated at fair value:
September 30, December 31,
1997 1996
Power generation and waste
transfer projects:
Pittsfield Investors Limited Partnership $ 2,347,321 $ 2,347,330
RSD Power Partners, L.P. --- 3,507,275
B-3 Limited Partnership 4,001,696 4,001,843
Sunnyside Cogeneration Partners, L.P. 5,308,467 5,308,467
California Pumping Project 951,667 951,667
$ 12,609,151 $ 16,116,582
<PAGE>
Ridgewood Electric Power Trust II
Notes to Financial Statements
Investments in power generation limited partnerships
Pittsfield Investors Limited Partnership (known as the Berkshire project)
On January 4, 1994, the Trust made a limited partnership investment in this
partnership, which was formed to acquire an operating facility, located in
Pittsfield, Massachusetts. The facility, which has been operating since 1981,
burns municipal solid waste supplied by the City of Pittsfield and surrounding
communities. The facility has a long-term supply agreement with the City of
Pittsfield, which expires in November 2004, under which the City makes
payments
to the facility for receiving the waste. The facility generates additional
revenue by selling steam produced from the waste burning process to a nearby
paper mill under a long-term contract, which expires in November 2004.
In exchange for its investment, the Trust is entitled to receive annually a
preferred distribution from available cash from the facility equal to 15% of
its
investment. In the event that in any given year available net cash flow from
the project does not cover the amount of the preferred minimum return, the
amount of such shortfall is payable on a priority basis out of any available
net
cash flow in subsequent years. The Trust may be entitled to receive
additional
distributions from any additional net cash flow. The aggregate cost of the
Trust's investment in the partnership was $2,347,321. The Trust received
distributions of $271,631, $351,451, and $446,888 from the project for the
periods ended September 30, 1997, December 31, 1996 and December 31, 1995,
respectively.
RSD Power Partners, L.P. (known as the San Diego project)
On March 21, 1994, the Trust made a limited partnership investment in the
partnership, which was formed to acquire an operating facility, located in San
Diego, California. The facility, which has been operating since 1972, sells
chilled water used in the central air conditioning of 13 commercial, retail
and
government office buildings connected by a closed underground pipeline loop
owned and used exclusively by the San Diego project.
In exchange for its investment, the Trust was entitled to receive annually the
greater of either 80% of net profits from the project or a preferred minimum
return of 25% on its total investment. The aggregate cost of the Trust's
investment in the partnership was $3,507,275. The Trust received
distributions
of $50,000 and $618,080 from the project for the periods ended September 30,
1997 and December 31, 1996, respectively.
On June 25, 1997, the Trust sold its entire partnership interest in RSD Power
Partners, L.P. to subsidiaries of NRG Energy, Inc. of Minneapolis, Minnesota
for
$6,150,000. The Trust received $3,450,000 in cash and $2,700,000 in the form
of
an 8% promissory note payable monthly over six years. The sale resulted in a
gain of $2,553,433.
B-3 Limited Partnership (known as the Columbia project)
On August 31, 1994, the Trust made a limited partnership investment in this
partnership, which was formed to construct and operate a municipal waste
transfer station, located in Columbia County, New York. The project commenced
operations in January 1995.
In exchange for its investment, the Trust is entitled to receive annually a
preferred distribution of available net cash flow from the facility equal to
18%
of its investment. In the event in any given year available net cash flow
from
the project does not cover the amount of the preferred minimum return, the
amount of such shortfall is payable on a priority basis out of any available
net
cash flow in subsequent years. The Trust may be entitled to receive
additional
distributions from any additional net cash flow. The aggregate cost of the
Trust's
<PAGE>
Ridgewood Electric Power Trust II
Notes to Financial Statements
investment in the partnership was $4,001,696. The Trust received
distributions
of $265,000, $515,000 and $510,000 from the project for the periods ended
September 30, 1997, December 31, 1996 and December 31, 1995, respectively.
