**GLOSSARY      OF      TERMS**

| ATSI                                                                 | American                    Transmission Systems, Inc., owns and operates transmission                    facilities                                                                                                  |
|----------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Avon                                                                 | Avon                    Energy                    Partners Holdings                                                                                                                                                   |
| CEI                                                                  | The                    Cleveland                    Electric Illuminating Company, an Ohio electric utility operating                    subsidiary                                                                   |
| Centerior                                                            | Centerior                    Energy Corporation, former parent of CEI and TE, which merged                    with OE to                    formFirstEnergy                    on                    November 8, 1997 |
| Companies                                                            | OE,                    CEI, TE,                    Penn, JCP&L, Met-Ed and Penelec                                                                                                                                |
| FENOC                                                                | FirstEnergy                    Nuclear Operating Company, operates nuclear generating                    facilities                                                                                                   |
| FES                                                                  | FirstEnergy                    Solutions Corp., provides energy-related products and                    services                                                                                                      |
| FESC                                                                 | FirstEnergy                    Service Company, provides legal, financial, and other corporate                    support                    services                                                                 |
| FGCO                                                                 | FirstEnergy                    Generation Corp., owns and operates non-nuclear generating                    facilities                                                                                               |
| FirstCom                                                             | First                    Communications, LLC, provides local and long-distance telephone                    service                                                                                                   |
| FirstEnergy                                                          | FirstEnergy                    Corp., a public utility holding company                                                                                                                                                |
| FSG                                                                  | FirstEnergy                    Facilities Services Group, LLC, former parent of several heating,                    ventilation,air                    conditioning and energy management companies                   |
| GLEP                                                                 | Great                    Lakes                    Energy Partners, LLC, an oil and natural gas exploration and                    production                    venture                                               |
| GPU                                                                  | GPU,                    Inc.,                    former parent of JCP&L, Met-Ed and Penelec, which merged with                    FirstEnergy onNovember 7,                    2001                          |
| JCP&L                                                            | Jersey                    Central                    Power & Light Company, a New Jersey electric utility operating                    subsidiary                                                                 |
| JCP&L                    Transition Funding                      | JCP&L                    Transition Funding LLC, a Delaware limited liability company                    and issuer of                    transition bonds                                                        |
| JCP&L                    TransitionFunding                    II | JCP&L                    Transition Funding II LLC, a Delaware limited liability company                    and issuer                    of transition bonds                                                     |
| Met-Ed                                                               | Metropolitan                    Edison Company, a Pennsylvania electric utility operating                    subsidiary                                                                                               |
| MYR                                                                  | MYR                    Group,                    Inc., a utility infrastructure construction service                    company                                                                                       |
| NGC                                                                  | FirstEnergy                    Nuclear Generation Corp., owns nuclear generating                    facilities                                                                                                        |
| OE                                                                   | Ohio                    Edison                    Company, an Ohio electric utility operating subsidiary                                                                                                              |
| Ohio                    Companies                                    | CEI,                    OE and                    TE                                                                                                                                                                  |
| Penelec                                                              | Pennsylvania                    Electric Company, a Pennsylvania electric utility operating                    subsidiary                                                                                             |
| Penn                                                                 | Pennsylvania                    Power Company, a Pennsylvania electric utility operating subsidiary                    of                    OE                                                                       |
| PNBV                                                                 | PNBV                    Capital                    Trust, a special purpose entity created by OE in 1996                                                                                                              |
| Shippingport                                                         | Shippingport                    Capital Trust, a special purpose entity created by CEI and TE                    in                    1997                                                                           |
| TE                                                                   | The                    Toledo                    Edison Company, an Ohio electric utility operating                    subsidiary                                                                                     |
| TEBSA                                                                | Termobarranquilla                    S.A., Empresa de Servicios                    Publicos                                                                                                                           |

| The                  following                  abbreviations and acronyms are used to identify frequently used                  terms in                  this report: |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ALJ                       | Administrative                    Law Judge                                                          |
|---------------------------|------------------------------------------------------------------------------------------------------|
| AOCL                      | Accumulated                    Other Comprehensive Loss                                              |
| APB                       | Accounting                    Principles Board                                                       |
| APB                    25 | APB                    Opinion                    No. 25, "Accounting for Stock Issued to Employees" |
| ARO                       | Asset                    Retirement Obligation                                                       |
| B&W                   | Babcock&                    Wilcox Company                                                       |
| Bechtel                   | Bechtel                    Power                    Corporation                                      |
| BGS                       | Basic                    Generation Service                                                          |
| BTU                       | British                    Thermal Unit                                                              |
| CAIR                      | Clean                    Air                    Interstate Rule                                      |
| CAL                       | Confirmatory                    Action Letter                                                        |
| CAMR                      | Clean                    Air                    Mercury Rule                                         |
| CAT                       | Commercial                    Activity Tax                                                           |
| CBP                       | Competitive                    Bid Process                                                           |
| CO2                       | Carbon                    Dioxide                                                                    |
| CONSOL                    | CONSOL                    Energy                    Inc.                                             |
| CTC                       | Competitive                    Transition Charge                                                     |
| DCPD                      | Deferred                    Compensation Plan for Outside Directors                                  |
| DOJ                       | United                    States                    Department of Justice                            |

----

**GLOSSARY      OF      TERMS, Cont'd.**

| DRA                                                                                       | Division                of                Ratepayer Advocate                                                                                                                                                      |
|-------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ECAR                                                                                      | East                Central                Area Reliability Coordination Agreement                                                                                                                                |
| EDCP                                                                                      | Executive                Deferred Compensation Plan                                                                                                                                                               |
| EEI                                                                                       | Edison                Electric Institute                                                                                                                                                                          |
| EITF                                                                                      | Emerging                Issues Task Force                                                                                                                                                                         |
| EITF                99-19                                                                 | EITF                Issue No.                99-19, "Reporting Revenue Gross as a Principal versus Net as an                Agent"                                                                                |
| EPA                                                                                       | Environmental                Protection Agency                                                                                                                                                                    |
| EPACT                                                                                     | Energy                Policy                Act of 2005                                                                                                                                                           |
| ERO                                                                                       | Electric                Reliability Organization                                                                                                                                                                  |
| ESOP                                                                                      | Employee                Stock                Ownership Plan                                                                                                                                                       |
| FASB                                                                                      | Financial                Accounting Standards Board                                                                                                                                                               |
| FERC                                                                                      | Federal                Energy                Regulatory Commission                                                                                                                                                |
| FIN                                                                                       | FASB                Interpretation                                                                                                                                                                                |
| FIN                46R                                                                    | FIN                46                (revised December 2003), "Consolidation of Variable Interest                Entities"                                                                                        |
| FIN                47                                                                     | FIN                47,                "Accounting for Conditional Asset Retirement Obligations - an                interpretation of FASB Statement No. 143"                                                      |
| FIN                48                                                                     | FIN                48,                “Accounting for Uncertainty in Income Taxes-an interpretation of FASB                Statement No. 109”                                                         |
| Fitch                                                                                     | Fitch                Ratings,                Ltd.                                                                                                                                                                 |
| FMB                                                                                       | First                Mortgage                Bonds                                                                                                                                                                |
| FSP                                                                                       | FASB                Staff                Position                                                                                                                                                                 |
| FSP                SFAS 115-1                and                SFAS                124-1 | FSP                SFAS 115-1                and SFAS 124-1, “The Meaning of Other-Than-Temporary Impairment and its                Application                to                Certain Investments” |
| GAAP                                                                                      | Accounting                Principles Generally Accepted in the United States                                                                                                                                      |
| GHG                                                                                       | Greenhouse                Gases                                                                                                                                                                                   |
| HVAC                                                                                      | Heating,                Ventilation and Air-conditioning                                                                                                                                                          |
| IRS                                                                                       | Internal                Revenue Service                                                                                                                                                                           |
| KWH                                                                                       | Kilowatt-hours                                                                                                                                                                                                    |
| LOC                                                                                       | Letter                of                Credit                                                                                                                                                                    |
| LTIP                                                                                      | Long-term                Incentive Program                                                                                                                                                                        |
| MISO                                                                                      | Midwest                Independent Transmission System Operator, Inc.                                                                                                                                             |
| Moody’s                                                                             | Moody’s                Investors Service                                                                                                                                                                    |
| MOU                                                                                       | Memorandum                of                Understanding                                                                                                                                                         |
| MTC                                                                                       | Market                Transition Charge                                                                                                                                                                           |
| MW                                                                                        | Megawatts                                                                                                                                                                                                         |
| NAAQS                                                                                     | National                Ambient Air Quality Standards                                                                                                                                                             |
| NERC                                                                                      | North                American                Electric Reliability Corporation                                                                                                                                     |
| NJBPU                                                                                     | New                Jersey                Board of Public Utilities                                                                                                                                                |
| NOPR                                                                                      | Notice                of                Proposed Rulemaking                                                                                                                                                       |
| NOV                                                                                       | Notice                of                Violation                                                                                                                                                                 |
| NOX                                                                                       | Nitrogen                Oxide                                                                                                                                                                                     |
| NRC                                                                                       | Nuclear                Regulatory Commission                                                                                                                                                                      |
| NUG                                                                                       | Non-Utility                Generation                                                                                                                                                                             |
| NUGC                                                                                      | Non-Utility                Generation Charge                                                                                                                                                                      |
| OCC                                                                                       | Office                of the                Ohio Consumers' Counsel                                                                                                                                               |
| OCI                                                                                       | Other                Comprehensive Income                                                                                                                                                                         |
| OPEB                                                                                      | Other                Post-Employment Benefits                                                                                                                                                                     |
| PJM                                                                                       | PJM                Interconnection L. L. C.                                                                                                                                                                       |
| PLR                                                                                       | Provider                of                Last Resort                                                                                                                                                             |
| PPUC                                                                                      | Pennsylvania                Public Utility Commission                                                                                                                                                             |
| PRP                                                                                       | Potentially                Responsible Party                                                                                                                                                                      |
| PUCO                                                                                      | Public                Utilities Commission of Ohio                                                                                                                                                                |
| PUHCA                                                                                     | Public                Utility                Holding Company Act of 1935                                                                                                                                          |
| RCP                                                                                       | Rate                Certainty                Plan                                                                                                                                                                 |
| RFP                                                                                       | Request                for                Proposal                                                                                                                                                                |
| RSP                                                                                       | Rate                Stabilization Plan                                                                                                                                                                            |
| RTC                                                                                       | Regulatory                Transition Charge                                                                                                                                                                       |
| RTO                                                                                       | Regional                Transmission Organization                                                                                                                                                                 |
| RTOR                                                                                      | Regional                Through and Out Rates                                                                                                                                                                     |
| S&P                                                                                   | Standard&                Poor’s Ratings Service                                                                                                                                                         |
| S&P                500                                                                | Standard&                Poor’s Index of Widely Held Common Stocks                                                                                                                                      |
| SBC                                                                                       | Societal                Benefits Charge                                                                                                                                                                           |
| SEC                                                                                       | U.S.                Securities and Exchange Commission                                                                                                                                                            |

----

**GLOSSARY      OF      TERMS, Cont'd.**

| SFAS                       | Statement                of                Financial Accounting Standards                                                                                                                                                                                 |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SFAS                71     | SFAS                No. 71,                "Accounting for the Effects of Certain Types of                Regulation"                                                                                                                                     |
| SFAS                87     | SFAS                No. 87,                "Employers' Accounting for Pensions"                                                                                                                                                                           |
| SFAS                101    | SFAS                No. 101,                "Accounting for Discontinuation of Application of SFAS                71"                                                                                                                                     |
| SFAS                106    | SFAS                No. 106,                "Employers' Accounting for Postretirement Benefits Other Than                Pensions"                                                                                                                        |
| SFAS                107    | SFAS                No. 107,                “Disclosure about Fair Value of Financial Instruments”                                                                                                                                            |
| SFAS                115    | SFAS                No. 115,                "Accounting for Certain Investments in Debt and Equity                Securities"                                                                                                                             |
| SFAS                123(R) | SFAS                No.                123(R), "Share-Based Payment"                                                                                                                                                                                      |
| SFAS                133    | SFAS                No. 133,                “Accounting for Derivative Instruments and Hedging                Activities”                                                                                                                     |
| SFAS                142    | SFAS                No. 142,                "Goodwill and Other Intangible Assets"                                                                                                                                                                        |
| SFAS                143    | SFAS                No. 143,                "Accounting for Asset Retirement Obligations"                                                                                                                                                                 |
| SFAS                144    | SFAS                No. 144,                "Accounting for the Impairment or Disposal of Long-Lived                Assets"                                                                                                                               |
| SFAS                157    | SFAS                No. 157,                “Fair Value Measurements”                                                                                                                                                                         |
| SFAS                158    | SFAS                No. 158,                “Employers’ Accounting for Defined Benefit Pension and Other                Postretirement Plans-an                amendment of FASB Statements No. 87, 88, 106, and                132(R)” |
| SFAS                159    | SFAS                No. 159,                “The Fair Value Option for Financial Assets and Financial Liabilities                -                Including anAmendment                of                FASB Statement No. 115”              |
| SIP                        | State                Implementation Plan(s) Under the Clean Air Act                                                                                                                                                                                       |
| SO2                        | Sulfur                Dioxide                                                                                                                                                                                                                             |
| SRM                        | Special                Reliability Master                                                                                                                                                                                                                 |
| TBC                        | Transition                Bond Charge                                                                                                                                                                                                                     |
| TMI-1                      | Three                Mile                Island Unit 1                                                                                                                                                                                                    |
| TMI-2                      | Three                Mile                Island Unit 2                                                                                                                                                                                                    |
| VIE                        | Variable                Interest Entity                                                                                                                                                                                                                   |
| VMEP                       | Vegetation                Management Enhancement Project                                                                                                                                                                                                  |

----

**MANAGEMENT      REPORTS **

*Management's      Responsibility for Financial Statements*

*Management's      Report on Internal Control Over Financial Reporting*

*Internal      Control      - Integrated Framework*
*.*

----

**Report      of      Independent Registered Public Accounting Firm**

*Internal      Control      - Integrated Framework*
*Internal      Control      - Integrated Framework*

