FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   (Mark One)
           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       For the transition period from ----------------- to ----------

Commission       Registrant; State of Incorporation;        I.R.S. Employer
File Number        Address; and Telephone Number            Identification No.
-----------      -----------------------------------        ------------------

333-21011        FIRSTENERGY CORP.                              34-1843785
                 (An Ohio Corporation)
                 76 South Main Street
                 Akron, OH  44308
                 Telephone (800)736-3402

1-2578           OHIO EDISON COMPANY                            34-0437786
                 (An Ohio Corporation)
                 76 South Main Street
                 Akron, OH  44308
                 Telephone (800)736-3402

1-2323           THE CLEVELAND ELECTRIC ILLUMINATING COMPANY    34-0150020
                 (An Ohio Corporation)
                 c/o FirstEnergy Corp.
                 76 South Main Street
                 Akron, OH  44308
                 Telephone (800)736-3402

1-3583           THE TOLEDO EDISON COMPANY                      34-4375005
                 (An Ohio Corporation)
                 c/o FirstEnergy Corp.
                 76 South Main Street
                 Akron, OH  44308
                 Telephone (800)736-3402

1-3491           PENNSYLVANIA POWER COMPANY                     25-0718810
                 (A Pennsylvania Corporation)
                 c/o FirstEnergy Corp.
                 76 South Main Street
                 Akron, OH  44308
                 Telephone (800)736-3402

1-3141           JERSEY CENTRAL POWER & LIGHT COMPANY           21-0485010
                 (A New Jersey Corporation)
                 c/o FirstEnergy Corp.
                 76 South Main Street
                 Akron, OH  44308
                 Telephone (800)736-3402

1-446            METROPOLITAN EDISON COMPANY                    23-0870160
                 (A Pennsylvania Corporation)
                 c/o FirstEnergy Corp.
                 76 South Main Street
                 Akron, OH  44308
                 Telephone (800)736-3402

1-3522           PENNSYLVANIA ELECTRIC COMPANY                  25-0718085
                 (A Pennsylvania Corporation)
                 c/o FirstEnergy Corp.
                 76 South Main Street
                 Akron, OH  44308
                 Telephone (800)736-3402


<PAGE>


          Indicate by check mark whether each of the  registrants  (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  the  number of shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date:

                                                           OUTSTANDING
           CLASS                                        AS OF MAY 13, 2002
           -----                                        ------------------
FirstEnergy Corp., $.10 par value ...................        297,636,276
Ohio Edison Company, no par value ...................                100
The Cleveland Electric Illuminating Company,
  no par value ......................................         79,590,689
The Toledo Edison Company, $5 par value .............         39,133,887
Pennsylvania Power Company, $30 par value ...........          6,290,000
Jersey Central Power & Light Company, $10 par value .         15,371,270
Metropolitan Edison Company, no par value ...........            859,500
Pennsylvania Electric Company, $20 par value ........          5,290,596

FirstEnergy  Corp.  is the sole holder of Ohio  Edison  Company,  The  Cleveland
Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power &
Light Company,  Metropolitan Edison Company,  and Pennsylvania  Electric Company
common  stock;  Ohio  Edison  Company is the sole holder of  Pennsylvania  Power
Company common stock.

          This combined Form 10-Q is separately filed by FirstEnergy Corp., Ohio
Edison Company,  Pennsylvania Power Company, The Cleveland Electric Illuminating
Company,  The Toledo  Edison  Company,  Jersey  Central  Power & Light  Company,
Metropolitan  Edison  Company and  Pennsylvania  Electric  Company.  Information
contained  herein  relating  to any  individual  registrant  is  filed  by  such
registrant  on its own behalf.  No  registrant  makes any  representation  as to
information  relating to any other registrant,  except that information relating
to  any  of  the  FirstEnergy  subsidiary  registrants  is  also  attributed  to
FirstEnergy.

          This  Form  10-Q   includes   forward-looking   statements   based  on
information  currently  available to management.  Such statements are subject to
certain risks and uncertainties. These statements typically contain, but are not
limited to, the terms "anticipate", "potential", "expect", "believe", "estimate"
and similar  words.  Actual  results may differ  materially due to the speed and
nature  of  increased  competition  and  deregulation  in the  electric  utility
industry,  economic or weather  conditions  affecting  future sales and margins,
changes in markets for energy  services,  changing  energy and commodity  market
prices,  legislative and regulatory  changes  (including  revised  environmental
requirements),  the availability  and cost of capital,  ability to accomplish or
realize  anticipated  benefits  from  strategic  initiatives  and other  similar
factors.


<PAGE>


                                TABLE OF CONTENTS


                                                                          Pages

Part I.    Financial Information

           Notes to Financial Statements..............................     1-8

      FirstEnergy Corp.

           Consolidated Statements of Income..........................      9
           Consolidated Balance Sheets................................    10-11
           Consolidated Statements of Cash Flows......................     12
           Report of Independent Public Accountants...................     13
           Management's Discussion and Analysis of Results
             of Operations and Financial Condition....................    14-23

      Ohio Edison Company

           Consolidated Statements of Income..........................      24
           Consolidated Balance Sheets................................    25-26
           Consolidated Statements of Cash Flows......................      27
           Report of Independent Public Accountants...................      28
           Management's Discussion and Analysis of Results
             of Operations and Financial Condition....................    29-31

      The Cleveland Electric Illuminating Company

           Consolidated Statements of Income..........................      32
           Consolidated Balance Sheets................................    33-34
           Consolidated Statements of Cash Flows......................      35
           Report of Independent Public Accountants...................      36
           Management's Discussion and Analysis of Results
             of Operations and Financial Condition....................    37-39

      The Toledo Edison Company

           Consolidated Statements of Income..........................      40
           Consolidated Balance Sheets................................    41-42
           Consolidated Statements of Cash Flows......................      43
           Report of Independent Public Accountants...................      44
           Management's Discussion and Analysis of Results
             of Operations and Financial Condition....................    45-47

      Pennsylvania Power Company

           Statements of Income.......................................      48
           Balance Sheets.............................................    49-50
           Statements of Cash Flows...................................      51
           Report of Independent Public Accountants...................      52
           Management's Discussion and Analysis of Results
             of Operations and Financial Condition...................     53-54

      Jersey Central Power & Light Company

           Consolidated Statements of Income..........................      55
           Consolidated Balance Sheets................................    56-57
           Consolidated Statements of Cash Flows......................      58
           Report of Independent Public Accountants...................      59
           Management's Discussion and Analysis of Results
             of Operations and Financial Condition....................    60-63


<PAGE>



                           TABLE OF CONTENTS (Cont'd)


                                                                          Pages


      Metropolitan Edison Company
           Consolidated Statements of Income..........................      64
           Consolidated Balance Sheets................................    65-66
           Consolidated Statements of Cash Flows......................      67
           Report of Independent Public Accountants...................      68
           Management's Discussion and Analysis of Results
             of Operations and Financial Condition....................    69-72

      Pennsylvania Electric Company

           Consolidated Statements of Income..........................      73
           Consolidated Balance Sheets................................    74-75
           Consolidated Statements of Cash Flows......................      76
           Report of Independent Public Accountants...................      77
           Management's Discussion and Analysis of Results
             of Operations and Financial Condition....................    78-81

Part II.   Other Information


<PAGE>




PART I.  FINANCIAL INFORMATION
------------------------------

                       FIRSTENERGY CORP. AND SUBSIDIARIES
                      OHIO EDISON COMPANY AND SUBSIDIARIES
          THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES
                    THE TOLEDO EDISON COMPANY AND SUBSIDIARY
                           PENNSYLVANIA POWER COMPANY
              JERSEY CENTRAL POWER & LIGHT COMPANY AND SUBSIDIARIES
                  METROPOLITAN EDISON COMPANY AND SUBSIDIARIES
                 PENNSYLVANIA ELECTRIC COMPANY AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1 -  FINANCIAL STATEMENTS:

          The  principal  business of  FirstEnergy  Corp.  (FirstEnergy)  is the
holding,  directly or indirectly,  of all of the outstanding common stock of its
eight principal  electric utility  operating  subsidiaries,  Ohio Edison Company
(OE),  The Cleveland  Electric  Illuminating  Company  (CEI),  The Toledo Edison
Company (TE),  Pennsylvania Power Company (Penn), American Transmission Systems,
Inc. (ATSI),  Jersey Central Power & Light Company (JCP&L),  Metropolitan Edison
Company (Met-Ed) and  Pennsylvania  Electric  Company  (Penelec).  These utility
subsidiaries  are referred to throughout as "Companies."  Penn is a wholly owned
subsidiary of OE. FirstEnergy's results include the results of JCP&L, Met-Ed and
Penelec from the November 7, 2001 merger date with GPU,  Inc., the former parent
company of JCP&L,  Met-Ed and  Penelec.  The  merger  was  accounted  for by the
purchase  method of accounting and the applicable  effects were reflected on the
financial  statements  of JCP&L,  Met-Ed  and  Penelec  as of the  merger  date.
Accordingly,  the  post-merger  financial  statements  reflect  a new  basis  of
accounting,  and pre-merger  period and post-merger  period financial results of
JCP&L,  Met-Ed and Penelec  (separated  by a heavy  black  line) are  presented.
FirstEnergy's consolidated financial statements also include its other principal
subsidiaries: FirstEnergy Solutions Corp. (FES); FirstEnergy Facilities Services
Group,  LLC  (FEFSG);   MYR  Group,  Inc.  (MYR);   MARBEL  Energy  Corporation;
FirstEnergy  Nuclear  Operating Company (FENOC);  GPU Capital,  Inc.; GPU Power,
Inc.;  FirstEnergy  Service Company (FECO);  and GPU Service,  Inc. (GPUS).  FES
provides  energy-related  products and  services  and,  through its  FirstEnergy
Generation Corp. (FGCO) subsidiary, operates FirstEnergy's nonnuclear generation
business. FENOC operates the Companies' nuclear generating facilities.  FEFSG is
the parent company of several heating,  ventilating, air conditioning and energy
management companies,  and MYR is a utility infrastructure  construction service
company.  MARBEL is a fully integrated natural gas company. GPU Capital owns and
operates electric  distribution  systems in foreign countries and GPU Power owns
and operates generation  facilities in foreign countries.  FECO and GPUS provide
legal,  financial and other corporate support services to affiliated FirstEnergy
companies.

          The condensed unaudited  financial  statements of FirstEnergy and each
of the Companies  reflect all normal recurring  adjustments that, in the opinion
of  management,  are necessary to fairly  present  results of operations for the
interim  periods.  These  statements  should  be read in  conjunction  with  the
financial  statements and notes  included in the combined  Annual Report on Form
10-K for the year ended  December 31, 2001 for  FirstEnergy  and the  Companies.
Significant intercompany  transactions have been eliminated.  The preparation of
financial statements in conformity with accounting principles generally accepted
in the  United  States  requires  management  to  make  periodic  estimates  and
assumptions  that affect the reported amounts of assets,  liabilities,  revenues
and expenses and disclosure of contingent assets and liabilities. Actual results
could differ from those  estimates.  The reported  results of operations are not
indicative of results of operations  for any future  period.  Certain prior year
amounts have been reclassified to conform with the current year presentation.

         Preferred Securities-

          The sole  assets of the OE and the CEI  subsidiary  trusts that is the
obligor on their respective  preferred  securities included in FirstEnergy's and
OE's and CEI's capitalization are $123,711,350 and $103,093,000 principal amount
of 9% Junior Subordinated  Debentures of OE due December 31, 2025 and of CEI due
December 31, 2006, respectively.

          Met-Ed and Penelec  have each  formed  statutory  business  trusts for
substantially  similar  transactions  as OE and  CEI for  the  issuance  of $100
million  each of  preferred  securities  due  2039.  However,  ownership  of the
respective  Met-Ed and Penelec trusts is through separate  wholly-owned  limited
partnerships,  of which a  wholly-owned  subsidiary  of


                                       1
<PAGE>



each company is the sole general partner. In these transactions, the sole assets
and  sources of  revenues  of each  trust are the  preferred  securities  of the
applicable  limited  partnership,  whose sole  assets are in the 7.35% and 7.34%
subordinated  debentures  (aggregate principal amount of $103.1 million each) of
Met-Ed and Penelec,  respectively.  In each case, the applicable  parent company
has effectively  provided a full and unconditional  guarantee of its obligations
under its trust's preferred securities.

       Derivative Accounting-

          On January 1, 2001,  FirstEnergy  adopted  SFAS 133,  "Accounting  for
Derivative  Instruments  and  Hedging  Activities",  as  amended  by  SFAS  138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities --
an amendment of FASB  Statement No. 133".  The  cumulative  effect to January 1,
2001 was a charge of $8.5 million (net of $5.8 million of income  taxes) or $.03
per share of common stock.

          FirstEnergy  is  exposed  to  financial   risks   resulting  from  the
fluctuation  of interest  rates and  commodity  prices,  including  electricity,
natural gas and coal.  To manage the  volatility  relating  to these  exposures,
FirstEnergy  uses  a  variety  of  non-derivative  and  derivative  instruments,
including  forward  contracts,   options,   futures  contracts  and  swaps.  The
derivatives are used principally for hedging  purposes,  and to a lesser extent,
for  trading  purposes.   FirstEnergy's  Risk  Policy  Committee,  comprised  of
executive  officers,  exercises an independent risk oversight function to ensure
compliance with corporate risk  management  policies and prudent risk management
practices.

          FirstEnergy uses derivatives to hedge the risk of price, interest rate
and  foreign  currency  fluctuations.   FirstEnergy's  primary  ongoing  hedging
activity involves cash flow hedges of electricity and natural gas purchases. The
maximum  periods over which the  variability of electricity and natural gas cash
flows are hedged are two and three  years,  respectively.  Gains and losses from
hedges of commodity  price risks are included in net income when the  underlying
hedged  commodities  are  delivered.  The  current net  deferred  loss of $133.6
million included in Accumulated Other  Comprehensive Loss (AOCL) as of March 31,
2002,  for  derivative  hedging  activity,  as compared to the December 31, 2001
balance  of $169.4  million  in AOCL,  resulted  from a $18.9  million  increase
related to current  hedging  activity  and a $16.9  million  increase due to net
hedge losses included in earnings during the quarter. Approximately $7.1 million
(after tax) of the current net deferred loss on derivative  instruments  in AOCL
is expected to be  reclassified  to  earnings  during the next twelve  months as
hedged  transactions  occur.   However,  the  fair  value  of  these  derivative
instruments will fluctuate from period to period based on various market factors
and will  generally  be more than  offset by the  margin  on  related  sales and
revenues.

          FirstEnergy  engages  in the  trading  of  commodity  derivatives  and
periodically  experiences  net open  positions.  FirstEnergy's  risk  management
policies limit the exposure to market risk from open positions and require daily
reporting to management of potential financial exposures.

2 -  COMMITMENTS, GUARANTEES AND CONTINGENCIES:

          Capital Expenditures-

          FirstEnergy's  current forecast reflects expenditures of approximately
$3.2 billion (OE-$195  million,  CEI-$256  million,  TE-$129  million,  Penn-$45
million,   JCP&L-$572  million,   Met-Ed-$336  million,   Penelec-$387  million,
ATSI-$118  million,  FES-$814 million and other  subsidiaries-$309  million) for
property additions and improvements from 2002-2006,  of which approximately $863
million (OE-$39  million,  CEI-$57  million,  TE-$27 million,  Penn-$9  million,
JCP&L-$144 million,  Met-Ed-$79 million,  Penelec-$84 million, ATSI-$20 million,
FES-$261  million and other  subsidiaries-$143  million) is  applicable to 2002.
Investments  for  additional  nuclear  fuel  during  the  2002-2006  period  are
estimated to be approximately  $502 million (OE-$136 million,  CEI-$166 million,
TE-$113  million  and  Penn-$87  million),  of which  approximately  $35 million
(OE-$10 million,  CEI-$12 million, TE-$8 million and Penn-$5 million) applies to
2002.

          Environmental Matters-

          Various federal,  state and local  authorities  regulate the Companies
with  regard  to  air  and  water  quality  and  other  environmental   matters.
FirstEnergy   estimates   additional  capital   expenditures  for  environmental
compliance of approximately $235 million,  which is included in the construction
forecast provided under "Capital Expenditures" for 2002 through 2006.

          The Companies are required to meet federally  approved  sulfur dioxide
(SO2) regulations.  Violations of such regulations can result in shutdown of the
generating unit involved and/or civil or criminal penalties of up to $27,500 for
each day the unit is in violation. The Environmental Protection Agency (EPA) has
an  interim  enforcement  policy  for SO2  regulations  in Ohio that  allows for
compliance based on a 30-day averaging period. The Companies cannot predict what
action the EPA may take in the future with  respect to the  interim  enforcement
policy.

                                       2

<PAGE>


          The Companies  believe they are in compliance with the current SO2 and
nitrogen oxides (NOx) reduction  requirements under the Clean Air Act Amendments
of 1990.  SO2  reductions  are being  achieved  by  burning  lower-sulfur  fuel,
generating more electricity from  lower-emitting  plants,  and/or using emission
allowances.  NOx reductions are being achieved through  combustion  controls and
the generation of more electricity at lower-emitting  plants. In September 1998,
the EPA finalized  regulations  requiring  additional  NOx  reductions  from the
Companies'  Ohio and  Pennsylvania  facilities.  The  EPA's NOx  Transport  Rule
imposes  uniform  reductions of NOx emissions (an  approximate  85% reduction in
utility plant NOx emissions from projected  2007  emissions)  across a region of
nineteen  states and the District of Columbia,  including  New Jersey,  Ohio and
Pennsylvania,  based on a conclusion  that such NOx emissions  are  contributing
significantly   to  ozone   pollution  in  the  eastern  United  States.   State
Implementation Plans (SIP) must comply by May 31, 2004 with individual state NOx
budgets  established  by the EPA.  Pennsylvania  submitted  a SIP that  requires
compliance with the NOx budgets at the Companies' Pennsylvania facilities by May
1, 2003 and Ohio submitted a "draft" SIP that requires  compliance  with the NOx
budgets at the Companies' Ohio facilities by May 31, 2004.

          In July 1997, the EPA promulgated  changes in the National Ambient Air
Quality  Standard  (NAAQS)  for ozone  emissions  and  proposed  a new NAAQS for
previously  unregulated  ultra-fine  particulate  matter.  In May 1999, the U.S.
Court of Appeals for the D.C. Circuit found  constitutional and other defects in
the new NAAQS rules.  In February  2001,  the U.S.  Supreme Court upheld the new
NAAQS rules  regulating  ultra-fine  particulates  but found  defects in the new
NAAQS rules for ozone and  decided  that the EPA must revise  those  rules.  The
future cost of compliance  with these  regulations  may be substantial  and will
depend if and how they are  ultimately  implemented  by the  states in which the
Companies operate affected facilities.

          In 1999 and 2000,  the EPA  issued  Notices  of  Violation  (NOV) or a
Compliance Order to nine utilities covering 44 power plants, including the W. H.
Sammis  Plant.  In addition,  the U.S.  Department  of Justice filed eight civil
complaints against various investor-owned utilities,  which included a complaint
against OE and Penn in the U.S.  District  Court for the  Southern  District  of
Ohio.  The NOV and  complaint  allege  violations  of the Clean Air Act based on
operation and maintenance of the Sammis Plant dating back to 1984. The complaint
requests  permanent  injunctive  relief to  require  the  installation  of "best
available  control  technology"  and civil penalties of up to $27,500 per day of
violation.  Although  unable  to  predict  the  outcome  of  these  proceedings,
FirstEnergy  believes the Sammis Plant is in full  compliance with the Clean Air
Act and the NOV and complaint are without merit.  Penalties  could be imposed if
the Sammis Plant continues to operate without  correcting the alleged violations
and a court  determines  that  the  allegations  are  valid.  The  Sammis  Plant
continues to operate while these proceedings are pending.

          In  December  2000,  the EPA  announced  it  would  proceed  with  the
development of  regulations  regarding  hazardous air  pollutants  from electric
power  plants.  The EPA  identified  mercury as the  hazardous  air pollutant of
greatest  concern.  The EPA  established  a schedule to propose  regulations  by
December 2003 and issue final  regulations  by December 2004. The future cost of
compliance with these regulations may be substantial.

          As a result of the Resource  Conservation and Recovery Act of 1976, as
amended,  and the  Toxic  Substances  Control  Act of 1976,  federal  and  state
hazardous  waste   regulations  have  been  promulgated.   Certain   fossil-fuel
combustion waste products,  such as coal ash, were exempted from hazardous waste
disposal  requirements  pending  the  EPA's  evaluation  of the need for  future
regulation.   The  EPA  has  issued  its  final  regulatory  determination  that
regulation of coal ash as a hazardous waste is  unnecessary.  In April 2000, the
EPA announced that it will develop  national  standards  regulating  disposal of
coal ash under its authority to regulate nonhazardous waste.

          Various   environmental   liabilities  have  been  recognized  on  the
Consolidated Balance Sheet as of March 31, 2002, based on estimates of the total
costs of cleanup, the Companies' proportionate responsibility for such costs and
the financial ability of other nonaffiliated entities to pay. The Companies have
been named as "potentially  responsible  parties" (PRPs) at waste disposal sites
which may  require  cleanup  under  the  Comprehensive  Environmental  Response,
Compensation  and  Liability Act of 1980.  Allegations  of disposal of hazardous
substances   at  historical   sites  and  the   liability   involved  are  often
unsubstantiated and subject to dispute. Federal law provides that all PRPs for a
particular site be held liable on a joint and several basis. In addition,  JCP&L
has accrued liabilities for environmental remediation of former manufactured gas
plants  in New  Jersey;  those  costs  are being  recovered  by JCP&L  through a
non-bypassable  societal  benefits  charge.  The  Companies  have total  accrued
liabilities  aggregating   approximately  $58.2  million  (JCP&L-$50.3  million,
CEI-$2.9 million, TE-$0.2 million, Met-Ed-$0.2 million, Penelec-$0.9 million and
other-$3.7  million)  as  of  March  31,  2002.  FirstEnergy  does  not  believe
environmental  remediation  costs  will have a  material  adverse  effect on its
financial condition, cash flows or results of operations.


                                       3

<PAGE>


3 -  PENDING DIVESTITURES:

          FirstEnergy identified certain former GPU international operations for
divestiture within twelve months of the merger date. These operations constitute
individual "lines of business" as defined in Accounting Principles Board Opinion
(APB) No. 30,  "Reporting  the Results of  Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," with physically and operationally  separable
activities.  Application  of Emerging  Issues Task Force (EITF) Issue No. 87-11,
"Allocation  of Purchase  Price to Assets to Be Sold,"  required that  expected,
pre-sale cash flows, including incremental interest costs on related acquisition
debt, of these  operations be considered part of the purchase price  allocation.
Accordingly,   subsequent  to  the  merger  date,   results  of  operations  and
incremental interest costs related to these international  subsidiaries were not
included  in  FirstEnergy's  Consolidated  Statements  of Income.  Additionally,
assets and liabilities of these  international  operations were segregated under
separate captions in the Consolidated Balance Sheet as "Assets Pending Sale" and
"Liabilities Related to Assets Pending Sale."

          In October 2001,  FirstEnergy  and Aquila,  Inc.  (formerly  UtiliCorp
United)  announced  that Aquila made an offer to  FirstEnergy  to purchase  Avon
Energy Partners Holdings, FirstEnergy's wholly owned holding company of Midlands
Electricity  plc, for $2.1 billion  including the  assumption of $1.7 billion of
debt.  FirstEnergy accepted the offer upon completion of its merger with GPU and
regulatory  approvals for the transaction were received by Aquila.  On March 18,
2002,  FirstEnergy  announced that the terms of the initial offer by Aquila were
modified such that Aquila would now acquire a 79.9 percent  interest in Avon for
approximately  $1.9 billion  (including the assumption of $1.7 billion of debt).
FirstEnergy and Aquila  together will own all of the outstanding  shares of Avon
through a jointly owned subsidiary, with each company having a 50-percent voting
interest.  The transaction  closed on May 8, 2002. In accordance with applicable
accounting  guidance,  the earnings of those foreign operations were capitalized
in advance of the sale and not  recognized in current  earnings from the date of
the GPU acquisition until February 6, 2002. However, the revision to the initial
offer by Aquila  caused a reversal of this  accounting  in the first  quarter of
2002,  resulting  in the  recognition  of a  cumulative  effect  of a change  in
accounting  which increased net income by $31.7 million.  This resulted from the
application of guidance provided by EITF Issue No. 90-6, "Accounting for Certain
Events Not Addressed in Issue No. 87-11  relating to an Acquired  Operating Unit
to Be Sold,"  accounting under EITF Issue No. 87-11,  recognizing the net income
of Avon from  November  7, 2001 to  February  6,  2002 that  previously  was not
recognized by FirstEnergy in its  consolidated  earnings as discussed  above. In
addition, Avon's financial statements are no longer presented as "Assets Pending
Sale"  and  "Liabilities  Related  to  Assets  Pending  Sale"  in  FirstEnergy's
Consolidated Balance Sheet at March 31, 2002.

          GPU's former Argentina  operations were also identified by FirstEnergy
for divestiture within twelve months of the merger date. FirstEnergy is actively
pursuing the sale of these operations.  FirstEnergy determined the fair value of
the Argentina operations based on the best available  information as of the date
of the  merger.  Subsequent  to that  date,  a number of  economic  events  have
occurred  in  Argentina  which may have an impact on  FirstEnergy's  ability  to
realize the  estimated  fair value of the  Argentina  operations.  These  events
include  currency  devaluation,  restrictions  on  repatriation of cash, and the
anticipation  of future asset sales in that region by  competitors.  FirstEnergy
has determined that the current economic conditions in Argentina have not eroded
the fair value  recorded for these  operations,  and as a result,  an impairment
writedown of this investment is not warranted as of March 31, 2002.  FirstEnergy
will continue to assess the potential  impact of these and other related  events
on the realizability of the value recorded for the Argentina  operations.  Other
international companies are being considered for sale; however, as of the merger
date those  sales were not judged to be  probable  of  occurring  within  twelve
months.

       Sale of Generating Assets-

          On November  29, 2001,  FirstEnergy  reached an agreement to sell four
coal-fired  power plants  totaling  2,535 MW to NRG Energy Inc. for $1.5 billion
($1.355 billion in cash and $145 million in debt assumption).  The net after-tax
gain from the sale, based on the difference between the sale price of the plants
and their market price used in the Ohio  restructuring  transition plan, will be
credited  to  customers  by  reducing  the  transition  cost  recovery   period.
FirstEnergy  also entered into a power purchase  agreement (PPA) with NRG. Under
the terms of the PPA, NRG is obligated  to sell  FirstEnergy  up to 10.5 billion
kilowatt-hours of electricity annually,  similar to the average annual output of
the plants, through 2005. The sale is expected to close in mid-2002.

       Other Commitments, Guarantees and Contingencies-

          GPU made significant  investments in foreign businesses and facilities
through its GPU Power subsidiary.  Although FirstEnergy attempts to mitigate its
risks related to foreign  investments,  it faces  additional  risks  inherent in
operating in such locations, including foreign currency fluctuations.


                                       4

<PAGE>


          EI Barranquilla,  a wholly owned subsidiary of GPU Power, is an equity
investor in Termobarranquilla S.A., Empresa de Servicios Publicos (TEBSA), which
owns a Colombian independent power generation project. As of March 31, 2002, GPU
Power  has an  investment  of  approximately  $113.7  million  in  TEBSA  and is
committed,  under  certain  circumstances,  to make  additional  standby  equity
contributions  of $21.3 million,  which  FirstEnergy has  guaranteed.  The total
outstanding  senior  debt of the TEBSA  project is $301  million as of March 31,
2002. The lenders include the Overseas Private Investment Corporation, US Export
Import Bank and a commercial bank syndicate. FirstEnergy has also guaranteed the
obligations  of the  operators  of the TEBSA  project,  up to a maximum  of $5.9
million (subject to escalation)  under the project's  operations and maintenance
agreement.

          GPU had believed that various events of default had occurred under the
loan agreements relating to the TEBSA project. In addition,  questions have been
raised as to the accuracy and  completeness  of information  provided to various
parties to the project in connection with the project's  formation.  FirstEnergy
continues to discuss these issues and related matters with the project  lenders,
CORELCA  (the  government  owned  Colombian  electric  utility with an ownership
interest in the project) and the Government of Colombia.

          Moreover,  in September  2001,  the DIAN (the  Colombian  national tax
authority)  presented  TEBSA with a statement of charges  alleging  that certain
lease payments made under the Lease  Agreement  with Los Amigos Leasing  Company
(an indirect wholly owned  subsidiary of GPU Power) violated  Colombian  foreign
exchange regulations and were, therefore,  subject to substantial penalties. The
DIAN has calculated a statutory penalty amounting to approximately  $200 million
and gave TEBSA two months to respond to the  statement  of charges.  In November
2001,  TEBSA filed a formal  response  to this  statement  of charges.  TEBSA is
continuing  to review the DIAN's  position and has been advised by its Colombian
counsel that the DIAN's position is without substantial legal merit. FirstEnergy
is unable to predict the outcome of these matters.

4 -  REGULATORY MATTERS:

          In Ohio,  New Jersey and  Pennsylvania,  laws  applicable  to electric
industry  deregulation  included the following provisions which are reflected in
the Companies' respective state regulatory plans:

          o  allowing the Companies' electric customers to select their
             generation suppliers;

          o  establishing  provider of last resort  (PLR)  obligations  to
             non-shopping  customers  in the  Companies' service areas;

          o  allowing recovery of potentially stranded investment (or transition
             costs);

          o  itemizing (unbundling) the current price of electricity into its
             component elements -- including generation, transmission,
             distribution and stranded costs recovery charges;

          o  deregulating the Companies' electric generation businesses; and

          o  continuing regulation of the Companies' transmission and
             distribution systems.

         Ohio-

          FirstEnergy's transition plan (which it filed on behalf of OE, CEI and
TE (Ohio  Companies))  included  approval  for  recovery  of  transition  costs,
including  regulatory  assets,  as filed in the transition plan through no later
than 2006 for OE, mid-2007 for TE and 2008 for CEI, except where a longer period
of recovery is provided for in the settlement agreement.  The approved plan also
granted  preferred  access  over  FirstEnergy's  subsidiaries  to  nonaffiliated
marketers,  brokers and aggregators to 1,120 MW of generation  capacity  through
2005 at established  prices for sales to the Ohio Companies'  retail  customers.
Customer  prices  are  frozen  through a  five-year  market  development  period
(2001-2005),  except for certain  limited  statutory  exceptions  including a 5%
reduction in the price of generation for residential customers.

          FirstEnergy's Ohio customers choosing alternative suppliers receive an
additional  incentive applied to the shopping credit  (generation  component) of
45%  for  residential  customers,  30%  for  commercial  customers  and  15% for
industrial  customers.  The  amount of the  incentive  is  deferred  for  future
recovery  from  customers -- recovery  will be  accomplished  by  extending  the
respective  transition  cost recovery  period.  If the customer  shopping  goals
established in the agreement are not achieved by the end of 2005, the transition
cost recovery  periods could be shortened for OE, CEI and TE to reduce  recovery
by as much  as $500  million  (OE-$250  million,  CEI-$170  million  and  TE-$80
million),  but any such  adjustment  would be computed on a  class-by-class  and
pro-rata  basis.  Based on


                                       5

<PAGE>




annualized  shopping  levels  as of March 31,  2002,  FirstEnergy  believes  the
maximum  potential  recovery  reductions are  approximately  $55 million (OE-$48
million and TE-$7 million).

