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 September 30, 1998

                                   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, Ohio  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                34-0150020
             ILLUMINATING COMPANY
             (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)
             1 East Washington Street
             P. O. Box 891
             New Castle, Pennsylvania  16103
             Telephone (412)652-5531


<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 NOVEMBER 13, 1998
           -----                         -----------------------

FirstEnergy Corp., $.10 par value                  237,069,087
Ohio Edison Company, $9 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

FirstEnergy Corp. is the sole holder of Ohio Edison Company, The 
Cleveland Electric Illuminating Company and The Toledo Edison 
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 and The 
Toledo Edison 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 four FirstEnergy subsidiaries 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 market prices, legislative and regulatory changes 
(including revised environmental requirements), availability and 
cost of capital and other similar factors.

<PAGE>

                           TABLE OF CONTENTS

                                                             Pages

Part I.  Financial Information

         Notes to Financial Statements                         1-4

       FirstEnergy Corp.

         Consolidated Statements of Income                      5
         Consolidated Balance Sheets                           6-7
         Consolidated Statements of Cash Flows                  8
         Report of Independent Public Accountants               9
         Management's Discussion and Analysis of
          Results of Operations and Financial Condition      10-14

       Ohio Edison Company

         Consolidated Statements of Income                     15
         Consolidated Balance Sheets                         16-17
         Consolidated Statements of Cash Flows                 18
         Report of Independent Public Accountants              19
         Management's Discussion and Analysis of Results
          of Operations and Financial Condition              20-23

       The Cleveland Electric Illuminating Company

         Consolidated Statements of Income                     24
         Consolidated Balance Sheets                         25-26
         Consolidated Statements of Cash Flows                 27
         Report of Independent Public Accountants              28
         Management's Discussion and Analysis of Results
          of Operations and Financial Condition              29-32

       The Toledo Edison Company

         Consolidated Statements of Income                     33
         Consolidated Balance Sheets                         34-35
         Consolidated Statements of Cash Flows                 36
         Report of Independent Public Accountants              37
         Management's Discussion and Analysis of Results
          of Operations and Financial Condition              38-41

       Pennsylvania Power Company

         Statements of Income                                  42
         Balance Sheets                                      43-44
         Statements of Cash Flows                              45
         Report of Independent Public Accountants              46
         Management's Discussion and Analysis of Results
          of Operations and Financial Condition              47-49


Part II. Other Information

<PAGE>

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

                 FIRSTENERGY CORP. AND SUBSIDIARIES
                 OHIO EDISON COMPANY AND SUBSIDIARIES
      THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARY
              THE TOLEDO EDISON COMPANY AND SUBSIDIARY
                     PENNSYLVANIA POWER COMPANY

                   NOTES TO FINANCIAL STATEMENTS
                            (Unaudited)

1 -  FINANCIAL STATEMENTS:

          FirstEnergy Corp. (FirstEnergy) became a holding company 
on November 8, 1997, in connection with the merger of Ohio Edison 
Company (OE) and Centerior Energy Corporation (Centerior). 
FirstEnergy's principal business is the holding, directly or 
indirectly, of all of the outstanding common stock of its four 
principal electric utility operating subsidiaries, OE, The 
Cleveland Electric Illuminating Company (CEI), The Toledo Edison 
Company (TE) and Pennsylvania Power Company (Penn). These utility 
subsidiaries are referred to throughout as "Companies." Penn is a 
wholly owned subsidiary of OE. Prior to the merger in November 
1997, CEI and TE were the principal operating subsidiaries of 
Centerior. The merger was accounted for using the purchase method 
of accounting in accordance with generally accepted accounting 
principles, and the applicable effects were reflected on CEI's and 
TE's financial statements 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 CEI and TE (separated by a heavy black line) are 
presented.

          The condensed 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 connection with the financial 
statements and notes included in the combined Annual Report on 
Form 10-K for the year ended December 31, 1997 for FirstEnergy and 
the Companies. The reported results of operations are not 
indicative of results of operations for any future period.

          The sole assets of the subsidiary trust that is the 
obligor on the preferred securities included in FirstEnergy's and 
OE's capitalization are $123,711,350 principal amount of 9% Junior 
Subordinated Debentures of OE due December 31, 2025.

2 -  COMMITMENTS, GUARANTEES AND CONTINGENCIES:

        CAPITAL EXPENDITURES-

          FirstEnergy's current forecast reflects expenditures of 
approximately $1.2 billion (OE-$510 million, CEI-$430 million, TE-
$200 million and Penn-$90 million) for property additions and 
improvements related to its regulated businesses from 1998-2002, 
of which approximately $282 million (OE-$133 million, CEI-$89 
million, TE-$43 million and Penn-$17 million) is applicable to 
1998. Investments for additional nuclear fuel during the 1998-2002 
period are estimated to be approximately $518 million (OE-$169 
million, CEI-$172 million, TE-$140 million and Penn-$37 million), 
of which approximately $85 million (OE-$24 million, CEI-$32 
million, TE-$27 million and Penn-$2 million) applies to 1998. 
FirstEnergy also expects to invest approximately $300 million 
during 1998-2002 relating to various nonregulated business 
ventures.

        GUARANTEES-

          The Companies and Duquesne Light Company have each 
severally guaranteed certain debt and lease obligations in 
connection with a coal supply contract for the Bruce Mansfield 
Plant. As of September 30, 1998, the Companies' share of the 
guarantees was $43.2 million (OE-$24.8 million, CEI-$9.3 million, 
TE-$5.5 million and Penn-$3.6 million). The price under the coal 
supply contract, which includes certain minimum payments, has 

                            - 1 -

<PAGE>

been determined to be sufficient to satisfy the debt and lease 
obligations.

        ENVIRONMENTAL MATTERS-

          Various federal, state and local authorities regulate 
the Companies with regard to air and water quality and other 
environmental matters. The Companies estimate additional capital 
expenditures for environmental compliance of approximately $50 
million (OE-$25 million, CEI-$12 million, TE-$11 million and Penn-
$2 million), which is included in the construction forecast for 
their regulated businesses provided under "Capital Expenditures" 
for 1998 through 2002.

          The Companies are in compliance with the current sulfur 
dioxide (SO2) and nitrogen oxides (NOx) reduction requirements 
under the Clean Air Act Amendments of 1990. SO2 reductions through 
the year 1999 will be achieved by burning lower-sulfur fuel, 
generating more electricity from lower-emitting plants, and/or 
purchasing emission allowances. Plans for complying with 
reductions required for the year 2000 and thereafter have not been 
finalized. In September 1998, the Environmental Protection Agency 
(EPA) finalized regulations requiring additional NOx reductions 
from the Companies' Ohio and Pennsylvania facilities by May 2003. 
The EPA`s NOx Transport Rule imposes uniform reductions of NOx 
emissions across a region of twenty-two states and the District of 
Columbia, including Ohio and Pennsylvania, based on a conclusion 
that such NOx emissions are contributing significantly to ozone 
pollution in the eastern United States. By September 1999, each of 
the twenty-two states are required to submit revised State 
Implementation Plans (SIP) which comply with individual state NOx 
budgets established by the EPA. These state NOx budgets 
contemplate an 85% reduction in utility plant NOx emissions from 
1990 emissions. A proposed Federal Implementation Plan accompanied 
the NOx Transport Rule and may be implemented by the EPA in states 
which fail to revise their SIP. In another separate but related 
action, eight states filed petitions with the EPA under Section 
126 of the Clean Air Act seeking reductions of NOx emissions which 
are alleged to contribute to ozone pollution in the eight 
petitioning states. The EPA suggests that the Section 126 
petitions will be adequately addressed by the NOx Transport 
Program, but a September 1998 proposed rulemaking established an 
alternative program which would require nearly identical 85% NOx 
reductions at the Companies' Ohio and Pennsylvania plants by May 
2003 in the event implementation of the NOx Transport Rule is 
delayed. The Companies continue to evaluate their compliance plans 
and other compliance options and currently estimate the additional 
capital expenditures for NOx reductions may reach $500 million.

           The Companies are required to meet federally approved 
SO2 regulations. Violations of such regulations can result in 
shutdown of the generating unit involved and/or civil or criminal 
penalties of up to $25,000 for each day the unit is in violation. 
The 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.

          In July 1997, the EPA promulgated changes in the 
National Ambient Air Quality Standard (NAAQS) for ozone and 
proposed a new NAAQS for previously unregulated ultra-fine 
particulate matter. The cost of compliance with these regulations 
may be substantial and depends on the manner in which they are 
implemented by the states in which the Companies operate affected 
facilities.

          OE, CEI and TE 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 that the 
Companies disposed 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 and TE have 
accrued a liability of $4.8 million and $1.0 million, 
respectively, as of September 30, 1998, based on estimates of the 
costs of cleanup and the proportionate responsibility of other 
PRPs for such costs. OE, CEI and TE believe that waste disposal 
costs will not have a material adverse effect on their financial 
condition, cash flows or results of operations.

          Legislative, administrative and judicial actions will 
continue to change the way that the Companies must operate in 
order to comply with environmental laws and regulations. With 
respect to any such changes and to the environmental matters 
described above, the Companies expect that any resulting 
additional capital costs which may be required, as well as any 

                            - 2 -

<PAGE>

required increase in operating costs, would ultimately be 
recovered from their customers.

        PENDING EXCHANGE OF ASSETS-

          As discussed under "Item 5. Other Events" in the 
combined Current Report on Form 8-K dated October 15, 1998, 
FirstEnergy announced that it has signed an agreement in principle 
with Duquesne Light Company (Duquesne) that would result in the 
transfer of 1,436 megawatts owned by Duquesne at eight generating 
units in exchange for 1,298 megawatts at three power plants owned 
by the Companies. A definitive agreement on the exchange of 
assets, which will be structured as a tax-free transaction to the 
extent possible, is expected by the end of 1998. Duquesne will 
fund decommissioning costs equal to its percentage interest in the 
three nuclear generating units to be transferred. The asset 
transfer is expected to take twelve to eighteen months to close.

3 -  REGULATORY ACCOUNTING:

          In June 1998, the Pennsylvania Public Utility Commission 
(PPUC) authorized a rate restructuring plan for Penn, which 
essentially resulted in the deregulation of Penn's generation 
business. Accordingly, Penn discontinued the application of 
Statement of Financial Accounting Standards (SFAS) No. 71, 
"Accounting for the Effects of Certain Types of Regulation" (SFAS 
71), for its generation business as of June 30, 1998. In 
accordance with SFAS 101, "Regulated Enterprises - Accounting for 
the Discontinuation of Application of SFAS 71," Penn was required 
to remove from its balance sheet all regulatory assets and 
liabilities related to its generation business for which SFAS 71 
was discontinued and assess all other assets for impairment.

          The Securities and Exchange Commission (SEC) recently 
issued interpretive guidance regarding asset impairment 
measurement when a regulated enterprise such as an electric 
utility discontinues SFAS 71 for separable portions of its 
operations and assets. That guidance concludes that any 
supplemental regulated cash flows such as a competitive transition 
charge (CTC) should be excluded from the cash flows of assets in a 
portion of the business not subject to regulatory accounting 
practices. If such assets are impaired, a regulatory asset should 
be established if such costs are recoverable through regulatory 
cash flows. Consistent with the SEC guidance, Penn reduced its 
nuclear generating unit investments by approximately $305 million, 
of which approximately $227 million was recognized as a regulatory 
asset to be recovered through a CTC over a seven-year transition 
period. The charge of $51.7 million ($30.5 million after income 
taxes) for discontinuing the application of SFAS 71 to Penn's 
generation business was recorded as an extraordinary item on 
FirstEnergy's and OE's respective Consolidated Statements of 
Income and Penn's Statements of Income.

          Based on the current regulatory environment and the 
Companies' respective regulatory plans, the Companies believe they 
will continue to be able to bill and collect cost-based rates 
relating to all of OE's operations, CEI's and TE's nonnuclear 
operations, and Penn's nongeneration operations; accordingly, it 
is appropriate that the Companies continue the application of SFAS 
71 to those respective operations.

4 -  PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME:

          The following pro forma statements of income for 
FirstEnergy, CEI and TE for the three months and nine months 
ended September 30, 1997, give effect to the OE-Centerior merger 
as if it had been consummated on January 1, 1997, with the 
purchase accounting adjustments actually recognized in the 
business combination.

                            - 3 - 

<PAGE>
<TABLE>
<CAPTION>
                                                               FE       CEI       TE
                                                               --       ---       --
                                                    (In millions, except per share amounts)
  <S>                                                      <C>       <C>        <C>
   Three Months Ended September 30, 1997
   -------------------------------------
   Operating Revenues                                      $1,350    $  499     $241
   Operating Expenses and Taxes                             1,022       365      188
                                                           ------    ------     ----
   Operating Income                                           328       134       53
   Other Income                                                21        10        6
   Net Interest Charges                                       170        68       26
                                                           ------    ------     ----
   Net Income                                              $  179    $   76     $ 33
                                                           ======    ======     ====
   Earnings per Share of Common Stock                      $  .81
                                                           ======

   Nine Months Ended September 30, 1997
   ------------------------------------
   Operating Revenues                                      $3,760    $1,359     $680
   Operating Expenses and Taxes                             2,942     1,063      552
                                                           ------    ------     ----
   Operating Income                                           818       296      128
   Other Income                                                47         8        9
   Net Interest Charges                                       478       177       69
                                                           ------    ------     ----
   Net Income                                              $  387    $  127     $ 68
                                                           ======    ======     ====
   Earnings per Share of Common Stock                      $ 1.74
                                                           ======
<FN>
          Pro forma adjustments reflected above include: (1) adjusting CEI and TE nuclear generating 
units to fair value based upon independent appraisals and estimated discounted future cash flows 
based on management's current view of cost recovery; (2) the effect of discontinuing SFAS 71 for 
CEI's and TE's nuclear operations; (3) amortization of the fair value adjustment for long-term debt; 
(4) goodwill recognized representing the excess of CEI's and TE's portion of the purchase price over 
the respective company's adjusted net assets; (5) the elimination of merger costs; and (6) 
adjustments for estimated tax effects of the above adjustments.

</TABLE>
                                             - 4 -

<PAGE>
<TABLE>
                                            FIRSTENERGY CORP.

                                  CONSOLIDATED STATEMENTS OF INCOME
                                              (Unaudited)
<CAPTION>
                                                       Three Months Ended      Nine Months Ended
                                                          September 30,           September 30,  
                                                      -------------------    ----------------------
                                                         1998       1997        1998        1997  
                                                      ----------  --------   ----------  ----------
                                                         (In thousands, except per share amounts)
<S>                                                   <C>         <C>        <C>         <C>
OPERATING REVENUES                                    $1,416,741  $652,660   $3,893,795  $1,850,684

OPERATING EXPENSES AND TAXES:
  Fuel and purchased power                               291,228   111,724      833,412     321,514
  Nuclear operating costs                                124,508    66,990      365,858     202,833
  Other operating costs                                  225,809   101,937      664,171     297,006
                                                      ----------  --------   ----------  ----------
    Total operation and maintenance expenses             641,545   280,651    1,863,441     821,353
  Provision for depreciation and amortization            162,478   106,402      496,375     292,975
  Amortization of net regulatory assets                   28,702    11,288       73,079      26,129
  General taxes                                          138,471    58,986      409,953     175,959
  Income taxes                                           125,080    54,277      263,863     140,909
                                                      ----------  --------   ----------  ----------
    Total operating expenses and taxes                 1,096,276   511,604    3,106,711   1,457,325
                                                      ----------  --------   ----------  ----------
OPERATING INCOME                                         320,465   141,056      787,084     393,359

OTHER INCOME (EXPENSE)                                    (5,275)   12,035        9,961      39,605
                                                      ----------  --------   ----------  ----------
INCOME BEFORE NET INTEREST CHARGES                       315,190   153,091      797,045     432,964
                                                      ----------  --------   ----------  ----------
NET INTEREST CHARGES:
  Interest on long-term debt                             128,479    50,799      390,810     155,137
  Allowance for borrowed funds used during
    construction and capitalized interest                 (2,461)   (1,056)      (5,129)     (1,817)
  Other interest expense                                   6,513     7,669       17,308      23,342
  Subsidiaries' preferred stock dividend requirements     19,568     6,981       47,359      20,943
                                                      ----------  --------   ----------  ----------
    Net interest charges                                 152,099    64,393      450,348     197,605
                                                      ----------  --------   ----------  ----------
INCOME BEFORE EXTRAORDINARY ITEM                         163,091    88,698      346,697     235,359
EXTRAORDINARY ITEM (NET OF INCOME TAXES) (Note 3)              -         -      (30,522)          -
                                                      ----------  --------   ----------  ----------
NET INCOME                                            $  163,091  $ 88,698   $  316,175  $  235,359
                                                      ==========  ========   ==========  ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING                                            229,482   144,586      225,292     144,466
                                                      ==========  ========   ==========  ==========
BASIC AND DILUTED EARNINGS PER SHARE OF
  COMMON STOCK:
  Income before extraordinary item                         $ .71     $ .61       $ 1.54      $ 1.63
  Extraordinary item (Net of income taxes) (Note 3)            -         -         (.14)          -
                                                           -----     -----       ------      ------
  Net income                                               $ .71     $ .61       $ 1.40      $ 1.63
                                                           =====     =====       ======      ======
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK               $.375     $.375       $1.125      $1.125
                                                           =====     =====       ======      ======

<FN>

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

</TABLE>
                                            - 5 -

<PAGE>
<TABLE>
                                              FIRSTENERGY CORP.