----

| **FIRSTENERGY                        CORP.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **SELECTED                        FINANCIAL DATA**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **For                        the Years Ended December 31,**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |    |   |   | **2006** |   |   | **2005** |   |   | **2004** |   |   | **2003** |   |   | **2002** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |    |   |  ***(In                        millions, except per share amounts)*** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |   |   | $ | 11,501 |   |   | $ | 11,358 |   |   | $ | 11,600 |   |   | $ | 10,802 |   |   | $ | 10,527 |   |
| Income                        From                        Continuing Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |         |   |   | $ | 1,258 |   |   | $ | 879 |   |   | $ | 907 |   |   | $ | 494 |   |   | $ | 609 |   |
| Net                        Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |         |   |   | $ | 1,254 |   |   | $ | 861 |   |   | $ | 878 |   |   | $ | 423 |   |   | $ | 553 |   |
| Basic                        Earnings                        per Share of Common Stock:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                        from                        continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |   | $ | 3.85 |   |   | $ | 2.68 |   |   | $ | 2.77 |   |   | $ | 1.63 |   |   | $ | 2.08 |   |
| Net                        earnings                        per basic share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |         |   |   | $ | 3.84 |   |   | $ | 2.62 |   |   | $ | 2.68 |   |   | $ | 1.39 |   |   | $ | 1.89 |   |
| Diluted                        Earnings per Share of Common Stock:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                        from                        continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |   | $ | 3.82 |   |   | $ | 2.67 |   |   | $ | 2.76 |   |   | $ | 1.62 |   |   | $ | 2.07 |   |
| Net                        earnings                        per diluted share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |         |   |   | $ | 3.81 |   |   | $ | 2.61 |   |   | $ | 2.67 |   |   | $ | 1.39 |   |   | $ | 1.88 |   |
| Dividends                        Declared per Share of Common Stock (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |         |   |   | $ | 1.85 |   |   | $ | 1.705 |   |   | $ | 1.9125 |   |   | $ | 1.50 |   |   | $ | 1.50 |   |
| Total                        Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |         |   |   | $ | 31,196 |   |   | $ | 31,841 |   |   | $ | 31,035 |   |   | $ | 32,878 |   |   | $ | 34,366 |   |
| Capitalization                        as of December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                        Stockholders’ Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |         |   |   | $ | 9,035 |   |   | $ | 9,188 |   |   | $ | 8,590 |   |   | $ | 8,290 |   |   | $ | 7,051 |   |
| Preferred                        Stock:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Not                        Subject to                        Mandatory Redemption                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |         |   |   |   | - |   |   |   | 184 |   |   |   | 335 |   |   |   | 335 |   |   |   | 335 |   |
|  Subject                        to                        Mandatory Redemption                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 428 |   |
| Long-Term                        Debt                        and Other Long-Term                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |         |   |   |   | 8,535 |   |   |   | 8,155 |   |   |   | 10,013 |   |   |   | 9,789 |   |   |   | 10,872 |   |
| Total                        Capitalization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |         |   |   | $ | 17,570 |   |   | $ | 17,527 |   |   | $ | 18,938 |   |   | $ | 18,414 |   |   | $ | 18,686 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                        Average Number of Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                        Outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         |   |   |   | 324 |   |   |   | 328 |   |   |   | 327 |   |   |   | 304 |   |   |   | 293 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                        Average Number of Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                        Outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         |   |   |   | 327 |   |   |   | 330 |   |   |   | 329 |   |   |   | 305 |   |   |   | 294 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)                         Dividends declared in 2006 include three                        quarterly payments                        of $0.45 per share in 2006 and one quarterly payment of $0.50                        per share                        payable in      2007,increasing                        the                        indicated annual dividend rate from $1.80 to $2.00 per share.                        Dividends                        declared in 2005 include two quarterly payments of                        $0.4125                             per share                        in 2005,                        one quarterly payment of $0.43 per share in 2005 and one                        quarterly payment                        of $0.45 per share in 2006. Dividends declared in                        2004  include                          four quarterly dividends of $0.375 per share paid in 2004                          and a quarterly                          dividend of $0.4125 per share paid in 2005. Dividends                          declared in                          2002                           and                          2003 include four quarterly dividends of $0.375 per                          share.  |         |

**PRICE      RANGE      OF COMMON STOCK**

|                                                                    |   | **2006** |   | **2005** |   |
|-------------------------------------------------------------------------|--------|----------|--------|----------|--------|
| First                Quarter                High-Low                    |   | $        | 52.17  |     | $      | 47.75 |   | $ | 42.36 |   | $ | 37.70 |   |
| Second                Quarter                High-Low                   |   | $        | 54.57  |     | $      | 48.23 |   | $ | 48.96 |   | $ | 40.75 |   |
| Third                Quarter                High-Low                    |   | $        | 57.50  |     | $      | 53.47 |   | $ | 53.00 |   | $ | 47.46 |   |
| Fourth                Quarter                High-Low                   |   | $        | 61.70  |     | $      | 55.99 |   | $ | 53.36 |   | $ | 45.78 |   |
| Yearly                High-Low                                          |   | $        | 61.70  |     | $      | 47.75 |   | $ | 53.36 |   | $ | 37.70 |   |
|                                                                    |   |     |   |     |   |   |   |   |   |   |   |   |   |
|                                                                    |   |     |   |     |   |   |   |   |   |   |   |   |   |
| Prices                are                from http://finance.yahoo.com. |

----

**SHAREHOLDER      RETURN**

**HOLDERS      OF      COMMON STOCK**

----

**FIRSTENERGY      CORP.**

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF**

**RESULTS      OF      OPERATIONS AND FINANCIAL CONDITION**

***Forward-Looking      Statements:***
*      This discussion      includes forward-looking statements based on information currently available      to      management. Such statements are subject to certain risks and uncertainties.      These statements typically contain, but are not limited to, the terms“anticipate,” “potential,” “expect,” “believe,” “estimate” and similar words.      Actual results may differ materially due to the speed and nature of increased      competition and deregulation in the electric utility industry, economic or      weather conditions affecting future sales and margins, changes in markets for      energy services, changing energy and commodity market prices, replacement power      costs being higher than anticipated or inadequately hedged, the continued      ability of our regulated utilities to collect transition and other charges      or to      recover increased transmission costs, maintenance costs being higher than      anticipated, legislative and regulatory changes (including revised environmental      requirements), and the legal and regulatory changes resulting from the      implementation of the EPACT (including, but not limited to, the repeal of the      PUHCA), the uncertainty of the timing and amounts of the capital expenditures      needed to, among other things, implement the Air Quality Compliance Plan      (including that such amounts could be higher than anticipated) or levels of      emission reductions related to the Consent Decree resolving the New Source      Review litigation, adverse regulatory or legal decisions and outcomes      (including, but not limited to, the revocation of necessary licenses or      operating permits, fines or other enforcement actions and remedies) of      governmental investigations and oversight, including by the SEC, the NRC and      the      various state public utility commissions as disclosed in our SEC filings,      generally, and heightened scrutiny at the Perry Nuclear Power Plant in      particular, the timing and outcome of various proceedings before the PUCO      (including, but not limited to, the successful resolution of the issues remanded      to the PUCO by the Ohio Supreme Court regarding the Rate Stabilization Plan)      and      the PPUC, including the transition rate plan filings for Met-Ed and Penelec,      the      continuing availability and operation of generating units, the ability of our      generating units to continue to operate at, or near full capacity, the inability      to accomplish or realize anticipated benefits from strategic goals (including      employee workforce initiatives), the anticipated benefits from voluntary pension      plan contributions, the ability to improve electric commodity margins and to      experience growth in the distribution business, the ability to access the public      securities and other capital markets and the cost of such capital, the outcome,      cost and other effects of present and potential legal and administrative      proceedings and claims related to the August 14, 2003 regional power      outage, the successful structuring and completion of a potential sale and      leaseback transaction for Bruce Mansfield Unit 1 currently under consideration      by management, the successful implementation of the share repurchase program      announced January 31, 2007, the risks and other factors discussed from time      to time in our SEC filings, and other similar factors. Dividends declared from      time to time on FirstEnergy’s common stock during any annual period may in      aggregate vary from the indicated amounts due to circumstances considered by      FirstEnergy’s Board of Directors at the time of the actual declarations. Also, a      security rating is not a recommendation to buy, sell or hold securities, and      it      may be subject to revision or withdrawal at any time and each such rating should      be evaluated independently of any other rating. We expressly disclaim any      current intention to update any forward-looking statements contained herein      as a      result of new information, future events, or otherwise. *

**EXECUTIVE      SUMMARY**

| **Change                in Basic Earnings Per Share From Prior Year **        |                                                           | **2006** |   | **2005** |   | **2004** |   |
|------------------------------------------------------------------------------------|----------------------------------------------------------------|----------|--------|----------|--------|----------|--------|
|                                                                               |                                                           |     |   |     |   |     |   |   |   |   |
| Basic                Earnings                Per Share - Prior Year                |                                                           | $        | 2.62   |     | $      | 2.68     |   | $ | 1.39 |   |
| PPUC                NUG                accounting adjustment in 2006               |                                                           |     | (0.02  | )        |   | -        |   |   | - |   |
| Trust                securities impairment in 2006                                 |                                                           |     | (0.02  | )        |   | -        |   |   | - |   |
| Ohio/New                Jersey income tax adjustments in 2005                      |                                                           |     | 0.19   |     |   | (0.19    | )      |   | - |   |
| Sammis                Plant                New Source Review settlement in 2005    |                                                           |     | 0.04   |     |   | (0.04    | )      |   | - |   |
| Davis-Besse                fine/penalty in 2005                                    |                                                           |     | 0.10   |     |   | (0.10    | )      |   | - |   |
| JCP&L                arbitration decision in 2005                              |                                                           |     | 0.03   |     |   | (0.03    | )      |   | - |   |
| New                regulatory                assets - JCP&L settlement in 2005 |                                                           |     | (0.05  | )        |   | 0.05     |   |   | - |   |
| Lawsuits                settlements in 2004                                        |                                                           |     | -      |     |   | 0.03     |   |   | (0.03 | ) |
| Nuclear                operations severance costs in 2004                          |                                                           |     | -      |     |   | 0.01     |   |   | (0.01 | ) |
| Davis-Besse                extended outage impacts                                 |                                                           |     | -      |     |   | 0.12     |   |   | 0.44 |   |
| Discontinued                Operations:                                            |                                                           |     |   |     |   |     |   |   |   |   |
|                                                                               | Non-core                asset                sales/impairments |     |   | (0.02    | )      |     | 0.21   |   |   | (0.19 | ) |
|                                                                               | Other                                                          |     |   | (0.02    | )      |     | (0.09  | ) |   | 0.67 |   |
| Revenues                                                                           |                                                           |     | 0.26   |     |   | (0.44    | )      |   | 1.46 |   |
| Transition                costs amortization                                       |                                                           |     | 0.82   |     |   | (0.18    | )      |   | (0.10 | ) |
| Deferral                of                new regulatory assets                    |                                                           |     | 0.23   |     |   | 0.22     |   |   | 0.12 |   |
| Fuel                and                purchased power                             |                                                           |     | (0.43  | )        |   | 0.72     |   |   | (0.81 | ) |
| Other                expenses                                                      |                                                           |     | 0.24   |     |   | (0.30    | )      |   | (0.20 | ) |
| Investment                income                                                   |                                                           |     | (0.11  | )        |   | 0.02     |   |   | 0.04 |   |
| Interest                expense                                                    |                                                           |     | (0.11  | )        |   | 0.02     |   |   | 0.23 |   |
| Cumulative                effect of a change in accounting principle               |                                                           |     | 0.09   |     |   | (0.09    | )      |   | (0.33 | ) |
| Basic                Earnings                Per Share                             |                                                           | $   | 3.84   |     | $      | 2.62     |   | $ | 2.68 |   |

----

**Generation**

| **2006                Power Uprates (MW)** |
|--------------------------------------------|
|                                       |   |   |
| Fossil:                                    |
|                                       | Bruce                Mansfield Unit 2 | 50 |
|                                       |   |   |
| Nuclear:                                   |
|                                       | Beaver                Valley                Unit 1 | 25 |
|                                       | Beaver                Valley                Unit 2 | 10 |
|                                       | Davis-Besse | 14 |
|                                       |   | 49 |
| Total                                      | 99 |

----

**Rate      Matters**

**Financings**

| **Company**                           | **Principal****(millions)** | **Maturity** | **Use                of                Proceeds** |
|---------------------------------------|-----------------------------|--------------|---------------------------------------------------|
| JCP&L                             | $                           | 200          | 2036                                              | Fund                maturing                long-term debt |
| JCP&L*                            |                        | 182          | 2021                                              | Preferred                stock redemption; common stock repurchase; short-term debt                reduction |
| OE                                    |                        | 250          | 2016                                              | Preferred                stock redemption; common stock repurchase; short-term debt                reduction |
| OE                                    |                        | 350          | 2036                                              | Preferred                stock redemption; common stock repurchase; short-term debt                reduction |
| TE                                    |                        | 300          | 2037                                              | Preferred                stock redemption; common stock repurchase |
| CEI                                   |                        | 300          | 2036                                              | Common                stock                repurchase |
| FGCO                                  |                        | 26           | 2041                                              | Short-term                debt reduction |
|                                  | $                           | 1,608        |                                              |   |
|                                  |                        |         |                                              |   |
| *                Securitization bonds |

----

**FIRSTENERGY’S      BUSINESS **

| · | **Regulated                Services**                transmits and                distributes electricity through FirstEnergy's eight utility operating                companies, serving 4.5 million customers within 36,100 square miles                of Ohio, Pennsylvania and New Jersey. This business segment derives                its                revenue principally from the delivery of electricity generated or                purchased by the Power Supply Management Services segment or, in                some                cases, purchased from independent suppliers in the states where the                utility subsidiaries operate and transition cost recovery. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Company** | **Area                Served**                                                                   | **Customers                Served** |
|-------------|--------------------------------------------------------------------------------------------------|-------------------------------------|
| OE          | Central                and                Northeastern Ohio                                      | 1,042,000                           |
|        |                                                                                             |                                |
| Penn        | Western                Pennsylvania                                                              | 159,000                             |
|        |                                                                                             |                                |
| CEI         | Northeastern                Ohio                                                                 | 762,000                             |
|        |                                                                                             |                                |
| TE          | Northwestern                Ohio                                                                 | 314,000                             |
|        |                                                                                             |                                |
| JCP&L   | Northern,                Western and EastCentral                New                Jersey        | 1,082,000                           |
|        |                                                                                             |                                |
| Met-Ed      | Eastern                Pennsylvania                                                              | 542,000                             |
|        |                                                                                             |                                |
| Penelec     | Western                Pennsylvania                                                              | 589,000                             |
|        |                                                                                             |                                |
| ATSI        | Service                areas                of OE, Penn,CEI                and                TE |                                |

| · | **Power                Supply Management** **Services**                owns and                operates FirstEnergy's power plants and purchases power to supply                the                electric power needs of customers in Ohio, Pennsylvania, Michigan,                Maryland and New Jersey. Wholesale arrangements with FirstEnergy's                Ohio                and Pennsylvania utility subsidiaries provide the power to meet all                or a                portion of their PLR requirements. This segment also markets energy                and                energy-related products to deregulated wholesale and retail markets.                The                segment's net income is primarily derived from electric generation                sales                revenues less the related costs of electricity generation, including                purchased power, and net transmission, congestion and ancillary costs                charged by PJM and MISO to deliver energy to retail                customers. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**STRATEGY**