         New Jersey-

          JCP&L's 2001 Final  Decision  and Order (Final  Order) with respect to
its rate  unbundling,  stranded cost and  restructuring  filings  confirmed rate
reductions  set  forth in its 1999  Summary  Order,  which  remain  in effect at
increasing  levels  through  July  2003,  with rates  after July 31,  2003 to be
determined in a rate case commencing in 2002. The Final Order had directed JCP&L
to make a filing,  no later than August 1, 2002, as to the proposed level of all
unbundled rate components for the period  commencing August 1, 2003. All parties
will have an opportunity  to  participate in the process and to examine  JCP&L's
proposed  unbundled rates,  including  distribution and market transition charge
rates.  The New  Jersey  Board of  Public  Utilities  (NJBPU)  will  review  the
unbundled rate components to establish the appropriate level of rates after July
31,  2003.  FirstEnergy  is unable to predict the outcome of this rate case.  In
addition to basic electric industry deregulation provisions discussed above, the
Final  Order  also  confirms  the  establishment  of a  non-bypassable  societal
benefits charge to recover costs which include nuclear plant decommissioning and
manufactured  gas  plant  remediation,   as  well  as  a  non-bypassable  market
transition charge (MTC) primarily to recover stranded costs.  However, the NJBPU
deferred  making a final  determination  of the net proceeds and stranded  costs
related to prior  generating  asset  divestitures  until JCP&L's  request for an
Internal  Revenue  Service  (IRS) ruling  regarding  the treatment of associated
federal  income tax  benefits is acted upon.  Should the IRS ruling  support the
return  of the  tax  benefits  to  customers,  JCP&L  would  need  to  record  a
corresponding  charge to income of approximately $25 million;  there would be no
effect to  FirstEnergy's  net income since the contingency  existed prior to the
merger.

          JCP&L's PLR  obligation to provide basic  generation  service (BGS) to
non-shopping  customers is supplied  almost  entirely from  contracted  and open
market  purchases.  JCP&L is  permitted  to defer  for  future  collection  from
customers  the  amounts  by which its  costs of  supplying  BGS to  non-shopping
customers and costs incurred under nonutility generation (NUG) agreements exceed
amounts  collected  through  BGS  and MTC  rates.  As of  March  31,  2002,  the
accumulated deferred cost balance totaled  approximately $320 million. The Final
Order provided for the ability to securitize  stranded costs associated with the
divested  Oyster Creek  Nuclear  Generation  Station.  In February  2002,  JCP&L
received  NJBPU  authorization  to issue  $320  million of  transition  bonds to
securitize  the  recovery of these  costs.  The NJBPU order also  provides for a
usage-based  non-bypassable  transition  bond charge and for the transfer of the
bondable transition  property to another entity.  JCP&L plans to sell transition
bonds in the second quarter of 2002 which will be recognized on the Consolidated
Balance  Sheet.  The Final Order also allows for  additional  securitization  of
JCP&L's  deferred  balance to the extent  permitted by law upon  application  by
JCP&L and a  determination  by the NJBPU that the  conditions  of the New Jersey
restructuring  legislation  are met. There can be no assurance as to the extent,
if any, that the NJBPU will permit such securitization.

          In December 2001,  the NJBPU  authorized the auctioning of BGS for the
period from August 1, 2002 through July 31, 2003 to meet the electric demands of
all customers who have not selected an alternative supplier.  The auction, which
ended on February  13, 2002 and was  approved by the NJBPU on February 15, 2002,
removed JCP&L's BGS obligation of 5,100 MW for the period August 1, 2002 through
July 31, 2003.  The auction  provides a  transitional  mechanism and a different
model for the procurement of BGS commencing August 1, 2003 may be adopted.

         Pennsylvania-

          The Pennsylvania Public Utility Commission (PPUC) authorized 1998 rate
restructuring plans for Penn, Met-Ed and Penelec. In 2000, the PPUC disallowed a
portion of the requested  additional  stranded costs above those amounts granted
in Met-Ed's and Penelec's 1998 rate restructuring plan orders. The PPUC required
Met-Ed  and  Penelec  to seek an IRS  ruling  regarding  the  return of  certain
unamortized  investment tax credits and excess  deferred  income tax benefits to
customers.  Similar to JCP&L's situation,  if the IRS ruling ultimately supports
returning these tax benefits to customers,  Met-Ed and Penelec would then reduce
stranded costs by $12 million and $25 million,  respectively,  plus interest and
record a  corresponding  charge to income;  similar to JCP&L,  there would be no
effect to FirstEnergy's net income.

          As a result of their generating asset divestitures, Met-Ed and Penelec
obtain their supply of electricity to meet their PLR obligations almost entirely
from contracted and open market  purchases.  In 2000, Met-Ed and Penelec filed a
petition with the PPUC seeking permission to defer, for future recovery,  energy
costs in excess of amounts  reflected in their capped generation rates; the PPUC
subsequently consolidated this petition in January 2001 with the FirstEnergy/GPU
merger proceeding.

                                       6


<PAGE>

          In June  2001,  the  PPUC  entered  orders  approving  the  Settlement
Stipulation with all of the major parties in the combined merger and rate relief
proceedings  which approved the merger and provided  Met-Ed and Penelec PLR rate
relief.  The PPUC permitted  Met-Ed and Penelec to defer for future recovery the
difference between their actual energy costs and those reflected in their capped
generation rates, retroactive to January 1, 2001. Correspondingly,  in the event
that energy  costs  incurred  by Met-Ed and  Penelec are below their  respective
capped  generation  rates,  that  difference  will  reduce  costs  that had been
deferred for recovery in future periods. This deferral accounting procedure will
cease on December 31. 2005.  Thereafter,  costs which had been deferred  through
that date would be recoverable  through  application  of competitive  transition
charge (CTC) revenues  received by Met-Ed and Penelec through December 31, 2010.
Met-Ed's and Penelec's PLR obligations  extend through December 31, 2010; during
that period CTC  revenues  will be applied  first to PLR costs,  then to non-NUG
stranded  costs and finally to NUG stranded  costs.  Met-Ed and Penelec would be
permitted to recover any remaining  stranded costs through a continuation of the
CTC after December 31, 2010 through no later than December 31, 2015. Any amounts
not  expected to be  recovered  by December 31, 2015 would be written off at the
time such nonrecovery becomes probable.

          Several parties had filed  Petitions for Review with the  Commonwealth
Court of Pennsylvania regarding the June 2001 PPUC orders. On February 21, 2002,
the Court  affirmed the PPUC  decision  regarding  the  FirstEnergy/GPU  merger,
remanding  the  decision  to the PPUC only with  respect  to the issue of merger
savings. The Court reversed the PPUC's decision regarding the PLR obligations of
Met-Ed and Penelec,  and rejected those parts of the  settlement  that permitted
the  companies to defer for  accounting  purposes the  difference  between their
wholesale  power costs and the amount that they collect  from retail  customers.
FirstEnergy  filed a Petition  for  Allowance  of Appeal  with the  Pennsylvania
Supreme  Court on March 25,  2002,  asking it to review the  Commonwealth  Court
decision.  Also on March 25,  2002,  Citizens  Power  filed a motion  seeking an
appeal of the  Commonwealth  Court's  decision to affirm the FirstEnergy and GPU
merger with the Supreme Court of Pennsylvania. If the February 21, 2002 Order is
not overturned by the Pennsylvania  Supreme Court,  the pretax  write-offs as of
March 31,  2002  would be  approximately  $90.2  million  for  Met-Ed and $103.0
million  for  Penelec.  FirstEnergy  is unable to predict  the  outcome of these
matters.  There would be no adverse effect to FirstEnergy's net income since the
contingency existed prior to the merger.

5 -  NEW ACCOUNTING STANDARDS:

          The Financial  Accounting  Standards  Board (FASB)  approved SFAS 141,
"Business Combinations" and SFAS 142, "Goodwill and Other Intangible Assets," on
June 29, 2001. SFAS 141 requires all business combinations  initiated after June
30, 2001, to be accounted for using purchase  accounting.  The provisions of the
new standard  relating to the  determination  of goodwill  and other  intangible
assets  have  been  applied  to the GPU  merger,  which was  accounted  for as a
purchase  transaction,  and have not materially affected the accounting for this
transaction. Under SFAS 142, amortization of existing goodwill ceased January 1,
2002.  Instead,  goodwill  will be tested for  impairment  at least on an annual
basis -- no impairment of goodwill is  anticipated  as a result of a preliminary
analysis.  Prior to the adoption of SFAS 142,  FirstEnergy  amortized  about $57
million  ($.25 per share of common  stock) of  goodwill  annually.  There was no
goodwill  amortization  in  2001  associated  with  the  GPU  merger  under  the
provisions of the new standard. FirstEnergy's net income in the first quarter of
2001 and the year 2001 of $98 million and $646 million, respectively, would have
been  $111  million  and  $701   million,   respectively,   excluding   goodwill
amortization.

          In July  2001,  the  FASB  issued  SFAS  143,  "Accounting  for  Asset
Retirement  Obligations." The new statement  provides  accounting  standards for
retirement obligations associated with tangible long-lived assets, with adoption
required  by  January  1,  2003.  SFAS 143  requires  that  the fair  value of a
liability for an asset retirement  obligation be recorded in the period in which
it is incurred. The associated asset retirement costs are capitalized as part of
the carrying amount of the long-lived asset. Over time the capitalized costs are
depreciated and the present value of the asset retirement  liability  increases,
resulting in a period expense. Upon retirement,  a gain or loss will be recorded
if the cost to  settle  the  retirement  obligation  differs  from the  carrying
amount.  FirstEnergy  is  currently  assessing  the new standard and has not yet
determined the impact on its financial statements.

          In  September  2001,  the FASB  issued SFAS 144,  "Accounting  for the
Impairment or Disposal of  Long-Lived  Assets."  SFAS 144  supersedes  SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." The Statement  also  supersedes  the  accounting  and reporting
provisions  of APB  30.  FirstEnergy's  adoption  of this  Statement,  effective
January 1, 2002,  will result in its  accounting  for any future  impairments or
disposals of  long-lived  assets under the  provisions of SFAS 144, but will not
change  the  accounting   principles  used  in  previous  asset  impairments  or
disposals.  Application of SFAS 144 is not anticipated to have a major impact on
accounting  for  impairments  or  disposal  transactions  compared  to the prior
application of SFAS 121 or APB 30.

                                       7

<PAGE>


6 -  SEGMENT INFORMATION:

          FirstEnergy   operates  under  the  following   reportable   segments:
regulated services,  competitive services and other (primarily corporate support
services  and  international  operations).   FirstEnergy's  primary  segment  is
regulated services,  which include eight electric utility operating companies in
Ohio,  Pennsylvania  and New  Jersey  that  provide  electric  transmission  and
distribution  services.  Its other  material  business  segment  consists of the
subsidiaries  that operate  unregulated  energy and  energy-related  businesses.
Certain  prior year amounts have been  reclassified  to conform with the current
year presentation.

          The  regulated  services  segment  designs,  constructs,  operates and
maintains FirstEnergy's regulated transmission and distribution systems. It also
provides  generation  services to  regulated  franchise  customers  who have not
chosen an alternative,  competitive  generation supplier. The regulated services
segment  obtains a portion  of its  required  generation  through  power  supply
agreements with the competitive services segment.

     Segment Financial Information
     -----------------------------

<TABLE>
<CAPTION>

                                         Regulated     Competitive               Reconciling
                                          Services       Services     Other      Adjustments       Consolidated
                                          --------       --------     -----      -----------       ------------
                                                                   (In millions)
<S>                                      <C>             <C>         <C>           <C>                <C>
Three Months Ended:
-------------------

       March 31, 2002
       --------------
External revenues.....................   $  1,995        $   678     $  123        $   6   (a)        $ 2,802
Internal revenues.....................        355            410        117         (882)  (b)             --
   Total revenues.....................      2,350          1,088        240         (876)               2,802
Depreciation and amortization.........        244              7         12           --                  263
Net interest charges..................        161             10        103          (14)  (b)            260
Income taxes..........................        162            (41)       (40)          --                   81
Income before cumulative effect of a
   change in accounting...............        198            (60)       (53)          --                   85
Net income (loss).....................        198            (60)       (22)          --                  116
Total assets..........................     29,147          2,706      6,288         (836)  (b)         37,305
Property additions....................        144             37         14           --                  195


       March 31, 2001
       --------------
External revenues.....................   $  1,309        $   633     $    1        $  43   (a)        $ 1,986
Internal revenues.....................        334            500         65         (899)  (b)             --
   Total revenues.....................      1,643          1,133         66         (856)               1,986
Depreciation and amortization.........        215              4          8           --                  227
Net interest charges..................        145             (4)         8          (23)  (b)            126
Income taxes..........................         67             13          4           --                   84
Income before cumulative effect of
   a change in accounting.............        123            (24)         7           --                  106
Net income (loss).....................        123            (32)         7           --                   98
Total assets..........................     15,624          1,896        481           --               18,001
Property additions....................         53             94          4           --                  151

<FN>


Reconciling adjustments to segment operating results from internal management reporting to consolidated external financial
reporting:

(a)  Principally fuel marketing revenues which are reflected as reductions to expenses for internal management reporting purposes.
(b)  Elimination of intersegment transactions.


                                                             8

</FN>
</TABLE>



<PAGE>


<TABLE>
<CAPTION>


                                          FIRSTENERGY CORP.

                                  CONSOLIDATED STATEMENTS OF INCOME
                                             (Unaudited)


                                                                                      Three Months Ended
                                                                                            March 31,
                                                                                  ---------------------------
                                                                                    2002               2001
                                                                                  --------          ---------
                                                                            (In thousands, except per share amounts)
<S>                                                                             <C>                 <C>
REVENUES:
   Electric utilities........................................................   $2,053,976          $1,311,289
   Unregulated businesses....................................................      748,181             674,452
                                                                                ----------          ----------
       Total revenues........................................................    2,802,157           1,985,741
                                                                                ----------          ----------


EXPENSES:
   Fuel and purchased power..................................................      725,019             324,579
   Purchased gas.............................................................      206,227             352,817
   Other operating expenses..................................................    1,010,651             645,403
   Provision for depreciation and amortization...............................      262,828             227,214
   General taxes.............................................................      171,988             119,422
                                                                                ----------          ----------
       Total expenses........................................................    2,376,713           1,669,435
                                                                                ----------          ----------


INCOME BEFORE INTEREST AND INCOME TAXES......................................      425,444             316,306
                                                                                ----------          ----------


NET INTEREST CHARGES:
   Interest expense..........................................................      241,565             118,219
   Capitalized interest......................................................       (5,814)             (8,823)
   Subsidiaries' preferred stock dividends...................................       24,071              16,934
                                                                                ----------          ----------
       Net interest charges..................................................      259,822             126,330
                                                                                ----------          ----------


INCOME TAXES.................................................................       80,829              83,769
                                                                                ----------          ----------

INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING....................       84,793             106,207

Cumulative effect of accounting change (net of income taxes (benefit) of
   $13,600,000 and $(5,839,000), respectively) (Note 1)......................       31,700              (8,499)
                                                                                ----------          ----------

NET INCOME...................................................................   $  116,493          $   97,708
                                                                                ==========          ==========

BASIC EARNINGS PER SHARE OF COMMON STOCK:
   Income before cumulative effect of accounting change......................        $0.29               $0.49
   Cumulative effect of accounting change (Net of income taxes) (Note 1).....         0.11               (0.04)
                                                                                     -----               -----
   Net income................................................................        $0.40               $0.45
                                                                                     =====               =====

WEIGHTED AVERAGE NUMBER OF BASIC SHARES OUTSTANDING..........................      292,791             218,107
                                                                                   =======             =======

DILUTED EARNINGS PER SHARE OF COMMON STOCK:
   Income before cumulative effect of accounting change......................        $0.29               $0.49
   Cumulative effect of accounting change (Net of income taxes) (Note 1).....         0.11               (0.04)
                                                                                     -----               -----
   Net income................................................................        $0.40               $0.45
                                                                                     =====               =====

WEIGHTED AVERAGE NUMBER OF DILUTED SHARES OUTSTANDING........................      294,344             218,903
                                                                                   =======             =======

DIVIDENDS DECLARED PER SHARE OF COMMON STOCK.................................       $0.375              $0.375
                                                                                    ======              ======

<FN>



The preceding  Notes to Financial  Statements  as they relate to  FirstEnergy  Corp.
are an integral part of these statements.

                                               9

</FN>

</TABLE>



<PAGE>


<TABLE>
<CAPTION>

                                        FIRSTENERGY CORP.

                                   CONSOLIDATED BALANCE SHEETS



                                                                                    (Unaudited)
                                                                                      March 31,      December 31,
                                                                                        2002              2001
                                                                                     ----------      ------------
                                                                                           (In thousands)

                             ASSETS
                             ------
<S>                                                                                 <C>              <C>
CURRENT ASSETS:
   Cash and cash equivalents.................................................       $   647,717      $   220,178
   Receivables-
     Customers (less accumulated provisions of $63,747,000 and $65,358,000
       respectively, for uncollectible accounts).............................         1,062,088        1,074,664
     Other (less accumulated provisions of $7,753,000 and $7,947,000,
       respectively, for uncollectible accounts).............................           540,703          473,550
   Materials and supplies, at average cost-
     Owned...................................................................           235,426          256,516
     Under consignment.......................................................           143,929          141,002
   Other.....................................................................           227,060          336,610
                                                                                    -----------      -----------
                                                                                      2,856,923        2,502,520
                                                                                    -----------      -----------

ASSETS PENDING SALE (Note 3).................................................           247,578        3,418,225
                                                                                    -----------      -----------



PROPERTY, PLANT AND EQUIPMENT:
   In service................................................................        21,759,136       19,981,749
   Less--Accumulated provision for depreciation..............................         8,282,506        8,161,022
                                                                                    -----------      -----------
                                                                                     13,476,630       11,820,727
   Construction work in progress.............................................           681,203          607,702
                                                                                    -----------      -----------
                                                                                     14,157,833       12,428,429
                                                                                    -----------      -----------


INVESTMENTS:
   Capital trust investments.................................................         1,166,283        1,166,714
   Nuclear plant decommissioning trusts......................................         1,032,968        1,014,234
   Letter of credit collateralization........................................           277,763          277,763
   Prepaid pension...........................................................           280,734          273,542
   Other.....................................................................           926,434          898,311
                                                                                    -----------      -----------
                                                                                      3,684,182        3,630,564
                                                                                    -----------      -----------


DEFERRED CHARGES:
   Regulatory assets.........................................................         8,826,579        8,912,584
   Goodwill..................................................................         6,257,481        5,600,918
   Other.....................................................................         1,274,651          858,273
                                                                                    -----------      -----------
                                                                                     16,358,711       15,371,775
                                                                                    -----------      -----------
                                                                                    $37,305,227      $37,351,513
                                                                                    ===========      ===========

                                                   10
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                         FIRSTENERGY CORP.

                                    CONSOLIDATED BALANCE SHEETS



                                                                                    (Unaudited)
                                                                                      March 31,      December 31,
                                                                                        2002              2001
                                                                                    -----------      ------------
                                                                                            (In thousands)

                CAPITALIZATION AND LIABILITIES
                ------------------------------
<S>                                                                                 <C>              <C>
CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................       $ 1,993,034      $ 1,867,657
   Short-term borrowings.....................................................           862,533          614,298
   Accounts payable..........................................................         1,069,900          704,184
   Accrued taxes.............................................................           500,852          418,555
   Other.....................................................................         1,171,393        1,064,763
                                                                                    -----------      -----------
                                                                                      5,597,712        4,669,457
                                                                                    -----------      -----------

LIABILITIES RELATED TO ASSETS PENDING SALE (Note 3)..........................           117,303        2,954,753
                                                                                    -----------      -----------

CAPITALIZATION:
   Common stockholders' equity-
     Common stock, $.10 par value, authorized 375,000,000 shares -
       297,636,276 shares outstanding........................................            29,764           29,764
     Other paid-in capital...................................................         6,103,647        6,113,260
     Accumulated other comprehensive loss....................................          (132,430)        (169,003)
     Retained earnings.......................................................         1,528,572        1,521,805
     Unallocated employee stock ownership plan common stock -
       4,697,241 and 5,117,375 shares, respectively..........................           (93,035)         (97,227)
                                                                                    -----------      -----------
         Total common stockholders' equity...................................         7,436,518        7,398,599
   Preferred stock of consolidated subsidiaries-
     Not subject to mandatory redemption.....................................           480,194          480,194
     Subject to mandatory redemption.........................................            65,327           65,406
   Subsidiary-obligated mandatorily redeemable preferred securities..........           529,450          529,450
   Long-term debt............................................................        12,597,269       11,433,313
                                                                                    -----------      -----------
                                                                                     21,108,758       19,906,962
                                                                                    -----------      -----------

DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         2,676,500        2,684,219
   Accumulated deferred investment tax credits...............................           254,374          260,532
   Nuclear plant decommissioning costs.......................................         1,220,367        1,201,599
   Power purchase contract loss liability....................................         3,506,823        3,566,531
   Other postretirement benefits.............................................           856,592          838,943
   Other.....................................................................         1,966,798        1,268,517
                                                                                    -----------      -----------
                                                                                     10,481,454        9,820,341
                                                                                    -----------      -----------

COMMITMENTS AND CONTINGENCIES (Note 2).......................................
                                                                                    -----------      -----------
                                                                                    $37,305,227      $37,351,513
                                                                                    ===========      ===========


<FN>



The preceding Notes to Financial Statements as they relate to FirstEnergy Corp.
are an integral part of these balance sheets.

</FN>
</TABLE>

                                                     11
<PAGE>

<TABLE>
<CAPTION>


                                           FIRSTENERGY CORP.

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (Unaudited)


                                                                                            Three Months Ended
                                                                                                March 31,
                                                                                        --------------------------
                                                                                          2002             2001
                                                                                        ---------        ---------
                                                                                             (In thousands)
<S>                                                                                     <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................................        $116,493         $  97,708
   Adjustments to reconcile net income to net cash from operating activities-
     Provision for depreciation and amortization................................         262,828           227,214
     Nuclear fuel and lease amortization........................................          20,965            23,975
     Other amortization, net....................................................          (3,537)           (3,633)
     Deferred costs recoverable as regulatory assets............................         (70,134)               --
     Deferred income taxes, net.................................................         (20,534)          (15,935)
     Investment tax credits, net................................................          (6,746)           (4,998)
     Cumulative effect of accounting change.....................................         (31,700)           14,338
     Receivables................................................................          66,590            29,194
     Materials and supplies.....................................................          18,163            (7,043)
     Accounts payable...........................................................          (9,992)          (69,660)
     Other......................................................................         121,688           (69,057)
                                                                                        --------         ---------
       Net cash provided from operating activities..............................         464,084           222,103
                                                                                        --------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Long-term debt.............................................................         105,031               622
     Short-term borrowings, net.................................................         115,556            42,114
   Redemptions and Repayments-
     Common stock...............................................................              --            15,308
     Preferred stock............................................................         185,299                --
     Long-term debt.............................................................         183,905            21,216
     Short-term borrowings, net.................................................              --                --
   Common stock dividend payments...............................................         109,726            81,753
                                                                                        --------         ---------
       Net cash used for financing activities...................................         258,343            75,541
                                                                                        --------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions...........................................................         195,292           151,176
   Avon cash and cash equivalents previously held for sale (Note 3).............        (411,822)               --
   Net assets held for sale.....................................................          61,565                --
   Cash investments.............................................................           4,343           (29,138)
   Other........................................................................         (71,176)           31,286
                                                                                        --------         ---------
       Net cash provided from (used for) investing activities...................         221,798          (153,324)
                                                                                        --------         ---------

Net increase (decrease) in cash and cash equivalents............................         427,539            (6,762)
Cash and cash equivalents at beginning of period*...............................         220,178            49,258
                                                                                        --------         ---------
Cash and cash equivalents at end of period*.....................................        $647,717         $  42,496
                                                                                        ========         =========
<FN>


*   Excludes amounts in "Assets Pending Sale" on the Consolidated Balance Sheets.

The preceding  Notes to Financial  Statements  as they relate to  FirstEnergy  Corp.
are an integral part of these statements.

</FN>
</TABLE>

                                                  12
<PAGE>






                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS










To the Board of Directors and
Shareholders of FirstEnergy Corp.:

We have reviewed the  accompanying  consolidated  balance  sheet of  FirstEnergy
Corp. and its  subsidiaries  as of March 31, 2002, and the related  consolidated
statements of income and cash flows for the  three-month  period ended March 31,
2002.  These  financial  statements  are  the  responsibility  of the  Company's
management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  the  accompanying   consolidated   interim  financial   statements
information for them to be in conformity with  accounting  principles  generally
accepted in the United States of America.




PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002

                                       13

<PAGE>


                                FIRSTENERGY CORP.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



          FirstEnergy Corp. is a registered public utility holding company.  Its
subsidiaries and affiliates  provide  regulated and competitive  electricity and
other energy and  energy-related  services (see Results of Operations - Business
Segments) to customers in the U.S. and abroad.

          FirstEnergy - which acquired the former GPU, Inc., in November of 2001
- provides domestic regulated electric  distribution  services through its seven
wholly  owned  electric  utility  operating  company  subsidiaries.  Ohio Edison
Company (OE), the Cleveland Electric  Illuminating  Company (CEI),  Pennsylvania
Power  (Penn)  and  Toledo  Edison  Company  (TE)  provide  regulated   electric
distribution services to customers in Ohio and Pennsylvania,  with FirstEnergy's
American   Transmission   Systems,   Inc.,  wholly  owned  subsidiary  providing
transmission  services.   Metropolitan  Edison  Company  (Met-Ed),  Pennsylvania
Electric  Company  (Penelec),  and Jersey  Central Power & Light (JCP&L) - which
were acquired through the GPU merger - provide regulated  electric  distribution
and transmission services to customers in Pennsylvania and New Jersey.

          Other   FirstEnergy   subsidiaries  and  affiliates  sell  energy  and
energy-related   products  and  services,   including  natural  gas  and  energy
management  services,  in competitive  markets.  These products and services are
often  bundled  under  master  contracts   through  which  multiple  energy  and
energy-related   products   and  services  are   provided.   Among   FirstEnergy
subsidiaries  and  affiliates  supplying  services  in  competitive  markets are
FirstEnergy Solutions (FES), MARBEL Energy Corporation,  FirstEnergy  Facilities
Services Group,  LLC, and MYR Group,  Inc.,  which was acquired  through the GPU
merger.  FirstEnergy also offers electric  distribution  services abroad through
international  operations that were acquired  through the GPU merger,  including
GPU Capital,  Inc., and GPU Power,  Inc. GPU Capital,  Inc. and its subsidiaries
provide electric  distribution  services in foreign countries.  GPU Power, Inc.,
and its subsidiaries  develop, own and operate electric generation facilities in
foreign  countries.  Sales of portions  of these  international  operations  are
pending. (See Note 3 - Pending Divestitures).

Results of Operations
---------------------

          Net income in the first quarter of 2002 was $116.5  million,  or $0.40
per share of common  stock  (basic and  diluted),  compared to $97.7  million or
$0.45 per share of common  stock  (basic and  diluted)  in the first  quarter of
2001.  Results in the first  quarter  of 2002 and 2001  include  the  cumulative
effect of accounting changes (described below).  Before the cumulative effect of
accounting  changes,  earnings for the first quarter of 2002 were $84.8 million,
or $0.29 per share of common  stock  (basic  and  diluted),  compared  to $106.2
million, or $0.49 per share of common stock (basic and diluted). Results for the
first  quarter of 2002 also  reflect the merger of  FirstEnergy  and GPU,  which
became  effective on November 7, 2001, and therefore  include the results of the
former GPU companies. As a result of the merger,  FirstEnergy issued nearly 73.7
million  shares of its common stock,  which are reflected in the  calculation of
earnings  per  share of  common  stock in the  first  quarter  of 2002.  Several
one-time  charges added  approximately  $78.2  million in pretax  expense to the
first quarter of 2002 (see Expenses), compared to $8.8 million due to a one-time
charge in the same period of 2001,  resulting in a comparative  net reduction to
earnings  of  $0.14  per  share of  common  stock.  The  cessation  of  goodwill
amortization  beginning  January 1, 2002,  upon  implementation  of Statement of
Financial  Accounting  Standard No. (SFAS) 142,  "Goodwill and Other  Intangible
Assets," added $0.05 per share of common stock (basic and diluted), in the first
quarter of 2002, compared to the same period last year.

Revenues

          Total revenues  increased $816.4 million in the first quarter of 2002,
as  compared  to the same  period in 2001.  Excluding  results of the former GPU
companies,  total  revenues  decreased by $332.4  million or 16.7% from the same
period last year.  Reduced  retail  electric  sales and lower gas sales were the
major factors contributing to the decline.  Sources of changes in pre-merger and
post-merger  revenues  during the first  quarter of 2002 are  summarized  in the
following table:

                                       14
<PAGE>


     Sources of Revenue Changes
     --------------------------
         Increase (Decrease)
                                                           (In millions)
     Pre-Merger Companies:

     Electric Utilities (Regulated Services):
       Retail electric sales..............................  $  (201.2)
       Other revenues.....................................        2.4
                                                            ---------

     Total Electric Utilities.............................     (198.8)
                                                            ---------

     Unregulated Businesses (Competitive Services):
       Retail electric sales..............................       (9.0)
       Wholesale electric sales...........................       61.4
       Gas sales..........................................     (126.7)
       Other businesses...................................      (59.3)
                                                            ---------

     Total Unregulated Businesses.........................     (133.6)
                                                            ---------

     Total Pre-Merger Companies...........................     (332.4)
                                                            ---------

     Former GPU Companies:
       Electric utilities.................................      941.5
       Unregulated businesses.............................      256.4
                                                            ---------

     Total Former GPU Companies...........................    1,197.9

     Intercompany Revenues................................      (49.1)
                                                            ---------

     Net Revenue Increase.................................  $   816.4
                                                            =========

Electric Sales

          Mild weather,  a decline in economic  conditions  and shopping by Ohio
customers for  alternative  energy  suppliers  contributed to the $201.2 million
reduction  in  retail  electric  sales  revenues  for  FirstEnergy's  pre-merger
electric  utility  operating  companies  (EUOCs)  in the first  quarter of 2002,
compared to the same quarter of 2001.  Kilowatt-hour  sales to retail  customers
decreased  by 25.3% in the first  quarter of 2002 from the same period last year
resulting in a corresponding  reduction in first quarter electric sales revenues
of $102.5 million.  FirstEnergy's lower generation  kilowatt-hour sales resulted
principally  from  customer  choice in Ohio.  Sales of  electric  generation  by
alternative  suppliers in the Ohio EUOCs  franchise  areas increased to 20.2% of
total  energy  delivered in the first  quarter of 2002,  compared to 3.0% in the
same quarter last year.  While the first quarter of 2002 showed some evidence of
an economic turnaround, generation kilowatt-hour sales continued to be adversely
affected by economic  conditions in the regional industrial base. Weather in the
first quarter of 2002 was milder than the  corresponding  quarter of 2001, which
also contributed to the reduced kilowatt-hour sales to retail customers.

