PENNSYLVANIA POWER COMPANY

                  2000 ANNUAL REPORT TO STOCKHOLDERS


          Pennsylvania Power Company, an electric utility operating
company of FirstEnergy Corp. and a wholly owned subsidiary of Ohio Edison
Company, provides electric service to approximately 138,000 customers in
western Pennsylvania. The Company furnishes electric service in 139
communities, as well as rural areas, and also sells electric energy at
wholesale to three municipalities.







Contents                                                         Page
--------                                                         ----

Selected Financial Data                                            1
Management's Discussion and Analysis                              2-5
Statements of Income                                               6
Balance Sheets                                                     7
Statements of Capitalization                                       8
Statements of Common Stockholder's Equity                          9
Statements of Preferred Stock                                      9
Statements of Cash Flows                                          10
Statements of Taxes                                               11
Notes to Financial Statements                                   12-19
Report of Independent Public Accountants                          20

<TABLE>
                                             PENNSYLVANIA POWER COMPANY

                                               SELECTED FINANCIAL DATA
<CAPTION>
                                              2000          1999          1998          1997            1996
                                            --------      --------      --------      --------        --------
                                                                 (Dollars in thousands)
<S>                                         <C>          <C>            <C>          <C>            <C>
Operating Revenues                          $383,112     $  329,234     $323,756     $  323,381     $  322,625
                                            ========     ==========     ========     ==========     ==========

Operating Income                            $ 39,979     $   32,063     $ 58,041     $   50,736     $   62,329
                                            ========     ==========     ========     ==========     ==========

Income Before Extraordinary Item            $ 22,847     $   12,648     $ 39,748     $   31,472     $   40,587
                                            ========     ==========     ========     ==========     ==========

Net Income                                  $ 22,847     $   12,648     $  9,226     $   31,472     $   40,587
                                            ========     ==========     ========     ==========     ==========

Earnings on Common Stock                    $ 19,143     $    8,278     $  4,600     $   26,846     $   35,961
                                            ========     ==========     ========     ==========     ==========

Total Assets                                $988,909     $1,015,616     $977,772     $1,034,457     $1,074,578
                                            ========     ==========     ========     ==========     ==========

CAPITALIZATION:
Common Stockholder's Equity                 $213,851     $  199,608     $275,281     $  291,977     $  286,504
Preferred Stock-
  Not Subject to Mandatory Redemption         39,105         39,105       50,905         50,905         50,905
  Subject to Mandatory Redemption             15,000         15,000       15,000         15,000         15,000
Long-Term Debt                               270,368        274,821      287,689        289,305        310,996
                                            --------     ----------     --------     ----------     ----------
Total Capitalization                        $538,324     $  528,534     $628,875     $  647,187     $  663,405
                                            ========     ==========     ========     ==========     ==========

CAPITALIZATION RATIOS:
Common Stockholder's Equity                     39.7%          37.8%        43.8%          45.1%          43.2%
Preferred Stock-
  Not Subject to Mandatory Redemption            7.3            7.4          8.1            7.9            7.7
  Subject to Mandatory Redemption                2.8            2.8          2.4            2.3            2.2
Long-Term Debt                                  50.2           52.0         45.7           44.7           46.9
                                               -----          -----        -----          -----          -----
Total Capitalization                           100.0%         100.0%       100.0%         100.0%         100.0%
                                               =====          =====        =====          =====          =====

TRANSMISSION AND DISTRIBUTION
KILOWATT-HOUR DELIVERIES (Millions):
Residential                                    1,387          1,325        1,278          1,238          1,254
Commercial                                     1,198          1,105        1,069          1,013            996
Industrial                                     1,665          1,495        1,439          1,659          1,693
Other                                              6              6            6              6              6
                                               -----          -----        -----          -----          -----
Total Retail                                   4,256          3,931        3,792          3,916          3,949
Total Wholesale                                4,091          1,118          964            901          1,106
                                               -----          -----        -----          -----          -----
Total                                          8,347          5,049        4,756          4,817          5,055
                                               =====          =====        =====          =====          =====

CUSTOMERS SERVED:
Residential                                  121,066        117,440      124,304        129,316        127,936
Commercial                                    16,634         16,307       16,924         16,738         16,531
Industrial                                       177            175          206            241            225
Other                                             87             87           86             97             99
                                             -------        -------      -------        -------        -------
Total                                        137,964        134,009      141,520        146,392        144,791
                                             =======        =======      =======        =======        =======

NUMBER OF EMPLOYEES (a)                          275            895          888            997          1,015
                                                 ===            ===          ===            ===          =====

<FN>

(a)  Reduction in 2000 reflects transfer of responsibility for generation
     operations to FirstEnergy Corp.'s competitive services unit.

</TABLE>

                    PENNSYLVANIA POWER COMPANY

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


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

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

          Earnings on common stock for 2000 increased to $19.1 million
from $8.3 million in 1999. Results for 2000 were favorably affected by
higher operating revenues which were partially offset by increased nuclear
operating expenses and taxes. In 1999, earnings on common stock increased
to $8.3 million from $4.6 million in 1998 primarily due to the absence of
an extraordinary charge recognized in 1998, which was substantially offset
by higher operating expenses in 1999.

          Operating revenues increased by $53.9 million in 2000 following
a $5.5 million increase in 1999. The sources of increases in operating
revenues during 2000 and 1999 are summarized in the following table:


Sources of Revenue Changes               2000          1999
------------------------------------------------------------
   Increase (Decrease)                     (In millions)

Generation sales revenue:
  Change in regulated sales             $15.4         $(37.7)
  Change in unregulated sales (PPE)     (13.5)           6.9
-------------------------------------------------------------
Total change in generation sales          1.9          (30.8)
Non-generation sales revenue:
  Change in average unit prices          (1.1)          24.6
  Increase in distribution sales volume  15.0            5.0
-------------------------------------------------------------
  Total change in retail sales           15.8           (1.2)
Increase in wholesale sales              42.9            5.6
All other changes                        (4.8)           1.1
-------------------------------------------------------------
Net Increase in Operating Revenues      $53.9         $  5.5
=============================================================

Electric Sales

          Service area growth combined with the return of customers
previously served by alternative generation suppliers increased our retail
sales revenues in 2000. Sales to all retail customer groups were
substantially higher in 2000, compared to the preceding year reflecting a
stronger economy in our service area. The transfer of ownership in Penn
Power Energy, Inc. (PPE) to FirstEnergy Services Corp. (FE Services), an
affiliated company, in December 1999, offset a portion of the increased
operating revenues in 2000. Substantial growth in wholesale kilowatt-hour
sales, primarily to affiliated utilities, contributed significantly to the
higher operating revenues in 2000. These sales were possible due to
additional available internal generation resulting from increased nuclear
capacity received in the December 1999 swap of generating assets with
Duquesne Light Company (Duquesne).

          In 1999, operating revenues benefited primarily from higher
kilowatt-hour sales to wholesale customers, compared to the preceding
year. As a result of additional available generation, kilowatt-hour sales
to the wholesale market were significantly higher. Sales to the retail
market were adversely impacted as some customers selected alternative
energy suppliers when customer choice became available in 1999. We
continued to provide the transmission and distribution of power through
our system to those customers. Changes in electric generation sales and
kilowatt-hour deliveries in 2000 and 1999, are summarized in the following
table:

Changes in KWH Sales                 2000          1999
----------------------------------------------------------
  Increase (Decrease)

Electric Generation Sales:
Retail                               15.1%        (6.8)%
Wholesale                           266.0%        16.0%
---------------------------------------------------------
Total Electric Generation Sales      78.5%        (2.0)%
---------------------------------------------------------
Kilowatt-hour Deliveries:
Residential                           4.7%         3.7%
Commercial                            8.3%         3.4%
Industrial                           11.3%         3.9%
---------------------------------------------------------
Total Kilowatt-hour Deliveries        8.2%         3.7%
---------------------------------------------------------

Operating Expenses and Taxes

          Total operating expenses and taxes increased $46.0 million in
2000 and $31.5 million in 1999. The increase in 2000 resulted primarily
from higher nuclear operating costs. Fuel and purchased power costs, other
operating costs, depreciation and amortization and general taxes were all
lower in 2000, compared to the prior year. In 1999, operating expenses and
taxes increased from the preceding year as a result of higher expense
levels in all major expense categories except income taxes.