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**RISKS      AND      CHALLENGES**

| ·  | Risks                  arising                  from the reliability of our power plants and transmission and distribution                  equipment;                                                                                                                                                                                                                                                                                                                                            |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | Changes                  in                  commodity prices that could adversely affect our profit margins;                                                                                                                                                                                                                                                                                                                                                                                     |
| ·  | We                  are exposed                  to operational, price and credit risks associated with selling                  and                  marketing products in the power markets that we do not always completely                  hedge against;                                                                                                                                                                                                                                    |
| ·  | Our                  risk                  management policies relating to energy and fuel prices, and counterparty                  credit are by their very nature risk related, and we could suffer                  economic                  losses despite such policies;                                                                                                                                                                                                                   |
| ·  | Nuclear                  generation involves risks that include uncertainties relating to                  health                  and safety, additional capital costs, the adequacy of insurance                  coverage                  and nuclear plant decommissioning;                                                                                                                                                                                                                  |
| ·  | We                  rely on                  transmission and distribution assets that we do not own or control                  to                  deliver our wholesale electricity. If transmission is disrupted                  including                  our own transmission, or not operated efficiently, or if capacity                  is                  inadequate, our ability to sell and deliver power may be                  hindered;                                       |
| ·  | Disruptions                  in                  our fuel supplies could occur, which could adversely affect our                  ability to                  operate our generation facilities;                                                                                                                                                                                                                                                                                                  |
| ·  | Seasonal                  temperature variations, as well as weather conditions or other                  natural                  disasters, could have a negative impact on our results of operations                  specifically with respect to our PLR contracts that do not provide                  for a                  specific level of supply, and demand significantly below or above                  our                  forecasts could adversely affect our energy margins;  |
| ·  | We                  are subject                  to financial performance risks related to the economic cycles of                  the                  electric utility industry;                                                                                                                                                                                                                                                                                                                |
| ·  | The                  goodwill of                  one or more of our operating subsidiaries may become impaired,                  which would                  result in write-offs of the impaired amounts;                                                                                                                                                                                                                                                                                      |
| ·  | We                  face                  certain human resource risks associated with the availability of                  trained                  and qualified labor to meet our future staffing requirements;                                                                                                                                                                                                                                                                                |
| ·  | Significant                  increases in our operation and maintenance expenses, including                  our health                  care and pension costs, that could adversely affect our future                  earnings                  and liquidity;                                                                                                                                                                                                                                 |
| ·  | Acts                  of war or                  terrorism that could negatively impact our business;                                                                                                                                                                                                                                                                                                                                                                                             |
| ·  | Complex                  and                  changing government regulations could have a negative impact on                  our                  results of operations;                                                                                                                                                                                                                                                                                                                        |
| ·  | Regulatory                  changes in the electric industry including a reversal, discontinuance                  or                  delay of the present trend towards competitive markets could affect                  our                  competitive position and result in unrecoverable costs adversely                  affecting                  our business and results of operations;                                                                                             |
| ·  | Our                  profitability is impacted by our affiliated companies’ continued                  authorization to sell power at market-based rates;                                                                                                                                                                                                                                                                                                                                   |
| ·  | The                  amount we                  charge third parties for using our transmission facilities may                  be reduced                  and not recovered;                                                                                                                                                                                                                                                                                                                    |
| ·  | There                  are                  uncertainties relating to our participation in the PJM and MISO                  regional                  transmission organizations;                                                                                                                                                                                                                                                                                                                     |

----

|         ·  | Costs                  of                  compliance with environmental laws are significant, and the cost                  of                  compliance with future environmental laws could adversely affect                  cash flow                  and profitability;      |
|--------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·                                                  | We                  are and may                  become subject to legal claims arising from the presence of asbestos                  or                  other regulated substances at some of our facilities;                                                                      |
| ·                                                  | The                  continuing                  availability and operation of generating units is dependent on                  retaining                  the necessary licenses, permits, and operating authority from governmental                  entities, including the NRC;  |
| ·                                                  | We                  may                  ultimately incur liability in connection with federal                  proceedings;                                                                                                                                                          |
| ·                                                  | Interest                  rates                  and/or a credit ratings downgrade could negatively affect our financing                  costs and our ability to access capital;                                                                                                    |
| ·                                                  | We                  must rely                  on cash from our subsidiaries; and                                                                                                                                                                                                     |
| ·                                                  | We                  cannot                  assure common shareholders that future dividend payments will be                  made, or                  if made, in what amounts they may be                  paid.                                                                        |

**FIRSTENERGY      INTRA-SYSTEM GENERATION ASSET TRANSFERS**

**RECLASSIFICATIONS**

**RESULTS      OF      OPERATIONS**

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|                                                                                          |   |                                                           |   |     |   |     |   | **Increase                  (Decrease)** |   |
|-----------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|----------|--------|----------|--------|------------------------------------------|--------|
|                                                                                          |   | **2006**                                                       |   | **2005** |   | **2004** |   | **2006                  vs 2005**        |   | **2005                  vs 2004** |   |
|                                                                                          |   | ***(In                  millions, except per share amounts)*** |   |
| **Net                  Income (Loss)**                                                        |   |                                                           |   |     |   |     |   |                                     |   |   |   |
| **By                  Business Segment:**                                                     |   |                                                           |   |     |   |     |   |                                     |   |   |   |
| Regulated                  services                                                           |   | $                                                              | 932    |     | $      | 1,153    |   | $                                        | 1,047  |   | $ | (221 | ) | $ | 106 |   |
| Power                  supply                  management services                            |   |                                                           | 465    |     |   | (50      | )      |                                     | 112    |   |   | 515 |   |   | (162 | ) |
| Other                  and                  reconciling adjustments*                          |   |                                                           | (143   | )        |   | (242     | )      |                                     | (281   | ) |   | 99 |   |   | 39 |   |
| Total                                                                                         |   | $                                                              | 1,254  |     | $      | 861      |   | $                                        | 878    |   | $ | 393 |   | $ | (17 | ) |
|                                                                                          |   |                                                           |   |     |   |          |   |                                     |        |   |   |   |   |   |  |   |
| **Basic                  Earnings Per Share:**                                                |   |                                                           |   |     |   |          |   |                                     |        |   |   |   |   |   |  |   |
| Income                  from                  continuing operations                           |   | $                                                              | 3.85   |     | $      | 2.68     |   | $                                        | 2.77   |   | $ | 1.17 |   | $ | (0.09 | ) |
| Discontinued                  operations                                                      |   |                                                           | (0.01  | )        |   | 0.03     |   |                                     | (0.09  | ) |   | (0.04 | ) |   | 0.12 |   |
| Cumulative                  effect of a change in accounting                   principle |   |                                                           | -      |     |   | (0.09    | )      |                                     | -      |   |   | 0.09 |   |   | (0.09 | ) |
| Basic                  earnings                  per share                                    |   | $                                                              | 3.84   |     | $      | 2.62     |   | $                                        | 2.68   |   | $ | 1.22 |   | $ | (0.06 | ) |
|                                                                                          |   |                                                           |   |     |   |     |   |                                     |   |   |   |   |   |   |   |   |
| **Diluted                  Earnings Per Share:**                                              |   |                                                           |   |     |   |          |   |                                     |        |   |   |   |   |   |  |   |
| Income                  from                  continuing operations                           |   | $                                                              | 3.82   |     | $      | 2.67     |   | $                                        | 2.76   |   | $ | 1.15 |   | $ | (0.09 | ) |
| Discontinued                  operations                                                      |   |                                                           | (0.01  | )        |   | 0.03     |   |                                     | (0.09  | ) |   | (0.04 | ) |   | 0.12 |   |
| Cumulative                  effect of a change in accounting                   principle |   |                                                           | -      |     |   | (0.09    | )      |                                     | -      |   |   | 0.09 |   |   | (0.09 | ) |
| Diluted                  earnings per share                                                   |   | $                                                              | 3.81   |     | $      | 2.61     |   | $                                        | 2.67   |   | $ | 1.20 |   | $ | (0.06 | ) |

***Summary      of Results of Operations - 2006 Compared with 2005***

|                                                                                |   |                               |   | **Power**      |   |                         |   |             |   |
|-------------------------------------------------------------------------------------|--------|------------------------------------|--------|----------------|--------|------------------------------|--------|------------------|--------|
|                                                                                |   |                               |   | **Supply**     |   | **Other                and** |   |             |   |
|                                                                                |   | **Regulated**                      |   | **Management** |   | **Reconciling**              |   | **FirstEnergy**  |   |
| **2006                Financial Results**                                           |   | **Services**                       |   | **Services**   |   | **Adjustments**              |   | **Consolidated** |   |
|                                                                                |   | ***(In                millions)*** |   |
| Revenues:                                                                           |   |                               |   |           |   |                         |   |             |   |
| External                                                                            |   |                               |   |           |   |                         |   |             |   |
| Electric                                                                            |   | $                                  | 3,850  |           | $      | 6,821                        |   | $                | -      |   | $ | 10,671 |   |
| Other                                                                          |   |                               | 591    |           |   | 208                          |   |             | 31     |   |   | 830 |   |
| Internal                                                                            |   |                               | -      |           |   | -                            |   |             | -      |   |   | - |   |
| Total                Revenues                                                       |   |                               | 4,441  |           |   | 7,029                        |   |             | 31     |   |   | 11,501 |   |
|                                                                                |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Expenses:                                                                           |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Fuel                and                purchased power                              |   |                               | -      |           |   | 4,253                        |   |             | -      |   |   | 4,253 |   |
| Other                operating expenses                                             |   |                               | 1,204  |           |   | 1,721                        |   |             | 40     |   |   | 2,965 |   |
| Provision                for                depreciation                            |   |                               | 376    |           |   | 194                          |   |             | 26     |   |   | 596 |   |
| Amortization                of regulatory assets                                    |   |                               | 842    |           |   | 19                           |   |             | -      |   |   | 861 |   |
| Deferral                of                new regulatory assets                     |   |                               | (217   | )              |   | (283                         | )      |             | -      |   |   | (500 | ) |
| General                taxes                                                        |   |                               | 532    |           |   | 171                          |   |             | 17     |   |   | 720 |   |
| Total                Expenses                                                       |   |                               | 2,737  |           |   | 6,075                        |   |             | 83     |   |   | 8,895 |   |
|                                                                                |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Operating                Income (Loss)                                              |   |                               | 1,704  |           |   | 954                          |   |             | (52    | ) |   | 2,606 |   |
| Other                Income                (Expense):                               |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Investment                income                                                    |   |                               | 270    |           |   | 36                           |   |             | (157   | ) |   | 149 |   |
| Interest                expense                                                     |   |                               | (408   | )              |   | (226                         | )      |             | (87    | ) |   | (721 | ) |
| Capitalized                interest                                                 |   |                               | 14     |           |   | 11                           |   |             | 1      |   |   | 26 |   |
| Subsidiaries'                preferred stock dividends                              |   |                               | (16    | )              |   | -                            |   |             | 9      |   |   | (7 | ) |
| Total                Other                Expense                                   |   |                               | (140   | )              |   | (179                         | )      |             | (234   | ) |   | (553 | ) |
|                                                                                |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Income                From                Continuing Operations Before Income Taxes |   |                               | 1,564  |           |   | 775                          |   |             | (286   | ) |   | 2,053 |   |
| Income                taxes                (benefit)                                |   |                               | 632    |           |   | 310                          |   |             | (147   | ) |   | 795 |   |
| Income                from                continuing operations                     |   |                               | 932    |           |   | 465                          |   |             | (139   | ) |   | 1,258 |   |
| Discontinued                operations                                              |   |                               | -      |           |   | -                            |   |             | (4     | ) |   | (4 | ) |
| Cumulative                effect of a change in accounting principle                |   |                               | -      |           |   | -                            |   |             | -      |   |   | - |   |
| Net                Income                (Loss)                                     |   | $                                  | 932    |           | $      | 465                          |   | $                | (143   | ) | $ | 1,254 |   |