                                       CONSOLIDATED BALANCE SHEETS
                                               (Unaudited)
<CAPTION>
                                                        September 30,      December 31,
                                                            1998              1997  
                                                        -------------      ------------
                                                                 (In thousands)

                        ASSETS
                        ------
<S>                                                      <C>               <C>
UTILITY PLANT:
  In service                                             $14,528,550       $15,008,448
  Less--Accumulated provision for depreciation             5,738,191         5,635,900
                                                         -----------       -----------
                                                           8,790,359         9,372,548
                                                         -----------       -----------
  Construction work in progress-
    Electric plant                                           254,835           165,837
    Nuclear fuel                                              32,358            34,825
                                                         -----------       -----------
                                                             287,193           200,662
                                                         -----------       -----------
                                                           9,077,552         9,573,210
                                                         -----------       -----------
OTHER PROPERTY AND INVESTMENTS:
  Capital trust investments                                1,331,843         1,370,177
  Nuclear plant decommissioning trusts                       323,252           301,173
  Letter of credit collateralization                         277,763           277,763
  Other                                                      634,662           357,989
                                                         -----------       -----------
                                                           2,567,520         2,307,102
                                                         -----------       -----------
CURRENT ASSETS:
  Cash and cash equivalents                                  117,671            98,237
  Receivables-
    Customers (less accumulated provisions of
     $6,273,000 and $5,618,000, respectively,
     for uncollectible accounts)                             266,487           284,162
    Other (less accumulated provisions of $49,204,000 
     and $4,026,000,respectively, for
     uncollectible accounts)                                 407,389          219,106
  Materials and supplies, at average cost-
    Owned                                                    125,840           154,961
    Under consignment                                        104,811            82,839
  Prepayments and other                                      152,705           163,686
                                                         -----------       -----------
                                                           1,174,903         1,002,991
                                                         -----------       -----------
DEFERRED CHARGES:
  Regulatory assets                                        2,736,580         2,624,144
  Goodwill                                                 2,194,940         2,107,795
  Property taxes                                             270,888           270,585
  Other                                                      200,668           194,968
                                                         -----------       -----------
                                                           5,403,076         5,197,492
                                                         -----------       -----------
                                                         $18,223,051       $18,080,795
                                                         ===========       ===========

</TABLE>
                                             - 6 -

<PAGE>
<TABLE>
                                              FIRSTENERGY CORP.

                                       CONSOLIDATED BALANCE SHEETS
                                               (Unaudited)
<CAPTION>
                                                                September 30,      December 31,
                                                                    1998              1997  
                                                                -------------      ------------
                                                                         (In thousands)

      CAPITALIZATION AND LIABILITIES
      ------------------------------
<S>                                                              <C>                <C>
CAPITALIZATION:
  Common stockholders' equity-
    Common stock, $.10 par value, authorized
     300,000,000 shares - 237,069,087 and 
     230,207,141 shares outstanding, respectively                $   23,707         $   23,021
    Other paid-in capital                                         3,843,946          3,636,908
    Retained earnings                                               709,804            646,646
    Unallocated employee stock ownership plan common
      stock - 7,533,164 and 7,829,538 shares,
      respectively                                                 (141,413)          (146,977)
                                                                 ----------         ----------
        Total common stockholders' equity                         4,436,044          4,159,598
  Preferred stock of consolidated subsidiaries-
    Not subject to mandatory redemption                             660,195            660,195
    Subject to mandatory redemption                                 193,460            214,864
  OE obligated mandatorily redeemable preferred
    securities of subsidiary trust holding solely OE
    subordinated debentures                                         120,000            120,000
  Long-term debt                                                  6,606,324          6,969,835
                                                                -----------        -----------
                                                                 12,016,023         12,124,492
                                                                -----------        -----------
CURRENT LIABILITIES:
  Currently payable long-term debt and preferred stock              602,926            470,436
  Short-term borrowings                                             348,450            302,229
  Accounts payable                                                  262,197            312,690
  Accrued taxes                                                     460,008            381,937
  Accrued interest                                                  148,336            147,694
  Other                                                             258,186            193,850
                                                                -----------        -----------
                                                                  2,080,103          1,808,836
                                                                -----------        -----------
DEFERRED CREDITS:
  Accumulated deferred income taxes                               2,265,548          2,304,305
  Accumulated deferred investment tax credits                       291,044            324,200
  Pensions and other postretirement benefits                        518,588            492,425
  Other                                                           1,051,745          1,026,537
                                                                -----------        -----------
                                                                  4,126,925          4,147,467
                                                                -----------        -----------
COMMITMENTS, GUARANTEES AND
  CONTINGENCIES (Note 2)                                        -----------        -----------
                                                                $18,223,051        $18,080,795
                                                                ===========        ===========


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

</TABLE>
                                           - 7 -

<PAGE>
<TABLE>
                                             FIRSTENERGY CORP.

                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (Unaudited)
<CAPTION>
                                                       Three Months Ended      Nine Months Ended
                                                          September 30,           September 30,  
                                                      -------------------    ----------------------
                                                         1998       1997        1998        1997  
                                                      ----------  --------   ----------  ----------
                                                                    (In thousands)
<S>                                                   <C>         <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                            $  163,091  $  88,698  $  316,175  $  235,359
  Adjustments to reconcile net income to net
    cash from operating activities-
      Provision for depreciation and amortization        162,478    106,402     496,375     292,975
      Nuclear fuel and lease amortization                 21,974     12,040      62,606      40,682
      Other amortization, net                             28,214     10,996      62,637      25,225
      Deferred income taxes, net                           8,395    (14,796)     (6,856)    (31,492)
      Investment tax credits, net                         (5,841)    (4,058)    (17,180)    (11,222)
      Extraordinary item                                       -          -      51,730           -
      Receivables                                       (192,236)    (3,405)   (103,750)     20,559
      Materials and supplies                              21,275       (135)     11,478      (9,696)
      Accounts payable                                   (97,985)    (9,219)   (133,134)     (3,907)
      Accrued liabilities                                171,765     25,702      82,871      75,731
      Other                                              (15,648)    20,132     (25,212)    (28,763)
                                                       ---------   --------   ---------    --------
        Net cash provided from operating activities      265,482    232,357     797,740     605,451
                                                       ---------   --------   ---------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  New Financing-
    Common stock                                               -          -     203,855           -
    Long-term debt                                        10,151      9,694     272,556      80,217
    Ohio Schools Council Prepayment Program                    -          -     116,598           -
    Short-term borrowings, net                           145,612          -      37,169           -
  Redemptions and Repayments-
    Preferred stock                                        6,000      5,000      21,379       5,000
    Long-term debt                                       209,963    121,163     559,874     337,706
    Short-term borrowings, net                                 -     10,303           -      53,806
  Common stock dividend payments                          86,040     53,109     253,017     163,069
                                                       ---------   --------   ---------    --------
        Net cash used for financing activities           146,240    179,881     204,092     479,364
                                                       ---------   --------   ---------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Property additions                                      76,614     52,147     447,838     115,724
  Cash investments                                          (205)         -     111,405           -
  Other                                                   (3,873)     2,374      14,971       7,172
                                                       ---------   --------   ---------    ---------
        Net cash used for investing activities            72,536     54,521     574,214     122,896
                                                       ---------   --------   ---------    ---------
Net increase (decrease) in cash and cash equivalents      46,706     (2,045)     19,434       3,191
Cash and cash equivalents at beginning of period          70,965     10,489      98,237       5,253
                                                       ---------   --------   ---------    --------
Cash and cash equivalents at end of period             $ 117,671   $  8,444   $ 117,671    $  8,444
                                                       =========   ========   =========    ========


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

</TABLE>
                                           - 8 -

<PAGE>

               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS






To FirstEnergy Corp.:

We have reviewed the accompanying consolidated balance sheet of 
FirstEnergy Corp. (an Ohio corporation) and subsidiaries as of 
September 30, 1998, and the related consolidated statements of 
income and cash flows for the three-month and nine-month periods 
ended September 30, 1998 and 1997. 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 financial statements 
referred to above for them to be in conformity with generally 
accepted accounting principles.

We have previously audited, in accordance with generally accepted 
auditing standards, the consolidated balance sheet of FirstEnergy 
Corp. and subsidiaries as of December 31, 1997 (not presented 
herein), and, in our report dated February 13, 1998, we expressed 
an unqualified opinion on that statement. In our opinion, the 
information set forth in the accompanying consolidated balance 
sheet as of December 31, 1997, is fairly stated, in all material 
respects, in relation to the balance sheet from which it has been 
derived.







                                  ARTHUR ANDERSEN LLP

Cleveland, Ohio
November 13, 1998
  

                              - 9 -

<PAGE>
                           FIRSTENERGY CORP.

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

          The Company, as a producer and trader of electricity, 
has certain financial risks inherent in its business activities. 
With respect to its trading operations, the Company uses 
principally over-the-counter contracts for the purchase and sale 
of electricity. These contracts expose the Company to commodity 
price fluctuations. Market risk represents the risk of loss that 
may impact financial position, results of operations or cash flow 
due to either changes in the commodity market prices for 
electricity or the failure of contract counterparties to perform. 
Various policies and procedures have been established to manage 
market risk exposure based on measures of historical market 
volatility. However, electricity is subject to unpredictable 
price fluctuations due to changing economic and weather 
conditions and constraints which arise from time to time in 
availability of supply. Financial results in the third quarter 
and year-to-date periods of 1998 were adversely affected by a 
combination of these factors as described below.

Results of Operations

          Basic and diluted earnings per share of common stock 
decreased to $1.40 for the nine-month period ended September 30, 
1998, compared to $1.63 per share for the same period last year. 
For the third quarter of 1998, net income increased to $.71 per 
share, compared to $.61 per share for the third quarter of 1997. 
Financial results reflect several factors including the merger of 
OE and Centerior, which was effective November 8, 1997. The 
former Centerior companies, which include CEI and TE, have been 
included in the third quarter and year-to-date 1998 results. The 
1997 third quarter and nine-month results are for OE and Penn 
only (OE companies). Also, 1998 nine-month results include an 
extraordinary charge of $30.5 million after taxes, or $.14 per 
common share, resulting from Penn's discontinued application of 
SFAS 71 to its generation business (see Note 3). Sharp increases 
in the spot market price for electricity occasioned by 
constrained power supply conditions and heavy customer demand in 
the latter part of June 1998, combined with unscheduled outages 
at certain FirstEnergy generating units, resulted in spot market 
purchases of power at prices which substantially exceeded amounts 
recovered from retail customers. The recovery shortfall reduced 
year-to-date net income by approximately $50 million or $.22 per 
common share. Finally, unprecedented market prices for 
electricity in June 1998 contributed to credit losses totaling 
$28 million after taxes or $.12 per common share. Four power 
marketers with which the Company's FirstEnergy Trading and Power 
Marketing Corp. subsidiary had transactions under contract 
defaulted as a result of June's price movements.

          Operating revenues increased $2.043 billion during the 
nine-month period ending September 30, 1998, compared to the same 
period of 1997, and increased $764 million in the third quarter 
of 1998 compared to the third quarter of 1997. Excluding the 
contribution of the former Centerior companies, operating 
revenues were 6.7% higher during the quarter and 3.4% higher in 
the year-to-date period compared to the corresponding periods of 
1997. For the OE companies, year-to-date retail kilowatt-hour 
sales increased 1.7%, with a 4.1% increase in residential sales 
and a 4.7% increase in commercial sales offset, in part, by a 
2.1% decrease in industrial sales. Industrial sales for 1998 were 
affected by the August 1997 closure of a major customer's 
electric arc furnace in the Penn service area. Excluding sales to 
that customer, industrial sales increased 0.1% and retail sales 
were 2.6% higher. Sales to wholesale customers increased 7.8% 
compared to the first nine months of 1997. This increase 
contributed to the 2.7% increase in total kilowatt-hour sales 
during the period.

          Retail kilowatt-hour sales in the third quarter of 1998 
for the OE companies increased 5.4% with residential and 
commercial sales being 13.1% and 7.5% higher, respectively. 
Residential sales benefited from higher air-conditioning loads 
due to hotter weather and commercial sales benefited from 
continued growth in the service sector of the area economy during 
the period. Industrial sales decreased 2.0% during the third 
quarter of 1998 compared to the same period of 1997; removing the 
impact of the electric arc furnace closure, industrial sales were 
relatively flat. A general decline in electricity demand by 
primary metal manufacturers and the General Motors strike also 
dampened industrial sales in the third quarter of 1998. Sales to 

                             - 10 -

<PAGE>

                      FIRSTENERGY CORP.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
       RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

wholesale customers increased 7.8% in the third quarter compared 
to the same period last year, contributing to the increase in 
total kilowatt-hour sales of 5.8%.

          All operation and maintenance expense categories 
increased substantially for the first nine months of 1998, 
compared to the same period of last year, due principally to the 
inclusion of the former Centerior companies. Excluding the 1998 
costs of the former Centerior companies, operation and 
maintenance expenses increased $116.6 million for the first nine 
months of 1998 compared to the first nine months of 1997. Most of 
the increase for the OE companies resulted from purchased power 
expenses which were up $82.1 million in the first nine months of 
1998 from the same period in 1997. Most of the increase occurred 
in the second quarter and resulted from a combination of  
factors. In late June 1998, the midwestern and southern regions 
of the United States experienced electricity shortages caused 
mainly by record temperatures and humidity and unscheduled 
generating unit outages. During that period, the Beaver Valley 
Plant was out of service and the Davis-Besse Plant was removed 
from service as a result of damage to transmission facilities 
caused by a tornado. Also, Avon Lake Unit 9 experienced an 
unscheduled outage during the period due to lightning-related 
transformer damage. As a result, the Companies purchased 
significant amounts of power on the spot market at unusually high 
prices (as discussed above), causing an increase in purchased 
power costs. Temperatures continued above last year's levels 
throughout the third quarter as well and the Beaver Valley Plant 
remained out of service for most of that period.

          Nuclear operating costs were higher in the first nine 
months of 1998 than the same period last year for the OE 
Companies due to higher costs at the Beaver Valley Plant, which 
were offset in part by lower costs at the Perry Plant. Reduced 
emission allowance sales in the year-to-date 1998 period and 
higher third quarter and year-to-date 1998 costs at the Sammis 
Plant compared to the corresponding periods of 1997 contributed 
to the increase in other operation and maintenance expenses.

          Inclusion of the former Centerior companies also 
increased other operating expenses. Excluding those companies' 
1998 costs, the provision for depreciation and amortization 
decreased $13.4 million in the third quarter of 1998 from the 
same period in 1997 due primarily to the net effect of the OE and 
Penn rate plans. The rate restructuring plan authorized by the 
PPUC for Penn in the second quarter caused the reduction in 
depreciation expense in the third quarter due to the reduction of 
nuclear generating unit investment resulting from the 
discontinued application of SFAS 71. Penn's rate restructuring 
plan also resulted in a reclassification of accelerated Perry 
Plant depreciation in the third quarter to amortization of net 
regulatory assets, further reducing reported depreciation 
expense. The reclassification of depreciation resulted in a 
corresponding increase in the amortization of net regulatory 
assets in both the first nine months of 1998 and in the third 
quarter of 1998 compared to the same periods of 1997. Also 
contributing to the increase in year-to-date 1998 amortization 
was the absence in 1998 of certain regulatory credits which were 
fully amortized by the end of the second quarter of 1997.

          Other income (expense) for the year-to-date period 
ending September 30, 1998 reflects the $28 million after-tax 
reserve for credit losses discussed above. Also included in the 
third quarter of 1998 were after tax losses of $26 million 
resulting from purchases of energy to replace scheduled third 
quarter deliveries from a power marketer which defaulted on its 
power contracts to FirstEnergy Trading and Power Marketing Corp. 
due to the unprecedented June 1998 price fluctuations.

          Interest expenses increased due to the inclusion of the 
former Centerior companies for both the nine-month period ended 
September 30, 1998 and the third quarter of 1998, from the 
corresponding periods in 1997. Excluding the impact of the 
merger, interest on long-term debt for the OE companies decreased 
due to redemptions of long-term debt totaling $273.8 million 
since October 1997. Other interest expense increased as a result 
of increased short-term borrowing levels in 1998.

                            - 11 -

<PAGE

                         FIRSTENERGY CORP.
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

Capital Resources and Liquidity

          The Companies have continuing cash requirements for 
planned capital expenditures and debt maturities. During the 
fourth quarter of 1998, capital requirements for property 
additions and capital leases for the utility operating companies 
are expected to be about $115 million, including $20 million for 
nuclear fuel. The Companies have additional cash requirements of 
approximately $66.6 million to meet sinking fund requirements for 
maturing long-term debt during the remainder of 1998. These cash 
requirements are expected to be satisfied with internal cash 
and/or short-term credit arrangements.

