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 June 30, 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 AUGUST 8, 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...............................    1-9

     FirstEnergy Corp.

          Consolidated Statements of Income...........................     10
          Consolidated Balance Sheets.................................   11-12
          Consolidated Statements of Cash Flows.......................     13
          Report of Independent Accountants...........................     14
          Management's Discussion and Analysis of Results of
            Operations and Financial Condition........................   15-26

    Ohio Edison Company

          Consolidated Statements of Income...........................     27
          Consolidated Balance Sheets.................................   28-29
          Consolidated Statements of Cash Flows.......................     30
          Report of Independent Accountants...........................     31
          Management's Discussion and Analysis of Results of
            Operations and Financial Condition........................   32-34

     The Cleveland Electric Illuminating Company

          Consolidated Statements of Income...........................     35
          Consolidated Balance Sheets.................................   36-37
          Consolidated Statements of Cash Flows.......................     38
          Report of Independent Accountants...........................     39
          Management's Discussion and Analysis of Results of
            Operations and Financial Condition........................   40-43

     The Toledo Edison Company

          Consolidated Statements of Income...........................     44
          Consolidated Balance Sheets.................................   45-46
          Consolidated Statements of Cash Flows.......................     47
          Report of Independent Accountants...........................     48
          Management's Discussion and Analysis of Results of
            Operations and Financial Condition........................   49-52

     Pennsylvania Power Company

          Statements of Income........................................     53
          Balance Sheets..............................................   54-55
          Statements of Cash Flows....................................     56
          Report of Independent Accountants...........................     57
          Management's Discussion and Analysis of Results of
            Operations and Financial Condition.......................    58-59

     Jersey Central Power & Light Company

          Consolidated Statements of Income...........................     60
          Consolidated Balance Sheets.................................   61-62
          Consolidated Statements of Cash Flows.......................     63
          Report of Independent Accountants...........................     64
          Management's Discussion and Analysis of Results of
            Operations and Financial Condition........................   65-69


<PAGE>


                           TABLE OF CONTENTS (Cont'd)


                                                                         Pages


     Metropolitan Edison Company

          Consolidated Statements of Income...........................     70
          Consolidated Balance Sheets.................................   71-72
          Consolidated Statements of Cash Flows.......................     73
          Report of Independent Accountants...........................     74
          Management's Discussion and Analysis of Results of
            Operations and Financial Condition........................   75-78

     Pennsylvania Electric Company

          Consolidated Statements of Income...........................     79
          Consolidated Balance Sheets.................................   80-81
          Consolidated Statements of Cash Flows.......................     82
          Report of Independent Accountants...........................     83
          Management's Discussion and Analysis of Results of
            Operations and Financial Condition........................   84-87

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, 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.  OE's  preferred  securities  and the related
Junior Subordinated Debentures will be optionally redeemed August 15, 2002.

          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 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

                                        1

<PAGE>

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.

         Securitized Transition Bonds-

           On June 11, 2002, JCP&L Transition Funding LLC (the Issuer), a wholly
owned limited liability company of JCP&L, sold $320 million of transition bonds
to securitize the recovery of JCP&L's bondable stranded costs associated with
the previously divested Oyster Creek Nuclear Generating Station.

           JCP&L does not own or did not purchase any of the transition bonds,
which are included in Long-term debt on FirstEnergy's and JCP&L's Consolidated
Balance Sheet. The transition bonds represent obligations only of the Issuer and
are collateralized solely by the equity and assets of the Issuer, which consist
primarily of bondable transition property. The bondable transition property is
solely the property of the Issuer.

           Bondable transition property is a presently existing property right
which includes the right to charge, collect and receive from JCP&L's utility
customers, through a non-bypassable transition bond charge, the principal amount
and interest on the transition bonds and other fees and expenses associated with
their issuance. JCP&L, as servicer, manages and administers the bondable
transition property, including the billing, collection and remittance of the
transition bond charge, pursuant to a servicing agreement with the Issuer. JCP&L
is entitled to a quarterly servicing fee of $100,000 that is payable from
transition bond charge collections.

         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 $133.0
million included in Accumulated Other Comprehensive Loss (AOCL) as of June 30,
2002, for derivative hedging activity as compared to the March 31, 2002 balance
of $133.6 million in AOCL, resulted from the sale of $6.0 million of derivative
losses with Avon, a $3.8 million loss related to current hedging activity and
$1.6 million of net hedge gains included in earnings during the quarter.
Approximately $15.7 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 $911
million (OE-$92 million, CEI-$152 million, TE-$101 million, Penn-$36 million,
JCP&L-$115 million, Met-Ed-$56 million, Penelec-$51 million, ATSI-$28 million,
FES-$184 million and other subsidiaries -$96 million) is applicable to 2002.
Investments for additional nuclear fuel during the 2002-2006 period are
estimated to be

                                        2

<PAGE>


approximately $515 million (OE-$141 million, CEI-$169 million,
TE-$114 million and Penn-$91 million), of which approximately $54 million
(OE-$16 million, CEI-$17 million, TE-$11 million and Penn-$10 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 $31,500 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.

           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 June 30, 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,


                                        3
<PAGE>


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  $57.3  million  (JCP&L-$50.0  million,
CEI-$2.8 million, TE-$0.2 million, Met-Ed-$0.2 million, Penelec-$0.4 million and
other-$3.7  million)  as  of  June  30,  2002.   FirstEnergy  does  not  believe
environmental  remediation  costs  will have a  material  adverse  effect on its
financial condition, cash flows or results of operations.

       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.

          El  Barranquilla,  a wholly owned subsidiary of GPU Power, is a 28.67%
equity  investor  in  Termobarranquilla  S.A.,  Empresa  de  Servicios  Publicos
(TEBSA),  which owns a Colombian independent power generation project. GPU Power
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 $286  million as of June 30,
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.

           In June 2002, the private TEBSA equity investors, including El
Barranquilla, entered into global settlement agreements with the TEBSA Project
lenders, and CORELCA (the government-owned Colombian electric utility with an
ownership interest in the Project) resolving all outstanding events of default
and other disclosure related issues which had been raised regarding the Project.

           Also in June 2002, the DIAN (the Colombian national tax authority)
notified TEBSA that it had determined that TEBSA did not violate certain foreign
exchange regulations regarding the Project lease finance arrangements (for which
the DIAN had initially sought to assess statutory penalties of approximately
$200 million) and that the DIAN had closed the matter.

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."

          Upon  completion  of its  merger  with GPU,  FirstEnergy  accepted  an
October 2001 offer from Aquila,  Inc.  (formerly  UtiliCorp  United) 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  received  approximately  $155  million  in cash
proceeds and  approximately  $87 million of long-term  notes  (representing  the
present value of $19 million per year to be received over six years beginning in
2003) from Aquila for its 79.9  percent  interest.  As of May 8, 2002,  Avon had
approximately $380 million in cash and cash equivalents.  The transaction closed
on May 8, 2002 and reflected  the March 2002  modification  of Aquila's  initial
offer  such  that  Aquila   acquired  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  own all of the  outstanding  shares  of Avon
through a jointly owned subsidiary, with each company having a 50-percent voting
interest.  Originally,  in accordance with applicable  accounting guidance,  the
earnings of those foreign  operations were anticipated cash flows 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.


                                        4

<PAGE>

GPU's former Argentina  operations were also identified by FirstEnergy
for divestiture within twelve months of the merger date.  FirstEnergy determined
the fair value of its Argentina operations,  GPU Empresa Distribuidora Electrica
Regional S.A. and affiliates (Emdersa),  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 Emdersa's estimated fair value. These events include currency
devaluation,  restrictions  on  repatriation  of cash, and the  anticipation  of
future asset sales in that region by competitors. Based on its assessment of the
probability of sale and several other key assumptions such as pricing, growth of
customer base and the timing of an economic recovery, FirstEnergy has determined
that it is not probable that the current  economic  conditions in Argentina have
eroded the fair value recorded for Emdersa; as a result, an impairment writedown
of this  investment  is not  warranted  as of June 30,  2002.  FirstEnergy  will
continue to assess the potential impact of these and other related events on the
realizability of the value recorded for Emdersa. FirstEnergy continues to pursue
divesting  Emdersa and, in accordance with EITF Issue No. 87-11,  has classified
its assets and liabilities in the Consolidated  Balance Sheet as "Assets Pending
Sale" and  "Liabilities  Related to Assets  Pending Sale".  Potential  investors
recently retained a financial advisor to assist in the due diligence process and
FirstEnergy  expects that preliminary  negotiations  with those investors may be
completed in the third  quarter of 2002.  If  FirstEnergy  has not completed the
sale of all of its interest in Emdersa or has not reached a definitive agreement
to sell such  interest  by  November 6, 2002,  those  assets  would no longer be
classified as "Assets Pending Sale" on FirstEnergy's  Consolidated Balance Sheet
and  Emdersa's   results  of  operations  would  be  included  on  FirstEnergy's
Consolidated  Statement of Income. In addition,  Emdersa's cumulative results of
operations (from November 7, 2001 through the date that it would become probable
that a definitive sale agreement for all of FirstEnergy's  interest would not be
reached by November 6, 2002) would be  reflected on  FirstEnergy's  Consolidated
Statement of Income as a "Cumulative  Effect of a Change in  Accounting".  As of
June 30, 2002, that adjustment  would have reduced  FirstEnergy's  net income by
approximately $95 million ($0.33 per share of common stock). Other international
operations 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). On August 8, 2002,
FirstEnergy  notified NRG that it was canceling the agreement because NRG stated
that it could not  complete  the  transaction  under the  original  terms of the
agreement. FirstEnergy also notified NRG that FirstEnergy is reserving the right
to pursue legal action  against NRG, its affiliate and its parent,  Xcel Energy,
for damages  based on the  anticipatory  breach of the  agreement.  As a result,
FirstEnergy  will pursue  opportunities  with other  parties who have  expressed
interest in purchasing the plants. FirstEnergy believes that an agreement can be
reached with another  buyer on a timely  basis and that no  impairment  of these
assets is  appropriate.  The net  after-tax  gain from such  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.

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.

                                        5

<PAGE>


           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 annualized shopping levels as of June 30, 2002,
FirstEnergy believes the remaining maximum potential recovery reductions are
OE's of approximately $31 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 the level of unbundled rate components
after July 31, 2003 to be determined in a rate case, which JCP&L filed on August
1, 2002. 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. In addition to basic electric industry deregulation
provisions discussed above, the Final Order also confirms the establishment of a
non-bypassable societal benefits charge (SBC) 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. JCP&L submitted two rate filings with NJBPU on August 1, 2002. The first
filing related to the level of unbundled rate components after July 31, 2003.
The second filing was a request to recover deferred costs that exceeded amounts
being recovered under the current MTC and SBC rates; one proposed method of
recovery of these costs is securitization of the deferred balance. The deferred
costs and JCP&L's current Oyster Creek securitization methodology which is
similar to the rate filing proposal is discussed in the following paragraph.
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, there would be no effect to
FirstEnergy's or JCP&L'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 June 30, 2002, the
accumulated deferred cost balance totaled approximately $365 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 provided for a
usage-based non-bypassable transition bond charge and for the transfer of the
bondable transition property to another entity. JCP&L sold $320 million
transition bonds through a new wholly owned subsidiary, JCP&L Transition Funding
LLC, in May 2002, which is 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, there would be no
effect to FirstEnergy's, Met-Ed's or Penelec's net income since the contingency
existed prior to the merger.


                                       6
<PAGE>

           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.

           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 in June and July 2001
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,
there would be no adverse  effect to  FirstEnergy's,  Met-Ed's or Penelec'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 -- based on the results of the transition analysis, no impairment of
goodwill is required. 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 second quarter
of 2001 and the first half of 2001 of $146 million and $244 million,
respectively, would have been $160 million and $271 million, respectively,
excluding goodwill amortization.

           In June 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 has identified various applicable legal obligations as
defined under the new standard and expects to complete an analysis of their
financial impact in the second half of 2002.

           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
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.



                                        8
<PAGE>

<TABLE>
<CAPTION>


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

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

       June 30, 2002
       -------------
External revenues.....................    $ 2,161         $  696     $   86     $     6    (a)        $ 2,949
Internal revenues.....................        177            417        125        (719)   (b)             --
   Total revenues.....................      2,338          1,113        211        (713)                2,949
Depreciation and amortization.........        233              6         12          --                   251
Net interest charges..................        156              7        102         (15)   (b)            250
Income taxes..........................        213              5        (33)         --                   185
Income before cumulative effect of a
   change in accounting...............        273              7        (47)         --                   233
Net income (loss).....................        273              7        (47)         --                   233
Total assets..........................     30,261          2,010      2,009          --                34,280
Property additions....................        120             72         32         --                    224


       June 30, 2001
       -------------
External revenues.....................    $ 1,260         $  499     $    1     $    44    (a)        $ 1,804
Internal revenues.....................        223            448         64        (735)   (b)             --
   Total revenues.....................      1,483            947         65        (691)                1,804
Depreciation and amortization.........        196              4          7          --                   207
Net interest charges..................        107             13          8          (7)   (b)            121
Income taxes..........................        158            (41)         3          --                   120
Income before cumulative effect of
   a change in accounting.............        159            (17)         4          --                   146
Net income (loss).....................        159            (17)         4          --                   146
Total assets..........................     15,494          2,154        490          --                18,138
Property additions....................         36             84          5          --                   125


Six Months Ended:
----------------

       June 30, 2002
       -------------
External revenues.....................    $ 4,156         $1,374     $  209     $    12    (a)        $ 5,751
Internal revenues.....................        532            827        242      (1,601)   (b)             --
   Total revenues.....................      4,688          2,201        451      (1,589)                5,751
Depreciation and amortization.........        477             13         24          --                   514
Net interest charges..................        317             17        205         (29)   (b)            510
Income taxes..........................        375            (37)       (73)         --                   265
Income before cumulative effect of a
   change in accounting...............        471            (53)      (100)         --                   318
Net income (loss).....................        471            (53)       (68)         --                   350
Total assets..........................     30,261          2,010      2,009          --                34,280
Property additions....................        264            110         46          --                   420


       June 30, 2001
       -------------
External revenues.....................    $ 2,569         $1,132     $    2     $    87    (a)        $ 3,790
Internal revenues.....................        557            948        129      (1,634)   (b)             --
   Total revenues.....................      3,126          2,080        131      (1,547)                3,790
Depreciation and amortization.........        411              8         15          --                   434
Net interest charges..................        252              9         16         (30)   (b)            247
Income taxes..........................        225            (28)         7          --                   204
Income before cumulative effect of
   a change in accounting.............        282            (41)        11          --                   252
Net income (loss).....................        282            (49)        11          --                   244
Total assets..........................     15,494          2,154        490          --                18,138
Property additions....................         89            178          9          --                   276


<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.

</FN>
</TABLE>

                                                        9

<PAGE>



<TABLE>
<CAPTION>

                                                          FIRSTENERGY CORP.

                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)

                                                                 Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                               ------------------------        ------------------------
                                                                  2002          2001              2002          2001
                                                               ----------    ----------        ----------    ----------
                                                                       (In thousands, except per share amounts)
<S>                                                            <C>           <C>               <C>           <C>
REVENUES:
   Electric utilities.....................................     $2,210,316    $1,260,511        $4,264,292    $2,571,800
   Unregulated businesses.................................        738,392       543,635         1,486,573     1,218,087
                                                               ----------    ----------        ----------    ----------
       Total revenues.....................................      2,948,708     1,804,146         5,750,865     3,789,887
                                                               ----------    ----------        ----------    ----------

EXPENSES:
   Fuel and purchased power...............................        802,623       300,528         1,527,642       625,107
   Purchased gas..........................................        145,954       173,557           352,181       526,374
   Other operating expenses...............................        936,156       643,846         1,946,807     1,289,249
   Provision for depreciation and amortization............        250,705       206,606           513,533       433,820
   General taxes..........................................        145,106        92,186           317,094       211,608
                                                               ----------    ----------        ----------    ----------
       Total expenses.....................................      2,280,544     1,416,723         4,657,257     3,086,158
                                                               ----------    ----------        ----------    ----------

INCOME BEFORE INTEREST AND INCOME TAXES...................        668,164       387,423         1,093,608       703,729
                                                               ----------    ----------        ----------    ----------

NET INTEREST CHARGES:
   Interest expense.......................................        231,782       116,342           473,347       234,561
   Capitalized interest...................................         (6,605)      (12,296)          (12,419)      (21,119)
   Subsidiaries' preferred stock dividends................         25,105        16,919            49,176        33,853
                                                               ----------    ----------        ----------    ----------
       Net interest charges...............................        250,282       120,965           510,104       247,295
                                                               ----------    ----------        ----------    ----------

INCOME TAXES..............................................        184,572       120,439           265,401       204,208
                                                               ----------    ----------        ----------    ----------

INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE
   IN ACCOUNTING..........................................        233,310       146,019           318,103       252,226

Cumulative effect of accounting change (net of income
   taxes(benefit) of $13,600,000 and $(5,839,000),
   respectively)(Notes 1 and 3)... .......................             --            --            31,700        (8,499)
                                                               ----------    ----------        ----------    ----------

NET INCOME................................................     $  233,310    $  146,019        $  349,803    $  243,727
                                                               ==========    ==========        ==========    ==========

BASIC EARNINGS PER SHARE OF COMMON STOCK:
   Income before cumulative effect of accounting change...         $  .80        $  .67             $1.08         $1.16
   Cumulative effect of accounting change (net of
   income taxes)(Notes 1 and 3)...........................             --            --               .11          (.04)
                                                                   ------        ------             -----         -----
    Net income............................................         $  .80        $  .67             $1.19         $1.12
                                                                   ======        ======             =====         =====

WEIGHTED AVERAGE NUMBER OF BASIC SHARES
   OUTSTANDING............................................        293,080       218,372           292,935       218,239
                                                                  =======       =======           =======       =======

DILUTED EARNINGS PER SHARE OF COMMON STOCK:
   Income before cumulative effect of accounting change...         $  .79        $  .67             $1.08         $1.15
   Cumulative effect of accounting change (net of income
   taxes)(Notes 1 and 3)..................................             --            --               .11          (.04)
                                                                   ------        ------             -----         -----
    Net income............................................         $  .79        $  .67             $1.19         $1.11
                                                                   ======        ======             =====         =====

WEIGHTED AVERAGE NUMBER OF DILUTED SHARES
   OUTSTANDING............................................        294,589       219,540           294,472       219,235
                                                                  =======       =======           =======       =======

DIVIDENDS DECLARED PER SHARE OF COMMON STOCK..............          $.375         $.375            $  .75        $  .75
                                                                    =====         =====            ======        ======


<FN>


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

</FN>
</TABLE>

                                                         10

<PAGE>


<TABLE>
<CAPTION>

                                                          FIRSTENERGY CORP.

                                                     CONSOLIDATED BALANCE SHEETS


                                                                                    (Unaudited)
                                                                                      June 30,       December 31,
                                                                                       2002              2001
                                                                                    -----------      ------------
                                                                                           (In thousands)

                             ASSETS
                             ------
<S>                                                                                 <C>              <C>
CURRENT ASSETS:
   Cash and cash equivalents.................................................       $   359,050      $   220,178
   Receivables-
     Customers (less accumulated provisions of $63,387,000 and $65,358,000,
       respectively, for uncollectible accounts).............................         1,069,580        1,074,664
     Other (less accumulated provisions of $7,490,000 and $7,947,000,
       respectively, for uncollectible accounts).............................           562,201          473,550
   Materials and supplies, at average cost-
     Owned...................................................................           243,785          256,516
     Under consignment.......................................................           157,312          141,002
   Other.....................................................................           355,996          336,610
                                                                                    -----------      -----------
                                                                                      2,747,924        2,502,520
                                                                                    -----------      -----------

ASSETS PENDING SALE (Note 3).................................................           299,502        3,418,225
                                                                                    -----------      -----------



PROPERTY, PLANT AND EQUIPMENT:
   In service................................................................        20,330,032       19,981,749
   Less--Accumulated provision for depreciation..............................         8,428,662        8,161,022
                                                                                    -----------      -----------
                                                                                     11,901,370       11,820,727
   Construction work in progress.............................................           582,559          607,702
                                                                                    -----------      -----------
                                                                                     12,483,929       12,428,429
                                                                                    -----------      -----------


INVESTMENTS:
   Capital trust investments.................................................         1,109,606        1,166,714
   Nuclear plant decommissioning trusts......................................         1,063,306        1,014,234
   Letter of credit collateralization........................................           277,763          277,763
   Pension investments.......................................................           288,609          273,542
   Other.....................................................................           964,699          898,311
                                                                                    -----------      -----------
                                                                                      3,703,983        3,630,564
                                                                                    -----------      -----------


DEFERRED CHARGES:
   Regulatory assets.........................................................         8,593,052        8,912,584
   Goodwill..................................................................         5,604,967        5,600,918
   Other.....................................................................           846,231          858,273
                                                                                    -----------      -----------
                                                                                     15,044,250       15,371,775
                                                                                    -----------      -----------
                                                                                    $34,279,588      $37,351,513
                                                                                    ===========      ===========



</TABLE>

                                                        11

<PAGE>


<TABLE>
<CAPTION>


                                                          FIRSTENERGY CORP.

                                                     CONSOLIDATED BALANCE SHEETS



                                                                                    (Unaudited)
                                                                                      June 30,       December 31,
                                                                                       2002              2001
                                                                                    ------------     ------------
                                                                                            (In thousands)

                CAPITALIZATION AND LIABILITIES
                ------------------------------
<S>                                                                                 <C>              <C>
CURRENT LIABILITIES:

   Currently payable long-term debt and preferred stock......................       $ 2,320,010      $ 1,867,657
   Short-term borrowings.....................................................           644,849          614,298
   Accounts payable..........................................................           741,958          704,184
   Accrued taxes.............................................................           505,275          418,555
   Other.....................................................................           989,722        1,064,763
                                                                                    -----------      -----------
                                                                                      5,201,814        4,669,457
                                                                                    -----------      -----------

LIABILITIES RELATED TO ASSETS PENDING SALE (Note 3)..........................           135,531        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...................................................         6,106,334        6,113,260
     Accumulated other comprehensive loss....................................          (134,035)        (169,003)
     Retained earnings.......................................................         1,652,006        1,521,805
     Unallocated employee stock ownership plan common stock -
       4,461,795 and 5,117,375 shares, respectively..........................           (88,615)         (97,227)
                                                                                    -----------      -----------
         Total common stockholders' equity...................................         7,565,454        7,398,599
   Preferred stock of consolidated subsidiaries-
     Not subject to mandatory redemption.....................................           335,123          480,194
     Subject to mandatory redemption.........................................            20,379           65,406
   Subsidiary-obligated mandatorily redeemable preferred securities..........           409,658          529,450
   Long-term debt............................................................        11,076,972       11,433,313
                                                                                    -----------      -----------
                                                                                     19,407,586       19,906,962
                                                                                    -----------      -----------

DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         2,757,711        2,684,219
   Accumulated deferred investment tax credits...............................           247,990          260,532
   Nuclear plant decommissioning costs.......................................         1,252,100        1,201,599
   Power purchase contract loss liability....................................         3,207,954        3,566,531
   Other postretirement benefits.............................................           870,703          838,943
   Other.....................................................................         1,198,199        1,268,517
                                                                                    -----------      -----------
                                                                                      9,534,657        9,820,341
                                                                                    -----------      -----------

COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2)...........................
                                                                                    -----------      -----------
                                                                                    $34,279,588      $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>

                                                       12

<PAGE>


<TABLE>
<CAPTION>


                                                          FIRSTENERGY CORP.