----

|                                                                                |   |                               |   | **Power**      |   |                         |    |             |   |
|-------------------------------------------------------------------------------------|--------|------------------------------------|--------|----------------|--------|------------------------------|---------|------------------|--------|
|                                                                                |   |                               |   | **Supply**     |   | **Other                and** |    |             |   |
|                                                                                |   | **Regulated**                      |   | **Management** |   | **Reconciling**              |    | **FirstEnergy**  |   |
| **2005                Financial Results**                                           |   | **Services**                       |   | **Services**   |   | **Adjustments**              |    | **Consolidated** |   |
|                                                                                |   | ***(In                millions)*** |   |
| Revenues:                                                                           |   |                               |   |           |   |                         |    |             |   |
| External                                                                            |   |                               |   |           |   |                         |    |             |   |
| Electric                                                                            |   | $                                  | 4,582  |           | $      | 5,964                        |    | $                | -      |   | $ | 10,546 |   |
| Other                                                                          |   |                               | 573    |           |   | 103                          |    |             | 136    |   |   | 812 |   |
| Internal                                                                            |   |                               | 270    |           |   | -                            |    |             | (270   | ) |   | - |   |
| Total                Revenues                                                       |   |                               | 5,425  |           |   | 6,067                        |    |             | (134   | ) |   | 11,358 |   |
|                                                                                |   |                               |   |           |   |                         |    |             |   |   |   |   |   |
| Expenses:                                                                           |   |                               |   |           |   |                         |    |             |   |   |   |   |   |
| Fuel                and                purchased power                              |   |                               | -      |           |   | 4,011                        |    |             | -      |   |   | 4,011 |   |
| Other                operating expenses                                             |   |                               | 1,250  |           |   | 1,986                        |    |             | (133   | ) |   | 3,103 |   |
| Provision                for                depreciation                            |   |                               | 516    |           |   | 45                           |    |             | 27     |   |   | 588 |   |
| Amortization                of regulatory assets                                    |   |                               | 1,281  |           |   | -                            |    |             | -      |   |   | 1,281 |   |
| Deferral                of                new regulatory assets                     |   |                               | (314   | )              |   | (91                          | )       |             | -      |   |   | (405 | ) |
| General                taxes                                                        |   |                               | 562    |           |   | 131                          |    |             | 20     |   |   | 713 |   |
| Total                Expenses                                                       |   |                               | 3,295  |           |   | 6,082                        |    |             | (86    | ) |   | 9,291 |   |
|                                                                                |   |                               |   |           |   |                         |    |             |   |   |   |   |   |
| Operating                Income (Loss)                                              |   |                               | 2,130  |           |   | (15                          | )       |             | (48    | ) |   | 2,067 |   |
| Other                Income                (Expense):                               |   |                               |   |           |   |                         |    |             |   |   |   |   |   |
| Investment                income                                                    |   |                               | 217    |           |   | -                            |    |             | -      |   |   | 217 |   |
| Interest                expense                                                     |   |                               | (392   | )              |   | (55                          | )       |             | (213   | ) |   | (660 | ) |
| Capitalized                interest                                                 |   |                               | 18     |           |   | 1                            |    |             | -      |   |   | 19 |   |
| Subsidiaries'                preferred stock dividends                              |   |                               | (15    | )              |   | -                            |    |             | -      |   |   | (15 | ) |
| Total                Other                Expense                                   |   |                               | (172   | )              |   | (54                          | )       |             | (213   | ) |   | (439 | ) |
|                                                                                |   |                               |   |           |   |                         |    |             |   |   |   |   |   |
| Income                From                Continuing Operations Before Income Taxes |   |                               | 1,958  |           |   | (69                          | )       |             | (261   | ) |   | 1,628 |   |
| Income                taxes                (benefit)                                |   |                               | 784    |           |   | (28                          | )       |             | (7     | ) |   | 749 |   |
| Income                from                continuing operations                     |   |                               | 1,174  |           |   | (41                          | )       |             | (254   | ) |   | 879 |   |
| Discontinued                operations                                              |   |                               | -      |           |   | -                            |    |             | 12     |   |   | 12 |   |
| Cumulative                effect of a change in accounting principle                |   |                               | (21    | )         |   | (9                           | )  |             | -      |   |   | (30 | ) |
| Net                Income                                                           |   | $                                  | 1,153  |           | $      | (50                          | )       | $                | (242   | ) | $ | 861 |   |

|                                                                                |   |                               |   | **Power**      |   |                         |   |             |   |
|-------------------------------------------------------------------------------------|--------|------------------------------------|--------|----------------|--------|------------------------------|--------|------------------|--------|
|                                                                                |   |                               |   | **Supply**     |   | **Other                and** |   |             |   |
| **Changes                Between 2006 and**                                         |   | **Regulated**                      |   | **Management** |   | **Reconciling**              |   | **FirstEnergy**  |   |
| **2005                Financial Results - Increase (Decrease)**                     |   | **Services**                       |   | **Services**   |   | **Adjustments**              |   | **Consolidated** |   |
|                                                                                |   | ***(In                millions)*** |   |
| Revenues:                                                                           |   |                               |   |           |   |                         |   |             |   |
| External                                                                            |   |                               |   |           |   |                         |   |             |   |
| Electric                                                                            |   | $                                  | (732   | )              | $      | 857                          |   | $                | -      |   | $ | 125 |   |
| Other                                                                          |   |                               | 18     |           |   | 105                          |   |             | (105   | ) |   | 18 |   |
| Internal                                                                            |   |                               | (270   | )              |   | -                            |   |             | 270    |   |   | - |   |
| Total                Revenues                                                       |   |                               | (984   | )              |   | 962                          |   |             | 165    |   |   | 143 |   |
|                                                                                |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Expenses:                                                                           |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Fuel                and                purchased power                              |   |                               | -      |           |   | 242                          |   |             | -      |   |   | 242 |   |
| Other                operating expenses                                             |   |                               | (46    | )              |   | (265                         | )      |             | 173    |   |   | (138 | ) |
| Provision                for                depreciation                            |   |                               | (140   | )              |   | 149                          |   |             | (1     | ) |   | 8 |   |
| Amortization                of regulatory assets                                    |   |                               | (439   | )              |   | 19                           |   |             | -      |   |   | (420 | ) |
| Deferral                of                new regulatory assets                     |   |                               | 97     |           |   | (192                         | )      |             | -      |   |   | (95 | ) |
| General                taxes                                                        |   |                               | (30    | )              |   | 40                           |   |             | (3     | ) |   | 7 |   |
| Total                Expenses                                                       |   |                               | (558   | )              |   | (7                           | )      |             | 169    |   |   | (396 | ) |
|                                                                                |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Operating                Income                                                     |   |                               | (426   | )              |   | 969                          |   |             | (4     | ) |   | 539 |   |
| Other                Income                (Expense):                               |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Investment                income                                                    |   |                               | 53     |           |   | 36                           |   |             | (157   | ) |   | (68 | ) |
| Interest                expense                                                     |   |                               | (16    | )              |   | (171                         | )      |             | 126    |   |   | (61 | ) |
| Capitalized                interest                                                 |   |                               | (4     | )              |   | 10                           |   |             | 1      |   |   | 7 |   |
| Subsidiaries'                preferred stock dividends                              |   |                               | (1     | )              |   | -                            |   |             | 9      |   |   | 8 |   |
| Total                Other                Income (Expense)                          |   |                               | 32     |           |   | (125                         | )      |             | (21    | ) |   | (114 | ) |
|                                                                                |   |                               |   |           |   |                         |   |             |   |   |   |   |   |
| Income                From                Continuing Operations Before Income Taxes |   |                               | (394   | )              |   | 844                          |   |             | (25    | ) |   | 425 |   |
| Income                taxes                (benefit)                                |   |                               | (152   | )              |   | 338                          |   |             | (140   | ) |   | 46 |   |
| Income                from                continuing operations                     |   |                               | (242   | )              |   | 506                          |   |             | 115    |   |   | 379 |   |
| Discontinued                operations                                              |   |                               | -      |           |   | -                            |   |             | (16    | ) |   | (16 | ) |
| Cumulative                effect of a change in accounting principle                |   |                               | 21     |           |   | 9                            |   |             | -      |   |   | 30 |   |
| Net                Income                                                           |   | $                                  | (221   | )              | $      | 515                          |   | $                | 99     |   | $ | 393 |   |

----

***Regulated      Services -2006 Compared with 2005***

**Revenues      -**

|                                                  |   |                               |   | **Increase** |   |
|-------------------------------------------------------|--------|------------------------------------|--------|--------------|--------|
| **Revenues                By Type of Service**        |   | **2006**                           |   | **2005**     |   | **(Decrease)** |   |
|                                                  |   | ***(In                millions)*** |   |
| Distribution                services                  |   | $                                  | 3,850  |         | $      | 4,582 |   | $ | (732 | ) |
| Transmission                services                  |   |                               | 389    |         |   | 415 |   |   | (26 | ) |
| Internal                lease                revenues |   |                               | -      |         |   | 270 |   |   | (270 | ) |
| Other                                                 |   |                               | 202    |         |   | 158 |   |   | 44 |   |
| Total                Revenues                         |   | $                                  | 4,441  |         | $      | 5,425 |   | $ | (984 | ) |

| **Electric                Distribution Deliveries** |   |   |   |
|-----------------------------------------------------|--------|--------|--------|
| Residential                                         |   |   | (3.9   | )% |
| Commercial                                          |   |   | (1.4   | )% |
| Industrial                                          |   |   | (1.4   | )% |
| Total                Distribution Deliveries        |   |   | (2.3   | )% |

| **Sources                of Change in Distribution Revenues**       |   | **Increase****(Decrease)**         |   |
|---------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                |   | ***(In                millions)*** |   |
| Changes                in                customer usage             |   | $                                  | (221   | ) |
| Ohio                shopping                incentives              |   |                               | 222    |   |
| Reduced                Ohio                transition rates         |   |                               | (817   | ) |
| Other                                                               |   |                               | 84     |   |
|                                                                |   |                               |   |   |
| Net                Decrease                in Distribution Revenues |   | $                                  | (732   | ) |

**Expenses-**

|   |  · | Other                operating expenses were $46 million lower in 2006 due, in part, to                the following factors: |
|--------|--------------|------------------------------------------------------------------------------------------------------------------------------------|

|                       ·   | The                absence in                2006 of expenses for ancillary service refunds to third parties of                $27 million in 2005 associated with implementation of the Ohio                Companies’ RCP in 2006 (under which alternate suppliers of ancillary                services now bill customers directly for those                services); |
|------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       ·   | A                $52 million                decrease in employee and contractor costs resulting from lower                storm-related expenses, reduced employee benefit costs and the decreased                use of outside contractors for tree trimming, reliability work, legal                services and jobbing and contracting;                and |
|------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       ·   | A                $31 million increase in other expenses principally due to increased                corporate support services of $18.5 million, and to the absence in                2006 of a $6 million insurance premium credit and an $8.6 million                insurance settlement received in                2005. |
|------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                    | · | Lower                depreciation expense of $140 million resulted principally from the                generation asset transfers; |
|--------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|                    | · | Reduced                amortization of regulatory assets of $439 million resulted from the                completion of Ohio generation transition cost recovery and Penn's                transition plan in 2005; |
|--------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    | · | A                $97 million decrease in deferral of new regulatory assets due to a                2005 rate decision for JCP&L and the end of shopping incentive                deferrals under the Ohio Companies’ transition plan partially offset by                the distribution cost deferrals authorized under the Ohio Companies’ RCP;                and |
|--------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    | · | General                taxes                decreased by $30 million primarily due to lower property taxes as a                result of the generation asset                transfers. |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Other      Income and      Expense -*

|                    | · | Higher                investment income reflects the impact of the generation asset transfers.                Interest income on the affiliated company notes receivable from the                power                supply management services segment in 2006 is partially offset by                the                absence of nuclear decommissioning trust investments, the majority                of                which is now included in the power supply management services segment;                and |
|--------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    | · | Interest                expense increased by $16 million due to the Ohio Companies’ 2006                long-term debt issuances. As further discussed under Capital Resources                and                Liquidity, the Ohio Companies used the debt proceeds to repurchase                portions of their respective common stock from FirstEnergy, where                the                proceeds were used for the retirement of FirstEnergy notes maturing                in                2006. |
|--------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Power      Supply Management Services - 2006 Compared with 2005***

*Revenues      -*

|                                                          |   |                               |   | **Increase** |   |
|---------------------------------------------------------------|--------|------------------------------------|--------|--------------|--------|
| **Revenues                By Type of Service**                |   | **2006**                           |   | **2005**     |   | **(Decrease)** |   |
|                                                          |   | ***(In                millions)*** |   |
| Electric                Generation Sales:                     |   |                               |   |         |   |   |   |
| Retail                                                        |   | $                                  | 5,459  |         | $      | 4,219 |   | $ | 1,240 |   |
| Wholesale                                                     |   |                               | 935    |         |   | 1,412 |   |   | (477 | ) |
| Total                Electric                Generation Sales |   |                               | 6,394  |         |   | 5,631 |   |   | 763 |   |
| Transmission                                                  |   |                               | 572    |         |   | 403 |   |   | 169 |   |
| Other                                                         |   |                               | 63     |         |   | 33 |   |   | 30 |   |
| Total                Revenues                                 |   | $                                  | 7,029  |         | $      | 6,067 |   | $ | 962 |   |

----

|                                                                    |   | **Increase**                       |   |
|-------------------------------------------------------------------------|--------|------------------------------------|--------|
| **Source                of Change in Electric Generation Sales**        |   | **(Decrease)**                     |   |
|                                                                    |   | ***(In                millions)*** |   |
| Retail:                                                                 |   |                               |   |   |
| Effect                of 6.7%                increase in customer usage |   | $                                  | 285    |   |
| Change                in                prices                          |   |                               | 955    |   |
|                                                                    |   |                               | 1,240  |   |
| Wholesale:                                                              |   |                               |   |   |
| Effect                of                19.1% decrease in KWH sales     |   |                               | (270   | ) |
| Change                in                prices                          |   |                               | (207   | ) |
|                                                                    |   |                               | (477   | ) |
| Net                Increase                in Electric Generation Sales |   | $                                  | 763    |   |

**Expenses      -**

|   |                     · | Higher                fuel                and purchased power costs of $242 million, including increased fuel                costs                of $94 million caused by our generation fleet’s record output of                82.0 billion KWH. In particular, coal costs increased                $128 million as a result of increased generation output, higher coal                prices and increased transportation costs for western coal. The increased                coal costs were partially offset by lower natural gas and emission                allowance costs of $42 million. Purchased power costs increased $148                million due to higher prices partially offset by lower volumes. Factors                contributing to the higher costs are summarized in the following                table: |
|--------|------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                         |   | **Increase**                       |   |
|------------------------------------------------------------------------------|--------|------------------------------------|--------|
| **Source                of Change in Fuel and Purchased Power**              |   | **(Decrease)**                     |   |
|                                                                         |   | ***(In                millions)*** |   |
| Fuel:                                                                        |   |                               |   |   |
| Change                due to                increased unit costs             |   |  $                            | 70     |   |
| Change                due to                volume consumed                  |   |                               | 24     |   |
|                                                                         |   |                               | 94     |   |
| Purchased                Power:                                              |   |                               |   |   |
| Change                due to                increased unit costs             |   |                               | 206    |   |
| Change                due to                volume purchased                 |   |                               | (33    | ) |
| PPUC                NUG                adjustment applicable to prior year   |   |                               | 10     |   |
| Increase                in                NUG costs deferred                 |   |                               | (35    | ) |
|                                                                         |   |                               | 148    |   |
|                                                                         |   |                               |   |   |
| Net                Increase                in Fuel and Purchased Power Costs |   | $                                  | 242    |   |

|                    | · | An                increase in                nuclear operating expenses of $55 million due to three refueling                outages in 2006 compared with two refueling outages in 2005; |
|--------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    | · | Increased                depreciation expenses of $149 million, resulting principally from the                generation asset transfers; and |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|                    | · | Higher                general                taxes of $40 million due principally to additional property taxes                resulting from the generation asset transfers. |
|--------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Other      Income and      Expense - *

|      · |                     Investment income in 2006 was $36 million                higher primarily due to nuclear decommissioning trust                     investments acquired through the generation asset transfers;                and |
|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |                                                                                                                                                                                                                                                                                |
| ·                               |      Interest                expense increased by $171 million, primarily due to interest on the                associated company                     notes payable that financed the generation asset transfers.                |