          Reduced  distribution  deliveries  contributed  $70.5  million  to the
reduction  in retail  electric  sales  revenues  in the first  quarter  of 2002,
compared to the same  quarter of 2001.  Kilowatt-hour  deliveries  to  franchise
customers  were down 9.3% due in part to the  decline  in  economic  conditions,
which  was a major  factor  resulting  in an 11.4%  decrease  in  deliveries  to
commercial  and  industrial  customers.  Mild  weather also  contributed  to the
reduced distribution deliveries to the residential sector.

          The remaining  decrease in retail  electric  sales  revenues  resulted
primarily  from  transition  plan  incentives  provided to  customers to promote
customer  shopping  for  alternative  suppliers.  This  reduction  to revenue is
deferred for future recovery under  FirstEnergy's  Ohio transition plan and does
not materially affect current period earnings.

          A portion of the  decline in retail  electric  revenues  was offset by
additional  kilowatt-hour  sales to the wholesale market - more than doubling in
the first quarter of 2002,  compared to the same period last year. That increase
resulted from the increased  availability of power for the wholesale market, due
to additional internal generation and reduced  kilowatt-hour  demand from retail
customers,  which  allowed  FirstEnergy  to take  advantage of wholesale  market
opportunities.  Nonaffiliated  retail  energy  suppliers  having access to 1,120
megawatts  of  FirstEnergy's   generation  capacity  made  available  under  its
transition  plan also  contributed  to the  increase  in sales to the  wholesale
market. Overall,  electric generation sales were nearly flat, increasing 0.4% in
the first quarter of 2002, compared to the same quarter of 2001.

                                     15
<PAGE>


Other Sales

          Other sales revenue declined by $185.9 million in the first quarter of
2002  from the same  period  last  year,  primarily  due to a  reduction  in gas
revenues ($126.7 million) resulting from lower gas prices; however, the quantity
of natural gas sales  increased  slightly.  Despite the lower prices,  the gross
margin for gas sales improved (see  Expenses).  The  elimination of coal trading
($40.4  million)  after March 31, 2001,  and reduced  sales from the  facilities
services group also contributed to the decrease in other sales revenues.

Expenses

          Total expenses  increased $707.3 million in the first quarter of 2002,
compared  to  the  same  period  of  2001,  which  included  $979.7  million  of
incremental  expenses  related to the former GPU  companies.  For the pre-merger
companies,  total  expenses  decreased by $222.2 million in the first quarter of
2002,  compared to the first  quarter of 2001.  Sources of changes in pre-merger
and post-merger  companies'  expenses in the first quarter of 2002,  compared to
the prior year, are summarized in the following table:

      Sources of Expense Changes
      --------------------------
        Increase (Decrease)                              (In millions)


      Pre-Merger Companies:
        Fuel and purchased power......................     $  (51.2)
        Purchased gas.................................       (146.6)
        Other operating expenses......................         33.6
        Depreciation and amortization.................        (61.6)
        General taxes.................................          3.6
                                                           --------

        Total Pre-Merger Companies....................       (222.2)

      Former GPU Companies............................        979.7

      Intercompany Expenses...........................        (50.2)
                                                           --------

      Net Expense Increase............................     $  707.3
                                                           ========

          The  following   comparisons  reflect  variances  for  the  pre-merger
companies only,  excluding the incremental expenses for the former GPU companies
in the first quarter of 2002.

          Fuel and purchased power costs decreased by $51.2 million in the first
quarter  of 2002 from the  first  quarter  of last  year due to a $76.8  million
reduction in purchased power costs. This decrease resulted from lower unit costs
and reduced  volume  requirements.  The  reduction in purchased  power costs was
partially  offset by a $25.6  million  increase in fuel expense  resulting  from
additional  internal  generation  and an  increased  mix of  higher-cost  fossil
generation - fossil generation  increased by 16% and nuclear generation declined
by 3%.

          Declining  gas  prices  resulted  in a  $146.6  million  reduction  in
purchased  gas costs in the first  quarter of 2002,  compared to the same period
last year - despite a slight increase in gas volumes purchased. The gross margin
on gas sales  improved  by $19.9  million in the first  quarter of 2002 from the
first quarter of 2001.

          Other  operating costs increased by $33.6 million in the first quarter
of 2002,  compared to the first quarter of 2001. Several factors  contributed to
the increase.  Higher nuclear  operating costs were the largest factors,  adding
$37.4  million as a result of refueling  outages at two nuclear  plants  (Beaver
Valley Unit 2 and Davis-Besse) in the first quarter of 2002,  compared with only
one nuclear refueling outage (Perry) in the first quarter of 2001. The following
one-time  charges also  contributed to the increase in other  operating costs in
the first quarter of 2002:

          o   A $30.4 million equity investment write-off related to the
              bankruptcy of a large customer

          o   An $18.1 million mark-to-market adjustment of a long-term
              purchased power contract resulting from the update of a model-
              based long-term electricity price forecast

          o   A charge of $17.1 million related to a generation  project
              opportunity  that  FirstEnergy  decided not to pursue

          o   Impairment of certain  telecommunication  investments  totaling
              $10.1 million  ($12.6  million  including former GPU investments)

                                       16
<PAGE>


          Factors  offsetting a portion of the 2002 increase in other  operating
costs included:  elimination of coal trading activities ($46.8 million), reduced
facilities  services costs ($19.0  million) and the absence of early  retirement
charges ($8.8 million) incurred in the first quarter of 2001.

          Charges for depreciation  and amortization  decreased by $61.6 million
in the first  quarter of 2002,  compared  to the same  period  last  year.  This
decrease resulted from several factors including:  shopping incentive  deferrals
and tax-related  deferrals  under the Ohio  transition  plan, the elimination of
depreciation associated with the pending sale of four power plants to NRG Energy
and  the  cessation  of  goodwill   amortization   beginning  January  1,  2002.
FirstEnergy's  goodwill  amortization in the first quarter of 2001 totaled $14.0
million.

Net Interest Charges

          Net interest charges  increased $133.5 million in the first quarter of
2002,  compared to the same period of 2001. This increase  includes  interest of
$73.9  million  on $4  billion  of  long-term  debt  issued  by  FirstEnergy  in
connection  with the merger.  Excluding  the results of former GPU companies and
the merger-related financing, net interest charges decreased by $12.8 million in
the first quarter of 2002 from the same period in 2001.

Cumulative Effect of Accounting Changes

          As of the merger date,  certain  former GPU  international  operations
were identified as "assets pending sale." Accordingly,  subsequent to the merger
date,  results of operations  and  incremental  interest  costs related to these
international  subsidiaries  were not  included  in  FirstEnergy's  Consolidated
Statement of Income. On February 6, 2002, discussions began with Aquila, Inc. on
modifying  its  initial  offer  for  the  acquisition  of Avon  Energy  Partners
Holdings,  which resulted in a change in accounting  for this  investment in the
first  quarter  of 2002.  That  change  resulted  in a $31.7  million  after-tax
increase to earnings (see Sale to Aquila,  Inc.).  In the first quarter of 2001,
FirstEnergy adopted SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities" resulting in an $8.5 million after-tax charge.

Results of Operations - Business Segments
-----------------------------------------

          FirstEnergy  manages  its  business  as two  separate  major  business
segments - regulated services and competitive  services.  The regulated services
segment  designs,  constructs,  operates and maintains  FirstEnergy's  regulated
domestic  transmission and  distribution  systems.  It also provides  generation
services to regulated  franchise  customers  who have not chosen an  alternative
generation  supplier.  The regulated  services  segment obtains a portion of its
required  generation  through  power  supply  agreements  with  the  competitive
services  segment.  The  competitive  services  segment  includes  all  domestic
unregulated  energy  and  energy-related   services  including  commodity  sales
(electricity  and natural gas) in the retail and wholesale  markets,  marketing,
generation,  trading and  sourcing of commodity  requirements,  as well as other
competitive energy application  services.  Competitive products are increasingly
marketed  to  customers  as bundled  services,  often  under  master  contracts.
Financial results discussed below include intersegment revenue. A reconciliation
of segment  financial  results to consolidated  financial results is provided in
Note 6 to the consolidated financial statements.

Regulated Services

          Net income  increased to $197.9  million in the first quarter of 2002,
compared to $122.6 million in the same period of 2001.  Excluding results of the
former GPU companies,  net income increased by $2.7 million in the first quarter
of 2002. The factors  contributing  to the increase in pre-merger net income are
summarized in the following table:

        Regulated Services
        ------------------
        Increase (Decrease)                                  (In millions)


        Revenues........................................      $(186.5)
        Expenses........................................       (172.4)
                                                              -------

        Income Before Interest and Income Taxes.........        (14.1)

        Net interest charges............................        (29.7)
        Income taxes....................................         12.9
                                                              -------

        Net Income Increase.............................      $   2.7
                                                              =======

                                       17
<PAGE>

          Lower  generation and distribution  revenues  reflecting mild weather,
tepid  economic   conditions  and  increased  shopping  by  Ohio  customers  for
alternative  energy  suppliers  combined  to  reduce  external  revenues,  which
accounted  for most of the decrease in revenues.  Expenses  were $172.4  million
lower in the first quarter of 2002 than the same period in 2001, principally due
to lower purchased  power,  depreciation  and  amortization  and other operating
expenses.  Lower  generation  sales reduced the need to purchase power from FES,
which  resulted in an $89.9  million  expense  decrease in the first  quarter of
2002,  compared  to the same  period last year.  Depreciation  and  amortization
declined by $65.8  million in the first  quarter of 2002,  compared to the first
quarter of 2001, due to new deferred regulatory assets under the Ohio transition
plan, the elimination of  depreciation  associated with the pending sale of four
power plants and the  cessation of goodwill  amortization  beginning  January 1,
2002.  Interest  charges in the first quarter of 2002 decreased by $29.7 million
from the same period of 2001,  reflecting  the impact of net debt and  preferred
stock redemptions and refinancings.

Competitive Services

          Net losses  increased to $59.6  million in the first  quarter of 2002,
compared to $31.8 million in the first quarter of 2001. Excluding results of the
former GPU companies, net losses increased by $29.1 million in 2001. The changes
to pre-merger net losses are summarized in the following table:

     Competitive Services
     --------------------
     Increase (Decrease)                                  (In millions)


     Revenues........................................      $(184.9)
     Expenses........................................       (127.2)
                                                           -------

     Income Before Interest and Income Taxes.........        (57.7)

     Net interest charges............................          6.0
     Income taxes....................................        (26.1)
     Cumulative effect of a change in accounting.....          8.5
                                                           -------

     Net Loss Increase...............................      $   29.1
                                                           ========

          Sales to nonaffiliates decreased by $95.0 million in the first quarter
of 2002, compared to the same quarter of 2001, with reduced natural gas revenues
and  lower  sales  from  the  facilities  services  group  partially  offset  by
additional  electricity sales to the wholesale market.  Lower power requirements
by the regulated  services segment reduced  internal  revenues by $89.9 million.
Expenses  decreased by $127.2 million  primarily due to a reduction in purchased
power costs and purchased gas costs,  which were partially  offset by additional
fuel costs and other operating expenses (see Results of Operations).

Capital Resources and Liquidity
-------------------------------

          FirstEnergy  and its  subsidiaries  have  continuing  cash  needs  for
planned  capital  expenditures,  maturing debt and preferred  stock sinking fund
requirements.  During the last three quarters of 2002, capital  requirements for
property  additions  and capital  leases are expected to be about $713  million,
including $15 million for nuclear fuel. These capital  requirements  exclude any
incremental  repair costs of an  unplanned  extended  outage at the  Davis-Besse
nuclear plant (see Supply Plan - Davis-Besse  Nuclear  Plant).  FirstEnergy  has
additional  cash  requirements of  approximately  $792.7 million to meet sinking
fund  requirements  for preferred  stock and maturing  long-term debt during the
remainder of 2002.  FirstEnergy  also  anticipates  optional  debt and preferred
stock  redemptions  during the last three quarters of 2002 totaling  nearly $1.0
billion.  These cash  requirements  are expected to be satisfied  from  internal
cash,  short-term  credit  arrangements  and net cash  proceeds from the sale of
79.9% of its interest in Avon Energy Partners Holdings and the four power plants
discussed  above.  Mandatory and optional  redemptions over the remainder of the
year are expected to reduce  interest and preferred  dividends by  approximately
$141 million  annually.  The pending sale of Avon (see Sale to Aquila,  Inc.) is
also expected to eliminate (due to equity accounting) approximately $1.7 billion
of debt from  FirstEnergy's  Consolidated  Balance Sheet. In total,  FirstEnergy
expects to reduce debt and preferred stock from its  Consolidated  Balance Sheet
by about $3.6 billion in the last three quarters of 2002. FirstEnergy also plans
to use  proceeds  from  JCP&L's  upcoming  sale of  transition  bonds (see State
Regulatory  Matters - New Jersey) to redeem higher cost debt and preferred stock
outstanding as of the end of the first quarter of 2002.

          As of March  31,  2002,  FirstEnergy  and its  subsidiaries  had about
$647.7  million  of  cash  and  temporary  investments  and  $862.5  million  of
short-term indebtedness.  Available borrowings included $880 million from unused
revolving lines of credit and $84 million from unused bank facilities. Excluding
property  released under mortgage  indenture  agreements  related to the pending
sale of four power plants, OE, CEI, TE and Penn had the capability to

                                       18
<PAGE>



issue $1.5  billion of  additional  first  mortgage  bonds (FMB) on the basis of
property  additions and retired bonds, as of March 31, 2002.  JCP&L,  Met-Ed and
Penelec had the  capability to issue $869 million of additional  senior notes as
of March 31, 2002,  based upon FMB collateral.  Based upon  applicable  earnings
coverage tests through March 31, 2002, and their  respective  charters OE, Penn,
TE and JCP&L could issue $6.9 billion of preferred stock (assuming no additional
debt was issued).  CEI,  Met-Ed and Penelec have no restrictions on the issuance
of preferred stock.

          On February  22, 2002,  Moody's  announced a change in its outlook for
the credit ratings of  FirstEnergy,  Met-Ed and Penelec from stable to negative.
The change was based upon a decision by the  Commonwealth  Court of Pennsylvania
to  remand  to  the   Pennsylvania   Public   Utility   Commission   (PPUC)  for
reconsideration  its decisions regarding rate relief,  accounting  deferrals and
the  mechanism  for  sharing  merger  savings  rendered in  connection  with its
approval of the GPU merger.

          On  April  4,  2002,   Standard  &  Poor's  changed  its  outlook  for
FirstEnergy's  credit ratings from stable to negative citing recent developments
- damage to the Davis Besse  reactor  vessel head (see Supply Plan - Davis-Besse
Nuclear Plant),  the Pennsylvania  Commonwealth Court decision (see Note 4), and
market conditions for some sales of FirstEnergy's remaining non-core assets.

Sale to Aquila, Inc.
--------------------

          On March 18, 2002,  FirstEnergy  announced that it had finalized terms
of a joint venture  agreement with Aquila,  Inc.  (formerly  UtiliCorp  United).
Accordingly,  on May 8, 2002,  Aquila acquired a 79.9% economic interest and 50%
voting interest in Avon. The terms of the agreement include certain restrictions
on the  sale  of  FirstEnergy's  remaining  20.1%  economic  interest  in  Avon.
Therefore,  it  is  not  probable  that  the  complete  sale  of  Avon  will  be
accomplished  within one year of the date of its  acquisition as part of the GPU
merger.  As a consequence,  FirstEnergy  recognized the cumulative  effect of an
accounting  change in the first  quarter  of 2002  based on the  application  of
Emerging  Issue Task Force No. (EITF) 90-6,  "Accounting  for Certain Events Not
Addressed in Issue No. 87-11 relating to an Acquired Operating Unit to Be Sold."
That $31.7 million  after-tax  cumulative  effect  represented the net income of
Avon  from  November  7, 2001 to  February  5,  2002,  that  previously  was not
recognized by FirstEnergy in its consolidated earnings due to the application of
EITF 87-11. In addition,  Avon's financial statements are no longer presented as
"Assets  Pending  Sale" and  "Liabilities  Related  to Assets  Pending  Sale" in
FirstEnergy's Consolidated Balance Sheet at March 31, 2002.

Market Risk Information
-----------------------

          FirstEnergy  uses  various  market  sensitive  instruments,  including
derivative  contracts,  primarily to manage the risk of price, interest rate and
foreign currency fluctuations. FirstEnergy's Risk Policy Committee, comprised of
executive  officers,  exercises an independent risk oversight function to ensure
compliance with corporate risk  management  policies and prudent risk management
practices.

Commodity Price Risk

          FirstEnergy is exposed to market risk primarily due to fluctuations in
electricity,  natural gas and coal prices. To manage the volatility  relating to
these  exposures,  FirstEnergy uses a variety of  non-derivative  and derivative
instruments,  including forward contracts, options, futures contracts and swaps.
The derivatives are used  principally for hedging purposes and, to a much lesser
extent,  for  trading  purposes.  The  change  in the fair  value  of  commodity
derivative  contracts  related to energy  production during the first quarter of
2002 is summarized in the following table:

    Change in the Fair Value of Commodity Derivative Contracts
    ----------------------------------------------------------
                                                          (In millions)

    Outstanding net liability as of December 31, 2001...       $(66.4)
    Contract value when entered.........................          2.1
    Increase in value of existing contracts.............         82.9
    Change in techniques/assumptions....................        (20.1)
    Settled contracts...................................         27.1
                                                               ------

    Outstanding net asset as of March 31, 2002..........       $ 25.6*
                                                               ======

*Does not include $10.2 million of derivative  contract fair value increase,  as
of March 31, 2002,  representing  FirstEnergy's  50% share of Great Lakes Energy
Partners, LLC

                                       19
<PAGE>

          The  valuation of derivative  contracts is based on observable  market
information  to the extent that such  information  is available.  In cases where
such   information   is  not  available,   FirstEnergy   relies  on  model-based
information. The above table includes changes in derivative valuations resulting
from revised assumptions used to develop FirstEnergy's  model-based information.
The model provides  estimates of future  regional  prices for electricity and an
estimate of related  price  volatility.  FirstEnergy  utilizes  these results in
developing estimates of fair value for the later years of applicable electricity
contracts for financial  reporting purposes and for internal management decision
making.  The impact of these revised  assumptions  on  derivative  valuations is
directly  attributable  to increased  volatility  of  electricity  prices due to
increased  volatility  in the  commodity  markets  such as coal and natural gas.
These   commodities   have  recently   exhibited   price   volatility   patterns
significantly greater than historical  volatilities.  Sources of information for
the  valuation of derivative  contracts by year are  summarized in the following
table:

Source of Information - Fair Value by Contract Year
---------------------------------------------------

                               2002*    2003      2004     Thereafter   Total
                               -----    ----      ----     ----------   -----
                                                 (In millions)

Prices actively quoted....... $(5.5)   $(0.5)    $(4.6)      $  --     $(10.6)
Prices based on models**.....  --       --        --          36.2       36.2
                              ------------------------------------------------

    Total.................... $(5.5)   $(0.5)    $(4.6)      $36.2     $ 25.6
                              ================================================

*  For the remaining quarters of 2002.
** Includes $34.6 million from an embedded option that is offset by a regulatory
   liability and does not affect earnings.


          FirstEnergy  performs sensitivity analyses to estimate its exposure to
the market risk of its commodity positions.  A hypothetical 10% adverse shift in
quoted  market  prices  in the  near  term on  both  FirstEnergy's  trading  and
nontrading  derivative  instruments  would not have had a material effect on its
consolidated  financial position or cash flows as of March 31, 2002. FirstEnergy
estimates  that if energy  commodity  prices  experienced  an adverse 10 percent
change, pretax income for the next twelve months would decrease by approximately
$4.3 million.

State Regulatory Matters
------------------------

Ohio

          The transition cost portion of FirstEnergy's Ohio EUOCs' rates provide
for  recovery of certain  amounts not  otherwise  recoverable  in a  competitive
generation market (such as regulatory assets).  Transition costs are paid by all
customers  whether  or not  they  choose  an  alternative  supplier.  Under  the
PUCO-approved transition plan, FirstEnergy assumed the risk of not recovering up
to  $500  million  of  transition  costs  if the  rate of  customers  (excluding
contracts and full-service accounts) switching their service from OE, CEI and TE
does not reach 20% for any consecutive  twelve-month period by December 31, 2005
- the end of the market development period. As of March 31, 2002, the annualized
customer-switching  rate  had  reduced  FirstEnergy's  risk  of  not  recovering
transition  costs to  approximately  $55 million.  FirstEnergy  began  accepting
customer  applications  for  switching to  alternative  suppliers on December 8,
2000;  as of March 31, 2002 its Ohio EUOCs have been  notified that over 640,000
of  their  customers   requested   generation  services  from  other  authorized
suppliers, including FES, a wholly owned subsidiary.

Pennsylvania

          In  June  2001,  Met-Ed,   Penelec  and  FirstEnergy  entered  into  a
settlement  agreement  with  major  parties  in the  combined  merger  and  rate
proceedings  that, in addition to resolving certain issues concerning the PPUC's
approval of the merger with GPU, also addressed  Met-Ed's and Penelec's  request
for "provider of last resort" (PLR) rate relief.  Several  parties  appealed the
PPUC decision to the Commonwealth  Court of Pennsylvania.  On February 21, 2002,
the Commonwealth  Court affirmed the PPUC decision regarding approval of the GPU
merger,  remanding  the  decision to the PPUC only with  respect to the issue of
merger savings.  The Commonwealth  Court reversed the PPUC's decision  regarding
the PLR obligations of Met-Ed and Penelec,  and denied the related  requests for
rate relief by Met-Ed and Penelec.  On March 25, 2002,  FirstEnergy,  Met-Ed and
Penelec filed a petition  asking the Supreme Court of Pennsylvania to review the
Commonwealth  Court's  decision  to deny Met-Ed and Penelec the ability to defer
costs associated with their PLR resort obligation.  If the Commonwealth  Court's
decision  is not  overturned  by the  Supreme  Court  of  Pennsylvania,  pre-tax
write-offs  based on March 31, 2002,  PLR deferred  balances  would total $193.2
million; there would be no adverse effect to FirstEnergy's net income since the
contingency  existed prior to the merger. Also on March 25, 2002, Citizens Power
filed a motion seeking an appeal of the Commonwealth  Court's decision to affirm
the  FirstEnergy  and  GPU  merger  with  the  Supreme  Court  of  Pennsylvania.
FirstEnergy is unable to predict the outcome of these matters.

                                       20
<PAGE>


New Jersey

          On February 6, 2002,  JCP&L received a Financing  Order from the NJBPU
with  authorization  to issue $320 million of transition bonds to securitize the
recovery of bondable  stranded costs  associated  with the  previously  divested
Oyster Creek  nuclear  generating  station.  The Order grants JCP&L the right to
charge a usage-based,  non-bypassable  transition bond charge (TBC) and provided
for the  transfer of the  bondable  transition  property  relating to the TBC to
JCP&L  Transition  Funding LLC  (Transition  Funding),  a wholly  owned  limited
liability  corporation.  Transition  Funding is expected to issue and sell up to
$320  million of  transition  bonds that would be  recognized  on  FirstEnergy's
Consolidated Balance Sheet in the second quarter of 2002, with the TBC providing
recovery of principal, interest and related fees on the transition bonds.

Supply Plan - Davis-Besse Nuclear Plant
---------------------------------------

          The  Davis-Besse  nuclear  plant began a refueling  outage in February
2002,  which was  anticipated  to last 34 days.  On March 13, 2002,  FirstEnergy
announced  that the  refueling and  maintenance  outage would be extended due to
corrosion  found in the reactor vessel head near a nozzle  penetration  hole. On
April 19, 2002, FirstEnergy submitted a comprehensive Root Cause Analysis Report
to the Nuclear Regulatory Commission (NRC).  FirstEnergy anticipates placing the
Davis-Besse  nuclear  plant back in service  in the  second  half of 2002.  As a
result,  FirstEnergy has secured on-peak  replacement  energy through the end of
August 2002 for the 883-megawatt plant. Net replacement power costs are expected
to be between  $10 and $15 million per month  during the  non-summer  months and
between $20 and $25 million per month for July and August 2002. FirstEnergy will
also incur capital and maintenance  costs associated with any equipment  repairs
or  replacements  necessary  to return the plant to  service.  The timing of the
return to service for Davis-Besse is subject to a number of  uncertainties  that
could affect the ultimate cost of this extended outage.

Environmental Matters
---------------------

          Various   environmental   liabilities  have  been  recognized  on  the
Consolidated Balance Sheet as of March 31, 2002, based on estimates of the total
costs of cleanup, the EUOCs' proportionate responsibility for such costs and the
financial  ability of other  nonaffiliated  entities to pay. The EUOCs have been
named as "potentially  responsible parties" (PRPs) at waste disposal sites which
may require cleanup under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.  Allegations  of disposal of hazardous  substances at
historical  sites  and the  liability  involved  are often  unsubstantiated  and
subject to dispute.  Federal law provides that all PRPs for a particular site be
held  liable  on a joint and  several  basis.  In  addition,  JCP&L has  accrued
liabilities for environmental  remediation of former  manufactured gas plants in
New Jersey;  those costs are being  recovered by JCP&L through a  non-bypassable
societal benefits charge. The EUOCs have total accrued  liabilities  aggregating
approximately  $58.2 million as of March 31, 2002.  FirstEnergy does not believe
environmental  remediation  costs  will have a  material  adverse  effect on its
financial condition, cash flows or results of operations.

Significant Accounting Policies
-------------------------------

          FirstEnergy   prepares  its  consolidated   financial   statements  in
accordance with accounting  principles that are generally accepted in the United
States.  Application  of  these  principles  often  requires  a high  degree  of
judgment,  estimates and assumptions that affect its financial  results.  All of
FirstEnergy's  assets are subject to their own specific risks and  uncertainties
and are periodically reviewed for impairment.  Assets related to the application
of the policies  discussed  below are  similarly  reviewed  with their risks and
uncertainties reflecting these specific factors.  FirstEnergy's more significant
accounting policies are described below:

Purchase Accounting - Acquisition of GPU

          Purchase  accounting requires judgment regarding the allocation of the
purchase  price  based on the fair  values  of the  assets  acquired  (including
intangible assets) and the liabilities  assumed. The fair values of the acquired
assets and assumed  liabilities for GPU were based  primarily on estimates.  The
more  significant  of these  included  the  estimation  of the fair value of the
international operations,  certain domestic operations and the fair value of the
pension  and  other  post  retirement   benefit  assets  and  liabilities.   The
preliminary  purchase price  allocations  for the GPU acquisition are subject to
adjustments  in 2002 when  finalized.  The excess of the purchase price over the
estimated  fair  values of the  assets  acquired  and  liabilities  assumed  was
recognized as goodwill, which must be reviewed for impairment at least annually.
As of March 31, 2002,  FirstEnergy  had $6.3 billion of goodwill  (excluding the
goodwill  in "Assets  Pending  Sale" on the  Consolidated  Balance  Sheet)  that
primarily relates to its regulated services segment.

                                       21
<PAGE>


          FirstEnergy has determined the fair value of its Argentina  operations
based on the best available information as of the date of the merger. Subsequent
to that date, a number of economic  events have occurred in Argentina  which may
have an impact on  FirstEnergy's  ability to realize the estimated fair value of
the  Argentina   operations.   These  events   include   currency   devaluation,
restrictions on repatriation of cash, and the anticipation of future asset sales
in that  region by  competitors.  FirstEnergy  has  determined  that the current
economic  conditions  in Argentina  have not eroded the fair value  recorded for
these operations; as a result, an impairment writedown of this investment is not
warranted  as of March  31,  2002.  FirstEnergy  will  continue  to  assess  the
potential  impact of these and other related events on the  realizability of the
value recorded for the Argentina operations.

Regulatory Accounting

          FirstEnergy's regulated services segment is subject to regulation that
sets the prices  (rates) it is permitted to charge its customers  based on costs
that the regulatory  agencies determine  FirstEnergy is permitted to recover. At
times,  regulators  permit the future recovery through rates of costs that would
be currently  charged to expense by an  unregulated  company.  This  rate-making
process  results in the  recording of  regulatory  assets  based on  anticipated
future cash inflows.  As a result of the changing  regulatory  framework in each
state in which FirstEnergy  operates,  a significant amount of regulatory assets
have been recorded.  As of March 31, 2002,  FirstEnergy had regulatory assets of
$8.8  billion.  FirstEnergy  regularly  reviews  these  assets to  assess  their
ultimate  recoverability within the approved regulatory  guidelines.  Impairment
risk  associated with these assets relates to potentially  adverse  legislative,
judicial  or  regulatory  actions  in  the  future.  As  disclosed  in  Note 1 -
Regulatory  Plans,  the full recovery of transition costs for the Ohio EUOCs are
dependent  on  achieving  20%  shopping  levels  in any  twelve-month  period by
December 31, 2005.

Derivative Accounting

          Determination  of appropriate  accounting for derivative  transactions
requires the involvement of management representing operations, finance and risk
assessment.  In order to determine the  appropriate  accounting  for  derivative
transactions,  the  provisions of the contract need to be carefully  assessed in
accordance  with  the  authoritative   accounting  literature  and  management's
intended use of the derivative.  New authoritative  guidance  continues to shape
the  application  of  derivative  accounting.   Management's   expectations  and
intentions  are key factors in  determining  the  appropriate  accounting  for a
derivative  transaction and, as a result,  such  expectations and intentions are
documented. Derivative contracts that are determined to fall within the scope of
SFAS 133, as amended, must be recorded at their fair value. Active market prices
are not always  available  to  determine  the fair value of the later years of a
contract,  requiring  that various  assumptions  and  estimates be used in their
valuation.   FirstEnergy   continually  monitors  its  derivative  contracts  to
determine if its activities, expectations, intentions, assumptions and estimates
remain  valid.  As  part  of its  normal  operations,  FirstEnergy  enters  into
significant  commodities  contracts,  which  increase  the impact of  derivative
accounting judgments.

Revenue Recognition

          FirstEnergy  follows the accrual  method of  accounting  for revenues,
recognizing revenue for kilowatt-hour sales that have been delivered but not yet
billed through the end of the accounting  period.  The determination of unbilled
revenues requires management to make various estimates including:

          o   Net energy generated or purchased for retail load
          o   Losses of energy over transmission and distribution lines
          o   Mix of kilowatt-hour usage by residential, commercial and
              industrial customers
          o   Kilowatt-hour usage of customers receiving electricity from
              alternative suppliers

Implementation of Recently Issued Accounting Standards
------------------------------------------------------

          Under SFAS 142,  goodwill must be tested for impairment at least on an
annual basis.  FirstEnergy has  periodically  reviewed its goodwill for possible
impairment  under the  pre-existing  guidance in SFAS 121,  "Accounting  for the
Impairment  of  Long-Lived  Assets and  Long-Lived  Assets to Be  Disposed  Of."
FirstEnergy does not anticipate that the revised impairment analysis required by
SFAS 142 will result in any material goodwill impairment. FirstEnergy expects to
have its  revised  goodwill  impairment  analysis  completed  later  this  year.
FirstEnergy's  net income in the first  quarter of 2001 and the year 2001 of $98
million and $646  million,  respectively,  would have been $111 million and $701
million, respectively, excluding goodwill amortization.