          As of September 30, 1998, the Companies had about 
$117.7 million of cash and temporary investments and $348.5 
million of short-term indebtedness. The Companies' unused 
borrowing capability included $115 million under revolving lines 
of credit and $22 million of bank facilities that provide for 
borrowings on a short-term basis at the banks' discretion.

          The Company recently acquired three new mechanical 
contractors. On September 30, 1998, the Company acquired The 
Hattenbach Company, a specialty mechanical contractor 
headquartered in Cleveland, Ohio. Hattenbach recorded 
approximately $15 million in sales in 1997 and has 65 employees. 
In October 1998, the Company acquired two additional mechanical 
contractors, Ancoma, Inc. and Spectrum Control Systems. Ancoma, 
Inc. is a full-service mechanical contractor headquartered in 
Rochester, New York with 275 employees and sales in 1997 of 
approximately $36 million. Spectrum Control Systems is a 
specialty mechanical contractor based in Cincinnati, Ohio. 
Spectrum posted approximately $3.5 million in sales in 1997 and 
has 25 employees. The Company has acquired eight mechanical 
construction and contracting companies in the last 12 months with 
approximately $350 million in annual revenues and more than 2,500 
employees.

          The Company signed an agreement in principle with 
Duquesne Light Company that would result in the transfer of 1,436 
megawatts owned by Duquesne at five generating plants in exchange 
for 1,298 megawatts at three plants owned by the Company's 
electric utility operating companies (see "Pending Exchange of 
Assets" in Note 2). A final agreement on the exchange of assets, 
which will be structured as a tax-free transaction to the extent 
possible, is expected to be reached by the end of the year. The 
transaction benefits the Company by providing it with exclusive 
ownership and operating control of all the generating assets that 
are now jointly owned and operated under the Central Area Power 
Coordination Group agreement.

          The Company formed a new wholly owned subsidiary, 
FirstEnergy Fuel Marketing Company, to provide products and 
services to electricity generators and industrial fuel users. The 
Company's Warrenton River Terminal, a coal-blending facility in 
Warrenton, Ohio, will be operated and marketed by the new 
company. The subsidiary will provide a number of products and 
services including fuel supply, logistics services, contract 
administration, inventory management and fuel blending. The 
Company believes there will be increased need for such services 
as the industry moves toward deregulation.

          In a venture to convert nonhazardous waste by-products 
into new products, the Company joined with Crown Coal and Coke 
Company and Canyon Resources, Inc. to form Carbon Plus, LLC. The 
new company will produce and market nationally, high-grade carbon 
and low-carbon fly ash products used in the steel, foundry and 
cement industries. The venture will use the Company's patented 
carbon extraction process to recover carbon particles for use in 
chemical additives in metallurgical processes. The new company is 
expected to produce approximately $4 million in annual revenues.

          In a final step to achieve complete ownership and 
operating control of its power plants, the Company announced on 
November 9, 1998, that it had signed an agreement to purchase 

                             - 12 -

<PAGE>

                         FIRSTENERGY CORP.

            MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

from General Public Utilities 87 megawatts of capacity at the 
Seneca Pumped-Storage Hydroelectric Plant. The added 
hydroelectric plant capacity will enhance the Company's ability 
to meet demand during peak periods.

Regulatory Matters

          On September 16, 1998, the Company, together with 
representatives of the three other Ohio investor-owned utilities, 
presented proposed legislation for restructuring the electric 
utility industry in Ohio to a private working group formed by the 
leadership of the Ohio General Assembly. The working group, which 
includes numerous interested parties, will consider the utility 
proposal -- a proposal that represents a balanced approach for 
bringing choice to Ohio's electric consumers -- as well as other 
restructuring proposals. Passage of a restructuring bill appears 
unlikely in 1998.

          On September 24, 1998, the Federal Environmental 
Protection Agency issued a final rule establishing tighter 
nitrogen oxide emission ceilings for Ohio, Pennsylvania and 20 
other Eastern states and the District of Columbia (see 
"Environmental Matters" in Note 2). Controls must be in place by 
May 2003, with required reductions achieved during the five-month 
summer ozone season (May through September). The new rule is 
expected to increase the cost of producing electricity; however, 
the Company believes that it is in a better position than a 
number of other utilities in achieving compliance due to its 
nuclear and hydroelectric generation capability.

          In connection with the regulatory plans for its utility 
operating companies to reduce fixed costs and lower rates, the 
Company continued to take steps to restructure its operations for 
improved efficiency and effectiveness in the changing electric 
utility industry. The Company announced plans to transfer its 
transmission assets into a new subsidiary, American Transmission 
Systems, Inc. (ATS), with the transfer expected to be finalized 
by early 1999. The new subsidiary represents a first step toward 
the Company's goal of establishing or becoming part of a larger 
independent transmission company (TransCo). FirstEnergy believes 
that a TransCo better addresses the Federal Energy Regulatory 
Commission's (FERC) stated transmission objectives of providing 
non-discriminatory service, while providing for streamlined and 
cost-efficient operation. In working toward the goal of forming a 
larger regional transmission entity, the Company, American 
Electric Power and Virginia Power announced on November 6, 1998, 
that they would prepare a FERC filing during the first quarter of 
1999 for such a regional transmission entity. The entity would be 
designed to meet the goals of reducing transmission costs that 
result when transferring power over several transmission systems, 
ensuring transmission reliability and providing non-
discriminatory access to the transmission grid.

Impact of the Year 2000 Issue

          The Year 2000 issue is the result of computer programs 
being written using two digits rather than four to identify the 
applicable year. Any of the Company's programs that have date-
sensitive software may recognize a date using "00" as the year 
1900 rather than the year 2000.

           The Company has developed a multi-phase program for 
Year 2000 compliance that consists of: (i) assessment of the 
corporate systems and operations of the Company that could be 
affected by the Year 2000 problem; (ii) remediation or 
replacement of noncompliant systems and components; and (iii) 
testing of systems and components following such remediation or 
replacement. The Company has focused its Year 2000 review on 
three areas: centralized system applications, noncentralized 
systems and relationships with third parties (including suppliers 
as well as end-use customers).

          The Company currently believes that with modifications 
to existing software and conversions to new software, the Year 
2000 issue will pose no significant operational problems for its 
computer systems. Most of the Company's Year 2000 problems will 
be resolved through system replacement. Of the Company's major 

                            - 13 -

<PAGE>

                       FIRSTENERGY CORP.

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

centralized systems, the general ledger system and inventory 
management and procurement accounts payable system will be 
replaced by the end of 1998. The Company's payroll system was 
enhanced to be Year 2000 compliant in July 1998; all employees 
will be converted to the new system by January 1999. The customer 
service system is due to be replaced in mid-1999.

          The Company has categorized its noncentralized systems 
into sixteen separate areas, and has already determined that five 
of such areas pose no material Year 2000 problem. The Company has 
identified certain Year 2000 issues in nine areas and is in the 
process of remediating them. The Company has plans to complete 
the assessment of the final two areas by the end of 1998. The 
Company plans to complete the entire Year 2000 project by 
September 1999. If the already identified modifications and 
conversions are not made or are not completed on a timely basis, 
or if the Company identifies material additional modifications 
which are not completed on a timely basis, the Year 2000 issue 
would have a material adverse impact on operations.

          The Company has initiated formal communications with 
many of its major suppliers to determine the extent to which it 
is vulnerable to those third parties' failure to resolve their 
own Year 2000 problems and is still in the assessment phase as to 
whether and to what extent such third parties have a Year 2000 
issue. There can be no guarantee that the failure of other 
companies to resolve their own Year 2000 issue will not have a 
material adverse effect on the Company's business, financial 
condition and results of operations.

          The Company is utilizing both internal and external 
resources to reprogram and/or replace and test the Company's 
software for Year 2000 modifications. Of the $111 million total 
project cost, approximately $90 million will be capitalized since 
those costs are attributable to the purchase of new software for 
total system replacements (i.e., the Year 2000 solution comprises 
only a portion of the benefits resulting from the system 
replacements). The remaining $21 million will be expensed as 
incurred. As of September 30, 1998, the Company had expended a 
total of $43 million for Year 2000 capital projects and had 
expensed approximately $6 million for Year 2000 related 
maintenance activities. The Company's total Year 2000 project 
cost, as well as its estimates of the time needed to complete 
remedial efforts, are based on currently available information 
and do not include the estimated costs and time associated with 
the impact of third party Year 2000 issues.

          The Company believes the most reasonably likely worst 
case scenario from the Year 2000 issue to be disruption in power 
plant monitoring systems, thereby producing inaccurate data and 
potential failures in electronic switching mechanisms at 
transmission junctions. This would prolong localized outages, as 
technicians would have to manually activate switches. Such an 
event could have a material, but presently undeterminable, effect 
on the Company's financial results. The Company has not yet 
developed a contingency plan to address the effects of any delay 
in becoming Year 2000 compliant but currently expects to have a 
contingency plan by the spring of 1999.

          The costs of the project and the dates on which the 
Company plans to complete the Year 2000 modifications are based 
on management's best estimates, which were derived from numerous 
assumptions of future events including the continued availability 
of certain resources, and other factors. However, there can be no 
guarantee that this project will be completed as planned and 
actual results could differ materially from the estimates. 
Specific factors that might cause material differences include, 
but are not limited to, the availability and cost of trained 
personnel, the ability to locate and correct all relevant 
computer code, and similar uncertainties.

                             - 14 -

<PAGE>
<TABLE>
                                          OHIO EDISON COMPANY

                                   CONSOLIDATED STATEMENTS OF INCOME
                                              (Unaudited)
<CAPTION>
                                                       Three Months Ended      Nine Months Ended
                                                          September 30,           September 30,  
                                                      -------------------    ----------------------
                                                         1998       1997        1998        1997  
                                                      ----------  --------   ----------  ----------
                                                                    (In thousands)
<S>                                                   <C>         <C>        <C>         <C>
OPERATING REVENUES                                    $696,226    $652,660   $1,912,689  $1,850,684
                                                      --------    --------   ----------  ----------
OPERATING EXPENSES AND TAXES:
  Fuel and purchased power                             146,194     111,724      413,242     321,514
  Nuclear operating costs                               69,336      66,990      210,324     202,833
  Other operating costs                                114,156     101,937      314,341     297,006
                                                      --------    --------   ----------  ----------
    Total operation and maintenance expenses           329,686     280,651      937,907     821,353
  Provision for depreciation                            93,005     106,402      289,524     292,975
  Amortization of net regulatory assets                 17,849      11,288       40,424      26,129
  General taxes                                         59,714      58,986      178,208     175,959
  Income taxes                                          55,288      54,277      121,161     140,909
                                                      --------    --------   ----------  ----------
    Total operating expenses and taxes                 555,542     511,604    1,567,224   1,457,325
                                                      --------    --------   ----------  ----------
OPERATING INCOME                                       140,684     141,056      345,465     393,359

OTHER INCOME                                            12,589      12,035       36,857      39,605
                                                      --------    --------   ----------  ----------
INCOME BEFORE NET INTEREST CHARGES                     153,273     153,091      382,322     432,964
                                                      --------    --------   ----------  ----------
NET INTEREST CHARGES:
  Interest on long-term debt                            47,258      50,799      140,255     155,137
  Allowance for borrowed funds used during
   construction and capitalized interest                  (363)     (1,056)      (1,492)     (1,817)
  Other interest expense                                 7,811       7,669       26,696      23,342
  Subsidiaries' preferred stock dividend 
   requirements                                          3,857       3,857       11,570      11,570
                                                      --------    --------   ----------  ----------
    Net interest charges                                58,563      61,269      177,029     188,232
                                                      --------    --------   ----------  ----------
INCOME BEFORE EXTRAORDINARY ITEM                        94,710      91,822      205,293     244,732

EXTRAORDINARY ITEM (NET OF INCOME TAXES) (Note 3)            -           -      (30,522)          -
                                                      --------    --------   ----------  ----------
NET INCOME                                              94,710      91,822      174,771     244,732

PREFERRED STOCK DIVIDEND REQUIREMENTS                    3,020       3,124        9,057       9,373
                                                      --------    --------   ----------  ----------
EARNINGS ON COMMON STOCK                              $ 91,690    $ 88,698   $  165,714  $  235,359
                                                      ========    ========   ==========  ==========

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

</TABLE>
                                           - 15 -

<PAGE>
<TABLE>
                                        OHIO EDISON COMPANY

                                    CONSOLIDATED BALANCE SHEETS
                                           (Unaudited)
<CAPTION>
                                                        September 30,      December 31,
                                                            1998              1997  
                                                        -------------     -------------
                                                                 (In thousands)

                        ASSETS
                        ------
<S>                                                      <C>              <C>
UTILITY PLANT:
  In service, at original cost                           $8,159,009       $8,666,272
  Less--Accumulated provision for depreciation            3,542,085        3,546,594
                                                         ----------       ----------
                                                          4,616,924        5,119,678
                                                         ----------       ----------
  Construction work in progress-
    Electric plant                                          125,512           99,158
    Nuclear fuel                                             14,129           21,360
                                                         ----------       ----------
                                                            139,641          120,518
                                                         ----------       ----------
                                                          4,756,565        5,240,196
                                                         ----------       ----------
OTHER PROPERTY AND INVESTMENTS:
  PNBV Capital Trust                                        477,986          482,220
  Nuclear plant decommissioning trusts                      114,496          109,883
  Letter of credit collateralization                        277,763          277,763
  Other                                                     314,740          419,525
                                                         ----------       ----------
                                                          1,184,985        1,289,391
                                                         ----------       ----------
CURRENT ASSETS:
  Cash and cash equivalents                                  43,338            4,680
  Receivables-
    Customers (less accumulated provisions of
     $6,273,000 and $5,618,000, respectively,
     for uncollectible accounts)                            240,035          235,332
    Associated companies                                    407,922           25,348
    Other                                                    54,347           87,566
  Materials and supplies, at average cost-
    Owned                                                    67,245           75,580
    Under consignment                                        45,133           47,890
  Prepayments and other                                      74,995           78,348
                                                         ----------       ----------
                                                            933,015          554,744
                                                         ----------       ----------
DEFERRED CHARGES:
  Regulatory assets                                       1,753,528        1,601,709
  Property taxes                                            101,119          100,043
  Unamortized sale and leaseback costs                       91,348           95,096
  Other                                                      55,646           96,276
                                                         ----------       ----------
                                                          2,001,641        1,893,124
                                                         ----------       ----------
                                                         $8,876,206       $8,977,455
                                                         ==========       ==========


</TABLE>
                                          - 16 -


<PAGE>
<TABLE>
                                            OHIO EDISON COMPANY

                                        CONSOLIDATED BALANCE SHEETS
                                               (Unaudited)
<CAPTION>
                                                                September 30,      December 31,
                                                                    1998              1997  
                                                                -------------      ------------
                                                                         (In thousands)

          CAPITALIZATION AND LIABILITIES
          ------------------------------
<S>                                                               <C>                <C>
CAPITALIZATION:
  Common stockholder's equity-
    Common stock, $9 par value, authorized 175,000,000 
      shares - 100 shares outstanding                             $        1          $        1
    Other paid-in capital                                          2,098,114           2,102,644
    Retained earnings                                                533,398             621,674
                                                                  ----------          ----------
        Total common stockholder's equity                          2,631,513           2,724,319
  Preferred stock-
    Not subject to mandatory redemption                              160,965             160,965
    Subject to mandatory redemption                                   10,000              15,000
  Preferred stock of consolidated subsidiary-
    Not subject to mandatory redemption                               50,905              50,905
    Subject to mandatory redemption                                   15,000              15,000
  OE obligated mandatorily redeemable preferred
    securities of subsidiary trust holding solely OE
    subordinated debentures                                          120,000             120,000
  Long-term debt                                                   2,405,875           2,569,802
                                                                  ----------          ----------
                                                                   5,394,258           5,655,991
                                                                  ----------          ----------
CURRENT LIABILITIES:
  Currently payable long-term debt and preferred stock               276,337             278,492
  Short-term borrowings-
    Associated companies                                              45,385                   -
    Other                                                            260,800             302,229
  Accounts payable-
    Associated companies                                             212,470               1,751
    Other                                                             84,139             114,085
  Accrued taxes                                                      206,478             157,095
  Accrued interest                                                    46,573              53,165
  Other                                                              158,088             115,256
                                                                  ----------          ----------
                                                                   1,290,270           1,022,073
                                                                  ----------          ----------
DEFERRED CREDITS:
  Accumulated deferred income taxes                                1,602,443           1,698,354
  Accumulated deferred investment tax credits                        157,483             184,804
  Postretirement benefits                                            173,136             158,038
  Other                                                              258,616             258,195
                                                                  ----------          ----------
                                                                   2,191,678           2,299,391
                                                                  ----------          ----------
COMMITMENTS, GUARANTEES AND
  CONTINGENCIES (Note 2)                                          ----------          ----------
                                                                  $8,876,206          $8,977,455
                                                                  ==========          ==========