***Other      -      2006 Compared to 2005***

| **Discontinued                Operations (Net of tax)** |   | **2006** |   | **2005** |   |
|---------------------------------------------------------|--------|----------|--------|----------|--------|
| Gain                on                sale:             |   |     |   |     |   |
| Natural                gas                business      |   | $        | -      |     | $      | 5 |   |
| FSG                Subsidiaries                         |   |     | 2      |     |   | 12 |   |
| Reclassification                of operating income     |   |     | (6     | )        |   | (5 | ) |
| Total                                                   |   | $        | (4     | )        | $      | 12 |   |

***Summary      of Results of Operations - 2005 Compared with 2004***

|                                                                                                          |   |                                   |   |  **Power**      |   |                                   |   |                   |   |
|---------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|----------------------|--------|----------------------------------------|--------|------------------------|--------|
|                                                                                                          |   |                                   |   |  **Supply**     |   |  **Other                    and** |   |                   |   |
|                                                                                                          |   |  **Regulated**                    |   |  **Management** |   |  **Reconciling**                  |   |  **FirstEnergy**  |   |
|  **2004                  Financial Results**                                                             |   | **Services**                           |   |  **Services**   |   |  **Adjustments**                  |   |  **Consolidated** |   |
|                                                                                                          |   | ***(In                    millions)*** |   |
| Revenues:                                                                                                     |   |                                   |   |                 |   |                                   |   |                   |   |
| External                                                                                                      |   |                                   |   |                 |   |                                   |   |                   |   |
| Electric                                                                                                      |   | $                                      | 4,396  |                 | $      | 6,435                                  |   | $                      | -      |   | $ | 10,831 |   |
| Other                                                                                                    |   |                                   | 489    |                 |   | 75                                     |   |                   | 205    |   |   | 769 |   |
| Internal                                                                                                      |   |                                   | 318    |                 |   | -                                      |   |                   | (318   | ) |   | - |   |
| Total                    Revenues                                                                             |   |                                   | 5,203  |                 |   | 6,510                                  |   |                   | (113   | ) |   | 11,600 |   |
|                                                                                                          |   |                                   |   |                 |   |                                   |   |                   |   |   |   |   |   |
| Expenses:                                                                                                     |   |                                   |   |                 |   |                                   |   |                   |   |   |   |   |   |
| Fuel                    and                    purchased power                                                |   |                                   | -      |                 |   | 4,469                                  |   |                   | -      |   |   | 4,469 |   |
| Other                    operating expenses                                                                   |   |                                   | 1,340  |                 |   | 1,660                                  |   |                   | (90    | ) |   | 2,910 |   |
| Provision                    for                    depreciation                                              |   |                                   | 513    |                 |   | 35                                     |   |                   | 37     |   |   | 585 |   |
| Amortization                    of regulatory assets                                                          |   |                                   | 1,166  |                 |   | -                                      |   |                   | -      |   |   | 1,166 |   |
| Deferral                    of                    new regulatory assets                                       |   |                                   | (257   | )                    |   | -                                      |   |                   | -      |   |   | (257 | ) |
| General                    taxes                                                                              |   |                                   | 538    |                 |   | 122                                    |   |                   | 18     |   |   | 678 |   |
| Total                    Expenses                                                                             |   |                                   | 3,300  |                 |   | 6,286                                  |   |                   | (35    | ) |   | 9,551 |   |
|                                                                                                          |   |                                   |   |                 |   |                                   |   |                   |   |   |   |   |   |
| Operating                    Income (Loss)                                                                    |   |                                   | 1,903  |                 |   | 224                                    |   |                   | (78    | ) |   | 2,049 |   |
| Other                    Income                    (Expense):                                                 |   |                                   |   |                 |   |                                   |   |                   |   |   |   |   |   |
| Investment                    income                                                                          |   |                                   | 205    |                 |   | -                                      |   |                   | -      |   |   | 205 |   |
| Interest                    expense                                                                           |   |                                   | (361   | )                    |   | (43                                    | )      |                   | (267   | ) |   | (671 | ) |
| Capitalized                    interest                                                                       |   |                                   | 19     |                 |   | 6                                      |   |                   | 1      |   |   | 26 |   |
| Subsidiaries'                    preferred stock dividends                                                    |   |                                   | (21    | )                    |   | -                                      |   |                   | -      |   |   | (21 | ) |
| Total                    Other                    Income (Expense)                                            |   |                                   | (158   | )                    |   | (37                                    | )      |                   | (266   | ) |   | (461 | ) |
|                                                                                                          |   |                                   |   |                 |   |                                   |   |                   |   |   |   |   |   |
| Income                    From                    Continuing Operations BeforeIncome                    Taxes |   |                                   | 1,745  |                 |   | 187                                    |   |                   | (344   | ) |   | 1,588 |   |
| Income                    taxes                    (benefit)                                                  |   |                                   | 698    |                 |   | 75                                     |   |                   | (92    | ) |   | 681 |   |
| Income                    from                    continuing operations                                       |   |                                   | 1,047  |                 |   | 112                                    |   |                   | (252   | ) |   | 907 |   |
| Discontinued                    operations                                                                    |   |                                   | -      |                 |   | -                                      |   |                   | (29    | ) |   | (29 | ) |
| Cumulative                    effect of a change in accountingprinciple                                       |   |                                   | -      |                 |   | -                                      |   |                   | -      |   |   | - |   |
| Net                    Income                    (Loss)                                                       |   | $                                      | 1,047  |                 | $      | 112                                    |   | $                      | (281   | ) | $ | 878 |   |

----

|                                                                                                                                                                                                                | ** ** | ** **                           | ** ** | ** Power**      | ** ** | ** **                     | ** ** | ** **             | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|----------------------|------------|--------------------------------|------------|------------------------|------------|
| **Changes                Between 2005 and 2004**                                                                                                                                                               | ** ** |                                 | ** ** | ** Supply**     | ** ** | **Other                  and** | ** ** |                   | ** ** |
| **Financial                Results**                                                                                                                                                                           | ** ** | ** Regulated**                  | ** ** | ** Management** | ** ** | **Reconciling**                | ** ** | **FirstEnergy**        | ** ** |
| **Increase                (Decrease)**                                                                                                                                                                         | ** ** | **Services**                         | ** ** | ** Services**   | ** ** | **Adjustments(1)**             | ** ** | **Consolidated**  |       |
|                                                                                                                                                                                                           |       | ***(In                  millions)*** |       |
| Revenues:                                                                                                                                                                                                      |       |                                 |       |                 |       |                           |       |                   |       |
| External                                                                                                                                                                                                       |       |                                 |       |                 |       |                           |       |                   |       |
| Electric                                                                                                                                                                                                  |       | $                                    | 186        |                 | $          | (471                           | )          | $                      | -          |   | $ | (285 | ) |
| Other                                                                                                                                                                                                     |       |                                 | 84         |                 |       | 28                             |       |                   | (69        | ) |   | 43 |   |
| Internal                                                                                                                                                                                                       |       |                                 | (48        | )                    |       | -                              |       |                   | 48         |   |   | - |   |
| Total                  Revenues                                                                                                                                                                                |       |                                 | 222        |                 |       | (443                           | )          |                   | (21        | ) |   | (242 | ) |
|                                                                                                                                                                                                           |       |                                 |       |                 |       |                           |       |                   |       |   |   |   |   |
| Expenses:                                                                                                                                                                                                      |       |                                 |       |                 |       |                           |       |                   |       |   |   |   |   |
| Fuel                  and                  purchased power                                                                                                                                                     |       |                                 | -          |                 |       | (458                           | )          |                   | -          |   |   | (458 | ) |
| Other                  operating expenses                                                                                                                                                                      |       |                                 | (90        | )                    |       | 326                            |       |                   | (43        | ) |   | 193 |   |
| Provision                  for                  depreciation                                                                                                                                                   |       |                                 | 3          |                 |       | 10                             |       |                   | (10        | ) |   | 3 |   |
| Amortization                  of regulatory assets                                                                                                                                                             |       |                                 | 115        |                 |       | -                              |       |                   | -          |   |   | 115 |   |
| Deferral                  of                  new regulatory assets                                                                                                                                            |       |                                 | (57        | )                    |       | (91                            | )          |                   | -          |   |   | (148 | ) |
| General                  taxes                                                                                                                                                                                 |       |                                 | 24         |                 |       | 9                              |       |                   | 2          |   |   | 35 |   |
| Total                  Expenses                                                                                                                                                                                |       |                                 | (5         | )                    |       | (204                           | )          |                   | (51        | ) |   | (260 | ) |
|                                                                                                                                                                                                           |       |                                 |       |                 |       |                           |       |                   |       |   |   |   |   |
| Operating                  Income                                                                                                                                                                              |       |                                 | 227        |                 |       | (239                           | )          |                   | 30         |   |   | 18 |   |
| Other                  Income                  (Expense):                                                                                                                                                      |       |                                 |       |                 |       |                           |       |                   |       |   |   |   |   |
| Investment                  income                                                                                                                                                                             |       |                                 | 12         |                 |       | -                              |       |                   | -          |   |   | 12 |   |
| Interest                  expense                                                                                                                                                                              |       |                                 | (31        | )                    |       | (12                            | )          |                   | 54         |   |   | 11 |   |
| Capitalized                  interest                                                                                                                                                                          |       |                                 | (1         | )                    |       | (5                             | )          |                   | (1         | ) |   | (7 | ) |
| Subsidiaries'                  preferred stock dividends                                                                                                                                                       |       |                                 | 6          |                 |       | -                              |       |                   | -          |   |   | 6 |   |
| Total                  Other                  Income (Expense)                                                                                                                                                 |       |                                 | (14        | )                    |       | (17                            | )          |                   | 53         |   |   | 22 |   |
|                                                                                                                                                                                                           |       |                                 |       |                 |       |                           |       |                   |       |   |   |   |   |
| Income                  From                  Continuing Operations BeforeIncome                  Taxes                                                                                                        |       |                                 | 213        |                 |       | (256                           | )          |                   | 83         |   |   | 40 |   |
| Income                  taxes                                                                                                                                                                                  |       |                                 | 86         |                 |       | (103                           | )          |                   | 85         |   |   | 68 |   |
| Income                  from                  continuing operations                                                                                                                                            |       |                                 | 127        |                 |       | (153                           | )          |                   | (2         | ) |   | (28 | ) |
| Discontinued                  operations                                                                                                                                                                       |       |                                 | -          |                 |       | -                              |       |                   | 41         |   |   | 41 |   |
| Cumulative                  effect of a change in accountingprinciple                                                                                                                                          |       |                                 | (21        | )                    |       | (9                             | )          |                   | -          |   |   | (30 | ) |
| Net                  Income                                                                                                                                                                                    |       | $                                    | 106        |                 | $          | (162                           | )          | $                      | 39         |   | $ | (17 | ) |
|                                                                                                                                                                                                           |
| (1)                  The                  impact of                  the new Ohio tax legislation is included with our other operating                  segments                  and reconciling adjustments. |

***Regulated      Services - 2005 Compared with 2004***

|                                                  |   |                               |   | **Increase** |   |
|-------------------------------------------------------|--------|------------------------------------|--------|--------------|--------|
| **Revenues                by Type of Service**        |   | **2005**                           |   | **2004**     |   | **(Decrease)** |   |
|                                                  |   | ***(In                millions)*** |
| Distribution                services                  |   | $                                  | 4,582  |         | $      | 4,396 |   | $ | 186 |   |
| Transmission                services                  |   |                               | 415    |         |   | 333 |   |   | 82 |   |
| Internal                lease                revenues |   |                               | 270    |         |   | 318 |   |   | (48 | ) |
| Other                                                 |   |                               | 158    |         |   | 156 |   |   | 2 |   |
| Total                Revenues                         |   | $                                  | 5,425  |         | $      | 5,203 |   | $ | 222 |   |

| **Electric                Distribution Deliveries**  |   |   |   |   |   |
|-----------------------------------------------------------|--------|--------|--------|--------|--------|
| Residential                                               |   |   |   |   |   | 7.3 | % |
| Commercial                                                |   |   |   |   |   | 4.8 |   |
| Industrial                                                |   |   |   |   |   | 2.0 |   |
| Total                Distribution Deliveries              |   |   |   |   |   | 4.7 | % |

----

|                                                                |   | **Increase**                       |   |
|---------------------------------------------------------------------|--------|------------------------------------|--------|
| **Sources                of Change in Distribution Revenues**       |   | **(Decrease)**                     |   |
|                                                                |   | ***(In                millions)*** |   |
| Changes                in                customer usage             |   | $                                  | 264    |   |
| Changes                in                prices:                    |   |                               |        |   |
| Rate                changes                --                       |   |                               |        |   |
| Ohio                shopping                credit incentives       |   |                               | (44    | ) |
| JCP&L                rate                settlements            |   |                               | 48     |   |
| Billing                component reallocations                      |   |                               | (82    | ) |
| Net                Increase                in Distribution Revenues |   | $                                  | 186    |   |

|   | · | Additional                amortization of regulatory assets of $115 million, principally Ohio                transition costs, due primarily to using the interest method to amortize                transition costs; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General                taxes                increased by $24 million due to higher property taxes and increased                KWH deliveries which increased the Ohio KWH tax and the Pennsylvania                gross                receipts tax. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*      -*

|   | · | Investment                income increased approximately $12 million in 2005 due primarily to                realized gains on nuclear decommissioning trust investments;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Interest                expense was $31 million higher in                2005. |
|--------|--------|-------------------------------------------------------------------------------------|