          In July  2001,  the  FASB  issued  SFAS  143,  "Accounting  for  Asset
Retirement  Obligations." The new statement  provides  accounting  standards for
retirement  obligations associated with tangible long-lived assets with adoption
required  as of  January  1, 2003.  SFAS 143  requires  that the fair value of a
liability for an asset retirement

                                       22
<PAGE>



obligation  be recorded in the period in which it is  incurred.  The  associated
asset  retirement  costs are  capitalized as part of the carrying  amount of the
long-lived  asset.  Over  time the  capitalized  costs are  depreciated  and the
present value of the asset retirement  liability increases resulting in a period
expense. Upon retirement,  a gain or loss will be recorded if the cost to settle
the  retirement  obligation  differs from the carrying  amount.  FirstEnergy  is
currently assessing its asset retirement  obligations under the new standard and
has not yet determined the impact on its financial statements.


                                       23
<PAGE>


<TABLE>
<CAPTION>


                                         OHIO EDISON COMPANY

                                   CONSOLIDATED STATEMENTS OF INCOME
                                             (Unaudited)



                                                                                          Three Months Ended
                                                                                               March 31,
                                                                                       -------------------------
                                                                                         2002             2001
                                                                                       ---------        --------
                                                                                             (In thousands)

<S>                                                                                    <C>              <C>
OPERATING REVENUES..............................................................       $707,799         $783,103
                                                                                       --------         --------

OPERATING EXPENSES AND TAXES:
   Fuel.........................................................................         14,290           14,146
   Purchased power..............................................................        241,479          306,417
   Nuclear operating costs......................................................         95,234           92,245
   Other operating costs........................................................         79,611           80,956
                                                                                       --------         --------
     Total operation and maintenance expenses...................................        430,614          493,764
   Provision for depreciation and amortization..................................         92,130          116,956
   General taxes................................................................         45,376           44,954
   Income taxes.................................................................         42,615           38,601
                                                                                       --------         --------
     Total operating expenses and taxes.........................................        610,735          694,275
                                                                                       --------         --------

OPERATING INCOME................................................................         97,064           88,828

OTHER INCOME....................................................................            512           12,365
                                                                                       --------         --------

INCOME BEFORE NET INTEREST CHARGES..............................................         97,576          101,193
                                                                                       --------         --------

NET INTEREST CHARGES:
   Interest on long-term debt...................................................         33,073           39,387
   Allowance for borrowed funds used during construction and capitalized
    interest                                                                               (621)          (2,918)
   Other interest expense.......................................................          5,147            6,912
   Subsidiaries' preferred stock dividend requirements..........................          3,626            3,626
                                                                                       --------         --------
     Net interest charges.......................................................         41,225           47,007
                                                                                       --------         --------

NET INCOME......................................................................         56,351           54,186

PREFERRED STOCK DIVIDEND REQUIREMENTS...........................................          2,596            2,702
                                                                                       --------         --------

EARNINGS ON COMMON STOCK........................................................       $ 53,755         $ 51,484
                                                                                       ========         ========


<FN>


The preceding Notes to Financial Statements as they relate to Ohio Edison Company
are an integral part of these statements.

</FN>
</TABLE>

                                                       24

<PAGE>


<TABLE>
<CAPTION>


                                           OHIO EDISON COMPANY

                                       CONSOLIDATED BALANCE SHEETS



                                                                                   (Unaudited)
                                                                                     March 31,       December 31,
                                                                                       2002               2001
                                                                                     ----------      ------------
                                                                                           (In thousands)

                              ASSETS
                              ------

UTILITY PLANT:
<S>                                                                                  <C>               <C>
   In service................................................................        $4,986,949        $4,979,807
   Less--Accumulated provision for depreciation..............................         2,472,714         2,461,972
                                                                                     ----------        ----------
                                                                                      2,514,235         2,517,835
                                                                                     ----------        ----------
   Construction work in progress-
     Electric plant..........................................................            92,494            87,061
     Nuclear fuel............................................................               816            11,822
                                                                                     ----------        ----------
                                                                                         93,310            98,883
                                                                                     ----------        ----------
                                                                                      2,607,545         2,616,718
                                                                                     ----------        ----------




OTHER PROPERTY AND INVESTMENTS:
   PNBV Capital Trust........................................................           428,552           429,040
   Letter of credit collateralization........................................           277,763           277,763
   Nuclear plant decommissioning trusts......................................           283,496           277,337
   Long-term notes receivable from associated companies......................           504,734           505,028
   Other.....................................................................           312,597           303,409
                                                                                     ----------        ----------
                                                                                      1,807,142         1,792,577
                                                                                     ----------        ----------




CURRENT ASSETS:
   Cash and cash equivalents.................................................            57,493             4,588
   Receivables-
     Customers (less accumulated provisions of $4,532,000 and
       $4,522,000, respectively for uncollectible accounts)..................           300,768           311,744
     Associated companies....................................................           470,162           523,884
     Other (less accumulated provisions of $1,000,000 for uncollectible
       accounts at both dates)...............................................            42,161            41,611
   Notes receivable from associated companies................................           247,069           108,593
   Materials and supplies, at average cost-
     Owned...................................................................            54,915            53,900
     Under consignment.......................................................            14,572            13,945
   Other.....................................................................            34,446            50,541
                                                                                     ----------        ----------
                                                                                      1,221,586         1,108,806
                                                                                     ----------        ----------



DEFERRED CHARGES:
   Regulatory assets..........................................................        2,190,376         2,234,227
   Other......................................................................          164,445           163,625
                                                                                     ----------        ----------
                                                                                      2,354,821         2,397,852
                                                                                     ----------        ----------
                                                                                     $7,991,094        $7,915,953
                                                                                     ==========        ==========

</TABLE>

                                                       25
<PAGE>



<TABLE>
<CAPTION>

                                            OHIO EDISON COMPANY

                                        CONSOLIDATED BALANCE SHEETS



                                                                                     (Unaudited)
                                                                                       March 31,      December 31,
                                                                                        2002              2001
                                                                                     ----------      -------------
                                                                                            (In thousands)

                 CAPITALIZATION AND LIABILITIES
                 ------------------------------
<S>                                                                                  <C>               <C>
CAPITALIZATION:
   Common stockholder's equity-
     Common stock, without par value, authorized 175,000,000 shares -
       100 shares outstanding.................................................       $2,098,729        $2,098,729
     Retained earnings........................................................          524,827           572,272
                                                                                     ----------        ----------
         Total common stockholder's equity....................................        2,623,556         2,671,001
   Preferred stock not subject to mandatory redemption........................          160,965           160,965
   Preferred stock of consolidated subsidiary-
     Not subject to mandatory redemption......................................           39,105            39,105
     Subject to mandatory redemption..........................................           14,250            14,250
   Company obligated mandatorily redeemable preferred
     securities of subsidiary trust holding solely Company
     subordinated debentures..................................................          120,000           120,000
   Long-term debt.............................................................        1,652,835         1,614,996
                                                                                     ----------        ----------
                                                                                      4,610,711         4,620,317
                                                                                     ----------        ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock.......................          554,873           576,962
   Short-term borrowings-
     Associated companies.....................................................          115,074            26,076
     Other....................................................................          171,058           219,750
   Accounts payable-
     Associated companies.....................................................          104,383           110,784
     Other....................................................................            7,925            19,819
   Accrued taxes..............................................................          315,715           258,831
   Accrued interest...........................................................           39,290            33,053
   Other......................................................................           93,478            63,140
                                                                                     ----------        ----------
                                                                                      1,401,796         1,308,415
                                                                                     ----------        ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes..........................................        1,147,984         1,175,395
   Accumulated deferred investment tax credits................................           96,011            99,193
   Nuclear plant decommissioning costs........................................          282,659           276,500
   Other postretirement benefits..............................................          167,822           166,594
   Other......................................................................          284,111           269,539
                                                                                     ----------        ----------
                                                                                      1,978,587         1,987,221
                                                                                     ----------        ----------

COMMITMENTS AND CONTINGENCIES (Note 2)........................................
                                                                                     ----------        ----------
                                                                                     $7,991,094        $7,915,953
                                                                                     ==========        ==========

<FN>


The preceding Notes to Financial Statements as they relate to Ohio Edison Company
are an integral part of these balance sheets.

</FN>
</TABLE>

                                                   26
<PAGE>



<TABLE>
<CAPTION>


                                        OHIO EDISON COMPANY

                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (Unaudited)


                                                                                        Three Months Ended
                                                                                               March 31,
                                                                                      ----------------------------
                                                                                        2002               2001
                                                                                      ---------          ---------
                                                                                           (In thousands)
<S>                                                                                    <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................................       $ 56,351         $  54,186
   Adjustments to reconcile net income to net cash from operating activities-
     Provision for depreciation and amortization................................         92,130           116,956
     Nuclear fuel and lease amortization........................................         11,402            11,757
     Deferred income taxes, net.................................................        (13,170)          (20,402)
     Investment tax credits, net................................................         (3,773)           (3,353)
     Receivables................................................................         64,148           (57,704)
     Materials and supplies.....................................................         (1,642)           53,146
     Accounts payable...........................................................        (18,295)          (88,181)
     Other......................................................................         80,360            45,655
                                                                                       --------         ---------
       Net cash provided from operating activities..............................        267,511           112,060
                                                                                       --------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Long-term debt.............................................................        104,985               500
     Short-term borrowings, net.................................................         40,306             5,615
   Redemptions and Repayments-
     Long-term debt.............................................................         89,547             7,150
   Dividend Payments-
     Common stock...............................................................        101,200            37,300
     Preferred stock............................................................          2,597             2,698
                                                                                       --------         ---------
       Net cash used for financing activities...................................         48,053            41,033
                                                                                       --------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions...........................................................         30,344            25,398
   Loans to associated companies................................................        138,181           175,572
   Sale of assets to associated companies.......................................             --         (121,594)
   Other........................................................................         (1,972)           (1,479)
                                                                                       --------         ---------
       Net cash used for investing activities...................................        166,553            77,897
                                                                                       --------         ---------

Net Increase (decrease) in cash and cash equivalents............................         52,905            (6,870)
Cash and cash equivalents at beginning of period................................          4,588            18,269
                                                                                       --------         ---------
Cash and cash equivalents at end of period......................................       $ 57,493         $  11,399
                                                                                       ========         =========

<FN>


The preceding Notes to Financial Statements as they relate to Ohio Edison Company
are an integral part of these statements.

</FN>
</TABLE>

                                                  27
<PAGE>





                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS











To the Board of Directors and
Shareholders of Ohio Edison Company:

We have  reviewed the  accompanying  consolidated  balance  sheet of Ohio Edison
Company and its subsidiaries as of March 31, 2002, and the related  consolidated
statements of income and cash flows for the  three-month  period ended March 31,
2002.  These  financial  statements  are  the  responsibility  of the  Company's
management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  the  accompanying   consolidated   interim  financial   statements
information for them to be in conformity with  accounting  principles  generally
accepted in the United States of America.



PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002

                                       28

<PAGE>


                               OHIO EDISON COMPANY

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



          OE is a wholly owned,  electric utility subsidiary of FirstEnergy.  OE
and its wholly owned subsidiary,  Penn, conduct business in portions of Ohio and
Pennsylvania,  providing regulated electric  distribution  services. OE and Penn
(OE Companies) also provide power to those customers  electing to retain them as
their power supplier.  The OE Companies also provide power directly to wholesale
customers  under  previously  negotiated  contracts,  as well as to  alternative
energy suppliers under OE's transition plan. The OE Companies have unbundled the
price of  electricity  into  its  component  elements  -  including  generation,
transmission,  distribution and transition charges. In addition, OE's transition
plan includes shopping incentives. Power supply requirements of the OE Companies
are provided by FES - an affiliated company.

Results of Operations
---------------------

          Operating  revenues  decreased  $75.3  million  or 9.6%  in the  first
quarter of 2002,  as compared to the first quarter of 2001,  principally  due to
mild weather,  a decline in economic  conditions  and shopping by Ohio customers
for  alternative  energy  suppliers.  Kilowatt-hour  sales to  retail  customers
decreased  by 19.2% in the first  quarter of 2002 from the same period last year
which reduced operating revenues from generation services by $39.9 million. OE's
lower generation  kilowatt-hour sales resulted primarily from customer choice in
Ohio. Sales of electric generation by alternative suppliers in the OE Companies'
franchise  areas  increased  to 17.1% of total  energy  delivered  in the  first
quarter of 2002, compared to 4.0% in the same quarter last year. As of March 31,
2002, nearly 14% of OE customers had selected alternative  suppliers.  While the
first quarter of 2002 showed some evidence of an economic turnaround, generation
kilowatt-hour sales continued to be adversely affected by economic conditions in
the regional  industrial  base.  Weather in the first quarter of 2002 was milder
than the  corresponding  quarter of 2001, also reducing  kilowatt-hour  sales to
retail customers.

          Reduced  distribution  deliveries  contributed  $21.0  million  to the
reduction in operating  revenues in the first  quarter of 2002,  compared to the
same quarter of 2001.  Kilowatt-hour deliveries to franchise customers were 6.5%
lower  due in part to the  decline  in  economic  conditions,  which was a major
factor  resulting in a 7.7% decrease in deliveries to commercial  and industrial
customers.  Mild weather also  contributed to a 4.5%  reduction in  distribution
deliveries to the residential sector.

          The remaining  decrease in retail  electric  sales  revenues  resulted
primarily from transition plan incentives to customers receiving generation from
alternative  suppliers.  This  reduction  to  revenues  is  deferred  for future
recovery  under OE's  transition  plan and does not  materially  affect  current
period earnings.  Increased revenues from  kilowatt-hour  sales to the wholesale
market were more than offset by reduced revenues from FES.

          The sources of changes in operating  revenues during the first quarter
of 2002 are summarized in the following table:

     Sources of Revenue Changes
     --------------------------
       Increase (Decrease)
                                                            (In millions)
     Retail:

       Generation sales...................................     $(39.9)
       Distribution deliveries............................      (21.0)
       Shopping incentives................................       (9.9)
                                                               ------

       Total Retail.......................................      (70.8)
     Wholesale............................................       (6.6)
     Other................................................        2.1
                                                               ------

     Net Operating Revenue Decrease.......................     $(75.3)
                                                               ======
                                       29
<PAGE>


Operating Expenses and Taxes

          Total  operating  expenses and taxes  decreased  $83.5  million in the
first  quarter of 2002,  compared  to the same period of 2001.  Purchased  power
costs  decreased  $64.9  million  in the  first  quarter  of 2002 from the first
quarter  of  last  year  reflecting  reduced  power  requirements  due to  lower
kilowatt-hour sales and lower unit costs. Nuclear operating costs increased $3.0
million  in the first  quarter  of 2002,  compared  to the same  period of 2001,
primarily  reflecting costs incurred for the Beaver Valley Unit 2 (55.62% owned)
refueling  outage  compared to costs related to the Perry Plant  (35.24%  owned)
refueling outage in the first quarter of 2001.

          Charges for depreciation  and amortization  decreased by $24.8 million
in the first  quarter of 2002,  compared  to the same  period  last  year.  This
decrease primarily  resulted from shopping  incentive  deferrals and tax-related
deferrals under OE's transition plan.

Other Income

          Other Income decreased $11.9 million in the first quarter of 2002 from
the first quarter of 2001  principally  due to  adjustments  related to OE's low
income housing investments.

Net Interest Charges

          Net interest  charges  continued to trend  lower,  decreasing  by $5.8
million in the first  quarter of 2002,  compared  to the same  period last year,
primarily due to debt redemption and refinancing activities.

Capital Resources and Liquidity
-------------------------------

          The OE Companies have continuing cash requirements for planned capital
expenditures and maturing debt. During the last three quarters of 2002,  capital
requirements for property  additions and capital leases are expected to be about
$32 million,  including $9 million for nuclear fuel.  The OE Companies also have
sinking fund  requirements  for preferred  stock and maturing  long-term debt of
$320.4 million during the remainder of 2002. These  requirements are expected to
be satisfied from internal cash and/or short-term credit arrangements.

          As of March 31,  2002,  the OE Companies  had about $304.6  million of
cash and temporary  investments  and $286.1 million of short-term  indebtedness.
Their  available  borrowing  capability  included  $145.0  million  from  unused
revolving  lines of  credit  and up to $34  million  from bank  facilities  on a
short-term  basis  at the  banks'  discretion.  As of  March  31,  2002,  the OE
Companies had the  capability  to issue up to $1.3 billion of  additional  first
mortgage bonds on the basis of property  additions and retired bonds.  Under the
earnings coverage tests contained in the OE Companies' charters, $2.2 billion of
preferred  stock  (assuming no additional debt was issued) could be issued based
on earnings through the first quarter of 2002.

State Regulatory Matters
------------------------

          The  transition  cost portion of the OE Companies'  rates provides for
recovery  of  certain  amounts  not  otherwise   recoverable  in  a  competitive
generation market (such as regulatory assets).  Transition costs are paid by all
customers  whether  or not  they  choose  an  alternative  supplier.  Under  the
PUCO-approved  transition plan, OE assumed the risk of not recovering up to $250
million of transition  costs if the rate of customers  (excluding  contracts and
full-service  accounts)  switching  their service from OE does not reach 20% for
any consecutive twelve-month period by December 31, 2005 - the end of the market
development period. As of March 31, 2002, the annualized customer-switching rate
essentially   reduced  OE's  risk  of  not   recovering   transition   costs  to
approximately  $48  million.  OE  began  accepting  customer   applications  for
switching  to  alternative  suppliers  on  December  8,  2000  and has  received
notifications as of March 31, 2002 that over 157,000 of its customers  requested
generation services from other authorized suppliers.

Significant Accounting Policies
-------------------------------

          OE prepares its consolidated  financial  statements in accordance with
accounting  principles  generally accepted in the United States.  Application of
these  principles  often  requires  a high  degree of  judgment,  estimates  and
assumptions that affect OE's financial  results.  All of OE's assets are subject
to their own specific risks and uncertainties  and are continually  reviewed for
impairment.  Assets related to the  application of the policies  discussed below
are  similarly  reviewed  with their risks and  uncertainties  reflecting  these
specific factors. OE's more significant accounting policies are described below.

                                       30
<PAGE>

Regulatory Accounting

          The OE  Companies  are  subject  to  regulation  that sets the  prices
(rates) they are  permitted to charge  their  customers  based on the costs that
regulatory  agencies  determine the OE Companies  are  permitted to recover.  At
times,  regulators  permit the future recovery through rates of costs that would
be currently  charged to expense by an  unregulated  company.  This  rate-making
process  results in the  recording of  regulatory  assets  based on  anticipated
future cash inflows.  As a result of the changing  regulatory  framework in Ohio
and Pennsylvania, a significant amount of regulatory assets have been recorded -
$2.2 billion as of March 31, 2002.  OE regularly  reviews these assets to assess
their  ultimate   recoverability  within  the  approved  regulatory  guidelines.
Impairment  risk  associated  with these assets relates to  potentially  adverse
legislative,  judicial or regulatory actions in the future. As disclosed in Note
1 - Regulatory  Plans,  OE's full recovery of  transition  costs is dependent on
achieving 20% shopping levels in any twelve-month period by 2005.

Revenue Recognition

          The OE Companies follow the accrual method of accounting for revenues,
recognizing revenue for kilowatt-hour sales that have been delivered but not yet
billed through the end of the accounting  period.  The determination of unbilled
revenues requires management to make various estimates including:

          o   Net energy generated or purchased for retail load
          o   Losses of energy over transmission and distribution lines
          o   Allocations to distribution companies within the FirstEnergy
              system
          o   Mix of kilowatt-hour usage by residential, commercial and
              industrial customers
          o   Kilowatt-hour usage of customers receiving electricity from
              alternative suppliers

Implementation of Recently Issued Accounting Standards
------------------------------------------------------

          In July  2001,  the  FASB  issued  SFAS  143,  "Accounting  for  Asset
Retirement  Obligations." The new statement  provides  accounting  standards for
retirement  obligations associated with tangible long-lived assets with adoption
required  as of  January  1, 2003.  SFAS 143  requires  that the fair value of a
liability for an asset retirement  obligation be recorded in the period in which
it is incurred. The associated asset retirement costs are capitalized as part of
the carrying amount of the long-lived asset. Over time the capitalized costs are
depreciated and the present value of the asset  retirement  liability  increases
resulting in a period expense. Upon retirement,  a gain or loss will be recorded
if the cost to  settle  the  retirement  obligation  differs  from the  carrying
amount. OE is currently assessing its asset retirement obligations under the new
standard and has not yet determined the impact on its financial statements.


                                       31
<PAGE>

<TABLE>
<CAPTION>


                       THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                             CONSOLIDATED STATEMENTS OF INCOME
                                       (Unaudited)


                                                                        Three Months Ended
                                                                              March 31,
                                                                     -------------------------
                                                                       2002             2001
                                                                     --------         --------
                                                                           (In thousands)

<S>                                                                  <C>              <C>
OPERATING REVENUES.............................................      $424,977         $516,417
                                                                     --------         --------


OPERATING EXPENSES AND TAXES:
   Fuel........................................................        17,270           17,865
   Purchased power.............................................       139,436          214,505
   Nuclear operating costs.....................................        71,417           49,950
   Other operating costs.......................................        66,847           78,303
                                                                     --------         --------
       Total operation and maintenance expenses................       294,970          360,623
   Provision for depreciation and amortization.................        28,471           56,764
   General taxes...............................................        38,746           37,870
   Income taxes................................................         7,468            7,715
                                                                     --------         --------
       Total operating expenses and taxes......................       369,655          462,972
                                                                     --------         --------


OPERATING INCOME...............................................        55,322           53,445


OTHER INCOME...................................................         5,241            4,420
                                                                     --------         --------


INCOME BEFORE NET INTEREST CHARGES.............................        60,563           57,865
                                                                     --------         --------


NET INTEREST CHARGES:
   Interest on long-term debt..................................        46,995           48,285
   Allowance for borrowed funds used during construction.......          (749)            (857)
   Other interest expense (credit).............................          (529)          (1,196)
   Subsidiaries' preferred dividend requirements...............         2,150               --
                                                                     --------         --------
       Net interest charges....................................        47,867           46,232
                                                                     --------         --------


NET INCOME.....................................................        12,696           11,633


PREFERRED STOCK DIVIDEND REQUIREMENTS..........................         8,256            6,561
                                                                     --------         --------


EARNINGS ON COMMON STOCK.......................................      $  4,440         $  5,072
                                                                     ========         ========

<FN>



The preceding Notes to Financial Statements as they relate to The Cleveland
Electric Illuminating Company are an integral part of these statements.

</FN>
</TABLE>

                                             32
<PAGE>


<TABLE>
<CAPTION>


                             THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                    CONSOLIDATED BALANCE SHEETS



                                                                                 (Unaudited)
                                                                                   March 31,       December 31,
                                                                                      2002             2001
                                                                                  -----------      ------------
                                                                                         (In thousands)

                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:

   In service................................................................      $4,071,357       $4,071,134
   Less--Accumulated provision for depreciation..............................       1,745,201        1,725,727
                                                                                   ----------       ----------
                                                                                    2,326,156        2,345,407
                                                                                   ----------       ----------
  Construction work in progress-
     Electric plant..........................................................          83,614           66,266
     Nuclear fuel............................................................          29,155           21,712
                                                                                   ----------       ----------
                                                                                      112,769           87,978
                                                                                   ----------       ----------
                                                                                    2,438,925        2,433,385
                                                                                   ----------       ----------

OTHER PROPERTY AND INVESTMENTS:
   Shippingport Capital Trust................................................         475,543          475,543
   Nuclear plant decommissioning trusts......................................         216,820          211,605
   Long-term notes receivable from associated companies......................         103,315          103,425
   Other.....................................................................          21,250           24,611
                                                                                   ----------       ----------
                                                                                      816,928          815,184
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................          15,262              296
   Receivables-
     Customers...............................................................          14,588           17,706
     Associated companies....................................................          56,179           75,113
     Other (less accumulated provisions of $1,015,000 for uncollectible
       accounts at both dates)...............................................         114,952           99,716
   Notes receivable from associated companies................................             525              415
   Materials and supplies, at average cost-
     Owned...................................................................          21,313           20,230
     Under consignment.......................................................          28,816           28,533
   Other.....................................................................           9,126           31,634
                                                                                   ----------       ----------
                                                                                      260,761          273,643
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................         898,240          874,488
   Goodwill..................................................................       1,370,639        1,370,639
   Other.....................................................................          89,860           88,767
                                                                                   ----------       ----------
                                                                                    2,358,739        2,333,894
                                                                                   ----------       ----------
                                                                                   $5,875,353       $5,856,106
                                                                                   ==========       ==========
</TABLE>

                                                     33
<PAGE>


<TABLE>
<CAPTION>

                           THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                   CONSOLIDATED BALANCE SHEETS



                                                                                 (Unaudited)
                                                                                   March 31,       December 31,
                                                                                     2002              2001
                                                                                  -----------      ------------
                                                                                         (In thousands)

             CAPITALIZATION AND LIABILITIES
             ------------------------------
<S>                                                                                <C>              <C>
CAPITALIZATION:
   Common stockholder's equity-
     Common stock, without par value, authorized 105,000,000 shares -
       79,590,689 shares outstanding.........................................      $  931,962       $  931,962
     Retained earnings.......................................................         154,557          150,183
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       1,086,519        1,082,145
   Preferred stock-
     Not subject to mandatory redemption.....................................         141,475          141,475
     Subject to mandatory redemption.........................................           6,208            6,288
   Company obligated mandatorily redeemable preferred securities of
     subsidiary trust holding solely Company subordinated debentures.........         100,000          100,000
   Long-term debt............................................................       2,139,221        2,156,322
                                                                                   ----------       ----------
                                                                                    3,473,423        3,486,230
                                                                                   ----------       ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................         444,788          526,630
   Accounts payable-
     Associated companies....................................................         111,163           81,463
     Other...................................................................          18,954           30,332
   Notes payable to associated companies.....................................         173,188           97,704
   Accrued taxes.............................................................         124,762          129,830
   Accrued interest..........................................................          62,670           57,101
   Other.....................................................................          84,107           60,664
                                                                                   ----------       ----------
                                                                                    1,019,632          983,724
                                                                                   ----------       ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         644,133          637,339
   Accumulated deferred investment tax credits...............................          75,285           76,187
   Nuclear plant decommissioning costs.......................................         226,013          220,798
   Pensions and other postretirement benefits................................         232,014          231,365
   Other.....................................................................         204,853          220,463
                                                                                   ----------       ----------
                                                                                    1,382,298        1,386,152
                                                                                   ----------       ----------


COMMITMENTS AND CONTINGENCIES (Note 2).......................................
                                                                                   ----------       ----------
                                                                                   $5,875,353       $5,856,106
                                                                                   ==========       ==========

<FN>


The preceding Notes to Financial Statements as they relate to The Cleveland
Electric Illuminating Company are an integral part of these balance sheets.

</FN>
</TABLE>

                                                  34
<PAGE>


<TABLE>
<CAPTION>



                           THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (Unaudited)


                                                                                        Three Months Ended
                                                                                              March 31,
                                                                                      2002               2001
                                                                                    ---------          --------
                                                                                            (In thousands)
<S>                                                                                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................................    $ 12,696           $ 11,633
   Adjustments to reconcile net income to net
     cash from operating activities-
       Provision for depreciation and amortization..............................      28,471             56,764
       Nuclear fuel and lease amortization......................................       5,990              7,044
       Other amortization.......................................................      (3,892)            (3,633)
       Deferred income taxes, net...............................................       7,196                 53
       Investment tax credits, net..............................................        (902)              (969)
       Receivables..............................................................       6,816             75,619
       Materials and supplies...................................................      (1,366)            15,323
       Accounts payable.........................................................      18,322            (55,050)
       Accrued taxes............................................................      (5,068)           (48,469)
       Other....................................................................      19,259            (53,583)
                                                                                    --------           --------
         Net cash provided from operating activities............................      87,522              4,732
                                                                                    --------           --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Short-term borrowings, net.................................................      75,484             32,263
   Redemptions and Repayments-
     Preferred Stock............................................................     100,000                 --
     Long-term debt.............................................................          94              8,640
   Dividend Payments-
     Common stock...............................................................          --             21,800
     Preferred stock............................................................       5,252              7,037
                                                                                    --------           --------
         Net cash used for financing activities.................................      29,862              5,214
                                                                                    --------           --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions...........................................................      36,470             10,217
   Capital trust investments....................................................          --            (15,208)
   Other........................................................................       6,224              7,150
                                                                                    --------           --------
         Net cash used for investing activities.................................      42,694              2,159
                                                                                    --------           --------

Net increase (decrease) in cash and cash equivalents............................      14,966             (2,641)
Cash and cash equivalents at beginning of period ...............................         296              2,855
                                                                                    --------           --------
Cash and cash equivalents at end of period......................................    $ 15,262           $    214
                                                                                    ========           ========

<FN>


The preceding Notes to Financial Statements as they relate to The Cleveland
Electric Illuminating Company are an integral part of these statements.

</FN>
</TABLE>

                                                  35
<PAGE>






                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS










To the Board of Directors and
Shareholders of The Cleveland
Electric Illuminating Company:

We have reviewed the  accompanying  consolidated  balance sheet of The Cleveland
Electric Illuminating Company and its subsidiaries as of March 31, 2002, and the
related  consolidated  statements  of income and cash flows for the  three-month
period ended March 31, 2002. These financial  statements are the  responsibility
of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  the  accompanying   consolidated   interim  financial   statements
information for them to be in conformity with  accounting  principles  generally
accepted in the United States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002


                                       36

<PAGE>


                   THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



          CEI is a wholly owned, electric utility subsidiary of FirstEnergy. CEI
conducts  business in portions of northern Ohio,  providing  regulated  electric
distribution  services.  CEI also provides power to those customers  electing to
retain CEI as their power  supplier.  CEI continues to provide power directly to
wholesale  customers  under  previously  negotiated  contracts,  as  well  as to
alternative  energy  suppliers under its regulatory  plan. CEI's regulatory plan
itemizes,  or unbundles the price of electricity  into its component  elements -
including  generation,  transmission,  distribution and transition  charges.  In
addition,  CEI's  transition  plan includes  shopping credit  incentives.  Power
supply requirements of CEI are provided by FES - an affiliated company.