Sunnyside Cogeneration Partners, L.P. (known as the Monterey project)
On January 9, 1995, the Trust acquired 100% of the existing partnership
interests of Sunnyside Cogeneration Partners, L.P., which owns and operates a
5.5 megawatt electric cogeneration facility, located in Monterey County,
California. The initial cost of the investment was $5,308,467, which
consisted
of $3,782,000 of cash, $226,467 of due diligence and other costs, and electric
power equipment valued at $1,300,000. The original cost of the equipment
contributed by the Trust was $1,599,940. In 1994, the Trust wrote down the
value of the equipment by $299,940. The Trust received distributions of
$548,612, $757,498 and $606,536 from the project for the periods ended
September
30, 1997, December 31, 1996 and December 31, 1995, respectively.
California Pumping Project
On March 31, 1995, the Trust acquired a package of natural gas fueled diesel
engines which drive deep irrigation well pumps in Ventura County, California.
The engines' shaft horsepower-hours are sold to the operator at a discount
from
the equivalent kilowatt hours of electricity. The Trust receives a
distribution
of $0.02 per equivalent kilowatt up to 3,000 running hours per year and $0.01
per equivalent kilowatt for each additional running hour per year. Total
investment at December 31, 1996 and 1995, was $951,667 for an equivalent of
299.8 kilowatts of power. The operator pays for fuel, maintenance, repair and
replacement. The Trust received distributions of $121,880, $129,179 and
$105,742 from the project for the periods ended September 30, 1997, December
31,
1996 and December 31, 1995 respectively.
Investments in project development limited partnerships
The Trust made investments in several limited partnerships with other major
participants in the power industry to provide access to investments in larger
projects in which these participants would take the leading role in the
acquisition or development of such projects. In 1994, the Trust wrote off its
investment in these limited partnerhsips of $1,065,798.
In 1997 the ABB Funding Partners, L.P. refunded the Trust $73,294 of its
original capital investment of $101,850. The refund has been recorded as
income
for the period ended September 30, 1997.
RE Power Partners, L.P. (known as the Blue Ridge project)
In 1993, the Trust entered into a limited partnership agreement to provide
construction funding of a 3 megawatt natural gas-fueled cogeneration project.
During 1994, after further review of the project the Trust decided not to
proceed with the construction funding. Total costs, excluding equipment
written
down separately and transferred to the Sunnyside Cogeneration Partners, L.P.,
incurred by the Trust and subsequently written off in 1994 totaled $331,552.
5. Transactions With Managing Shareholder And Affiliates
The Trust also pays to the managing shareholder a distribution and offering
fee
in an amount up to 5% of each capital contribution made to the Trust. This
fee
is intended to cover legal, accounting, consulting, filing, printing,
distribution, selling and closing costs for the offering of the Trust. These
fees were recorded as a reduction in shareholders' capital contributions.
<PAGE>
Ridgewood Electric Power Trust II
Notes to Financial Statements
The Trust pays to the managing shareholder an investment fee of 2% of each
capital contribution made to the Trust. The fee is payable to the managing
shareholder for its services in investigating and evaluating investment
opportunities and effecting transactions for investing the capital of the
Trust.
The Trust entered into a management agreement with the managing shareholder,
under which the managing shareholder renders certain management,
administrative
and advisory services and provides office space and other facilities to the
Trust. As compensation to the managing shareholder, the Trust pays the
managing
shareholder an annual management fee equal to 2.5% of the net asset value of
the
Trust payable monthly upon the closing of the Trust. For the periods ended
September 30, 1997, December 31, 1996 and December 31, 1995, the Trust paid
management fees to the managing shareholder of $281,710, $328,952, and
$494,023,
respectively.
Under the Declaration of Trust, the managing shareholder is entitled to
receive
each year 1% of all distributions made by the Trust (other than those derived
from the disposition of Trust property) until the shareholders have been
distributed in respect of the year an amount equal to 15% of their equity
contribution. Thereafter, the managing shareholder is entitled to receive 20%
of the distributions for the remainder of the year. The managing shareholder
is
entitled to receive 1% of the proceeds from dispositions of Trust properties
until the shareholders have received cumulative distributions equal to their
original investment ("Payout"). In all cases, after Payout the managing
shareholder is entitled to receive 20% of all remaining distributions of the
Trust.
Where permitted, in the event the managing shareholder or an affiliate
performs
brokering services in respect of an investment acquisition or disposition
opportunity for the Trust, the managing shareholder or such affiliate may
charge
the Trust a brokerage fee. Such fee may not exceed 2% of the gross proceeds
of
any such acquisition or disposition. No such fees were paid through December
31, 1996.
