895993--12/14/2007--RIDGEWOOD_ELECTRIC_POWER_TRUST

related topics

{interest, director, officer}

{tax, income, asset}

{gas, price, oil}

{investment, property, distribution}

{control, financial, internal}

{cost, contract, operation}

RISKS INHERENT IN THE BUSINESSES OF THE TRUST The Trust has material weaknesses in its disclosure controls and procedures. The Trust s remaining operating asset, Monterey, has not operated since January 2006. The project of the Trust depends on the near-continuous operation of its 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 project of the Trust is subject to regulatory changes (including changes in environmental regulations) that could significantly reduce revenues or increase expenses of the Trust. The Trust may become involved in litigation. 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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895993--12/14/2007--RIDGEWOOD_ELECTRIC_POWER_TRUST_II