Results of Operations
---------------------

          Operating  revenues  decreased  $91.4  million in the first quarter of
2002, as compared to the first quarter of 2001, principally due to mild weather,
a decline in economic  conditions  and  shopping by  customers  for  alternative
energy suppliers. Kilowatt-hour sales to generation customers decreased by 37.3%
in the first  quarter  of 2002 from the same  period  last year  resulting  in a
corresponding  reduction in first quarter  operating  revenues  from  generation
services of $50.2 million.  CEI's lower generation  kilowatt-hour sales resulted
primarily  from  customer  choice  in Ohio.  Sales  of  electric  generation  by
alternative suppliers in CEI's franchise area increased to 28.5% of total energy
delivered  in the first  quarter of 2002,  compared to 2.9% in the same  quarter
last year.  As of March 31,  2002,  nearly  49% of CEI  customers  had  selected
alternative  suppliers.  While the first quarter of 2002 showed some evidence of
an economic turnaround, generation kilowatt-hour sales continued to be adversely
affected by economic  conditions in the regional industrial base. Weather in the
first quarter of 2002 was milder than the  corresponding  quarter of 2001, which
also  contributed  slightly  to  the  reduced   kilowatt-hour  sales  to  retail
customers.

          Reduced  distribution  deliveries  contributed  $33.6  million  to the
reduction in operating  revenues in the first  quarter of 2002,  compared to the
same quarter of 2001. Kilowatt-hour deliveries to franchise customers were 14.9%
lower  due in part to the  decline  in  economic  conditions,  which was a major
factor  resulting in a 17.8% decrease in deliveries to commercial and industrial
customers.  Mild weather also  contributed to a 7.8%  reduction in  distribution
deliveries to the residential sector.

          The remaining  decrease in retail  electric  sales  revenues  resulted
primarily  from  transition  plan  incentives  provided  to  customers  choosing
alternative  suppliers.  This  reduction  to  revenues  is  deferred  for future
recovery  under CEI's  transition  plan and does not  materially  affect current
period earnings. Additional kilowatt-hour sales to wholesale customers increased
slightly  in the first  quarter of 2002,  partially  offsetting  the  decline in
retail operating revenues.

          The sources of changes in operating  revenues during the first quarter
of 2002 are summarized in the following table:

     Sources of Operating Revenue Changes
     ------------------------------------
     Increase (Decrease)
                                                            (In millions)
     Retail:
       Generation sales...................................     $(50.2)
       Distribution deliveries............................      (33.6)
       Shopping incentives................................      (13.9)
                                                               ------

       Total Retail.......................................      (97.7)
     Wholesale............................................        8.6
     Other................................................       (2.3)
                                                               ------

     Total Operating Revenue Decrease.....................     $(91.4)
                                                               ======

Operating Expenses and Taxes

          Total  operating  expenses and taxes  decreased  $93.3  million in the
first  quarter of 2002,  compared  to the same period of 2001.  Purchased  power
costs  decreased  $75.1  million  in the  first  quarter  of 2002 from the first
quarter  of  last  year  reflecting  reduced  power  requirements  due to  lower
kilowatt-hour sales. Higher nuclear operating costs

                                       37
<PAGE>


resulted from having refueling outages at two nuclear plants (Beaver Valley Unit
2 and  Davis-Besse)  in the  first  quarter  of  2002,  compared  with  only one
refueling  outage (Perry) in the first quarter of 2001.  Other  operating  costs
were $11.5  million lower in the first quarter of 2002 than the same period last
year.  More than  one-half of the decrease  related to customer  expense items -
elimination  of  low-income  payment  plan costs (now  administered  by the Ohio
Department of Development),  reduced customer uncollectible expenses and reduced
program expenditures.

          Charges for depreciation  and amortization  decreased by $28.3 million
in the first  quarter of 2002,  compared  to the same  period  last  year.  This
decrease resulted from shopping  incentive  deferrals and tax-related  deferrals
under CEI's transition plan, the elimination of depreciation associated with the
pending sale of the Ashtabula, Eastlake and Lake Shore generating plants as part
of a transaction  with NRG Energy,  and the  cessation of goodwill  amortization
beginning January 1, 2002, upon  implementation of SFAS 142, "Goodwill and Other
Intangible  Assets."  CEI's goodwill  amortization  in the first quarter of 2001
totaled $9.6 million.

Net Interest Charges and Preferred Stock Dividend Requirements

          Net interest charges increased slightly by $1.6 million or 3.5% in the
first quarter of 2002,  compared to the first quarter of 2001,  primarily due to
preferred  dividends  paid by  CEI's  consolidated  Centerior  Funding  Trust on
securities  issued in early December 2001 (see Note 1). Preferred stock dividend
requirements  increased  $1.7  million  due to  premiums  relating  to  optional
redemptions  of $96.9  million of preferred  stock  during the first  quarter of
2002.

Capital Resources and Liquidity
-------------------------------

          CEI has continuing  cash needs for planned  capital  expenditures  and
maturing debt. During the last three quarters of 2002, capital  requirements for
property  additions  and capital  leases are  expected to be about $36  million,
including $5 million for nuclear fuel.  These capital  requirements  exclude any
incremental  repair costs of an  unplanned  extended  outage at the  Davis-Besse
nuclear  plant  described  below.  CEI also has sinking  fund  requirements  for
preferred  stock and  maturing  long-term  debt of  $246.8  million  during  the
remainder of 2002. These requirements are expected to be satisfied with internal
cash and/or short-term credit arrangements.

          As of March 31, 2002, CEI had approximately  $15.3 million of cash and
temporary   investments  and  $173.2  million  of  short-term   indebtedness  to
associated companies.  Under its first mortgage indenture and excluding property
additions  associated with the pending sale of coal-fired  generating plants, as
of March  31,  2002,  CEI had the  capability  to issue  up to $121  million  of
additional  first mortgage bonds on the basis of property  additions and retired
bonds. CEI has no restrictions on the issuance of preferred stock.

          The Davis-Besse nuclear plant began a refueling outage on February 16,
2002,  which was  anticipated  to last 34 days.  On March 13, 2002,  FirstEnergy
announced  that the  refueling and  maintenance  outage would be extended due to
corrosion  found in the reactor vessel head near a nozzle  penetration  hole. On
April 19, 2002, FirstEnergy submitted a comprehensive Root Cause Analysis Report
to the  Nuclear  Regulatory  Commission.  FirstEnergy  anticipates  placing  the
Davis-Besse  nuclear plant back in service  during the second half of 2002.  CEI
owns a 51.38% share of the Davis-Besse  plant and is responsible for its portion
of the incremental  maintenance and capital expenditures  required to return the
plant to  service.  All output from the plant is sold to FES under a power sales
agreement and an extended outage will reduce CEI's  kilowatt-hour  sales to FES.
The timing of the return to service  for  Davis-Besse  is subject to a number of
uncertainties that could affect the ultimate cost of this extended outage.

Ohio Regulatory Matters
-----------------------

          The  transition  cost portion of CEI's rates  provides for recovery of
certain  amounts not otherwise  recoverable in a competitive  generation  market
(such as regulatory assets).  Transition costs are paid by all customers whether
or not they choose an alternative supplier.  Under the PUCO-approved  transition
plan,  CEI assumed the risk of not  recovering  up to $170 million of transition
costs if the rate of customers (excluding  contracts and full-service  accounts)
switching  their  service  from  CEI  does  not  reach  20% for any  consecutive
twelve-month  period by December  31,  2005 - the end of the market  development
period. As of March 31, 2002, the annualized customer-switching rate essentially
eliminated CEI's risk of not recovering  transition costs, since over 366,000 of
its customers requested generation services from other authorized suppliers.

Environmental Matters
---------------------

          Various   environmental   liabilities  have  been  recognized  on  the
Consolidated Balance Sheet as of March 31, 2002, based on estimates of the total
costs of  cleanup,  CEI's  proportionate  responsibility  for such costs and the
financial ability of other  nonaffiliated  entities to pay. CEI has been named a
"potentially responsible party"

                                       38
<PAGE>


(PRP) at waste disposal sites which may require cleanup under the  Comprehensive
Environmental  Response,  Compensation and Liability Act of 1980. Allegations of
disposal of hazardous  substances at historical sites and the liability involved
are often unsubstantiated and subject to dispute.  Federal law provides that all
PRPs for a particular site be held liable on a joint and several basis.  CEI has
accrued liabilities of approximately $2.9 million as of March 31, 2002, and does
not believe environmental  remediation costs will have a material adverse effect
on its financial condition, cash flows or results of operations.

Significant Accounting Policies
-------------------------------

          CEI prepares its consolidated  financial statements in accordance with
accounting  principles  generally accepted in the United States.  Application of
these  principles  often  requires  a high  degree of  judgment,  estimates  and
assumptions that affect CEI's financial results. All of CEI's assets are subject
to their own specific risks and uncertainties and are periodically  reviewed for
impairment.  Assets related to the  application of the policies  discussed below
are  similarly  reviewed  with their risks and  uncertainties  reflecting  these
specific  factors.  CEI's more  significant  accounting  policies are  described
below.

Regulatory Accounting

          CEI is  subject  to  regulation  that sets the  prices  (rates)  it is
permitted  to charge  customers  based on the  costs  that  regulatory  agencies
determine CEI is permitted to recover.  At times,  regulators  permit the future
recovery through rates of costs that would be currently charged to expense by an
unregulated  company.  This  rate-making  process  results in the  recording  of
regulatory assets based on anticipated  future cash inflows.  As a result of the
changing regulatory framework in Ohio, a significant amount of regulatory assets
have been recorded - $898.2 million as of March 31, 2002. CEI regularly  reviews
these  assets  to assess  their  ultimate  recoverability  within  the  approved
regulatory  guidelines.  Impairment risk associated with these assets relates to
potentially adverse  legislative,  judicial or regulatory actions in the future.
As disclosed in Note 1 - Regulatory  Plans,  CEI's full  recovery of  transition
costs is dependent on achieving 20% shopping levels in any  twelve-month  period
by 2005.

Revenue Recognition

          CEI follows the accrual method of accounting for revenues, recognizing
revenue  for  kilowatt-hour  sales that have been  delivered  but not yet billed
through the end of the accounting period. The determination of unbilled revenues
requires management to make various estimates including:

          o   Net energy generated or purchased for retail load
          o   Losses of energy over transmission and distribution lines
          o   Allocations to distribution companies within the FirstEnergy
              system
          o   Mix of kilowatt-hour usage by residential, commercial and
              industrial customers
          o   Kilowatt-hour usage of customers receiving electricity from
              alternative suppliers

Implementation of Recently Issued Accounting Standards
------------------------------------------------------

          Under SFAS 142,  goodwill must be tested for impairment at least on an
annual basis. CEI has periodically reviewed its goodwill for possible impairment
under the pre-existing  guidance in SFAS 121,  "Accounting for the Impairment of
Long-Lived  Assets  and  Long-Lived  Assets  to Be  Disposed  Of."  CEI does not
anticipate that the revised impairment analysis required by SFAS 142 will result
in any material  goodwill  impairment.  CEI expects to have its revised goodwill
impairment analysis completed later this year.

          In July  2001,  the  FASB  issued  SFAS  143,  "Accounting  for  Asset
Retirement  Obligations." The new statement  provides  accounting  standards for
retirement  obligations associated with tangible long-lived assets with adoption
required  as of  January  1, 2003.  SFAS 143  requires  that the fair value of a
liability for an asset retirement  obligation be recorded in the period in which
it is incurred. The associated asset retirement costs are capitalized as part of
the carrying amount of the long-lived asset. Over time the capitalized costs are
depreciated and the present value of the asset  retirement  liability  increases
resulting in a period expense. Upon retirement,  a gain or loss will be recorded
if the cost to  settle  the  retirement  obligation  differs  from the  carrying
amount.  CEI is currently  assessing its asset retirement  obligations under the
new standard and has not yet determined the impact on its financial statements.


                                       39
<PAGE>


<TABLE>
<CAPTION>


                                 THE TOLEDO EDISON COMPANY

                              CONSOLIDATED STATEMENTS OF INCOME
                                        (Unaudited)


                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                       -------------------------
                                                                                         2002             2001
                                                                                       --------         --------
                                                                                            (In thousands)

<S>                                                                                    <C>              <C>
OPERATING REVENUES..............................................................       $244,167         $271,635
                                                                                       --------         --------

OPERATING EXPENSES AND TAXES:
   Fuel.........................................................................         11,391           12,753
   Purchased power..............................................................         82,404           88,352
   Nuclear operating costs......................................................         75,098           47,648
   Other operating costs........................................................         34,879           38,626
                                                                                       --------         --------
       Total operation and maintenance expenses.................................        203,772          187,379
   Provision for depreciation and amortization..................................         21,368           32,775
   General taxes................................................................         13,748           16,061
   Income taxes (benefit).......................................................         (4,379)           7,086
                                                                                       --------         --------
       Total operating expenses and taxes.......................................        234,509          243,301
                                                                                       --------         --------


OPERATING INCOME................................................................          9,658           28,334


OTHER INCOME....................................................................          4,343            3,788
                                                                                       --------         --------


INCOME BEFORE NET INTEREST CHARGES..............................................         14,001           32,122
                                                                                       --------         --------


NET INTEREST CHARGES:
   Interest on long-term debt...................................................         15,872           17,244
   Allowance for borrowed funds used during construction........................           (428)            (349)
   Other interest expense (credit)..............................................           (735)            (978)
                                                                                       --------         --------
       Net interest charges.....................................................         14,709           15,917
                                                                                       --------         --------


NET INCOME (LOSS)...............................................................           (708)          16,205
                                                                                       --------         --------


PREFERRED STOCK DIVIDEND REQUIREMENTS...........................................          4,724            4,045
                                                                                       --------         --------


EARNINGS (LOSSES) ATTRIBUTABLE TO COMMON STOCK..................................       $ (5,432)        $ 12,160
                                                                                       ========         ========


<FN>


The preceding Notes to Financial Statements as they relate to The Toledo Edison
Company are an integral part of these statements.

</FN>
</TABLE>

                                           40

<PAGE>

<TABLE>
<CAPTION>



                                      THE TOLEDO EDISON COMPANY

                                     CONSOLIDATED BALANCE SHEETS



                                                                                 (Unaudited)
                                                                                   March 31,       December 31,
                                                                                      2002              2001
                                                                                  -----------      ------------
                                                                                         (In thousands)

                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:
   In service................................................................      $1,581,997       $1,578,943
   Less--Accumulated provision for depreciation..............................         659,671          645,865
                                                                                   ----------       ----------
                                                                                      922,326          933,078
                                                                                   ----------       ----------
   Construction work in progress-
     Electric plant..........................................................          53,674           40,220
     Nuclear fuel............................................................          26,497           19,854
                                                                                   ----------       ----------
                                                                                       80,171           60,074
                                                                                   ----------       ----------
                                                                                    1,002,497          993,152
                                                                                   ----------       ----------

OTHER PROPERTY AND INVESTMENTS:
   Shippingport Capital Trust................................................         262,188          262,131
   Nuclear plant decommissioning trusts......................................         162,303          156,084
   Long-term notes receivable from associated companies......................         162,301          162,347
   Other.....................................................................           3,921            4,248
                                                                                   ----------       ----------
                                                                                      590,713          584,810
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................           2,609              302
   Receivables-
     Customers...............................................................           5,313            5,922
     Associated companies....................................................          49,653           64,667
     Other...................................................................           5,310            9,709
   Notes receivable from associated companies................................          13,954            7,607
   Materials and supplies, at average cost-
     Owned...................................................................          15,055           13,996
     Under consignment.......................................................          16,642           17,050
   Prepayments and other.....................................................           4,593           14,580
                                                                                   ----------       ----------
                                                                                      113,129          133,833
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................         397,338          388,846
   Goodwill..................................................................         445,732          445,732
   Other.....................................................................          26,077           25,745
                                                                                   ----------       ----------
                                                                                      869,147          860,323
                                                                                   ----------       ----------
                                                                                   $2,575,486       $2,572,118
                                                                                   ==========       ==========

</TABLE>

                                               41

<PAGE>



<TABLE>
<CAPTION>

                                         THE TOLEDO EDISON COMPANY

                                        CONSOLIDATED BALANCE SHEETS



                                                                                 (Unaudited)
                                                                                   March 31,       December 31,
                                                                                      2002             2001
                                                                                  -----------      ------------
                                                                                         (In thousands)

           CAPITALIZATION AND LIABILITIES
           ------------------------------
<S>                                                                                <C>              <C>
CAPITALIZATION:
   Common stockholder's equity-
     Common stock, $5 par value, authorized 60,000,000 shares -
       39,133,887 shares outstanding.........................................      $  195,670       $  195,670
     Other paid-in capital...................................................         328,559          328,559
     Retained earnings.......................................................         102,404          113,436
                                                                                   ----------       ----------
         Total common stockholder's equity...................................         626,633          637,665
   Preferred stock not subject to mandatory redemption.......................         126,000          126,000
   Long-term debt............................................................         591,680          646,174
                                                                                   ----------       ----------
                                                                                    1,344,313        1,409,839
                                                                                   ----------       ----------



CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................         316,899          347,593
   Accounts payable-
     Associated companies....................................................          66,811           53,960
     Other...................................................................          17,428           27,418
   Notes payable to associated companies.....................................          86,206           17,208
   Accrued taxes.............................................................          34,138           39,848
   Accrued interest..........................................................          17,888           19,918
   Other.....................................................................          77,389           40,222
                                                                                   ----------       ----------
                                                                                      616,759          546,167
                                                                                   ----------       ----------



DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         219,439          213,145
   Accumulated deferred investment tax credits...............................          30,856           31,342
   Nuclear plant decommissioning costs.......................................         168,645          162,426
   Pensions and other postretirement benefits................................         121,299          120,561
   Other.....................................................................          74,175           88,638
                                                                                   ----------       ----------
                                                                                      614,414          616,112
                                                                                   ----------       ----------

COMMITMENTS AND CONTINGENCIES (Note 2).......................................
                                                                                   ----------       ----------
                                                                                   $2,575,486       $2,572,118
                                                                                   ==========       ==========

<FN>


The preceding Notes to Financial Statements as they relate to The Toledo Edison
Company are an integral part of these balance sheets.

</FN>
</TABLE>

                                         42

<PAGE>


<TABLE>
<CAPTION>

                                           THE TOLEDO EDISON COMPANY

                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (Unaudited)


                                                                                        Three Months Ended
                                                                                              March 31,
                                                                                    ---------------------------
                                                                                      2002               2001
                                                                                    ---------          --------
                                                                                          (In thousands)
<S>                                                                                   <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...............................................................      $  (708)        $  16,205
   Adjustments to reconcile net income (loss) to net
     cash from operating activities-
       Provision for depreciation and amortization..............................       21,368            32,775
       Nuclear fuel and lease amortization......................................        3,573             5,174
       Deferred income taxes, net...............................................        5,314             2,158
       Investment tax credits, net..............................................         (486)             (486)
       Receivables..............................................................       20,022            17,617
       Materials and supplies...................................................         (651)           11,423
       Accounts payable.........................................................        2,861             1,909
       Other....................................................................       14,472           (29,804)
                                                                                      -------         ---------
         Net cash provided from operating activities............................       65,765            56,971
                                                                                      -------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Short-term borrowings, net.................................................       68,998                --
   Redemptions and Repayments-
     Preferred stock............................................................       85,299                --
     Long-term debt.............................................................           94             5,863
     Short-term borrowings, net.................................................           --            41,936
   Dividend Payments-
     Common stock...............................................................        5,600            14,700
     Preferred stock............................................................        3,425             4,045
                                                                                      -------         ---------
         Net cash used for financing activities.................................       25,420            66,544
                                                                                      -------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions...........................................................       25,559            12,028
   Loans to associated companies................................................        6,301           117,890
   Loan payments from associated companies......................................           --            (3,548)
   Capital trust investments....................................................           57           (17,185)
   Sale of assets to associated companies.......................................           --          (117,890)
   Other........................................................................        6,121              (190)
                                                                                      -------         ---------
         Net cash used for (provided from) investing activities.................       38,038            (8,895)
                                                                                      -------         ---------

Net increase (decrease) in cash and cash equivalents............................        2,307              (678)
Cash and cash equivalents at beginning of period................................          302             1,385
                                                                                      -------         ---------
Cash and cash equivalents at end of period......................................      $ 2,609         $     707
                                                                                      =======         =========

<FN>


The preceding Notes to Financial Statements as they relate to The Toledo Edison
Company are an integral part of these statements.

</FN>
</TABLE>

                                            43
<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS











To the Board of Directors and
Shareholders of The Toledo
Edison Company:

We have  reviewed  the  accompanying  consolidated  balance  sheet of The Toledo
Edison  Company  and its  subsidiaries  as of March 31,  2002,  and the  related
consolidated  statements  of income  and cash flows for the  three-month  period
ended March 31, 2002. These financial  statements are the  responsibility of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  the  accompanying   consolidated   interim  financial   statements
information for them to be in conformity with  accounting  principles  generally
accepted in the United States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002


                                       44

<PAGE>


                            THE TOLEDO EDISON COMPANY

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION


          TE is a wholly owned electric  utility  subsidiary of FirstEnergy.  TE
conducts   business  in  northwestern   Ohio,   providing   regulated   electric
distribution  services.  TE also provides power to those  customers  electing to
retain TE as their power  supplier.  TE  provides  power  directly to  wholesale
customers  under  previously  negotiated  contracts,  as well as to  alternative
energy  suppliers under its regulatory  plan. TE's regulatory plan itemizes,  or
unbundles  the price of  electricity  into its  component  elements -  including
generation, transmission, distribution and transition charges. In addition, TE's
transition plan includes shopping credit incentives.  Power supply  requirements
of TE are provided by FES - an affiliated company.

Results of Operations
---------------------

          Operating  revenues  decreased  $27.5  million in the first quarter of
2002, as compared to the first quarter of 2001, principally due to mild weather,
a decline in economic  conditions and shopping by Ohio customers for alternative
energy suppliers.  Kilowatt-hour sales to retail customers decreased by 19.0% in
the  first  quarter  of 2002  from the same  period  last  year  resulting  in a
corresponding  reduction in first quarter  operating  revenues  from  generation
services of $12.3 million.  TE's lower generation  kilowatt-hour  sales resulted
primarily  from  customer  choice  in Ohio.  Sales  of  electric  generation  by
alternative  suppliers in TE's franchise area increased to 14.4% of total energy
delivered  in the first  quarter of 2002,  compared to 0.9% in the same  quarter
last year.  As of March 31,  2002,  nearly 39% of TE's  customers  had  selected
alternative  suppliers.  While the first quarter of 2002 showed some evidence of
economic  turnaround,  generation  kilowatt-hour sales continued to be adversely
affected by economic  conditions in the regional industrial base. Weather in the
first quarter of 2002 was milder than the  corresponding  quarter of 2001, which
also contributed to the reduced kilowatt-hour sales to retail customers.

          Reduced  distribution  deliveries  contributed  $15.8  million  to the
reduction in operating  revenues in the first  quarter of 2002,  compared to the
same quarter of 2001.  Kilowatt-hour deliveries to franchise customers were 6.2%
lower  due in part to the  decline  in  economic  conditions,  which was a major
factor  resulting in an 8.1% decrease in deliveries to commercial and industrial
customers.  Mild weather also  contributed to a slight  decline in  distribution
deliveries to the residential sector.

          The remaining  decrease in retail  electric  sales  revenues  resulted
primarily from  transition  plan  incentives to customers  choosing  alternative
suppliers. This reduction to revenues is deferred for future recovery under TE's
transition plan and does not materially affect current period earnings. Revenues
from kilowatt-hour  sales to wholesale customers increased slightly in the first
quarter of 2002,  primarily  reflecting higher  kilowatt-hour  sales to CEI from
Beaver Valley Unit 2.

          The sources of changes in operating  revenues during the first quarter
of 2002 are summarized in the following table:

    Sources of Operating Revenue Changes
    ------------------------------------
    Increase (Decrease)
                                                           (In millions)
    Retail:
      Generation sales...................................     $(12.3)
      Distribution deliveries............................      (15.8)
      Shopping incentives................................       (4.1)
                                                              ------

      Total Retail.......................................      (32.2)
    Wholesale............................................        5.5
    Other................................................       (0.8)
                                                              ------

    Net Operating Revenue Decrease.......................     $(27.5)
                                                              ======


Operating Expenses and Taxes

          Total operating expenses and taxes decreased $8.8 million in the first
quarter  of 2002,  compared  to the same  period  of  2001.  Nuclear  generation
decreased by 22% in the first quarter of 2002,  compared to the same period last
year,  which  reduced fuel expense by $1.4 million.  Purchased  power costs were
$5.9 million  lower in the first  quarter of 2002

                                       45
<PAGE>


than the first quarter of last year reflecting reduced power requirements due to
lower  kilowatt-hour  sales.  Higher nuclear  operating  costs resulted from two
refueling outages (Beaver Valley Unit 2 and Davis-Besse) in the first quarter of
2002,  compared with only one refueling  outage  (Perry) in the first quarter of
2001.  Other  operating  costs  decreased  $3.7 million  principally  due to the
elimination  of  low-income  payment  plan costs (now  administered  by the Ohio
Department of  Development)  and reduced  distribution  maintenance and customer
program expenditures.

          Charges for depreciation  and amortization  decreased by $11.4 million
in the first  quarter of 2002,  compared  to the same  period  last  year.  This
decrease resulted from shopping  incentive  deferrals and tax-related  deferrals
under TE's transition plan, the elimination of depreciation  associated with the
pending sale of the Bay Shore generating plant as part of a transaction with NRG
Energy,  and the cessation of goodwill  amortization  beginning January 1, 2002,
upon  implementation of SFAS 142,  "Goodwill and Other Intangible  Assets." TE's
goodwill amortization in the first quarter of 2001 totaled $3.1 million.

          General taxes  decreased by $2.3 million in the first quarter of 2002,
compared  to the same  period of 2001,  primarily  due to state tax  changes  in
connection with the Ohio electric industry restructuring.

Net Interest Charges

          Net interest  charges  continued to trend  lower,  decreasing  by $1.2
million in the first  quarter of 2002,  compared  to the same  period last year,
primarily due to debt redemption activities.

Capital Resources and Liquidity
-------------------------------

          TE has  continuing  cash needs for planned  capital  expenditures  and
maturing debt. During the last three quarters of 2002, capital  requirements for
property  additions  and capital  leases are  expected to be about $10  million,
including $1 million for nuclear fuel.  These capital  requirements  exclude any
incremental  repair  costs from  unplanned  extended  outage at the  Davis-Besse
nuclear plant  described  below.  TE also has maturing  long-term debt of $164.4
million during the remainder of 2002. These cash requirements are expected to be
satisfied with internal cash and/or short-term credit arrangements.

          As of March 31, 2002, TE had  approximately  $16.6 million of cash and
temporary investments and $86.2 million of short-term indebtedness to associated
companies.  Under its first mortgage  indenture and excluding property additions
associated with the pending sale of the Bay Shore generating  plant, as of March
31, 2002, TE had the  capability to issue a nominal  amount of additional  first
mortgage bonds on the basis of property  additions and retired bonds.  Under the
earnings coverage test contained in the TE charter,  no preferred stock could be
issued based on earnings through the first quarter of 2002.

          The Davis-Besse nuclear plant began a refueling outage on February 16,
2002,  which was  anticipated  to last 34 days.  On March 13, 2002,  FirstEnergy
announced  that the  refueling and  maintenance  outage would be extended due to
corrosion  found in the reactor vessel head near a nozzle  penetration  hole. On
April 19, 2002, FirstEnergy submitted a comprehensive Root Cause Analysis Report
to the  Nuclear  Regulatory  Commission.  FirstEnergy  anticipates  placing  the
Davis-Besse  nuclear  plant back in service  during the second half of 2002.  TE
owns a 48.62% share of the Davis-Besse  plant and is responsible for its portion
of the incremental  maintenance and capital  expenditures to return the plant to
service.  All output from the plant is sold to FES under a power sales agreement
and an extended outage will reduce TE's  kilowatt-hour  sales to FES. The timing
of the return to service for Davis-Besse is subject to a number of uncertainties
that could affect the ultimate cost of this extended outage.

Ohio Regulatory Matters
-----------------------

          The  transition  cost  portion of TE's rates  provides for recovery of
certain  amounts not otherwise  recoverable in a competitive  generation  market
(such as regulatory assets).  Transition costs are paid by all customers whether
or not they choose an alternative supplier.  Under the PUCO-approved  transition
plan,  TE assumed the risk of not  recovering  up to $80  million of  transition
costs if the rate of customers (excluding  contracts and full-service  accounts)
switching  their  service  from  TE does  not  reach  20%  for  any  consecutive
twelve-month  period by December  31,  2005 - the end of the market  development
period. As of March 31, 2002, the annualized customer-switching rate essentially
reduced  TE's risk of not  recovering  transition  revenue to  approximately  $8
million,  since over 118,000 of its customers requested generation services from
other authorized suppliers.


                                       46
<PAGE>


Significant Accounting Policies
-------------------------------

          TE prepares its consolidated  financial  statements in accordance with
accounting  principles  generally accepted in the United States.  Application of
these  principles  often  requires  a high  degree of  judgment,  estimates  and
assumptions that affect TE's financial  results.  All of TE's assets are subject
to their own specific risks and uncertainties  and are continually  reviewed for
impairment.  Assets related to the  application of the policies  discussed below
are  similarly  reviewed  with their risks and  uncertainties  reflecting  these
specific factors. TE's more significant accounting policies are described below.

Regulatory Accounting

          TE is  subject  to  regulation  that  sets the  prices  (rates)  it is
permitted  to charge  customers  based on the  costs  that  regulatory  agencies
determine  TE is permitted to recover.  At times,  regulators  permit the future
recovery through rates of costs that would be currently charged to expense by an
unregulated  company.  This  rate-making  process  results in the  recording  of
regulatory assets based on anticipated  future cash inflows.  As a result of the
changing regulatory framework in Ohio, a significant amount of regulatory assets
have been recorded - $397.3 million as of March 31, 2002. TE continually reviews
these  assets  to assess  their  ultimate  recoverability  within  the  approved
regulatory  guidelines.  Impairment risk associated with these assets relates to
potentially adverse  legislative,  judicial or regulatory actions in the future.
As disclosed  in Note 1 - Regulatory  Plans,  TE's full  recovery of  transition
costs is dependent on achieving 20% shopping levels in any  twelve-month  period
by 2005.

Revenue Recognition

          TE follows the accrual method of accounting for revenues,  recognizing
revenue  for  kilowatt-hour  sales that have been  delivered  but not yet billed
through the end of the accounting period. The determination of unbilled revenues
requires management to make various estimates including:

          o   Net energy generated or purchased for retail load
          o   Losses of energy over transmission and distribution lines
          o   Allocations to distribution companies within the FirstEnergy
              system
          o   Mix of kilowatt-hour usage by residential, commercial and
              industrial customers
          o   Kilowatt-hour usage of customers receiving electricity from
              alternative suppliers

Implementation of Recently Issued Accounting Standards
------------------------------------------------------

          Under SFAS 142,  goodwill must be tested for impairment at least on an
annual basis. TE has periodically  reviewed its goodwill for possible impairment
under the pre-existing  guidance in SFAS 121,  "Accounting for the Impairment of
Long-Lived  Assets  and  Long-Lived  Assets  to Be  Disposed  Of." TE  does  not
anticipate that the revised impairment analysis required by SFAS 142 will result
in any material  goodwill  impairment.  TE expects to have its revised  goodwill
impairment analysis completed later this year.