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (Unaudited)



                                                                  Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                -----------------------         -----------------------
                                                                  2002          2001               2002         2001
                                                                ---------     ---------         ---------     ---------
                                                                                     (In thousands)
<S>                                                             <C>           <C>               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................      $ 233,310     $ 146,019         $ 349,803     $ 243,727
   Adjustments to reconcile net income to net cash from
     operating activities-
       Provision for depreciation and amortization........        250,705       206,606           513,533       433,820
       Nuclear fuel and lease amortization................         19,598        24,226            40,563        48,201
       Other amortization, net............................         (4,386)       (4,039)           (7,923)       (7,672)
       Deferred costs recoverable as regulatory assets....        (68,936)           --          (139,070)           --
       Deferred income taxes, net.........................         50,355       (19,373)           43,421       (35,308)
       Investment tax credits, net........................         (6,967)       (4,988)          (13,713)       (9,986)
       Cumulative effect of accounting change.............             --            --           (45,300)       14,338
       Receivables........................................       (150,157)       (5,609)          (83,567)       23,585
       Materials and supplies.............................        (21,742)      (37,219)           (3,579)      (44,262)
       Accounts payable...................................         47,766       (38,019)           37,774      (107,679)
       Other..............................................        (87,423)      (99,111)           34,265      (168,168)
                                                                ---------     ---------         ---------     ---------
         Net cash provided from operating activities......        262,123       168,493           726,207       390,596
                                                                ---------     ---------         ---------     ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Long-term debt.......................................        261,699       254,877           366,730       255,499
     Short-term borrowings, net...........................             --        16,367            30,551        58,481
   Redemptions and Repayments-
     Common stock.........................................             --            --                --        15,308
     Preferred stock......................................          5,000        10,716           190,299        10,716
     Long-term debt.......................................        194,738        74,345           378,643        95,561
     Short-term borrowings, net...........................         85,005            --                --            --
   Common stock dividend payments.........................        109,876        81,864           219,602       163,617
                                                                ---------     ---------         ---------     ---------
         Net cash used for (provided from) financing
          activities .....................................        132,920      (104,319)          391,263       (28,778)
                                                                ---------     ---------         ---------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions.....................................        224,399       125,322           419,691       276,498
   Proceeds from sale of Midlands.........................       (155,034)           --          (155,034)           --
   Avon cash and cash equivalents(Note 3).................        380,496            --           (31,326)           --
   Net assets held for sale...............................        (63,624)           --            (2,059)           --
   Cash investments.......................................        (68,365)       (3,463)          (64,022)      (32,601)
   Other..................................................         99,998       (11,770)           28,822        19,516
                                                                ---------     ---------         ---------     ---------
         Net cash used for investing activities...........        417,870       110,089           196,072       263,413
                                                                ---------     ---------         ---------     ---------

Net increase (decrease) in cash and cash equivalents......       (288,667)      162,723           138,872       155,961
Cash and cash equivalents at beginning of period*.........        647,717        42,496           220,178        49,258
                                                                ---------     ---------         ---------     ---------
Cash and cash equivalents at end of period*...............      $ 359,050     $ 205,219         $ 359,050     $ 205,219
                                                                =========     =========         =========     =========


<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>

                                                     13




<PAGE>


                    REPORT OF INDEPENDENT  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 June 30, 2002,  and the related  consolidated
statements  of income and cash flows for each of the  three-month  and six-month
periods ended June 30, 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 for them
to be in conformity with accounting principles generally accepted in the United
States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
August 8, 2002


                                        14


<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).

          FirstEnergy - which acquired the former GPU, Inc., in November of 2001
- provides domestic regulated electric  distribution  services through its seven
wholly owned  electric  utility  subsidiaries.  Ohio Edison  Company  (OE),  The
Cleveland Electric Illuminating Company (CEI), Pennsylvania Power Company (Penn)
and The Toledo  Edison  Company (TE)  provide  regulated  electric  distribution
services  to  customers  in Ohio and  Pennsylvania,  and  American  Transmission
Systems,  Inc.  provides  transmission  services.  Metropolitan  Edison  Company
(Met-Ed),  Pennsylvania  Electric Company (Penelec),  and Jersey Central Power &
Light  Company  (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  electricity,  natural gas and
energy management services, in competitive markets.  These products and services
are often bundled under master  contracts.  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.  FirstEnergy  also offers  electric  distribution  services
through international operations that were acquired in the GPU merger, including
GPU Capital,  Inc., and GPU Power,  Inc. GPU Capital,  Inc. and its subsidiaries
provide electric distribution services and GPU Power, Inc., and its subsidiaries
develop, own and operate electric generation facilities.

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

          Net income in the second quarter of 2002 was $233.3 million,  or basic
earnings of $0.80 per share of common stock ($0.79 diluted),  compared to $146.0
million,  or $0.67 per share of common  stock  (basic and diluted) in the second
quarter  of 2001.  During  the first six  months of 2002,  net income was $349.8
million, or $1.19 per share of common stock (basic and diluted), compared to net
income of $243.7  million,  or basic earnings of $1.12 per share of common stock
($1.11  diluted)  in the first six months of 2001.  Results in the first half of
2002 and 2001 include the  cumulative  effect of accounting  changes  (described
below).  Before the  cumulative  effect of  accounting  changes,  net income was
$318.1  million in the first six months of 2002,  compared to $252.2 million for
the same period of 2001.  Basic and diluted  earnings  per share of common stock
before the cumulative effect of accounting  changes were $1.08 in the first half
of 2002, compared to $1.16 ($1.15 diluted) in the first six months of 2001.

          Results  for the second  quarter  and first half of 2002  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
second quarter and  year-to-date  periods of 2002. Costs related to the extended
outage at the  Davis-Besse  nuclear plant (see Supply Plan) reduced  earnings by
$0.09 per share in the second quarter and year-to-date  periods of 2002. Several
one-time  charges  resulted 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  second  quarter of 2002,
compared to the same period last year and $0.09 per share of common stock (basic
and diluted) in the first half of 2002, compared to the corresponding  period of
2001.

Revenues

          Total  revenues  increased $1.1 billion in the second quarter and $2.0
billion in the first six months of 2002,  compared to the same  periods in 2001.
Excluding results of the former GPU companies, total revenues decreased by $12.2
million or 0.7% in the second  quarter  and $344.6  million or 9.1% in the first
half of 2002, compared to the corresponding  periods of 2001. Sources of changes
in pre-merger and  post-merger  revenues during the second quarter and first six
months of 2002, compared with the corresponding  periods of 2001, are summarized
in the following table:

                                        15

<PAGE>


  Sources of Revenue Changes
  --------------------------
  Increase (Decrease)
                                                  Periods Ending June 30, 2002
                                                  ----------------------------
                                                    3 Months         6 Months
                                                  -----------      -----------
                                                           (In millions)
  Pre-Merger Companies:

  Electric Utilities (Regulated Services):
    Retail electric sales........................    $  (16.3)       $ (217.5)
    Other revenues...............................       (20.2)          (17.7)
                                                     --------        --------

  Total Electric Utilities.......................       (36.5)         (235.2)
                                                     --------        --------

  Unregulated Businesses (Competitive Services):
    Retail electric sales........................         8.2            (0.8)
    Wholesale electric sales.....................        62.9           124.3
    Gas sales....................................       (14.9)         (141.6)
    Other businesses.............................       (31.9)          (91.3)
                                                     --------        --------

  Total Unregulated Businesses...................        24.3          (109.4)
                                                     --------        --------

  Total Pre-Merger Companies.....................       (12.2)         (344.6)
                                                     --------        --------

  Former GPU Companies:
    Electric utilities...........................       986.3         1,927.8
    Unregulated businesses.......................       230.8           487.2
                                                     --------        --------

  Total Former GPU Companies.....................     1,217.1         2,415.0

  Intercompany Revenues..........................       (60.3)         (109.4)
                                                     --------        --------

  Net Revenue Increase...........................    $1,144.6        $1,961.0
                                                     ========        ========

Electric Sales

          Shopping by Ohio customers for alternative  energy suppliers  combined
with a weak but recovering  economy  reduced retail  electric sales revenues for
FirstEnergy's  pre-merger  electric utility operating companies (EUOCs) by $16.3
million in the  second  quarter  and  $217.5  million in the first six months of
2002,  compared to the same  periods of 2001.  Kilowatt-hour  sales to regulated
retail  customers  decreased  10.1% in the second quarter and 18.4% in the first
half of 2002,  which reduced retail electric sales revenues by $24.5 million and
$127.0  million,  respectively.  Sales of  electric  generation  by  alternative
suppliers  in the EUOCs'  franchise  areas  increased  to 21.1% of total  energy
delivered in the second  quarter of 2002,  compared to 11.8% in the same quarter
last year. In the first six months of 2002,  the EUOCs' share of  franchise-area
sales declined by 13.4 percentage  points,  compared to the same period of 2001.
Although  generation  kilowatt-hour  sales continued to be adversely affected by
economic  conditions in the regional  industrial base, the second quarter impact
was moderated by a gradual recovery, as well as warmer weather in June, compared
to the second quarter of 2001.

          Revenue from distribution  deliveries increased by $28.4 million, more
than  offsetting  the lower  generation  sales revenues in the second quarter of
2002,  compared to the same quarter of 2001, due to an overall 0.6% net increase
in kilowatt-hour  deliveries to franchise  customers.  The net increase resulted
from additional  kilowatt-hour deliveries to residential customers (9.4% higher)
that were  substantially  offset by a 2.4%  decrease in deliveries to commercial
and  industrial  customers.  Unusually  warm weather in June 2002  increased the
air-conditioning demand of residential customers,  compared to last year. During
the first six months of 2002,  a 4.6%  decline in  kilowatt-hour  deliveries  to
franchise  customers  reduced  retail  electric sales revenues by $42.1 million,
compared  to the  same  period  in 2001.  The  reduced  distribution  deliveries
resulted from a 6.9%  reduction in deliveries to the  commercial  and industrial
sectors,  which  were  offset  in  part  by a  1.2%  increase  in  kilowatt-hour
deliveries to residential  customers.  While some evidence of a modest  economic
recovery  began in the first half of 2002,  the tentative  recovery has not been
broad  based  and  reduced  sales  to  the  steel  sector  continue  to  depress
FirstEnergy's industrial sector.

          The remaining  decrease in regulated  retail  electric  sales revenues
resulted from additional  transition  plan  incentives  provided to customers to
promote  customer  shopping  for  alternative  suppliers - $20.5  million in the
second quarter and $48.4 million in the first half of 2002, compared to the same
periods of 2001.  These  reductions to revenue are deferred for future  recovery
under  FirstEnergy's  Ohio transition plan and do not materially  affect current
period earnings.

          Retail  electric  sales revenue of the  competitive  services  segment
increased $8.2 million in the second quarter  resulting from a 14.9% increase in
kilowatt-hour  sales from the same quarter last year. Despite a 6.7% increase in
kilowatt-hour  sales in the  first  six  months  of 2002,  a change in sales mix
resulted in revenues that were nearly  unchanged,  compared to the corresponding
period of 2001. The increase in FirstEnergy's competitive kilowatt-hour sales in
2002

                                        16

<PAGE>


occurred  primarily  in Ohio.  As of June 30, 2002,  approximately  one-third of
FirstEnergy's Ohio  franchise-area  customers serviced by alternative  suppliers
were supplied by FES.

          Wholesale  revenues  increased $65.7 million in the second quarter and
$140.1 million in the year-to-date period of 2002, compared to the corresponding
periods  last  year.   Kilowatt-hour   sales  to  the  wholesale   markets  were
correspondingly  higher,  increasing by 67% in the second  quarter and by 83% in
the first six months of 2002, compared to the same periods last year. The higher
kilowatt-hour  sales 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 sales revenues in the second
quarter of 2002 showed an increase of $57.3 million, compared to the same period
last year, due to a firming economy,  warmer weather in June and increased sales
to the wholesale  market.  The first half of 2002  reflected a decrease of $78.5
million,  compared to the first six months of last year,  principally due to the
weak  economic  environment  and customer  choice in Ohio  including  transition
incentives.

Other Sales

          Other sales  revenues  declined by $47.0 million in the second quarter
and  $233.0  million  in the  first six  months  of 2002 from the  corresponding
periods of 2001. The  elimination of coal trading  activities in the second half
of 2001 and reduced natural gas revenues were the primary  factors  contributing
to the lower revenues.  Reduced gas revenues  resulted from lower prices,  which
were offset in part by higher sales  volumes.  Despite  lower gas prices,  gross
margins for gas sales improved in 2002 (see Expenses). Reduced revenues from the
facilities  services  group also  contributed  to the  decrease  in other  sales
revenue in the second quarter and year-to-date  periods of 2002, compared to the
same periods of 2001.

Expenses

          Total  expenses  increased  $863.8  million in the second  quarter and
$1,571.1  million in the first six months of 2002 compared to the  corresponding
periods of 2001,  including  $985.6 million and $1,965.3  million of incremental
expenses related to the former GPU companies,  respectively.  For the pre-merger
companies,  total expenses  decreased by $59.9 million in the second quarter and
$282.0 million in the first half of 2002,  compared to the same periods of 2001.
Sources of changes in  pre-merger  and  post-merger  companies'  expenses in the
second  quarter and first six months of 2002,  compared  to the prior year,  are
summarized in the following table:

    Sources of Expense Changes
    --------------------------
    Increase (Decrease)
                                               Periods Ending June 30, 2002
                                               ----------------------------
                                                3 Months          6 Months
                                               ----------       -----------
                                                       (In millions)

    Pre-Merger Companies:
      Fuel and purchased power..............    $ 35.0           $  (16.2)
      Purchased gas.........................     (27.6)            (174.1)
      Other operating expenses..............     (43.6)             (10.0)
      Depreciation and amortization.........     (43.1)            (104.7)
      General taxes.........................      19.4               23.0
                                                ------           --------

      Total Pre-Merger Companies............     (59.9)            (282.0)

    Former GPU Companies....................     985.6            1,965.3

    Intercompany Expenses...................     (61.9)            (112.2)
                                                ------           --------

    Net Expense Increase....................    $863.8           $1,571.1
                                                ======           ========

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

          Fuel and purchased  power costs  increased $35.0 million in the second
quarter  but  declined  by $16.2  million  during  the first six months of 2002,
compared to the same periods of 2001. Fuel expense  increased in both the second
quarter  and  first  six  months  of 2002  ($34.5  million  and  $60.1  million,
respectively) principally due to additional internal generation and an increased
mix of  higher-cost  fossil  generation,  as well as higher  unit costs for coal
consumed  in 2002.  An extended  outage at the  Davis-Besse  nuclear  plant (see
Supply Plan) contributed to declines in nuclear  production of 16.6% and 9.8% in
the second  quarter and  year-to-date  periods of 2002 from the same  periods in
2001.  Fossil plant  production  increased 27.3% and 21.7% in the second quarter
and first six months of 2002,  compared  to the same  periods of 2001.  Overall,
internal  generation was  approximately 8% higher in both the second quarter and
first six months of 2002 than the corresponding periods of 2001. Purchased power
costs were nearly unchanged in the second quarter and $76.3 million

                                        17
<PAGE>

lower in the first six months of 2002,  compared to the same  periods last year.
Both  periods  benefited  from lower unit costs for  purchased  power;  however,
increased volume requirements  resulting in part from the Davis-Besse  unplanned
extended  outage  substantially  offset the effect of lower  costs in the second
quarter of 2002.

          Declining gas prices  resulted in reductions to purchased gas costs of
$27.6 million in the second  quarter and $174.1 million for the first six months
of 2002,  compared  to the same  periods  of 2001 - despite an  increase  in gas
volumes  purchased.  The gross margins on gas sales improved by $12.6 million in
the second  quarter  and $32.5  million in the first six months of 2002 from the
same periods last year.

          Other operating costs decreased by $43.6 million in the second quarter
of 2002,  compared to the same period of 2001.  Higher expenses  associated with
the extended outage at the Davis-Besse nuclear plant (see Supply Plan) were more
than  offset by lower  costs for the  fossil  plants.  The  elimination  of coal
trading  activities  in the second  half of 2001 was the largest  factor  ($44.5
million) reducing other operating costs in the second quarter of 2002,  compared
to the second  quarter of 2001.  The decrease in other  operating  costs for the
six-month period reflects  several  factors:  elimination of coal trading ($88.1
million),  reduced facilities service business ($24.0 million), and lower outage
related fossil plant expenditures ($35.6 million).  Those reductions were offset
in part by additional costs related to nuclear  refueling and unplanned  outages
($54.7 million) and several one-time factors ($78.2 million) in 2002, including:

        o A $30.4 million equity investment write-off related to a bankruptcy

        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)

          Charges for depreciation  and amortization  decreased $43.1 million in
the second  quarter and $104.7  million in the first six months of 2002 from the
corresponding  periods last year. These decreases  resulted from several factors
including: shopping incentive deferrals and tax-related deferrals under the Ohio
transition  plan, the  elimination of  depreciation  associated with the planned
sale of four power plants and the cessation of goodwill  amortization  beginning
January 1, 2002.  FirstEnergy's  goodwill amortization in the second quarter and
year-to-date   periods  of  2001  totaled  $14.0  million  and  $28.0   million,
respectively.

          General taxes  increased $19.4 million in the second quarter and $23.0
million  in the first six months of 2002 from the same  periods  in 2001.  These
increases  were  due in  large  part to the  successful  resolution  of  certain
property  tax  issues in the  second  quarter  of 2001  resulting  in a one-time
benefit of $15 million in that  quarter.  Additional  property  taxes  partially
offset  by  reductions  related  to the  Ohio  restructuring  accounted  for the
remaining  net  increase  in the  second  quarter  and first six months of 2002,
compared to the same periods last year.

Net Interest Charges

          Net interest  charges  increased  $129.3 million in the second quarter
and $262.8  million in the first half of 2002,  compared to the same  periods of
2001. These increases  included  interest of $68.0 million in the second quarter
and $141.9  million  in the first six months of 2002 on $4 billion of  long-term
debt issued by FirstEnergy in connection with the merger.  Excluding the results
of the former GPU  companies  and the  merger-related  financing,  net  interest
charges  decreased by $8.0 million in the second quarter and $9.8 million in the
first six months of 2002 from the corresponding  periods in 2001. Redemption and
refinancing  activities completed in the first six months of 2002 totaled $446.1
million  and are  expected  to result in  annualized  savings  of $32.1  million
(interest  rate swap  effect not  included - see Market  Risk  Information,  New
Interest Rate Swap Agreements).

Cumulative Effect of Accounting Changes

          Year-to-date  earnings in 2002 and 2001 were  affected  by  accounting
changes.  In  connection  with the  November  2001  merger,  certain  former GPU
international operations were identified as "assets pending sale." 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,
increasing  year-to-date  net  income  in 2002 by $31.7  million.  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.

                                        18

<PAGE>



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 (both
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 $272.9  million in the second quarter of 2002
and $470.8  million in the first half of 2002,  compared  to $159.2  million and
$281.8 million in the  corresponding  periods of 2001.  Excluding results of the
former GPU companies, net income increased by $25.9 million to $185.2 million in
the  second  quarter  and by $28.7  million  to $310.5  million in the first six
months of 2002.  The factors  contributing  to the  increase in  pre-merger  net
income are summarized in the following table:
   Regulated Services
   ------------------
   Increase (Decrease)

                                                Periods Ending June 30, 2002
                                                ----------------------------
                                                 3 Months         6 Months
                                                 --------         --------
                                                        (In millions)


   Revenues....................................  $(52.0)           $(260.2)
   Expenses....................................   (77.5)            (271.5)
                                                 ------            -------

   Income Before Interest and Income Taxes.....    25.5               11.3

   Net interest charges........................   (21.4)             (51.2)
   Income taxes................................    21.0               33.8
                                                 ------            -------

   Net Income Increase.........................  $ 25.9            $  28.7
                                                 ======            =======

          Lower  generation  sales  and  additional  transition  plan  incentive
credits  combined to reduce revenues in the second quarter of 2002 from the same
period in 2001.  In the first six months of 2002,  retail  generation  sales and
distribution  throughput were both down,  reflecting the combined  influences of
tepid economic  conditions and shopping by Ohio customers for alternative energy
suppliers.  Sales to FES were also lower,  due to less available  generation for
sale because of the unplanned outage at Davis-Besse.

          Expenses were lower in the second  quarter and first half of 2002 than
the  corresponding  periods of 2001,  primarily  due to lower  purchased  power,
depreciation and amortization,  and other operating  expenses.  Lower generation
sales reduced the need to purchase power from FES, which  contributed to a $31.5
million expense  decrease in the second quarter and a $121.4 million decrease in
the  first  six  months  of  2002,  compared  to the  same  periods  last  year.
Depreciation  and  amortization  declined by $48.2 million in the second quarter
and  $114.0  million in the first half of 2002,  compared  to the  corresponding
periods of 2001, due to new deferred regulatory assets under the Ohio transition
plan, the elimination of  depreciation  associated with the planned sale of four
power plants and the  cessation of goodwill  amortization  beginning  January 1,
2002.  Other  operating  expenses  also  decreased  $13.7  million in the second
quarter and $48.7 million in the first six months of 2002,  compared to the same
periods last year.  Reduced  expenses from jobbing and contracting  work lowered
other operating  expenses by  approximately  $16.6 million in the second quarter
and first  half of 2002,  compared  to the same  periods of 2001.  Net  interest
charges in the second  quarter and  year-to-date  periods of 2002  decreased  by
$21.4 million and $51.2 million, respectively, from the corresponding periods of
2001,  reflecting  the impact of net debt and preferred  stock  redemptions  and
refinancings.

Competitive Services

          Net income was $6.4 million in the second quarter of 2002, compared to
a net loss of $17.0 million in the same period of 2001. For the first six months
of 2002 the net  loss  increased  to  $53.3  million  ($14.4  million  excluding
one-time  items)  from $48.8  million in the first half of last year.  Excluding
results of the former GPU  companies,  net income was $5.7 million in the second
quarter, and the net loss was $55.2 million in the first six months of 2002. The
factors contributing to the changes in pre-merger earnings are summarized in the
following table:

                                        19

<PAGE>

   Competitive Services
   --------------------
   Increase (Decrease)

                                                    Periods Ending June 30, 2002
                                                    ----------------------------
                                                     3 Months         6 Months
                                                     --------         --------
                                                            (In millions)


   Revenues.....................................     $ 20.4            $(164.5)
   Expenses.....................................      (20.4)            (147.6)
                                                     ------            -------

   Income Before Interest and Income Taxes......       40.8              (16.9)

   Net interest charges.........................        2.4                8.3
   Income taxes.................................       15.7              (10.3)
   Cumulative effect of a change in accounting..        --                 8.5
                                                     ------            -------

   Net Income Increase (Decrease)...............     $ 22.7            $  (6.4)
                                                     ======            =======

          The increased availability of power for the electric wholesale market,
due to  additional  internal  generation  and  reduced  kilowatt-hour  sales  to
affiliates,  allowed  FES to  take  advantage  of  additional  wholesale  market
opportunities in 2002 -- increasing sales by $62.9 million in the second quarter
and $124.3 million in the first six months of 2002,  compared to the prior year.
FES retail  electric sales revenue  contributed  $8.2 million to the increase in
the second quarter of 2002 and was nearly unchanged over the first half of 2002.
As a result,  electricity sales to non-affiliates increased $71.1 million in the
second  quarter  and  $123.4  million  in the  first  half of 2002 from the same
periods last year. In the second quarter,  this increase was partially offset by
reduced sales to regulated affiliates  reflecting the impact of shopping by Ohio
customers  for  alternative  power  providers,   reduced  natural  gas  revenues
resulting from lower prices and less revenue from the facilities services group,
resulting  in  a  net  $20.4  million  increase.  In  the  year-to-date  period,
additional  electricity sales to  non-affiliates  were more than offset by lower
sales to regulated affiliates,  reduced gas revenues and lower revenues from the
facilities services group.

          Expenses  decreased by $20.4 million in the second  quarter and $147.6
million in the first six months of 2002,  compared to the same  periods of 2001.
The decrease in second  quarter  expenses was  primarily  attributable  to lower
purchased gas costs  reflecting  reduced unit costs,  lower  operating costs and
reduced  expenses  from the  facilities  service  group due to reduced  business
activity.  Other  operating  costs and purchased  power costs were lower despite
incremental  expenses  ($12.3 million other operating costs and $33.6 million of
replacement purchased power costs) related to the extended outage at Davis-Besse
(see Supply Plan). Partially offsetting these lower expenses was additional fuel
expense  resulting from additional  internal  generation and an increased mix of
higher-cost fossil generation.  Higher unit costs for coal consumed in 2002 also
added to the increase in fuel expense. Reduced expenses for the first six months
of 2002  primarily  reflect  lower  purchased  gas and  purchased  power  costs,
partially  offset by higher  fuel costs and other  operating  expenses.  Several
one-time charges (see Expenses)  increased other operating expenses in the first
six months of 2002 by $65.6 million.