***Power      Supply Management Services - 2005 Compared with 2004***

----

*Revenues      -*

|                                                                                                                                  |   |                               |   | **Increase** |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|--------------|--------|
| **Revenues                by Type of Service**                                                                                        |   | **2005**                           |   | **2004**     |   | **(Decrease)** |   |
|                                                                                                                                  |   | ***(In                millions)*** |   |
| Electric                generation sales:                                                                                             |   |                               |   |         |   |   |   |
| Retail                                                                                                                           |   | $                                  | 4,219  |         | $      | 3,795 |   | $ | 424 |   |
| Wholesale(1)                                                                                                                     |   |                               | 1,412  |         |   | 1,267 |   |   | 145 |   |
| Total                electric                generation sales                                                                         |   |                               | 5,631  |         |   | 5,062 |   |   | 569 |   |
| Transmission                                                                                                                          |   |                               | 403    |         |   | 344 |   |   | 59 |   |
| Other                                                                                                                                 |   |                               | 33     |         |   | 36 |   |   | (3 | ) |
|                                                                                                                                  |   |                               | 6,067  |         |   | 5,442 |   |   | 625 |   |
| PJM                adjustment                                                                                                         |   |                               | -      |         |   | 1,068 |   |   | (1,068 | ) |
| Total                Revenues                                                                                                         |   | $                                  | 6,067  |         | $      | 6,510 |   | $ | (443 | ) |
| (1)                Excluding                2004                effect of recording PJM transactions on a gross                basis. |

|                                                                                            |   | **Increase**                       |   |
|-------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|
| **Source                of Change in Electric Generation Sales**                                |   | **(Decrease)**                     |   |
|                                                                                            |   | ***(In                millions)*** |   |
| Retail:                                                                                         |   |                               |   |   |
| Effect                of 5.2%                increase in customer usage                         |   | $                                  | 228    |   |
| Change                in                prices                                                  |   |                               | 196    |   |
|                                                                                            |   |                               | 424    |   |
| Wholesale:                                                                                      |   |                               |   |   |
| Effect                of 2.3%                reduction in customer usage(1)                     |   |                               | (28    | ) |
| Change                in                prices                                                  |   |                               | 173    |   |
|                                                                                            |   |                               | 145    |   |
| Net                Increase                in Electric Generation Sales                         |   | $                                  | 569    |   |
|                                                                                            |   |
| (1)                Decrease of                46.5% including the effect of the PJM adjustment. |   |

*Expenses      -*

----

|                                                                         |   | **Increase**                       |   |
|------------------------------------------------------------------------------|--------|------------------------------------|--------|
| **Source                of Change in Fuel and Purchased Power**              |   | **(Decrease)**                     |   |
|                                                                         |   | ***(In                millions)*** |   |
| Fuel:                                                                        |   |                               |   |   |
| Change                due to                increased unit costs             |   |  $                            | 254    |   |
| Change                due to                volume consumed                  |   |                               | 54     |   |
|                                                                         |   |                               | 308    |   |
| Purchased                Power:                                              |   |                               |   |
| Change                due to                increased unit costs             |   |                               | 360    |   |
| Change                due to                volume purchased                 |   |                               | (55    | ) |
| Increase                in                costs deferred                     |   |                               | (3     | ) |
|                                                                         |   |                               | 302    |   |
| Total                Increase                                                |   |                               | 610    |   |
| PJM                adjustment                                                |   |                               | (1,068 | ) |
| Net                Decrease                in Fuel and Purchased Power Costs |   | $                                  | (458   | ) |

***Other      -      2005 Compared with 2004***

----

*Cumulative      Effect of Accounting Change*

**DISCONTINUED      OPERATIONS **

| **Discontinued                  Operations (****net                  of                  tax)**          |   | **2006**                             |   | **2005** |   | **2004** |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                                                                     |   | ***(In                  millions)*** |   |
| FES                  natural                  gas business - gain on sale                                |   | $                                    | -      |     | $      | 5        |   | $ | - |   |
| FSG                  subsidiaries - gain on sale                                                         |   |                                 | 2      |     |   | 12       |   |   | - |   |
| Net                  gain on                  divestitures                                               |   |                                 | 2      |     |   | 17       |   |   | - |   |
| Reclassification                  of operating (loss) incometo                  discontinued operations: |   |                                 |   |     |   |     |   |   |   |   |
| FES                  natural                  gas business                                               |   |                                 | -      |     |   | -        |   |   | 4 |   |
| FSG                  subsidiaries                                                                        |   |                                 | (8     | )        |   | (4       | )      |   | (29 | ) |
| MYR                                                                                                      |   |                                 | 2      |     |   | (1       | )      |   | (4 | ) |
| Income                  (Loss)                  from discontinued operations                             |   | $                                    | (4     | )        | $      | 12       |   | $ | (29 | ) |

**POSTRETIREMENT      BENEFITS**

| **Postretirement                Benefits Expenses** |   | **2006**                           |   | **2005** |   | **2004** |   |
|-----------------------------------------------------|--------|------------------------------------|--------|----------|--------|----------|--------|
|                                                |   | ***(In                millions)*** |   |
| Pension                                             |   | $                                  | 29     |     | $      | 32       |   | $ | 83 |   |
| OPEB                                                |   |                               | 48     |     |   | 72       |   |   | 87 |   |
| Total                                               |   | $                                  | 77     |     | $      | 104      |   | $ | 170 |   |

----

**SUPPLY      PLAN**

**PJM      AND MISO      INTERCONNECTION TRANSACTIONS**

**CAPITAL      RESOURCES AND LIQUIDITY **

*Changes      in Cash      Position *

----

*Cash      Flows From      Operating Activities *

| **Operating                Cash Flows**                                   |   | **2006**                                                                           |   | **2005**                                                                                           |   | **2004**                                                                                           |   |
|---------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|--------|
|                                                                      |   | ***(In                millions)***                                                 |   |
| Net                income                                                 |   | $                          1,254 |   | $                             861 |   | $                             878 |   |
| Non-cash                charges (credits)                                 |   |                                                                               | 770    |                                                                                               |   | 1,324                                                                                              |   |   | 1,326 |   |
| Pension                trust                contribution*                 |   |                                                                               | 90     |                                                                                               |   | (341                                                                                               | )      |   | (300 | ) |
| Working                capital and other                                  |   |                                                                               | (175   | )                                                                                                  |   | 376                                                                                                |   |   | (12 | ) |
| Net                cash                provided from operating activities |   | $                                                                                  | 1,939  |                                                                                               | $      | 2,220                                                                                              |   | $ | 1,892 |   |

*Cash      Flows From      Financing Activities *

| **Securities                Issued or Redeemed**       |   | **2006**                                                                                                                                                                                                        |   | **2005**                                                                                                                                                 |    | **2004**                                                                                                                                                 |   |
|--------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                   |   | ***(In                millions)***                                                                                                                                                                              |   |
| *New                Issues*                            |   |                                                                                                                                                                                                            |   |                                                                                                                                                     |    |                                                                                                                                                     |   |
| Pollution                control notes                 |   | $                            1,157                                  |   | $                                      721 |    | $261                                                                                                                                                     |   |
| Senior                secured                notes     |   |  382                                                                                                                                                                                                       |   |  -                                                                                                                                                  |    |  300                                                                                                                                                |   |
| Unsecured                notes                         |   |  1,200                                                                                                                                                                                                     |   |  -                                                                                                                                                  |    |  400                                                                                                                                                |   |
|                                                   |   | $                                           2,739                        |   | $                                      721      |    | $                       961           |   |
| *Redemptions*                                          |   |                                                                                                                                                                                                       |   |                                                                                                                                                |    |                                                                                                                                                |   |
| First                mortgage                bonds     |   | $                                  41 |   | $252                                                                                                                                                     |    |  $                                     589 |   |
| Pollution                control notes                 |   |                                                                                                                                                                                                            | 1,189  |                                                                                                                                                     |    | 555                                                                                                                                                      |   |   | 80 |   |
| Senior                secured                notes     |   |                                                                                                                                                                                                            | 206    |                                                                                                                                                     |    | 94                                                                                                                                                       |   |   | 471 |   |
| Long-term                revolving credit              |   |                                                                                                                                                                                                            | -      |                                                                                                                                                     |    | 215                                                                                                                                                      |   |   | 95 |   |
| Unsecured                notes                         |   |                                                                                                                                                                                                            | 1,100  |                                                                                                                                                     |    | 308                                                                                                                                                      |   |   | 337 |   |
| Common                stock                            |   |                                                                                                                                                                                                            | 600    |                                                                                                                                                     |    | -                                                                                                                                                        |   |   | - |   |
| Preferred                stock                         |   |                                                                                                                                                                                                            | 193    |                                                                                                                                                     |    | 170                                                                                                                                                      |   |   | 2 |   |
|                                                   |   | $                                                                                                                                                                                                               | 3,329  |                                                                                                                                                     |  $ | 1,594                                                                                                                                                    |   |  $ | 1,574 |   |
|                                                   |   |                                                                                                                                                                                                            |   |                                                                                                                                                     |    |                                                                                                                                                     |   |   |   |   |
| Short-term                borrowings (repayments), net |   | $                                                                                                                                                                                                               | 386    |                                                                                                                                                     |  $ | 561                                                                                                                                                      |   |  $ | (351 | ) |

----

| **Borrowing                Capability**                                                                                                                                                                                                                                                 |   |    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|
| Short-term                credit facilities(1)                                                                                                                                                                                                                                          |   | $       | 2,870  |   |
| Accounts                receivable financing facilities                                                                                                                                                                                                                                 |   |    | 550    |   |
| Utilized                                                                                                                                                                                                                                                                                |   |    | (1,105 | ) |
| LOCs                                                                                                                                                                                                                                                                                    |   |    | (478   | ) |
| Net                                                                                                                                                                                                                                                                                     |   |  $ | 1,837  |   |
|                                                                                                                                                                                                                                                                                    |   |    |   |   |
| (1)                Includes the                $2.75 billion revolving credit facility described below, a                $100 million revolving credit facility that expires in December 2009                and a $20 million uncommitted line of credit                facility. |

----

|            |   | **Revolving**                      |   | **Regulatory                and**          |   |
|-----------------|--------|------------------------------------|--------|--------------------------------------------|--------|
|            |   | **Credit                Facility** |   | **Other                Short-Term**        |   |
| **Borrower**    |   | **Sub-Limit**                      |   | **Debt                Limitations****(1)** |   |
|            |   | ***(In                millions)*** |   |
| **FirstEnergy** |   |                               | $      | 2,750                                      |   |   | $ | 1,500 |   |
| **OE**          |   |                               | 500    |                                       |   | 500 |   |
| **Penn**        |   |                               | 50     |                                       |   | 39 |   |
| **CEI**         |   |                               | 250    | (2)                                        |   | 600 |   |
| **TE**          |   |                               | 250    | (2)                                        |   | 500 |   |
| **JCP&L**   |   |                               | 425    |                                            |   | 414 |   |
| **Met-Ed**      |   |                               | 250    |                                       |   | 250 | (3) |
| **Penelec**     |   |                               | 250    |                                       |   | 250 | (3) |
| **FES**         |   |                               | -      | (4)                                        |   | n/a |   |
| **ATSI**        |   |                               | -      | (4)                                        |   | 50 |   |

|   | (1) | As                of                December 31, 2006. |
|--------|-----|-------------------------------------------------------------|

|   | (2) | Borrowing                sub-limits for CEI and TE may be increased to up to $500 million by                delivering notice to the administrativeagent                that                such borrower has senior unsecured debt ratings of at least BBB by                S&P                and Baa2 by Moody’s. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Excluding                amounts which may be borrowed under the regulated money                pool. |
|--------|-----|-------------------------------------------------------------------------------------------------------|

|   | (4) | Borrowing                sub-limits for FES and ATSI may be increased up to $250 million and |
|--------|-----|---------------------------------------------------------------------------------------------------|

| **Borrower**    |   |   |
|-----------------|--------|--------|
| **FirstEnergy** |   | 57     | % |
| **OE**          |   | 41     | % |
| **Penn**        |   | 24     | % |
| **CEI**         |   | 57     | % |
| **TE**          |   | 53     | % |
| **JCP&L**   |   | 24     | % |
| **Met-Ed**      |   | 42     | % |
| **Penelec**     |   | 33     | % |

----

| **Issuer**  |   | **Securities**                  |   | **S&P** |   | **Moody’s** |   | **Fitch** |
|-------------|--------|---------------------------------|--------|-------------|--------|-------------------|--------|-----------|
|        |   |                            |   |        |   |              |   |      |
| FirstEnergy |   | Senior                unsecured |   | BBB-        |   | Baa3              |   | BBB       |
|        |   |                            |   |        |   |              |   |      |
| OE          |   | Senior                unsecured |   | BBB-        |   | Baa2              |   | BBB       |
|        |   |                            |   |        |   |              |   |      |
| CEI         |   | Senior                secured   |   | BBB         |   | Baa2              |   | BBB       |
|        |   | Senior                unsecured |   | BBB-        |   | Baa3              |   | BBB-      |
|        |   |                            |   |        |   |              |   |      |
| TE          |   | Senior                secured   |   | BBB         |   | Baa2              |   | BBB       |
|        |   | Senior                unsecured |   | BBB-        |   | Baa3              |   | BBB-      |
|        |   |                            |   |        |   |              |   |      |
| Penn        |   | Senior                secured   |   | BBB+        |   | Baa1              |   | BBB+      |
|        |   |                            |   |        |   |              |   |      |
| JCP&L   |   | Senior                secured   |   | BBB+        |   | Baa1              |   | A-        |
|        |   |                            |   |        |   |              |   |      |
| Met-Ed      |   | Senior                unsecured |   | BBB         |   | Baa2              |   | BBB       |
|        |   |                            |   |        |   |              |   |      |
| Penelec     |   | Senior                unsecured |   | BBB         |   | Baa2              |   | BBB       |
|        |   |                            |   |        |   |              |   |      |