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

</TABLE>
                                           - 17 -

<PAGE>
<TABLE>
                                         OHIO EDISON COMPANY

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (Unaudited)
<CAPTION>
                                                       Three Months Ended      Nine Months Ended
                                                          September 30,           September 30,  
                                                      ---------------------  ---------------------
                                                         1998       1997        1998        1997  
                                                      ---------  ----------  ----------  ---------
                                                                    (In thousands)
<S>                                                   <C>         <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                            $  94,710   $  91,822  $  174,771  $244,732
  Adjustments to reconcile net income to net
    cash from operating activities-
      Provision for depreciation                         93,005     106,402     289,524   292,975
      Nuclear fuel and lease amortization                 8,244      12,040      21,590    40,682
      Other amortization, net                            17,954      10,996      39,992    25,225
      Deferred income taxes, net                        (14,837)    (14,796)    (66,363)  (31,492)
      Investment tax credits, net                        (3,897)     (4,058)    (11,345)  (11,222)
      Extraordinary item                                      -           -      51,730         -
      Receivables                                      (166,506)     (3,405)   (208,382)   20,559
      Materials and supplies                              6,512        (135)     11,092    (9,696)
      Accounts payable                                   76,043      (9,219)    185,633    (3,907)
      Other                                              60,844      46,527     106,967    47,565
                                                      ---------    --------  ----------  --------
        Net cash provided from operating activities     172,072     236,174     595,209   615,421
                                                      ---------    --------  ----------  --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  New Financing-
    Long-term debt                                       10,039       9,694     117,499    80,217
    Short-term borrowings, net                                -           -       3,956         -
  Redemptions and Repayments-
    Preferred stock                                       5,000       5,000       5,000     5,000
    Long-term debt                                        4,522     121,163     286,157   337,706
    Short-term borrowings, net                           79,581      10,303           -    53,806
  Dividend Payments-
    Common stock                                         44,597      53,109     254,379   163,069
    Preferred stock                                       3,093       3,817       8,952     9,970
                                                      ---------    --------  ----------  --------
        Net cash used for financing activities          126,754     183,698     433,033   489,334
                                                      ---------    --------  ----------  --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Property additions                                     36,793      52,147     125,163   115,724
  Other                                                  (1,767)      2,374      (1,645)    7,172
                                                      ---------    --------   ---------  --------
        Net cash used for investing activities           35,026      54,521     123,518   122,896
                                                      ---------    --------   ---------  --------
Net increase (decrease) in cash and cash equivalents     10,292      (2,045)     38,658     3,191
Cash and cash equivalents at beginning of period         33,046      10,489       4,680     5,253
                                                      ---------    --------   ---------  --------
Cash and cash equivalents at end of period            $  43,338    $  8,444   $  43,338  $  8,444
                                                      =========    ========   =========  ========

<FN>

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

</TABLE>
                                          - 18 - 

<PAGE>

               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS








To Ohio Edison Company:

We have reviewed the accompanying consolidated balance sheet of 
Ohio Edison Company (an Ohio corporation and wholly owned 
subsidiary of FirstEnergy Corp.) and subsidiaries as of September 
30, 1998, and the related consolidated statements of income and 
cash flows for the three-month and nine-month periods ended 
September 30, 1998 and 1997. 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 financial statements 
referred to above for them to be in conformity with generally 
accepted accounting principles.

We have previously audited, in accordance with generally accepted 
auditing standards, the consolidated balance sheet of Ohio Edison 
Company and subsidiaries as of December 31, 1997 (not presented 
herein), and, in our report dated February 13, 1998, we expressed 
an unqualified opinion on that statement. In our opinion, the 
information set forth in the accompanying consolidated balance 
sheet as of December 31, 1997, is fairly stated, in all material 
respects, in relation to the balance sheet from which it has been 
derived.







                                 ARTHUR ANDERSEN LLP

Cleveland, Ohio
November 13, 1998


                             - 19 -

<PAGE>
                        OHIO EDISON COMPANY

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

Results of Operations

          Earnings were adversely affected in the nine-month 
period ended September 30, 1998, compared to the same period of 
1997 by an extraordinary item resulting from deregulation of 
Penn's generation business and the corresponding discontinuation 
of SFAS 71 with respect to that business. This action was taken 
following the June 18, 1998, authorization by the PPUC of a 
restructuring plan for Penn (see below and Note 3). Excluding the 
extraordinary item, earnings on common stock were $196.2 million 
in the first nine months of 1998 compared to $235.4 million in 
the same period last year; for the third quarter of 1998, 
earnings on common stock were $91.7 million compared to $88.7 
million in the third quarter of 1997. Earnings were also 
adversely affected in the nine-month period by increased 
purchased power costs in 1998 occasioned by unprecedented market 
prices for electricity and unscheduled generating unit outages. 
This increase in purchased power costs more than offset an 
increase in operating revenues.

          Operating revenues increased $62.0 million during the 
first nine months of 1998, compared to the same period of 1997, 
and increased $43.6 million in the third quarter of 1998 compared 
to the third quarter of 1997. Year-to-date retail kilowatt-hour 
sales increased 1.7%, with a 4.1% increase in residential sales 
and a 4.7% increase in commercial sales offset, in part, by a 
2.1% decrease in industrial sales. Industrial sales for 1998 were 
affected by the August 1997 closure of a major customer's 
electric arc furnace in the Penn service area. Excluding sales to 
that customer, industrial sales increased 0.1% and retail sales 
were 2.6% higher. Sales to wholesale customers increased 7.8% 
compared to the first nine months of 1997. This increase 
contributed to the 2.7% increase in total kilowatt-hour sales 
during the period.

          Retail kilowatt-hour sales in the third quarter of 1998 
increased 5.4% with residential and commercial sales being 13.1% 
and 7.5% higher, respectively. Residential sales benefited from 
higher air-conditioning loads due to hotter weather and 
commercial sales benefited from continued growth in the service 
sector of the area economy during the period. Industrial sales 
decreased 2.0% during the third quarter of 1998 compared to the 
same period of 1997; removing the impact of the electric arc 
furnace closure, industrial sales were relatively flat. A general 
decline in energy use by primary metal manufacturers and the 
General Motors strike also dampened industrial sales in the third 
quarter of 1998. Sales to wholesale customers increased 7.8% in 
the third quarter compared to the same period last year, 
contributing to the increase in total kilowatt-hour sales of 
5.8%.

          Operation and maintenance expenses increased $116.6 
million for the first nine months of 1998 compared to the first 
nine months of 1997. Most of the increase resulted from purchased 
power expenses which were up $82.1 million in the first nine 
months of 1998 from the same period in 1997. Most of the increase 
occurred in the second quarter and resulted from a combination of 
factors. In late June 1998, the midwestern and southern regions 
of the United States experienced electricity shortages caused 
mainly by record temperatures and humidity and unscheduled 
generating unit outages. Due in part to unscheduled outages at 
the Beaver Valley Plant, the OE companies' production 
capabilities were reduced to the point that they purchased 
significant amounts of power during this period. Temperatures 
continued above last year's levels in the third quarter of 1998 
as well and the Beaver Valley Plant remained out of service for 
most of that period. As a result, OE purchased significant 
amounts of power at unusually high spot market prices, causing 
the increase in purchased power costs.

          Nuclear operating costs were higher in the first nine 
months of 1998 than the same period last year due to higher costs 
at the Beaver Valley Plant which were offset in part by lower 
costs at the Perry Plant. Reduced emission allowance sales in the 
year-to-date 1998 period and higher third quarter and year-to-

                            - 20 -

<PAGE>

                       OHIO EDISON COMPANY

            MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

date 1998 costs at the Sammis Plant compared to the corresponding 
periods of 1997 contributed to the increase in other operation 
and maintenance expenses.

          The provision for depreciation and amortization 
decreased $13.4 million in the third quarter of 1998 from the 
same period in 1997 due primarily to the net effect of the OE and 
Penn rate plans. The rate restructuring plan authorized by the 
PPUC for Penn in the second quarter caused the reduction in 
depreciation expense in the third quarter due to the reduction of 
nuclear generating unit investment resulting from the 
discontinued application of SFAS 71. Penn's rate restructuring 
plan also resulted in a reclassification of accelerated Perry 
Plant depreciation in the third quarter to amortization of net 
regulatory assets, further reducing reported depreciation 
expense. The reclassification of depreciation resulted in a 
corresponding increase in the amortization of net regulatory 
assets in both the first nine months of 1998 and in the third 
quarter of 1998 compared to the same periods of 1997. Also 
contributing to the increase in year-to-date 1998 amortization 
was the absence in 1998 of certain regulatory credits which were 
fully amortized by the end of the second quarter 1997.

          Interest on long-term debt decreased due to redemptions 
of long-term debt totaling $273.8 million since October 1997. 
Other interest expense increased as a result of increased short-
term borrowing levels in 1998.

Capital Resources and Liquidity

          The OE companies have continuing cash requirements for 
planned capital expenditures and debt maturities. During the 
fourth quarter of 1998, capital requirements for property 
additions and capital leases are expected to be about $57 
million, including $13 million for nuclear fuel. The OE companies 
have additional cash requirements of approximately $2.7 million 
to meet sinking fund requirements for maturing long-term debt 
during the remainder of 1998. These cash requirements are 
expected to be satisfied with internal cash and/or short-term 
credit arrangements.

          As of September 30, 1998, the OE companies had about 
$43.3 million of cash and temporary investments and $306.2 
million of short-term indebtedness. In addition, the OE 
companies' unused borrowing capability included $100 million 
under revolving lines of credit and $22 million of bank 
facilities that provide for borrowings on a short-term basis at 
the banks' discretion.

          FirstEnergy signed an agreement in principle with 
Duquesne Light Company that would result in the transfer of 1,436 
megawatts owned by Duquesne at five generating plants in exchange 
for 1,298 megawatts at three plants owned by FirstEnergy's 
electric utility operating companies (see "Pending Exchange of 
Assets" in Note 2), including the OE companies. A final agreement 
on the exchange of assets, which will be structured as a tax-free 
transaction to the extent possible, is expected to be reached by 
the end of the year. The transaction benefits the Companies by 
providing them with exclusive ownership and operating control of 
all the generating assets that are now jointly owned and operated 
under the Central Area Power Coordination Group agreement.

Regulatory Matters

          On September 16, 1998, FirstEnergy, together with 
representatives of the three other Ohio investor-owned utilities, 
presented proposed legislation for restructuring the electric 
utility industry in Ohio to a private working group formed by the 
leadership of the Ohio General Assembly. The working group, which 
includes numerous interested parties, will consider the utility 
proposal -- a proposal that represents a balanced approach for 
bringing choice to Ohio's electric consumers -- as well as other 
restructuring proposals. Passage of a restructuring bill appears 
unlikely in 1998.

                            - 21 -

<PAGE>

                       OHIO EDISON COMPANY

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

          On September 24, 1998, the Federal Environmental 
Protection Agency issued a final rule establishing tighter 
nitrogen oxide emission ceilings for Ohio, Pennsylvania and 20 
other Eastern states and the District of Columbia (see 
"Environmental Matters" in Note 2). Controls must be in place by 
May 2003, with required reductions achieved during the five-month 
summer ozone season (May through September). The new rule is 
expected to increase the cost of producing electricity; however, 
the OE companies believe that they are in a better position than 
a number of other utilities in achieving compliance due to their 
nuclear generation capability.

          In connection with the regulatory plans for its utility 
operating companies to reduce fixed costs and lower rates, 
FirstEnergy continued to take steps to restructure its operations 
for improved efficiency and effectiveness in the changing 
electric utility industry. FirstEnergy announced plans to 
transfer its transmission assets (including the OE companies' 
assets) into a new subsidiary, American Transmission Systems, 
Inc. (ATS), with the transfer expected to be finalized by early 
1999. The new subsidiary represents a first step toward 
FirstEnergy's goal of establishing or becoming part of a larger 
independent transmission company (TransCo). FirstEnergy believes 
that a TransCo better addresses the Federal Energy Regulatory 
Commission's (FERC) stated transmission objectives of providing 
non-discriminatory service, while providing for streamlined and 
cost-efficient operation. In working toward the goal of forming a 
larger regional transmission entity, FirstEnergy, American 
Electric Power and Virginia Power announced on November 6, 1998, 
that they would prepare a FERC filing during the first quarter of 
1999 for such a regional transmission entity. The entity would be 
designed to meet the goals of reducing transmission costs that 
result when transferring power over several transmission systems, 
ensuring transmission reliability and providing non-
discriminatory access to the transmission grid.

Impact of the Year 2000 Issue

          The Year 2000 issue is the result of computer programs 
being written using two digits rather than four to identify the 
applicable year. Any of the OE companies' programs that have 
date-sensitive software may recognize a date using "00" as the 
year 1900 rather than the year 2000.

          The OE companies have developed a multi-phase program 
for Year 2000 compliance that consists of: (i) assessment of the 
corporate systems and operations of the OE companies that could 
be affected by the Year 2000 problem; (ii) remediation or 
replacement of non-compliant systems and components; and (iii) 
testing of systems and components following such remediation or 
replacement. The OE companies have focused their Year 2000 review 
on three areas: centralized system applications, non-centralized 
systems and relationships with third parties (including suppliers 
as well as end-use customers).

          The OE companies currently believe that with 
modifications to existing software and conversions to new 
software, the Year 2000 issue will pose no significant 
operational problems for their computer systems. Most of the OE 
companies' Year 2000 problems will be resolved through system 
replacement. Of the OE companies' major centralized systems, the 
general ledger system and inventory management and procurement 
accounts payable system will be replaced by the end of 1998. The 
OE companies' payroll system was enhanced to be Year 2000 
compliant in July 1998. The customer service system is due to be 
replaced in mid-1999.

          The OE companies have categorized their non-centralized 
systems into sixteen separate areas, and have already determined 
that five of such areas pose no material Year 2000 problem. The 
OE companies have identified certain Year 2000 issues in nine of 
such areas and are in the process of remediating them. The OE 
companies have plans to complete the assessment of the final two 
areas by the end of 1998. The OE companies plan to complete the 
entire Year 2000 project by September 1999. If the already 
identified modifications and conversions are not made or are not 
completed on a timely basis, or if the OE companies identify 

                           - 22 -

<PAGE>

                       OHIO EDISON COMPANY

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
       RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

material additional modifications which are not completed on a 
timely basis, the Year 2000 issue would have a material adverse 
impact on operations.

          The OE companies have initiated formal communications 
with many of their major suppliers to determine the extent to 
which they are vulnerable to those third parties' failure to 
resolve their own Year 2000 problems and are still in the 
assessment phase as to whether and to what extent such third 
parties have a Year 2000 issue. There can be no guarantee that 
the failure of other companies to resolve their own Year 2000 
issue will not have a material adverse effect on the OE 
companies' business, financial condition and results of 
operations.

          The OE companies are utilizing both internal and 
external resources to reprogram and/or replace and test the OE 
companies' software for Year 2000 modifications. Of the $53 
million total project cost, approximately $43 million will be 
capitalized since those costs are attributable to the purchase of 
new software for total system replacements (i.e., the Year 2000 
solution comprises only a portion of the benefits resulting from 
the system replacements). The remaining $10 million will be 
expensed as incurred. As of September 30, 1998, the OE companies 
have expended a total of $20 million for Year 2000 capital 
projects and have expensed approximately $3 million for Year 2000 
related maintenance activities. The OE companies' total Year 2000 
project cost, as well as their estimates of time needed to 
complete remedial efforts, are based on currently available 
information and do not include the estimated costs and time 
associated with the impact of third party Year 2000 issues.

          The OE companies believe the most reasonably likely 
worst case scenario from the Year 2000 issue to be disruption in 
power plant monitoring systems, thereby producing inaccurate data 
and potential failures in electronic switching mechanisms at 
transmission junctions. This would prolong localized outages, as 
technicians would have to manually activate switches. Such an 
event could have a material, but presently undeterminable, effect 
on the OE companies' financial results. The OE companies have not 
yet developed a contingency plan to address the effects of any 
delay in becoming Year 2000 compliant but currently expect to 
have a contingency plan by the spring of 1999.

          The costs of the project and the dates on which the OE 
companies plan to complete the Year 2000 modifications are based 
on management's best estimates, which were derived from numerous 
assumptions of future events including the continued availability 
of certain resources, and other factors. However, there can be no 
guarantee that this project will be completed as planned and 
actual results could differ materially from the estimates. 
Specific factors that might cause material differences include, 
but are not limited to, the availability and cost of trained 
personnel, the ability to locate and correct all relevant 
computer code, and similar uncertainties.