          Fuel and purchased power costs decreased $19.0 million in 2000,
compared to 1999, primarily due to an $18.6 million reduction in purchased
power costs and a slight reduction in fuel expense. The decrease in
purchased power costs in 2000 resulted from a substantial increase in
available internal generation, which reduced the need for external sources
of power, as well as the transfer of ownership in PPE to FE Services.
Although internal generation increased by 76% compared to 1999, fuel
expense was slightly lower. One factor contributing to the improvement was
the absence of a nonrecurring charge of $6.8 million from the Duquesne
asset swap in 1999. However, fuel expenses in 2000 also benefited from the
following factors:

o  A higher proportion of nuclear generation (which has lower unit fuel
   costs than fossil fuel) due to increased nuclear ownership from the
   exchange of generating assets with Duquesne in December 1999;

o  The expiration of an above-market coal contract at the end of 1999;
   and

o  Continued improvement of coal-blending strategies, which resulted in
   the use of additional lower-cost coal and enhanced the efficiency and
   cost-competitiveness of our fossil generation.

          In 1999, fuel and purchased power costs increased $10.3 million
from the preceding year due primarily to the one-time costs resulting from
the Duquesne asset swap described above.

          Nuclear operating costs increased $75.8 million in 2000 from the
prior year. The increase was due to additional costs associated with
refueling outages at both Beaver Valley Plant units and increased
ownership of the Beaver Valley Plant for the entire year following the
1999 asset exchange with Duquesne, compared to approximately one month of
increased ownership in the prior year. In 1999, nuclear operating costs
increased $13.9 million as a result of higher refueling outage-related
costs at the Perry Plant and Beaver Valley Unit 2, as well as the one
month of increased ownership in the Beaver Valley Plant. Other operating
costs decreased $5.7 million in 2000 primarily due to increased gains
realized from the sale of emission allowances in 2000. In 1999, other
operating costs increased $12.7 million from the prior year principally
due to higher customer and sales expenses including expenditures for
energy marketing programs, information system requirements and an increase
in employee benefit expense, as well as higher distribution costs from
storm repair and overhead line maintenance. The $6.2 million reduction in
depreciation and amortization in 2000 from 1999 primarily reflects lower
accrued decommissioning costs. Depreciation and amortization increased by
$2.9 million in 1999, compared to the prior year, due to the amortization
of regulatory assets from our rate restructuring plan which exceeded the
related reduction in depreciation from our reduced nuclear investment.
General taxes decreased $6 million in 2000 from 1999 primarily due to
favorable property tax law changes and the phase-out of Pennsylvania's
Capital Stock and Franchise Tax.

Effects of SFAS 71 Discontinuation
----------------------------------

          On June 18, 1998, the Pennsylvania Public Utility Commission
authorized our rate restructuring plan that resulted in the
discontinuation of Statement of Financial Accounting Standards No. (SFAS)
71, "Accounting for the Effects of Certain Types of Regulation," to our
generation business. Under the plan, our rates were restructured to
establish separate charges for transmission and distribution services;
generation (which is subject to competition); and stranded cost recovery.
A total of $215.4 million of impaired nuclear plant investments were
recognized as regulatory assets to be recovered through the stranded cost
recovery charge. The portion of generating plant investment not recovered
through future customer rates resulted in a $30.5 million extraordinary
after-tax write-down in 1998.

          We continue to bill and collect cost-based rates for
transmission and distribution services, which remain subject to cost-based
regulation; accordingly, it is appropriate that we continue the
application of SFAS 71 to those operations.

Financial Condition, Capital Resources and Liquidity
----------------------------------------------------

          On September 1, 2000, FirstEnergy Corp.'s electric utility
operating companies transferred $1.2 billion of their transmission assets
to American Transmission Systems, Inc. (ATSI), an affiliated company. ATSI
represents a first step toward the goal of establishing a larger
independent, regional transmission organization. As part of the transfer,
we sold to ATSI $125.6 million of our transmission assets, net of $59.0
million of accumulated depreciation and $2.5 million of investment tax
credits for $30.1 million in cash and $34.0 million in long-term notes.

          We had about $44.7 million of cash and temporary investments and
no short-term indebtedness as of December 31, 2000. We also had a $2
million bank facility that provides for borrowings on a short-term basis
at the bank's discretion. At the end of 2000, we had the capability to
issue $225 million of additional first mortgage bonds on the basis of
property additions and retired bonds. Based on our earnings in 2000 under
the earnings coverage test contained in our charter, we could issue $55
million of preferred stock (assuming no additional debt was issued).

          Our cash requirements in 2001 for operating expenses,
construction expenditures and scheduled debt maturities are expected to be
met without issuing new securities. We have cash requirements of
approximately $82 million for the 2001-2005 period to meet scheduled
maturities of long-term debt and preferred stock. Of that amount,
approximately $1 million relates to 2001.

          Our capital spending for the period 2001-2005 is expected to be
about $153 million (excluding nuclear fuel), of which approximately $28
million applies to 2001. Investments for additional nuclear fuel during
the 2001-2005 period are estimated to be approximately $81 million, of
which about $22 million relates to 2001. During the same periods, our
nuclear fuel investments are expected to be reduced by approximately $91
million and $18 million, respectively, as the nuclear fuel is consumed.

Interest Rate Risk
------------------

          Our exposure to fluctuations in market interest rates is
mitigated since a significant portion of our debt has fixed interest
rates, as noted in the table below. We are subject to the inherent
interest rate risks related to refinancing maturing debt by issuing new
debt securities. Changes in the market value of our nuclear
decommissioning trust funds are recognized by making a corresponding
change to the decommissioning liability, as described in Note 1.

          The table below presents principal amounts and related weighted
average interest rates by year of maturity for our investment portfolio,
debt obligations and preferred stock with mandatory redemption provisions.


<TABLE>
<CAPTION>
Comparison of Carrying Value to Fair Value
-----------------------------------------------------------------------------------------------------------------------
                                                                                         There-                   Fair
                                   2001       2002       2003       2004       2005       after       Total       Value
-----------------------------------------------------------------------------------------------------------------------
                                                                (Dollars in millions)
<S>                                <C>         <C>       <C>        <C>        <C>        <C>         <C>          <C>
Investments other than Cash and
Cash Equivalents:
Fixed Income                                                         $1         $1        $111        $113         $113
  Average interest rate                                             7.8%       7.8%        5.9%        6.0%
----------------------------------------------------------------------------------------------------------------------
Liabilities
----------------------------------------------------------------------------------------------------------------------
Long-term Debt:
Fixed rate                         $1          $1        $41        $35         $1        $158        $237         $247
  Average interest rate           9.7%        9.7%       7.6%       6.6%       9.7%        7.1%        7.1%
Variable rate                                                                             $ 16        $ 16         $ 16
  Average interest rate                                                                    5.3%        5.3%
----------------------------------------------------------------------------------------------------------------------
Preferred Stock                                $1        $ 1        $ 1         $1        $ 11        $ 15         $ 15
  Average dividend rate                       7.6%       7.6%       7.6%       7.6%        7.6%        7.6%
----------------------------------------------------------------------------------------------------------------------


</TABLE>



Outlook
-------

          Since FirstEnergy's regionally-focused retail sales strategy
envisions the continued operation of both regulated and competitive
operations, FirstEnergy manages its businesses through a competitive
services unit, a utility services unit and a corporate support services
unit - we are included in the utility services unit. FE Services provides
competitive retail energy services while we continue to provide regulated
distribution services. In February 2001, the Pennsylvania Public Utility
Commission approved our lease agreement with FirstEnergy Generation Corp.
(FE Generation), an associated company, to lease and operate our fossil
plants. Together with FirstEnergy's Ohio utilities, we expect that the
transfer of our fossil generating assets to FE Generation will be
completed by the end of 2005.

          We are in compliance with current sulfur dioxide and nitrogen
oxides (NOx) reduction requirements under the Clean Air Act Amendments of
1990. In 1998 the EPA finalized regulations requiring additional NOx
reductions in the future from our Ohio and Pennsylvania facilities (see
Note 5). We continue to evaluate our compliance plans and other compliance
options.