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 half of 2002,  capital  requirements for property
additions and capital  leases are expected to be about $585  million,  including
$34 million for nuclear fuel. These capital  requirements include $60 million of
additional  repair costs for the unplanned  extended  outage at the  Davis-Besse
nuclear plant (see Supply Plan). FirstEnergy has additional cash requirements of
approximately  $615.4  million to meet sinking fund  requirements  for preferred
stock and maturing long-term debt during the remainder of 2002. FirstEnergy also
anticipates  optional preferred stock redemptions  during the last half
of 2002 totaling about $145.0 million.  These cash  requirements are expected to
be satisfied from internal cash and short-term  credit  arrangements.  Mandatory
and optional  redemptions and refinancings  (excluding a fixed-to-floating  rate
conversion  - discussed  below) over the  remainder  of the year are expected to
reduce interest and preferred dividends by approximately $62.7 million annually.
The sale of a 79.9%  interest in Avon to Aquila on May 8, 2002,  resulted in the
elimination from  FirstEnergy's  balance sheet of approximately  $1.7 billion of
Avon's debt, which is non-recourse to FirstEnergy. In total, FirstEnergy expects
to reduce  debt and  preferred  stock by about  $760.4  million  in the last two
quarters of 2002.  JCP&L issued $320 million of  transition  bonds in June 2002,
which  securitize  recovery of certain  stranded  costs.  Net proceeds  from the
issuance will be used to redeem higher cost debt and preferred  stock during the
second half of 2002.

          During  the  second  quarter of 2002,  FirstEnergy  entered  into five
interest  rate  swap  agreements   designed  to  exchange  fixed  interest  rate
obligations  associated with existing  long-term debt for variable interest rate
payments.  The agreements  effectively converted $668.5 million of FirstEnergy's
debt from fixed rate to floating rate.  Two additional  interest rate swaps were
completed  in July 2002 for debt with a  principal  value of $325  million  (see
Market Risk Information).

                                        20

<PAGE>


          As of June 30, 2002, FirstEnergy and its subsidiaries had about $359.1
million  of cash and  temporary  investments  and $644.8  million of  short-term
indebtedness. Available borrowings included $1.035 billion from unused revolving
lines of credit and $76 million from unused bank facilities.  Excluding property
already released under the applicable mortgage indentures related to the planned
sale of four power plants, OE, CEI, TE and Penn had the capability to issue $2.0
billion  of  additional  first  mortgage  bonds  (FMB) on the basis of  property
additions and retired bonds, as of June 30, 2002. JCP&L,  Met-Ed and Penelec had
the  capability to issue $816 million of additional  senior notes based upon FMB
collateral, as of June 30, 2002. Based upon applicable charter earnings coverage
tests through June 30, 2002,  OE, Penn, TE and JCP&L could issue $7.6 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 July 31, 2002,  Fitch revised its rating  outlook for  FirstEnergy,
CEI and TE securities to negative from stable.  The revised outlook reflects the
adverse  impact of the  unplanned  outage at the  Davis-Besse  Plant and Fitch's
judgment at that time about NRG's  financial  ability to consummate the purchase
of four power plants from  FirstEnergy  and Fitch's  expectation  of  subsequent
delay in debt reduction.

          On August 1, 2002, the Standard & Poor's Utilities  Ratings Team (S&P)
concluded that while NRG's liquidity  position added  uncertainty to its sale of
power plants to NRG,  FirstEnergy's  ratings  would not be  affected.  S&P found
FirstEnergy  cash flows  sufficiently  stable to support a  continued  (although
delayed) program of debt and preferred stock redemption. S&P noted that it would
continue to closely monitor FirstEnergy's progress on various initiatives.

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.

New Interest Rate Swap Agreements
---------------------------------

          During  the  second  quarter of 2002,  FirstEnergy  entered  into five
interest rate swap  agreements and two additional  interest rate swap agreements
were  subsequently  completed  in  July  2002.  The  transactions   collectively
increased the  proportion of variable rate  obligations  in  FirstEnergy's  debt
portfolio  from 14% at the  beginning  of 2002 to a level of  approximately  22%
expected by year end, with the variable  interest rate payments based on the six
month  LIBOR rate plus a fixed  spread.  These  derivatives  are treated as fair
value hedges of fixed-rate,  long-term debt issues - protecting against the risk
changes in the fair value of fixed-rate  debt  instruments due to lower interest
rates.  Swap maturities,  call options and interest payment dates match those of
the   underlying   obligations.   The   following   summarizes   the   principal
characteristics of the new swap agreements.

                                Debt Hedged
                             -----------------
                                         Fixed      Principal     June 30, 2002
                             Issuer     Coupon       Amount      Swap Fair Value
                             ------     ------      ---------     -------------
                                                         ($ millions)
Completed in June 2002
----------------------
                             JCP&L      6.750%        $150.0         $ (1.5)
                             CEI        9.000%         150.0           (4.0)
                             OE         7.625%          75.0           (2.5)
                             OE         7.875%          93.5           (2.4)
                             FE         5.500%         200.0           (0.3)
                                                      ------         ------

                                                       668.5         $(10.7)
                                                                     ======

Completed in July 2002
----------------------
                             JCP&L      7.500%          125.0
                             FE         5.500%          200.0
                                                       ------

                             Total                     $993.5
                                                       ======

          The average fixed rate of the hedged debt above is 6.85%,  compared to
an  average  variable  rate of 3.16% to be paid by  FirstEnergy  under  the swap
agreements.  FirstEnergy  accrues  interest  on the  hedged  debt at the  lower,
variable rate. In the event FirstEnergy or its swap counterparties terminate the
transactions  before the  underlying  debt issues  mature,  payments are made or
received  equal to the fair  value of the swaps at that  time and are  amortized
over the remaining life of the hedged debt.


                                        21

<PAGE>


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 second quarter of
2002 is summarized in the following table:

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

   Outstanding net asset as of March 31, 2002.................      $ 25.6
   New contract value when entered............................         0.1
   Decrease in value of existing contracts....................       (22.9)
   Change in techniques/assumptions...........................        --
   Settled contracts..........................................        (0.8)
                                                                    ------

   Outstanding net asset as of June 30, 2002................        $  2.0
                                                                    ======

   * Does not include $1.1 million of derivative contract fair
     value increase, as of June 30, 2002, representing
     FirstEnergy's 50% share of Great Lakes Energy Partners, LLC


          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  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  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.........  $(15.5)   $(0.6)   $(9.0)    $  --     $(25.1)
Prices based on models**.......    --       --       --        27.1       27.1
                                  ---------------------------------------------

    Total......................   $(15.5)  $(0.6)   $(9.0)    $27.1     $  2.0
                                  =============================================

*   For the last half of 2002.
**  Includes $22.2 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 June 30, 2002.  FirstEnergy
estimates  that if energy  commodity  prices  experienced  an adverse 10 percent
change,  net income for the next twelve months would  decrease by  approximately
$5.4 million.

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

Ohio

          The transition cost portion of FirstEnergy's  Ohio EUOC 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, 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 June 30, 2002, the annualized
customer-switching  rate  had  reduced  FirstEnergy's  risk  of  not  recovering
transition  costs to  approximately  $31 million.  FirstEnergy  began  accepting
customer  applications  for  switching to  alternative  suppliers on December 8,
2000;  as of June 30, 2002 its Ohio EUOC had been  notified that over 725,000 of
their customers requested  generation services from other authorized  suppliers,
including FES, a wholly owned subsidiary.

                                        22

<PAGE>


New Jersey

          Under New Jersey  transition  legislation,  all electric  distribution
companies  in that state are  required to file rate cases by August 1, 2002.  On
August 1, 2002,  FirstEnergy  submitted  two rate filings for JCP&L with the New
Jersey Board of Public  Utilities  (NJBPU).  The first  related to base electric
rates  (Delivery  Charge Filing).  The second was a request to recover  deferred
costs  (Deferral  Filing)  primarily  associated  with  mandated  purchase-power
contracts  with  non-utility  generators  (NUGs) - which produce power at prices
that exceed  wholesale  market prices - and providing Basic  Generation  Service
(BGS) to  customers in excess of the state's  generation  rate cap. The new rate
structure, when approved, becomes effective on August 1, 2003.

Delivery Charge Filing -

          The delivery charge filing includes recovery of JCP&L's  distribution,
transmission,  customer service,  administrative  and general costs,  along with
taxes and some  assessment  fees.  FirstEnergy  is  requesting a decrease in the
JCP&L delivery charge of $11 million, or a 0.6% rate reduction.  The filing uses
calendar  year 2002 as the test  year and is based on a net rate  base  value of
$2.1 billion and allowed  return on common  equity of 12%. The December 31, 2001
capital  structure  used in the filing has been  modified to eliminate  purchase
accounting  adjustments  from the merger of  FirstEnergy  and GPU,  Inc.  and to
remove a pre-merger  $300 million  deferred  balance  write-off  required by the
NJBPU  merger  approval  order  (See  Deferral  Filing).  The  modified  capital
structure is comparable to JCP&L's pre-merger capital structure.

Deferral Filing -

          The deferral  filing  addresses the current Market  Transition  Charge
(MTC) and the Societal  Benefits  Charge (SBC),  which were  confirmed by a 2001
rate order.  The combined effect of JCP&L's MTC and SBC requests would result in
a  2.8%  rate  increase  with   securitization   of  a  deferred   balance;   if
securitization is not available, there would be an additional 6.5% increase with
a four-year amortization of the deferred balance.

          JCP&L  was  authorized  to  defer  energy-related  costs  incurred  in
providing BGS to  non-shopping  retail  customers and costs  incurred  under NUG
agreements and purchased power  agreements  that exceeded the amounts  collected
under the current BGS and MTC rates. Additionally, in 2001, JCP&L wrote off $300
million of deferred costs upon receipt of the NJBPU merger  approval  order,  in
order to ensure that  customers  receive the benefit of future  merger  savings.
This amount is not included in the requested deferred cost recovery.

          JCP&L's filing proposes to recover the MTC deferred  balance through a
securitization  transaction  involving  the  issuance of  transition  bonds in a
principal  amount equal to the projected  July 31, 2003 MTC deferred  balance of
$684 million.  The transition  bond-related rate increase would be approximately
$69 million per year, or a 3.5% increase.  An alternative to  securitization  of
the deferred  balance would be to recover the deferred  balance over a four-year
amortization  period with interest.  This alternative  approach would require an
MTC rate increase of $195 million or an increase of 10%. JCP&L's  securitization
proposal minimizes the required customer rate increase.

          Stranded  cost  securitization  would create a transition  bond charge
(TBC) which would be the revenue  collection  mechanism for the transition  bond
principal and interest payments. In June 2002, JCP&L sold $320 million principal
amount of transition  bonds to securitize its net investment in the Oyster Creek
nuclear generating facility. The TBC was offset by a corresponding  reduction in
the MTC since the stranded Oyster Creek investment was initially being amortized
through the MTC.  Securitization  of the  deferred  energy-related  cost balance
would require an increase in the TBC.

          The 2001 rate order confirmed the  establishment of the SBC to recover
costs which include nuclear plant  decommissioning  and  manufactured  gas plant
remediation. JCP&L's request would reduce the SBC by $14 million, or a 0.7% rate
decrease.

Sale of Power Plants
--------------------

          On November 29, 2001  FirstEnergy  announced an agreement to sell four
of its older coal-fired power plants located along Lake Erie in Ohio to NRG (see
Note 3). By  constructing  peaking  units and selling  these  larger  generating
plants,  FirstEnergy is reshaping its generating  capability to more efficiently
meet the needs of its target market. On August 8, 2002, FirstEnergy notified NRG
that it was  canceling  the  agreement  because  NRG  stated  that it could  not
complete the transaction under the original terms of the agreement.  FirstEnergy
also notified NRG that FirstEnergy is reserving the right to pursue legal action
against NRG, its affiliate and its parent, Xcel Energy, for damages based on the
anticipatory  breach of the  agreement.  As a result,  FirstEnergy  will  pursue
opportunities  with other parties who have expressed  interest in purchasing the
plants. FirstEnergy believes that an agreement can be reached with another buyer
on a timely basis and that no impairment of these assets is appropriate.

                                      23

<PAGE>


 Emdersa Divestiture
 -------------------

          FirstEnergy determined the fair value of its Argentina operations, GPU
Empresa Distribuidora Electrica Regional S.A. and affiliates (Emdersa), 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 Emdersa's estimated fair value. 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 it is not probable that the subsequent  economic
conditions in Argentina  have eroded the fair value  recorded for Emdersa;  as a
result,  an impairment  writedown of this investment is not warranted as of June
30,  2002.  FirstEnergy  continues to assess the  potential  impact of these and
other related  events on the  realizability  of the value  recorded for Emdersa.
FirstEnergy  continues to pursue divesting  Emdersa and, in accordance with EITF
Issue No. 87-11,  has classified its assets and liabilities in the  Consolidated
Balance  Sheet as  "Assets  Pending  Sale" and  "Liabilities  Related  to Assets
Pending  Sale."  FirstEnergy  believes it is probable that a completed sale or a
definitive  agreement  to sell its  interest  in Emdersa  could be  achieved  by
November 6, 2002.  Potential  investors recently retained a financial advisor to
assist in the due diligence  process and  FirstEnergy  expects that  preliminary
negotiations with those investors may be completed in the third quarter of 2002.
If  FirstEnergy  has not completed the sale of all of its interest in Emdersa or
has not  reached a  definitive  agreement  to sell such  interest by November 6,
2002,  those assets would no longer be  classified  as "Assets  Pending Sale" on
FirstEnergy's  Consolidated  Balance Sheet and  Emdersa's  results of operations
would  be  included  on  FirstEnergy's  Consolidated  Statement  of  Income.  In
addition,  Emdersa's  cumulative  results of operations  (from  November 7, 2001
through the date that it would become  probable that a definitive sale agreement
for all of  FirstEnergy's  interest  would not be reached by  November  6, 2002)
would be  reflected  on  FirstEnergy's  Consolidated  Statement  of  Income as a
"Cumulative  Effect  of a  Change  in  Accounting".  As of June 30,  2002,  that
adjustment  would have reduced  FirstEnergy's  net income by  approximately  $95
million ($0.33 per share of common stock).

Supply Plan
-----------

          On April 30, 2002, the Nuclear Regulatory Commission (NRC) initiated a
formal  inspection  process at the  Davis-Besse  nuclear plant.  This action was
taken in response to corrosion  found by  FirstEnergy in the reactor vessel head
near the nozzle  penetration hole during a refueling outage in the first quarter
of 2002. The purpose of the formal inspection  process is to establish  criteria
for NRC oversight of the licensee's  performance  and to provide a record of the
major  regulatory and licensee  actions taken,  and technical  issues  resolved,
leading to the NRC's approval of restart of the plant.

          On May 23, 2002,  FirstEnergy  purchased an unused reactor vessel head
from  Consumers  Energy's  Midland  Nuclear  Plant -  similar  in  design to the
Davis-Besse  Plant. In addition to refurbishment  and  installation  work at the
plant, FirstEnergy has made significant changes in senior and mid-level managers
at the plant and in its corporate nuclear organization.  It has also established
an  independent  oversight  panel  consisting  of industry  experts to assist in
Davis-Besse  restart efforts and to provide advice  regarding the safe return of
Davis-Besse  to  service.  FirstEnergy  expects to  complete  refurbishment  and
installation of the  replacement  reactor head as well as any other work related
to  restart  of the  plant in the  fourth  quarter  of this  year.  The NRC must
authorize  restart of the plant following its formal  inspection  process before
the unit can be returned to service.

          The estimated, incremental costs (capital and expense) associated with
the extended Davis-Besse outage in 2002 are:

  Incremental Costs of Davis-Besse Extended Outage
  ------------------------------------------------
                                                               Expenditure Range
                                                               -----------------
                                                                 (In millions)

 Replace reactor vessel head (principally capital expenditures).    $55-$75
   Primarily operating expenses (pre-tax):
 Additional maintenance (including acceleration of programs)....    $50-$70
 Replacement power for July and August 2002.....................    $40
 Replacement power for September through December ..............    $40-$60

          FirstEnergy has fully hedged its on-peak replacement energy supply for
Davis-Besse through the end of 2002.  FirstEnergy's  fossil units performed very
well in the first half of 2002,  more than replaced the reduced  nuclear output.
Although  FirstEnergy expects to return Davis-Besse to service before the end of
the year, it has made on-peak power purchases for delivery in early 2003 to meet
a portion of FirstEnergy's  incremental  power needs if the Davis-Besse  restart
date is delayed.

          FirstEnergy  continues  to enter  into  power  contracts  to cover its
"provider  of  last  resort"  obligations  for  the  2003-2005  period.   Market
conditions   are   currently   relatively   favorable,    therefore   minimizing
FirstEnergy's  exposure to the commodity market and reducing  potential negative
impacts  related to the pending  appeal to the  Pennsylvania  Supreme Court with
respect to the Met-Ed and Penelec deferred energy mechanism.  FirstEnergy is now
over 90% hedged for the projected 2003 summer peak and  approximately 85% hedged
for the projected 2004 and 2005 summer peak loads.

                                        24

<PAGE>

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

          Various   environmental   liabilities  have  been  recognized  on  the
Consolidated  Balance Sheet as of June 30, 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  $57.3 million as of June 30, 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  financial  results.  All of
FirstEnergy's  assets are subject to their own specific risks and  uncertainties
and are regularly 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
adjustment  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.
FirstEnergy's most recent review was completed in June 2002. The results of that
review  indicate that no impairment of goodwill is  appropriate.  As of June 30,
2002,  FirstEnergy  had $5.6 billion of goodwill that  primarily  relates to its
regulated services segment.

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 -- $8.6 billion as of June 30, 2002.  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.

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  commodity  contracts,  as well as interest rate and currency swaps,
which increase the impact of derivative accounting judgments.


                                        25
<PAGE>


Revenue Recognition

          FirstEnergy  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  Mix of kilowatt-hour usage by residential, commercial and industrial
           customers

        o  Kilowatt-hour usage of customers receiving electricity from
           alternative suppliers

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

          In June  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.  FirstEnergy  has identified  various  applicable  legal  obligations as
defined  under the new  standard  and  expects to  complete an analysis of their
financial impact in the second half of 2002.

                                        26

<PAGE>



<TABLE>
<CAPTION>

                                                         OHIO EDISON COMPANY

                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)



                                                                 Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                ---------------------          ------------------------
                                                                  2002         2001               2002          2001
                                                                --------     --------          ----------    ----------
                                                                                   (In thousands)

<S>                                                             <C>          <C>               <C>           <C>
OPERATING REVENUES........................................      $744,550     $744,712          $1,452,349    $1,527,815
                                                                --------     --------          ----------    ----------


OPERATING EXPENSES AND TAXES:
   Fuel...................................................        15,129       13,408              29,419        27,554
   Purchased power........................................       213,172      237,795             454,651       544,212
   Nuclear operating costs................................        80,700       76,987             175,934       169,232
   Other operating costs..................................        78,497       79,716             158,108       160,672
                                                                --------     --------          ----------    ----------
     Total operation and maintenance expenses.............       387,498      407,906             818,112       901,670
   Provision for depreciation and amortization............        91,521      104,205             183,651       221,161
   General taxes..........................................        42,524       26,133              87,900        71,087
   Income taxes...........................................        84,403       68,540             127,018       107,141
                                                                --------     --------          ----------    ----------
     Total operating expenses and taxes...................       605,946      606,784           1,216,681     1,301,059
                                                                --------     --------          ----------    ----------


OPERATING INCOME..........................................       138,604      137,928             235,668       226,756


OTHER INCOME..............................................        15,087       17,821              15,599        30,186
                                                                --------     --------          ----------    ----------


INCOME BEFORE NET INTEREST CHARGES........................       153,691      155,749             251,267       256,942
                                                                --------     --------          ----------    ----------


NET INTEREST CHARGES:
   Interest on long-term debt.............................        30,312       39,527              63,385        78,914
   Allowance for borrowed funds used during
     construction and capitalized interest................          (883)       1,612              (1,504)       (1,306)
   Other interest expense.................................         2,801        5,806               7,948        12,718
   Subsidiaries' preferred stock dividend requirements....         3,626        3,626               7,252         7,252
                                                                --------     --------          ----------    ----------
     Net interest charges.................................        35,856       50,571              77,081        97,578
                                                                --------     --------          ----------    ----------


NET INCOME................................................       117,835      105,178             174,186       159,364


PREFERRED STOCK DIVIDEND REQUIREMENTS.....................         2,597        2,702               5,193         5,404
                                                                --------     --------          ----------    ----------


EARNINGS ON COMMON STOCK..................................      $115,238     $102,476          $  168,993    $  153,960
                                                                ========     ========          ==========    ==========


<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>

<TABLE>
<CAPTION>

                                                          OHIO EDISON COMPANY

                                                      CONSOLIDATED BALANCE SHEETS


                                                                                     (Unaudited)
                                                                                      June 30,      December 31,
                                                                                        2002            2001
                                                                                     -----------    ------------
                                                                                           (In thousands)

                              ASSETS
                              ------
<S>                                                                                  <C>             <C>
UTILITY PLANT:
   In service.................................................................       $5,000,153      $4,979,807
   Less--Accumulated provision for depreciation...............................        2,507,148       2,461,972
                                                                                     ----------      ----------
                                                                                      2,493,005       2,517,835
                                                                                     ----------      ----------
   Construction work in progress-
     Electric plant...........................................................           98,938          87,061
     Nuclear fuel.............................................................              816          11,822
                                                                                     ----------      ----------
                                                                                         99,754          98,883
                                                                                     ----------      ----------
                                                                                      2,592,759       2,616,718
                                                                                     ----------      ----------


OTHER PROPERTY AND INVESTMENTS:
   PNBV Capital Trust.........................................................          416,152         429,040
   Letter of credit collateralization.........................................          277,763         277,763
   Nuclear plant decommissioning trusts.......................................          295,381         277,337
   Long-term notes receivable from associated companies.......................          504,439         505,028
   Other......................................................................          308,084         303,409
                                                                                     ----------      ----------
                                                                                      1,801,819       1,792,577
                                                                                     ----------      ----------


CURRENT ASSETS:
   Cash and cash equivalents..................................................           24,139           4,588
   Receivables-
     Customers (less accumulated provisions of $4,692,000 and
       $4,522,000, respectively, for uncollectible accounts)..................          341,330         311,744
     Associated companies.....................................................          470,053         523,884
     Other (less accumulated provisions of $1,000,000 for uncollectible
       accounts at both dates)................................................           33,053          41,611
   Notes receivable from associated companies.................................          243,961         108,593
   Materials and supplies, at average cost-
     Owned....................................................................           55,072          53,900
     Under consignment........................................................           17,573          13,945
   Other......................................................................           19,268          50,541
                                                                                     ----------      ----------
                                                                                      1,204,449       1,108,806
                                                                                     ----------      ----------


DEFERRED CHARGES:
   Regulatory assets..........................................................        2,130,457       2,234,227
   Other......................................................................          165,262         163,625
                                                                                     ----------      ----------
                                                                                      2,295,719       2,397,852
                                                                                     ----------      ----------
                                                                                     $7,894,746      $7,915,953
                                                                                     ==========      ==========

</TABLE>


                                                        28

<PAGE>

<TABLE>
<CAPTION>


                                                          OHIO EDISON COMPANY

                                                      CONSOLIDATED BALANCE SHEETS


                                                                                     (Unaudited)
                                                                                       June 30       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........................................................          640,065         572,272
                                                                                     ----------      ----------
         Total common stockholder's equity....................................        2,738,794       2,671,001
   Preferred stock not subject to mandatory redemption........................           60,965         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
   Long-term debt.............................................................        1,483,805       1,614,996
                                                                                     ----------      ----------
                                                                                      4,336,919       4,620,317
                                                                                     ----------      ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock.......................          700,837         576,962
   Short-term borrowings-
     Associated companies.....................................................           42,538          26,076
     Other....................................................................          177,131         219,750
   Accounts payable-
     Associated companies.....................................................           95,645         110,784
     Other....................................................................           15,497          19,819
   Accrued taxes..............................................................          465,091         258,831
   Accrued interest...........................................................           31,090          33,053
   Other......................................................................           64,160          63,140
                                                                                     ----------      ----------
                                                                                      1,591,989       1,308,415
                                                                                     ----------      ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes..........................................        1,125,037       1,175,395
   Accumulated deferred investment tax credits................................           92,829          99,193
   Nuclear plant decommissioning costs........................................          294,544         276,500
   Other postretirement benefits..............................................          169,629         166,594
   Other......................................................................          283,799         269,539
                                                                                     ----------      ----------
                                                                                      1,965,838       1,987,221
                                                                                     ----------      ----------


COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2)............................
                                                                                     ----------      ----------
                                                                                     $7,894,746      $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>

                                                         29

<PAGE>


<TABLE>
<CAPTION>

                                                          OHIO EDISON COMPANY

                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                              (Unaudited)


                                                                  Three Months Ended                Six Months Ended
                                                                       June 30,                        June 30,
                                                                ----------------------          ----------------------
                                                                  2002          2001              2002         2001
                                                                --------     ---------          --------     ---------
                                                                                    (In thousands)
<S>                                                             <C>          <C>                <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................      $117,835     $ 105,178          $174,186     $ 159,364
   Adjustments to reconcile net income to net cash from
     operating activities-
       Provision for depreciation and amortization........        91,521       104,205           183,651       221,161
       Nuclear fuel and lease amortization................        12,133        11,920            23,535        23,677
       Deferred income taxes, net.........................        (8,886)      (22,160)          (22,056)      (42,562)
       Investment tax credits, net........................        (3,762)       (3,341)           (7,535)       (6,694)
       Receivables........................................       (31,345)     (137,091)           32,803      (194,795)
       Materials and supplies.............................        (3,158)          914            (4,800)       54,060
       Accounts payable...................................        (1,166)       35,497           (19,461)      (52,684)
       Accrued taxes .....................................       149,376       (20,063)          206,260        18,211
       Other..............................................       (29,119)      (54,008)           (5,643)      (46,627)
                                                                --------     ---------          --------     ---------
         Net cash provided from operating activities......       293,429        21,051           560,940       133,111
                                                                --------     ---------          --------     ---------


CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Long-term debt.......................................            --       249,042                --       249,542
   Redemptions and Repayments-
     Long-term debt.......................................       244,179        30,560           228,741        37,710
     Short-term borrowings, net...........................        66,464        21,062            26,158        15,447
   Dividend Payments-
     Common stock.........................................            --            --           101,200        37,300
     Preferred stock......................................         2,596         2,706             5,193         5,404
                                                                --------     ---------          --------     ---------
         Net cash used for (provided from) financing
          activities                                             313,239      (194,714)          361,292      (153,681)
                                                                --------     ---------          --------     ---------


CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions.....................................        25,377        15,608            55,721        41,006
   Loans to associated companies..........................            --       136,257           135,325       311,829
   Loan payments from associated companies................        (3,402)         (506)             (546)         (506)
   Sale of assets to associated companies.................            --       (33,002)               --      (154,596)
   Other..................................................        (8,431)       (4,567)          (10,403)       (6,046)
                                                                --------     ---------          --------     ---------
         Net cash used for investing activities...........        13,544       113,790           180,097       191,687
                                                                --------     ---------          --------     ---------


Net increase (decrease) in cash and cash equivalents......       (33,354)      101,975            19,551        95,105
Cash and cash equivalents at beginning of period..........        57,493        11,399             4,588        18,269
                                                                --------     ---------          --------     ---------
Cash and cash equivalents at end of period................      $ 24,139     $ 113,374          $ 24,139     $ 113,374
                                                                ========     =========          ========     =========


<FN>


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

</FN>
</TABLE>

                                                        30


<PAGE>


                        REPORT OF INDEPENDENT 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 June 30, 2002, and the related  consolidated
statements  of income and cash flows for each of the  three-month  and six-month
periods ended June 30, 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 for them
to be in conformity with accounting principles generally accepted in the United
States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
August 8, 2002

                                        31

<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  generation  services to those customers electing to
retain them as their power supplier.  The OE Companies 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.  Power supply
requirements of the OE Companies are provided by FES - an affiliated company.

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

          Operating  revenues  were nearly  unchanged in the second  quarter and
decreased  $75.5  million or 4.9% in the first half of 2002,  as compared to the
corresponding  periods  of 2001.  Changes  in  operating  revenues  reflect  the
combined  effects of a weak but recovering  economy,  shopping by Ohio customers
for alternative energy providers,  reduced revenues from wholesale customers and
weather. While retail kilowatt-hour sales declined by 3.3% in the second quarter
of 2002,  compared  to the second  quarter of 2001,  favorable  price  variances
resulting from a change in sales mix resulted in a relatively small reduction in
generation  sales  revenue.  During  the  first  six  months  of 2002,  however,
kilowatt-hour  sales declined in all customer sectors - residential,  commercial
and industrial - resulting in a 12.1%  reduction  overall and reduced  operating
revenues by $41.0 million.  OE's lower  generation  kilowatt-hour  sales in both
periods  resulted  principally  from customer choice in Ohio.  Sales of electric
generation by alternative suppliers as a percent of total sales delivered in the
OE Companies'  franchise  area  increased to 19.0% in the second quarter of 2002
from 13.7% in the same  period  last year.  During the first six months of 2002,
OE's share of electric  generation sales in its franchise areas decreased by 9.5
percentage points, compared to the same period of 2001.

          Distribution  deliveries increased 3.0% in the second quarter of 2002,
which increased revenues from electricity throughput by $14.0 million,  compared
with the second  quarter of 2001.  The second  quarter of 2002  benefited from a
slight  pick up in  economic  activity  and warmer  June  weather.  Despite  the
stronger second quarter performance,  distribution  deliveries and revenues were
lower in the first six months of 2002,  compared  to the same  period last year,
declining by 2.0% and $7.0  million,  respectively,  primarily due to the weaker
economic environment earlier in the year.

          Transition  plan  incentives,   provided  to  customers  to  encourage
switching to alternative energy providers, further reduced operating revenues in
the second quarter and first six months of 2002,  compared to the  corresponding
periods  of 2001 -  reducing  comparable  revenues  by $6.7  million  and  $16.6
million, respectively. These revenue reductions are deferred for future recovery
under OE's transition plan and do not materially affect current period earnings.

          Sales  revenues from  wholesale  customers were also lower in both the
second quarter and  year-to-date  periods of 2002,  compared to the same periods
last  year.   Increased  revenues  from  kilowatt-hour  sales  to  nonaffiliated
wholesale customers were more than offset by reduced revenues from FES.

          The sources of changes in operating revenues during the second quarter
and first six months of 2002,  compared with the corresponding  periods of 2001,
are summarized in the following table:

   Sources of Operating Revenue Changes
   ------------------------------------
            Increase (Decrease)
                                                Periods Ending June 30, 2002
                                                ----------------------------
                                                 3 Months         6 Months
                                                 --------         --------
                                                        (In millions)
   Retail:
     Generation sales.........................       $(1.0)         $(41.0)
     Distribution deliveries..................        14.0            (7.0)
     Increased shopping incentives............        (6.7)          (16.6)
                                                     -----          ------

     Total Retail.............................         6.3           (64.6)
   Wholesale..................................        (3.6)          (10.2)
     Other....................................        (2.9)           (0.7)
                                                     -----          ------

   Net Decrease in Operating Revenue..........       $(0.2)         $(75.5)
                                                     =====          ======

                                        32

<PAGE>


Operating Expenses and Taxes

          Total  operating  expenses and taxes were slightly lower in the second
quarter  and  declined  $84.4  million  in the first six months of 2002 from the
corresponding  periods of 2001. Purchased power costs decreased $24.6 million in
the second  quarter and $89.6 million in the first six months of 2002,  compared
to the same  periods  last  year,  due to lower unit  costs and  reduced  volume
requirements supporting lower generation  kilowatt-hour sales. Nuclear operating
costs increased $3.7 million in the second quarter and $6.7 million in the first
half of 2002 from the same periods in 2001.  The  six-month  increase  reflected
additional  amounts  related  to the first  quarter  refueling  outage at Beaver
Valley Unit 2 (55.62% owned) that exceeded  refueling outage costs for the Perry
Plant (35.24% owned) in the same period of 2001.

          Charges for depreciation  and amortization  decreased by $12.7 million
in the  second  quarter  and $37.5  million  in the  first  six  months of 2002,
compared to the same periods last year. These decreases  primarily resulted from
higher  shopping  incentive  deferrals  and  tax-related  deferrals  under  OE's
transition plan in 2002.

          General  taxes  increased by $16.4  million in the second  quarter and
$16.8 million in the first six months of 2002 from the same periods in 2001, due
in large part to the successful resolution of certain property tax issues in the
second  quarter of 2001.  This resulted in a one-time  benefit of $15 million in
the second quarter of 2001.

Other Income

          Other income  decreased  $2.7 million in the second  quarter and $14.6
million  in the  first  half of 2002  from the  corresponding  periods  of 2001.
Reduced interest income was the principal factor in the second quarter decrease.
Most of the reduction for the year-to-date  period resulted from a first quarter
2002 adjustment related to OE's low income housing investments.

Net Interest Charges

     Net interest charges continued to trend lower,  decreasing by $14.7 million
in the  second  quarter  and $20.5  million  in the  first  six  months of 2002,
compared to the same periods last year,  primarily  due to debt  redemption  and
refinancing  activities.  During  the first six  months of 2002,  maturing  debt
redemptions  totaled  $140.1  million and will result in  annualized  savings of
$11.5 million.

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

          The OE Companies have continuing cash requirements for planned capital
expenditures  and maturing debt.  During the last two quarters of 2002,  capital
requirements for property  additions and capital leases are expected to be about
$98 million,  including $20 million for nuclear fuel. The OE Companies also have
sinking fund  requirements  for preferred  stock and maturing  long-term debt of
$182.6 million and optional  preferred stock  redemptions of $220 million during
the  remainder of 2002.  These  requirements  are expected to be satisfied  from
internal cash and/or short-term credit arrangements.

          As of June 30, 2002, the OE Companies had about $268.1 million of cash
and temporary investments and $219.7 million of short-term  indebtedness.  Their
available  borrowing  capability  included $250.0 million from unused  revolving
lines of credit and $26  million  from unused  bank  facilities.  As of June 30,
2002,  the OE  Companies  had the  capability  to  issue up to $1.5  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,  $2.6 billion of preferred  stock  (assuming  no  additional  debt was
issued) could be issued based on earnings through the second 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 June 30, 2002, the annualized  customer-switching rate
essentially   reduced  OE's  risk  of  not   recovering   transition   costs  to
approximately  $31  million.  OE  began  accepting  customer   applications  for
switching  to  alternative  suppliers  on  December  8,  2000  and has  received
notifications  as of June 30, 2002 that over 220,000 of its customers  requested
generation services from other authorized suppliers.

                                        33

<PAGE>

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 regularly  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.

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 -
$2.1 billion as of June 30, 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
4 -  Regulatory  Matters  - Ohio,  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-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

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

          In June  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. The OE Companies have identified various applicable legal obligations as
defined  under the new  standard  and expect to  complete  an  analysis of their
financial impact in the second half of 2002.

                                        34



<PAGE>


<TABLE>
<CAPTION>


                                             THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)


                                                                 Three Months Ended                Six Months Ended
                                                                       June 30,                        June 30,
                                                                ----------------------          -----------------------
                                                                  2002          2001               2002         2001
                                                                --------      --------          --------     ----------
                                                                                    (In thousands)

<S>                                                             <C>           <C>               <C>          <C>
OPERATING REVENUES........................................      $462,874      $498,766          $887,851     $1,015,183
                                                                --------      --------          --------     ----------


OPERATING EXPENSES AND TAXES:
   Fuel...................................................        15,088        16,888            32,358         34,753
   Purchased power........................................       118,458       193,590           257,894        408,095
   Nuclear operating costs................................        38,785        28,679           110,202         78,629
   Other operating costs..................................        68,353        72,396           135,200        150,699
                                                                --------      --------          --------     ----------
       Total operation and maintenance expenses...........       240,684       311,553           535,654        672,176
   Provision for depreciation and amortization............        28,333        52,964            56,804        109,728
   General taxes..........................................        36,493        34,080            75,239         71,950
   Income taxes...........................................        44,610        21,579            52,078         29,294
                                                                --------      --------          --------     ----------
       Total operating expenses and taxes.................       350,120       420,176           719,775        883,148
                                                                --------      --------          --------     ----------


OPERATING INCOME..........................................       112,754        78,590           168,076        132,035


OTHER INCOME..............................................         3,356         1,138             8,597          5,558
                                                                --------      --------          --------     ----------


INCOME BEFORE NET INTEREST CHARGES........................       116,110        79,728           176,673        137,593
                                                                --------      --------          --------     ----------


NET INTEREST CHARGES:
   Interest on long-term debt.............................        45,372        48,317            92,367         96,602
   Allowance for borrowed funds used during construction..          (747)         (216)           (1,496)        (1,073)
   Other interest expense (credit)........................          (125)         (879)             (654)        (2,075)
   Subsidiaries' preferred stock dividend requirements....         2,250            --             4,400             --
                                                                --------      --------          --------     ----------
       Net interest charges...............................        46,750        47,222            94,617         93,454
                                                                --------      --------          --------     ----------


NET INCOME................................................        69,360        32,506            82,056         44,139


PREFERRED STOCK DIVIDEND REQUIREMENTS.....................         3,054         6,561            11,310         13,122
                                                                --------      --------          --------     ----------


EARNINGS ON COMMON STOCK..................................      $ 66,306      $ 25,945          $ 70,746     $   31,017
                                                                ========      ========          ========     ==========

<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>
<TABLE>
<CAPTION>


                                             THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                                     CONSOLIDATED BALANCE SHEETS


                                                                                  (Unaudited)
                                                                                    June 30,        December 31,
                                                                                      2002              2001
                                                                                   ----------       ------------
                                                                                          (In thousands)
                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:

   In service................................................................      $4,081,483       $4,071,134
   Less--Accumulated provision for depreciation..............................       1,771,704        1,725,727
                                                                                   ----------       ----------
                                                                                    2,309,779        2,345,407
                                                                                   ----------       ----------
  Construction work in progress-
     Electric plant..........................................................          94,511           66,266
     Nuclear fuel............................................................          29,033           21,712
                                                                                   ----------       ----------
                                                                                      123,544           87,978
                                                                                   ----------       ----------
                                                                                    2,433,323        2,433,385
                                                                                   ----------       ----------

OTHER PROPERTY AND INVESTMENTS:
   Shippingport Capital Trust................................................         448,149          475,543
   Nuclear plant decommissioning trusts......................................         226,910          211,605
   Long-term notes receivable from associated companies......................         103,205          103,425
   Other.....................................................................          20,937           24,611
                                                                                   ----------       ----------
                                                                                      799,201          815,184
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................             290              296
   Receivables-
     Customers...............................................................          14,272           17,706
     Associated companies....................................................          56,035           75,113
     Other (less accumulated provisions of $1,015,000 for uncollectible
       accounts at both dates)...............................................         153,885           99,716
   Notes receivable from associated companies................................             430              415
   Materials and supplies, at average cost-
     Owned...................................................................          18,431           20,230
     Under consignment.......................................................          33,538           28,533
   Other.....................................................................           2,023           31,634
                                                                                   ----------       ----------
                                                                                      278,904          273,643
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................         907,948          874,488
   Goodwill..................................................................       1,370,639        1,370,639
   Other.....................................................................          96,880           88,767
                                                                                   ----------       ----------
                                                                                    2,375,467        2,333,894
                                                                                   ----------       ----------
                                                                                   $5,886,895       $5,856,106
                                                                                   ==========       ==========

</TABLE>

                                                    36

<PAGE>

<TABLE>
<CAPTION>


                                     THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                             CONSOLIDATED BALANCE SHEETS


                                                                                   (Unaudited)
                                                                                     June 30,       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.......................................................         220,863          150,183
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       1,152,825        1,082,145
   Preferred stock-
     Not subject to mandatory redemption.....................................          96,404          141,475
     Subject to mandatory redemption.........................................           6,129            6,288
   Company obligated mandatorily redeemable preferred securities of
     subsidiary trust holding solely Company subordinated debentures.........         100,000          100,000
   Long-term debt............................................................       2,037,118        2,156,322
                                                                                   ----------       ----------
                                                                                    3,392,476        3,486,230
                                                                                   ----------       ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................         589,868          526,630
   Accounts payable-
     Associated companies....................................................         121,915           81,463
     Other...................................................................          16,259           30,332
   Notes payable to associated companies.....................................         124,367           97,704
   Accrued taxes.............................................................         142,505          129,830
   Accrued interest..........................................................          56,763           57,101
   Other.....................................................................          46,236           60,664
                                                                                   ----------       ----------
                                                                                    1,097,913          983,724
                                                                                   ----------       ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         649,647          637,339
   Accumulated deferred investment tax credits...............................          74,156           76,187
   Nuclear plant decommissioning costs.......................................         236,103          220,798
   Pensions and other postretirement benefits................................         234,079          231,365
   Other.....................................................................         202,521          220,463
                                                                                   ----------       ----------
                                                                                    1,396,506        1,386,152
                                                                                   ----------       ----------


COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2)...........................
                                                                                   ----------       ----------
                                                                                   $5,886,895       $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>

                                                       37

<PAGE>

<TABLE>
<CAPTION>


                                             THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (Unaudited)


                                                                 Three Months Ended                Six Months Ended
                                                                       June 30,                        June 30,
                                                               -----------------------          ----------------------
                                                                 2002           2001              2002          2001
                                                               --------       --------          --------      --------
                                                                                    (In thousands)
<S>                                                            <C>            <C>               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................     $ 69,360       $ 32,506          $ 82,056      $ 44,139
   Adjustments to reconcile net income to net
     cash from operating activities-
       Provision for depreciation and amortization........       28,333         52,964            56,804       109,728
       Nuclear fuel and lease amortization................        4,794          7,070            10,784        14,114
       Other amortization.................................       (4,275)        (4,039)           (8,167)       (7,672)
       Deferred income taxes, net.........................        5,904          4,607            13,100         4,660
       Investment tax credits, net........................       (1,129)          (970)           (2,031)       (1,939)
       Receivables........................................      (38,473)       (60,559)          (31,657)       15,060
       Materials and supplies.............................       (1,840)           234            (3,206)       15,557
       Accounts payable...................................        8,057          8,869            26,379       (46,181)
       Accrued taxes......................................       17,743         21,765            12,675       (26,704)
       Other..............................................      (45,522)       (13,482)          (26,263)      (67,065)
                                                               --------       --------          --------      --------
         Net cash provided from operating activities......       42,952         48,965           130,474        53,697
                                                               --------       --------          --------      --------


CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Short-term borrowings, net...........................           --         96,323            26,663       128,586
   Redemptions and Repayments-
     Preferred stock......................................           --         10,716           100,000        10,716
     Long-term debt.......................................           96         21,264               190        29,904
     Short-term borrowings, net...........................       48,821             --                --            --
   Dividend Payments-
     Common stock.........................................           --         84,000                --       105,800
     Preferred stock......................................        3,133          7,040             8,385        14,077
                                                               --------       --------          --------      --------
         Net cash used for financing activities...........       52,050         26,697            81,912        31,911
                                                               --------       --------          --------      --------


CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions.....................................       25,452          5,363            61,922        15,580
   Loans to associated companies..........................           --         11,117                --        11,117
   Loan payments from associated companies................         (205)          (188)             (205)         (188)
   Capital trust investments..............................      (27,394)        (1,071)          (27,394)      (16,279)
   Sale of assets to associated companies.................           --        (11,117)               --       (11,117)
   Other..................................................        8,021         18,140            14,245        25,290
                                                               --------       --------          --------      --------
         Net cash used for investing activities...........        5,874         22,244            48,568        24,403
                                                               --------       --------          --------      --------


Net increase (decrease) in cash and cash equivalents......      (14,972)            24                (6)       (2,617)
Cash and cash equivalents at beginning of period..........       15,262            214               296         2,855
                                                               --------       --------          --------      --------
Cash and cash equivalents at end of period................     $    290       $    238          $    290      $    238
                                                               ========       ========          ========      ========

<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>

                                                         38



<PAGE>


                        REPORT OF INDEPENDENT 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 June 30, 2002, and the
related  consolidated  statements  of  income  and  cash  flows  for each of the
three-month  and  six-month   periods  ended  June  30,  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 for them
to be in conformity with accounting  principles generally accepted in the United
States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
August 8, 2002

                                        39

<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
provides regulated electric  distribution services in portions of northern Ohio.
CEI also provides  generation services 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.  Power supply
requirements of CEI are provided by FES - an affiliated company.

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

          Operating  revenues  decreased  $35.9  million  or 7.2% in the  second
quarter  and $127.3  million or 12.5% in the first half of 2002,  as compared to
the same  periods of 2001.  Reduced  operating  revenues  reflect  the  combined
effects  of a weak  but  recovering  economy,  shopping  by Ohio  customers  for
alternative   energy  providers  and  reduced  sales  to  wholesale   customers.
Kilowatt-hour  sales to  generation  customers  decreased by 23.0% in the second
quarter and 30.8% in the first six months of 2002,  compared to the same periods
last  year,  principally  from  customer  choice  in  Ohio.  Sales  of  electric
generation  by  alternative  suppliers  as a percent  of total  sales in the CEI
franchise  area  increased to 27.9% in the second  quarter of 2002 from 12.1% in
the same period last year.  During the first six months of 2002,  CEI's share of
electric  generation  sales in its franchise area  decreased by 20.8  percentage
points,  compared to the same period of 2001.  A very weak steel sector in CEI's
service  area also  contributed  significantly  to the decline in  kilowatt-hour
sales to generation customers in both the second quarter and first six months of
2002 from the corresponding periods last year.

          Despite lower  distribution  deliveries in the second quarter of 2002,
compared to the same quarter of 2001,  distribution  revenues  increased by $5.8
million - reflecting  an increase in the  proportion of  kilowatt-hour  sales to
residential  customers.  Sales to  residential  customers  benefited from warmer
weather in June 2002,  increasing  air-conditioning  load,  as  compared to last
year. Distribution deliveries and revenues were lower in the first six months of
2002, compared to the same period last year,  declining 10.7% and $27.8 million,
respectively,  primarily due to the weaker  economic  conditions  earlier in the
year.

          Transition  plan  incentives,   provided  to  customers  to  encourage
switching to alternative energy providers, further reduced operating revenues in
the second quarter and first six months of 2002,  compared to the  corresponding
periods  of 2001 -  reducing  comparable  revenues  by $10.1  million  and $24.1
million, respectively. These revenue reductions are deferred for future recovery
under  CEI's  transition  plan  and  do not  materially  affect  current  period
earnings.

     Revenues on sales to wholesale  customers  were lower in the second quarter
and slightly  higher in the  year-to-date  period of 2002,  compared to the same
periods  last year,  on lower  kilowatt-hour  sales in both  periods.  Increased
revenues from  kilowatt-hour  sales to nonaffiliated  customers in the wholesale
market were more than offset by reduced  revenues from FES in the second quarter
of 2002.