                            - 23 -


<PAGE>
<TABLE>
                              THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                  CONSOLIDATED STATEMENTS OF INCOME
                                              (Unaudited)
<CAPTION>
                                                        September 30, 1998       September 30, 1997
                                                      -----------------------   ---------------------
                                                        Three        Nine        Three       Nine
                                                        Months       Months      Months      Months
                                                        Ended        Ended       Ended       Ended
                                                      ----------  -----------  ---------   ----------
                                                                       (In thousands)
<S>                                                    <C>        <C>           <C>        <C>
OPERATING REVENUES                                     $512,616   $1,392,868 |  $499,468   $1,359,341
                                                       --------   ---------- |  --------   ----------
OPERATING EXPENSES AND TAXES:                                                |
  Fuel and purchased power                              127,342      358,704 |   111,095      329,347
  Nuclear operating costs                                19,836       55,335 |    23,617       65,029
  Other operating costs                                  82,272      249,774 |    77,407      251,002
                                                       --------   ---------- |  --------   ----------
      Total operation and maintenance expenses          229,450      663,813 |   212,119      645,378
  Provision for depreciation and amortization            50,002      148,557 |    55,611      166,134
  Amortization of net regulatory assets                   6,567       19,701 |     6,567       19,701
  General taxes                                          55,356      163,730 |    56,864      170,824
  Income taxes                                           48,077       95,752 |    36,836       68,390
                                                       --------   ---------- |  --------   ----------
      Total operating expenses and taxes                389,452    1,091,553 |   367,997    1,070,427
                                                       --------   ---------- |  --------   ----------
OPERATING INCOME                                        123,164      301,315 |   131,471      288,914
                                                                             | 
OTHER INCOME (EXPENSE)                                    8,166       21,616 |     7,544       (1,341)
                                                       --------   ---------- |  --------   ----------
INCOME BEFORE NET INTEREST CHARGES                      131,330      322,931 |   139,015      287,573
                                                       --------   ---------- |  --------   ----------
NET INTEREST CHARGES:                                                        |
  Interest on long-term debt                             57,072      177,883 |    66,901      174,451
  Allowance for borrowed funds used during                                   |
    construction                                           (664)      (1,620)|      (729)      (1,440)
  Other interest expense (credit)                           (95)      (2,821)|     5,101       12,620
                                                       --------   ---------- |  --------   ----------
      Net interest charges                               56,313      173,442 |    71,273      185,631
                                                       --------   ---------- |  --------   ----------
NET INCOME                                               75,017      149,489 |    67,742      101,942
                                                                             |
PREFERRED STOCK DIVIDEND REQUIREMENTS                     8,547       17,053 |     8,876       27,287
                                                       --------   ---------- |  --------   ----------
EARNINGS ON COMMON STOCK                               $ 66,470   $  132,436 |  $ 58,866   $   74,655
                                                       ========   ========== |  ========   ==========

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

</TABLE>
                                            - 24 - 

<PAGE>
<TABLE>
                               THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                      CONSOLIDATED BALANCE SHEETS
                                              (Unaudited)
<CAPTION>
                                                        September 30,      December 31,
                                                            1998              1997  
                                                        -------------      ------------
                                                                 (In thousands)
<S>                                                     <C>                <C>
               ASSETS
               ------
UTILITY PLANT:
  In service                                            $4,626,360         $4,578,649
  Less--Accumulated provision for depreciation           1,589,311          1,470,084
                                                        ----------         ----------
                                                         3,037,049          3,108,565
                                                        ----------         ----------
  Construction work in progress-
    Electric plant                                          45,947             41,261
    Nuclear fuel                                            10,115              6,833
                                                        ----------         ----------
                                                            56,062             48,094
                                                        ----------         ----------
                                                         3,093,111          3,156,659
                                                        ----------         ----------
OTHER PROPERTY AND INVESTMENTS:
  Shippingport Capital Trust                               543,161            575,084
  Nuclear plant decommissioning trusts                     114,265            105,334
  Other.                                                    18,223             21,482
                                                        ----------         ----------
                                                           675,649            701,900
                                                        ----------         ----------
CURRENT ASSETS:
  Cash and cash equivalents                                 27,776             33,775
  Receivables-
    Customers                                               17,427             29,759
    Associated companies                                     9,945              8,695
    Other                                                  241,175             98,077
  Notes receivable from associated companies                26,628                  -
  Materials and supplies, at average cost-
    Owned                                                   29,483             47,489
    Under consignment                                       40,455             25,411
  Prepayments and other                                     52,068             57,763
                                                        ----------         ----------
                                                           444,957            300,969
                                                        ----------         ----------
DEFERRED CHARGES:
  Regulatory assets                                        559,453            579,711
  Goodwill                                               1,511,635          1,552,483
  Property taxes                                           126,414            125,204
  Other                                                     15,627             23,358
                                                        ----------         ----------
                                                         2,213,129          2,280,756
                                                        ----------         ----------
                                                        $6,426,846         $6,440,284
                                                        ==========         ==========

</TABLE>
                                             - 25 -

<PAGE>
<TABLE>
                            THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                   CONSOLIDATED BALANCE SHEETS
                                           (Unaudited)
<CAPTION>
                                                        September 30,      December 31,
                                                            1998              1997  
                                                        -------------      ------------
                                                                 (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                                         $  931,312        $  931,614
    Retained earnings                                       101,251            19,290
                                                         ----------        ----------
        Total common stockholder's equity                 1,032,563           950,904
  Preferred stock-
    Not subject to mandatory redemption                     238,325           238,325
    Subject to mandatory redemption                         168,460           183,174
  Long-term debt                                          2,956,689         3,189,590
                                                         ----------        ----------
                                                          4,396,037         4,561,993
                                                         ----------        ----------
CURRENT LIABILITIES:
  Currently payable long-term debt and preferred
   stock                                                    181,476           121,965
  Accounts payable-
    Associated companies                                     51,831            56,109
    Other                                                    58,332            90,737
  Notes payable to associated companies                      60,838            56,802
  Accrued taxes                                             238,418           194,394
  Accrued interest                                           70,078            67,896
  Other                                                      43,068            52,297
                                                         ----------        ----------
                                                            704,041           640,200
                                                         ----------        ----------
DEFERRED CREDITS:
  Accumulated deferred income taxes                         533,755           496,437
  Accumulated deferred investment tax credits                92,242            96,131
  Pensions and other postretirement benefits                204,152           198,642
  Other                                                     496,619           446,881
                                                         ----------        ----------
                                                          1,326,768         1,238,091
                                                         ----------        ----------
COMMITMENTS, GUARANTEES AND
  CONTINGENCIES (Note 2)                                 ----------        ----------
                                                         $6,426,846        $6,440,284
                                                         ==========        ==========
<FN>

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

</TABLE>
                                          - 26 -

<PAGE>
<TABLE>
                              THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (Unaudited)
<CAPTION>
                                                       September 30, 1998       September 30, 1997
                                                      ----------------------  ---------------------
                                                        Three        Nine        Three      Nine
                                                        Months       Months      Months     Months
                                                        Ended        Ended       Ended      Ended
                                                      ----------  ----------  ----------  ---------
                                                                       (In thousands)

<S>                                                   <C>         <C>          <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                            $  75,017   $ 149,489 |  $ 67,742   $101,942
  Adjustments to reconcile net income to net                                |
    cash from operating activities-                                         |
      Provision for depreciation and amortization        50,002     148,557 |    55,611    166,134
      Nuclear fuel and lease amortization                 8,154      24,510 |    12,924     38,110
      Other amortization                                  5,974       9,691 |     6,567     19,701
      Deferred income taxes, net                          4,229      35,020 |    12,057     34,254
      Investment tax credits, net                        (1,296)     (3,889)|    (2,001)    (6,003)
      Allowance for equity funds used during                                |
       construction                                           -          -  |      (465)    (1,190)
      Receivables                                       (44,448)   (132,016)|    (8,096)     6,869
      Materials and supplies                             13,684       2,962 |     2,465     (1,675)
      Accounts payable                                  (69,068)    (36,683)|   (15,214)   (26,535)
      Accrued taxes                                      76,357      44,024 |     8,379    (14,060)
      Other                                               4,771     (31,535)|    42,415     27,285
                                                      ---------  ---------- |  --------   --------
        Net cash provided from operating activities     123,376     210,130 |   182,384    344,832
                                                      ---------  ---------- |  --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:                                       |
  New Financing-                                                            |
    Equity contributions from parent                          -           - |     4,500      4,500
    Long-term debt                                            -       5,822 |   168,118    743,065
    Short-term borrowings, net                           30,528       4,036 |         -          -
    Ohio Schools Council Prepayment Program                   -     116,598 |         -          -
  Redemptions and Repayments-                                               |
    Preferred stock                                       1,000      14,714 |     1,000     29,714
    Long-term debt                                      172,192     198,773 |   192,475    218,636
    Short-term borrowings, net                                -           - |    37,651      8,618
  Dividend Payments-                                                        |
    Common stock                                         28,653      54,122 |    29,606     88,816
    Preferred stock                                       8,559      26,300 |     8,889     27,631
                                                      ---------   --------- |  --------   --------
        Net cash provided from (used for) financing                         |
         activities                                    (179,876)   (167,453)|   (97,003)   374,150
                                                      ---------   --------- |  --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:                                       |
  Property additions                                     16,327      43,741 |    31,733     86,705
  Loans to associated companies                               -      26,628 |         -          -
  Loan payments from associated companies              (110,272)          - |         -          -
  Capital trust investments                                  35     (31,923)|   (10,576)   558,813
  Other                                                  24,183      10,230 |      (673)    16,714
                                                      ---------   --------- | ---------  ---------
        Net cash used for (provided from)                                   |
         investing activities                           (69,727)     48,676 |    20,484    662,232
                                                      ---------   --------- | ---------  ---------
Net increase (decrease) in cash and cash equivalents     13,227      (5,999)|    64,897     56,750
Cash and cash equivalents at beginning of period         14,549      33,775 |    22,126     30,273
                                                      ---------   --------- | ---------  ---------
Cash and cash equivalents at end of period            $  27,776   $  27,776 | $  87,023  $  87,023
                                                      =========   ========= | =========  =========

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

</TABLE>
                                           - 27 -

<PAGE>

                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS










To The Cleveland Electric Illuminating Company:

We have reviewed the accompanying consolidated balance sheet of 
The Cleveland Electric Illuminating Company (an Ohio corporation 
and wholly owned subsidiary of FirstEnergy Corp.) and subsidiary 
as of September 30, 1998, and the related consolidated statements 
of income and cash flows for the three-month and nine-month 
periods ended September 30, 1998 and 1997. 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 financial statements 
referred to above for them to be in conformity with generally 
accepted accounting principles.

We have previously audited, in accordance with generally accepted 
auditing standards, the consolidated balance sheet of The 
Cleveland Electric Illuminating Company and subsidiary as of 
December 31, 1997 (not presented herein), and, in our report dated 
February 13, 1998, we expressed an unqualified opinion on that 
statement. In our opinion, the information set forth in the 
accompanying consolidated balance sheet as of December 31, 1997, 
is fairly stated, in all material respects, in relation to the 
balance sheet from which it has been derived.







                               ARTHUR ANDERSEN LLP

Cleveland, Ohio
November 13, 1998


                              - 28 -


<PAGE>
              THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

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

Results of Operations

          Financial results reflect the application of purchase 
accounting to the merger of CEI's former parent company, 
Centerior, with OE to form FirstEnergy on November 8, 1997. The 
application of this accounting resulted in fair value adjustments 
which were "pushed down" or reflected on the separate financial 
statements of Centerior's direct subsidiaries as of the merger 
date, including CEI's financial statements. Accordingly, the 
post-merger financial statements for the first nine months and 
third quarter of 1998 and the December 31, 1997 Consolidated 
Balance Sheet reflect a new basis of accounting. Material effects 
of this new basis of accounting are identified below.

          Earnings on common stock increased to $132.4 million 
for the nine-month period ended September 30, 1998, from $74.7 
million in the same period last year. For the third quarter of 
1998, earnings increased to $66.5 million, compared to $58.9 
million in the third quarter of 1997. The increases reflect 
increased operating revenues, benefits provided by the Bruce 
Mansfield Plant lease refinancing and net reductions in the 
provision for depreciation and amortization resulting from the 
fair value adjustment of nuclear plant in connection with the 
merger. The above factors were offset in part by an increase in 
purchased power costs.

          Operating revenues increased $33.5 million during the 
nine-month period ended September 30, 1998, compared to the same 
period of 1997 and increased $13.1 million in the third quarter 
of 1998 from the corresponding 1997 period. Operating revenues in 
the year-to-date 1998 period included $9.2 million received as a 
termination charge for a canceled power supply contract. Year-to-
date retail kilowatt-hour sales increased 1.9% from the same 
period of 1997, with residential, commercial and industrial 
customers all contributing to the increase with increases of 
2.4%, 1.9% and 1.6%, respectively. Sales to wholesale customers 
decreased 50.6% compared to the first nine months of 1997 due in 
part to unplanned generating unit outages which reduced available 
energy for sale to other utilities. This resulted in a 4.9% 
decrease in total kilowatt-hour sales during the nine-month 
period compared to 1997.

          Retail kilowatt-hour sales in the third quarter of 1998 
increased 4.5% from the third quarter of 1997. Residential sales 
benefited from higher air-conditioning loads due to hotter 
weather in 1998, increasing 15.0%. The large increase in 
residential sales was offset in part by a 1.0% decline in 
commercial sales reflecting a softening in the service sector. 
However, sales to industrial customers increased 3.0%. Sales to 
wholesale customers decreased 48.1% in the third quarter of 1998 
compared to the same period in 1997. Overall, reduced off-system 
sales more than offset the increase in retail sales leading to a 
decline in total kilowatt-hour sales of 3.0% for the third 
quarter of 1998 compared to the third quarter of 1997.

          Fuel and purchased power expenses increased in both the 
first nine months of 1998 and the third quarter of 1998 compared 
to the same periods of 1997. The increases resulted from higher 
purchased power costs, which were due to a combination of 
factors. In late June 1998, the midwestern and southern regions 
of the United States experienced electricity shortages caused 
mainly by record temperatures and humidity and unscheduled 
generating unit outages. During this period, Beaver Valley Unit 2 
was out of service and the Davis-Besse Plant was removed from 
service as a result of damage to transmission facilities caused 
by a tornado. Also, Avon Lake Unit 9 experienced an unscheduled 
outage during the period due to lightning-related transformer 
damage. Temperatures continued above last year's levels 
throughout the third quarter of 1998 as well and Beaver Valley 
Unit 2 remained out of service for most of that period. As a 
result, CEI purchased significant amounts of power on the spot 
market at unusually high prices, causing the increase in 
purchased power costs. On a net basis, nuclear operating costs 
were lower for the year-to-date and third quarter periods of 1998 
compared to 1997, offsetting part of the increase in fuel and 
purchased power expense discussed above.

                             - 29 -

<PAGE>

            THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

          Lower depreciable asset balances resulting from the 
purchase accounting adjustment reduced the provision for 
depreciation in the first nine months of 1998 compared to the 
same period last year and for the third quarter of 1998 compared 
to the third quarter of 1997. These reductions were partially 
offset by the amortization of goodwill recognized with the 
application of purchase accounting.

          Interest income from investments related to the 
refinancing of the Mansfield Plant lease increased other income 
in the first nine months of 1998 compared to the same period of 
1997. Interest expense decreased $15 million in the third quarter 
of 1998 compared to the same period of 1997 due to refinancings 
and redemptions completed in the last twelve months and the 
amortization of premiums associated with the revaluation of long-
term debt in connection with the merger.

Capital Resources and Liquidity

          CEI has continuing cash requirements for planned 
capital expenditures and debt maturities. During the fourth 
quarter of 1998, capital requirements for property additions and 
capital leases are expected to be about $45 million, including $4 
million for nuclear fuel. CEI has additional cash requirements of 
approximately $51.5 million to meet sinking fund requirements for 
maturing long-term debt during the remainder of 1998. These cash 
requirements are expected to be satisfied with internal cash 
and/or short-term credit arrangements.

          As of September 30, 1998, CEI had approximately $54.4 
million of cash and temporary investments and $60.8 million of 
short-term indebtedness to an associated company. Upon completion 
of the merger, application of purchase accounting reduced 
bondable property such that CEI is not currently able to issue 
additional first mortgage bonds, except against retired bonds.

          FirstEnergy signed an agreement in principle with 
Duquesne Light Company that would result in the transfer of 1,436 
megawatts owned by Duquesne at five generating plants in exchange 
for 1,298 megawatts at three plants owned by FirstEnergy's 
electric utility operating companies (see "Pending Exchange of 
Assets" in Note 2), including CEI. A final agreement on the 
exchange of assets, which will be structured as a tax-free 
transaction to the extent possible, is expected to be reached by 
the end of the year. The transaction benefits the Companies by 
providing them with exclusive ownership and operating control of 
all the generating assets that are now jointly owned and operated 
under the Central Area Power Coordination Group agreement.

Regulatory Matters

          On September 16, 1998, FirstEnergy, together with 
representatives of the three other Ohio investor-owned utilities, 
presented proposed legislation for restructuring the electric 
utility industry in Ohio to a private working group formed by the 
leadership of the Ohio General Assembly. The working group, which 
includes numerous interested parties, will consider the utility 
proposal -- a proposal that represents a balanced approach for 
bringing choice to Ohio's electric consumers -- as well as other 
restructuring proposals. Passage of a restructuring bill appears 
unlikely in 1998.

          On September 24, 1998, the Federal Environmental 
Protection Agency issued a final rule establishing tighter 
nitrogen oxide emission ceilings for Ohio, Pennsylvania and 20 
other Eastern states and the District of Columbia (see 
"Environmental Matters" in Note 2). Controls must be in place by 
May 2003, with required reductions achieved during the five-month 
summer ozone season (May through September). The new rule is 
expected to increase the cost of producing electricity; however, 
CEI believes that it is in a better position than a number of 
other utilities in achieving compliance due to its nuclear and 
hydroelectric generation capability.