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

          In 1999, we received notification of pending legal actions based
on alleged violations of the Clean Air Act at our W. H. Sammis Plant
involving the states of New York and Connecticut as well as the U.S.
Department of Justice. The civil complaint filed by the U.S. Department of
Justice requests installation of "best available control technology" as
well as civil penalties of up to $27,500 per day of violation. We believe
the Sammis Plant is in full compliance with the Clean Air Act and the
legal actions are without merit. However, we are unable to predict the
outcome of this litigation. Penalties could be imposed if the Sammis Plant
continues to operate without correcting the alleged violations and a court
determines that the allegations are valid. The Sammis Plant continues to
operate while the matter is being decided.

          Under federal environmental law and related federal and state
waste regulations, certain fossil-fuel combustion waste products, such as
coal ash, were exempted from hazardous waste disposal requirements pending
the EPA's evaluation of the need for future regulation. The EPA has issued
its final regulatory determination that regulation of coal ash as a
hazardous waste is unnecessary. On April 25, 2000, the EPA announced that
it will develop national standards regulating disposal of coal ash as a
nonhazardous waste.

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

          On August 8, 2000, FirstEnergy Corp. entered into an agreement
to merge with GPU, Inc, a Pennsylvania corporation, headquartered in
Morristown, New Jersey. The target date for completing the merger is by
the end of the second quarter of 2001. Our parent company, Ohio Edison
Company, will continue to be a wholly owned subsidiary of FirstEnergy
Corp.



<TABLE>
                                              PENNSYLVANIA POWER COMPANY

                                                STATEMENTS OF INCOME
<CAPTION>
For the Years Ended December 31,                                    2000         1999         1998
-----------------------------------------------------------------------------------------------------
                                                                             (In thousands)
<S>                                                                <C>         <C>          <C>
OPERATING REVENUES                                                 $383,112    $329,234     $323,756
                                                                   --------    --------     --------

OPERATING EXPENSES AND TAXES:
  Fuel and purchased power                                           68,099      87,128       76,801
  Nuclear operating costs                                           112,731      36,915       22,968
  Other operating costs                                              59,389      65,079       52,348
                                                                   --------    --------    ---------
    Total operation and maintenance expenses                        240,219     189,122      152,117
  Provision for depreciation and amortization                        55,964      62,182       59,264
  General taxes                                                      22,076      28,110       22,540
  Income taxes                                                       24,874      17,757       31,794
                                                                   --------    --------    ---------
    Total operating expenses and taxes                              343,133     297,171      265,715
                                                                   --------    --------    ---------

OPERATING INCOME                                                     39,979      32,063       58,041

OTHER INCOME                                                          2,300       1,438        2,485
                                                                   --------    --------    ---------

INCOME BEFORE NET INTEREST CHARGES                                   42,279      33,501       60,526
                                                                   --------    --------    ---------

NET INTEREST CHARGES:
  Interest on long-term debt                                         18,651      19,268       19,255
  Interest on nuclear fuel obligations                                  364          90           28
  Allowance for borrowed funds used during construction              (1,005)       (464)        (294)
  Other interest expense                                              1,422       1,959        1,789
                                                                   --------    --------    ---------
    Net interest charges                                             19,432      20,853       20,778
                                                                   --------    --------    ---------

INCOME BEFORE EXTRAORDINARY ITEM                                     22,847      12,648       39,748

EXTRAORDINARY ITEM (NET OF INCOME TAXES) (Note 1)                        --          --      (30,522)
                                                                   --------    --------    ---------

NET INCOME                                                           22,847      12,648        9,226

PREFERRED STOCK DIVIDEND REQUIREMENTS                                 3,704       4,370        4,626
                                                                   --------    --------     --------

EARNINGS ON COMMON STOCK                                           $ 19,143    $  8,278     $  4,600
                                                                   ========    ========     ========

<FN>

The accompanying Notes to Financial Statements are an integral
part of these statements.

</TABLE>
<PAGE>



<TABLE>
                                              PENNSYLVANIA POWER COMPANY

                                                      BALANCE SHEETS
<CAPTION>
As of December 31,                                              2000              1999
-----------------------------------------------------------------------------------------
                                                                    (In thousands)
<S>                                                         <C>               <C>
                       ASSETS
UTILITY PLANT:
In service                                                  $  636,418        $  646,186
Less-Accumulated provision for depreciation                    275,699           237,893
                                                            ----------        ----------
                                                               360,719           408,293
                                                            ----------        ----------
Construction work in progress-
  Electric plant                                                20,800            18,558
  Nuclear fuel                                                   2,810             6,540
                                                            ----------        ----------
                                                                23,610            25,098
                                                            ----------        ----------
                                                               384,329           433,391
                                                            ----------        ----------

OTHER PROPERTY AND INVESTMENTS:
Nuclear plant decommissioning trusts (Note 1)                  117,453           104,775
Long-term notes receivable from associated companies            33,581                --
Other                                                           21,279            19,784
                                                            ----------        ----------
                                                               172,313           124,559
                                                            ----------        ----------

CURRENT ASSETS:
Cash and cash equivalents                                        3,475             5,670
Notes receivable from associated companies (Note 4)             41,264            15,423
Receivables-
  Customers (less accumulated provisions of $628,000 and
   $3,537,000, respectively, for uncollectible accounts)        40,980            34,568
  Associated companies                                          40,685            38,565
  Other                                                          8,848             8,896
Materials and supplies, at average cost                         29,595            32,483
Prepayments                                                      2,044             2,208
                                                            ----------        ----------
                                                               166,891           137,813
                                                            ----------        ----------

DEFERRED CHARGES:
Regulatory assets                                              260,221           314,593
Other                                                            5,155             5,260
                                                            ----------        ----------
                                                               265,376           319,853
                                                            ----------        ----------
                                                            $  988,909        $1,015,616
                                                            ==========        ==========

  CAPITALIZATION AND LIABILITIES

CAPITALIZATION (See Statements of Capitalization):
Common stockholder's equity                                 $  213,851        $  199,608
Preferred stock-
  Not subject to mandatory redemption                           39,105            39,105
  Subject to mandatory redemption                               15,000            15,000
Long-term debt-
  Associated companies                                          18,135            18,007
  Other                                                        252,233           256,814
                                                            ----------        ----------
                                                               538,324           528,534
                                                            ----------        ----------
CURRENT LIABILITIES:
Currently payable long-term debt-
  Associated companies                                          16,620            13,504
  Other                                                          1,036            29,521
Accounts payable-
  Associated companies                                          42,293            26,220
  Other                                                         21,165            28,903
Accrued taxes                                                   19,250            21,863
Accrued interest                                                 5,972             6,592
Other                                                           16,228            16,506
                                                            ----------        ----------
                                                               122,564           143,109
                                                            ----------        ----------

DEFERRED CREDITS:
Accumulated deferred income taxes                              160,632           182,702
Accumulated deferred investment tax credits                      4,407             7,266
Nuclear plant decommissioning costs                            117,915           107,816
Other                                                           45,067            46,189
                                                            ----------        ----------
                                                               328,021           343,973
                                                            ----------        ----------

COMMITMENTS AND CONTINGENCIES (Notes 2 and 5)               ----------        ----------
                                                            $  988,909        $1,015,616
                                                            ==========        ==========

<FN>

The accompanying Notes to Financial Statements are an
integral part of these balance sheets.