          The sources of changes in operating revenues during the second quarter
and first six months of 2002,  compared with the corresponding  periods of 2001,
are summarized in the following table:

       Sources of Operating Revenue Changes
       ------------------------------------
       Increase (Decrease)
                                                  Periods Ending June 30, 2002
                                                  ----------------------------
                                                   3 Months         6 Months
                                                   --------         --------
                                                          (In millions)
       Retail:
         Generation sales......................     $(20.7)        $ (70.9)
         Distribution deliveries...............        5.8           (27.8)
         Increased shopping incentives.........      (10.1)          (24.1)
                                                    ------         -------

         Total Retail..........................      (25.0)         (122.8)
       Wholesale...............................       (7.8)            0.8
       Other...................................       (3.1)           (5.3)
                                                    ------         -------

       Net Operating Revenue Decrease..........     $(35.9)        $(127.3)
                                                    ======         =======


                                        40

<PAGE>


Operating Expenses and Taxes

          Total  operating  expenses and taxes  declined by $70.1 million in the
second  quarter  and  $163.4  million  in the first six  months of 2002 from the
corresponding  periods of 2001. Purchased power costs decreased $75.1 million in
the second quarter and $150.2 million in the first six months of 2002,  compared
to the same  periods  last  year,  due to lower unit  costs and  reduced  volume
requirements supporting lower generation  kilowatt-hour sales. Nuclear operating
costs  increased  $10.1  million in the second  quarter and $31.6 million in the
first half of 2002 from the same periods in 2001.  Costs related to the extended
outage at the  Davis-Besse  nuclear plant (see Capital  Resources and Liquidity)
and to a lesser extent  additional  operating  costs at Beaver Valley Unit 2 and
the Perry  Plant,  accounted  for the  increase  in nuclear  costs in the second
quarter compared to the second quarter of last year. In the year-to-date period,
2002 costs also include amounts  incurred in the first quarter of 2002 resulting
from  refueling  outages  at  two  nuclear  plants  (Beaver  Valley  Unit  2 and
Davis-Besse), compared to only one refueling outage (Perry) in the first quarter
of 2001.

          Charges for depreciation  and amortization  decreased by $24.6 million
in the  second  quarter  and $52.9  million  in the  first  six  months of 2002,
compared to the same periods last year. These decreases  primarily resulted from
higher  shopping  incentive  deferrals  and  tax-related  deferrals  under CEI's
transition  plan in 2002, the  elimination of  depreciation  associated with the
planned sale of the  Ashtabula,  Eastlake and Lakeshore  generating  plants (see
Note 3), 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 second quarter and first half of 2001 totaled $9.6
million and $19.1 million, respectively.

          General taxes increased by $2.4 million in the second quarter and $3.3
million in the first six months of 2002.  Higher  property  taxes were partially
offset  by  reductions  due to state tax  changes  in  connection  with the Ohio
electric industry restructuring.

Other Income

          A reduction in  discounts  associated  with the  factoring of accounts
receivable  resulted in an increase  in other  income in the second  quarter and
first six months of 2002,  compared to the prior year - increasing  other income
by $2.2 million and $3.0 million respectively.

Preferred Stock Dividend Requirements

          Preferred  stock dividend  requirements  decreased $3.5 million in the
second quarter and $1.8 million in the first half of 2002,  compared to the same
periods  last  year,  principally  due to the  completion  of $100.0  million in
refinancings.  Premiums  related  to  the  optional  first  quarter  redemptions
partially offset the lower dividend requirements.

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

          CEI has continuing cash requirements for planned capital  expenditures
and maturing debt.  During the last two quarters of 2002,  capital  requirements
for property additions and capital leases are expected to be about $110 million,
including $9 million for nuclear fuel.  These capital  requirements  include the
estimated  incremental  repair costs of the unplanned  outage at the Davis-Besse
nuclear  plant  discussed  below.  CEI also has sinking  fund  requirements  for
preferred  stock and  maturing  long-term  debt of $246.8  million and  optional
preferred stock redemptions of $45.0 million during the remainder of 2002. These
cash requirements are expected to be satisfied from internal cash and short-term
credit arrangements.

          As of June 30, 2002,  CEI had about $0.7 million of cash and temporary
investments  and  $124.4  million  of  short-term   indebtedness  to  associated
companies.  Under its first mortgage  indenture,  excluding  property  additions
associated with the pending sale of coal-fired  generating  plants,  CEI had the
capability to issue up to $314 million of additional first mortgage bonds on the
basis of property  additions and retired  bonds as of June 30, 2002.  CEI has no
restrictions on the issuance of preferred stock.

          On April 30, 2002, the Nuclear Regulatory Commission (NRC) initiated a
formal  inspection  process at the  Davis-Besse  nuclear plant.  This action was
taken in response to corrosion  found by  FirstEnergy in the reactor vessel head
near the nozzle  penetration hole during a refueling outage in the first quarter
of 2002. The purpose of the formal inspection  process is to establish  criteria
for NRC oversight of the licensee's  performance  and to provide a record of the
major  regulatory and licensee  actions taken,  and technical  issues  resolved,
leading to the NRC's approval of restart of the plant.

          On May 23, 2002,  FirstEnergy  purchased an unused reactor vessel head
from  Consumers  Energy's  Midland  Nuclear  Plant -  similar  in  design to the
Davis-Besse  Plant. In addition to refurbishment  and  installation  work at the
plant, FirstEnergy has made significant changes in senior and mid-level managers
at the plant and in its corporate nuclear organization.  It has also established
an  independent  oversight  panel  consisting  of industry  experts to assist in
Davis-
                                        41

<PAGE>



Besse  restart  efforts  and to  provide  advice  regarding  the safe  return of
Davis-Besse  to  service.  FirstEnergy  expects to  complete  refurbishment  and
installation of the  replacement  reactor head as well as any other work related
to  restart  of the  plant in the  fourth  quarter  of this  year.  The NRC must
authorize  restart of the plant following its formal  inspection  process before
the unit can be returned to service.

          The estimated, incremental costs (capital and expense) associated with
the extended Davis-Besse outage (CEI's share - 51.38%) in 2002 are:

Incremental Costs of Davis-Besse Extended Outage (100%)
-------------------------------------------------------
                                                               Expenditure Range
                                                               -----------------
                                                                 (In millions)

Replace reactor vessel head (principally capital expenditures).     $55 - $75
  Primarily operating expenses (pre-tax):
Additional maintenance (including acceleration of programs)....     $50 - $70
Replacement power for July and August 2002.....................     $40
Replacement power for September through December 2002..........     $40 - $60


          On July 31, 2002,  Fitch revised its rating outlook for CEI securities
to negative from stable.  The revised outlook reflects the adverse impact of the
unplanned  outage at the  Davis-Besse  Plant and  Fitch's  judgment at that time
about NRG's  financial  ability to consummate  the purchase of four power plants
from FirstEnergy and Fitch's expectation of subsequent delays in debt reduction.

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

          Various   environmental   liabilities  have  been  recognized  on  the
Consolidated  Balance Sheet as of June 30, 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" (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   $2.8  million  as  of  June  30,  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 regularly  reviewed for
impairment.  CEI's goodwill will be reviewed for impairment at least annually in
accordance with SFAS 142. FirstEnergy's most recent review was completed in June
2002.  The results of that review  indicate  that no  impairment  of goodwill is
appropriate.  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 - $908 million as of June 30, 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.


                                        42

<PAGE>

Revenue Recognition

          CEI 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

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

          In June  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 has identified various applicable legal obligations as defined under
the new standard and expects to complete an analysis of their  financial  impact
in the second half of 2002.



                                        43



<PAGE>

<TABLE>
<CAPTION>


                                                      THE TOLEDO EDISON COMPANY

                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)


                                                                  Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                ----------------------           ---------------------
                                                                  2002          2001               2002         2001
                                                                --------      --------           --------     --------
                                                                                    (In thousands)

<S>                                                             <C>           <C>                <C>          <C>
OPERATING REVENUES........................................      $250,307      $263,003           $494,474     $534,638
                                                                --------      --------           --------     --------


OPERATING EXPENSES AND TAXES:
   Fuel...................................................         9,427        12,015             20,818       24,768
   Purchased power........................................        79,352        86,713            161,756      175,065
   Nuclear operating costs................................        45,542        37,111            120,640       84,759
   Other operating costs..................................        35,920        37,287             70,799       75,913
                                                                --------      --------           --------     --------
       Total operation and maintenance expenses...........       170,241       173,126            374,013      360,505
   Provision for depreciation and amortization............        19,748        29,240             41,116       62,015
   General taxes..........................................        13,449        13,879             27,197       29,940
   Income taxes...........................................        12,710        13,403              8,331       20,489
                                                                --------      --------           --------     --------
       Total operating expenses and taxes.................       216,148       229,648            450,657      472,949
                                                                --------      --------           --------     --------


OPERATING INCOME..........................................        34,159        33,355             43,817       61,689


OTHER INCOME..............................................         3,743         2,178              8,086        5,966
                                                                --------      --------           --------     --------


INCOME BEFORE NET INTEREST CHARGES........................        37,902        35,533             51,903       67,655
                                                                --------      --------           --------     --------


NET INTEREST CHARGES:
   Interest on long-term debt.............................        15,601        16,616             31,473       33,860
   Allowance for borrowed funds used during construction..          (382)       (2,914)              (810)      (3,263)
   Other interest expense (credit)........................          (360)       (1,133)            (1,095)      (2,111)
                                                                --------      --------           --------     --------
       Net interest charges...............................        14,859        12,569             29,568       28,486
                                                                --------      --------           --------     --------


NET INCOME................................................        23,043        22,964             22,335       39,169


PREFERRED STOCK DIVIDEND REQUIREMENTS.....................         2,210         4,030              6,934        8,075
                                                                --------      --------           --------     --------


EARNINGS ON COMMON STOCK..................................      $ 20,833      $ 18,934           $ 15,401     $ 31,094
                                                                ========      ========           ========     ========


<FN>


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


</FN>
</TABLE>

                                                          44

<PAGE>


<TABLE>
<CAPTION>

                                                      THE TOLEDO EDISON COMPANY

                                                     CONSOLIDATED BALANCE SHEETS


                                                                                   (Unaudited)
                                                                                     June 30,      December 31,
                                                                                      2002             2001
                                                                                   -----------     ------------
                                                                                          (In thousands)

                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:
   In service................................................................      $1,588,298       $1,578,943
   Less--Accumulated provision for depreciation..............................         672,742          645,865
                                                                                   ----------       ----------
                                                                                      915,556          933,078
                                                                                   ----------       ----------
   Construction work in progress-
     Electric plant..........................................................          61,370           40,220
     Nuclear fuel............................................................          26,383           19,854
                                                                                   ----------       ----------
                                                                                       87,753           60,074
                                                                                   ----------       ----------
                                                                                    1,003,309          993,152
                                                                                   ----------       ----------

OTHER PROPERTY AND INVESTMENTS:
   Shippingport Capital Trust................................................         245,305          262,131
   Nuclear plant decommissioning trusts......................................         171,306          156,084
   Long-term notes receivable from associated companies......................         162,255          162,347
   Other.....................................................................           3,684            4,248
                                                                                   ----------       ----------
                                                                                      582,550          584,810
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................             453              302
   Receivables-
     Customers...............................................................           6,993            5,922
     Associated companies....................................................          48,210           64,667
     Other...................................................................          23,835            9,709
   Notes receivable from associated companies................................          15,906            7,607
   Materials and supplies, at average cost-
     Owned...................................................................          13,460           13,996
     Under consignment.......................................................          19,406           17,050
   Prepayments and other.....................................................           3,649           14,580
                                                                                   ----------       ----------
                                                                                      131,912          133,833
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................         400,902          388,846
   Goodwill..................................................................         445,732          445,732
   Other.....................................................................          31,505           25,745
                                                                                   ----------       ----------
                                                                                      878,139          860,323
                                                                                   ----------       ----------
                                                                                   $2,595,910       $2,572,118
                                                                                   ==========       ==========
</TABLE>


                                                     45


<PAGE>


<TABLE>
<CAPTION>


                                                      THE TOLEDO EDISON COMPANY

                                                     CONSOLIDATED BALANCE SHEETS


                                                                                  (Unaudited)
                                                                                    June 30,        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.......................................................         123,237          113,436
                                                                                   ----------       ----------
         Total common stockholder's equity...................................         647,466          637,665
   Preferred stock not subject to mandatory redemption.......................         126,000          126,000
   Long-term debt............................................................         566,624          646,174
                                                                                   ----------       ----------
                                                                                    1,340,090        1,409,839
                                                                                   ----------       ----------

CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................         328,730          347,593
   Accounts payable-
     Associated companies....................................................          67,896           53,960
     Other...................................................................           7,133           27,418
   Notes payable to associated companies.....................................         134,163           17,208
   Accrued taxes.............................................................          49,229           39,848
   Accrued interest..........................................................          19,860           19,918
   Other.....................................................................          27,730           40,222
                                                                                   ----------       ----------
                                                                                      634,741          546,167
                                                                                   ----------       ----------

DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         220,953          213,145
   Accumulated deferred investment tax credits...............................          30,369           31,342
   Nuclear plant decommissioning costs.......................................         177,648          162,426
   Pensions and other postretirement benefits................................         121,343          120,561
   Other.....................................................................          70,766           88,638
                                                                                   ----------       ----------
                                                                                      621,079          616,112
                                                                                   ----------       ----------

COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2)...........................
                                                                                   ----------       ----------
                                                                                   $2,595,910       $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>

                                                       46

<PAGE>
<TABLE>
<CAPTION>


                                              THE TOLEDO EDISON COMPANY

                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (Unaudited)


                                                                  Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                ----------------------          ----------------------
                                                                  2002          2001              2002          2001
                                                                --------      --------          --------      --------
                                                                                    (In thousands)
<S>                                                             <C>           <C>               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................      $ 23,043      $ 22,964          $ 22,335      $ 39,169
   Adjustments to reconcile net income to net
     cash from operating activities-
       Provision for depreciation and amortization........        19,748        29,240            41,116        62,015
       Nuclear fuel and lease amortization................         2,671         5,236             6,244        10,410
       Deferred income taxes, net.........................           578           994             5,892         3,152
       Investment tax credits, net........................          (487)         (487)             (973)         (973)
       Receivables........................................       (18,762)      (13,617)            1,260         4,000
       Materials and supplies.............................        (1,169)         (711)           (1,820)       10,712
       Accounts payable...................................        (9,210)       (6,400)           (6,349)       (4,491)
       Accrued sale leaseback costs ......................       (53,332)      (19,528)          (28,454)      (29,157)
       Other..............................................        12,447           778             2,041       (19,397)
                                                                --------      --------          --------      --------
         Net cash provided from (used for) operating
          activities .....................................       (24,473)       18,469            41,292        75,440
                                                                --------      --------          --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Short-term borrowings, net...........................        47,957         7,491           116,955            --
   Redemptions and Repayments-
     Preferred stock......................................            --            --            85,299            --
     Long-term debt.......................................        12,169        25,949            12,263        31,812
     Short-term borrowings, net...........................            --            --                --        34,445
   Dividend Payments-
     Common stock.........................................            --            --             5,600        14,700
     Preferred stock......................................         2,210         4,028             5,635         8,073
                                                                --------      --------          --------      --------
         Net cash used for (provided from) financing
          activities .....................................       (33,578)       22,486            (8,158)       89,030
                                                                --------      --------          --------      --------


CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions.....................................        14,702         8,481            40,261        20,509
   Loans to associated companies..........................         1,906         5,548             8,207       123,438
   Loan payments from associated companies................            --       (21,556)               --       (25,104)
   Capital trust investments..............................       (16,883)         (520)          (16,826)      (17,705)
   Sale of assets to associated companies.................            --        (5,548)               --      (123,438)
   Other..................................................        11,536         9,936            17,657         9,746
                                                                --------      --------          --------      --------
         Net cash used for (provided from) investing
          activities .....................................        11,261        (3,659)           49,299       (12,554)
                                                                --------      --------          --------      --------


Net increase (decrease) in cash and cash equivalents......        (2,156)         (358)              151        (1,036)
Cash and cash equivalents at beginning of period..........         2,609           707               302         1,385
                                                                --------      --------          --------      --------
Cash and cash equivalents at end of period................      $    453      $    349          $    453      $    349
                                                                ========      ========          ========      ========

<FN>



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

</FN>
</TABLE>


                                                         47


<PAGE>


                        REPORT OF INDEPENDENT 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  subsidiary  as of June  30,  2002,  and  the  related
consolidated statements of income and cash flows for each of the three-month and
six-month  periods  ended June 30,  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 for them
to be in conformity with accounting  principles generally accepted in the United
States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
August 8, 2002


                                        48

<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
provides regulated electric  distribution services in portions of northern Ohio.
TE also provides generation services to those customers electing to retain TE as
their power  supplier.  TE  continues  to provide  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.  Power supply
requirements of TE are provided by FES - an affiliated company.

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

     Operating revenues decreased by $12.7 million or 4.8% in the second quarter
and $40.2  million or 7.5% in the first half of 2002,  as  compared  to the same
periods of 2001.  Reduced  operating  revenues reflect the combined effects of a
weak but recovering  economy,  shopping by Ohio customers for alternative energy
providers  and reduced  sales to  wholesale  customers.  Kilowatt-hour  sales to
generation  customers  decreased by 3.5% in the second  quarter and 11.7% in the
first  six  months  of  2002,  compared  to the  same  periods  last  year,  due
principally  to  customer  choice  in Ohio.  Sales  of  electric  generation  by
alternative  suppliers as a percent of total sales delivered in the TE franchise
area  increased  to 15.3% in the  second  quarter  of 2002 from 6.1% in the same
period last year.  Despite  the  reduction  in  generation  load to  alternative
suppliers in the second  quarter,  kilowatt-hour  sales to generation  customers
decreased  only 3.5%,  demonstrating  some strength in the Toledo Edison service
area. Automotive and automotive-related industrial customers continue to provide
sales support in Toledo's  franchise area.  During the first six months of 2002,
TE's share of electric generation sales in its franchise areas decreased by 11.5
percentage points, compared to the same period in 2001.

          Distribution  deliveries  increased  by 7.0% in the second  quarter of
2002 from the same  quarter  last year,  increasing  revenues  from  electricity
throughput  by $8.6  million  due to  higher  sales in all  customer  sectors  -
residential,  commercial and  industrial.  In addition to the benefit derived by
TE's   franchise   area   economy   from   automotive   and   automotive-related
manufacturers,  warmer weather in June 2002 increased  air-conditioning load, as
compared  to  the  second  quarter  last  year.  In  the  first  half  of  2002,
distribution  deliveries  increased  slightly;   however,  revenues  were  lower
reflecting a net decrease in average unit prices.

          Transition  plan  incentives,   provided  to  customers  to  encourage
switching to  alternative  energy  providers,  further  magnified  the effect of
generation  sales  reductions  to operating  revenues in the second  quarter and
first six  months  of 2002,  compared  to the  corresponding  periods  of 2001 -
reducing  comparable  revenues by $3.6 million and $7.7  million,  respectively.
These revenue  reductions are deferred for future recovery under TE's transition
plan and do not materially affect current period earnings.

          Sales to  wholesale  customers  were  also  lower  in both the  second
quarter and  year-to-date  periods of 2002,  compared to the same  periods  last
year, primarily reflecting reduced revenues from FES.

          The sources of changes in operating revenues during the second quarter
and first six months of 2002,  compared with the corresponding  periods of 2001,
are summarized in the following table:

  Sources of Operating Revenue Changes
  ------------------------------------
  Increase (Decrease)
                                                Periods Ending June 30, 2002
                                                ----------------------------
                                                 3 Months         6 Months
                                                 --------         --------
                                                         (In millions)
  Retail:
    Generation sales......................       $ (2.8)           $(15.0)
    Distribution deliveries...............          8.6              (7.2)
    Increased shopping incentives.........         (3.6)             (7.7)
                                                 ------            ------

    Total Retail..........................          2.2             (29.9)
  Wholesale...............................        (15.0)             (9.5)
  Other...................................          0.1              (0.8)
                                                 ------            ------

  Net Decrease in Operating Revenue.......       $(12.7)           $(40.2)
                                                 ======            ======

                                        49

<PAGE>


Operating Expenses and Taxes

          Total  operating  expenses and taxes  declined by $13.5 million in the
second  quarter  and $22.3  million  in the  first  six  months of 2002 from the
corresponding  period of 2001.  Purchased power costs decreased $7.4 million and
$13.3  million in the second  quarter and first six months of 2002,  compared to
the same  periods  last  year,  primarily  due to lower unit costs in the second
quarter  and   reduced   volume   requirements   supporting   lower   generation
kilowatt-hour  sales  in  the  year-to-date  period.

          Nuclear  operating  costs  increased  by $8.4  million  in the  second
quarter  and $35.9  million in the first  half of 2002 from the same  periods in
2001. Costs related to the extended outage at the Davis-Besse nuclear plant (see
Capital  Resources and  Liquidity) and to a lesser extent  additional  operating
costs at Beaver Valley Unit 2 and the Perry Plant, accounted for the increase in
nuclear costs in the second quarter compared to the second quarter of last year.
During the first six months of 2002, costs also included amounts incurred in the
first  quarter of 2002 from  refueling  outages at two  nuclear  plants  (Beaver
Valley Unit 2 and Davis-Besse), compared to only one refueling outage (Perry) in
the first quarter of 2001.

          Charges for depreciation and amortization decreased by $9.5 million in
the second  quarter and $20.9 million in the first six months of 2002,  compared
to the same periods last year.  These decreases  primarily  resulted from higher
shopping  incentive  deferrals and  tax-related  deferrals under TE's transition
plan in 2002, the elimination of  depreciation  associated with the planned sale
of the Bay Shore  generating  plant (see Note 3), 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 second
quarter  and  first  half  of  2001  totaled  $3.1  million  and  $6.2  million,
respectively.

          General  taxes  decreased  by $2.7  million in the first six months of
2002,  compared  to the same  period  last  year,  due to state tax  changes  in
connection with the Ohio electric industry restructuring.

Net Interest Charges

           Net interest charges increased by $2.3 million in the second quarter
of 2002, compared to the same quarter last year, reflecting in part TE's higher
short-term borrowing levels from affiliates.

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

          TE has continuing cash  requirements for planned capital  expenditures
and  maturing  debt.  During  the last half of 2002,  capital  requirements  for
property  additions  are expected to be about $72 million,  including $5 million
for nuclear fuel. These capital requirements  include the estimated  incremental
repair costs of the unplanned outage at the Davis-Besse  nuclear plant discussed
below.  TE also has sinking fund  requirements  for preferred stock and maturing
long-term debt of $152.4 million and optional debt  redemptions of $15.0 million
during  the  remainder  of 2002.  These cash  requirements  are  expected  to be
satisfied from internal cash and short-term credit arrangements.

          As of June 30, 2002,  TE had about $16.4 million of cash and temporary
investments  and  $134.2  million  of  short-term   indebtedness  to  associated
companies.  Under its first mortgage  indenture,  excluding  property  additions
associated  with the planned sale of the Bay Shore Plant.  TE had the capability
to issue up to $131 million of additional  first  mortgage bonds on the basis of
property  additions  and retired  bonds as of June 30, 2002.  Under the earnings
coverage  test  contained in TE's  charter,  no preferred  stock could be issued
based on earnings through the second quarter of 2002.

          On April 30, 2002, the Nuclear Regulatory Commission (NRC) initiated a
formal  inspection  process at the  Davis-Besse  nuclear plant.  This action was
taken in response to corrosion  found by  FirstEnergy in the reactor vessel head
near the nozzle  penetration hole during a refueling outage in the first quarter
of 2002. The purpose of the formal inspection  process is to establish  criteria
for NRC oversight of the licensee's  performance  and to provide a record of the
major  regulatory and licensee  actions taken,  and technical  issues  resolved,
leading to the NRC's approval of restart of the plant.

          On May 23, 2002,  FirstEnergy  purchased an unused reactor vessel head
from  Consumers  Energy's  Midland  Nuclear  Plant -  similar  in  design to the
Davis-Besse  Plant. In addition to refurbishment  and  installation  work at the
plant, FirstEnergy has made significant changes in senior and mid-level managers
at the plant and in its corporate nuclear organization.  It has also established
an  independent  oversight  panel  consisting  of industry  experts to assist in
Davis-Besse  restart efforts and to provide advice  regarding the safe return of
Davis-Besse  to  service.  FirstEnergy  expects to  complete  refurbishment  and
installation of the  replacement  reactor head as well as any other work related
to  restart  of the  plant in the  fourth  quarter  of this  year.  The NRC must
authorize  restart of the plant following its formal  inspection  process before
the unit can be returned to service.
                                        50

<PAGE>

          The estimated, incremental costs (capital and expense) associated with
the extended Davis-Besse outage (TE share - 48.62%) in 2002 are:

Incremental Costs of Davis-Besse Extended Outage (100%)
-------------------------------------------------------
                                                               Expenditure Range
                                                               -----------------
                                                                 (In millions)

Replace reactor vessel head (principally capital expenditures).     $55 - $75
  Primarily operating expenses (pre-tax):
Additional maintenance (including acceleration of programs)....     $50 - $70
Replacement power for July and August 2002.....................     $40
Replacement power for September through December 2002..........     $40 - $60


          On July 31, 2002,  Fitch revised its rating  outlook for TE securities
to negative from stable.  The revised outlook reflects the adverse impact of the
unplanned  outage at the  Davis-Besse  Plant and  Fitch's  judgment at that time
about NRG's  financial  ability to consummate  the purchase of four power plants
from FirstEnergy and Fitch's expectation of subsequent delays in debt reduction.