                             - 30 -

<PAGE>

            THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS (Cont.)

          In connection with the regulatory plans for its utility 
operating companies to reduce fixed costs and lower rates, 
FirstEnergy continued to take steps to restructure its operations 
for improved efficiency and effectiveness in the changing 
electric utility industry. FirstEnergy announced plans to 
transfer its transmission assets (including CEI's assets) into a 
new subsidiary, American Transmission Systems, Inc. (ATS), with 
the transfer expected to be finalized by early 1999. The new 
subsidiary represents a first step toward FirstEnergy's goal of 
establishing or becoming part of a larger independent 
transmission company (TransCo). FirstEnergy believes that a 
TransCo better addresses the Federal Energy Regulatory 
Commission's (FERC) stated transmission objectives of providing 
non-discriminatory service, while providing for streamlined and 
cost-efficient operation. In working toward the goal of forming a 
larger regional transmission entity, FirstEnergy, American 
Electric Power and Virginia Power announced on November 6, 1998, 
that they would prepare a FERC filing during the first quarter of 
1999 for such a regional transmission entity. The entity would be 
designed to meet the goals of reducing transmission costs that 
result when transferring power over several transmission systems, 
ensuring transmission reliability and providing non-
discriminatory access to the transmission grid.

Impact of the Year 2000 Issue

          The Year 2000 issue is the result of computer programs 
being written using two digits rather than four to identify the 
applicable year. Any of CEI's programs that have date-sensitive 
software may recognize a date using "00" as the year 1900 rather 
than the year 2000.

          CEI has developed a multi-phase program for Year 2000 
compliance that consists of: (i) assessment of the corporate 
systems and operations of CEI that could be affected by the Year 
2000 problem; (ii) remediation or replacement of noncompliant 
systems and components; and (iii) testing of systems and 
components following such remediation or replacement. CEI has 
focused its Year 2000 review on three areas: centralized system 
applications, noncentralized systems and relationships with third 
parties (including suppliers as well as end-use customers).

          CEI currently believes that, with modifications to 
existing software and conversions to new software, the Year 2000 
issue will pose no significant operational problems for its 
computer systems. Most of CEI's Year 2000 problems will be 
resolved through system replacement. Of CEI's major centralized 
systems, the general ledger system and inventory management and 
procurement accounts payable system will be replaced by the end 
of 1998. CEI's payroll system was enhanced to be Year 2000 
compliant in July 1998; all employees will be converted to the 
new system by January 1999. The customer service system is due to 
be replaced in mid-1999.

          CEI has categorized its noncentralized systems into 
sixteen separate areas, and has already determined that five of 
such areas pose no material Year 2000 problem. CEI has identified 
certain Year 2000 issues in nine of such areas and is in the 
process of remediating them. CEI has plans to complete the 
assessment of the final two areas by the end of 1998. CEI plans 
to complete the entire Year 2000 project by September 1999. If 
the already identified modifications and conversions are not made 
or are not completed on a timely basis, or if CEI identifies 
material additional modifications which are not completed on a 
timely basis, the Year 2000 issue would have a material adverse 
impact on operations.

          CEI has initiated formal communications with many of 
its major suppliers to determine the extent to which it is 
vulnerable to those third parties' failure to resolve their own 
Year 2000 problems and is still in the assessment phase as to 
whether and to what extent such third parties have a Year 2000 
issue. There can be no guarantee that the failure of other 
companies to resolve their own Year 2000 issue will not have a 
material adverse effect on CEI's business, financial condition 
and results of operations.

                            - 31 -

<PAGE>

            THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS (Cont.)

          CEI is utilizing both internal and external resources 
to reprogram and/or replace and test CEI's software for Year 2000 
modifications. Of the $38 million total project cost, 
approximately $31 million will be capitalized since those costs 
are attributable to the purchase of new software for total system 
replacements (i.e., the Year 2000 solution comprises only a 
portion of the benefits resulting from the system replacements). 
The remaining $7 million will be expensed as incurred. As of 
September 30,1998, CEI has expended a total of $15 million for 
Year 2000 capital projects and had expensed approximately $2 
million for Year 2000 related maintenance activities. CEI's total 
Year 2000 project cost, as well as its estimates of time needed 
to complete remedial efforts, are based on currently available 
information and do not include the estimated costs and time 
associated with the impact of third party Year 2000 issues.

          CEI believes the most reasonably likely worst case 
scenario from the Year 2000 issue to be disruption in power plant 
monitoring systems, thereby producing inaccurate data and 
potential failures in electronic switching mechanisms at 
transmission junctions. This would prolong localized outages, as 
technicians would have to manually activate switches. Such an 
event could have a material, but presently undeterminable, effect 
on CEI's financial results. CEI has not yet developed a 
contingency plan to address the effects of any delay in becoming 
Year 2000 compliant but currently expects to have a contingency 
plan by the spring of 1999.

          The costs of the project and the dates on which CEI 
plans to complete the Year 2000 modifications are based on 
management's best estimates, which were derived from numerous 
assumptions of future events including the continued availability 
of certain resources, and other factors. However, there can be no 
guarantee that this project will be completed as planned and 
actual results could differ materially from the estimates. 
Specific factors that might cause material differences include, 
but are not limited to, the availability and cost of trained 
personnel, the ability to locate and correct all relevant 
computer code, and similar uncertainties.

                            - 32 -


<PAGE>
<TABLE>
                                        THE TOLEDO EDISON COMPANY

                                   CONSOLIDATED STATEMENTS OF INCOME
                                              (Unaudited)
<CAPTION>
                                                       September 30, 1998      September 30, 1997
                                                     ----------------------   ---------------------
                                                       Three        Nine        Three       Nine
                                                       Months       Months      Months      Months
                                                       Ended        Ended       Ended       Ended
                                                     ----------  -----------  ---------   ----------
                                                                       (In thousands)

<S>                                                   <C>         <C>         <C>         <C>
OPERATING REVENUES                                   $253,282     $714,116  | $241,282    $680,486
                                                     --------     --------  | --------    --------
OPERATING EXPENSES AND TAXES:                                               |
  Fuel and purchased power                             56,708      164,049  |   47,976     140,792
  Nuclear operating costs                              37,681      106,912  |   38,027     113,854
  Other operating costs                                42,680      115,515  |   40,214     123,042
                                                     --------     --------  | --------    --------
      Total operation and maintenance expenses        137,069      386,476  |  126,217     377,688
  Provision for depreciation and amortization          19,472       58,295  |   24,542      74,032
  Amortization of net regulatory assets                 4,286       12,954  |    4,291      12,873
  General taxes                                        21,435       63,393  |   22,729      68,124
  Income taxes                                         19,817       51,985  |   14,132      29,964
                                                     --------     --------  | --------    --------
      Total operating expenses and taxes              202,079      573,103  |  191,911     562,681
                                                     --------     --------  | --------    --------
OPERATING INCOME                                       51,203      141,013  |   49,371     117,805
                                                                            |
OTHER INCOME                                            2,674        9,573  |    5,058       5,091
                                                     --------     --------  | --------    --------
INCOME BEFORE NET INTEREST CHARGES                     53,877      150,586  |   54,429     122,896
                                                     --------     --------  | --------    --------
NET INTEREST CHARGES:                                                       |
  Interest on long-term debt                           21,524       66,780  |   23,388      64,970
  Allowance for borrowed funds used during                                  |
    construction                                         (344)        (927) |     (124)       (239)
  Other interest expense (credit)                          10       (1,089) |    3,946       8,990
                                                     --------     --------  | --------    --------
      Net interest charges                             21,190       64,764  |   27,210      73,721
                                                     --------     --------  | --------    --------
NET INCOME                                             32,687       85,822  |   27,219      49,175
                                                                            |
PREFERRED STOCK DIVIDEND REQUIREMENTS                   4,145        9,680  |    4,185      12,590
                                                     --------     --------  | --------    --------
EARNINGS ON COMMON STOCK                             $ 28,542     $ 76,142  | $ 23,034    $ 36,585
                                                     ========     ========  | ========    ========


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

</TABLE>
                                           - 33 -

<PAGE>
<TABLE>
                                        THE TOLEDO EDISON COMPANY

                                       CONSOLIDATED BALANCE SHEETS
                                              (Unaudited)
<CAPTION>
                                                        September 30,      December 31,
                                                            1998              1997  
                                                        -------------      ------------
                                                                 (In thousands)
<S>                                                     <C>                <C>
                ASSETS
                ------
UTILITY PLANT:
  In service                                            $1,741,913         $1,763,495
  Less--Accumulated provision for depreciation             606,442            619,222
                                                        ----------         ----------
                                                         1,135,471          1,144,273
                                                        ----------         ----------
  Construction work in progress-
    Electric plant                                          23,885             19,901
    Nuclear fuel                                             8,114              6,632
                                                        ----------         ----------
                                                            31,999             26,533
                                                        ----------         ----------
                                                         1,167,470          1,170,806
                                                        ----------         ----------
OTHER PROPERTY AND INVESTMENTS:
  Shippingport Capital Trust                               310,696            312,873
  Nuclear plant decommissioning trusts                      94,491             85,956
  Other                                                      3,719              3,164
                                                        ----------         ----------
                                                           408,906            401,993
                                                        ----------         ----------
CURRENT ASSETS:
  Cash and cash equivalents                                 21,356             22,170
  Receivables-
    Associated companies                                    21,663             15,199
    Other                                                   10,501             21,664
  Notes receivable from associated companies                79,595             40,802
  Materials and supplies, at average cost-
    Owned                                                   24,136             31,892
    Under consignment                                       19,223              9,538
  Prepayments and other                                     22,211             26,437
                                                        ----------         ----------
                                                           198,685            167,702
                                                        ----------         ----------
DEFERRED CHARGES:
  Regulatory assets                                        423,599            442,724
  Goodwill                                                 500,532            514,462
  Property taxes                                            43,355             45,338
  Other                                                      5,127             15,127
                                                        ----------         ----------
                                                           972,613          1,017,651
                                                        ----------         ----------
                                                        $2,747,674         $2,758,152
                                                        ==========         ==========

</TABLE>
                                           - 34 -

<PAGE>
<TABLE>
                                      THE TOLEDO EDISON COMPANY

                                      CONSOLIDATED BALANCE SHEETS
                                             (Unaudited)
<CAPTION>
                                                        September 30,      December 31,
                                                            1998              1997  
                                                        -------------      ------------
                                                                 (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                                   328,193           328,364
    Retained earnings                                        48,470             7,616
                                                         ----------        ----------
        Total common stockholder's equity                   572,333           531,650
  Preferred stock-
    Not subject to mandatory redemption                     210,000           210,000
    Subject to mandatory redemption                               -             1,690
  Long-term debt                                          1,086,227         1,210,190
                                                         ----------        ----------
                                                          1,868,560         1,953,530
                                                         ----------        ----------
CURRENT LIABILITIES:
  Currently payable long-term debt and preferred stock      142,492            69,979
  Accounts payable-
    Associated companies                                     24,676            21,173
    Other                                                    56,389            60,756
  Accrued taxes                                              47,997            34,441
  Accrued interest                                           24,806            26,633
  Other                                                      35,138            22,603
                                                         ----------        ----------
                                                            331,498           235,585
                                                         ----------        ----------
DEFERRED CREDITS:
  Accumulated deferred income taxes                         125,061           104,543
  Accumulated deferred investment tax credits                41,319            43,265
  Pensions and other postretirement benefits                116,584           113,254
  Other                                                     264,652           307,975
                                                         ----------        ----------
                                                            547,616           569,037
                                                         ----------        ----------
COMMITMENTS, GUARANTEES AND
  CONTINGENCIES (Note 2)                                 ----------        ----------
                                                         $2,747,674        $2,758,152
                                                         ==========        ==========

<FN>

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

</TABLE>
                                           - 35 -

<PAGE>
<TABLE>
                                       THE TOLEDO EDISON COMPANY

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (Unaudited)
<CAPTION>
                                                       September 30, 1998       September 30, 1997
                                                      ----------------------  --------------------
                                                        Three        Nine       Three      Nine
                                                        Months       Months     Months     Months
                                                        Ended        Ended      Ended      Ended
                                                      ----------  ----------  ---------  ---------
                                                                       (In thousands)

<S>                                                   <C>         <C>          <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                            $ 32,687    $ 85,822  | $ 27,219    $ 49,175
  Adjustments to reconcile net income to net                                |
    cash from operating activities-                                         |
      Provision for depreciation and amortization       19,472      58,295  |   24,542      74,032
      Nuclear fuel and lease amortization                5,576      16,506  |    9,264      26,898
      Amortization of net regulatory assets              4,286      12,954  |    4,291      12,873
      Deferred income taxes, net                         3,954      24,971  |   (3,336)     (6,462)
      Investment tax credits, net                         (648)     (1,946) |   (1,080)     (3,240)
      Allowance for equity funds used during                                |
       construction                                          -           -  |     (291)       (677)
      Receivables                                        1,473       4,699  |     (203)      1,569
      Accounts payable                                  (3,216)       (864) |    2,774         852
      Accrued taxes                                      7,083      13,556  |    2,503      10,977
      Other                                             19,891     (15,265) |   17,370      20,951
                                                      --------    --------  | --------    --------
        Net cash provided from operating activities     92,136     196,799  |  102,950     201,742
                                                      --------    --------  | --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:                                       |
  New Financing-                                                            |
    Long-term debt                                           -       3,657  |    6,973     151,945
    Short-term borrowings, net                               -           -  |        -      24,500
  Redemptions and Repayments-                                               |
    Preferred stock                                          -       1,665  |        -       1,665
    Long-term debt                                      33,273      74,968  |   49,692      75,952
    Short-term borrowings, net                               -           -  |   60,500           -
  Dividend Payments-                                                        |
    Common stock                                        15,654      36,786  |        -           -
    Preferred stock                                      4,074      12,309  |    4,192      12,589
                                                      --------    --------  | --------    --------
        Net cash provided from (used for)                                   |
         financing activities                          (53,001)   (122,071) | (107,411)     86,239
                                                      --------    --------  | --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:                                       |
  Property additions                                    14,518      29,165  |    8,761      33,880
  Loans to associated companies                              -      38,793  |        -           -
  Loan payments from associated companies               (5,855)          -  |  (27,651)    (38,817)
  Capital trust investments                               (240)     (2,177) |  (17,115)    319,984
  Other                                                 13,923       9,761  |    5,902       6,244
                                                      --------    --------  | --------    --------
        Net cash used for (provided from)                                   |
         investing activities                           22,346      75,542  |  (30,103)    321,291
                                                      --------    --------  | --------    --------
Net  increase (decrease) in cash and cash                                   |
 equivalents                                            16,789        (814) |   25,642     (33,310)
Cash and cash equivalents at beginning of period         4,567      22,170  |   22,502      81,454
                                                      --------    --------  | --------    --------
Cash and cash equivalents at end of period            $ 21,356    $ 21,356  | $ 48,144    $ 48,144
                                                      ========    ========  | ========    ========


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

</TABLE>

                                           - 36 -

<PAGE>

               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS








To The Toledo Edison Company:

We have reviewed the accompanying consolidated balance sheet of 
The Toledo Edison Company (an Ohio corporation and wholly owned 
subsidiary of FirstEnergy Corp.) and subsidiary as of September 
30, 1998, and the related consolidated statements of income and 
cash flows for the three-month and nine-month periods ended 
September 30, 1998 and 1997. 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 financial statements 
referred to above for them to be in conformity with generally 
accepted accounting principles.

We have previously audited, in accordance with generally accepted 
auditing standards, the consolidated balance sheet of The Toledo 
Edison Company and subsidiary as of December 31, 1997 (not 
presented herein), and, in our report dated February 13, 1998, we 
expressed an unqualified opinion on that statement. In our 
opinion, the information set forth in the accompanying 
consolidated balance sheet as of December 31, 1997, is fairly 
stated, in all material respects, in relation to the balance sheet 
from which it has been derived.







                               ARTHUR ANDERSEN LLP

Cleveland, Ohio
November 13, 1998


                             - 37 -

<PAGE>
                       THE TOLEDO EDISON COMPANY

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


Results of Operations

          Financial results reflect the application of purchase 
accounting to the merger of TE's former parent company, 
Centerior, with OE to form FirstEnergy on November 8, 1997. The 
application of this accounting resulted in fair value adjustments 
which were "pushed down" or reflected on the separate financial 
statements of Centerior's direct subsidiaries as of the merger 
date, including TE's financial statements. Accordingly, the post-
merger financial statements for the first nine months and third 
quarter of 1998 and the December 31, 1997 Consolidated Balance 
Sheet reflect a new basis of accounting. Material effects of this 
new basis of accounting are identified below.

          Earnings on common stock increased to $76.1 million for 
the nine-month period ended September 30, 1998, from $36.6 
million in the same period last year. For the third quarter of 
1998, earnings increased to $28.5 million, compared to $23.0 
million in the third quarter of 1997. The increases reflect 
increased operating revenues, benefits provided by the Bruce 
Mansfield Plant lease refinancing and net reductions in the 
provision for depreciation and amortization resulting from the 
fair value adjustment of nuclear plant in connection with the 
merger. The above factors were offset in part by an increase in 
purchased power costs.