</TABLE>
<PAGE>

<TABLE>
                                                PENNSYLVANIA POWER COMPANY

                                               STATEMENTS OF CAPITALIZATION
<CAPTION>
As of December 31,                                                                                  2000            1999
--------------------------------------------------------------------------------------------------------------------------------
                             (Dollars in thousands, except per share amounts)
<S>                                                                                                <C>             <C>
COMMON STOCKHOLDER'S EQUITY:
  Common stock, $30 par value, 6,500,000 shares authorized, 6,290,000 shares outstanding           $188,700        $188,700
  Other paid-in capital                                                                                (310)           (310)
  Retained earnings (Note 3A)                                                                        25,461          11,218
                                                                                                   --------        --------
    Total common stockholder's equity                                                               213,851         199,608
                                                                                                   --------        --------
<CAPTION>
                                               Number of Shares             Optional
                                                 Outstanding            Redemption Price
                                               ----------------       -------------------
                                               2000        1999       Per Share  Aggregate
                                               ----        ----       ---------  ---------
<S>                                          <C>         <C>           <C>         <C>
PREFERRED STOCK (Note 3B):
Cumulative, $100 par value-
Authorized 1,200,000 shares
  Not Subject to Mandatory Redemption:
    4.24%                                     40,000      40,000       $103.13     $ 4,125            4,000           4,000
    4.25%                                     41,049      41,049        105.00       4,310            4,105           4,105
    4.64%                                     60,000      60,000        102.98       6,179            6,000           6,000
    7.75%                                    250,000     250,000            --          --           25,000          25,000
                                             -------     -------                   -------         --------        --------
      Total not subject to mandatory
        redemption                           391,049     391,049                   $14,614           39,105          39,105
                                             =======     =======                   =======         --------        --------

  Subject to Mandatory Redemption
   (Note 3C):
    7.625%                                   150,000     150,000        105.34     $15,801           15,000          15,000
                                             =======     =======                   =======         --------        --------

LONG-TERM DEBT (Note 3D):
  First mortgage bonds-
    9.740% due 2001-2019                                                                             18,539          19,513
    7.500% due 2003                                                                                  40,000          40,000
    6.375% due 2004                                                                                  20,500          20,500
    6.625% due 2004                                                                                  14,000          14,000
    8.500% due 2022                                                                                  27,250          27,250
    7.625% due 2023                                                                                   6,500           6,500
                                                                                                   --------        --------
      Total first mortgage bonds                                                                    126,789         127,763
                                                                                                   --------        --------

  Secured notes-
    6.080% due 2000                                                                                      --          23,000
    8.100% due 2000                                                                                      --           5,200
    5.400% due 2013                                                                                   1,000           1,000
    5.400% due 2017                                                                                  10,600          10,600
    7.150% due 2017                                                                                  17,925          17,925
    5.900% due 2018                                                                                  16,800          16,800
    7.150% due 2021                                                                                  14,482          14,482
    6.150% due 2023                                                                                  12,700          12,700
  * 5.050% due 2027                                                                                  10,300          10,300
    6.450% due 2027                                                                                  14,500          14,500
    5.375% due 2028                                                                                   1,734           1,734
    5.450% due 2028                                                                                   6,950           6,950
    6.000% due 2028                                                                                  14,250          14,250
    5.950% due 2029                                                                                     238             238
                                                                                                   --------        --------
      Total secured notes                                                                           121,479         149,679
                                                                                                   --------        --------

  Unsecured notes-
  * 5.900% due 2033                                                                                   5,200           5,200
                                                                                                   --------        --------

  Other obligations-
    Nuclear fuel                                                                                     34,756          31,511
    Capital leases (Note 2)                                                                             170           4,160
                                                                                                   --------        --------
      Total other obligations                                                                        34,926          35,671
                                                                                                   --------        --------
  Net unamortized discount on debt                                                                     (370)           (467)
                                                                                                   --------        --------
  Long-term debt due within one year                                                                (17,656)        (43,025)
                                                                                                   --------        --------
      Total long-term debt                                                                          270,368         274,821
                                                                                                   --------        --------
TOTAL CAPITALIZATION                                                                               $538,324        $528,534
                                                                                                   ========        ========

<FN>

*Denotes variable rate issue with December 31, 2000 interest rate shown.

The accompanying Notes to Financial Statements are an
integral part of these statements.

</TABLE>
<PAGE>

<TABLE>
                                            PENNSYLVANIA POWER COMPANY

                                      STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<CAPTION>
                                                                                            Accumulated
                                                                                               Other
                                                                                 Other     Comprehensive
                                         Comprehensive     Number      Par      Paid-In       Income        Retained
                                             Income      of Shares    Value     Capital       (Loss)        Earnings
                                         -------------   ---------   -------    -------    ------------     --------
                                                                       (Dollars in thousands)
<S>                                        <C>           <C>         <C>         <C>            <C>         <C>
Balance, January 1, 1998                                 6,290,000   $188,700    $(310)         $(90)       $103,677
  Net income                               $ 9,226                                                             9,226
  Transfer of minimum liability for
    unfunded retirement benefits to
    FirstEnergy                                 90                                                90
                                           -------
  Comprehensive income                     $ 9,316
                                           =======
  Cash dividends on common stock                                                                             (21,386)
  Cash dividends on preferred stock                                                                           (4,626)
--------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                               6,290,000    188,700     (310)           --          86,891
  Net income                               $12,648                                                            12,648
                                           =======
  Transfer of Penn Power Energy
    to FirstEnergy Services Corp.                                                                              3,302
  Cash dividends on common stock                                                                             (87,362)
  Cash dividends on preferred stock                                                                           (4,056)
  Premium on redemption of preferred
    stock                                                                                                       (205)
--------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                               6,290,000    188,700     (310)           --          11,218
  Net income                               $22,847                                                            22,847
                                           =======
  Cash dividends on common stock                                                                              (4,900)
  Cash dividends on preferred stock                                                                           (3,704)
--------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                               6,290,000   $188,700    $(310)         $ --        $ 25,461
======================================================================================================================

</TABLE>



<TABLE>
                                               STATEMENTS OF PREFERRED STOCK
<CAPTION>
                                                        Not Subject to              Subject to
                                                     Mandatory Redemption      Mandatory Redemption
                                                     --------------------      ----------------------
                                                       Number        Par          Number         Par
                                                     of Shares      Value       of Shares       Value
                                                     ---------      -----       ---------       -----
                                                                    (Dollars in thousands)
<S>                                                   <C>          <C>          <C>            <C>
Balance, January 1, 1998                              509,049      $50,905      150,000        $15,000
------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                            509,049       50,905      150,000         15,000
------------------------------------------------------------------------------------------------------
  Redemptions-
    7.64% Series                                      (60,000)      (6,000)
    8.00% Series                                      (58,000)      (5,800)
------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                            391,049       39,105      150,000         15,000
------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                            391,049      $39,105      150,000        $15,000
======================================================================================================

<FN>

The accompanying Notes to Financial Statements are an
integral part of these statements.

</TABLE>
<PAGE>

<TABLE>
                                             PENNSYLVANIA POWER COMPANY

                                              STATEMENTS OF CASH FLOWS
<CAPTION>
For the Years Ended December 31,                                   2000          1999           1998
-----------------------------------------------------------------------------------------------------
                                                                           (In thousands)
<S>                                                             <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                      $ 22,847       $ 12,648       $  9,226
Adjustments to reconcile net income to net cash
 from operating activities:
  Provision for depreciation and amortization                     55,964         62,182         59,264
  Nuclear fuel and lease amortization                             18,248          8,423          5,418
  Other amortization, net                                             --             --           (330)
  Deferred income taxes, net                                      (8,620)       (16,207)       (20,007)
  Investment tax credits, net                                     (3,051)        (3,111)        (2,289)
  Extraordinary item                                                  --             --         51,730
  Receivables                                                     (8,484)          (390)       (20,680)
  Materials and supplies                                           2,888            389           (542)
  Accounts payable                                                 8,335         22,291          3,293
  Other                                                           (9,651)        15,899          3,148
                                                                --------       --------       --------
    Net cash provided from operating activities                   78,476        102,124         88,231
                                                                --------       --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing-
  Long-term debt                                                      --          5,200          1,563
Redemptions and Repayments-
  Preferred stock                                                     --         12,005             --
  Long-term debt                                                  47,796          8,675          6,088
Dividend Payments-
  Common stock                                                     4,900         87,362         21,386
  Preferred stock                                                  3,704          4,055          4,626
                                                                --------       --------        -------
    Net cash used for financing activities                        56,400        106,897         30,537
                                                                --------       --------        -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions                                                29,856         21,964         16,495
Loans to associated companies                                     59,421             --         32,500
Loan payment from parent                                              --        (34,577)            --
Sale of assets to associated companies                           (67,472)            --             --
Other                                                              2,466          9,655          1,874
                                                                --------       --------        -------
    Net cash used for (provided from) investing activities        24,271         (2,958)        50,869
                                                                --------       --------        -------
Net increase (decrease) in cash and cash equivalents              (2,195)        (1,815)         6,825
Cash and cash equivalents at beginning of year                     5,670          7,485            660
                                                                --------       --------        -------
Cash and cash equivalents at end of year                        $  3,475       $  5,670        $ 7,485
                                                                ========       ========        =======

SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid during the year-
  Interest (net of amounts capitalized)                         $ 18,804       $ 19,436        $19,057
                                                                ========       ========        =======
  Income taxes                                                  $ 39,704       $ 33,786        $32,290
                                                                ========       ========        =======

<FN>

The accompanying Notes to Financial Statements are an integral
part of these statements.