The managing shareholder purchased 1.45 shares of the Trust for $121,800.
Through the closing of the Trust's offering on January 3, 1994, commissions
and
placement fees of $248,807 were earned by Ridgewood Securities Corporation, an
affiliate of the managing shareholder.
In 1996, under an Operating Agreement with the Trust, Ridgewood Power
Management
Corporation ("Ridgewood Management"), an entity related to the managing
shareholder through common ownership, provides management, purchasing,
engineering, planning and administrative services to the power generation
project operated by the Trust. Ridgewood Management charges the project at
its
cost for these services and for the allocable amount of certain overhead
items.
Allocations of costs are on the basis of identifiable direct costs, time
records
or in proportion to amount invested in projects managed by Ridgewood
Management.
6. Litigation
On February 28, 1997 Michael Cutbirth, an individual, sued the Managing
Shareholder in the Superior Court of California, Kern County, claiming
unspecified damages (which may include a claim for an equity interest) for
breach of an alleged confidentiality agreement relating to the acquisition of
the Monterey Project. The Managing Shareholder has successfully removed the
lawsuit to the United States District Court for the Eastern District of
California. Discovery has begun. The Managing Shareholder believes that it
has
ample defenses to Mr. Cutbirth's claims and it will defend the action
vigorously.
ITEM 2 - MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q, like some other statements made by the
Trust
from time to time, has forward-looking statements. These statements discuss
business trends and other matters relating to the Trust's future results and
the
business climate. 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 forward-looking 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.
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.
Dollar amounts in this discussion are generally rounded to the nearest $1,000.
Nine months ended September 30, 1997 versus nine months ended September 30,
1996
Results of operations
The Trust carries its investment in the Projects it owns at fair value and
does not
consolidate its financial statements with the financial statements of the
Projects.
Revenue is recorded by the Trust as cash distributions are received from the
Projects.
Trust revenues may fluctuate from period to period depending on the operating
cash flow
generated by the Projects and the amount of cash retained to fund capital
expenditures.
In addition, income and cash flow earned by the Projects located in California
is
seasonal, peaking in the third quarter of the year as summer heat increases
demand for
electricity and for water and electricity prices are at peak levels and
falling in the
fourth and first quarters, when prices for electricity are at lower off-peak
levels and
equipment maintenance is performed.
For the nine months ended September 30, 1997, the Trust's net income
increased by $1,844,000 (123.2%) from the same period in 1996. The increase
reflects a gain of $2,594,000 on the sale of its entire partnership interest
in RSD Power Partners, L.P., a $425,000 (24.2%) decrease in income received
from other Projects in which the
Trust has invested, an increase of $77,000 in interest income and an increase
of
$362,000 in Trust expenses. Income from the Columbia Project was lower by
$271,000,
the San Diego Project (prior to divestiture) by $413,000 and the Monterey
Project by
$49,000. The Columbia Project's results reflected a continuing intense
competition in the
local waste disposal market and the San Diego Project continued to be affected
by
inability to economically replace a lost customer and cool weather. Income
from the
Pump Services Project was higher by $51,000 and from the Berkshire Project by
$184,000.
In addition, the Trust received a $73,000 distribution from a project
development
limited partnership for which the Trust had previously written off its
investment.
Interest income increased because cash was consolidated at the Trust level in
early
1997 and invested in higher yielding investment accounts.
For the nine months ended September 30, 1997, the Trust's expenses increased
by
$362,000 from the same period in 1996. The increase resulted from a $281,000
write-
down of electric power generation equipment to its net realizable value of
$54,000, and
an increase in the management fee payable to the Managing Shareholder of
$81,000.
There were no material changes in the other expense categories.
Liquidity and Capital Resources
During the nine months ended September 30, 1997, the Trust's average balance
of
cash and cash equivalents increased, reflecting $3,450,000 of cash received
from
the sale of its entire partnership interest in RSD Power Partners, L.P.,
$1,330,000 of income from other power generating projects and interest income,
net of $340,000 of Trust cash operating expenses and $1,347,000 of regular
cash
distributions to shareholders. An additional special distribution of
$2,942,000
was made to shareholders in July 1997 from the proceeds of the sale of the San
Diego Project.
