1060755--9/27/2007--RIDGEWOOD_ELECTRIC_POWER_TRUST

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{interest, director, officer}

{cost, contract, operation}

{tax, income, asset}

{investment, property, distribution}

{gas, price, oil}

{operation, natural, condition}

{cost, regulation, environmental}

{control, financial, internal}

{property, intellectual, protect}

{operation, international, foreign}

RISKS INHERENT IN THE BUSINESSES OF THE TRUST The Trust has material weaknesses and significant deficiencies in its internal controls over financial reporting. The Trust s biomass business can be affected by factors including weather and business conditions in other industries. The Trust s investment in the Egyptian water desalinization business depends on the willingness and ability of tourists to travel to the Egyptian Red Sea resort areas. Factors that reduce that tourism, including acts of terrorism, could have an adverse impact on the business of the Trust. The Trust s hydroelectric business can be affected by adverse weather conditions. The Trust has a significant portion of its investments located outside the United States that can be affected by events beyond the Trust s control. The operations of the Trust have limited capital, limited access to new capital and have obligations to third parties for borrowed money. The operations of the Trust may experience competitive price pressure and competition for project development opportunities. The Trust may experience delays and cost overruns in the development of new projects. The projects of the Trust depend on the near-continuous operation of their equipment. Should the productivity of some or all of this equipment be compromised or should the equipment fail altogether, the Trust would be adversely affected. The Trust may also experience difficulty in hiring qualified operating personnel. The projects of the Trust are subject to regulatory changes (including changes in environmental regulations) that could significantly reduce revenues or increase expenses of the Trust. The projects of the Trust are subject to regulatory changes (including changes in environmental regulations) that could significantly reduce revenues or increase expenses of the Trust. REFI must arrange for feedwater, for the disposal of reject water and for a supply of electricity to operate its projects. The Trust or the Managing Shareholder may become involved in litigation. The Trust s UK landfill methane business depends on the production of landfill methane from the landfill sites on which they operate and access to that gas production. Certain of the RUK projects sell their electricity and ROC output at open market prices and could be adversely affected should prices fall substantially. RISKS RELATED TO THE NATURE OF THE TRUST S SHARES The Trust s shares have severe restrictions on transferability and liquidity and shareholders are required to hold the shares indefinitely. Shareholders are not permitted to participate in the Trust s management or operations and must rely exclusively on the Managing Shareholder. The Trust s assets are generally illiquid and any disposition of Trust assets is at the discretion of the Managing Shareholder. The Trust indemnifies its officers, as well as the Managing Shareholder and its employees, for certain actions taken on its behalf. Therefore, the Trust has limited recourse relative to these actions. The Managing Shareholder is entitled to receive a management fee regardless of the Trust s profitability and also receives cash distributions. Cash distributions are not guaranteed and may be less than anticipated or estimated. Because the Managing Shareholder manages other electricity generation and infrastructure Trusts, it may have conflicts of interest in its management of the Trust s operations. TAX RISKS ASSOCIATED WITH AN INVESTMENT IN SHARES If the IRS audits the Trust, it could require investors to amend or adjust their tax returns or result in an audit of their tax.

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1060755--9/27/2007--RIDGEWOOD_ELECTRIC_POWER_TRUST_V