State 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
revenue 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 June 30, 2002, the annualized  customer-switching rate essentially
eliminated TE's risk of not recovering  transition costs,  since over 113,000 of
its  customers  have  requested   generation   services  from  other  authorized
suppliers.

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

          Various   environmental   liabilities  have  been  recognized  on  the
Consolidated  Balance Sheet as of June 30, 2002, based on estimates of the total
costs of  cleanup,  TE's  proportionate  responsibility  for such  costs and the
financial  ability of other  nonaffiliated  entities to pay. TE has been named 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.  TE has  accrued  liabilities  of
approximately   $0.2  million  as  of  June  30,  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
-------------------------------

          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 regularly  reviewed for
impairment.  TE's goodwill will be reviewed for  impairment at least annually in
accordance with SFAS 142. FirstEnergy's most recent review was completed in June
2002.  The results of that review  indicate  that no  impairment  of goodwill is
appropriate.  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 - $401  million as of June 30, 2002.  TE  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.

                                        51

<PAGE>


Revenue Recognition

          TE 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

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

          In June  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 has identified  various applicable legal obligations as defined under
the new  standard and expects to have  completed an analysis of their  financial
impact in the second half of 2002.

                                        52


<PAGE>



<TABLE>
<CAPTION>


                                                     PENNSYLVANIA POWER COMPANY

                                                        STATEMENTS OF INCOME
                                                             (Unaudited)


                                                                 Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                ----------------------          ----------------------
                                                                  2002          2001              2002          2001
                                                                --------      --------          --------      --------
                                                                                    (In thousands)

<S>                                                             <C>           <C>               <C>           <C>
OPERATING REVENUES........................................      $127,737      $124,701          $252,072      $253,098
                                                                --------      --------          --------      --------


OPERATING EXPENSES AND TAXES:
   Fuel...................................................         6,379         5,887            12,712        12,528
   Purchased power........................................        35,663        33,791            75,626        79,559
   Nuclear operating costs................................        19,473        19,252            41,805        39,517
   Other operating costs..................................         9,717        11,897            19,669        22,193
                                                                --------      --------          --------      --------
       Total operation and maintenance expenses...........        71,232        70,827           149,812       153,797
   Provision for depreciation and amortization............        14,208        14,267            28,412        28,530
   General taxes..........................................         6,006         1,261            12,010         5,741
   Income taxes...........................................        14,835        15,482            25,251        26,157
                                                                --------      --------          --------      --------
       Total operating expenses and taxes.................       106,281       101,837           215,485       214,225
                                                                --------      --------          --------      --------


OPERATING INCOME..........................................        21,456        22,864            36,587        38,873


OTHER INCOME..............................................           476           747             1,141         1,622
                                                                --------      --------          --------      --------


INCOME BEFORE NET INTEREST CHARGES........................        21,932        23,611            37,728        40,495
                                                                --------      --------          --------      --------


NET INTEREST CHARGES:
   Interest expense.......................................         4,268         4,674             8,366         9,402
   Allowance for borrowed funds used during construction..          (345)         (108)             (597)         (340)
                                                                --------      --------          --------      --------
       Net interest charges...............................         3,923         4,566             7,769         9,062
                                                                --------      --------          --------      --------


NET INCOME................................................        18,009        19,045            29,959        31,433


PREFERRED STOCK DIVIDEND REQUIREMENTS.....................           926           926             1,852         1,852
                                                                --------      --------          --------      --------


EARNINGS ON COMMON STOCK..................................      $ 17,083      $ 18,119          $ 28,107      $ 29,581
                                                                ========      ========          ========      ========


<FN>


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

</FN>
</TABLE>

                                                        53

<PAGE>



<TABLE>
<CAPTION>

                                              PENNSYLVANIA POWER COMPANY

                                                    BALANCE SHEETS


                                                                                  (Unaudited)
                                                                                    June 30,         December 31,
                                                                                      2002              2001
                                                                                    --------         ------------
                                                                                          (In thousands)

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

   In service................................................................       $672,863          $664,432
   Less--Accumulated provision for depreciation..............................        301,051           290,216
                                                                                    --------          --------
                                                                                     371,812           374,216
                                                                                    --------          --------

   Construction work in progress-
     Electric plant..........................................................         30,751            24,141
     Nuclear fuel............................................................            469             2,921
                                                                                    --------          --------
                                                                                      31,220            27,062
                                                                                    --------          --------
                                                                                     403,032           401,278
                                                                                    --------          --------


OTHER PROPERTY AND INVESTMENTS:
   Nuclear plant decommissioning trusts......................................        121,309           116,634
   Long-term notes receivable from associated companies......................         39,109            39,290
   Other.....................................................................         21,916            21,597
                                                                                    --------          --------
                                                                                     182,334           177,521
                                                                                    --------          --------


CURRENT ASSETS:
   Cash and cash equivalents.................................................            590                67
   Receivables-
     Customers (less accumulated provisions of $666,000 and $619,000,
       respectively, for uncollectible accounts).............................         48,991            40,890
     Associated companies....................................................         32,813            36,491
     Other...................................................................          4,384             4,787
   Notes receivable from associated companies................................         37,718            54,411
   Materials and supplies, at average cost...................................         27,881            25,598
   Prepayments...............................................................         14,465             5,682
                                                                                    --------          --------
                                                                                     166,842           167,926
                                                                                    --------          --------


DEFERRED CHARGES:
   Regulatory assets.........................................................        182,570           208,838
   Other.....................................................................          4,596             4,534
                                                                                    --------          --------
                                                                                     187,166           213,372
                                                                                    --------          --------
                                                                                    $939,374          $960,097
                                                                                    ========          ========


</TABLE>

                                                     54

<PAGE>

<TABLE>
<CAPTION>


                                              PENNSYLVANIA POWER COMPANY

                                                    BALANCE SHEETS


                                                                                   (Unaudited)
                                                                                     June 30,       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.......................................................         55,706            35,398
                                                                                    --------          --------
         Total common stockholder's equity...................................        244,096           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...................................................................        240,480           240,983
                                                                                    --------          --------
                                                                                     537,931           539,190
                                                                                    --------          --------
CURRENT LIABILITIES:
   Currently payable long-term debt-
     Associated companies....................................................             --            18,090
     Other...................................................................         12,077            12,075
   Accounts payable-
     Associated companies....................................................         29,798            50,604
     Other...................................................................          3,341             1,441
   Accrued taxes.............................................................         41,942            18,853
   Accrued interest..........................................................          5,333             5,264
   Other.....................................................................          9,063             9,675
                                                                                    --------          --------
                                                                                     101,554           116,002
                                                                                    --------          --------

DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................        126,803           136,808
   Accumulated deferred investment tax credits...............................          3,959             4,108
   Nuclear plant decommissioning costs.......................................        121,771           117,096
   Other.....................................................................         47,356            46,893
                                                                                    --------          --------
                                                                                     299,889           304,905
                                                                                    --------          --------

COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2)...........................
                                                                                    --------          --------
                                                                                    $939,374          $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>

                                                   55

<PAGE>


<TABLE>
<CAPTION>

                                              PENNSYLVANIA POWER COMPANY

                                               STATEMENTS OF CASH FLOWS
                                                     (Unaudited)


                                                                  Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                 ---------------------          ----------------------
                                                                  2002          2001              2002          2001
                                                                 -------      --------          --------      --------
                                                                                    (In thousands)
<S>                                                              <C>          <C>               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................       $18,009      $ 19,045          $ 29,959      $ 31,433
   Adjustments to reconcile net income to net
     cash from operating activities-
       Provision for depreciation and amortization........        14,208        14,267            28,412        28,530
       Nuclear fuel and lease amortization................         4,852         4,359             9,568         9,241
       Deferred income taxes, net.........................        (1,950)       (3,555)           (3,875)       (6,036)
       Investment tax credits, net........................          (655)         (699)           (1,320)       (1,410)
       Receivables........................................        (3,338)       (7,751)           (4,020)        1,314
       Materials and supplies.............................        (1,711)       (1,656)           (2,283)        6,308
       Accounts payable...................................        (3,147)        7,347           (18,906)      (26,007)
       Accrued taxes .....................................        12,439        (3,505)           23,089         3,369
       Other..............................................         7,220         7,128            (8,162)       (8,616)
                                                                 -------      --------          --------      --------
         Net cash provided from operating activities......        45,927        34,980            52,462        38,126
                                                                 -------      --------          --------      --------


CASH FLOWS FROM FINANCING ACTIVITIES:
   New Financing-
     Long-term debt.......................................            --        32,603                --        32,603
   Redemptions and Repayments-
     Long-term debt.......................................           623         4,804            41,290         9,722
   Dividend Payments-
     Common stock.........................................            --            --             7,800         6,300
     Preferred stock......................................           926           926             1,852         1,852
                                                                 -------      --------          --------      --------
         Net cash used for (provided from) financing
          activities .....................................         1,549       (26,873)           50,942       (14,729)
                                                                 -------      --------          --------      --------



CASH FLOWS FROM INVESTING ACTIVITIES:
   Property additions.....................................         8,343         8,552            16,426        13,910
   Loans to associated companies..........................        36,357        30,828                --        30,828
   Loan payment from parent...............................            --            --           (16,706)      (13,640)
   Sale of assets to associated companies.................            --        (6,053)               --        (6,053)
   Other..................................................            89        (3,175)            1,277        (2,860)
                                                                 -------      --------          --------      --------
         Net cash used for investing activities...........        44,789        30,152               997        22,185
                                                                 -------      --------          --------      --------


Net increase (decrease) in cash and cash equivalents......          (411)       31,701               523        30,670
Cash and cash equivalents at beginning of period..........         1,001         2,444                67         3,475
                                                                 -------      --------          --------      --------
Cash and cash equivalents at end of period................       $   590      $ 34,145          $    590      $ 34,145
                                                                 =======      ========          ========      ========


<FN>


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


</FN>
</TABLE>

                                                         56




<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS






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

We have reviewed the accompanying balance sheet of Pennsylvania Power Company as
of June 30, 2002,  and the related  statements of income and cash flows for each
of the  three-month and six-month  periods ended June 30, 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  interim  financial  statements  for  them to be in
conformity with accounting principles generally accepted in the United States of
America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
August 8, 2002


                                        57

<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
provides regulated electric distribution services in western Pennsylvania.  Penn
also provides  generation services to those customers electing to retain Penn as
their power supplier.  Penn provides 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  increased  by $3.0  million or 2.4% in the second
quarter  and  decreased  by $1.0  million or 0.4% in the first half of 2002,  as
compared to the same periods of 2001.  Higher  operating  revenues in the second
quarter  of 2002  primarily  resulted  from the return of  generation  customers
previously served by alternative  suppliers,  while lower year-to-date operating
revenues   principally   resulted  from  reduced  sales  revenues  to  wholesale
customers. Sales of electric generation by alternative suppliers as a percent of
total sales  delivered in Penn's  franchise area decreased to 0.4% in the second
quarter of 2002 from 5.0% in the same  period  last  year.  During the first six
months of 2002, Penn's share of electric  generation sales in its franchise area
increased by 6.9 percentage points, compared to the same period in 2001.

          Distribution  revenues  changed very little in the second  quarter and
first  six  months of 2002,  compared  to the same  periods  last  year.  Higher
residential sales,  which benefited from warmer weather in June 2002,  increased
in both  periods  but were more than  offset in the first six  months of 2002 by
reduced  deliveries to commercial and industrial  customers,  as a result of the
decline in economic conditions.

          Lower  wholesale  revenues  partially  offset  higher  generation  and
distribution  revenues in the second quarter of 2002  moderating the increase in
operating  revenues in that period and resulted in a decrease in revenues during
the first six months of 2002, compared to the prior year. Reduced sales revenues
from FES accounted for nearly all of the decrease in wholesale  revenues in both
periods.

          The sources of changes in operating revenues during the second quarter
and first six months of 2002,  compared with the corresponding  periods of 2001,
are summarized in the following table:

  Sources of Operating Revenue Changes
  ------------------------------------
  Increase (Decrease)
                                                    Periods Ending June 30, 2002
                                                    ----------------------------
                                                     3 Months         6 Months
                                                     --------         --------
                                                            (In millions)
  Retail:
    Generation sales.............................     $ 6.4           $  9.9
    Distribution deliveries......................       0.9             (0.2)
                                                      -----           ------

    Total Retail.................................       7.3              9.7
  Wholesale......................................      (3.6)           (11.7)
  Other..........................................      (0.7)             1.0
                                                      -----           ------

  Net Increase (Decrease) in Operating Revenues..     $ 3.0           $ (1.0)
                                                      =====           ======


Operating Expenses and Taxes

          Total  operating  expenses and taxes  increased by $4.4 million in the
second  quarter  and $1.3  million  in the  first  six  months  of 2002 from the
corresponding  period of 2001.  Purchased  power costs increased $1.9 million in
the second quarter of 2002 from the same quarter last year as a result of higher
volume  requirements for customers  returning from alternative  suppliers.  This
increase  was  partially  offset by  reduced  unit  costs.  During the first six
months,  purchased power costs decreased $3.9 million with lower unit costs more
than   offsetting  the  additional   volume   purchased  to  supply   generation
kilowatt-hour  sales. In the first six months of 2002,  nuclear  operating costs
increased  by $2.3 million  from the same period last year,  primarily  due to a
larger  ownership  share of capacity in the  refueling  outage for Beaver Valley
Unit 2 (13.74% owned) in the first quarter of 2002,  compared to the Perry Plant
(5.24% owned) in the first quarter of 2001.


                                        58

<PAGE>


          General taxes increased by $4.7 million in the second quarter and $6.3
million in the first half of 2002 due in part to the  successful  resolution  of
certain  property  tax issues in the second  quarter of 2001,  which  provided a
one-time benefit of $3.0 million in that year. An increase in the gross receipts
tax rate for 2002 also  contributed  to the  increase in general  taxes for both
periods.

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

          Penn has continuing cash requirements for planned capital expenditures
and maturing debt.  During the last two quarters of 2002,  capital  requirements
for property  additions and capital leases are expected to be about $27 million,
including $5 million for nuclear fuel.  Penn also has sinking fund  requirements
for  preferred  stock and maturing  long-term  debt of $1.2  million  during the
remainder of 2002. These requirements are expected to be satisfied from internal
cash and/or short-term credit arrangements.

          As of June  30,  2002,  Penn  had  about  $38.3  million  of cash  and
temporary investments and no short-term  indebtedness.  Under its first mortgage
indenture,  as of June 30,  2002,  Penn had the  capability  to issue up to $290
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,
$188 million of preferred  stock  (assuming no additional debt was issued) could
be issued based on earnings through the second quarter of 2002.

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

          Penn prepares its 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 regularly  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 - $183 million as of
June 30, 2002.  Penn  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.

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

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

          In June  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 has identified  various  applicable  legal  obligations as defined
under the new  standard  and expects to complete an analysis of their  financial
impact in the second half of 2002.


                                        59

<PAGE>




<TABLE>
<CAPTION>

                                                JERSEY CENTRAL POWER & LIGHT COMPANY

                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)


                                                                  Three Months Ended                Six Months Ended
                                                                       June 30,                        June 30,
                                                                -----------------------           ---------------------
                                                                  2002          2001               2002         2001
                                                                --------       --------           --------     --------
                                                                                     (In thousands)

<S>                                                             <C>            <C>                <C>          <C>
OPERATING REVENUES........................................      $501,232   |   $521,054           $951,945  |  $982,736
                                                                --------   |   --------           --------  |  --------
                                                                           |                                |
                                                                           |                                |
OPERATING EXPENSES AND TAXES:                                              |                                |
   Fuel...................................................         1,298   |      1,440              2,474  |     2,778
   Purchased power........................................       249,466   |    275,627            460,451  |   491,293
   Other operating costs..................................        74,100   |     67,812            142,617  |   131,456
                                                                --------   |   --------           --------  |  --------
       Total operation and maintenance expenses...........       324,864   |    344,879            605,542  |   625,527
   Provision for depreciation and amortization............        55,371   |     62,684            119,274  |   124,433
   General taxes..........................................         4,294   |     15,081             21,297  |    30,654
   Income taxes...........................................        38,543   |     29,103             66,404  |    59,331
                                                                --------   |   --------           --------  |  --------
       Total operating expenses and taxes.................       423,072   |    451,747            812,517  |   839,945
                                                                --------   |   --------           --------  |  --------
                                                                           |                                |
OPERATING INCOME..........................................        78,160   |     69,307            139,428  |   142,791
                                                                           |                                |
OTHER INCOME..............................................         2,196   |      2,401              5,022  |     3,559
                                                                --------   |   --------           --------  |  --------
                                                                           |                                |
INCOME BEFORE NET INTEREST CHARGES........................        80,356   |     71,708            144,450  |   146,350
                                                                --------   |   --------           --------  |  --------
                                                                           |                                |
NET INTEREST CHARGES:                                                      |                                |
   Interest on long-term debt.............................        22,768   |     22,821             45,485  |    44,030
   Allowance for borrowed funds used during construction..           (97)  |          3               (579) |      (431)
   Deferred interest......................................        (1,834)  |     (3,330)            (1,385) |    (6,406)
   Other interest expense (credit)........................          (533)  |      3,485             (1,777) |     6,371
   Subsidiaries' preferred stock dividend requirements....         2,672   |      2,675              5,347  |     5,350
                                                                --------   |   --------           --------  |  --------
       Net interest charges...............................        22,976   |     25,654             47,091  |    48,914
                                                                --------   |   --------           --------  |  --------
                                                                           |                                |
NET INCOME................................................        57,380   |     46,054             97,359  |    97,436
                                                                           |                                |
PREFERRED STOCK DIVIDEND REQUIREMENTS.....................           431   |      1,391              1,184  |     2,782
                                                                --------   |   --------           --------  |  --------
                                                                           |                                |
EARNINGS ON COMMON STOCK..................................      $ 56,949   |   $ 44,663           $ 96,175  |  $ 94,654
                                                                ========   |   ========           ========  |  ========


<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>

                                                         60

<PAGE>


<TABLE>
<CAPTION>

                                                JERSEY CENTRAL POWER & LIGHT COMPANY

                                                     CONSOLIDATED BALANCE SHEETS


                                                                                   (Unaudited)
                                                                                    June 30,       December 31,
                                                                                      2002             2001
                                                                                   ----------      ------------
                                                                                         (In thousands)

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

   In service................................................................      $3,496,702       $3,431,823
   Less--Accumulated provision for depreciation..............................       1,369,453        1,313,259
                                                                                   ----------       ----------
                                                                                    2,127,249        2,118,564
   Construction work in progress - electric plant............................          37,643           60,482
                                                                                   ----------       ----------
                                                                                    2,164,892        2,179,046
                                                                                   ----------       ----------

OTHER PROPERTY AND INVESTMENTS:
   Nuclear plant decommissioning trusts......................................         112,768          114,899
   Nuclear fuel disposal trust...............................................         141,271          137,098
   Long-term notes receivable from associated companies......................          20,333           20,333
   Other.....................................................................          11,908            6,643
                                                                                   ----------       ----------
                                                                                      286,280          278,973
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................         247,296           31,424
   Receivables-
     Customers (less accumulated provisions of $10,353,000 and $12,923,000,
      respectively, for uncollectible accounts)..............................         221,683          226,392
     Associated companies....................................................             692            6,412
     Other ..................................................................          21,221           20,729
   Materials and supplies, at average cost...................................           1,303            1,348
   Prepayments and other.....................................................          88,820           16,569
                                                                                   ----------       ----------
                                                                                      581,015          302,874
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................       3,180,896        3,324,804
   Goodwill..................................................................       1,926,526        1,926,526
   Other.....................................................................          27,944           27,775
                                                                                   ----------       ----------
                                                                                    5,135,366        5,279,105
                                                                                   ----------       ----------
                                                                                   $8,167,553       $8,039,998
                                                                                   ==========       ==========


</TABLE>

                                                    61


<PAGE>



<TABLE>
<CAPTION>

                                                JERSEY CENTRAL POWER & LIGHT COMPANY

                                                     CONSOLIDATED BALANCE SHEETS


                                                                                  (Unaudited)
                                                                                    June 30,       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 loss....................................            (640)            (472)
     Retained earnings.......................................................          59,518           29,343
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       3,193,708        3,163,701
   Preferred stock-
     Not subject to mandatory redemption.....................................          12,649           12,649
     Subject to mandatory redemption.........................................              --           44,868
   Company-obligated mandatorily redeemable preferred securities.............         125,247          125,250
   Long-term debt............................................................       1,223,520        1,224,001
                                                                                   ----------       ----------
                                                                                    4,555,124        4,570,469
                                                                                   ----------       ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................         365,361           60,848
   Accounts payable-
     Associated companies....................................................         179,264          171,168
     Other...................................................................         114,587           89,739
   Notes payable to associated companies.....................................              --           18,149
   Accrued taxes.............................................................           7,323           35,783
   Accrued interest..........................................................          24,026           25,536
   Other.....................................................................         136,305           79,589
                                                                                   ----------       ----------
                                                                                      826,866          480,812
                                                                                   ----------       ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         579,425          514,216
   Accumulated deferred investment tax credits...............................          11,691           13,490
   Power purchase contract loss liability....................................       1,757,948        1,968,823
   Nuclear fuel disposal costs...............................................         164,834          163,377
   Nuclear plant decommissioning costs.......................................         137,308          137,424
   Other.....................................................................         134,357          191,387
                                                                                   ----------       ----------
                                                                                    2,785,563        2,988,717
                                                                                   ----------       ----------


COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2)...........................
                                                                                   ----------       ----------
                                                                                   $8,167,553       $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>

                                                      62


<PAGE>

<TABLE>
<CAPTION>


                                                JERSEY CENTRAL POWER & LIGHT COMPANY

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (Unaudited)

                                                                 Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                               -----------------------         ------------------------
                                                                  2002          2001              2002          2001
                                                               ---------      --------         ---------      ---------
                                                                                    (In thousands)
<S>                                                            <C>            <C>              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                      |                              |
Net income................................................     $  57,380   |  $ 46,054         $  97,359  |   $  97,436
   Adjustments to reconcile net income to net                              |                              |
     cash from operating activities-                                       |                              |
       Provision for depreciation and amortization........        55,371   |    62,684           119,274  |     124,433
       Other amortization.................................           940   |     9,538             1,451  |      18,590
       Deferred costs, net................................       (43,340)  |   (63,137)         (108,948) |    (113,874)
       Deferred income taxes, net.........................        27,862   |     3,507            36,540  |      19,918
       Investment tax credits, net........................          (900)  |      (900)           (1,799) |      (1,799)
       Receivables........................................       (34,185)  |   (37,735)            9,937  |    (105,386)
       Materials and supplies.............................            39   |      (815)               45  |        (843)
       Accounts payable...................................        37,910   |    47,133            32,944  |     (30,031)
       Prepayments .......................................       (76,906)  |   (64,927)          (70,650) |      26,465
       Accrued taxes .....................................       (63,030)  |    (1,910)          (28,460) |      33,301
       Other..............................................        (4,347)  |        84             1,491  |     (17,250)
                                                               ---------   |  --------         ---------  |   ---------
         Net cash provided from (used for) operating                       |                              |
          activities .....................................       (43,206)  |      (424)           89,184  |      50,960
                                                               ---------   |  --------         ---------  |   ---------
                                                                           |                              |
                                                                           |                              |
CASH FLOWS FROM FINANCING ACTIVITIES:                                      |                              |
   New Financing-                                                          |                              |
     Long-term debt.......................................       318,106   |   148,796           318,106  |     148,796
     Short-term borrowings, net...........................            --   |    13,700                --  |      76,800
   Redemptions and Repayments-                                             |                              |
     Preferred stock......................................         5,000   |     2,500             5,000  |       2,500
     Long-term debt.......................................            --   |        --            50,000  |          --
     Short-term borrowings, net...........................            --   |        --            18,149  |          --
   Dividend Payments-                                                      |                              |
     Common stock.........................................        66,000   |        --            66,000  |      75,000
     Preferred stock......................................           991   |     1,391             1,744  |       2,782
                                                               ---------   |  --------         ---------  |   ---------
         Net cash provided from financing activities......       246,115   |   158,605           177,213  |     145,314
                                                               ---------   |  --------         ---------  |   ---------
                                                                           |                              |
                                                                           |                              |
CASH FLOWS FROM INVESTING ACTIVITIES:                                      |                              |
   Property additions.....................................        20,932   |    44,972            46,834  |      78,085
   Decommissioning trust investments......................           608   |       304               709  |         598
   Other..................................................         1,690   |     1,646             2,982  |       3,321
                                                               ---------   |  --------         ---------  |   ---------
         Net cash used for investing activities...........        23,230   |    46,922            50,525  |      82,004
                                                               ---------   |  --------         ---------  |   ---------
                                                                           |                              |
                                                                           |                              |
Net increase in cash and cash equivalents.................       179,679   |   111,259           215,872  |     114,270
Cash and cash equivalents at beginning of period..........        67,617   |     5,032            31,424  |       2,021
                                                               ---------   |  --------         ---------  |   ---------
Cash and cash equivalents at end of period................     $ 247,296   |  $116,291         $ 247,296  |   $ 116,291
                                                               =========   |  ========         =========  |   =========

<FN>



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


</FN>
</TABLE>

                                                         63


<PAGE>


                        REPORT OF INDEPENDENT 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 June 30, 2002, and the related
consolidated statements of income and cash flows for each of the three-month and
six-month periods ended June 30, 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 for them
to be in conformity with accounting principles generally accepted in the United
States of America.