----

*Cash      Flows From      Investing Activities *

| **Summary                of Cash Flows**                       |   | **Property**                       |   |            |   |      |   |      |   |
|----------------------------------------------------------------|--------|------------------------------------|--------|-----------------|--------|-----------|--------|-----------|--------|
| **Used                for Investing Activities By Segment**    |   | **Additions**                      |   | **Investments** |   | **Other** |   | **Total** |   |
| **2006                Sources (Uses)**                         |   | ***(In                millions)*** |   |
| Regulated                services                              |   | $                                  | (633   | )               | $      | 147       |   | $         | (10    | ) | $ | (496 | ) |
| Power                supply                management services |   |                               | (644   | )               |   | (5        | )      |      | (1     | ) |   | (650 | ) |
| Other                                                          |   |                               | (1     | )               |   | (26       | )      |      | 1      |   |   | (26 | ) |
| Reconciling                adjustments                         |   |                               | (37    | )               |   | 90        |   |      | 10     |   |   | 63 |   |
| Total                                                          |   | $                                  | (1,315 | )               | $      | 206       |   | $         | -      |   | $ | (1,109 | ) |
|                                                           |   |                               |   |            |   |      |   |      |   |   |   |   |   |
| **2005                Sources (Uses)**                         |   |                               |   |            |   |      |   |      |   |   |   |   |   |
| Regulated                services                              |   | $                                  | (788   | )               | $      | (106      | )      | $         | (14    | ) | $ | (908 | ) |
| Power                supply                management services |   |                               | (375   | )               |   | (19       | )      |      | 3      |   |   | (391 | ) |
| Other                                                          |   |                               | (8     | )               |   | 18        |   |      | (21    | ) |   | (11 | ) |
| Reconciling                adjustments                         |   |                               | (37    | )               |   | 13        |   |      | 1      |   |   | (23 | ) |
| Total                                                          |   | $                                  | (1,208 | )               | $      | (94       | )      | $         | (31    | ) | $ | (1,333 | ) |
|                                                           |   |                               |   |            |   |      |   |      |   |   |   |   |   |
| **2004                Sources (Uses)**                         |   |                               |   |            |   |      |   |      |   |   |   |   |   |
| Regulated                services                              |   | $                                  | (572   | )               | $      | 184       |   | $         | (88    | ) | $ | (476 | ) |
| Power                supply                management services |   |                               | (246   | )               |   | (13       | )      |      | (2     | ) |   | (261 | ) |
| Other                                                          |   |                               | (7     | )               |   | 175       |   |      | (4     | ) |   | 164 |   |
| Reconciling                adjustments                         |   |                               | (21    | )               |   | (2        | )      |      | 100    |   |   | 77 |   |
| Total                                                          |   | $                                  | (846   | )               | $      | 344       |   | $         | 6      |   | $ | (496 | ) |

----

**CONTRACTUAL      OBLIGATIONS**

|                                                       |   |                                     |   |     |   |                  **2008-** |   |                  **2010-** |   |           |   |
|------------------------------------------------------------|--------|------------------------------------------|--------|----------|--------|---------------------------------|--------|---------------------------------|--------|----------------|--------|
| **Contractual                Obligations**                 |   | **Total**                                |   | **2007** |   | **2009**                        |   | **2011**                        |   | **Thereafter** |   |
|                                                       |   | ***(In                millions)***  |   |
| Long-term                debt                              |   | $                                        | 10,424 |     | $      | 241                             |   | $                               | 623    |           | $      | 1,739 |   | $ | 7,821 |   |
| Short-term                borrowings                       |   |                                     | 1,108  |     |   | 1,108                           |   |                            | -      |           |   | - |   |   | - |   |
| Interest                on                long-term debt   |   |                                     | 9,564  |     |   | 609                             |   |                            | 1,172  |           |   | 1,110 |   |   | 6,673 |   |
| Capital                leases                (1)           |   |                                     | 7      |     |   | 1                               |   |                            | 2      |           |   | 2 |   |   | 2 |   |
| Operating                leases (1)                        |   |                                     | 2,298  |     |   | 204                             |   |                            | 449    |           |   | 416 |   |   | 1,229 |   |
| Pension                funding (2)                         |   |                                     | 300    |     |   | 300                             |   |                            | -      |           |   | - |   |   | - |   |
| Fuel                and                purchased power (3) |   |                                     | 16,108 |     |   | 2,809                           |   |                            | 4,927  |           |   | 3,835 |   |   | 4,537 |   |
| Total                                                      |   | $                                        | 39,809 |     | $      | 5,272                           |   | $                               | 7,173  |           | $      | 7,102 |   | $ | 20,262 |   |

|   | (1) | See                Note 6 to                the consolidated financial                statements. |
|--------|-----|---------------------------------------------------------------------------------------------------|

|   | (2) | We                estimate                that no further pension contributions will be required during the                2008-2011 period to maintain our defined benefit pension plan's funding                at                a minimum required level as determined by government regulations.                We are                unable to estimate projected contributions beyond 2011. See Note                3 to the                consolidated financial statements. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Amounts                under                contract with fixed or minimum quantities and approximate                timing. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------|

*Guarantees      and      Other Assurances *

|                                                                  |   | **Maximum**                        |   |
|-----------------------------------------------------------------------|--------|------------------------------------|--------|
| **Guarantees                and Other Assurances**                    |   | **Exposure**                       |   |
|                                                                  |   | ***(In                millions)*** |   |
| FirstEnergy                Guarantees of Subsidiaries                 |   |                               |   |
| Energy                and                Energy-Related Contracts (1) |   | $                                  | 953    |   |
| Other                (2)                                              |   |                               | 1,585  |   |
|                                                                  |   |                               | 2,538  |   |
|                                                                  |   |                               |   |   |
| Surety                Bonds                                           |   |                               | 130    |   |
| LOC                (3)(4)                                             |   |                               | 2,740  |   |
|                                                                  |   |                               |   |   |
| Total                Guarantees and Other Assurances                  |   | $                                  | 5,408  |   |

|   | (1) | Issued                for                open-ended terms, with a 10-day termination right by                FirstEnergy. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Issued                for                various terms. |
|--------|-----|---------------------------------------------------------|

|   | (3) | Includes                $479 million issued for various terms under LOC capacity available in                FirstEnergy’s revolving credit agreement and an additional                $1.6 billion outstanding in support of pollution control revenue                bonds issued with various                maturities. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Includes                approximately $194 million pledged in connection with the sale and                leaseback of Beaver Valley Unit 2 by CEI and TE, $291 million pledged                in connection with the sale and leaseback of Beaver Valley Unit 2                by OE                and $134 million pledged in connection with the sale and leaseback of                Perry Unit 1 by OE. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**OFF-BALANCE      SHEET ARRANGEMENTS**

**MARKET      RISK      INFORMATION **

*Commodity      Price      Risk *

----

| **Increase                (Decrease) in the Fair Value of Derivative                Contracts**  |   | **Non-Hedge**                      |   | **Hedge** |   | **Total** |   |
|--------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|-----------|--------|-----------|--------|
|                                                                                             |   | ***(In                millions)*** |   |
| **Change                in the fair value of commodity derivative                contracts:**    |   |                               |   |      |   |      |   |
| Outstanding                net liability as of January 1, 2006                                   |   | $                                  | (1,170 | )         | $      | (3        | )      | $ | (1,173 | ) |
| New                contract                value when entered                                    |   |                               | -      |      |   | -         |   |   | - |   |
| Additions/change                in value of existing contracts                                   |   |                               | (244   | )         |   | (23       | )      |   | (267 | ) |
| Change                in                techniques/assumptions                                   |   |                               | -      |      |   | -         |   |   | - |   |
| Settled                contracts                                                                 |   |                               | 287    |      |   | 9         |   |   | 296 |   |
| Other                                                                                            |   |                               | (13    | )         |   | -         |   |   | (13 | ) |
| Outstanding                net liability as of December 31, 2006(1)                              |   | $                                  | (1,140 | )         | $      | (17       | )      | $ | (1,157 | ) |
|                                                                                             |   |                               |   |      |   |      |   |   |   |   |
| **Non-commodity                net liabilities as of December 31, 2006**:                        |   |                               |   |      |   |      |   |   |   |   |
| Interest                rate                swaps(2)                                             |   |                               | -      |      |   | (39       | )      |   | (39 | ) |
| **Net                Liabilities - Derivative Contracts as of December 31,                2006** |   | **$**                              | (1,140 | )         | **$**  | (56       | )      | **$** | (1,196 | ) |
|                                                                                             |   |                               |   |      |   |      |   |   |   |   |
| **Impact                of Changes in Commodity Derivative Contracts****(3)**                    |   |                               |   |      |   |      |   |   |   |   |
| Income                Statement effects (pre-tax)                                                |   | $                                  | (3     | )         | $      | -         |   | $ | (3 | ) |
| Balance                Sheet                effects:                                             |   |                               |   |      |   |      |   |   |   |   |
| OCI                (pre-tax)                                                                     |   | $                                  | -      |      | $      | (14       | )      | $ | (14 | ) |
| Regulatory                asset (net)                                                            |   | $                                  | (46    | )         | $      | -         |   | $ | (46 | ) |

|   | (1) | Includes                $1.14 billion in non-hedge commodity derivative contracts (primarily                with NUGs), which are offset by a regulatory                asset. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Interest                rate                swaps are treated as cash flow or fair value hedges (see Interest                Rate                Swap Agreements below). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Represents                the                change in value of existing contracts, settled contracts and changes                in                techniques/ assumptions. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Balance                Sheet Classification**      |   | **Non-Hedge**                      |   | **Hedge** |   | **Total** |   |
|------------------------------------------------------|--------|------------------------------------|--------|-----------|--------|-----------|--------|
|                                                 |   | ***(In                millions)*** |   |
| **Current-**                                         |   |                               |   |      |   |      |   |
| Other                assets                          |   | $                                  | -      |      | $      | 21        |   | $ | 21 |   |
| Other                liabilities                     |   |                               | (4     | )         |   | (38       | )      |   | (42 | ) |
|                                                 |   |                               |   |      |   |      |   |   |   |   |
| **Non-Current-**                                     |   |                               |   |      |   |      |   |   |   |   |
| Other                deferred                charges |   |                               | 46     |      |   | 16        |   |   | 62 |   |
| Other                noncurrent liabilities          |   |                               | (1,182 | )         |   | (55       | )      |   | (1,237 | ) |
| **Net                liabilities**                   |   | **$**                              | (1,140 | )         | **$**  | (56       | )      | **$** | (1,196 | ) |

| **Source                of Information**                        |   |                               |   |     |   |     |   |     |   |     |   |           |   |      |   |
|-----------------------------------------------------------------|--------|------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------------|--------|-----------|--------|
| **-                Fair                Value by Contract Year** |   | **2007**                           |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **Thereafter** |   | **Total** |   |
|                                                            |   | ***(In                millions)*** |   |
| Prices                actively quoted(1)                        |   | $                                  | (3     | )        | $      | -        |   | $        | -      |     | $      | -              |   |  $   | -      |   | $ | - |   | $ | (3 | ) |
| Other                external                sources(2)         |   |                               | (323   | )        |   | (249     | )      |     | (193   | )        |   | -              |   |      | -      |   |   | - |   |   | (765 | ) |
| Prices                based                on models            |   |                               | -      |     |   | -        |   |     | -      |     |   | (185           | )      |      | (105   | ) |   | (99 | ) |   | (389 | ) |
| **Total****(3)**                                                |   | $                                  | (326   | )        | $      | (249     | )      | $        | (193   | )        | $      | (185           | )      | $         | (105   | ) | $ | (99 | ) | $ | (1,157 | ) |

----

*Interest      Rate      Risk *

| **Comparison                of Carrying Value to Fair Value** |   |
|---------------------------------------------------------------|--------|
|                                                          |   |   |   |   |   |   |   |   |   |   |   | **There-** |   |   |   | **Fair** |   |
| **Year                of Maturity**                           |   | **2007** |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **after** |   | **Total** |   | **Value** |   |
|                                                          |   | ***(Dollars                in millions)*** |   |
| Assets                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments                other than Cash and Cash           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equivalents-Fixed                Income                       |   | $ | 100 |   | $ | 57 |   | $ | 68 |   | $ | 84 |   | $ | 92 |   | $ | 1,565 |   | **$** | 1,966 |   | **$** | 2,068 |   |
| Average                interest rate                          |   |   | 7.1 | % |   | 7.7 | % |   | 7.9 | % |   | 7.9 | % |   | 7.9 | % |   | 5.6 | % |   | 6.0% |   |   |   |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term                Debt                and Other        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term                Obligations:                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                rate(1)                                  |   | $ | 241 |   | $ | 336 |   | $ | 287 |   | $ | 199 |   | $ | 1,540 |   | $ | 5,820 |   | **$** | 8,423 |   | **$** | 8,829 |   |
| Average                interest rate                          |   |   | 6.5 | % |   | 5.2 | % |   | 6.7 | % |   | 5.4 | % |   | 6.4 | % |   | 6.5 | % |   | 6.4 | % |   |   |   |
| Variable                rate(1)                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 2,001 |   | **$** | 2,001 |   | **$** | 2,001 |   |
| Average                interest rate                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3.9 | % |   | 3.9 | % |   |   |   |
| Short-term                Borrowings                          |   | $ | 1,108 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **$** | 1,108 |   | **$** | 1,108 |   |
| Average                interest rate                          |   |   | 5.7 | % |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 5.7 | % |   |   |   |

*Interest      Rate      Swap Agreements - Fair Value Hedges*

|                                            |   | **December                31, 2006** |   | **December                31, 2005** |   |
|-------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|
|                                            |   | **Notional**                         |   | **Maturity**                         |   | **Fair** |   | **Notional** |   | **Maturity** |   | **Fair** |   |
| **Interest                Rate Swaps**          |   | **Amount**                           |   | **Date**                             |   | **Value** |   | **Amount** |   | **Date** |   | **Value** |   |
|                                            |   | ***(In                millions)***   |   |
| Fair                value                hedges |   | $                                    | 100    |                                 |   | 2008 |   | $ | (2 | ) | $ | 100 |   |   | 2008 |   | $ | (3 | ) |
|                                            |   |                                 | 50     |                                 |   | 2010 |   |   | (1 | ) |   | 50 |   |   | 2010 |   |   | - |   |
|                                            |   |                                 | -      |                                 |   | 2011 |   |   | - |   |   | 50 |   |   | 2011 |   |   | - |   |
|                                            |   |                                 | 300    |                                 |   | 2013 |   |   | (6 | ) |   | 450 |   |   | 2013 |   |   | (4 | ) |
|                                            |   |                                 | 150    |                                 |   | 2015 |   |   | (10 | ) |   | 150 |   |   | 2015 |   |   | (9 | ) |
|                                            |   |                                 | -      |                                 |   | 2016 |   |   | - |   |   | 150 |   |   | 2016 |   |   | - |   |
|                                            |   |                                 | 50     |                                 |   | 2025 |   |   | (2 | ) |   | 50 |   |   | 2025 |   |   | (1 | ) |
|                                            |   |                                 | 100    |                                 |   | 2031 |   |   | (6 | ) |   | 100 |   |   | 2031 |   |   | (5 | ) |
|                                            |   | $                                    | 750    |                                 |   |   |   | $ | (27 | ) | $ | 1,100 |   |   |   |   | $ | (22 | ) |