          Operating revenues increased $33.6 million during the 
nine-month period ended September 30, 1998 compared to the same 
period of 1997 and increased $12.0 million in the third quarter 
of 1998 from the corresponding period of 1997. Year-to-date 
retail kilowatt-hour sales increased 8.0% from the same period 
last year, with residential, commercial and industrial customers 
all contributing to the increase with increases of  5.3%, 5.1% 
and 10.5%, respectively. Expanded production at the North Star 
BHP Steel (North Star) facility was the primary factor in the 
increase in industrial sales in the first nine months of 1998 
from last year's level. Excluding North Star, industrial sales 
increased 0.2%. Sales to wholesale customers decreased 39.4% 
compared to the first nine months of 1997 due in part to 
unplanned generating unit outages which reduced available energy 
for sale to other utilities. This resulted in a 2.1% decrease in 
total kilowatt-hour sales during the nine-month period compared 
to 1997.

          Retail kilowatt-hour sales in the third quarter of 1998 
increased 5.7% from the third quarter of 1997 with increased 
demand from all customer groups. Residential sales benefited from 
higher air-conditioning loads due to hotter weather, increasing 
12.4% in the third quarter of 1998, compared to the same period 
of 1997. Continued growth in the service sector of the area 
economy during the period contributed to a 2.2% increase in 
commercial sales in the third quarter of 1998 compared to the 
third quarter of 1997. Expanded production at North Star remained 
a major contributor to industrial sales in the period with sales 
up 4.5% in the third quarter of 1998 from the same period last 
year. Excluding sales to North Star, industrial sales decreased 
4.7% in the third quarter of 1998 from the third quarter of 1997. 
A general decline in energy use by primary metal manufacturers 
and the General Motors strike dampened industrial sales in the 
third quarter of 1998. Sales to wholesale customers decreased 
15.3% in the third quarter of 1998 compared to the same period of 
1997. Reduced off-system sales offset, in part, the increase in 
retail sales resulting in a net increase in total sales of 1.8% 
for the third quarter of 1998 compared to the third quarter of 
1997.

          Fuel and purchased power expenses increased in both the 
first nine months of 1998 and the third quarter of 1998 compared 
to the same periods of 1997. The increases resulted from higher 
purchased power costs, which resulted from a combination of 
factors. In late June 1998, the midwestern and southern regions 
of the United States experienced electricity shortages caused 
mainly by record temperatures and humidity and unscheduled 
generating unit outages. During this period, Beaver Valley Unit 2 
was out of service and the Davis-Besse Plant was removed from 
service as a result of damage to transmission facilities caused 

                             - 38 -
<PAGE>

                   THE TOLEDO EDISON COMPANY

            MANAGEMENT'S DISCUSSION AND ANALYSIS OF
       RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

by a tornado. Temperatures continued above last year's levels 
throughout the third quarter of 1998 as well and Beaver Valley 
Unit 2 remained out of service for most of that period. As a 
result, TE purchased significant amounts of power on the spot 
market at unusually high prices, causing the increase in 
purchased power costs.

          Reduced nuclear operating costs and other operating 
costs combined to substantially offset the year-to-date 1998 
increase in fuel and purchased power expense compared to the same 
period last year. On a net basis nuclear operating costs were 
down at the three nuclear plants. Other operating costs were 
lower for the first nine months of 1998 compared to the same 
period last year due to lower costs at the Bay Shore and 
Mansfield plants. Lower rent expense resulting from the 
refinancing of the Mansfield Plant lease and reduced employee 
levels contributed to these reduced costs.

          Lower depreciable asset balances resulting from the 
purchase accounting adjustment reduced the provision for 
depreciation in the first nine months of 1998 compared to the 
same period last year and for the third quarter of 1998 compared 
to the third quarter of 1997. These reductions were partially 
offset by the amortization of goodwill recognized with the 
application of purchase accounting.

          Interest income from investments related to the 
refinancing of the Mansfield Plant lease increased other income 
in the first nine months of 1998 compared to same period of 1997. 
Total interest charges decreased due in part to the amortization 
of net premiums associated with the revaluation of long-term debt 
in connection with the merger.

Capital Resources and Liquidity

          TE has continuing cash requirements for planned capital 
expenditures and debt maturities. During the fourth quarter of 
1998, capital requirements for property additions and capital 
leases are expected to be about $13 million, including $2 million 
for nuclear fuel. TE has additional cash requirements of 
approximately $12.4 million to meet sinking fund requirements for 
maturing long-term debt during the remainder of 1998. These cash 
requirements are expected to be satisfied with internal cash 
and/or short-term credit arrangements.

          As of September 30, 1998, TE had approximately $101.0 
million of cash and temporary investments and no short-term 
indebtedness. Upon completion of the merger, application of 
purchase accounting reduced bondable property such that TE is not 
currently able to issue additional first mortgage bonds, except 
against retired bonds.

Regulatory Matters

          On September 16, 1998, FirstEnergy, together with 
representatives of the three other Ohio investor-owned utilities, 
presented proposed legislation for restructuring the electric 
utility industry in Ohio to a private working group formed by the 
leadership of the Ohio General Assembly. The working group, which 
includes numerous interested parties, will consider the utility 
proposal -- a proposal that represents a balanced approach for 
bringing choice to Ohio's electric consumers -- as well as other 
restructuring proposals. Passage of a restructuring bill appears 
unlikely in 1998.

          On September 24, 1998, the Federal Environmental 
Protection Agency issued a final rule establishing tighter 
nitrogen oxide emission ceilings for Ohio, Pennsylvania and 20 
other Eastern states and the District of Columbia (see 
"Environmental Matters" in Note 2). Controls must be in place by 
May 2003, with required reductions achieved during the five-month 
summer ozone season (May through September). The new rule is 
expected to increase the cost of producing electricity; however, 

                            - 39 -

<PAGE>

                  THE TOLEDO EDISON COMPANY

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

TE believes that it is in a better position than a number of 
other utilities in achieving compliance due to its nuclear 
generation capability.

          In connection with the regulatory plans for its utility 
operating companies to reduce fixed costs and lower rates, 
FirstEnergy continued to take steps to restructure its operations 
for improved efficiency and effectiveness in the changing 
electric utility industry. FirstEnergy announced plans to 
transfer its transmission assets (including TE's assets) into a 
new subsidiary, American Transmission Systems, Inc. (ATS), with 
the transfer expected to be finalized by early 1999. The new 
subsidiary represents a first step toward FirstEnergy's goal of 
establishing or becoming part of a larger independent 
transmission company (TransCo). FirstEnergy believes that a 
TransCo better addresses the Federal Energy Regulatory 
Commission's (FERC) stated transmission objectives of providing 
non-discriminatory service, while providing for streamlined and 
cost-efficient operation. In working toward the goal of forming a 
larger regional transmission entity, FirstEnergy, American 
Electric Power and Virginia Power announced on November 6, 1998, 
that they would prepare a FERC filing during the first quarter of 
1999 for such a regional transmission entity. The entity would be 
designed to meet the goals of reducing transmission costs that 
result when transferring power over several transmission systems, 
ensuring transmission reliability and providing non-
discriminatory access to the transmission grid.

Impact of the Year 2000 Issue

          The Year 2000 issue is the result of computer programs 
being written using two digits rather than four to identify the 
applicable year. Any of TE's programs that have date-sensitive 
software may recognize a date using "00" as the year 1900 rather 
than the year 2000.

          TE has developed a multi-phase program for Year 2000 
compliance that consists of: (i) assessment of the corporate 
systems and operations of TE that could be affected by the Year 
2000 problem; (ii) remediation or replacement of noncompliant 
systems and components; and (iii) testing of systems and 
components following such remediation or replacement. TE has 
focused its Year 2000 review on three areas: centralized system 
applications, noncentralized systems and relationships with third 
parties (including suppliers as well as end-use customers).

          TE currently believes that, with modifications to 
existing software and conversions to new software, the Year 2000 
issue will pose no significant operational problems for its 
computer systems. Most of TE's Year 2000 problems will be 
resolved through system replacement. Of TE's major centralized 
systems, the general ledger system and inventory management and 
procurement accounts payable system will be replaced by the end 
of 1998. TE's payroll system was enhanced to be Year 2000 
compliant in July 1998; all employees will be converted to the 
new system by January 1999. The customer service system is due to 
be replaced in mid-1999.

          TE has categorized its noncentralized systems into 
sixteen separate areas, and has already determined that five of 
such areas pose no material Year 2000 problem. TE has identified 
certain Year 2000 issues in nine of such areas and is in the 
process of remediating them. TE has plans to complete the 
assessment of the final two areas by the end of 1998. TE plans to 
complete the entire Year 2000 project by September 1999. If the 
already identified modifications and conversions are not made or 
are not completed on a timely basis, or if TE identifies material 
additional modifications which are not completed on a timely 
basis, the Year 2000 issue would have a material adverse impact 
on operations.

          TE has initiated formal communications with many of its 
major suppliers to determine the extent to which it is vulnerable 
to those third parties' failure to resolve their own Year 2000 
problems and is still in the assessment phase as to whether and 
to what extent such third parties have a Year 2000 issue. There 

                            - 40 -

<PAGE>

                   THE TOLEDO EDISON COMPANY

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

can be no guarantee that the failure of other companies to 
resolve their own Year 2000 issue will not have a material 
adverse effect on TE's business, financial condition and results 
of operations.

          TE is utilizing both internal and external resources to 
reprogram and/or replace and test TE's software for Year 2000 
modifications. Of the $16 million total project cost, 
approximately $13 million will be capitalized since those costs 
are attributable to the purchase of new software for total system 
replacements (i.e., the Year 2000 solution comprises only a 
portion of the benefits resulting from the system replacements). 
The remaining $3 million will be expensed as incurred. As of 
September 30, 1998, TE has expended a total of $7 million for 
Year 2000 capital projects and had expensed approximately $1 
million for Year 2000 related maintenance activities. TE's total 
Year 2000 project cost, as well as its estimates of time needed 
to complete remedial efforts, are based on currently available 
information and do not include the estimated costs and time 
associated with the impact of third party Year 2000 issues.

          TE believes the most reasonably likely worst case 
scenario from the Year 2000 issue to be disruption in power plant 
monitoring systems, thereby producing inaccurate data and 
potential failures in electronic switching mechanisms at 
transmission junctions. This would prolong localized outages, as 
technicians would have to manually activate switches. Such an 
event could have a material, but presently undeterminable, effect 
on TE's financial results. TE has not yet developed a contingency 
plan to address the effects of any delay in becoming Year 2000 
compliant but currently expects to have a contingency plan by the 
spring of 1999.

          The costs of the project and the dates on which TE 
plans to complete the Year 2000 modifications are based on 
management's best estimates, which were derived from numerous 
assumptions of future events including the continued availability 
of certain resources, and other factors. However, there can be no 
guarantee that this project will be completed as planned and 
actual results could differ materially from the estimates. 
Specific factors that might cause material differences include, 
but are not limited to, the availability and cost of trained 
personnel, the ability to locate and correct all relevant 
computer code, and similar uncertainties.

                             - 41 -


<PAGE>
<TABLE>
                                        PENNSYLVANIA POWER COMPANY

                                           STATEMENTS OF INCOME
                                               (Unaudited)
<CAPTION>
                                                       Three Months Ended      Nine Months Ended
                                                          September 30,           September 30,  
                                                      --------------------   ---------------------
                                                         1998       1997        1998        1997  
                                                      ----------  --------   ----------  ---------
                                                                     (In thousands)
<S>                                                   <C>         <C>        <C>         <C>
OPERATING REVENUES                                    $87,885     $85,239    $246,732    $243,436
                                                      -------     -------    --------    --------
OPERATING EXPENSES AND TAXES:
  Fuel and purchased power                             21,948      17,299      62,835      48,411
  Nuclear operating costs                               6,720       6,407      20,516      19,541
  Other operating costs                                14,952      13,870      40,725      45,122
                                                      -------     -------    --------    --------
      Total operation and maintenance expenses         43,620      37,576     124,076     113,074
  Provision for depreciation                            4,719      15,621      34,037      42,903
  Amortization of net regulatory assets                 8,406       1,845      12,096       5,535
  General taxes                                         5,335       5,913      16,608      17,620
  Income taxes                                          9,375       8,649      20,847      22,032
                                                      -------     -------    --------    --------
      Total operating expenses and taxes               71,455      69,604     207,664     201,164
                                                      -------     -------    --------    --------
OPERATING INCOME                                       16,430      15,635      39,068      42,272

OTHER INCOME                                              569         795       1,942       1,789
                                                      -------     -------    --------    --------
INCOME BEFORE NET INTEREST CHARGES                     16,999      16,430      41,010      44,061
                                                      -------     -------    --------    --------

NET INTEREST CHARGES:
  Interest expense                                      5,234       5,669      15,951      17,066
  Allowance for borrowed funds used during
   construction                                           (52)       (133)       (196)       (269)
                                                      -------     -------    --------     -------
      Net interest charges                              5,182       5,536      15,755      16,797
                                                      -------     -------    --------     -------
INCOME BEFORE EXTRAORDINARY ITEM                       11,817      10,894      25,255      27,264

EXTRAORDINARY ITEM (NET OF INCOME TAXES) (Note 3)           -           -     (30,522)          -
                                                      -------     -------    --------    --------
NET INCOME (LOSS)                                      11,817      10,894      (5,267)     27,264

PREFERRED STOCK DIVIDEND REQUIREMENTS                   1,157       1,157       3,470       3,470
                                                      -------     -------    --------    --------
EARNINGS (LOSS) ON COMMON STOCK                       $10,660     $ 9,737    $ (8,737)   $ 23,794
                                                      =======     =======    ========    ========

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

</TABLE>
                                            - 42 -

<PAGE>
<TABLE>
                                     PENNSYLVANIA POWER COMPANY

                                          BALANCE SHEETS
                                           (Unaudited)
<CAPTION>
                                                        September 30,     December 31,
                                                            1998             1997  
                                                        -------------     ------------
                                                                (In thousands)
                ASSETS
                ------
<S>                                                     <C>                <C>
UTILITY PLANT:
  In service, at original cost                          $689,654           $1,237,562
  Less--Accumulated provision for depreciation           285,242              508,981
                                                        --------           ----------
                                                         404,412              728,581
                                                        --------           ----------
  Construction work in progress-
    Electric plant                                        10,977                7,427
    Nuclear fuel                                             118                6,788
                                                        --------           ----------
                                                          11,095               14,215
                                                        --------           ----------
                                                         415,507              742,796
                                                        --------           ----------
OTHER PROPERTY AND INVESTMENTS                            32,259               26,157
                                                        --------           ----------
CURRENT ASSETS:
  Cash and cash equivalents                                4,094                  660
  Notes receivable from parent company                    34,400               17,500
  Receivables-
    Customers (less accumulated provisions
     of $3,596,000 and $3,609,000,
     respectively, for uncollectible accounts)            34,949               33,934
    Associated companies                                  15,674               15,764
    Other                                                  8,509               11,261
  Materials and supplies, at average cost                 15,985               14,973
  Prepayments                                              5,511                1,707
                                                        --------           ----------
                                                         119,122               95,799
                                                        --------           ----------
DEFERRED CHARGES:
  Regulatory assets                                      381,758              162,966
  Other                                                    6,155                6,739
                                                        --------           ----------
                                                         387,913              169,705
                                                        --------           ----------
                                                        $954,801           $1,034,457
                                                        ========           ==========

</TABLE>
                                           - 43 -

<PAGE>
<TABLE>
                                        PENNSYLVANIA POWER COMPANY

                                              BALANCE SHEETS
                                               (Unaudited)
<CAPTION>
                                                        September 30,      December 31,
                                                            1998              1997  
                                                        -------------      ------------
                                                                 (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                                   (400)               (400)
    Retained earnings                                     78,900             103,677
                                                        --------          ----------
        Total common stockholder's equity                267,200             291,977
  Preferred stock-
    Not subject to mandatory redemption                   50,905              50,905
    Subject to mandatory redemption                       15,000              15,000
  Long-term debt-
    Associated companies                                   7,785               9,231
    Other                                                281,636             280,074
                                                        --------          ----------
                                                         622,526             647,187
                                                        --------          ----------
CURRENT LIABILITIES:
  Currently payable long-term debt-
    Associated companies                                   5,960               6,958
    Other                                                    512               1,443
  Accounts payable-
    Associated companies                                   7,768               6,788
    Other                                                 14,284              22,751
  Accrued taxes                                           12,155              12,332
  Accrued interest                                         3,982               6,588
  Other                                                   16,450              14,746
                                                        --------          ----------
                                                          61,111              71,606
                                                        --------          ----------
DEFERRED CREDITS:
  Accumulated deferred income taxes                      208,209             239,952
  Accumulated deferred investment tax credits              8,359              26,052
  Other                                                   54,596              49,660
                                                        --------          ----------
                                                         271,164             315,664
                                                        --------          ----------
COMMITMENTS, GUARANTEES AND
  CONTINGENCIES (Note 2)                                --------          ----------
                                                        $954,801          $1,034,457
                                                        ========          ==========