          In July  2001,  the  FASB  issued  SFAS  143,  "Accounting  for  Asset
Retirement  Obligations." The new statement  provides  accounting  standards for
retirement  obligations associated with tangible long-lived assets with adoption
required  as of  January  1, 2003.  SFAS 143  requires  that the fair value of a
liability for an asset retirement  obligation be recorded in the period in which
it is incurred. The associated asset retirement costs are capitalized as part of
the carrying amount of the long-lived asset. Over time the capitalized costs are
depreciated and the present value of the asset  retirement  liability  increases
resulting in a period expense. Upon retirement,  a gain or loss will be recorded
if the cost to  settle  the  retirement  obligation  differs  from the  carrying
amount. TE is currently assessing its asset retirement obligations under the new
standard and has not yet determined the impact on its financial statements.


                                       47
<PAGE>

<TABLE>
<CAPTION>


                                   PENNSYLVANIA POWER COMPANY

                                      STATEMENTS OF INCOME
                                           (Unaudited)


                                                                                           Three Months Ended
                                                                                                March 31,
                                                                                       -------------------------
                                                                                         2002             2001
                                                                                       ---------        --------
                                                                                             (In thousands)

<S>                                                                                    <C>              <C>
OPERATING REVENUES..............................................................       $124,335         $128,397
                                                                                       --------         --------


OPERATING EXPENSES AND TAXES:
   Fuel.........................................................................          6,333            6,641
   Purchased power..............................................................         39,963           45,768
   Nuclear operating costs......................................................         22,332           20,265
   Other operating costs........................................................          9,952           10,296
                                                                                       --------         --------
       Total operation and maintenance expenses.................................         78,580           82,970
   Provision for depreciation and amortization..................................         14,204           14,263
   General taxes................................................................          6,004            4,480
   Income taxes.................................................................         10,416           10,675
                                                                                       --------         --------
       Total operating expenses and taxes.......................................        109,204          112,388
                                                                                       --------         --------


OPERATING INCOME................................................................         15,131           16,009


OTHER INCOME....................................................................            665              875
                                                                                       --------         --------


INCOME BEFORE NET INTEREST CHARGES..............................................         15,796           16,884
                                                                                       --------         --------


NET INTEREST CHARGES:
   Interest expense.............................................................          4,098            4,728
   Allowance for borrowed funds used during construction........................           (252)            (232)
                                                                                       --------         --------
       Net interest charges.....................................................          3,846            4,496
                                                                                       --------         --------


NET INCOME......................................................................         11,950           12,388


PREFERRED STOCK DIVIDEND REQUIREMENTS...........................................            926              926
                                                                                       --------         --------


EARNINGS ON COMMON STOCK........................................................       $ 11,024         $ 11,462
                                                                                       ========         ========


<FN>


The preceding Notes to Financial Statements as they relate to Pennsylvania Power
Company are an integral part of these statements.


</FN>
</TABLE>


                                            48

<PAGE>

<TABLE>
<CAPTION>

                                    PENNSYLVANIA POWER COMPANY

                                          BALANCE SHEETS



                                                                                   (Unaudited)
                                                                                    March 31,       December 31,
                                                                                      2002             2001
                                                                                   -----------      ------------
                                                                                        (In thousands)

                              ASSETS
                              ------
<S>                                                                                 <C>               <C>
UTILITY PLANT:
   In service................................................................       $670,422          $664,432
   Less--Accumulated provision for depreciation..............................        293,101           290,216
                                                                                    --------          --------
                                                                                     377,321           374,216
                                                                                    --------          --------

   Construction work in progress-
     Electric plant..........................................................         25,289            24,141
     Nuclear fuel............................................................            468             2,921
                                                                                    --------          --------
                                                                                      25,757            27,062
                                                                                    --------          --------
                                                                                     403,078           401,278
                                                                                    --------          --------



OTHER PROPERTY AND INVESTMENTS:
   Nuclear plant decommissioning trusts......................................        116,035           116,634
   Long-term notes receivable from associated companies......................         39,200            39,290
   Other.....................................................................         22,003            21,597
                                                                                    --------          --------
                                                                                     177,238           177,521
                                                                                    --------          --------


CURRENT ASSETS:
   Cash and cash equivalents.................................................          1,001                67
   Receivables-
     Customers (less accumulated provisions of $631,000 and $619,000,
       respectively, for uncollectible accounts).............................         43,038            40,890
     Associated companies....................................................         35,498            36,491
     Other...................................................................          4,314             4,787
   Notes receivable from associated companies................................          1,439            54,411
   Materials and supplies, at average cost...................................         26,170            25,598
   Prepayments...............................................................         19,152             5,682
                                                                                    --------          --------
                                                                                     130,612           167,926
                                                                                    --------          --------



DEFERRED CHARGES:
   Regulatory assets.........................................................        195,664           208,838
   Other.....................................................................          4,523             4,534
                                                                                    --------          --------
                                                                                     200,187           213,372
                                                                                    --------          --------
                                                                                    $911,115          $960,097
                                                                                    ========          ========

</TABLE>


                                              49

<PAGE>

<TABLE>
<CAPTION>


                                     PENNSYLVANIA POWER COMPANY

                                           BALANCE SHEETS



                                                                                  (Unaudited)
                                                                                    March 31,       December 31,
                                                                                      2002              2001
                                                                                  -----------      ------------
                                                                                          (In thousands)
           CAPITALIZATION AND LIABILITIES
           ------------------------------
<S>                                                                               <C>                 <C>
CAPITALIZATION:
   Common stockholder's equity-
     Common stock, $30 par value, authorized 6,500,000 shares -
       6,290,000 shares outstanding..........................................     $188,700            $188,700
     Other paid-in capital...................................................         (310)               (310)
     Retained earnings.......................................................       38,623              35,398
                                                                                  --------            --------
         Total common stockholder's equity...................................      227,013             223,788
   Preferred stock-
     Not subject to mandatory redemption.....................................       39,105              39,105
     Subject to mandatory redemption.........................................       14,250              14,250
   Long-term debt-
     Associated companies....................................................           --              21,064
     Other...................................................................      240,975             240,983
                                                                                  --------            --------
                                                                                   521,343             539,190
                                                                                  --------            --------
CURRENT LIABILITIES:
   Currently payable long-term debt-
     Associated companies....................................................           --              18,090
     Other...................................................................       12,076              12,075
   Accounts payable-
     Associated companies....................................................       35,312              50,604
     Other...................................................................          974               1,441
   Accrued taxes.............................................................       29,503              18,853
   Accrued interest..........................................................        3,626               5,264
   Other.....................................................................        8,727               9,675
                                                                                  --------            --------
                                                                                    90,218             116,002
                                                                                  --------            --------

DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................      131,797             136,808
   Accumulated deferred investment tax credits...............................        4,033               4,108
   Nuclear plant decommissioning costs.......................................      116,497             117,096
   Other.....................................................................       47,227              46,893
                                                                                  --------            --------
                                                                                   299,554             304,905
                                                                                  --------            --------

COMMITMENTS AND CONTINGENCIES (Note 2).......................................
                                                                                  --------            --------
                                                                                  $911,115            $960,097
                                                                                  ========            ========

<FN>



The preceding Notes to Financial Statements as they relate to Pennsylvania Power
Company are an integral part of these balance sheets.


</FN>
</TABLE>

                                            50

<PAGE>

<TABLE>
<CAPTION>

                                      PENNSYLVANIA POWER COMPANY

                                       STATEMENTS OF CASH FLOWS
                                              (Unaudited)


                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                    ---------------------------
                                                                                      2002               2001
                                                                                    ---------          --------
                                                                                           (In thousands)
<S>                                                                                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................................    $ 11,950           $ 12,388
Adjustments to reconcile net income to net
   cash from operating activities-
     Provision for depreciation and amortization................................      14,204             14,263
     Nuclear fuel and lease amortization........................................       4,716              4,882
     Deferred income taxes, net.................................................      (1,925)            (2,481)
     Investment tax credits, net................................................        (665)              (711)
     Receivables................................................................        (682)             9,065
     Materials and supplies.....................................................        (572)             7,964
     Accounts payable...........................................................     (15,759)           (33,354)
     Other......................................................................      (4,732)            (8,870)
                                                                                    --------           --------
         Net cash provided from operating activities............................       6,535              3,146
                                                                                    --------           --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Redemptions and Repayments-
     Long-term debt.............................................................      40,667              4,918
   Dividend Payments-
     Common stock...............................................................       7,800              6,300
     Preferred stock............................................................         926                926
                                                                                    --------           --------
         Net cash used for financing activities.................................      49,393             12,144
                                                                                    --------           --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions...........................................................       8,083              5,358
   Loan payment from parent.....................................................     (53,063)           (13,640)
   Other........................................................................       1,188                315
                                                                                    --------           --------
         Net cash provided from investing activities............................      43,792              7,967
                                                                                    --------           --------


Net increase (decrease) in cash and cash equivalents............................         934             (1,031)
Cash and cash equivalents at beginning of period................................          67              3,475
                                                                                    --------           --------
Cash and cash equivalents at end of period......................................    $  1,001           $  2,444
                                                                                    ========           ========

<FN>



The preceding Notes to Financial Statements as they relate to Pennsylvania Power
Company are an integral part of these statements.

</FN>
</TABLE>

                                            51
<PAGE>





                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS










To the Board of Directors and
Shareholders of Pennsylvania
Power Company:

We have reviewed the  accompanying  consolidated  balance sheet of  Pennsylvania
Power  Company  and its  subsidiaries  as of March  31,  2002,  and the  related
consolidated  statements  of income  and cash flows for the  three-month  period
ended March 31, 2002. These financial  statements are the  responsibility of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  the  accompanying   consolidated   interim  financial   statements
information for them to be in conformity with  accounting  principles  generally
accepted in the United States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002

                                       52

<PAGE>


                           PENNSYLVANIA POWER COMPANY

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



          Penn is a  wholly  owned,  electric  utility  subsidiary  of OE.  Penn
conducts  business  in  portions of western  Pennsylvania,  providing  regulated
electric  distribution  services.  Penn also provides  power to those  customers
electing to retain Penn as their power supplier. Penn continues to provide power
directly to wholesale customers under previously  negotiated  contracts.  Penn's
regulatory  plan  itemizes,  or  unbundles  the  price of  electricity  into its
component  elements  -  including  generation,  transmission,  distribution  and
transition  charges.  Penn's power supply  requirements are provided by FES - an
affiliated company.

Results of Operations
---------------------

          Operating revenues decreased $4.1 million in the first quarter of 2002
as  compared  to the first  quarter of 2001,  primarily  due to lower  wholesale
revenues from power sales to FES, which declined $7.5 million.

          Reduced  distribution  deliveries  contributed  $1.1  million  to  the
reduction in operating  revenues in the first  quarter of 2002,  compared to the
same quarter of 2001.  Kilowatt-hour deliveries to franchise customers were 5.6%
lower in the first quarter of 2002 than the corresponding  quarter last year due
in part to a decline in economic  conditions  which was a major factor resulting
in an 8.0% decrease in deliveries to commercial and industrial  customers.  Mild
weather also  contributed  to a 1.4%  reduction in  distribution  deliveries  to
residential customers.

          Revenues from sales of generation to retail  customers  increased $3.5
million due to a 3.8%  increase in  kilowatt-hour  sold in the first  quarter of
2002,  compared to the same quarter last year.  Customers returning to Penn from
alternative generation suppliers more than offset the effects of the economy and
weather.  Electric generation by alternative  suppliers in Penn's franchise area
declined to 0.7% of total  energy  delivered  in the first  quarter of 2002 from
9.6% in the same quarter last year.

          The sources of changes in operating  revenues during the first quarter
of 2002 are summarized in the following table:

      Sources of Operating Revenue Changes
      ------------------------------------
      Increase (Decrease)
                                                             (In millions)
      Retail:
        Generation sales...................................     $  3.5
        Distribution deliveries............................       (1.1)
                                                                ------

        Total Retail.......................................        2.4
      Wholesale............................................       (8.1)
      Other................................................        1.6
                                                                ------

      Net Operating Revenue Decrease.......................     $ (4.1)
                                                                ======

Operating Expenses and Taxes

          Total operating expenses and taxes decreased $3.2 million in the first
quarter of 2002,  compared  to the same  period of 2001.  Purchased  power costs
decreased  $5.8  million in the first  quarter of 2002 from the same period last
year,  reflecting  lower  unit  costs  that were  offset  in part by  additional
quantities  purchased  to  supply  additional  generation  kilowatt-hour  sales.
Nuclear  operating  costs  increased  $2.1 million in the first quarter of 2002,
primarily from a larger  ownership share of capacity in the refueling outage for
Beaver Valley Unit 2 (13.74% owned) compared to the Perry Plant (5.24% owned) in
the first quarter of 2001.

          General taxes  increased by $1.5 million in the first quarter of 2002,
compared  to the first  quarter of 2001,  principally  due to an increase in the
gross receipts tax rate for 2002.

Net Interest Charges

          Net interest charges decreased  $650,000 or 14.4% in the first quarter
of 2002,  compared  to the same period  last year,  primarily  due to prior debt
redemption and refinancing activities.

                                       53

<PAGE>

Capital Resources and Liquidity
-------------------------------

          Penn has continuing cash requirements for planned capital expenditures
and maturing debt. During the last three quarters of 2002, capital  requirements
for property  additions and capital  leases are expected to be about $5 million,
including $4 million for nuclear fuel.  Penn also has sinking fund  requirements
for  preferred  stock and maturing  long-term  debt of $1.7  million  during the
remainder of 2002.  These cash  requirements  are expected to be satisfied  from
internal cash and/or short-term credit arrangements.

          As of  March  31,  2002,  Penn  had  about  $2.4  million  of cash and
temporary  investments  and no  short-term  indebtedness.  Also,  Penn  had $2.0
million  available from an unused bank facility as of March 31, 2002,  which may
be borrowed  for up to several  days at the bank's  discretion.  Under its first
mortgage indenture, as of March 31, 2002, Penn had the capability to issue up to
$298  million  of  additional  first  mortgage  bonds on the  basis of  property
additions  and retired  bonds.  Under the earnings  coverage  test  contained in
Penn's charter, $189 million of preferred stock (assuming no additional debt was
issued) could be issued based on earnings through the first quarter of 2002.

Significant Accounting Policies
-------------------------------

          Penn prepares its consolidated financial statements in accordance with
accounting  principles  generally accepted in the United States.  Application of
these  principles  often  requires  a high  degree of  judgment,  estimates  and
assumptions  that affect  Penn's  financial  results.  All of Penn's  assets are
subject  to their own  specific  risks  and  uncertainties  and are  continually
reviewed  for  impairment.  Assets  related to the  application  of the policies
discussed  below are  similarly  reviewed  with  their  risks and  uncertainties
reflecting these specific factors.  Penn's more significant  accounting policies
are described below.

Regulatory Accounting

          Penn is  subject  to  regulation  that sets the  prices  (rates) it is
permitted  to charge  customers  based on the  costs  that  regulatory  agencies
determine Penn is permitted to recover.  At times,  regulators permit the future
recovery through rates of costs that would be currently charged to expense by an
unregulated  company.  This  rate-making  process  results in the  recording  of
regulatory assets based on anticipated  future cash inflows.  As a result of the
changing  regulatory   framework  in  Pennsylvania,   a  significant  amount  of
regulatory assets have been recorded - $195.7 million as of March 31, 2002. Penn
continually reviews these assets to assess their ultimate  recoverability within
the approved regulatory guidelines. Impairment risk associated with these assets
relates to potentially  adverse  legislative,  judicial or regulatory actions in
the future.

Revenue Recognition

          Penn  follows  the  accrual   method  of   accounting   for  revenues,
recognizing  revenue for  kilowatt-hours  that have been  delivered  but not yet
billed through the end of the accounting  period.  The determination of unbilled
revenues requires management to make various estimates including:

          o   Net energy generated or purchased for retail load
          o   Losses of energy over transmission and distribution lines
          o   Allocations to distribution companies within the FirstEnergy
              system
          o   Mix of kilowatt-hour usage by residential, commercial and
              industrial customers
          o   Kilowatt-hour usage of customers receiving electricity from
              alternative suppliers

Implementation of Recently Issued Accounting Standards
------------------------------------------------------

          In July  2001,  the  FASB  issued  SFAS  143,  "Accounting  for  Asset
Retirement  Obligations." The new statement  provides  accounting  standards for
retirement  obligations associated with tangible long-lived assets with adoption
required  as of  January  1, 2003.  SFAS 143  requires  that the fair value of a
liability for an asset retirement  obligation be recorded in the period in which
it is incurred. The associated asset retirement costs are capitalized as part of
the carrying amount of the long-lived asset. Over time the capitalized costs are
depreciated and the present value of the asset  retirement  liability  increases
resulting in a period expense. Upon retirement,  a gain or loss will be recorded
if the cost to  settle  the  retirement  obligation  differs  from the  carrying
amount. Penn is currently  assessing its asset retirement  obligations under the
new standard and has not yet determined the impact on its financial statements.


                                       54
<PAGE>


<TABLE>
<CAPTION>


                                JERSEY CENTRAL POWER & LIGHT COMPANY

                                  CONSOLIDATED STATEMENTS OF INCOME
                                             (Unaudited)


                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                       -------------------------
                                                                                         2002             2001
                                                                                       ---------        --------
                                                                                            (In thousands)
<S>                                                                                    <C>               <C>
OPERATING REVENUES..............................................................       $450,713    |     $461,682
                                                                                       --------    |     --------
                                                                                                   |
OPERATING EXPENSES AND TAXES:                                                                      |
   Fuel.........................................................................          1,176    |        1,338
   Purchased power..............................................................        210,985    |      215,666
   Other operating costs........................................................         68,517    |       63,644
                                                                                       --------    |     --------
       Total operation and maintenance expenses.................................        280,678    |      280,648
   Provision for depreciation and amortization..................................         63,903    |       61,749
   General taxes................................................................         17,003    |       15,573
   Income taxes.................................................................         27,861    |       30,228
                                                                                       --------    |     --------
       Total operating expenses and taxes.......................................        389,445    |      388,198
                                                                                       --------    |     --------
                                                                                                   |
OPERATING INCOME................................................................         61,268    |       73,484
                                                                                                   |
OTHER INCOME....................................................................          2,826    |        1,158
                                                                                       --------    |     --------
                                                                                                   |
INCOME BEFORE NET INTEREST CHARGES..............................................         64,094    |       74,642
                                                                                       --------    |     --------
                                                                                                   |
NET INTEREST CHARGES:                                                                              |
   Interest on long-term debt...................................................         22,717    |       21,209
   Allowance for borrowed funds used during construction........................           (482)   |         (434)
   Deferred interest............................................................            449    |       (3,076)
   Other interest expense (credit)..............................................         (1,244)   |        2,886
   Subsidiaries' preferred stock dividend requirements..........................          2,675    |        2,675
                                                                                       --------    |     --------
       Net interest charges.....................................................         24,115    |       23,260
                                                                                       --------    |     --------
                                                                                                   |
NET INCOME......................................................................         39,979    |       51,382
                                                                                                   |
PREFERRED STOCK DIVIDEND REQUIREMENTS...........................................            753    |        1,391
                                                                                       --------    |     --------
                                                                                                   |
EARNINGS ON COMMON STOCK........................................................       $ 39,226    |     $ 49,991
                                                                                       ========    |     ========

<FN>


The preceding Notes to Financial Statements as they relate to Jersey Central Power &
Light Company are an integral part of these statements.

</FN>
</TABLE>


                                           55

<PAGE>



<TABLE>
<CAPTION>

                                  JERSEY CENTRAL POWER & LIGHT COMPANY

                                       CONSOLIDATED BALANCE SHEETS



                                                                                  (Unaudited)
                                                                                    March 31,      December 31,
                                                                                      2002            2001
                                                                                  ------------     ------------
                                                                                          (In thousands)

                              ASSETS
                              ------
<S>                                                                               <C>              <C>
UTILITY PLANT:
   In service................................................................     $ 3,453,937      $ 3,431,823
   Less--Accumulated provision for depreciation..............................       1,341,659        1,313,259
                                                                                  -----------      -----------
                                                                                    2,112,278        2,118,564
   Construction work in progress - electric plant............................          62,493           60,482
                                                                                  -----------      -----------
                                                                                    2,174,771        2,179,046
                                                                                  -----------      -----------

OTHER PROPERTY AND INVESTMENTS:
   Nuclear plant decommissioning trusts......................................         114,104          114,899
   Nuclear fuel disposal trust...............................................         140,988          137,098
   Long-term notes receivable from associated companies......................          20,333           20,333
   Other.....................................................................          17,360            6,643
                                                                                  -----------      -----------
                                                                                      292,785          278,973
                                                                                  -----------      -----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................          67,617           31,424
   Receivables-
     Customers (less accumulated provisions of $10,642,000 and $12,923,000
      respectively, for uncollectible accounts)..............................         186,430          226,392
     Associated companies....................................................             475            6,412
     Other ..................................................................          22,506           20,729
   Materials and supplies, at average cost-..................................           1,342            1,348
   Prepayments and other.....................................................          10,313           16,569
                                                                                  -----------      -----------
                                                                                      288,683          302,874
                                                                                  -----------      -----------

DEFERRED CHARGES:
   Regulatory assets.........................................................       3,291,456        3,324,804
   Goodwill..................................................................       1,926,526        1,926,526
   Other.....................................................................          30,333           27,775
                                                                                  -----------      -----------
                                                                                    5,248,315        5,279,105
                                                                                  -----------      -----------
                                                                                  $ 8,004,554      $ 8,039,998
                                                                                  ===========      ===========

<FN>


The preceding Notes to Financial Statements as they relate to Jersey Central Power &
Light Company are an integral part of these balance sheets.

</FN>

</TABLE>

                                            56

<PAGE>



<TABLE>
<CAPTION>

                                 JERSEY CENTRAL POWER & LIGHT COMPANY

                                      CONSOLIDATED BALANCE SHEETS



                                                                                  (Unaudited)
                                                                                    March 31,       December 31,
                                                                                     2002              2001
                                                                                  -----------      ------------
                                                                                          (In thousands)

             CAPITALIZATION AND LIABILITIES
             ------------------------------
<S>                                                                                <C>              <C>
CAPITALIZATION:
   Common stockholder's equity-
     Common stock, par value $10 per share, authorized 16,000,000
       shares - 15,371,270 shares outstanding................................      $  153,713       $  153,713
     Other paid-in capital...................................................       2,981,117        2,981,117
     Accumulated other comprehensive income (loss)...........................             467             (472)
     Retained earnings.......................................................          68,569           29,343
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       3,203,866        3,163,701
   Preferred stock-
     Not subject to mandatory redemption.....................................          12,649           12,649
     Subject to mandatory redemption.........................................          44,868           44,868
   Company-obligated mandatorily redeemable preferred securities.............         125,250          125,250
   Long-term debt............................................................       1,221,114        1,224,001
                                                                                   ----------       ----------
                                                                                    4,607,747        4,570,469
                                                                                   ----------       ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................          10,848           60,848
   Accounts payable-
     Associated companies....................................................         165,618          171,168
     Other...................................................................          90,323           89,739
   Notes payable to associated companies.....................................              --           18,149
   Accrued taxes.............................................................          70,353           35,783
   Accrued interest..........................................................          29,889           25,536
   Other.....................................................................         107,669           79,589
                                                                                   ----------       ----------
                                                                                      474,700          480,812
                                                                                   ----------       ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         516,494          514,216
   Accumulated deferred investment tax credits...............................          12,591           13,490
   Power purchase contract loss liability....................................       1,929,252        1,968,823
   Nuclear fuel disposal costs...............................................         164,087          163,377
   Nuclear plant decommissioning costs.......................................         137,424          137,424
   Other.....................................................................         162,259          191,387
                                                                                   ----------       ----------
                                                                                    2,922,107        2,988,717
                                                                                   ----------       ----------


COMMITMENTS AND CONTINGENCIES (Note 2).......................................
                                                                                   ----------       ----------
                                                                                   $8,004,554       $8,039,998
                                                                                   ==========       ==========


<FN>


The preceding Notes to Financial Statements as they relate to Jersey Central Power &
Light Company are an integral part of these balance sheets.

</FN>
</TABLE>

                                            57
<PAGE>


<TABLE>
<CAPTION>


                               JERSEY CENTRAL POWER & LIGHT COMPANY

                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (Unaudited)


                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                      2002               2001
                                                                                    ---------          --------
                                                                                           (In thousands)
<S>                                                                                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                                            |
Net income...................................................................       $ 39,979     |     $ 51,382
   Adjustments to reconcile net income to net                                                    |
     cash from operating activities-                                                             |
       Provision for depreciation and amortization...........................         63,903     |       61,749
       Other amortization....................................................            511     |        9,052
       Deferred costs, net...................................................        (65,608)    |      (50,737)
       Deferred income taxes, net............................................          8,678     |       16,411
       Investment tax credits, net...........................................           (899)    |         (899)
       Receivables...........................................................         44,122     |      (67,651)
       Materials and supplies................................................              6     |          (28)
       Accounts payable......................................................         (4,966)    |      (77,164)
       Other.................................................................         46,664     |      109,269
                                                                                    --------     |     --------
         Net cash provided from operating activities.........................        132,390     |       51,384
                                                                                    --------     |     --------
                                                                                                 |
CASH FLOWS FROM FINANCING ACTIVITIES:                                                            |
   New Financing-                                                                                |
     Short-term borrowings, net..............................................             --     |       63,100
   Redemptions and Repayments-                                                                   |
     Long-term debt..........................................................         50,000     |           --
     Short-term borrowings, net..............................................         18,149     |           --
   Dividend Payments-                                                                            |
     Common stock............................................................             --     |       75,000
     Preferred stock.........................................................            753     |        1,391
                                                                                    --------     |     --------
         Net cash used for financing activities..............................         68,902     |       13,291
                                                                                    --------     |     --------
                                                                                                 |
CASH FLOWS FROM INVESTING ACTIVITIES:                                                            |
   Property additions........................................................         25,902     |       33,113
   Capital trust investments.................................................            101     |          294
   Other.....................................................................          1,292     |        1,675
                                                                                    --------     |     --------
         Net cash used for investing activities..............................         27,295     |       35,082
                                                                                    --------     |     --------
                                                                                                 |
Net increase in cash and cash equivalents....................................         36,193     |        3,011
Cash and cash equivalents at beginning of period ............................         31,424     |        2,021
                                                                                    --------     |     --------
Cash and cash equivalents at end of period...................................       $ 67,617     |     $  5,032
                                                                                    ========     |     ========

<FN>


The preceding Notes to Financial Statements as they relate to Jersey Central Power &
Light Company are an integral part of these statements.

</FN>
</TABLE>

                                           58
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS











To the Board of Directors and
Shareholders of Jersey Central
Power & Light Company:

We have reviewed the accompanying  consolidated  balance sheet of Jersey Central
Power & Light Company and its subsidiaries as of March 31, 2002, and the related
consolidated  statements  of income and cash flows for the  three-month  periods
ended March 31, 2002 and 2001. These financial statements are the responsibility
of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  the  accompanying   consolidated   interim  financial   statements
information for them to be in conformity with  accounting  principles  generally
accepted in the United States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002


                                       59


<PAGE>


                      JERSEY CENTRAL POWER & LIGHT COMPANY

                           MANAGEMENT'S DISCUSSION AND
                        ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION



          JCP&L is a wholly owned electric  utility  subsidiary of  FirstEnergy.
JCP&L  conducts  business  in  northern,  western  and east  central New Jersey,
offering regulated electric distribution services.  JCP&L also provides power to
those  customers  electing  to  retain  them as their  power  supplier.  JCP&L's
regulatory  plan requires it to itemize,  or unbundle,  the price of electricity
into its component elements - including generation,  transmission,  distribution
and  transition  charges.  JCP&L was formerly a wholly owned  subsidiary of GPU,
Inc., which merged with FirstEnergy on November 7, 2001.

Results of Operations
---------------------

          Operating  revenues  decreased  by $11.0  million or 2.4% in the first
quarter  of 2002  compared  to the first  quarter  of 2001.  The  sources of the
changes in  operating  revenues,  as compared  to the same  period in 2001,  are
summarized in the following table.

   Sources of Operating Revenue Changes
   -----------------------------------------------------------------------
          Increase (Decrease)                                  (In millions)

   Change in kilowatt-hour sales due to level of retail
      customers shopping for generation service..........          $ 27.0
   Change in other retail kilowatt-hour sales............           (35.6)
   All other changes.....................................            (2.4)
   -----------------------------------------------------------------------

   Net Decrease in Operating Revenues....................          $(11.0)
   =======================================================================

Electric Sales

          In the  first  quarter  of  2002,  the  majority  of the  decrease  in
operating  revenues was due to the mild weather compared to the first quarter of
2001, and a 2% rate reduction that was effective  August 1, 2001. The effects of
these decreases more than offset an increase in generation  sales to residential
customers. Sales to industrial  customers  also  decreased due to a decline in
economic  conditions,  while sales to commercial  customers  increased slightly.
Continuing to have an effect on operating  revenues was a significant  reduction
in the number of customers who received  their power from  alternate  suppliers.
During the first quarter of 2001,  11.6% of  kilowatt-hour  deliveries were from
shopping customers;  whereas,  only 0.3% of kilowatt-hour  deliveries during the
first quarter of 2002 were from  shopping  customers.  Changes in  kilowatt-hour
deliveries  by customer  class during the first  quarter of 2002, as compared to
the same period of 2001, are summarized in the following table:

       Changes in Kilowatt-hour Deliveries
       ---------------------------------------------------------------------
              Increase (Decrease)

       Residential...............................               (4.1)%
       Commercial................................                0.1%
       Industrial................................               (6.8)%
       ----------------------------------------------------------------------

       Total Retail..............................               (2.5)%
       Wholesale.................................              (65.8)%
       ----------------------------------------------------------------------

       Total Deliveries..........................               (3.9)%
       ----------------------------------------------------------------------

Operating Expenses and Taxes

          Total operating expenses and taxes increased $1.2 million in the first
quarter of 2002, compared to the first quarter of 2001. Fuel and purchased power
costs (net of deferrals)  decreased  $4.8 million  during the three months ended
March 31, 2002, compared to the same three months of 2001, partly as a result of
the rate reduction  mentioned  above,  which  increased  energy cost  deferrals.
Higher other  operating  costs of $4.9 million were  partially  attributable  to
greater  employee-related costs. An increase of $2.2 million in depreciation and
amortization


                                       60
<PAGE>


expenses  was mostly due to higher  average  depreciable  plant  balances in the
first quarter of 2002 versus the first quarter of 2001.

Net Interest Charges

          Net  interest  charges  increased  by $0.9  million in the first three
months of 2002, compared to the same period in 2001. The increase was attributed
to the issuance of $150 million of senior notes in May 2001, partially offset by
the redemption of $50 million of notes in March 2002.

Capital Resources and Liquidity
-------------------------------

          JCP&L  has   continuing   cash   requirements   for  planned   capital
expenditures  and maturing  debt.  During the remaining  three quarters of 2002,
capital  requirements  for  property  additions  are  expected  to be about $120
million.  JCP&L also has sinking fund  requirements for preferred stock of $10.8
million  during the  remainder of 2002.  These  requirements  are expected to be
satisfied from internal cash and/or short-term credit  arrangements.  JCP&L also
plans to use proceeds from its upcoming sale of transition bonds (see New Jersey
Regulatory Matters) to redeem preferred stock and higher cost debt.