</TABLE>
<PAGE>

<TABLE>
                                                   PENNSYLVANIA POWER COMPANY

                                                      STATEMENTS OF TAXES
<CAPTION>
For the Years Ended December 31,                                       2000        1999         1998
------------------------------------------------------------------------------------------------------
                                                                             (In thousands)
<S>                                                                 <C>          <C>          <C>
GENERAL TAXES:
State gross receipts                                                $ 14,264     $ 13,466     $ 10,830
Real and personal property                                             4,012        8,626        6,893
State capital stock                                                    1,598        3,067        2,774
Social security and unemployment                                       2,137        2,875        1,894
Other                                                                     65           76          149
                                                                    --------     --------     --------
    Total general taxes                                             $ 22,076     $ 28,110     $ 22,540
                                                                    ========     ========     ========

PROVISION FOR INCOME TAXES:
Currently payable-
  Federal                                                           $ 26,712     $ 29,522     $ 25,938
  State                                                               11,080        8,630        7,654
                                                                    --------     --------     --------
                                                                      37,792       38,152       33,592
                                                                    --------     --------     --------
Deferred, net-
  Federal                                                             (4,273)     (12,714)     (15,454)
  State                                                               (4,347)      (3,493)      (4,553)
                                                                    --------     --------     --------
                                                                      (8,620)     (16,207)     (20,007)
                                                                    --------     --------     --------
Investment tax credit amortization                                    (3,051)      (3,111)      (2,289)
                                                                    --------     --------     --------
    Total provision for income taxes                                $ 26,121     $ 18,834     $ 11,296
                                                                    ========     ========     ========

INCOME STATEMENT CLASSIFICATION OF PROVISION FOR
INCOME TAXES:
Operating expenses                                                  $ 24,874     $ 17,757     $ 31,794
Other income                                                           1,247        1,077          710
Extraordinary item                                                        --           --      (21,208)
                                                                    --------     --------     --------
    Total provision for income taxes                                $ 26,121     $ 18,834     $ 11,296
                                                                    ========     ========     ========

RECONCILIATION OF FEDERAL INCOME TAX EXPENSE AT
STATUTORY RATE TO TOTAL PROVISION FOR INCOME TAXES:
Book income before provision for income taxes                       $ 48,968     $ 31,482     $ 20,522
                                                                    ========     ========     ========
Federal income tax expense at statutory rate                        $ 17,139     $ 11,019     $  7,183
Increases (reductions) in taxes resulting from:
  State income taxes, net of federal income tax benefit                4,376        3,339        2,016
  Amortization of investment tax credits                              (3,051)      (3,111)      (2,289)
  Amortization of tax regulatory assets                                6,899        7,059        4,745
  Other, net                                                             758          528         (359)
                                                                    --------     --------     --------
    Total provision for income taxes                                $ 26,121     $ 18,834     $ 11,296
                                                                    ========     ========     ========

ACCUMULATED DEFERRED INCOME TAXES AT DECEMBER 31:
Competitive transition charge                                       $ 95,497     $115,277     $135,730
Property basis differences                                            64,348       73,694       69,867
Allowance for equity funds used during construction                    4,163        5,688        7,219
Customer receivables for future income taxes                           7,016        8,354        9,690
Unamortized investment tax credits                                    (1,823)      (2,987)      (3,193)
Deferred gain for asset sale to affiliated company                     8,925           --           --
Other                                                                (17,494)     (17,324)      (6,886)
                                                                    --------     --------     --------
    Net deferred income tax liability                               $160,632     $182,702     $212,427
                                                                    ========     ========     ========
<FN>

The accompanying Notes to Financial Statements are an
integral part of these statements.

</TABLE>
<PAGE>

NOTES TO FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

          The Company, a wholly owned subsidiary of Ohio Edison Company
(Edison), follows the accounting policies and practices prescribed by the
Pennsylvania Public Utility Commission (PPUC) and the Federal Energy
Regulatory Commission (FERC). The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States (GAAP) requires management to make periodic estimates and
assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses.

          Results of operations for 1999 include Penn and its wholly owned
subsidiary, Penn Power Energy, Inc. (PPE). The subsidiary was formed to
market energy products and services coincident with the commencement of
electricity generation customer choice and competition in Pennsylvania in
January 1999. All significant intercompany transactions have been
eliminated. The Company transferred its 100% ownership in PPE to
FirstEnergy Services Corp., an affiliate, effective December 31, 1999. On
September 1, 2000, the Company sold its transmission assets to an
affiliate, American Transmission Systems, Inc. (ATSI). As a result, ATSI
owns and operates the Company's and its affiliates' major high-voltage
transmission facilities and has interconnections with other regional
utilities.

REVENUES-

          The Company's principal business is providing electric service to
customers in western Pennsylvania. The Company's retail customers are
metered on a cycle basis. Revenue is recognized for unbilled electric
service through the end of the year.

          Receivables from customers include sales to residential,
commercial and industrial customers located in the Company's service area
and sales to wholesale customers. There was no material concentration of
receivables at December 31, 2000 or 1999, with respect to any particular
segment of the Company's customers.

REGULATORY PLAN-

          In December 1996, Pennsylvania enacted "The Electricity
Generation Customer Choice and Competition Act," which permitted customers,
including the Company's customers, to choose their electric generation
supplier, while transmission and distribution services would continue to be
supplied by their current providers. The phase in of customer choice was
completed on January 1, 2001. The Company continues to deliver power to
homes and businesses through its distribution system, which remains
regulated by the PPUC. The Company's rates have been restructured to
establish separate charges for transmission and distribution; generation,
which is subject to competition; and stranded cost recovery. In the event
customers obtain power from an alternative source, the generation portion
of the Company's rates is excluded from their bill and the customers
receive a generation charge from the alternative supplier. The stranded
cost recovery portion of rates provides for recovery of certain amounts not
otherwise considered recoverable in a competitive generation market,
including regulatory assets.

          In June 1998, the PPUC authorized the Company's rate
restructuring plan, which essentially resulted in the deregulation of the
Company's generation business as of June 30, 1998. The Company was required
to remove from its balance sheet all regulatory assets and liabilities
related to its generation business and assess all other assets for
impairment. The Securities and Exchange Commission (SEC) issued
interpretive guidance regarding asset impairment measurement which
concluded 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 those assets are impaired, a regulatory asset should be established if
the costs are recoverable through regulatory cash flows. Consistent with
the SEC guidance, the Company 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
the CTC over a seven-year transition period; the remaining net amount of
$78 million was written off. The charge of $51.7 million ($30.5 million
after income taxes) for discontinuing the application of Statement of
Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects
of Certain Types of Regulation" (SFAS 71), to the Company's generation
business was recorded as a 1998 extraordinary item on the Statement of
Income. The Company is entitled to recover $236 million of stranded costs
through the CTC that began in 1999 and ends in 2006. The Company's net
assets included in utility plant relating to the operations for which the
application of SFAS 71 was discontinued were $92 million as of December 31,
2000. All of the Company's regulatory assets continue to be recovered under
provisions of the rate restructuring plan.

UTILITY PLANT AND DEPRECIATION-

          Utility plant reflects the original cost of construction (except
for nuclear generating units which were adjusted to fair value as discussed
above), including payroll and related costs such as taxes, employee
benefits, administrative and general costs, and interest costs.

          The Company provides for depreciation on a straight-line basis at
various rates over the estimated lives of property included in plant in
service. The annual composite rate for electric plant was approximately
2.6% in 2000, 2.5% in 1999 and 3.0% in 1998. In addition to the
straight-line depreciation recognized in 2000, 1999 and 1998, the Company
also recognized additional cumulative capital recovery of $143 million, as
of December 31, 2000, as additional depreciation expense in accordance with
its former regulatory plan.