During the third quarter of 1997, the Trust and its principal bank executed a
commitment letter for a revolving line of credit, whereby the bank will
provide
a three year committed line of credit facility of $750,000. Outstanding
borrowings bear interest at the bank's prime rate or, at the Trust's choice,
at
LIBOR plus 2.5%. The credit agreement will require the Trust to maintain a
ratio of total debt to tangible net worth of no more than 1 to 1 and a minimum
debt service coverage ratio of 2 to 1. The credit facility is being obtained
in
order to allow the Trust to operate using a minimum amount of cash, maximize
the
amount invested in Projects and maximize cash distributions to shareholders.
The Trust expects to execute the definitive credit agreement during the fourth
quarter of 1997.
Other than investments of available cash in power generation Projects,
obligations of the Trust are generally limited to payment of the 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 will be further reduced by obtaining a line of
credit.
Certain Industry Trends
The industry trend toward deregulation of the electric power generating and
transmission industries has accelerated after the adoption of Order 888 by the
Federal Energy Regulatory Commission ("FERC") on April 24, 1996. A number of
major states, including California, have adopted proposals to allow "retail
wheeling," which would allow any qualified generator to use utility
transmission
and distribution networks to sell electricity directly to utility customers.
Other states, such as Massachusetts, New Hampshire and New York, are preparing
their own initiatives. As a result, profound changes in the industry are
occurring, marked by consolidations of utilities, large scale spin-offs or
sales
of generating capacity, reorganizations of power pools and transmission
entities, and attempts by electric utilities to recover stranded costs and
alter
power purchase contracts with independent power producers such as the Trust.
It is too early to predict the effects of these trends and others on the
Trust's
business. A critical issue for the Trust, however, is whether any action will
be taken to modify its existing power purchase contracts or to shift costs to
independent power producers. To date, neither FERC nor the California
authorities have adopted measures that would impair power purchase contracts
and
the Trust is not aware of any other such action by regulatory authorities in
other states where it does business.
Legislative and regulatory action is unpredictable and that at any time
federal
or state legislatures or regulators could adopt measures that would be
materially adverse to the Trust's business. Further, volatile market
conditions
could adversely affect the Trust's operations and the actions of other
industry
participants, such as electric utilities, which in turn could affect the
Trust.
<PAGE>
PART II - OTHER INFORMATION
Item #1 Legal Proceedings
On February 28, 1997 Michael Cutbirth, an individual, sued the Managing
Shareholder in the Superior Court of California, Kern County, claiming
unspecified damages (which may include a claim for an equity interest)
for breach of an alleged confidentiality agreement relating to the
acquisition of the Monterey Project. The Managing Shareholder has
successfully removed the lawsuit to the United States District Court for
the Eastern District of California. Discovery has begun. The
Managing Shareholder believes that it has ample defenses to Mr.
Cutbirth's claims and that it will defend the action vigorously.
Item #6 Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
RIDGEWOOD ELECTRIC POWER TRUST II
SIGNATURES
Pursuant to the requirement of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
RIDGEWOOD ELECTRIC POWER TRUST II Registrant
November 14, 1997 By /s/ Martin V. Quinn
Date Martin V. Quinn
Senior Vice President and
Chief Financial Officer
(signing on behalf of the
Registrant and as principal
financial officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the Registrant's unaudited interim financial
statements for the nine months ended September 30, 1997 and is
qualified in its entirety by reference to those financial
statements.
</LEGEND>
<CIK> 0000895993
<NAME> RIDGEWOOD ELECTRIC POWER TRUST II
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 202,170
<SECURITIES> 15,220,543<F1>
<RECEIVABLES> 103,771
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 574,752
<PP&E> 54,125<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,584,033
<CURRENT-LIABILITIES> 178,961
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 15,405,072<F3>
<TOTAL-LIABILITY-AND-EQUITY> 15,584,033
<SALES> 0
<TOTAL-REVENUES> 3,961,595
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 621,365
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,340,230
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,340,230
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,340,230
<EPS-PRIMARY> 14,191
<EPS-DILUTED> 14,191
<FN>
<F1>Investments in power project partnerships and note receivable from
sale of San Diego Project.
<F2>Equipment in storage.
<F3>Represents Investor Shares of beneficial interest in
Trust with capital accounts of $15,452,264 less managing
shareholder's accumulated deficit of $47,192.
</FN>
</TABLE>