          As of March  31,  2002,  JCP&L  had about  $67.6  million  of cash and
temporary investments, and no short-term indebtedness. JCP&L may borrow from its
affiliates  on a short-term  basis.  JCP&L will not issue first  mortgage  bonds
(FMBs)  other  than as  collateral  for  senior  notes,  since its  senior  note
indentures  prohibit  (subject to certain  exceptions)  it from issuing any debt
which is  senior  to the  senior  notes.  As of March  31,  2002,  JCP&L had the
capability  to issue $307  million of  additional  senior  notes  based upon FMB
collateral. Based upon applicable earnings coverage tests and its charter, JCP&L
could issue $4.6 billion of preferred  stock  (assuming no  additional  debt was
issued) based on earnings through March 31, 2002.

Market Risk Information
-----------------------

          JCP&L uses various market sensitive instruments,  including derivative
contracts,  primarily  to manage the risk of price  fluctuations.  JCP&L's  Risk
Policy  Committee,  comprised of FirstEnergy  executive  officers,  exercises an
independent  risk oversight  function to ensure  compliance  with corporate risk
management policies and prudent risk management practices.

Commodity Price Risk

          JCP&L is exposed  to market  risk  primarily  due to  fluctuations  in
electricity and natural gas prices.  To manage the volatility  relating to these
exposures,  JCP&L uses a variety of derivative  instruments,  including  forward
contracts,  options and futures contracts.  The derivatives are used principally
for  hedging  purposes.  The  change in the fair value of  commodity  derivative
contracts  related  to energy  production  during  the first  quarter of 2002 is
summarized in the following table:

  Change in the Fair Value of Commodity Derivative Contracts
  ----------------------------------------------------------------------
                                                          (In millions)

  Outstanding as of December 31, 2001.................      $ 1.5
  Contract value when entered.........................        1.6
  Increase in value of existing contracts.............       11.5
  ----------------------------------------------------------------------
  Outstanding as of March 31, 2002....................      $14.6
  ======================================================================


          The  valuation of derivative  contracts is based on observable  market
information  to the extent that such  information  is available.  In cases where
such information is not available, JCP&L relies on model-based information.  The
model  provides  estimates  of future  regional  prices for  electricity  and an
estimate of related price volatility. JCP&L utilizes these results in developing
estimates of fair value for the later years of applicable  electricity contracts
for both  financial  reporting  purposes  and for internal  management  decision
making. Sources of information for the valuation of derivative contracts by year
are summarized in the following table:

                                       61
<PAGE>


     Source of Information - Fair Value by Contract Year
     ---------------------------------------------------

                                   2002*    2003    2004    Thereafter   Total
--------------------------------------------------------------------------------
                                                   (In millions)

     Prices actively quoted...     $4.1     $0.9    $0.9       $ --     $ 5.9
     Prices based on models**.     --       --      --          8.7       8.7
     --------------------------------------------------------------------------

       Total..................     $4.1     $0.9    $0.9       $8.7     $14.6
===============================================================================

 *  For the remaining quarters of 2002.
 ** Relates to an embedded option that is offset by a regulatory liability and
    does not affect earnings.


          JCP&L  performs  sensitivity  analyses to estimate its exposure to the
market risk of its  commodity  position.  A  hypothetical  10% adverse  shift in
quoted market prices in the near term on derivative  instruments  would not have
had a material effect on JCP&L's  consolidated  financial position or cash flows
as of March 31, 2002.

New Jersey Regulatory Matters
-----------------------------

          In March 2001,  the NJBPU issued a Final Decision and Order in JCP&L's
restructuring  proceedings  under which JCP&L was directed to make a filing,  no
later than  August 1,  2002,  as to the  proposed  level of all  unbundled  rate
components  for the period  commencing  August 1, 2003. All parties will have an
opportunity  to  participate  in the  process  and to examine  JCP&L's  proposed
unbundled rates,  including distribution and market transition charge rates. The
NJBPU will review the unbundled  rate  components  to establish the  appropriate
level of rates after July 31, 2003.

          On February  6, 2002,  JCP&L  received a Financing  Order from the New
Jersey Board of Public  Utilities  with  authorization  to issue $320 million of
transition  bonds  to  securitize  the  recovery  of  bondable   stranded  costs
associated with the previously divested Oyster Creek nuclear generating station.
The  Order  grants  JCP&L  the  right to  charge a  usage-based,  non-bypassable
transition  bond charge  (TBC) and  provided  for the  transfer of the  bondable
transition  property  relating  to  the  TBC to  JCP&L  Transition  Funding  LLC
(Transition Funding), a wholly owned limited liability  corporation.  Subject to
the  receipt of  authorization  from the  Securities  and  Exchange  Commission,
Transition  Funding is  expected  to issue and sell $320  million of  transition
bonds  in  the  second  quarter  of  2002,  which  will  be  recognized  on  the
Consolidated  Balance  Sheet,  with the TBC  providing  recovery  of  principal,
interest and related fees on the transition bonds.

Environmental Matters
---------------------

          Various   environmental   liabilities  have  been  recognized  on  the
Consolidated Balance Sheet as of March 31, 2002, based on estimates of the total
costs of cleanup,  JCP&L's  proportionate  responsibility for such costs and the
financial ability of other  nonaffiliated  entities to pay. JCP&L has been named
as a  "potentially  responsible  party" (PRP) at waste  disposal sites which may
require cleanup under the Comprehensive Environmental Response, Compensation and
Liability  Act of 1980.  Allegations  of disposal  of  hazardous  substances  at
historical  sites  and the  liability  involved  are often  unsubstantiated  and
subject to dispute.  Federal law provides that all PRPs for a particular site be
held  liable  on a joint and  several  basis.  In  addition,  JCP&L has  accrued
liabilities for environmental  remediation of former  manufactured gas plants in
New Jersey;  those costs are being recovered  through a non-bypassable  societal
benefits charge. JCP&L has total accrued liabilities  aggregating  approximately
$50.3  million  as of March  31,  2002.  JCP&L  does not  believe  environmental
remediation  costs  will  have  a  material  adverse  effect  on  its  financial
condition, cash flows or results of operations.

Significant Accounting Policies
-------------------------------

          JCP&L  prepares its  consolidated  financial  statements in accordance
with accounting principles generally accepted in the United States.  Application
of these  principles  often  requires a high degree of judgment,  estimates  and
assumptions that affect its financial results. All of JCP&L's assets are subject
to their own specific risks and uncertainties and are periodically  reviewed for
impairment.  Assets related to the  application of the policies  discussed below
are  similarly  reviewed  with their risks and  uncertainties  reflecting  these
specific  factors.  JCP&L's more significant  accounting  policies are described
below.

Purchase Accounting - Acquisition of GPU

          On November 7, 2001,  the merger  between  FirstEnergy  and GPU became
effective, and JCP&L became a wholly owned subsidiary of FirstEnergy. The merger
was accounted for by the purchase method of accounting,  which requires judgment
regarding the  allocation of the purchase  price based on the fair values of the
assets acquired

                                       62

<PAGE>



(including  intangible assets) and the liabilities  assumed.  The fair values of
the acquired assets and assumed  liabilities  were based primarily on estimates.
The adjustments reflected in JCP&L's records, which are subject to adjustment in
2002 when finalized,  primarily consist of: (1) revaluation of certain property,
plant  and  equipment;  (2)  adjusting  preferred  stock  subject  to  mandatory
redemption  and  long-term  debt  to  estimated  fair  value;   (3)  recognizing
additional  obligations  related to  retirement  benefits;  and (4)  recognizing
estimated  severance  and  other  compensation  liabilities.  The  excess of the
purchase  price  over the  estimated  fair  values of the  assets  acquired  and
liabilities  assumed was  recognized  as  goodwill,  which will be reviewed  for
impairment at least annually.  As of March 31, 2002, JCP&L had recorded goodwill
of approximately $1.9 billion related to the merger.

Regulatory Accounting

          JCP&L is subject  to  regulation  that sets the  prices  (rates) it is
permitted to charge customers based on costs that regulatory  agencies determine
JCP&L is permitted to recover.  At times,  regulators permit the future recovery
through  rates of costs  that  would  be  currently  charged  to  expense  by an
unregulated  company.  This  rate-making  process  results in the  recording  of
regulatory assets based on anticipated  future cash inflows.  As a result of the
changing regulatory  framework in New Jersey, a significant amount of regulatory
assets have been recorded - $3.3 billion as of March 31, 2002.  JCP&L  regularly
reviews these assets to assess their ultimate recoverability within the approved
regulatory  guidelines.  Impairment risk associated with these assets relates to
potentially adverse legislative, judicial or regulatory actions in the future.

Derivative Accounting

          Determination  of appropriate  accounting for derivative  transactions
requires the involvement of management representing operations, finance and risk
assessment.  In order to determine the  appropriate  accounting  for  derivative
transactions,  the  provisions of the contract need to be carefully  assessed in
accordance  with  the  authoritative   accounting  literature  and  management's
intended use of the derivative.  New authoritative  guidance  continues to shape
the  application  of  derivative  accounting.   Management's   expectations  and
intentions  are key factors in  determining  the  appropriate  accounting  for a
derivative  transaction and, as a result,  such expectations and intentions must
be documented. Derivative contracts that are determined to fall within the scope
of SFAS 133, as amended,  must be  recorded at their fair value.  Active  market
prices are not always  available to determine  the fair value of the later years
of a contract, requiring that various assumptions and estimates be used in their
valuation.  JCP&L continually  monitors its derivative contracts to determine if
its  activities,  expectations,  intentions,  assumptions  and estimates  remain
valid.  As  part  of  its  normal  operations,  JCP&L  enters  into  commodities
contracts, which increase the impact of derivative accounting judgments.

Revenue Recognition

          JCP&L  follows  the  accrual   method  of  accounting   for  revenues,
recognizing  revenue for  kilowatt-hours  that have been  delivered but have not
been billed  through  March 31, 2002.  The  determination  of unbilled  revenues
requires management to make various estimates including:

          o   Net energy generated or purchased for retail load
          o   Losses of energy over transmission and distribution lines
          o   Mix of kilowatt-hour usage by residential, commercial and
              industrial customers
          o   Kilowatt-hour usage of customers receiving electricity from
              alternative suppliers

Implementation of Recently Issued Accounting Standards
------------------------------------------------------

          Under SFAS 142, "Goodwill and Other Intangible  Assets," goodwill must
be tested for  impairment  at least on an annual  basis.  JCP&L did not have any
goodwill prior to its 2001 merger.  Goodwill associated with the merger will not
be amortized,  but will be reviewed for  impairment at least  annually under the
provisions  of the new standard.  JCP&L expects to have its goodwill  impairment
analysis completed later this year.

          In July 2001,  the Financial  Accounting  Standards  Board issued SFAS
143,  "Accounting for Asset Retirement  Obligations." The new statement provides
accounting  standards  for  retirement   obligations  associated  with  tangible
long-lived  assets  with  adoption  required  as of January  1,  2003.  SFAS 143
requires that the fair value of a liability for an asset  retirement  obligation
be  recorded  in the  period  in  which it is  incurred.  The  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset.  Over  time the  capitalized  costs are  depreciated  and the
present value of the asset retirement  liability increases resulting in a period
expense. Upon retirement,  a gain or loss will be recorded if the cost to settle
the retirement  obligation differs from the carrying amount.  JCP&L is currently
assessing its asset  retirement  obligations  under the new standard and has not
yet determined the impact on its financial statements.

                                       63

<PAGE>


<TABLE>
<CAPTION>

                                     METROPOLITAN EDISON COMPANY

                                  CONSOLIDATED STATEMENTS OF INCOME
                                            (Unaudited)


                                                                                           Three Months Ended
                                                                                               March 31,
                                                                                       -------------------------
                                                                                         2002             2001
                                                                                       --------         --------
                                                                                            (In thousands)

<S>                                                                                    <C>               <C>
OPERATING REVENUES..............................................................       $245,790   |      $221,020
                                                                                       --------   |      --------
                                                                                                  |
                                                                                                  |
OPERATING EXPENSES AND TAXES:                                                                     |
   Purchased power..............................................................        148,949   |       125,227
   Other operating costs........................................................         29,005   |        36,553
                                                                                       --------   |      --------
       Total operation and maintenance expenses.................................        177,954   |       161,780
   Provision for depreciation and amortization..................................         15,292   |        17,794
   General taxes................................................................         16,912   |        10,632
   Income taxes.................................................................          9,556   |         6,413
                                                                                       --------   |      --------
       Total operating expenses and taxes.......................................        219,714   |       196,619
                                                                                       --------   |      --------
                                                                                                  |
OPERATING INCOME................................................................         26,076   |        24,401
                                                                                                  |
OTHER INCOME....................................................................          5,131   |         4,685
                                                                                       --------   |      --------
                                                                                                  |
INCOME BEFORE NET INTEREST CHARGES..............................................         31,207   |        29,086
                                                                                       --------   |      --------
                                                                                                  |
NET INTEREST CHARGES:                                                                             |
   Interest on long-term debt...................................................         10,455   |         9,154
   Allowance for borrowed funds used during construction........................           (284)  |          (159)
   Deferred interest............................................................           (193)  |            --
   Other interest expense.......................................................            273   |         2,236
   Subsidiaries' preferred stock dividend requirements..........................          1,838   |         1,838
                                                                                       --------   |      --------
       Net interest charges.....................................................         12,089   |        13,069
                                                                                       --------   |      --------
                                                                                                  |
                                                                                                  |
NET INCOME......................................................................       $ 19,118   |      $ 16,017
                                                                                       ========   |      ========

<FN>


The preceding Notes to Financial Statements as they relate to Metropolitan Edison
Company are an integral part of these statements.

</FN>
</TABLE>

                                             64

<PAGE>



<TABLE>
<CAPTION>

                                     METROPOLITAN EDISON COMPANY

                                     CONSOLIDATED BALANCE SHEETS



                                                                                 (Unaudited)
                                                                                   March 31,       December 31,
                                                                                      2002             2001
                                                                                  -----------      ------------
                                                                                         (In thousands)

                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:
   In service................................................................      $1,618,998       $1,609,974
   Less--Accumulated provision for depreciation..............................         541,786          530,006
                                                                                   ----------       ----------
                                                                                    1,077,212        1,079,968
  Construction work in progress..............................................          13,701           14,291
                                                                                   ----------       ----------
                                                                                    1,090,913        1,094,259
                                                                                   ----------       ----------

OTHER PROPERTY AND INVESTMENTS:
   Nuclear plant decommissioning trusts......................................         159,952          157,699
   Long-term notes receivable from associated companies......................          12,418           12,418
   Other.....................................................................          33,490           13,391
                                                                                   ----------       ----------
                                                                                      205,860          183,508
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................          20,812           25,274
   Receivables-
     Customers (less accumulated provisions of $10,641,000 and $12,271,000
       respectively, for uncollectible accounts).............................         104,258          112,257
     Associated companies....................................................           1,628            8,718
     Other...................................................................          18,850           16,675
   Prepayments and other.....................................................          39,136           12,239
                                                                                   ----------       ----------
                                                                                      184,684          175,163
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................       1,296,378        1,320,412
   Goodwill..................................................................         784,443          784,443
   Other.....................................................................          52,802           49,402
                                                                                   ----------       ----------
                                                                                    2,133,623        2,154,257
                                                                                   ----------       ----------
                                                                                   $3,615,080       $3,607,187
                                                                                   ==========       ==========

<FN>


The preceding Notes to Financial Statements as they relate to Metropolitan Edison
Company are an integral part of these balance sheets.

</FN>
</TABLE>

                                           65

<PAGE>


<TABLE>
<CAPTION>

                                      METROPOLITAN EDISON COMPANY

                                      CONSOLIDATED BALANCE SHEETS



                                                                                  (Unaudited)
                                                                                    March 31,       December 31,
                                                                                     2002              2001
                                                                                  -----------      ------------
                                                                                          (In thousands)

             CAPITALIZATION AND LIABILITIES
             ------------------------------
<S>                                                                                <C>              <C>
CAPITALIZATION:
   Common stockholder's equity-
     Common stock, without par value, authorized 900,000 shares -
       859,500 shares outstanding............................................      $1,274,325       $1,274,325
     Accumulated other comprehensive income (loss)...........................            (158)              11
     Retained earnings.......................................................          33,735           14,617
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       1,307,902        1,288,953
   Company-obligated trust preferred securities..............................          92,200           92,200
   Long-term debt............................................................         541,779          583,077
                                                                                   ----------       ----------
                                                                                    1,941,881        1,964,230
                                                                                   ----------       ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................          40,029           30,029
   Accounts payable-
     Associated companies....................................................          53,019           67,351
     Other...................................................................          30,270           36,750
   Notes payable to associated companies.....................................         127,558           72,011
   Accrued taxes.............................................................           5,686            7,037
   Accrued interest..........................................................          10,635           17,468
   Other.....................................................................          11,205           13,652
                                                                                   ----------       ----------
                                                                                      278,402          244,298
                                                                                   ----------       ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         304,907          300,438
   Accumulated deferred investment tax credits...............................          13,098           13,310
   Purchase power contract loss liability....................................         721,812          730,662
   Nuclear fuel disposal costs...............................................          37,066           36,906
   Nuclear plant decommissioning costs.......................................         269,834          268,967
   Other.....................................................................          48,080           48,376
                                                                                   ----------       ----------
                                                                                    1,394,797        1,398,659
                                                                                   ----------       ----------


COMMITMENTS AND CONTINGENCIES (Note 2).......................................
                                                                                   ----------        ---------
                                                                                   $3,615,080       $3,607,187
                                                                                   ==========       ==========

<FN>


The preceding Notes to Financial Statements as they relate to Metropolitan Edison
Company are an integral part of these balance sheets.

</FN>
</TABLE>

                                            66

<PAGE>



<TABLE>
<CAPTION>

                                     METROPOLITAN EDISON COMPANY

                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (Unaudited)


                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                    ---------------------------
                                                                                      2002               2001
                                                                                    --------           --------
                                                                                          (In thousands)
<S>                                                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                                            |
Net income...................................................................       $ 19,118     |     $ 16,017
   Adjustments to reconcile net income to net                                                    |
     cash from operating activities-                                                             |
       Provision for depreciation and amortization...........................         15,292     |       17,794
       Other amortization....................................................           (938)    |          237
       Deferred costs, net...................................................          5,889     |          296
       Deferred income taxes, net............................................          2,567     |        1,372
       Investment tax credits, net...........................................           (212)    |         (212)
       Receivables...........................................................         12,914     |         (173)
       Accounts payable......................................................        (20,812)    |       (2,283)
       Other.................................................................        (51,331)    |      (40,473)
                                                                                    --------     |     --------
         Net cash used for operating activities..............................        (17,513)    |       (7,425)
                                                                                    --------     |     --------
                                                                                                 |
CASH FLOWS FROM FINANCING ACTIVITIES:                                                            |
   New Financing-                                                                                |
     Short-term borrowings, net..............................................         55,547     |       40,300
   Redemptions and Repayments-                                                                   |
     Long-term debt..........................................................         30,000     |           --
   Dividend Payments-                                                                            |
     Common stock............................................................             --     |       15,000
                                                                                    --------     |     --------
         Net cash provided from financing activities.........................         25,547     |       25,300
                                                                                    --------     |     --------
                                                                                                 |
CASH FLOWS FROM INVESTING ACTIVITIES:                                                            |
   Property additions........................................................          9,096     |       11,793
   Capital trust investments.................................................          3,161     |        2,371
   Other.....................................................................            239     |        2,991
                                                                                    --------     |     --------
         Net cash used for investing activities..............................         12,496     |       17,155
                                                                                    --------     |     --------
                                                                                                 |
Net increase (decrease) in cash and cash equivalents.........................         (4,462)    |          720
Cash and cash equivalents at beginning of period ............................         25,274     |        3,439
                                                                                    --------     |     --------
Cash and cash equivalents at end of period...................................       $ 20,812     |     $  4,159
                                                                                    ========     |     ========

<FN>

The preceding Notes to Financial Statements as they relate Metropolitan Edison Company
are an integral part of these statements.

</FN>
</TABLE>

                                           67

<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS









To the Board of Directors and
Shareholders of Metropolitan
Edison Company:

We have reviewed the  accompanying  consolidated  balance sheet of  Metropolitan
Edison  Company  and its  subsidiaries  as of March 31,  2002,  and the  related
consolidated  statements  of income and cash flows for the  three-month  periods
ended March 31, 2002 and 2001. These financial statements are the responsibility
of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  the  accompanying   consolidated   interim  financial   statements
information for them to be in conformity with  accounting  principles  generally
accepted in the United States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002





                                       68

<PAGE>


                           METROPOLITAN EDISON COMPANY

                           MANAGEMENT'S DISCUSSION AND
                        ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION



          Met-Ed is a wholly owned electric  utility  subsidiary of FirstEnergy.
Met-Ed  conducts  business in eastern and south central  parts of  Pennsylvania,
offering regulated electric distribution services. Met-Ed also provides power to
those  customers  electing  to retain  them as their  power  supplier.  Met-Ed's
regulatory  plan requires it to itemize,  or unbundle,  the price of electricity
into its component elements - including generation,  transmission,  distribution
and transition  charges.  Met-Ed was formerly a wholly owned  subsidiary of GPU,
Inc., which merged with FirstEnergy on November 7, 2001.

Results of Operations
---------------------

          Operating  revenues  increased by $24.8  million or 11.2% in the first
quarter  of 2002  compared  to the first  quarter  of 2001.  The  sources of the
changes in  operating  revenues,  as compared  to the same  period in 2001,  are
summarized in the following table.

   Sources of Operating Revenue Changes
   ----------------------------------------------------------------------
          Increase (Decrease)                                 (In millions)

   Change in kilowatt-hour sales due to level of retail
      customers shopping for generation service                  $  35.5
   Change in other retail kilowatt-hour sales...............        (6.2)
   Decrease in wholesale sales..............................        (1.0)
   All other changes........................................        (3.5)
   ----------------------------------------------------------------------

   Net Increase in Operating Revenues.......................     $  24.8
   ======================================================================


Electric Sales

          In the first quarter of 2002, a significant reduction in the number of
customers who received their power from alternate suppliers continued to have an
effect on  operating  revenues.  During  the  first  quarter  of 2001,  32.0% of
kilowatt-hour  deliveries  were to  shopping  customers;  whereas,  only 7.7% of
kilowatt-hour  deliveries  during  the first  quarter  of 2002 were to  shopping
customers.  More than  offsetting  this  increase  in  revenues  from  returning
shopping  customers  was lower  kilowatt-hour  sales to  residential  customers,
primarily due to milder weather during the first quarter of 2002 compared to the
first quarter of 2001.  Sales to industrial  customers  also  decreased due to a
decline in economic conditions.  Changes in kilowatt-hour deliveries by customer
class during the first  quarter of 2002, as compared to the same period of 2001,
are summarized in the following table:

    Changes in Kilowatt-hour Deliveries
    ----------------------------------------------------------------
           Increase (Decrease)

    Residential...............................        (7.1)%
    Commercial................................         0.7%
    Industrial................................        (8.9)%
    ----------------------------------------------------------------

    Total Retail..............................        (5.4)%
    Wholesale.................................         7.4%
    ----------------------------------------------------------------

    Total Deliveries..........................        (4.5)%
    ----------------------------------------------------------------

Operating Expenses and Taxes

          Total  operating  expenses and taxes  increased  $23.1  million in the
first  quarter of 2002  compared  to the same period of 2001.  Higher  purchased
power costs accounted for the majority of the increase,  as Met-Ed required more
power to satisfy its provider of last resort (PLR)  obligation  to customers who
returned from alternate suppliers in the first quarter of 2002. The $7.5 million
decrease in other  operating  costs in the first quarter of 2002 compared to the
same period of 2001 was primarily  attributable  to the absence of costs related
to early  retirement  programs  offered to certain  bargaining unit employees in
2001.

                                       69
<PAGE>

Net Interest Charges

          Net  interest  charges  decreased  by $1.0  million in the first three
months of 2002, compared to the same period in 2001 due to the redemption of $30
million of long-term debt in the first quarter of 2002.

Capital Resources and Liquidity
-------------------------------

          Met-Ed  has  continuing   cash   requirements   for  planned   capital
expenditures  and maturing  debt.  During the remaining  three quarters of 2002,
capital  requirements  for  property  additions  are  expected  to be about  $69
million.  These  requirements  are expected to be satisfied  from  internal cash
and/or short-term credit arrangements.

          As of March 31,  2002,  Met-Ed  had about  $20.8  million  of cash and
temporary investments and $127.6 million of short-term indebtedness.  Met-Ed may
borrow from its  affiliates on a short-term  basis.  Met-Ed will not issue first
mortgage  bonds  (FMBs) other than as  collateral  for senior  notes,  since its
senior note indentures  prohibit (subject to certain exceptions) it from issuing
any debt which is senior to the senior notes.  As of March 31, 2002,  Met-Ed had
the  capability to issue $112 million of additional  senior notes based upon FMB
collateral. Met-Ed has no restrictions on the issuance of preferred stock.

Market Risk Information
-----------------------

          Met-Ed uses various market sensitive instruments, including derivative
contracts,  primarily to manage the risk of price  fluctuations.  Met-Ed's  Risk
Policy  Committee,  comprised of FirstEnergy  executive  officers,  exercises an
independent  risk oversight  function to ensure  compliance  with corporate risk
management policies and prudent risk management practices.

Commodity Price Risk

          Met-Ed is exposed to market  risk  primarily  due to  fluctuations  in
electricity and natural gas prices.  To manage the volatility  relating to these
exposures,  Met-Ed uses a variety of derivative  instruments,  including options
and  futures  contracts.  The  derivatives  are  used  principally  for  hedging
purposes. The change in the fair value of commodity derivative contracts related
to energy  production  during  the first  quarter of 2002 is  summarized  in the
following table:

   Change in the Fair Value of Commodity Derivative Contracts
   ----------------------------------------------------------------------
                                                           (In millions)

   Outstanding as of December 31, 2001.................       $ 2.3
   Contract value when entered.........................         0.2
   Increase in value of existing contracts.............        18.8
   ----------------------------------------------------------------------
   Outstanding as of March 31, 2002....................       $21.3
   ======================================================================

          The  valuation of derivative  contracts is based on observable  market
information  to the extent that such  information  is available.  In cases where
such information is not available, Met-Ed relies on model-based information. The
model  provides  estimates  of future  regional  prices for  electricity  and an
estimate  of  related  price  volatility.   Met-Ed  utilizes  these  results  in
developing estimates of fair value for the later years of applicable electricity
contracts for financial  reporting purposes and for internal management decision
making. Sources of information for the valuation of derivative contracts by year
are summarized in the following table:

     Source of Information - Fair Value by Contract Year
     ---------------------------------------------------

                               2002*    2003     2004     Thereafter    Total
-------------------------------------------------------------------------------
                                                (In millions)

   Prices actively quoted...   $0.3     $1.8     $1.9        $ --       $ 4.0
   Prices based on models**.   --       --       --           17.3       17.3
   ----------------------------------------------------------------------------

     Total..................   $0.3     $1.8     $1.9        $17.3      $21.3
===============================================================================

     *  For the remaining quarters of 2002.
     ** Relates to an embedded option that is offset by a regulatory liability
        and does not affect earnings.

          Met-Ed performs  sensitivity  analyses to estimate its exposure to the
market risk of its  commodity  position.  A  hypothetical  10% adverse  shift in
quoted market prices in the near term on derivative  instruments  would not have
had a material effect on Met-Ed's consolidated  financial position or cash flows
as of March 31, 2002.

                                       70

<PAGE>

Pennsylvania Regulatory Matters
-------------------------------

          In June 2001,  Met-Ed  entered into a settlement  agreement with major
parties in the  combined  merger  and rate  proceedings  that,  in  addition  to
resolving certain issues concerning the PPUC's approval of FirstEnergy's  merger
with GPU, also addressed  Met-Ed's request for PLR rate relief.  Several parties
appealed  the  PPUC  decision  to the  Commonwealth  Court of  Pennsylvania.  On
February 21, 2002,  the Court affirmed the PPUC decision  regarding  approval of
the merger, remanding the decision to the PPUC only with respect to the issue of
merger savings.  The Court reversed the PPUC's decision  regarding  Met-Ed's PLR
obligation,  and denied Met-Ed's  related request for rate relief.  On March 25,
2002, Met-Ed filed a petition asking the Supreme Court of Pennsylvania to review
the  Commonwealth  Court  decision  denying  Met-Ed the  ability to defer  costs
associated  with its PLR obligation.  If the  Commonwealth  Court's  decision is
affirmed  by the  Supreme  Court of  Pennsylvania,  Met-Ed  would have a pre-tax
write-off  of  approximately  $90.2  million  based on the  March  31,  2002 PLR
deferred balance.  Also on March 25, 2002, Citizens Power filed a motion seeking
an appeal of the Commonwealth Court's decision to affirm the FirstEnergy and GPU
merger with the Supreme Court of  Pennsylvania.  Met-Ed is unable to predict the
outcome of these matters.

Significant Accounting Policies
-------------------------------

          Met-Ed prepares its  consolidated  financial  statements in accordance
with accounting principles generally accepted in the United States.  Application
of these  principles  often  requires a high degree of judgment,  estimates  and
assumptions  that  affect its  financial  results.  All of  Met-Ed's  assets are
subject  to their own  specific  risks and  uncertainties  and are  periodically
reviewed  for  impairment.  Assets  related to the  application  of the policies
discussed  below are  similarly  reviewed  with  their  risks and  uncertainties
reflecting these specific factors. Met-Ed's more significant accounting policies
are described below.

Purchase Accounting - Acquisition of GPU

          On November 7, 2001,  the merger  between  FirstEnergy  and GPU became
effective,  and Met-Ed  became a wholly owned  subsidiary  of  FirstEnergy.  The
merger was accounted for by the purchase  method of  accounting,  which requires
judgment regarding the allocation of the purchase price based on the fair values
of the  assets  acquired  (including  intangible  assets)  and  the  liabilities
assumed.  The fair values of the acquired  assets and assumed  liabilities  were
based  primarily on estimates.  The adjustments  reflected in Met-Ed's  records,
which are subject to adjustment in 2002 when  finalized,  primarily  consist of:
(1)  revaluation  of  certain  property,  plant  and  equipment;  (2)  adjusting
preferred stock subject to mandatory  redemption and long-term debt to estimated
fair  value;  (3)  recognizing  additional  obligations  related  to  retirement
benefits;  and  (4)  recognizing  estimated  severance  and  other  compensation
liabilities.  The excess of the purchase price over the estimated fair values of
the assets  acquired and liabilities  assumed was recognized as goodwill,  which
will be reviewed for impairment at least annually.  As of March 31, 2002, Met-Ed
had recorded goodwill of approximately $784.4 million related to the merger.

Regulatory Accounting

          Met-Ed is subject  to  regulation  that sets the prices  (rates) it is
permitted to charge customers based on costs that regulatory  agencies determine
Met-Ed is permitted to recover. At times,  regulators permit the future recovery
through  rates of costs  that  would  be  currently  charged  to  expense  by an
unregulated  company.  This  rate-making  process  results in the  recording  of
regulatory assets based on anticipated  future cash inflows.  As a result of the
changing  regulatory   framework  in  Pennsylvania,   a  significant  amount  of
regulatory assets have been recorded - $1.3 billion as of March 31, 2002. Met-Ed
regularly  reviews these assets to assess their ultimate  recoverability  within
the approved regulatory guidelines. Impairment risk associated with these assets
relates to potentially  adverse  legislative,  judicial or regulatory actions in
the future.