          Annual depreciation expense includes approximately $1.6 million
for future decommissioning costs applicable to the Company's ownership
interest in three nuclear generating units. The Company's future
decommissioning costs reflect the 1999 increase in its ownership interests
related to the exchange of certain generating assets with Duquesne Light
Company (Duquesne). The Company's share of the future obligation to
decommission these units is approximately $315 million in current dollars
and (using a 4.0% escalation rate) approximately $695 million in future
dollars. The estimated obligation and the escalation rate were developed
based on site specific studies. Payments for decommissioning are expected
to begin in 2016, when actual decommissioning work begins. The Company has
recovered approximately $14 million for decommissioning through its
electric rates from customers through December 31, 2000. The Company has
also recognized an estimated liability of approximately $7.5 million
related to decontamination and decommissioning of nuclear enrichment
facilities operated by the United States Department of Energy, as required
by the Energy Policy Act of 1992.

          The Financial Accounting Standards Board (FASB) issued a proposed
accounting standard for nuclear decommissioning costs in 1996. If the
standard is adopted as proposed: (1) annual provisions for decommissioning
could change; (2) the net present value of estimated decommissioning costs
could be recorded as a liability; and (3) income from the external
decommissioning trusts could be reported as investment income. The FASB
subsequently expanded the scope of the proposed standard to include other
closure and removal obligations related to long-lived assets. A final
pronouncement is expected in the second quarter of 2001 and is anticipated
to be implemented on January 1, 2002.

COMMON OWNERSHIP OF GENERATING FACILITIES-

          The Company, together with Edison and affiliated companies, The
Cleveland Electric Illuminating Company (CEI) and The Toledo Edison Company
(TE), own, as tenants in common, various power generating facilities. Each
of the companies is obligated to pay a share of the costs associated with
any jointly owned facility in the same proportion as its interest. The
Company's portion of operating expenses associated with jointly owned
facilities is included in the corresponding operating expenses on the
Statements of Income. The amounts reflected on the Balance Sheet under
utility plant at December 31, 2000 include the following:

                           Utility    Accumulated  Construction  Company's
                          Plant in   Provision for    Work in    Ownership
  Generating Units         Service   Depreciation     Progress   Interest
--------------------------------------------------------------------------
                                            (In millions)
W. H. Sammis #7           $ 67.0       $ 24.6           $ 0.1     20.80%
Bruce Mansfield
  #1, #2 and #3            182.3        110.4            --       16.38%
Beaver Valley #1 and #2     36.3          9.9             7.9     39.37%
Perry #1                     1.8          0.7             1.6      5.24%
-------------------------------------------------------------------------
    Total                 $287.4       $145.6            $9.6
=========================================================================

NUCLEAR FUEL-

          OES Fuel, Incorporated (OES Fuel), a wholly owned subsidiary of
Edison, is the sole lessor for the Company's nuclear fuel requirements.

          Minimum lease payments during the next five years are estimated
to be as follows:

           (In millions)
-------------------------
2001              $18.9
2002               12.8
2003                4.7
2004                1.7
2005                0.2
------------------------

          The Company amortizes the cost of nuclear fuel based on the rate
of consumption.

INCOME TAXES-

          Details of the total provision for income taxes are shown on the
Statements of Taxes. Deferred income taxes result from timing differences
in the recognition of revenues and expenses for tax and accounting
purposes. Investment tax credits, which were deferred when utilized, are
being amortized over the recovery period of the related property. The
liability method is used to account for deferred income taxes. Deferred
income tax liabilities related to tax and accounting basis differences are
recognized at the statutory income tax rates in effect when the liabilities
are expected to be paid. The Company is included in Edison's parent's,
FirstEnergy Corp. (FirstEnergy) consolidated federal income tax return. The
consolidated tax liability is allocated on a "stand-alone" company basis,
with the Company recognizing any tax losses or credits it contributed to
the consolidated return.

RETIREMENT BENEFITS-

          FirstEnergy's trusteed, noncontributory defined benefit pension
plan covers almost all of the Company's full-time employees. Upon
retirement, employees receive a monthly pension based on length of service
and compensation. The Company uses the projected unit credit method for
funding purposes and was not required to make pension contributions during
the three years ended December 31, 2000. The assets of the FirstEnergy
pension plan consist primarily of common stocks, United States government
bonds and corporate bonds.

          The Company provides a minimum amount of noncontributory life
insurance to retired employees in addition to optional contributory
insurance. Health care benefits, which include certain employee deductibles
and copayments, are also available to retired employees, their dependents
and, under certain circumstances, their survivors. The Company pays
insurance premiums to cover a portion of these benefits in excess of set
limits; all amounts up to the limits are paid by the Company. The Company
recognizes the expected cost of providing other postretirement benefits to
employees and their beneficiaries and covered dependents from the time
employees are hired until they become eligible to receive those benefits.

          The following sets forth the funded status of the plans and
amounts recognized on FirstEnergy's Consolidated Balance Sheets as of
December 31:

<TABLE>
<CAPTION>
                                                                                           Other
                                                         Pension Benefits         Postretirement Benefits
                                                       --------------------       ----------------------
                                                         2000        1999           2000           1999
---------------------------------------------------------------------------------------------------------
                                                                         (In millions)
<S>                                                    <C>         <C>           <C>              <C>
Change in benefit obligation:
Benefit obligation as of January 1                     $1,394.1    $1,500.1      $ 608.4          $ 601.3
Service cost                                               27.4        28.3         11.3              9.3
Interest cost                                             104.8       102.0         45.7             40.7
Plan amendments                                            41.3        --           --               --
Actuarial loss (gain)                                      17.3      (155.6)       121.7            (17.6)
Net increase from asset swap                               --          14.8         --               12.5
Voluntary early retirement program expense                 23.4        --           --               --
Benefits paid                                            (102.2)      (95.5)       (35.1)           (37.8)
---------------------------------------------------------------------------------------------------------
Benefit obligation as of December 31                    1,506.1     1,394.1        752.0            608.4
---------------------------------------------------------------------------------------------------------

Change in plan assets:
Fair value of plan assets as of January 1               1,807.5     1,683.0          4.9              3.9
Actual return on plan assets                                0.7       220.0         (0.2)             0.6
Company contribution                                       --          --           18.3              0.4
Benefits paid                                            (102.2)      (95.5)        --               --
----------------------------------------------------------------------------------------------------------
Fair value of plan assets as of December 31             1,706.0     1,807.5         23.0              4.9
----------------------------------------------------------------------------------------------------------

Funded status of plan                                     199.9       413.4       (729.0)          (603.5)
Unrecognized actuarial loss (gain)                        (90.9)     (303.5)       147.3             24.9
Unrecognized prior service cost                            93.1        57.3         20.9             24.1
Unrecognized net transition obligation (asset)             (2.1)      (10.1)       110.9            120.1
----------------------------------------------------------------------------------------------------------
Prepaid (accrued) benefit cost                         $  200.0    $  157.1      $(449.9)         $(434.4)
===========================================================================================================
Company's share of prepaid (accrued)
  benefit cost                                         $   21.1    $   13.8      $ (35.1)         $ (31.7)
===========================================================================================================

Assumptions used as of December 31:
Discount rate                                              7.75%       7.75%        7.75%            7.75%
Expected long-term return on plan assets                  10.25%      10.25%       10.25%           10.25%
Rate of compensation increase                              4.00%       4.00%        4.00%            4.00%

</TABLE>

          FirstEnergy's net pension and other postretirement benefit costs
for the three years ended December 31, 2000 were computed as follows:


<TABLE>
<CAPTION>

                                                                                            Other
                                                      Pension Benefits               Postretirement Benefits
                                                  ------------------------          ------------------------
                                                  2000      1999      1998          2000      1999      1998
------------------------------------------------------------------------------------------------------------
                                                                         (In millions)
<S>                                             <C>       <C>        <C>           <C>       <C>       <C>
Service cost                                    $  27.4   $  28.3    $ 25.0        $11.3     $ 9.3     $ 7.5
Interest cost                                     104.8     102.0      92.5         45.7      40.7      37.6
Expected return on plan assets                   (181.0)   (168.1)   (152.7)        (0.5)     (0.4)     (0.3)
Amortization of transition obligation (asset)      (7.9)     (7.9)     (8.0)         9.2       9.2       9.2
Amortization of prior service cost                  5.7       5.7       2.3          3.2       3.3      (0.8)
Recognized net actuarial loss (gain)               (9.1)     --        (2.6)        --        --        --
Voluntary early retirement program expense         17.2      --        --           --        --        --
------------------------------------------------------------------------------------------------------------
Net benefit cost                                $ (42.9)   $(40.0)   $(43.5)       $68.9     $62.1     $53.2
==============================================================================================================
Company's share of total plan costs             $  (3.6)   $ (4.8)   $ (6.1)       $ 7.5     $ 7.5     $ 5.4
-------------------------------------------------------------------------------------------------------------

</TABLE>


          The FirstEnergy plan's health care trend rate assumption is 7.2%
in 2001, 7.0% in 2002 and 6.5% in 2003, trending to 5.0%-5.5% in later
years. Assumed health care cost trend rates have a significant effect on
the amounts reported for the health care plan. An increase in the health
care trend rate assumption by one percentage point would increase the total
service and interest cost components by $7.5 million and the postretirement
benefit obligation by $94.4 million. A decrease in the same assumption by
one percentage point would decrease the total service and interest cost
components by $8.5 million and the postretirement benefit obligation by
$111.0 million.