PricewaterhouseCoopers LLP
Cleveland, Ohio
August 8, 2002

                                        64



<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 transmission and distribution  services.  JCP&L also
provides  power  to those  customers  electing  to  retain  them as their  power
supplier.   JCP&L's  regulatory  plan  itemizes,  or  unbundles,  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 $19.8  million or 3.8% in the second
quarter  of  2002,  and by  $30.8  million  or 3.1% in the  first  half of 2002,
compared to the same  periods in 2001.  The sources of the changes in  operating
revenues,  as  compared  to the same  periods  in 2001,  are  summarized  in the
following table.

                                          Three Months Ended   Six Months Ended
Sources of Operating Revenue Changes         June 30, 2002       June 30, 2002
--------------------------------------------------------------------------------
Increase (Decrease)                                    (In millions)

Change in kilowatt-hour sales due to
  level of retail customers shopping
  for generation service ................      $ 16.1               $ 43.1
Change in other retail kilowatt-hour
  sales .................................        (2.7)               (38.3)
Change in wholesale sales ...............       (38.9)               (38.9)
All other changes .......................         5.7                  3.3
                                               -------              ------

Net Decrease in Operating Revenues ......      $(19.8)              $(30.8)
                                               ======               ======

Electric Sales

          In the first half of 2002,  a  significant  reduction in the number of
customers who received their power from alternate  suppliers continued to have a
positive effect on operating revenues. During the first six months of 2001, 8.7%
of  kilowatt-hours  delivered were to shopping  customers,  whereas only 0.5% of
kilowatt-hours  delivered  during the first six months of 2002 were to  shopping
customers.  More than  offsetting  this  increase  in  revenues  from  returning
shopping customers were lower sales to wholesale customers during the first half
of 2002.  A decline in  economic  conditions  resulted in a decrease in sales to
industrial  customers  during  the six  months  ended  June 30,  2002;  however,
conditions began to improve in the second quarter of 2002, resulting in a slight
increase in  industrial  sales  during  that  period.  Changes in  kilowatt-hour
deliveries  by  customer  class  during the three and six months  ended June 30,
2002, as compared to the same periods in 2001,  are  summarized in the following
table:

Changes in Distribution Deliveries     Three Months Ended   Six Months Ended
  and Wholesale Generation Sales         June 30, 2002       June 30, 2002
--------------------------------------------------------------------------------
Increase (Decrease)

Residential............................         1.1%               (1.8)%
Commercial.............................         -- %                0.5 %
Industrial.............................         0.8%               (3.0)%
                                              -----               -----

Total Retail...........................         0.5%               (1.1)%
Wholesale..............................       (72.0)%             (71.1)%
                                              -----               -----

Total .................................       (8.7)%              (6.4)%
                                              =====               =====

Operating Expenses and Taxes

          Total  operating  expenses and taxes decreased by $28.7 million in the
second  quarter  of 2002,  and $27.4  million  in the first six  months of 2002,
compared to the same periods in 2001.  Purchased  power costs decreased by $26.2
million  and $30.8  million for the three and six month  periods  ended June 30,
2002,  respectively,  compared to the same periods in 2001,  as a result of less
power  required  and lower unit  costs.  Higher  other  operating  costs of $6.3
million  and $11.2  million  in the three and six month  periods  ended June 30,
2002,  respectively,  were  partially  attributable  to increases in pension and
other  employee  benefit  costs.  Decreases  in  depreciation  and  amortization
expenses of $7.3 million and $5.2 million for the

                                        65

<PAGE>


three  and six  month  periods  ended  June  30,  2002,  respectively,  were due
primarily to the cessation of amortization  of regulatory  assets related to the
net  investment  in the  previously  divested  Oyster Creek  Nuclear  Generating
Station,   which  transferred  to  JCP&L  Transition  Funding  LLC  as  bondable
transition property during the second quarter of 2002 (see New Jersey Regulatory
Matters  for  further  discussion).   These  decreases  were  offset  by  higher
depreciation due to higher average depreciable plant balances in the quarter and
six months ended June 30, 2002 versus the same periods in 2001.

          General  taxes  decreased by $10.8  million in the second  quarter and
$9.4  million in the first six months of 2002,  compared to the same  periods in
2001 due  principally  to a  reduction  in the  transitional  energy  facilities
assessment.

Net Interest Charges

          Net interest  charges  decreased by $2.7 million in the second quarter
and $1.8  million in the first six months of 2002,  compared to the same periods
in 2001,  primarily due to reduced short-term  borrowing levels and amortization
of fair value adjustments recognized in connection with the merger. Net interest
charges were also affected by the issuance of $150 million of notes in May 2001,
and $320 million of transition bonds by a special purpose finance  subsidiary in
June 2002,  as well as the  redemption  of $40 million of notes in November 2001
and $50 million of notes in March 2002.  These  transactions  had an  offsetting
effect on net interest charges for the quarter ended June 30, 2002, and resulted
in a $1.5 million increase in net interest charges for the six months ended June
30, 2002.

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

          JCP&L  has   continuing   cash   requirements   for  planned   capital
expenditures and preferred stock sinking fund requirements,  which are expected
to be satisfied from internal cash and/or short-term credit arrangements. During
the remaining six months of 2002,  capital  requirements for property  additions
are expected to be about $70.0 million. As of June 30, 2002, JCP&L had mandatory
sinking fund  requirements  for  preferred  stock of $8.3  million,  which JCP&L
satisfied  in July 2002,  in  addition  to $8.3  million of  preferred  stock it
redeemed  pursuant to an optional  sinking  fund  provision.  In July and August
2002, JCP&L also used proceeds from the sale of transition bonds (see New Jersey
Regulatory Matters) to redeem $142.0 million of long-term debt and $29.8 million
of preferred stock.

          As of June 30,  2002,  JCP&L  had  about  $247.3  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
indenture  prohibits  (subject to certain  exceptions)  it from issuing any debt
which is  senior  to the  senior  notes.  As of June  30,  2002,  JCP&L  had the
capability  to issue  up to $291  million  of  additional  FMBs on the  basis of
retired bonds.  Based upon applicable  earnings  coverage tests and its charter,
JCP&L could issue $126.6 million of preferred stock (assuming no additional debt
was issued) based on earnings through June 30, 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 for hedging
purposes. The change in the fair value of commodity derivative contracts related
to energy  production  during the second  quarter of 2002 is  summarized  in the
following table:

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

 Outstanding net asset as of March 31, 2002..........        $14.6
 Settled contracts...................................         (3.2)
 Change in techniques/assumptions....................          --
 Decrease in value of existing contracts.............         (5.3)
                                                             -----

 Outstanding net asset as of June 30, 2002...........        $ 6.1
                                                             =====

          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

                                        66

<PAGE>


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 ....    $0.4     $ --      $ --         $--        $0.4
Prices based on models** ..     --        --        --          5.7        5.7
                               ----     ----      ----         ----       ----

  Total ...................    $0.4     $ --      $ --         $5.7       $6.1
                               ====     ====      ====         ====       ====

*  For the last half 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 and volatilities 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 June 30, 2002.

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

          Under New Jersey  transition  legislation,  all electric  distribution
companies in that state were  required to file rate cases by August 1, 2002.  On
August 1, 2002,  JCP&L  submitted  two rate filings with the New Jersey Board of
Public  Utilities  (NJBPU).  The first related to base electric rates  (Delivery
Charge  Filing).  The second was a request to recover  deferred costs  (Deferral
Filing)  primarily  associated  with  mandated  purchase-power   contracts  with
non-utility  generators  (NUGs) - which  produce  power at  prices  that  exceed
wholesale  market  prices - and  providing  Basic  Generation  Service  (BGS) to
customers in excess of the state's  generation rate cap. The new rate structure,
when approved, becomes effective on August 1, 2003.

Delivery Charge Filing -

          The delivery charge filing includes recovery of JCP&L's  distribution,
transmission,  customer service,  administrative  and general costs,  along with
taxes and some assessment  fees.  JCP&L is requesting a decrease in the delivery
charge of $11 million,  or a 0.6% rate reduction.  The filing uses calendar year
2002 as the test year and is based on a net rate base value of $2.1  billion and
allowed return on common equity of 12%. The December 31, 2001 capital  structure
used  in  the  filing  has  been  modified  to  eliminate  purchase   accounting
adjustments  from the  merger  of  FirstEnergy  and GPU,  Inc.  and to  remove a
pre-merger $300 million deferred balance write-off  required by the NJBPU merger
approval  order  (See  Deferral  Filing).  The  modified  capital  structure  is
comparable to JCP&L's pre-merger capital structure.

Deferral Filing -

          The deferral  filing  addresses the current Market  Transition  Charge
(MTC) and Societal  Benefits  Charge (SBC),  which were confirmed by a 2001 rate
order.  The combined  effect of JCP&L's MTC and SBC  requests  would result in a
2.8% rate increase with  securitization of a deferred balance; if securitization
is not  available,  there would be an additional  6.5% increase with a four-year
amortization of the deferred balance.

          JCP&L  was  authorized  to  defer  energy-related  costs  incurred  in
providing BGS to  non-shopping  retail  customers and costs  incurred  under NUG
agreements and purchased power  agreements  that exceeded the amounts  collected
under the current BGS and MTC rates. Additionally, in 2001, JCP&L wrote off $300
million of deferred costs upon receipt of the NJBPU merger  approval  order,  in
order to ensure that  customers  receive the benefit of future  merger  savings.
This amount is not included in the requested deferred cost recovery.

          JCP&L's filing proposes to recover the MTC deferred  balance through a
securitization  transaction  involving  the  issuance of  transition  bonds in a
principal  amount equal to the projected  July 31, 2003 MTC deferred  balance of
$684 million.  The transition  bond-related rate increase would be approximately
$69 million per year, or a 3.5% increase.  An alternative to  securitization  of
the deferred  balance would be to recover the deferred  balance over a four-year
amortization  period with interest.  This alternative  approach would require an
MTC rate increase of $195 million or an increase of 10%. JCP&L's  securitization
proposal minimizes the required customer rate increase.

          Stranded  cost  securitization  would create a transition  bond charge
(TBC) which would be the revenue  collection  mechanism for the transition  bond
principal and interest payments. In June 2002, JCP&L sold $320 million principal
amount of transition  bonds to securitize its net investment in the Oyster Creek
Nuclear Generating Facility. The TBC was offset by a

                                        67

<PAGE>


corresponding  reduction in the MTC since the stranded  Oyster Creek  investment
was initially being amortized  through the MTC.  Securitization  of the deferred
energy-related cost balance would require an increase in the TBC.

          The 2001 rate order confirmed the  establishment of the SBC to recover
costs which include nuclear plant  decommissioning  and  manufactured  gas plant
remediation. JCP&L's request would reduce the SBC by $14 million, or a 0.7% rate
decrease.

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

          Various   environmental   liabilities  have  been  recognized  on  the
Consolidated  Balance Sheet as of June 30, 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 the SBC. JCP&L has accrued
liabilities  aggregating  approximately $50.0 million as of June 30, 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 financial results.  All of JCP&L's assets are subject to
their own  specific  risks and  uncertainties  and are  regularly  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 (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.  FirstEnergy's most recent review was completed in
June 2002.  The results of that review  indicate  that no  impairment of JCP&L's
$1.9 billion of goodwill is appropriate.

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 - $3.2 billion as of June 30, 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

                                        68

<PAGE>


activities,  expectations,  intentions,  assumptions  and estimates  remain
valid. As part of its normal operations,  JCP&L enters into commodity 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 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

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

          In June 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 has identified
various  applicable  legal  obligations  as defined  under the new  standard and
expects to complete an analysis of their financial  impact in the second half of
2002.

                                        69


<PAGE>

<TABLE>
<CAPTION>


                                                     METROPOLITAN EDISON COMPANY

                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)


                                                                  Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                ----------------------           ---------------------
                                                                  2002          2001               2002         2001
                                                                --------      --------           --------     --------
                                                                                    (In thousands)

<S>                                                             <C>           <C>                <C>          <C>
OPERATING REVENUES........................................      $240,003   |  $222,536           $485,793  |  $443,556
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
OPERATING EXPENSES AND TAXES:                                              |                               |
   Purchased power........................................       139,961   |   128,375            288,910  |   253,602
   Other operating costs..................................        33,570   |    30,287             62,575  |    66,840
                                                                --------   |  --------           --------  |  --------
       Total operation and maintenance expenses...........       173,531   |   158,662            351,485  |   320,442
   Provision for depreciation and amortization............        15,046   |    21,435             30,338  |    39,229
   General taxes..........................................        14,815   |    10,601             31,727  |    21,233
   Income taxes...........................................         9,656   |     7,161             19,212  |    13,574
                                                                --------   |  --------           --------  |  --------
       Total operating expenses and taxes.................       213,048   |   197,859            432,762  |   394,478
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
OPERATING INCOME..........................................        26,955   |    24,677             53,031  |    49,078
                                                                           |                               |
OTHER INCOME..............................................         5,456   |     5,317             10,587  |    10,002
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
INCOME BEFORE NET INTEREST CHARGES........................        32,411   |    29,994             63,618  |    59,080
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
NET INTEREST CHARGES:                                                      |                               |
   Interest on long-term debt.............................        10,227   |     9,155             20,682  |    18,309
   Allowance for borrowed funds used during construction..          (280)  |       (27)              (564) |      (186)
   Deferred interest......................................           (42)  |        --               (235) |        --
   Other interest expense.................................           898   |     3,137              1,171  |     5,373
   Subsidiaries' preferred stock dividend requirements....         1,941   |     1,837              3,779  |     3,675
                                                                --------   |  --------           --------  |  --------
       Net interest charges...............................        12,744   |    14,102             24,833  |    27,171
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
                                                                           |                               |
NET INCOME................................................      $ 19,667   |  $ 15,892           $ 38,785  |  $ 31,909
                                                                ========   |  ========           ========  |  ========

<FN>


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

</FN>
</TABLE>

                                                         70


<PAGE>


<TABLE>
<CAPTION>

                                                     METROPOLITAN EDISON COMPANY

                                                     CONSOLIDATED BALANCE SHEETS

                                                                                  (Unaudited)
                                                                                    June 30,        December 31,
                                                                                      2002             2001
                                                                                  -----------      ------------
                                                                                         (In thousands)

                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:
   In service................................................................      $1,630,079       $1,609,974
   Less--Accumulated provision for depreciation..............................         552,723          530,006
                                                                                   ----------       ----------
                                                                                    1,077,356        1,079,968
  Construction work in progress..............................................          12,654           14,291
                                                                                   ----------       ----------
                                                                                    1,090,010        1,094,259
                                                                                   ----------       ----------

OTHER PROPERTY AND INVESTMENTS:
   Nuclear plant decommissioning trusts......................................         162,208          157,699
   Long-term notes receivable from associated companies......................          12,418           12,418
   Other.....................................................................          23,131           13,391
                                                                                   ----------       ----------
                                                                                      197,757          183,508
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................           5,335           25,274
   Receivables-
     Customers (less accumulated provisions of $10,477,000 and $12,271,000,
       respectively, for uncollectible accounts).............................         114,217          112,257
     Associated companies....................................................          17,515            8,718
     Other...................................................................          19,726           16,675
   Prepayments and other.....................................................          23,665           12,239
                                                                                   ----------       ----------
                                                                                      180,458          175,163
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................       1,290,057        1,320,412
   Goodwill..................................................................         784,443          784,443
   Other.....................................................................          48,877           49,402
                                                                                   ----------       ----------
                                                                                    2,123,377        2,154,257
                                                                                   ----------       ----------
                                                                                   $3,591,602       $3,607,187
                                                                                   ==========       ==========


</TABLE>

                                                      71


<PAGE>

<TABLE>
<CAPTION>

                                                     METROPOLITAN EDISON COMPANY

                                                     CONSOLIDATED BALANCE SHEETS

                                                                                  (Unaudited)
                                                                                    June 30,       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)...........................             (91)              11
     Retained earnings.......................................................          23,402           14,617
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       1,297,636        1,288,953
   Company-obligated trust preferred securities..............................          92,304           92,200
   Long-term debt............................................................         570,968          583,077
                                                                                   ----------       ----------
                                                                                    1,960,908        1,964,230
                                                                                   ----------       ----------


CURRENT LIABILITIES:
   Currently payable long-term debt..........................................          60,029           30,029
   Accounts payable-
     Associated companies....................................................          60,403           67,351
     Other...................................................................          40,773           36,750
   Notes payable to associated companies.....................................          71,152           72,011
   Accrued taxes.............................................................           1,949            7,037
   Accrued interest..........................................................          17,904           17,468
   Other.....................................................................          11,267           13,652
                                                                                   ----------       ----------
                                                                                      263,477          244,298
                                                                                   ----------       ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................         315,630          300,438
   Accumulated deferred investment tax credits...............................          12,886           13,310
   Purchase power contract loss liability....................................         686,517          730,662
   Nuclear fuel disposal costs...............................................          37,235           36,906
   Nuclear plant decommissioning costs.......................................         270,499          268,967
   Other.....................................................................          44,450           48,376
                                                                                   ----------       ----------
                                                                                    1,367,217        1,398,659
                                                                                   ----------       ----------


COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2)...........................
                                                                                   ----------       ----------
                                                                                   $3,591,602       $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>

                                                  72



<PAGE>


<TABLE>
<CAPTION>

                                                     METROPOLITAN EDISON COMPANY

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (Unaudited)

                                                                 Three Months Ended                Six Months Ended
                                                                       June 30,                        June 30,
                                                                ----------------------          ----------------------
                                                                  2002          2001              2002          2001
                                                                --------      --------          --------      --------
                                                                                    (In thousands)
<S>                                                             <C>            <C>               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                      |                                |
Net income................................................      $ 19,667   |    $ 15,892          $ 38,785  |  $ 31,909
   Adjustments to reconcile net income to net                              |                                |
     cash from operating activities-                                       |                                |
       Provision for depreciation and amortization........        15,046   |      21,435            30,338  |    39,229
       Other amortization.................................          (456)  |         519            (1,394) |       756
       Deferred costs, net................................        (8,826)  |     (24,690)           (2,937) |   (24,394)
       Deferred income taxes, net.........................         6,937   |       9,505             9,504  |    10,877
       Investment tax credits, net........................          (212)  |        (212)             (424) |      (424)
       Receivables........................................       (26,722)  |     (13,973)          (13,808) |   (14,146)
       Accounts payable...................................        17,887   |      60,029            (2,925) |    57,746
       Other..............................................        14,375   |       7,070           (36,956) |   (33,403)
                                                                --------   |    --------          --------  |  --------
         Net cash provided from operating activities......        37,696   |      75,575            20,183  |    68,150
                                                                --------   |    --------          --------  |  --------
                                                                           |                                |
CASH FLOWS FROM FINANCING ACTIVITIES:                                      |                                |
   New Financing-                                                          |                                |
     Long-term debt.......................................        49,750   |          --            49,750  |        --
     Short-term borrowings, net...........................            --   |      11,100                --  |    51,400
   Redemptions and Repayments-                                             |                                |
     Long-term debt.......................................            --   |          --            30,000  |        --
     Short-term borrowings, net...........................        56,406   |          --               859  |        --
   Dividend Payments-                                                      |                                |
     Common stock.........................................        30,000   |          --            30,000  |    15,000
                                                                --------   |    --------          --------  |  --------
         Net cash used for (provided from) financing                       |                                |
          activities .....................................        36,656   |     (11,100)           11,109  |   (36,400)
                                                                --------   |    --------          --------  |  --------
                                                                           |                                |
CASH FLOWS FROM INVESTING ACTIVITIES:                                      |                                |
   Property additions.....................................        11,691   |      13,229            20,787  |    25,022
   Decommissioning trust investments......................         4,826   |       2,371             7,987  |     4,742
   Other..................................................            --   |       1,564               239  |     4,555
                                                                --------   |    --------          --------  |  --------
         Net cash used for investing activities...........        16,517   |      17,164            29,013  |    34,319
                                                                --------   |    --------          --------  |  --------
                                                                           |                                |
Net increase (decrease) in cash and cash equivalents......       (15,477)  |      69,511           (19,939) |    70,231
Cash and cash equivalents at beginning of period..........        20,812   |       4,159            25,274  |     3,439
                                                                --------   |    --------          --------  |  --------
Cash and cash equivalents at end of period................      $  5,335   |    $ 73,670          $  5,335  |  $ 73,670
                                                                ========   |    ========          ========  |  ========


<FN>

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


</FN>
</TABLE>

                                                       73


<PAGE>


                        REPORT OF INDEPENDENT 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 June  30,  2002,  and the  related
consolidated statements of income and cash flows for each of the three-month and
six-month  periods  ended June 30,  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 for them
to be in conformity with accounting  principles generally accepted in the United
States of America.





PricewaterhouseCoopers LLP
Cleveland, Ohio
August 8, 2002



                                        74



<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  the  eastern  and  south  central  portions  of
Pennsylvania,   offering  regulated   electric   transmission  and  distribution
services.  Met-Ed also provides power to those customers electing to retain them
as their power supplier.  Met-Ed's regulatory plan itemizes,  or unbundles,  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 $17.4  million or 7.9% in the second
quarter of 2002,  and by $42.2  million or 9.5% in the first six months of 2002,
compared to the same  periods in 2001.  The sources of the changes in  operating
revenues,  as  compared  to the same  periods  in 2001,  are  summarized  in the
following table.