<FN>

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

</TABLE>
                                            - 44 -

<PAGE>
<TABLE>
                                     PENNSYLVANIA POWER COMPANY

                                      STATEMENTS OF CASH FLOWS
                                             (Unaudited)
<CAPTION>
                                                       Three Months Ended      Nine Months Ended
                                                          September 30,           September 30,  
                                                      ---------------------   ---------------------
                                                         1998       1997        1998        1997  
                                                      ----------  ---------   ---------  ----------
                                                                     (In thousands)
<S>                                                   <C>         <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                     $ 11,817    $10,894    $ (5,267)   $27,264
Adjustments to reconcile net income to net
  cash from operating activities-
    Provision for depreciation                           4,719     15,621      34,037     42,903
    Nuclear fuel and lease amortization                  1,460      1,658       3,252      6,467
    Other amortization, net                              8,511      1,553      11,664      4,631
    Deferred income taxes, net                             931     (1,857)    (26,058)    (8,464)
    Investment tax credits, net                           (573)      (629)     (1,717)    (1,748)
    Extraordinary item                                       -          -      51,730          -
    Receivables                                            881       (122)      1,827     11,365
    Materials and supplies                                (839)       328      (1,012)      (600)
    Accounts payable                                   (12,493)    (5,025)     (7,487)    (9,177)
    Other                                               (1,638)     2,013      (7,505)    (3,051)
                                                      --------    -------    --------    -------
        Net cash provided from operating activities     12,776     24,434      53,464     69,590
                                                      --------    -------    --------    -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  New Financing-
    Long-term debt                                           -     10,007       1,621     10,007
  Redemptions and Repayments-
    Long-term debt                                       1,443     12,103       3,994     26,415
  Dividend Payments-
    Common stock                                         5,347      5,347      16,040     16,040
    Preferred stock                                      1,232      1,232       3,470      3,470
                                                      --------    -------    --------    -------
        Net cash used for financing activities           8,022      8,675      21,883     35,918
                                                      --------    -------    --------    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Property additions                                     4,541      3,529      11,560     10,059
  Loan to parent                                         4,400     11,500      16,900     22,000
  Other                                                 (2,194)     1,211        (313)     2,988
                                                      --------    -------    --------    -------
        Net cash used for investing activities           6,747     16,240      28,147     35,047
                                                      --------    -------    --------    -------
Net increase (decrease) in cash and cash equivalents    (1,993)      (481)      3,434     (1,375)
Cash and cash equivalents at beginning of period         6,087        493         660      1,387
                                                      --------    -------    --------    -------
Cash and cash equivalents at end of period            $  4,094    $    12    $  4,094    $    12
                                                      ========    =======    ========    =======

<FN>

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

</TABLE
                                            - 45 -

<PAGE>


               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS








To Pennsylvania Power Company:

We have reviewed the accompanying balance sheet of Pennsylvania 
Power Company (a Pennsylvania corporation and a wholly owned 
subsidiary of Ohio Edison Company) as of September 30, 1998, and 
the related statements of income and cash flows for the three-
month and nine-month periods ended September 30, 1998 and 1997. 
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 financial statements 
referred to above for them to be in conformity with generally 
accepted accounting principles.

We have previously audited, in accordance with generally accepted 
auditing standards, the balance sheet of Pennsylvania Power 
Company as of December 31, 1997 (not presented herein), and, in 
our report dated February 13, 1998, we expressed an unqualified 
opinion on that statement. In our opinion, the information set 
forth in the accompanying balance sheet as of December 31, 1997, 
is fairly stated, in all material respects, in relation to the 
balance sheet from which it has been derived.







                              ARTHUR ANDERSEN LLP

Cleveland, Ohio
November 13, 1998


                             - 46 -

<PAGE>

                  PENNSYLVANIA POWER COMPANY

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


Results of Operations

          Earnings were adversely affected in the nine-month 
period ended September 30, 1998 compared to the same period of 
1997, by an extraordinary item resulting from the deregulation of 
Penn's generation business and the corresponding discontinuation 
of SFAS 71 with respect to that business. This action was taken 
following the June 18, 1998, authorization by the PPUC of a 
restructuring plan for Penn (see below and Note 3). Excluding the 
extraordinary item, earnings on common stock were $21.8 million 
in the first nine months of 1998 compared to $23.8 million in the 
same period last year; for the third quarter of 1998, earnings on 
common stock were $10.7 million compared to $9.7 million in the 
third quarter of 1997.

          Retail kilowatt-hour sales decreased 1.7% in the first 
nine months of 1998 and increased 0.4% in the third quarter of 
1998 from the same periods in 1997. Year-to-date results reflect 
a decline in industrial sales which was more than offset in the 
third quarter by growth in the residential and commercial 
sectors. Closure of an electric arc facility at Caparo Steel 
Company in August 1997, caused the reduced industrial sales. 
Excluding sales to Caparo, sales to industrial customers in the 
first nine months of 1998 increased 2.7% and sales in the third 
quarter of 1998 were up 0.9% from the corresponding periods last 
year. A general decline in electricity demand by primary metal 
manufacturers also dampened industrial sales in the third quarter 
of 1998. Residential sales increased 5.1% during the first nine 
months of 1998 compared to the first nine months of 1997 and 8.5% 
in the third quarter of 1998 from the same period last year. 
Residential sales benefited from higher air-conditioning loads 
due to hotter weather. Commercial sales also increased in both 
the nine month and third quarter periods of 1998 from the 
corresponding periods last year, by 7.8% and 10.7%, respectively, 
reflecting continued growth in the service sector economy. Sales 
to wholesale customers increased 9.9% in the first nine months of 
1998 compared to the first nine months of 1997 and were up 34.1% 
in the third quarter of 1998 compared to the same period last 
year due to increased generation availability.

          Fuel and purchased power expenses increased in both the 
first nine months of 1998 and in the third quarter of 1998 
compared to the same periods of 1997. Most of the increase in 
purchased power costs occurred in the second quarter of 1998, 
resulting from a combination of factors. In late June 1998, the 
midwestern and southern regions of the United States experienced 
electricity shortages caused mainly by record temperatures and 
humidity and unscheduled generating unit outages. Due in part to 
an unscheduled outage at Beaver Valley Unit 1, Penn's production 
capability was reduced to the point that Penn purchased 
significant amounts of power during this period. Temperatures 
continued above last year's levels in the third quarter of 1998 
as well and Beaver Valley Unit 1 remained out of service for 
approximately half of that period. As a result, Penn purchased 
significant amounts of power at unusually high spot market 
prices, causing the increase in purchased power costs.

          Other operating costs decreased in the first nine 
months of 1998 compared to the same period of 1997 due to a $3 
million charge for uncollectible accounts in the second quarter 
of 1997. The provision for depreciation and amortization 
decreased $10.9 million in the third quarter of 1998 from the 
same period of 1997 primarily due to the effects of Penn's rate 
restructuring plan authorized by the PPUC in the second quarter. 
The rate restructuring plan resulted in a reduction in nuclear 
generating unit investment due to the discontinued application of 
SFAS 71 with a corresponding reduction in reported depreciation 
expense. Penn's rate restructuring plan also resulted in a 
reclassification of accelerated Perry 1 depreciation in the third 
quarter of 1998 to amortization of net regulatory assets, further 
reducing depreciation. The reclassification of depreciation 
resulted in an increase in the amortization of net regulatory 
assets in the third quarter of 1998 compared to the third quarter 
of 1997.

                            - 47 -

<PAGE>

                   PENNSYLVANIA POWER COMPANY

            MANAGEMENT'S DISCUSSION AND ANALYSIS OF
       RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

Capital Resources and Liquidity

          Penn has continuing cash requirements for planned 
capital expenditures. During the fourth quarter of 1998, capital 
requirements for property additions and capital leases are 
expected to be about $8 million, including $2 million for nuclear 
fuel. These requirements are expected to be satisfied with 
internal cash.

          As of September 30, 1998, Penn had approximately $38.5 
million of cash and temporary investments and no short-term 
indebtedness. Penn had $2 million of unused bank facilities as of 
September 30, 1998, which may be borrowed for up to several days 
at the banks' discretion.

          In connection with the regulatory plans for its utility 
operating companies to reduce fixed costs and lower rates, 
FirstEnergy continued to take steps to restructure its operations 
for improved efficiency and effectiveness in the changing 
electric utility industry. FirstEnergy announced plans to 
transfer its transmission assets (including Penn's assets) into a 
new subsidiary, American Transmission Systems, Inc. (ATS), with 
the transfer expected to be finalized by early 1999. The new 
subsidiary represents a first step toward FirstEnergy's goal of 
establishing or becoming part of a larger independent 
transmission company (TransCo). FirstEnergy believes that a 
TransCo better addresses the Federal Energy Regulatory 
Commission's (FERC) stated transmission objectives of providing 
non-discriminatory service, while providing for streamlined and 
cost-efficient operation. In working toward the goal of forming a 
larger regional transmission entity, FirstEnergy, American 
Electric Power and Virginia Power announced on November 6, 1998, 
that they would prepare a FERC filing during the first quarter of 
1999 for such a regional transmission entity. The entity would be 
designed to meet the goals of reducing transmission costs that 
result when transferring power over several transmission systems, 
ensuring transmission reliability and providing non-
discriminatory access to the transmission grid.

          FirstEnergy signed an agreement in principle with 
Duquesne Light Company that would result in the transfer of 1,436 
megawatts owned by Duquesne at five generating plants in exchange 
for 1,298 megawatts at three plants owned by FirstEnergy's 
utility operating companies (see "Pending Exchange of Assets" in 
Note 2) including Penn. A final agreement on the exchange of 
assets, which will be structured as a tax-free transaction to the 
extent possible, is expected to be reached by the end of the 
year. The transaction benefits the Companies by providing them 
with exclusive ownership and operating control of all the 
generating assets that are now jointly owned and operated under 
the Central Area Power Coordination Group agreement. Certain 
details of the arrangement such as the specific allocation of 
generation assets among the Companies remains to be determined.

          On September 24, 1998, the Federal Environmental 
Protection Agency issued a final rule establishing tighter 
nitrogen oxide emission ceilings for Pennsylvania, Ohio and 20 
other Eastern states and the District of Columbia (see 
"Environmental Matters" in Note 2). Controls must be in place by 
May 2003, with required reductions achieved during the five-month 
summer ozone season (May through September). The new rule is 
expected to increase the cost of producing electricity; however, 
Penn believes that it is in a better position than a number of 
other utilities in achieving compliance due to its nuclear 
generation capability.

Impact of the Year 2000 Issue

          The Year 2000 issue is the result of computer programs 
being written using two digits rather than four to identify the 
applicable year. Any of Penn's programs that have date-sensitive 
software may recognize a date using "00" as the year 1900 rather 
than the year 2000.

                             - 48 -

<PAGE>

                   PENNSYLVANIA POWER COMPANY

            MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Cont.)

          Penn has developed a multi-phase program for Year 2000 
compliance that consists of: (i) assessment of the corporate 
systems and operations of Penn that could be affected by the Year 
2000 problem; (ii) remediation or replacement of noncompliant 
systems and components; and (iii) testing of systems and 
components following such remediation or replacement. Penn has 
focused its Year 2000 review on three areas: centralized system 
applications, noncentralized systems and relationships with third 
parties (including suppliers as well as end-use customers).

          Penn currently believes that, with modifications to 
existing software and conversions to new software, the Year 2000 
issue will pose no significant operational problems for its 
computer systems. Most of Penn's Year 2000 problems will be 
resolved through system replacement. Of Penn's major centralized 
systems, the general ledger system and inventory management and 
procurement accounts payable system will be replaced by the end 
of 1998. Penn's payroll system was enhanced to be Year 2000 
compliant in July 1998. The customer service system is due to be 
replaced in mid-1999.

          Penn has categorized its noncentralized systems into 
sixteen separate areas, and has already determined that five of 
such areas pose no material Year 2000 problem. Penn has 
identified certain Year 2000 issues in nine areas and is in the 
process of remediating them. Penn has plans to complete the 
assessment of the final two areas by the end of 1998. Penn plans 
to complete the entire Year 2000 project by September 1999. If 
the already identified modifications and conversions are not made 
or are not completed on a timely basis, or if Penn identifies 
material additional modifications which are not completed on a 
timely basis, the Year 2000 issue would have a material adverse 
impact on operations.

          Penn has initiated formal communications with many of 
its major suppliers to determine the extent to which it is 
vulnerable to those third parties' failure to resolve their own 
Year 2000 problems and is still in the assessment phase as to 
whether and to what extent such third parties have a Year 2000 
issue. There can be no guarantee that the failure of other 
companies to resolve their own Year 2000 issue will not have a 
material adverse effect on Penn's business, financial condition 
and results of operations.

          Penn is utilizing both internal and external resources 
to reprogram and/or replace and test Penn's software for Year 
2000 modifications. Of the $7 million total project cost, 
approximately $6 million will be capitalized since those costs 
are attributable to the purchase of new software for total system 
replacements (i.e., the Year 2000 solution comprises only a 
portion of the benefits resulting from the system replacements). 
The remaining $1 million will be expensed as incurred. As of 
September 30, 1998, Penn had expended a total of $3 million for 
Year 2000 capital projects and had expensed approximately 
$400,000 for Year 2000 related maintenance activities. Penn's 
total Year 2000 project cost, as well as its estimates of the 
time needed to complete remedial efforts, are based on currently 
available information and do not include the estimated costs and 
time associated with the impact of third party Year 2000 issues.

          Penn believes the most reasonably likely worst case 
scenario from the Year 2000 issue to be disruption in power plant 
monitoring systems, thereby producing inaccurate data and 
potential failures in electronic switching mechanisms at 
transmission junctions. This would prolong localized outages, as 
technicians would have to manually activate switches. Such an 
event could have a material, but presently undeterminable, effect 
on Penn's financial results. Penn has not yet developed a 
contingency plan to address the effects of any delay in becoming 
Year 2000 compliant but currently expects to have a contingency 
plan by the spring of 1999.

          The costs of the project and the dates on which Penn 
plans to complete the Year 2000 modifications are based on 
management's best estimates, which were derived from numerous 
assumptions of future events including the continued availability 
of certain resources, and other factors. However, there can be no 
guarantee that this project will be completed as planned and 
actual results could differ materially from the estimates. 
Specific factors that might cause material differences include, 
but are not limited to, the availability and cost of trained 
personnel, the ability to locate and correct all relevant 
computer code, and similar uncertainties.

                            - 49 -

<PAGE>

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

Item 5.  Other Information
         -----------------

         FirstEnergy's Code of Regulations requires a shareholder 
         to give appropriate notice to the Company before any 
         business requested to be brought before an annual meeting 
         of the Company's shareholders by that shareholder can be 
         considered at the meeting. Appropriate notice in this 
         case is notice to the Company's Corporate Secretary 
         received at least 60 days prior to the meeting. Business 
         that a shareholder requests be brought before the 1999 
         Annual Meeting as to which appropriate notice is given to 
         the Company on or before February 3, 1999, will be 
         referred to in the Company's proxy materials for that 
         meeting, but such business as to which the Company 
         receives notice after that date will not. In either case,
         the rules contained in Regulation 14a-4(c) under the 
         Securities Exchange Act of 1934 relating to the 
         conferring of discretionary voting authority in a proxy 
         will apply.


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

         (a)  Exhibits

         Exhibit
         Number 
         -------

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

            15  Letter from independent public accountants.


         TE
         --

                 None

         Pursuant to paragraph (b)(4)(iii)(A) of Item 601 of 
         Regulation S-K, FirstEnergy, or, respectively, any of 
         the Companies, has not 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 the total assets of 
         FirstEnergy and its subsidiaries on a consolidated 
         basis, or respectively, any of the Companies, but hereby 
         agrees to furnish to the Commission on request any such 
         documents.

         (b) Reports on Form 8-K

              FirstEnergy, OE, CEI, TE, Penn - Two combined 
              ------------------------------
              reports on Form 8-K were filed since June 30, 1998. 
              A report dated July 6, 1998 reported events 
              affecting second quarter 1998 results of operations 
              for FirstEnergy and its four operating subsidiaries 
              including power supply transactions, power marketing 
              and trading transactions, and Penn's rate 
              restructuring plan. A report dated October 15, 1998 
              reported that FirstEnergy will transfer its 
              transmission assets into a new subsidiary and has 
              signed an agreement in principle with Duquesne 
              Light Company (Duquesne) that would result in an 
              exchange of certain generating assets between 
              FirstEnergy's operating subsidiaries and Duquesne.

                             - 50 -


<PAGE>





                             SIGNATURE



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



November 13, 1998






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

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

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

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


                              /s/  Harvey L. Wagner  
                          ---------------------------------
                                   Harvey L. Wagner
                                     Controller
                             Principal Accounting Officer


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


                              /s/  Harvey L. Wagner  
                          ---------------------------------
                                   Harvey L. Wagner
                                     Comptroller
                             Principal Accounting Officer


                             - 51 -








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