TRANSACTIONS WITH AFFILIATED COMPANIES-

          Operating revenues and operating expenses include transactions
with Edison, CEI, TE and ATSI. Operating revenue transactions with
affiliates were primarily for electric sales of $57.6 million,
$12.6 million and $9.8 million in 2000, 1999 and 1998, respectively; Bruce
Mansfield Plant administrative and general charges of $2.9 million,
$5.3 million and $6.3 million in 2000, 1999 and 1998, respectively; and
ground lease revenues of $0.7 million to ATSI which began in 2000.

          Operating expense transactions with affiliates were primarily for
nuclear fuel leased from OES Fuel of $20.3 million, $8.8 million and
$5.9 million in 2000, 1999 and 1998, respectively; purchased power of
$7.1 million, $12.9 million and $20.9 million in 2000, 1999 and 1998,
respectively; transmission facilities rentals (including ATSI rents which
began in 2000) of $5.7 million, $1.3 million and $1.3 million in 2000, 1999
and 1998, respectively; and nuclear operations administrative and general
charges of $15.0 million, $2.1 million and $1.5 million in 2000, 1999 and
1998, respectively. The increase in 2000 nuclear administrative and general
charges reflects the Company's increased nuclear assets ownership due to
the Duquesne asset swap described in "Utility Plant and Depreciation."

          FirstEnergy provides support services at cost to the Company and
other affiliated companies, for which the Company was billed $27.4 million,
$28.3 million and $9.5 million in 2000, 1999 and 1998, respectively.

SUPPLEMENTAL CASH FLOWS INFORMATION-

          All temporary cash investments purchased with an initial maturity
of three months or less are reported as cash equivalents on the Balance
Sheets. As of December 31, 1999, cash and cash equivalents included $5
million used for the redemption of long-term debt in the first quarter of
2000. The Company reflects temporary cash investments at cost, which
approximates their market value. Noncash financing and investing activities
included capital lease transactions amounting to $21.2 million,
$27.1 million and $0.8 million for the years 2000, 1999 and 1998,
respectively.

          All borrowings with initial maturities of less than one year are
defined as financial instruments under GAAP and are reported on the Balance
Sheets at cost, which approximates their fair market value. The following
sets forth the approximate fair value and related carrying amounts of all
other long-term debt, preferred stock subject to mandatory redemption and
investments other than cash and cash equivalents as of December 31:

                                      2000               1999
-----------------------------------------------------------------
                                 Carrying  Fair    Carrying  Fair
                                   Value   Value     Value   Value
------------------------------------------------------------------
                                             (In millions)
Long-term debt                     $253    $263       $283   $279
Preferred stock                      15      15         15     14
Investments other than cash
 and cash equivalents               155     153        108    116
------------------------------------------------------------------

          The fair values of long-term debt and preferred stock reflect the
present value of the cash outflows relating to those securities based on
the current call price, the yield to maturity or the yield to call, as
deemed appropriate at the end of each respective year. The yields assumed
were based on securities with similar characteristics offered by a
corporation with credit ratings similar to the Company's ratings.

          The fair value of investments other than cash and cash
equivalents represent cost (which approximates fair value) or the present
value of the cash inflows based on the yield to maturity. The yields
assumed were based on financial instruments with similar characteristics
and terms. Investments other than cash and cash equivalents consist
primarily of decommissioning trust investments. Unrealized gains and losses
applicable to the decommissioning trusts have been recognized in the trust
investment with a corresponding change to the decommissioning liability.
The Company has no securities held for trading purposes.

REGULATORY ASSETS-

          The Company recognizes, as regulatory assets, costs which the
FERC and PPUC have authorized for recovery from customers in future
periods. Without such authorization, the costs would have been charged to
income as incurred. All regulatory assets are being recovered from
customers under the Company's rate restructuring plan. Based on the rate
restructuring plan, the Company continues to bill and collect cost-based
rates relating to the Company's nongeneration operations and continues the
application of SFAS 71 to these operations. Regulatory assets on the
Balance Sheets are comprised of the following:

                                                   2000       1999
--------------------------------------------------------------------
                                                    (In millions)
Competitive transition charge                     $230.9     $280.4
Customer receivables for future income taxes        17.0       20.3
Loss on reacquired debt                              6.4        7.1
Employee postretirement benefit costs                4.5        5.4
Other                                                1.4        1.4
--------------------------------------------------------------------
  Total                                           $260.2     $314.6
====================================================================

2.  LEASES

          The Company leases office space and other property and equipment
under cancelable and noncancelable leases. Consistent with the regulatory
treatment, the rentals for capital and operating leases are charged to
operating expenses on the Statements of Income. Such costs for the three
years ended December 31, 2000, are summarized as follows:

                                   2000         1999         1998
------------------------------------------------------------------
                                           (In millions)
Operating leases
  Interest element                 $0.4         $0.6         $0.5
  Other                             0.3          1.6          1.3
Capital leases
  Interest element                  0.3          0.6          0.6
  Other                             0.8          0.5          0.7
------------------------------------------------------------------
Total rental payments              $1.8         $3.3         $3.1
==================================================================

          The future minimum lease payments as of December 31, 2000, are:

                                      Capital         Operating
                                      Leases            Leases
------------------------------------------------------------------
                                             (In millions)
2001                                   $0.1              $0.1
2002                                    0.2               0.1
2003                                    0.1               0.1
2004                                   --                 0.1
2005                                   --                 0.1
Years thereafter                       --                 0.8
--------------------------------------------------------------
Total minimum lease payments            0.4              $1.3
Executory costs                         0.2              ====
-------------------------------------------
Net minimum lease payments              0.2
Interest portion                       --
-------------------------------------------
Present value of net minimum
  lease payments                        0.2
Less current portion                    0.1
-------------------------------------------
Noncurrent portion                     $0.1
===========================================

3.  CAPITALIZATION

  (A)  RETAINED EARNINGS-

          Under the Company's Charter, the Company's retained earnings
unrestricted for payment of cash dividends on the Company's common stock
were $18.3 million as of December 31, 2000.

  (B)  PREFERRED STOCK-

          The Company's 7.75% series of preferred stock has a restriction
which prevents early redemption prior to July 2003. All other preferred
stock may be redeemed by the Company in whole, or in part, with 30-60 days'
notice.

  (C)  PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION-

          The Company's 7.625% series has an annual sinking fund
requirement for 7,500 shares beginning on October 1, 2002.

  (D)  LONG-TERM DEBT-

          The first mortgage indenture and its supplements, which secure
all of the Company's first mortgage bonds, serve as a direct first mortgage
lien on substantially all property and franchises, other than specifically
excepted property, owned by the Company.

          Based on the amount of bonds authenticated by the Trustee through
December 31, 2000, the Company's annual sinking and improvement fund
requirements for all bonds issued under the mortgage amounts to
$1.0 million. The Company expects to deposit funds in 2001 that will be
withdrawn upon the surrender for cancellation of a like principal amount of
bonds, which are specifically authenticated for such purposes against
unfunded property additions or against previously retired bonds. This
method can result in minor increases in the amount of the annual sinking
fund requirement. Sinking fund requirements for first mortgage bonds and
maturing long-term debt (excluding capital leases) during the next five
years are $1.0 million in 2001, $1.0 million in 2002, $41.0 million in
2003, $40.7 million in 2004 and $1.0 million in 2005.