                                            Three Months Ended  Six Months Ended
Sources of Operating Revenue Changes           June 30, 2002      June 30, 2002
--------------------------------------------------------------------------------
Increase (Decrease)                                        (In millions)

Change in kilowatt-hour sales due to level
   of retail customers shopping for
   generation service .....................       $21.3               $56.8
Change in other retail kilowatt-hour
   sales ..................................         5.5                (0.7)
Change in wholesale sales..................        (8.7)               (9.7)
All other changes..........................        (0.7)               (4.2)
                                                  -----               -----

Net Increase in Operating Revenues.........       $17.4               $42.2
                                                  =====               =====


Electric Sales

          In the first half of 2002,  a  significant  reduction in the number of
customers who received their power from alternate  suppliers continued to have a
positive effect on operating  revenues.  During the first half of 2001, 26.7% of
kilowatt-hours  delivered  were to  shopping  customers,  whereas  only  9.2% of
kilowatt-hours  delivered  during  the  first  half  of 2002  were  to  shopping
customers.  Partially  offsetting  this  increase  in  revenues  from  returning
shopping customers were lower sales to industrial  customers due to a decline in
economic  conditions,  as well as reduced  revenues  from  wholesale  customers.
Milder  weather  in  the  first  quarter  of  2002  resulted  in a  decrease  in
kilowatt-hour  sales to  residential  customers  in the first six  months  2002,
compared to the same period in

                                        75
<PAGE>



2001. Changes in kilowatt-hour deliveries by customer class during the three and
six months  ended June 30, 2002,  as compared to the same  periods in 2001,  are
summarized in the following table:

Changes in Distribution Deliveries     Three Months Ended     Six Months Ended
  and Wholesale Generation Sales         June 30, 2002         June 30, 2002
-------------------------------------------------------------------------------
Increase (Decrease)

Residential............................         1.1 %                 (3.6)%
Commercial.............................         1.4 %                  1.1 %
Industrial.............................        (4.6)%                 (6.7)%
                                               ----                   ----

Total Retail...........................        (0.8)%                 (3.2)%
Wholesale..............................         4.6 %                  5.9 %
                                               ----                   ----

Total .................................        (0.3)%                 (2.5)%
                                               ----                   ----


Operating Expenses and Taxes

          Total  operating  expenses and taxes increased by $15.2 million in the
second quarter of 2002, and $38.3 million in the first half of 2002, compared to
the same  periods in 2001. A majority of the increase in both periods was due to
higher purchased power costs, as Met-Ed required additional power to satisfy its
provider  of last  resort  (PLR)  obligation  to  customers  who  returned  from
alternate suppliers in the first half of 2002, as well as an increase in general
taxes.  The $3.3 million increase in other operating costs in the second quarter
of 2002 compared to the same period in

                                        76
<PAGE>



2001 was primarily  attributable to higher occupancy rents and  employee-related
costs.  The $4.3  million  decrease in other  operating  costs in the six months
ended June 30, 2002 compared to the same period of 2001 was primarily due to the
absence  of costs  related  to early  retirement  programs  offered  to  certain
bargaining  unit  employees  in the  first  quarter  of 2001,  offset  by higher
rental costs and pension and other employee related costs.

Net Interest Charges

          Net interest  charges  decreased by $1.4 million in the second quarter
of 2002 and $2.3  million in the first six months of 2002,  compared to the same
periods  in 2001,  primarily  due to  reduced  short-term  borrowing  levels and
amortization  of fair market value  adjustments  recorded in connection with the
merger.  An  additional  reduction  was  attributable  to the  redemption of $30
million  of notes in the first  quarter  of 2002;  however,  this was  partially
offset by  increased  interest  on  long-term  debt due to the  issuance of $100
million of notes in  September  2001 and $50  million of notes in May 2002 which
was used to refinance $30 million of notes in July 2002.

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

          Met-Ed  has  continuing   cash   requirements   for  planned   capital
expenditures.  During the remaining six months of 2002, capital requirements for
property  additions are expected to be about $33.5 million.  These  requirements
are  expected  to be  satisfied  from  internal  cash and/or  short-term  credit
arrangements.

          As of June  30,  2002,  Met-Ed  had  about  $5.3  million  of cash and
temporary investments and $71.2 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 indenture  prohibits (subject to certain exceptions) it from issuing
any debt which is senior to the senior  notes.  As of June 30, 2002,  Met-Ed had
the  capability  to issue up to $62 million of  additional  FMBs on the basis of
property additions and retired bonds. 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 for hedging purposes. The change
in the fair value of commodity derivative contracts related to energy production
during the second quarter of 2002 is summarized in the following table:

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

  Outstanding net asset as of March 31, 2002..........        $21.3
  Settled contracts...................................         (0.2)
  Change in techniques/assumptions....................          --
  Decrease in value of existing contracts.............         (9.8)
                                                              -----

  Outstanding net asset as of June 30, 2002...........        $11.3
                                                              =====

          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:

                                        77

<PAGE>


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

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

Prices actively quoted ......   $(0.1)     $0.1     $ --      $  --     $ --
Prices based on models** ....      --        --       --       11.3      11.3
                                -----      ----     ----      -----     -----

  Total .....................   $(0.1)     $0.1     $ --      $11.3     $11.3
                                =====      ====     ====      =====     =====

*  Last half 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 and volatilities 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 June 30, 2002.

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. 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 financial results. All of Met-Ed's assets are subject to
their own  specific  risks and  uncertainties  and are  regularly  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.  FirstEnergy's  most recent
review was completed in June 2002.  The results of that review  indicate that no
impairment of the $784.4 million of goodwill is appropriate.

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 June 30, 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.

                                        78
<PAGE>

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  and estimates  remain
valid. As part of its normal operations, Met-Ed enters into commodity 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 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

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

          In June 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  has
identified  various  applicable  legal  obligations  as  defined  under  the new
standard  and expects to complete an analysis of their  financial  impact in the
second half of 2002.

                                        78

<PAGE>


<PAGE>

<TABLE>
<CAPTION>


                                                    PENNSYLVANIA ELECTRIC COMPANY

                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)


                                                                  Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                ----------------------           ---------------------
                                                                  2002          2001               2002         2001
                                                                --------      --------           --------     --------
                                                                                    (In thousands)

<S>                                                             <C>           <C>                <C>          <C>
OPERATING REVENUES........................................      $237,576   |  $230,600           $480,396  |  $474,427
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
                                                                           |                               |
OPERATING EXPENSES AND TAXES:                                              |                               |
   Purchased power........................................       143,219   |   142,327            289,367  |   311,391
   Other operating costs..................................        38,418   |    37,682             72,218  |    80,765
                                                                --------   |  --------           --------  |  --------
       Total operation and maintenance expenses...........       181,637   |   180,009            361,585  |   392,156
   Provision for depreciation and amortization............        14,814   |    15,099             29,645  |    29,628
   General taxes..........................................        14,426   |    12,461             29,456  |    24,151
   Income taxes...........................................         6,414   |     4,638             15,586  |     1,302
                                                                --------   |  --------           --------  |  --------
       Total operating expenses and taxes.................       217,291   |   212,207            436,272  |   447,237
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
OPERATING INCOME..........................................        20,285   |    18,393             44,124  |    27,190
                                                                           |                               |
OTHER INCOME..............................................           789   |     1,414              1,087  |     2,019
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
                                                                           |                               |
INCOME BEFORE NET INTEREST CHARGES........................        21,074   |    19,807             45,211  |    29,209
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
NET INTEREST CHARGES:                                                      |                               |
   Interest on long-term debt.............................         7,907   |     8,178             16,328  |    16,419
   Allowance for borrowed funds used during construction..          (163)  |      (140)              (283) |      (284)
   Deferred interest......................................          (691)  |        --             (1,442) |        --
   Other interest expense.................................           834   |     2,744              1,439  |     4,319
   Subsidiaries' preferred stock dividend requirements....         1,942   |     1,835              3,777  |     3,670
                                                                --------   |  --------           --------  |  --------
       Net interest charges...............................         9,829   |    12,617             19,819  |    24,124
                                                                --------   |  --------           --------  |  --------
                                                                           |                               |
NET INCOME................................................      $ 11,245   |  $  7,190           $ 25,392  |  $  5,085
                                                                ========   |  ========           ========  |  ========

<FN>


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


</FN>
</TABLE>

                                                         79

<PAGE>

<TABLE>
<CAPTION>

                                                    PENNSYLVANIA ELECTRIC COMPANY

                                                     CONSOLIDATED BALANCE SHEETS


                                                                                   (Unaudited)
                                                                                    June 30,        December 31,
                                                                                      2002             2001
                                                                                   ----------       ------------
                                                                                         (In thousands)

                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:
   In service................................................................      $1,860,346       $1,845,187
   Less--Accumulated provision for depreciation..............................         656,265          630,957
                                                                                   ----------       ----------
                                                                                    1,204,081        1,214,230
  Construction work in progress-
     Electric plant..........................................................          13,720           12,857
                                                                                   ----------       ----------
                                                                                    1,217,801        1,227,087
                                                                                   ----------       ----------
OTHER PROPERTY AND INVESTMENTS:
   Non-utility generation trusts.............................................         122,162          154,067
   Nuclear plant decommissioning trusts......................................          94,733           96,610
   Long-term notes receivable from associated companies......................          15,515           15,515
   Other.....................................................................           6,673            2,265
                                                                                   ----------       ----------
                                                                                      239,083          268,457
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................          20,311           39,033
   Receivables-
     Customers (less accumulated provisions of $11,432,000 and
        $14,719,000, respectively, for uncollectible accounts)...............          92,933          107,170
     Associated companies....................................................          62,119           40,203
     Other...................................................................          16,815           14,842
   Prepayments and other.....................................................          21,302            8,605
                                                                                   ----------       ----------
                                                                                      213,480          209,853
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................         682,793          769,807
   Goodwill..................................................................         797,362          797,362
   Other.....................................................................          27,469           27,703
                                                                                   ----------       ----------
                                                                                    1,507,624        1,594,872
                                                                                   ----------       ----------
                                                                                   $3,177,988       $3,300,269
                                                                                   ==========       ==========
</TABLE>

                                               80



<PAGE>

<TABLE>
<CAPTION>


                                                    PENNSYLVANIA ELECTRIC COMPANY

                                                     CONSOLIDATED BALANCE SHEETS


                                                                                  (Unaudited)
                                                                                    June 30,        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..................................             198            1,779
     Retained earnings.......................................................          22,187           10,795
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       1,316,387        1,306,576
   Company-obligated trust preferred securities .............................          92,107           92,000
   Long-term debt............................................................         471,444          472,400
                                                                                   ----------       ----------
                                                                                    1,879,938        1,870,976
                                                                                   ----------       ----------

CURRENT LIABILITIES:
   Currently payable long-term debt..........................................          25,783           50,756
   Accounts payable-
     Associated companies....................................................         122,110          126,390
     Other...................................................................          44,092           38,720
   Notes payable to associated companies.....................................         103,488           77,623
   Accrued taxes.............................................................           9,430           29,255
   Accrued interest..........................................................          12,647           12,284
   Other.....................................................................           8,267           10,993
                                                                                   ----------       ----------
                                                                                      325,817          346,021
                                                                                   ----------       ----------

DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................          15,852           21,682
   Accumulated deferred investment tax credits...............................          11,385           11,956
   Nuclear plant decommissioning costs.......................................         135,999          135,483
    Nuclear fuel disposal costs..............................................          18,617           18,453
   Power purchase contract loss liability....................................         763,489          867,046
   Other.....................................................................          26,891           28,652
                                                                                   ----------       ----------
                                                                                      972,233        1,083,272
                                                                                   ----------       ----------


COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2)...........................
                                                                                   ----------       ----------
                                                                                   $3,177,988       $3,300,269
                                                                                   ==========       ==========


<FN>


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

</FN>
</TABLE>
                                                        81

<PAGE>

<TABLE>
<CAPTION>


                                                    PENNSYLVANIA ELECTRIC COMPANY

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (Unaudited)


                                                                 Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                               -----------------------         ----------------------
                                                                 2002           2001             2002          2001
                                                               --------       --------         --------     ---------
                                                                                    (In thousands)
<S>                                                            <C>            <C>              <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                     |                              |
Net income................................................     $ 11,245   |   $  7,190         $ 25,392  |  $   5,085
   Adjustments to reconcile net income to net                             |                              |
     cash from operating activities-                                      |                              |
       Provision for depreciation and amortization........       14,814   |     12,660           29,645  |     25,814
       Other amortization.................................         (595)  |        582              187  |      1,044
       Deferred costs, net................................      (16,770)  |    (24,388)         (27,185) |    (34,755)
       Deferred income taxes, net.........................        7,980   |      8,085           (1,651) |      8,882
       Investment tax credits, net........................         (286)  |       (286)            (571) |       (571)
       Receivables........................................      (21,455)  |      6,619           (9,652) |      9,501
       Accounts payable...................................       12,915   |     48,397            1,093  |     43,080
       Accrued taxes .....................................      (35,087)  |      4,620          (19,825) |     (5,644)
       Other..............................................       15,248   |      3,321          (14,199) |     (7,157)
                                                               --------   |   --------         --------  |  ---------
         Net cash provided from (used for) operating                      |                              |
          activities .....................................      (11,991)  |     66,800          (16,766) |     45,279
                                                               --------   |   --------         --------  |  ---------
                                                                          |                              |
                                                                          |                              |
CASH FLOWS FROM FINANCING ACTIVITIES:                                     |                              |
   New Financing-                                                         |                              |
     Short-term borrowings, net...........................       65,438   |     22,500           25,865  |     53,200
     Contributions from parent............................           --   |     50,000               --  |     50,000
   Redemptions and Repayments-                                            |                              |
     Long-term debt.......................................       24,973   |         --           24,973  |         --
   Dividend Payments-                                                     |                              |
     Common stock.........................................       14,000   |         --           14,000  |         --
                                                               --------   |   --------         --------  |  ---------
         Net cash used for (provided from) financing                      |                              |
          activities .....................................      (26,465)  |    (72,500)          13,108  |   (103,200)
                                                               --------   |   --------         --------  |  ---------
                                                                          |                              |
CASH FLOWS FROM INVESTING ACTIVITIES:                                     |                              |
   Property additions.....................................       12,623   |     15,149           22,817  |     29,372
   Proceeds from non-utility generation trusts............           --   |     (7,720)         (34,208) |    (16,185)
   Decommissioning trust investments......................           --   |          3               --  |         15
   Other..................................................           --   |        852              239  |      4,171
                                                               --------   |   --------         --------  |  ---------
         Net cash used for (provided from) investing                      |                              |
          activities .....................................       12,623   |      8,284          (11,152) |     17,373
                                                               --------   |   --------         --------  |  ---------
                                                                          |                              |
Net increase (decrease) in cash and cash equivalents......        1,851   |    131,016          (18,722) |    131,106
Cash and cash equivalents at beginning of period..........       18,460   |        670           39,033  |        580
                                                               --------   |   --------         --------  |  ---------
Cash and cash equivalents at end of period................     $ 20,311   |   $131,686         $ 20,311  |  $ 131,686
                                                               ========   |   ========         ========  |  =========

<FN>


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

</FN>
</TABLE>

                                                        82


<PAGE>


                        REPORT OF INDEPENDENT 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 June 30,  2002,  and the related
consolidated statements of income and cash flows for each of the three-month and
six-month  periods  ended June 30,  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 for them
to be in conformity with accounting  principles generally accepted in the United
States of America.




PricewaterhouseCoopers LLP
Cleveland, Ohio
August 8, 2002

                                        83

<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 portions of
Pennsylvania,   offering  regulated   electric   transmission  and  distribution
services. Penelec also provides power to those customers electing to retain them
as their power supplier.  Penelec's regulatory plan itemizes, or unbundles,  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  increased  by $7.0  million or 3.0% in the second
quarter of 2002, and by $6.0 million or 1.3% in the first half of 2002, compared
to the same periods in 2001.  The sources of the changes in operating  revenues,
as compared to the same periods in 2001, are summarized in the following table.

                                            Three Months Ended  Six Months Ended
Sources of Operating Revenue Changes           June 30, 2002      June 30, 2002
--------------------------------------------------------------------------------
Increase (Decrease)                                      (In millions)

Change in kilowatt-hour sales due to level
  of retail customers shopping for
  generation service .......................     $ 25.0              $ 60.4
Change in other retail kilowatt-hour sales..       (3.3)               (8.8)
Change in wholesale sales...................      (12.7)              (40.6)
All other changes...........................       (2.0)               (5.0)
                                                 -------             ------

Net Increase in Operating Revenues..........     $  7.0              $  6.0
                                                 =======             ======

Electric Sales

          In the first half of 2002,  a  significant  reduction in the number of
customers  receiving  their power from alternate  suppliers  continued to have a
positive  effect on  operating  revenues.  During  the first six months of 2001,
21.5% of kilowatt-hours delivered were to shopping customers,  whereas only 4.9%
of kilowatt-hours delivered during the first six months of 2002 were to shopping
customers.   Offsetting  this  increase  in  revenues  from  returning  shopping
customers were lower sales to wholesale customers during the first half of 2002.
A decline in economic  conditions  resulted in a decrease in sales to industrial
customers during the six months ended June 30, 2002;  however,  conditions began
to improve in the  quarter  ended June 30,  2002,  resulting  in an  increase in
industrial  sales during that period.  Changes in  kilowatt-hour  deliveries  by
customer  class during the three and six months  periods ended June 30, 2002, as
compared to the same periods in 2001, are summarized in the following table:

Changes in Distribution Deliveries      Three Months Ended   Six Months Ended
  and Wholesale Generation Sales          June 30, 2002      June 30, 2002
------------------------------------------------------------------------------
Increase (Decrease)

Residential.............................         1.5%               (1.5)%
Commercial..............................         2.0%                0.9 %
Industrial..............................         9.3%               (4.9)%
                                               -----               -----

Total Retail............................         4.2%               (1.8)%
Wholesale...............................       (56.9)%             (71.9)%
                                               -----               -----

Total ..................................        (2.5)%             (10.7)%
                                               -----               -----


Operating Expenses and Taxes

          Total  operating  expenses and taxes  increased by $5.1 million in the
second  quarter of 2002  compared to the same  period in 2001,  as a result of a
slight increase in operation and maintenance expenses, as well as higher general
taxes.
                                        84

<PAGE>

          Total  operating  expenses and taxes decreased by $11.0 million in the
first six months of 2002  compared to the same period in 2001.  A $22.0  million
decrease in purchased  power costs during this period was  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 decrease of $8.5 million  during the same
period was  primarily  attributable  to the  absence  of costs  related to early
retirement  programs  offered to certain  bargaining  unit employees  during the
first quarter of 2001.  These decreases were partially  offset by an increase of
$5.3  million in general  taxes in the first six months of 2002  compared to the
same period in 2001, as well as higher pension and other employee related costs.

Net Interest Charges

          Net interest  charges  decreased by $2.8 million in the second quarter
of 2002,  and $4.3  million  in the  first  half of 2002,  compared  to the same
periods in 2001. The decreases  reflect  higher  interest  deferrals  related to
Penelec's  deferred  provider  of last  resort  costs,  and  reduced  short-term
borrowing levels.

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

          Penelec  has  continuing   cash   requirements   for  planned  capital
expenditures and maturing debt. During the remaining six months of 2002, capital
requirements for property  additions and capital leases are expected to be about
$31.6  million.  Penelec also has  requirements  for maturing  long-term debt of
$25.2 million during the remainder of 2002.  These  requirements are expected to
be satisfied from internal cash and/or short-term credit arrangements.

          As of June 30,  2002,  Penelec  had about  $20.3  million  of cash and
temporary investments and $103.5 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 indenture  prohibits (subject to certain exceptions) it from issuing
any debt which is senior to the senior notes.  As of June 30, 2002,  Penelec had
the  capability to issue up to $463 million of  additional  FMBs on the basis of
property  additions  and  retired  bonds.  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 for hedging purposes. The change
in the fair value of commodity derivative contracts related to energy production
during the second quarter of 2002 is summarized in the following table:

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

 Outstanding net asset as of March 31, 2002..........        $10.5
 Settled contracts...................................         (0.2)
 Change in techniques/assumptions....................          --
 Decrease in value of existing contracts.............         (4.6)
                                                             -----

 Outstanding net asset as of June 30, 2002...........        $ 5.7
                                                             =====

          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:

                                        85

<PAGE>


Source of Information - Fair Value by Contract Year

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

Prices actively quoted .....   $(0.1)     $0.1     $ --        $ --     $ --
Prices based on models** ...      --        --       --         5.7      5.7
                               -----      ----     ----        ----     ----

  Total ....................   $(0.1)     $0.1     $ --        $5.7      $5.7
                               =====      ====     ====        ====      ====

*  For the last half 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 and volatilities 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 June 30, 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. 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 financial  results.  All of Penelec's assets are subject
to their own specific  risks and  uncertainties  and are regularly  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.  FirstEnergy's  most recent
review was completed in June 2002.  The results of that review  indicate that no
impairment of Penelec's $797.4 million of goodwill is appropriate.

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 - $682.8  million  as of June 30,  2002.
Penelec 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.
                                        86

<PAGE>

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  commodity
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 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

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

          In June 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  has
identified  various  applicable  legal  obligations  as  defined  under  the new
standard  and expects to complete an analysis of their  financial  impact in the
second half of 2002.
                                        87




<PAGE>


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

Item 4.    Submission of Matters to a Vote of Security Holders
           ---------------------------------------------------

           (a) The annual meeting of FirstEnergy shareholders was held on
               May 21, 2002.

           (b) At this meeting, the following persons were elected to
               FirstEnergy's Board of Directors:

                                              Number of Votes
                                     ------------------------------
                                        For               Withheld
                                     -----------          ---------

           Anthony J. Alexander      249,064,230          3,900,177
           H. Peter Burg             249,016,232          3,948,175
           Russell W. Maier          248,971,447          3,992,960
           Robert N. Pokelwaldt      248,926,056          4,038,351
           Jesse T. Williams, Sr.    249,446,265          3,518,142

           (c) At this meeting, an amendment to the Executive and Director
               Incentive Compensation Plan was approved (passage required a
               majority of votes cast):


                                          Number of Votes
                         ----------------------------------------------
                             For             Against        Abstentions
                         -----------        ----------      -----------

                         211,599,033        37,047,370       4,318,004

           (d) At this meeting, a shareholder proposal designed to result in
               the election of the entire Board of Directors each year was
               rejected (passage required 80% of the 297,636,276 common shares
               outstanding):

                                         Number of Votes
               ----------------------------------------------------------------
                                                                      Broker
                    For             Against          Abstentions     Non-Votes
               -----------        ----------         -----------     ---------

               127,437,897        87,573,561         5,452,837       32,500,112


           (e) At this meeting, a shareholder proposal to reinstate
               simple-majority vote on all issues that are submitted to
               shareholder vote was rejected (passage required 80% of the
               297,636,276 common shares outstanding):

                                       Number of Votes
               -----------------------------------------------------------------
                                                                    Broker
                  For             Against       Abstentions       Non-Votes
               -----------      ----------      -----------       ---------

               135,678,057      79,163,575       5,626,478       32,496,297


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

           (a) Exhibits

           Exhibit
           Number
           -------

           Met-Ed
           ------

             12    Fixed charge ratios
             99.1  Certification letter from chief executive officer
             99.2  Certification letter from chief financial officer

           Penelec
           -------

             12    Fixed charge ratios
             15    Letter from independent public accountants
             99.1  Certification letter from chief executive officer
             99.2  Certification letter from chief financial officer

                                        88
<PAGE>


           JCP&L
           -----

             12    Fixed charge ratios
             15    Letter from independent public accountants
             99.2  Certification letter from chief financial officer
             99.3  Certification letter from chief executive officer


           FirstEnergy, OE and Penn
           ------------------------

             15    Letter from independent public accountants
             99.1  Certification letter from chief executive officer
             99.2  Certification letter from chief financial officer

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

             99.1  Certification letter from chief executive officer
             99.2  Certification letter from chief financial officer


           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
           -----------

           Four reports on Form 8-K were filed since March 31, 2002. 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. A report dated May 24, 2002
           reported the purchase of an unused replacement reactor vessel head
           for the Davis-Besse Nuclear Power Station. A report dated August 1,
           2002 reported two JCP&L rate filings with the New Jersey Board of
           Public Utilities.

           OE, Penn, Met-Ed and Penelec
           ----------------------------

           OE, Penn, Met-Ed and Penelec each filed one report on Form 8-K since
           March 31, 2002. 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 March 31, 2002. A
           report dated April 18, 2002 reported a change in the registrant's
           certifying accountant. A report dated May 24, 2002 reported the
           purchase of an unused replacement reactor vessel head for the
           Davis-Besse Nuclear Power Station.

           JCP&L
           -----

           JCP&L filed two reports on Form 8-K since March 31, 2002. A report
           dated April 18, 2002 reported a change in the registrant's certifying
           accountant. A report dated August 1, 2002 reported two JCP&L rate
           filings with the New Jersey Board of Public Utilities.


                                        89

<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.



August 8, 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,Controller
                                        and Chief Accounting Officer



                                        90

<PAGE>