Derivative Accounting

          Determination  of appropriate  accounting for derivative  transactions
requires the involvement of management representing operations, finance and risk
assessment.  In order to determine the  appropriate  accounting  for  derivative
transactions,  the  provisions of the contract need to be carefully  assessed in
accordance  with  the  authoritative   accounting  literature  and  management's
intended use of the derivative.  New authoritative  guidance  continues to shape
the  application  of  derivative  accounting.   Management's   expectations  and
intentions  are key factors in  determining  the  appropriate  accounting  for a
derivative  transaction and, as a result,  such expectations and intentions must
be documented. Derivative contracts that are determined to fall within the scope
of SFAS 133, as amended,  must be  recorded at their fair value.  Active  market
prices are not always  available to determine  the fair value of the later years
of a contract, requiring that various assumptions and estimates be used in their
valuation.  Met-Ed continually monitors its derivative contracts to determine if
its  activities,  expectations,  intentions,  assumptions


                                       71
<PAGE>


and estimates remain valid. As part of its normal operations, Met-Ed enters into
commodities  contracts,  which  increase  the  impact of  derivative  accounting
judgments.

Revenue Recognition

          Met-Ed   follows  the  accrual  method  of  accounting  for  revenues,
recognizing  revenue for  kilowatt-hours  that have been  delivered but have not
been billed  through  March 31, 2002.  The  determination  of unbilled  revenues
requires management to make various estimates including:

          o   Net energy generated or purchased for retail load
          o   Losses of energy over transmission and distribution lines
          o   Mix of kilowatt-hour usage by residential, commercial and
              industrial customers
          o   Kilowatt-hour usage of customers receiving electricity from
              alternative suppliers

Implementation of Recently Issued Accounting Standards
------------------------------------------------------

          Under SFAS 142, "Goodwill and Other Intangible  Assets," goodwill must
be tested for  impairment at least on an annual  basis.  Met-Ed did not have any
goodwill prior to its 2001 merger.  Goodwill associated with the merger will not
be amortized,  but will be reviewed for  impairment at least  annually under the
provisions of the new standard.  Met-Ed expects to have its goodwill  impairment
analysis completed later this year.

          In July 2001,  the Financial  Accounting  Standards  Board issued SFAS
143,  "Accounting for Asset Retirement  Obligations." The new statement provides
accounting  standards  for  retirement   obligations  associated  with  tangible
long-lived  assets  with  adoption  required  as of January  1,  2003.  SFAS 143
requires that the fair value of a liability for an asset  retirement  obligation
be  recorded  in the  period  in  which it is  incurred.  The  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset.  Over  time the  capitalized  costs are  depreciated  and the
present value of the asset retirement  liability increases resulting in a period
expense. Upon retirement,  a gain or loss will be recorded if the cost to settle
the retirement  obligation differs from the carrying amount. Met-Ed is currently
assessing its asset  retirement  obligations  under the new standard and has not
yet determined the impact on its financial statements.


                                       72
<PAGE>


<TABLE>
<CAPTION>


                                    PENNSYLVANIA ELECTRIC COMPANY

                                  CONSOLIDATED STATEMENTS OF INCOME
                                             (Unaudited)


                                                                                           Three Months Ended
                                                                                       -------------------------
                                                                                               March 31,
                                                                                         2002             2001
                                                                                       ---------        --------
                                                                                            (In thousands)

<S>                                                                                    <C>              <C>
OPERATING REVENUES..............................................................       $242,820    |     $243,827
                                                                                       --------    |     --------
                                                                                                   |
OPERATING EXPENSES AND TAXES:                                                                      |
   Purchased power..............................................................        146,148    |      169,064
   Other operating costs........................................................         33,800    |       43,083
                                                                                       --------    |     --------
       Total operation and maintenance expenses.................................        179,948    |      212,147
   Provision for depreciation and amortization..................................         14,831    |       14,529
   General taxes................................................................         15,030    |       11,690
   Income taxes (benefit).......................................................          9,172    |       (3,336)
                                                                                       --------    |     --------
       Total operating expenses and taxes.......................................        218,981    |      235,030
                                                                                       --------    |     --------
                                                                                                   |
OPERATING INCOME................................................................         23,839    |        8,797
                                                                                                   |
OTHER INCOME....................................................................            298    |          605
                                                                                       --------    |     --------
                                                                                                   |
INCOME BEFORE NET INTEREST CHARGES..............................................         24,137    |        9,402
                                                                                       --------    |     --------
                                                                                                   |
NET INTEREST CHARGES:                                                                              |
   Interest on long-term debt...................................................          8,421    |        8,241
   Allowance for borrowed funds used during construction........................           (120)   |         (144)
   Deferred interest............................................................           (751)   |           --
   Other interest expense ......................................................            605    |        1,575
   Subsidiaries' preferred stock dividend requirements..........................          1,835    |        1,835
                                                                                       --------    |     --------
       Net interest charges.....................................................          9,990    |       11,507
                                                                                       --------    |     --------
                                                                                                   |
NET INCOME (LOSS)...............................................................       $ 14,147    |     $ (2,105)
                                                                                       ========    |     ========


<FN>



The preceding Notes to Financial Statements as they relate to the Pennsylvania Electric
Company are an integral part of these statements.

</FN>
</TABLE>

                                             73

<PAGE>
<TABLE>
<CAPTION>


                                       PENNSYLVANIA ELECTRIC COMPANY

                                        CONSOLIDATED BALANCE SHEETS



                                                                                  (Unaudited)
                                                                                    March 31,       December 31,
                                                                                      2002             2001
                                                                                  -----------      ------------
                                                                                         (In thousands)

                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:
   In service................................................................      $1,851,968       $1,845,187
   Less--Accumulated provision for depreciation..............................         644,012          630,957
                                                                                   ----------       ----------
                                                                                    1,207,956        1,214,230
  Construction work in progress-
     Electric plant..........................................................          15,578           12,857
                                                                                   ----------       ----------
                                                                                    1,223,534        1,227,087
                                                                                   ----------       ----------
OTHER PROPERTY AND INVESTMENTS:
   Non-utility generation trusts.............................................         121,686          154,067
   Nuclear plant decommissioning trusts......................................          96,293           96,610
   Long-term notes receivable from associated companies......................          15,515           15,515
   Other.....................................................................          11,410            2,265
                                                                                   ----------       ----------
                                                                                      244,904          268,457
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................          18,460           39,033
   Receivables-
     Customers (less accumulated provisions of $12,215,000 and $14,719,000
        respectively, for uncollectible accounts)............................          95,093          107,170
     Associated companies....................................................          40,493           40,203
     Other...................................................................          14,825           14,842
   Prepayments and other.....................................................          37,449            8,605
                                                                                   ----------       ----------
                                                                                      206,320          209,853
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................         752,791          769,807
   Goodwill..................................................................         797,362          797,362
   Other.....................................................................          27,664           27,703
                                                                                   ----------       ----------
                                                                                    1,577,817        1,594,872
                                                                                   ----------       ----------
                                                                                   $3,252,575       $3,300,269
                                                                                   ==========       ==========

<FN>



The preceding Notes to Financial Statements as they relate to the Pennsylvania Electric
Company are an integral part of these balance sheets.

</FN>
</TABLE>


                                            74
<PAGE>

<TABLE>
<CAPTION>

                                       PENNSYLVANIA ELECTRIC COMPANY

                                        CONSOLIDATED BALANCE SHEETS



                                                                                 (Unaudited)
                                                                                   March 31,       December 31,
                                                                                     2002              2001
                                                                                  -----------      ------------
                                                                                        (In thousands)

             CAPITALIZATION AND LIABILITIES
             ------------------------------
<S>                                                                                <C>              <C>
CAPITALIZATION:
   Common stockholder's equity-
     Common stock, par value $20 per share, authorized 5,400,000
       shares, 5,290,596 shares outstanding..................................      $  105,812       $  105,812
     Other paid-in capital...................................................       1,188,190        1,188,190
     Accumulated other comprehensive income..................................             929            1,779
     Retained earnings.......................................................          24,942           10,795
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       1,319,873        1,306,576
   Company-obligated trust preferred securities .............................          92,000           92,000
   Long-term debt............................................................         471,918          472,400
                                                                                   ----------       ----------
                                                                                    1,883,791        1,870,976
                                                                                   ----------       ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................          50,769           50,756
   Accounts payable-
     Associated companies....................................................         114,706          126,390
     Other...................................................................          38,582           38,720
   Notes payable to associated companies.....................................          38,050           77,623
   Accrued taxes.............................................................          44,517           29,255
   Accrued interest..........................................................          18,373           12,284
   Other.....................................................................           7,600           10,993
                                                                                   ----------       ----------
                                                                                      312,597          346,021
                                                                                   ----------       ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................           4,490           21,682
   Accumulated deferred investment tax credits...............................          11,671           11,956
   Nuclear plant decommissioning costs.......................................         135,795          135,483
    Nuclear fuel disposal costs..............................................          18,533           18,453
   Power purchase contract loss liability....................................         855,759          867,046
   Other.....................................................................          29,939           28,652
                                                                                   ----------       ----------
                                                                                    1,056,187        1,083,272
                                                                                   ----------       ----------


COMMITMENTS AND CONTINGENCIES (Note 2).......................................
                                                                                   ----------       ----------
                                                                                   $3,252,575       $3,300,269
                                                                                   ==========       ==========
<FN>


The preceding Notes to Financial Statements as they relate to the Pennsylvania Electric
Company are an integral part of these balance sheets.

</FN>
</TABLE>

                                            75
<PAGE>

<TABLE>
<CAPTION>

                                     PENNSYLVANIA ELECTRIC COMPANY

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (Unaudited)


                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                    ---------------------------
                                                                                      2002               2001
                                                                                    --------           --------
                                                                                          (In thousands)
<S>                                                                                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                                            |
Net income (loss)............................................................       $ 14,147     |     $ (2,105)
   Adjustments to reconcile net income (loss) to net                                             |
     cash from operating activities-                                                             |
       Provision for depreciation and amortization...........................         14,831     |       13,154
       Other amortization....................................................            782     |          462
       Deferred costs, net...................................................        (10,415)    |      (10,367)
       Deferred income taxes, net............................................         (9,631)    |          797
       Investment tax credits, net...........................................           (285)    |         (285)
       Receivables...........................................................         11,803     |        2,882
       Accounts payable......................................................        (11,822)    |       (5,317)
       Other.................................................................        (14,185)    |      (20,742)
                                                                                    --------     |     --------
         Net cash used for operating activities..............................         (4,775)    |      (21,521)
                                                                                    --------     |     --------
CASH FLOWS FROM FINANCING ACTIVITIES:                                                            |
    New Financing-                                                                               |
     Short-term borrowings, net..............................................             --     |       30,700
   Redemptions and Repayments-                                                                   |
     Short-term borrowings, net..............................................         39,573     |           --
                                                                                    --------     |     --------
   Net cash used for (provided from) financing activities....................         39,573     |      (30,700)
                                                                                    --------     |     --------
                                                                                                 |
CASH FLOWS FROM INVESTING ACTIVITIES:                                                            |
   Property additions........................................................         10,194     |       14,223
   Proceeds from non-utility generation trusts...............................        (34,208)    |       (8,465)
   Contributions to decommissioning trusts...................................             --     |           12
   Other.....................................................................            239     |        3,319
                                                                                    --------     |     --------
         Net cash used for (provided from) investing activities..............        (23,775)    |        9,089
                                                                                    --------     |     --------
                                                                                                 |
Net increase (decrease) in cash and cash equivalents.........................        (20,573)    |           90
Cash and cash equivalents at beginning of period ............................         39,033     |          580
                                                                                    --------     |     --------
Cash and cash equivalents at end of period...................................       $ 18,460     |     $    670
                                                                                    ========     |     ========


<FN>


The preceding Notes to Financial Statements as they relate to the Pennsylvania Electric
Company are an integral part of these statements.

</FN>
</TABLE>

                                             76
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS













To the Board of Directors and
Shareholders of Pennsylvania
Electric Company:

We have reviewed the  accompanying  consolidated  balance sheet of  Pennsylvania
Electric  Company and its  subsidiaries  as of March 31,  2002,  and the related
consolidated  statements  of income and cash flows for the  three-month  periods
ended March 31, 2002 and 2001. These financial statements are the responsibility
of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  the  accompanying   consolidated   interim  financial   statements
information for them to be in conformity with  accounting  principles  generally
accepted in the United States of America.



PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002

                                       77

<PAGE>


                          PENNSYLVANIA ELECTRIC COMPANY

                           MANAGEMENT'S DISCUSSION AND
                        ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION


          Penelec is a wholly owned electric utility  subsidiary of FirstEnergy.
Penelec  conducts  business in northern,  western,  and south  central  parts of
Pennsylvania,  offering regulated electric distribution  services.  Penelec also
provides  power  to those  customers  electing  to  retain  them as their  power
supplier.  Penelec's  regulatory plan requires it to itemize,  or unbundle,  the
price of  electricity  into  its  component  elements  -  including  generation,
transmission, distribution and transition charges. Penelec was formerly a wholly
owned  subsidiary of GPU,  Inc.,  which merged with  FirstEnergy  on November 7,
2001.

Results of Operations
---------------------

          Operating  revenues  decreased  by $1.0  million  or 0.4% in the first
quarter  of 2002  compared  to the first  quarter  of 2001.  The  sources of the
changes in  operating  revenues,  as compared  to the same  period in 2001,  are
summarized in the following table.

   Sources of Operating Revenue Changes
   --------------------------------------------------------------------------
          Increase (Decrease)                                    (In millions)

   Change in kilowatt-hour sales due to level of retail
      customers shopping for generation service                     $  35.4
   Change in other retail kilowatt-hour sales...............           (5.5)
   Decrease in wholesale sales..............................          (27.9)
   Provision for rate refunds...............................           (0.8)
   All other changes........................................           (2.2)
   ---------------------------------------------------------------------------

   Net Decrease in Operating Revenues.......................        $  (1.0)
   ===========================================================================


Electric Sales

          In the first quarter of 2002, a significant reduction in the number of
customers who received their power from alternate suppliers continued to have an
effect on  operating  revenues.  During  the  first  quarter  of 2001,  25.9% of
kilowatt-hour  deliveries  were from  shopping  customers,  whereas only 4.4% of
kilowatt-hour  deliveries  during the first  quarter of 2002 were from  shopping
customers.  More than  offsetting  this  increase  in  revenues  from  returning
shopping customers was lower kilowatt-hour  deliveries to residential customers,
primarily due to milder weather during the first quarter of 2002 compared to the
first quarter of 2001.  Sales to industrial  customers  also  decreased due to a
decline in economic conditions;  lower sales to wholesale customers in the first
quarter  of 2002 also  reduced  operating  revenues.  Changes  in  kilowatt-hour
deliveries  by customer  class during the first  quarter of 2002, as compared to
the same period of 2001, are summarized in the following table:

    Changes in Kilowatt-hour Deliveries
    ----------------------------------------------------------------------
           Increase (Decrease)

    Residential...............................               (3.8)%
    Commercial................................               (0.1)%
    Industrial................................              (16.5)%
    ----------------------------------------------------------------------

    Total Retail..............................              (10.8)%
    Wholesale.................................              (81.4)%
    ----------------------------------------------------------------------

    Total Deliveries..........................              (20.4)%
    ----------------------------------------------------------------------


Operating Expenses and Taxes

          Total  operating  expenses and taxes  decreased  $16.0  million in the
first quarter of 2002 compared to the same period of 2001. Purchased power costs
decreased  $22.9  million  in the first  quarter of 2002  compared  to the first
quarter of 2001  primarily due to the absence in 2002 of a $16.0 million  charge
related to the  termination  of a  wholesale  energy  contract  in 2001.  A $9.3
million  decrease in other operating costs in the first quarter of 2002


                                       78
<PAGE>



compared to the same period of 2001 was primarily attributable to the absence of
costs related to early retirement  programs  offered to certain  bargaining unit
employees in 2001.

Net Interest Charges

          Net  interest  charges  decreased  by $1.5  million in the first three
months of 2002, compared to the same period in 2001. The decrease was attributed
to higher deferred interest related to Penelec's deferred energy costs and lower
short-term borrowing levels.

Capital Resources and Liquidity
-------------------------------

          Penelec  has  continuing   cash   requirements   for  planned  capital
expenditures  and maturing  debt.  During the remaining  three quarters of 2002,
capital  requirements for property  additions and capital leases are expected to
be about $75 million.  Penelec also has sinking fund  requirements  for maturing
long-term debt of $50.2 million during the remainder of 2002. These requirements
are  expected  to be  satisfied  from  internal  cash and/or  short-term  credit
arrangements.

          As of March 31,  2002,  Penelec  had about  $18.5  million of cash and
temporary investments and $38.1 million of short-term indebtedness.  Penelec may
borrow from its affiliates on a short-term  basis.  Penelec will not issue first
mortgage  bonds  (FMBs) other than as  collateral  for senior  notes,  since its
senior note indentures  prohibit (subject to certain exceptions) it from issuing
any debt which is senior to the senior notes. As of March 31, 2002,  Penelec had
the  capability to issue $450 million of additional  senior notes based upon FMB
collateral. Penelec has no restrictions on the issuance of preferred stock.

Market Risk Information
-----------------------

          Penelec  uses  various   market   sensitive   instruments,   including
derivative  contracts,  primarily  to  manage  the risk of  price  fluctuations.
Penelec's Risk Policy Committee,  comprised of FirstEnergy  executive  officers,
exercises an  independent  risk  oversight  function to ensure  compliance  with
corporate risk management policies and prudent risk management practices.

Commodity Price Risk

          Penelec is exposed to market risk  primarily  due to  fluctuations  in
electricity and natural gas prices.  To manage the volatility  relating to these
exposures,  Penelec uses a variety of derivative instruments,  including options
and  futures  contracts.  The  derivatives  are  used  principally  for  hedging
purposes. The change in the fair value of commodity derivative contracts related
to energy  production  during  the first  quarter of 2002 is  summarized  in the
following table:

     Change in the Fair Value of Commodity Derivative Contracts
     ----------------------------------------------------------------------
                                                             (In millions)

     Outstanding as of December 31, 2001.................        $1.3
     Contract value when entered.........................         0.2
     Increase in value of existing contracts.............         9.0
     ----------------------------------------------------------------------
     Outstanding as of March 31, 2002....................       $10.5
     ======================================================================


          The  valuation of derivative  contracts is based on observable  market
information  to the extent that such  information  is available.  In cases where
such  information is not available,  Penelec relies on model-based  information.
The model provides  estimates of future  regional  prices for electricity and an
estimate  of  related  price  volatility.  Penelec  utilizes  these  results  in
developing estimates of fair value for the later years of applicable electricity
contracts  for both  financial  reporting  purposes and for internal  management
decision  making.  Sources  of  information  for  the  valuation  of  derivative
contracts by year are summarized in the following table:


                                       79
<PAGE>


     Source of Information - Fair Value by Contract Year
     ---------------------------------------------------

                                2002*   2003     2004     Thereafter   Total
------------------------------------------------------------------------------
                                                (In millions)

  Prices actively quoted...   $ --      $0.9     $0.9       $ --       $ 1.8
  Prices based on models**.     --      --       --           8.7        8.7
  ----------------------------------------------------------------------------

    Total..................   $ --      $0.9     $0.9       $ 8.7      $10.5
==============================================================================

     *  For the remaining quarters of 2002.
     ** Relates to an embedded option that is offset by a regulatory liability
        and does not affect earnings.

          Penelec performs  sensitivity analyses to estimate its exposure to the
market risk of its  commodity  position.  A  hypothetical  10% adverse  shift in
quoted market prices in the near term on derivative  instruments  would not have
had a material effect on Penelec's consolidated financial position or cash flows
as of March 31, 2002.

Pennsylvania Regulatory Matters
-------------------------------

          In June 2001,  Penelec entered into a settlement  agreement with major
parties in the  combined  merger  and rate  proceedings  that,  in  addition  to
resolving certain issues concerning the PPUC's approval of FirstEnergy's  merger
with GPU, also addressed Penelec's request for PLR rate relief.  Several parties
appealed  the  PPUC  decision  to the  Commonwealth  Court of  Pennsylvania.  On
February 21, 2002,  the Court affirmed the PPUC decision  regarding  approval of
the merger, remanding the decision to the PPUC only with respect to the issue of
merger savings.  The Court reversed the PPUC's decision regarding  Penelec's PLR
obligation,  and denied Penelec's  related request for rate relief. On March 25,
2002,  Penelec  filed a petition  asking the Supreme  Court of  Pennsylvania  to
review the  Commonwealth  Court  decision  denying  Penelec the ability to defer
costs associated with its PLR obligation.  If the Commonwealth  Court's decision
is affirmed by the Supreme Court of  Pennsylvania,  Penelec would have a pre-tax
write-off  of  approximately  $103.0  million  based on the March  31,  2002 PLR
deferred balance.  Also on March 25, 2002, Citizens Power filed a motion seeking
an appeal of the Commonwealth Court's decision to affirm the FirstEnergy and GPU
merger with the Supreme Court of Pennsylvania.  Penelec is unable to predict the
outcome of these matters.

Significant Accounting Policies
-------------------------------

          Penelec prepares its consolidated  financial  statements in accordance
with accounting principles generally accepted in the United States.  Application
of these  principles  often  requires a high degree of judgment,  estimates  and
assumptions  that affect its  financial  results.  All of  Penelec's  assets are
subject  to their own  specific  risks and  uncertainties  and are  periodically
reviewed  for  impairment.  Assets  related to the  application  of the policies
discussed  below are  similarly  reviewed  with  their  risks and  uncertainties
reflecting  these  specific  factors.   Penelec's  more  significant  accounting
policies are described below.

Purchase Accounting - Acquisition of GPU

          On November 7, 2001,  the merger  between  FirstEnergy  and GPU became
effective,  and Penelec  became a wholly owned  subsidiary of  FirstEnergy.  The
merger was accounted for by the purchase  method of  accounting,  which requires
judgment regarding the allocation of the purchase price based on the fair values
of the  assets  acquired  (including  intangible  assets)  and  the  liabilities
assumed.  The fair values of the acquired  assets and assumed  liabilities  were
based primarily on estimates.  The adjustments  reflected in Penelec's  records,
which are subject to adjustment in 2002 when  finalized,  primarily  consist of:
(1)  revaluation  of  certain  property,  plant  and  equipment;  (2)  adjusting
preferred stock subject to mandatory  redemption and long-term debt to estimated
fair  value;  (3)  recognizing  additional  obligations  related  to  retirement
benefits;  and  (4)  recognizing  estimated  severance  and  other  compensation
liabilities.  The excess of the purchase price over the estimated fair values of
the assets  acquired and liabilities  assumed was recognized as goodwill,  which
will be reviewed for impairment at least annually. As of March 31, 2002, Penelec
had recorded goodwill of approximately $797.4 million related to the merger.

Regulatory Accounting

          Penelec is subject to  regulation  that sets the prices  (rates) it is
permitted to charge customers based on costs that regulatory  agencies determine
Penelec is permitted to recover. At times, regulators permit the future recovery
through  rates of costs  that  would  be  currently  charged  to  expense  by an
unregulated  company.  This  rate-making  process  results in the  recording  of
regulatory assets based on anticipated  future cash inflows.  As a result of the
changing  regulatory   framework  in  Pennsylvania,   a  significant  amount  of
regulatory  assets  have been  recorded - $752.8  million as of March 31,  2002.
Penelec regularly  reviews these assets to assess their ultimate  recoverability

                                       80
<PAGE>


within the approved regulatory guidelines. Impairment risk associated with these
assets  relates to  potentially  adverse  legislative,  judicial  or  regulatory
actions in the future.

Derivative Accounting

          Determination  of appropriate  accounting for derivative  transactions
requires the involvement of management representing operations, finance and risk
assessment.  In order to determine the  appropriate  accounting  for  derivative
transactions,  the  provisions of the contract need to be carefully  assessed in
accordance  with  the  authoritative   accounting  literature  and  management's
intended use of the derivative.  New authoritative  guidance  continues to shape
the  application  of  derivative  accounting.   Management's   expectations  and
intentions  are key factors in  determining  the  appropriate  accounting  for a
derivative  transaction and, as a result,  such expectations and intentions must
be documented. Derivative contracts that are determined to fall within the scope
of SFAS 133, as amended,  must be  recorded at their fair value.  Active  market
prices are not always  available to determine  the fair value of the later years
of a contract, requiring that various assumptions and estimates be used in their
valuation. Penelec continually monitors its derivative contracts to determine if
its  activities,  expectations,  intentions,  assumptions  and estimates  remain
valid.  As  part of its  normal  operations,  Penelec  enters  into  commodities
contracts, which increase the impact of derivative accounting judgments.

Revenue Recognition

          Penelec  follows  the  accrual  method  of  accounting  for  revenues,
recognizing  revenue for  kilowatt-hours  that have been  delivered but have not
been billed  through  March 31, 2002.  The  determination  of unbilled  revenues
requires management to make various estimates including:

          o    Net energy generated or purchased for retail load
          o    Losses of energy over transmission and distribution lines
          o    Mix of kilowatt-hour usage by residential, commercial and
               industrial customers
          o    Kilowatt-hour usage of customers receiving electricity from
               alternative suppliers

Implementation of Recently Issued Accounting Standards
------------------------------------------------------

          Under SFAS 142, "Goodwill and Other Intangible  Assets," goodwill must
be tested for  impairment at least on an annual basis.  Penelec did not have any
goodwill prior to its 2001 merger.  Goodwill associated with the merger will not
be amortized,  but will be reviewed for  impairment at least  annually under the
provisions of the new standard.  Penelec expects to have its goodwill impairment
analysis completed later this year.

          In July 2001,  the Financial  Accounting  Standards  Board issued SFAS
143,  "Accounting for Asset Retirement  Obligations." The new statement provides
accounting  standards  for  retirement   obligations  associated  with  tangible
long-lived  assets  with  adoption  required  as of January  1,  2003.  SFAS 143
requires that the fair value of a liability for an asset  retirement  obligation
be  recorded  in the  period  in  which it is  incurred.  The  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset.  Over  time the  capitalized  costs are  depreciated  and the
present value of the asset retirement  liability increases resulting in a period
expense. Upon retirement,  a gain or loss will be recorded if the cost to settle
the retirement obligation differs from the carrying amount. Penelec is currently
assessing its asset  retirement  obligations  under the new standard and has not
yet determined the impact on its financial statements.


                                       81
<PAGE>


PART II.    OTHER INFORMATION
-----------------------------

Item 6.   Exhibits and Reports on Form 8-K
          --------------------------------

          (a)  Exhibits

          Exhibit
          Number
          ------

          JCP&L, Met-Ed and Penelec
          -------------------------
            12   Fixed charge ratios

          FirstEnergy, OE, CEI, Penn, JCP&L, Met-Ed and Penelec
          -----------------------------------------------------

            15   Letter from independent public accountants.

          TE
          --

               None

          Pursuant to paragraph  (b)(4)(iii)(A)  of Item 601 of Regulation  S-K,
          neither FirstEnergy, OE, CEI, TE, Penn, JCP&L, Met-Ed nor Penelec have
          filed as an exhibit to this Form 10-Q any  instrument  with respect to
          long-term debt if the respective total amount of securities authorized
          thereunder  does not exceed 10% of their  respective  total  assets of
          FirstEnergy  and  its   subsidiaries  on  a  consolidated   basis,  or
          respectively,  OE, CEI, TE, Penn, JCP&L,  Met-Ed or Penelec but hereby
          agree to furnish to the Commission on request any such documents.

          (b)  Reports on Form 8-K

          FirstEnergy
          -----------

          Seven reports on Form 8-K were filed since December 31, 2001. A report
          dated   February  21,  2002  announced  the   Commonwealth   Court  of
          Pennsylvania's decision on issues related to the merger of FirstEnergy
          and GPU,  Inc. A report  dated  February  22,  2002  reported  that an
          agreement  had been  reached  with  Utilicorp  to extend  the dates to
          terminate  the  pending  transaction.  A report  dated  March 13, 2002
          announced the extension of the Davis-Besse  refueling outage. A report
          dated  March 15, 2002  reported  the  agreement  to sell 79.9% of Avon
          Energy  Partners  Holdings  in the  United  Kingdom  to  Aquila,  Inc.
          (formerly   Utilicorp).   A  report  dated  March  25,  2002  provided
          additional  details with respect to the petition to the Supreme  Court
          of  Pennsylvania.  A report dated April 18, 2002  reported a change in
          the  registrant's  certifying  accountant.  A report dated May 9, 2002
          reported the completion of the Avon Energy Partners Holdings sale.

          OE and Penn
          -----------

          OE and Penn each filed one report on Form 8-K since December 31, 2001.
          A report  dated April 18, 2002  reported a change in the  registrant's
          certifying accountant.

          CEI and TE
          ----------

          CEI and TE each filed two reports on Form 8-K since December 31, 2001.
          A  report  dated  March  13,  2002  announced  the  extension  of  the
          Davis-Besse  refueling  outage  and a  report  dated  April  18,  2002
          reported a change in the registrant's certifying accountant.

          Met-Ed and Penelec
          ------------------

          Met-Ed  filed three  reports on Form 8-K since  December  31,  2001. A
          report dated  February 21, 2002  announced the  Commonwealth  Court of
          Pennsylvania's decision on issues related to the merger of FirstEnergy
          and GPU,  Inc.;  a report  dated  March 25, 2002  provided  additional
          details  with  respect  to  the  petition  to  the  Supreme  Court  of
          Pennsylvania;  and a report dated April 18, 2002  reported a change in
          the registrant's certifying accountant.

          JCP&L
          -----

          A report  dated April 18, 2002  reported a change in the  registrant's
          certifying accountant.

                                       82
<PAGE>











                                    SIGNATURE



          Pursuant to the  requirements of the Securities  Exchange Act of 1934,
each  Registrant  has duly  caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


May 14, 2002






                                             FIRSTENERGY CORP.
                                             -----------------
                                                Registrant

                                            OHIO EDISON COMPANY
                                            -------------------
                                                Registrant

                                          THE CLEVELAND ELECTRIC
                                          ----------------------
                                           ILLUMINATING COMPANY
                                           --------------------
                                                Registrant

                                        THE TOLEDO EDISON COMPANY
                                        -------------------------
                                                Registrant

                                        PENNSYLVANIA POWER COMPANY
                                        --------------------------
                                                Registrant

                                    JERSEY CENTRAL POWER & LIGHT COMPANY
                                    ------------------------------------
                                                Registrant

                                        METROPOLITAN EDISON COMPANY
                                        ---------------------------
                                                Registrant

                                       PENNSYLVANIA ELECTRIC COMPANY
                                       -----------------------------
                                                Registrant



                                           /s/  Harvey L. Wagner
                                     ---------------------------------------
                                                Harvey L. Wagner
                                          Vice President and Controller
                                          Principal Accounting Officer

                                       83

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