          The Company's obligations to repay certain pollution control
revenue bonds are secured by a series of first mortgage bonds. The
$10.3 million pollution control revenue bond is entitled to the benefit of
irrevocable bank letters of credit of $10.4 million. To the extent that
drawings are made under the letters of credit to pay principal of, or
interest on, the pollution control revenue bond, the Company is entitled to
a credit against its obligation to repay this bond. The Company pays an
annual fee of 1.25% of the amount of the letters of credit to the issuing
bank and is obligated to reimburse the bank for any drawings thereunder.

4.  SHORT-TERM BORROWINGS:

          The Company has a credit agreement with Edison whereby either
company can borrow funds from the other by issuing unsecured notes at the
prevailing prime or similar interest rate. Under the terms of this
agreement, the maximum borrowing is limited only by the availability of
funds; however, the Company's borrowing under this agreement is currently
limited by the PPUC to a total of $50 million. Either company can terminate
the agreement with six months' notice.

5.  COMMITMENTS AND CONTINGENCIES:

CAPITAL EXPENDITURES-

          The Company's current forecast reflects expenditures of
approximately $153 million for property additions and improvements from
2001-2005, of which approximately $28 million is applicable to 2001.
Investments for additional nuclear fuel during the 2001-2005 period are
estimated to be approximately $81 million, of which approximately
$22 million applies to 2001. During the same periods, the Company's nuclear
fuel investments are expected to be reduced by approximately $91 million
and $18 million, respectively, as the nuclear fuel is consumed.

NUCLEAR INSURANCE-

          The Price-Anderson Act limits the public liability relative to a
single incident at a nuclear power plant to $9.5 billion. The amount is
covered by a combination of private insurance and an industry retrospective
rating plan. Based on its ownership interests in the Beaver Valley Station
and the Perry Plant, the Company's maximum potential assessment under the
industry retrospective rating plan (assuming the other affiliate co-owners
contribute their proportionate shares of any assessments under the
retrospective rating plan) would be $74 million per incident but not more
than $8.4 million in any one year for each incident.

          The Company is also insured as to its interest in Beaver Valley
and Perry under policies issued to the operating company for each plant.
Under these policies, up to $2.75 billion is provided for property damage
and decontamination and decommissioning costs. The Company has also
obtained approximately $148 million of insurance coverage for replacement
power costs for its interests in Beaver Valley and Perry. Under these
policies, the Company can be assessed a maximum of approximately
$7.4 million for incidents at any covered nuclear facility occurring during
a policy year which are in excess of accumulated funds available to the
insurer for paying losses.

          The Company intends to maintain insurance against nuclear risks
as described above as long as it is available. To the extent that
replacement power, property damage, decontamination, decommissioning,
repair and replacement costs and other such costs arising from a nuclear
incident at any of the Company's plants exceed the policy limits of the
insurance in effect with respect to that plant, to the extent a nuclear
incident is determined not to be covered by the Company's insurance
policies, or to the extent such insurance becomes unavailable in the
future, the Company would remain at risk for such costs.

ENVIRONMENTAL MATTERS-

          Various federal, state and local authorities regulate the Company
with regard to air and water quality and other environmental matters.
Generation operations and any related additional capital expenditures for
environmental compliance are the responsibility of FirstEnergy's
competitive services business unit.

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

          The Company is in compliance with the current SO2 and nitrogen
oxides (NOx) reduction requirements under the Clean Air Act Amendments of
1990. SO2 reductions are being achieved by burning lower-sulfur fuel,
generating more electricity from lower-emitting plants, and/or using
emission allowances. NOx reductions are being achieved through combustion
controls and the generation of more electricity at lower-emitting plants.
In September 1998, the EPA finalized regulations requiring additional NOx
reductions from the Company's Pennsylvania facilities. The EPA's NOx
Transport Rule imposes uniform reductions of NOx emissions (an approximate
85% reduction in utility plant NOx emissions from projected 2007 emissions)
across a region of 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. In March 2000, the U.S. Court of Appeals for the D.C.
Circuit upheld EPA's NOx Transport Rule except as applied to the State of
Wisconsin and portions of Georgia and Missouri. By October 2000, states
were to submit revised State Implementation Plans (SIP) to comply by
May 31, 2004 with individual state NOx budgets established by the EPA.
Pennsylvania recently submitted a SIP that requires compliance with the NOx
budgets at the Company's Pennsylvania facilities by May 1, 2003. A 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 position is that the Section 126 petitions will be
adequately addressed by the NOx Transport Program, but a December 17, 1999
rulemaking established an alternative program which would require nearly
identical 85% NOx reductions at 392 utility plants, including the Company's
Ohio and Pennsylvania plants, by May 2003, in the event implementation of
the NOx Transport Rule is not implemented by a state. Additional
Section 126 petitions were filed by New Jersey, Maryland, Delaware and the
District of Columbia in mid-1999 and are still under evaluation by the EPA.
FirstEnergy continues to evaluate its compliance plans and other compliance
options.

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

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

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

          As a result of the Resource Conservation and Recovery Act of
1976, as amended, and the Toxic Substances Control Act of 1976, federal and
state hazardous waste regulations have been promulgated. Certain
fossil-fuel combustion waste products, such as coal ash, were exempted from
hazardous waste disposal requirements pending the EPA's evaluation of the
need for future regulation. The EPA has issued its final regulatory
determination that regulation of coal ash as a hazardous waste is
unnecessary. On April 25, 2000, the EPA announced that it will develop
national standards regulating disposal of coal ash under its authority to
regulate nonhazardous waste.

6.  SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED):

          The following summarizes certain operating results by quarter for
2000 and 1999.


<TABLE>
<CAPTION>
                                    March 31,  June 30,  September 30,  December 31,
Three Months Ended                    2000       2000        2000          2000
-----------------------------------------------------------------------------------
                                                    (In millions)
<S>                                 <C>         <C>         <C>            <C>
Operating Revenues                  $ 83.9      $93.6       $102.8         $102.8
Operating Expenses and Taxes          90.3       81.0         83.0           88.9
-----------------------------------------------------------------------------------
Operating Income (Loss)               (6.4)      12.6         19.8           13.9
Other Income                           0.4        0.4          0.4            1.1
Net Interest Charges                   4.4        5.4          5.0            4.6
-----------------------------------------------------------------------------------
Net Income (Loss)                   $(10.4)     $ 7.6       $ 15.2         $ 10.4
===================================================================================
Earnings (Loss) on Common Stock     $(11.3)     $ 6.7       $ 14.3         $  9.5
===================================================================================

</TABLE>


<TABLE>
<CAPTION>

                                    March 31,  June 30,  September 30,  December 31,
Three Months Ended                    1999      1999         1999          1999
-----------------------------------------------------------------------------------
                                                   (In millions)
<S>                                 <C>         <C>         <C>            <C>
Operating Revenues                  $81.4       $82.1       $82.4          $83.4
Operating Expenses and Taxes         67.1        72.4        73.2           84.5
----------------------------------------------------------------------------------
Operating Income (Loss)              14.3         9.7         9.2           (1.1)
Other Income                          1.0         0.3         0.2           --
Net Interest Charges                  5.0         5.9         4.9            5.1
----------------------------------------------------------------------------------
Net Income (Loss)                   $10.3       $ 4.1       $ 4.5          $(6.2)
==================================================================================
Earnings (Loss) on Common Stock     $ 9.2       $ 2.9       $ 3.3          $(7.2)
==================================================================================


</TABLE>


Report of Independent Public Accountants

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

We have audited the accompanying balance sheets and statements
of capitalization of Pennsylvania Power Company (a Pennsylvania
corporation and wholly owned subsidiary of Ohio Edison Company)
as of December 31, 2000 and 1999, and the related statements of
income, common stockholder's equity, preferred stock, cash flows
and taxes for each of the three years in the period ended
December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Pennsylvania Power Company as of December 31, 2000 and 1999,
and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the
United States.







ARTHUR ANDERSEN LLP


Cleveland, Ohio,
  February 16, 2001.




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