----

*Forward      Starting      Swap Agreements - Cash Flow Hedges*

|                                           |   | **December                31, 2006** |   | **December                31, 2005** |   |
|------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|
|                                           |   | **Notional**                         |   | **Maturity**                         |   | **Fair** |   | **Notional** |   | **Maturity** |   | **Fair** |   |
| **Forward                Starting Swaps**      |   | **Amount**                           |   | **Date**                             |   | **Value** |   | **Amount** |   | **Date** |   | **Value** |   |
|                                           |   | ***(In                millions)***   |   |
| Cash                flow                hedges |   | $                                    | 25     |                                 |   | 2015 |   | $ | - |   | $ | 25 |   |   | 2015 |   | $ | - |   |
|                                           |   |                                 | -      |                                 |   | 2016 |   |   | - |   |   | 600 |   |   | 2016 |   |   | 2 |   |
|                                           |   |                                 | 200    |                                 |   | 2017 |   |   | (4 | ) |   | 25 |   |   | 2017 |   |   | - |   |
|                                           |   |                                 | 25     |                                 |   | 2018 |   |   | (1 | ) |   | 275 |   |   | 2018 |   |   | 1 |   |
|                                           |   |                                 | 50     |                                 |   | 2020 |   |   | 1 |   |   | 50 |   |   | 2020 |   |   | - |   |
|                                           |   | $                                    | 300    |                                 |   |   |   | $ | (4 | ) | $ | 975 |   |   |   |   | $ | 3 |   |

*Equity      Price      Risk *

**CREDIT      RISK**

----

**REGULATORY      MATTERS **

|        · |                  restructuring the electric generation business and allowing the Companies'                customers to select a competitive electric generation supplier other                than                the Companies;                               |
|--------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                             |                                                                                                                                                                                                                                                                 |
| ·                                           |                  establishing or defining the PLR obligations to customers in the                Companies' service areas;                                                                                                                                      |
|                                             |                                                                                                                                                                                                                                                                 |
| ·                                           |                  providing the Companies with the opportunity to recover potentially                stranded investment (or transition costs) not otherwise recoverable                in a                competitive                  generation market; |
|                                             |                                                                                                                                                                                                                                                                 |
| ·                                           |                  itemizing (unbundling) the price of electricity into its component                elements - including generation, transmission, distribution and stranded                costs recovery charges;                                              |
|                                             |                                                                                                                                                                                                                                                                 |
| ·                                           |                  continuing regulation of the Companies' transmission and distribution                systems; and                                                                                                                                              |
|                                             |                                                                                                                                                                                                                                                                 |
| ·                                           |                  requiring corporate separation of regulated and unregulated business                activities.                                                                                                                                                |

|                                  |   | **December                31,**    |   | **December                31,** |   | **Increase**   |   |
|---------------------------------------|--------|------------------------------------|--------|---------------------------------|--------|----------------|--------|
| **Regulatory                Assets*** |   | **2006**                           |   | **2005**                        |   | **(Decrease)** |   |
|                                  |   | ***(In                millions)*** |   |
| OE                                    |   | $                                  | 741    |                            | $      | 775            |   | $ | (34 | ) |
| CEI                                   |   |                               | 855    |                            |   | 862            |   |   | (7 | ) |
| TE                                    |   |                               | 248    |                            |   | 287            |   |   | (39 | ) |
| JCP&L                             |   |                               | 2,152  |                            |   | 2,227          |   |   | (75 | ) |
| Met-Ed                                |   |                               | 409    |                            |   | 310            |   |   | 99 |   |
| ATSI                                  |   |                               | 36     |                            |   | 25             |   |   | 11 |   |
| Total                                 |   | $                                  | 4,441  |                            | $      | 4,486          |   | $ | (45 | ) |

| * | Penn                had net                regulatory liabilities of approximately $69 million and                $59 million as of December 31, 2006 and 2005. Penelec had net                regulatory liabilities of approximately $96 million and                $163 million as of December 31, 2006 and 2005, respectively.                These net regulatory liabilities are included in Other Non-current                Liabilities on the Consolidated Balance                Sheets. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                |   | **December                    31,**    |   | **December                    31,** |   | **Increase**   |   |
|---------------------------------------------------------------------|--------|----------------------------------------|--------|-------------------------------------|--------|----------------|--------|
| **Regulatory                    Assets By Source**                  |   | **2006**                               |   | **2005**                            |   | **(Decrease)** |   |
|                                                                |   | ***(In                    millions)*** |   |
| Regulatory                    transition costs                      |   |  $                                | 3,266  |                                | $      | 3,576          |   | $ | (310 | ) |
| Customer                    shopping incentives                     |   |                                   | 603    |                                |   | 884            |   |   | (281 | ) |
| Customer                    receivables for future income taxes     |   |                                   | 217    |                                |   | 217            |   |   | - |   |
| Societal                    benefits charge                         |   |                                   | 11     |                                |   | 29             |   |   | (18 | ) |
| Loss                    on                    reacquired debt       |   |                                   | 43     |                                |   | 41             |   |   | 2 |   |
| Employee                    postretirement benefits                 |   |                                   | 47     |                                |   | 55             |   |   | (8 | ) |
| Nuclear                    decommissioning, decontamination         |   |                                   |   |                                |   |           |   |   |   |   |
| and                    spent fuel                    disposal costs |   |                                   | (145   | )                                   |   | (126           | )      |   | (19 | ) |
| Asset                    removal                    costs           |   |                                   | (168   | )                                   |   | (365           | )      |   | 197 |   |
| Property                    losses and unrecovered plant costs      |   |                                   | 19     |                                |   | 29             |   |   | (10 | ) |
| MISO/PJM                    transmission costs                      |   |                                   | 213    |                                |   | 91             |   |   | 122 |   |
| Fuel                    costs -                    RCP              |   |                                   | 113    |                                |   | -              |   |   | 113 |   |
| Distribution                    costs - RCP                         |   |                                   | 155    |                                |   | -              |   |   | 155 |   |
| Other                                                               |   |                                   | 67     |                                |   | 55             |   |   | 12 |   |
| Total                                                               |   | $                                      | 4,441  |                                | $      | 4,486          |   | $ | (45 | ) |

----

***Ohio***

| -          | Maintaining                  the existing level of base distribution rates through December 31,                  2008 for OE and TE, and April 30, 2009 for CEI;                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| -     | Deferring                  and                  capitalizing for future recovery (over a 25-year period) with carrying                  charges certain distribution costs to be incurred during the period                  January 1, 2006 through December 31, 2008, not to exceed                  $150 million in each of the three years;                                                                                                                                                                                                                                    |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| -          | Adjusting                  the                  RTC and extended RTC recovery periods and rate levels so that full                  recovery of authorized costs will occur as of December 31, 2008 for                  OE and TE and as of December 31, 2010 for CEI;                                                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| -          | Reducing                  the                  deferred shopping incentive balances as of January 1, 2006 by up to                  $75 million for OE, $45 million for TE, and $85 million for CEI                  by accelerating the application of each respective company's accumulated                  cost of removal regulatory liability; and                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| -          | Recovering                  increased fuel costs (compared to a 2002 baseline) of up to                  $75 million, $77 million, and $79 million, in 2006, 2007,                  and 2008, respectively, from all OE and TE distribution and transmission                  customers through a fuel recovery mechanism. OE, TE, and CEI may                  defer and                  capitalize (for recovery over a 25-year period) increased fuel                  costs above                  the amount collected through the fuel recovery                  mechanism. |

| **Amortization**                      |   |                               |   |    |   |   |   | **Total** |   |
|---------------------------------------|--------|------------------------------------|--------|---------|--------|--------|--------|-----------|--------|
| **Period**                            |   | **OE**                             |   | **CEI** |   | **TE** |   | **Ohio**  |   |
|                                  |   | ***(In                millions)*** |   |
| 2007                                  |   | **$**                              | 179    |    | **$**  | 108    |   | **$**     | 93     |   | **$** | 380 |   |
| 2008                                  |   |                               | 208    |    |   | 124    |   |      | 119    |   |   | 451 |   |
| 2009                                  |   |                               | -      |    |   | 216    |   |      | -      |   |   | 216 |   |
| 2010                                  |   |                               | -      |    |   | 273    |   |      | -      |   |   | 273 |   |
| **Total                Amortization** |   | **$**                              | 387    |    | **$**  | 721    |   | **$**     | 212    |   | **$** | 1,320 |   |

----

| -     | Recognize                fuel                and distribution deferrals commencing January 1,                2006;                                        |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                           |
| -          | Recognize                distribution deferrals on a monthly basis prior to review by the                PUCO                Staff;                            |
|            |                                                                                                                                                           |
| -          | Clarify                that                the types of distribution expenditures included in the Supplemental                Stipulation may be deferred; and |
|            |                                                                                                                                                           |
| -          | Clarify                that                distribution expenditures do not have to be “accelerated” in order to be                deferred.       |

***Pennsylvania***

----

----

***New      Jersey***

----

***FERC      Matters***

----

*** ***
*** ***

----

***Reliability      Initiatives***

----

*First*
*First*
*First*

**ENVIRONMENTAL      MATTERS**

*Clean      Air Act      Compliance*

----

*National      Ambient      Air Quality Standards*

*Mercury      Emissions*

----

*W.      H. Sammis      Plant*

*Climate      Change*

----

*Regulation      of      Hazardous Waste*

**OTHER      LEGAL      PROCEEDINGS **

*Power      Outages      and Related Litigation*

----

*Nuclear      Plant      Matters*

----

*Other      Legal      Matters*

----

**CRITICAL      ACCOUNTING POLICIES **

*Revenue      Recognition *

*Regulatory      Accounting *

*Pension      and      Other Postretirement Benefits Accounting*

----

| **Increase                in Costs from Adverse Changes in Key Assumptions** |   |                              |                                            |
|------------------------------------------------------------------------------|--------|-----------------------------------|-------------------------------------------------|
|                                                                         |   |                              |                                            |   |   |   |   |   |   |
| **Assumption**                                                               |   | **Adverse                Change** |                                            | **Pension** |   | **OPEB** |   | **Total** |   |
|                                                                         |   |                              | ***(In                millions)***              |   |
| Discount                rate                                                 |   |                              | Decrease                by                0.25% |   | $ | 13 |   | $ | 2 |   | $ | 15 |   |
| Long-term                return on assets                                    |   |                              | Decrease                by                0.25% |   | $ | 13 |   | $ | 1 |   | $ | 14 |   |
| Health                care                trend rate                         |   |                              | Increase                by                1%    |   |   | N/A |   | $ | 6 |   | $ | 6 |   |

*Ohio      Transition      Cost Amortization *

*Long-Lived      Assets *

----

*Asset      Retirement      Obligations *

*Income      Taxes*

*Goodwill*

**NEW      ACCOUNTING STANDARDS AND INTERPRETATIONS**

|   | *SFAS                159 -                The Fair Value Option for Financial Assets and Financial Liabilities                -                Including an amendment of FASB Statement No.                115* |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Fair      Value      Measurements, *
*Disclosures      about Fair Value of Financial Instruments. *

----

|   | *FSP                EITF                00-19-2 - “Accounting for Registration Payment                Arrangements”* |
|--------|----------------------------------------------------------------------------------------------------------------------------------|

*Accounting      for      Contingencies. *

|   | *EITF                06-5                - “Accounting for Purchases of Life Insurance-Determining the Amount                That                Could Be Realized in Accordance with FASB Technical Bulletin No.                85-4,                Accounting for Purchases of Life                Insurance”* |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*SFAS      157 - “Fair      Value Measurements”*

*FSP      FIN 46(R)-6      - “Determining the Variability to Be Considered in Applying FASB interpretation      No. 46(R)”*

| Step                1: | Analyze                the                nature of the risks in the entity                                                                                                                                                  |
|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Step                2: | Determine                the                purpose(s) for which the entity was created and determine the variability                the entity is designed to create and pass along to its interest                holders. |

----

*FIN      48 -“Accounting for Uncertainty in Income Taxes - an interpretation of FASB      Statement No. 109”*

----

| **FIRSTENERGY                    CORP.**                                                                                                                                                         |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                             |   |   |   |   |   |   |   |
| **CONSOLIDATED                    STATEMENTS OF INCOME**                                                                                                                                         |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |
| **For                    the Years Ended December 31,**                                                                                                                                          |   | **2006** |   | **2005** |   | **2004** |   |
|                                                                                                                                                                                             |   | ***(In                    millions, except per share amounts)*** |   |
| **REVENUES:**                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Electric                    utilities                                                                                                                                                       |   | $ | 10,007 |   | $ | 9,703 |   | $ | 8,860 |   |
| Unregulated                    businesses                                                                                                                                                   |   |   | 1,494 |   |   | 1,655 |   |   | 2,740 |   |
|  Total                    revenues*                                                                                                                                                         |   |   | 11,501 |   |   | 11,358 |   |   | 11,600 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **EXPENSES:**                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Fuel                    and                    purchased power                                                                                                                              |   |   | 4,253 |   |   | 4,011 |   |   | 4,469 |   |
| Other                    operating expenses                                                                                                                                                 |   |   | 2,965 |   |   | 3,103 |   |   | 2,910 |   |
| Provision                    for                    depreciation                                                                                                                            |   |   | 596 |   |   | 588 |   |   | 585 |   |
| Amortization                    of regulatory assets                                                                                                                                        |   |   | 861 |   |   | 1,281 |   |   | 1,166 |   |
| Deferral                    of                    new regulatory assets                                                                                                                     |   |   | (500 | ) |   | (405 | ) |   | (257 | ) |
| General                    taxes                                                                                                                                                            |   |   | 720 |   |   | 713 |   |   | 678 |   |
|  Total                    expenses                                                                                                                                                          |   |   | 8,895 |   |   | 9,291 |   |   | 9,551 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **OPERATING                    INCOME**                                                                                                                                                          |   |   | 2,606 |   |   | 2,067 |   |   | 2,049 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **OTHER                    INCOME (EXPENSE):**                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Investment                    income                                                                                                                                                        |   |   | 149 |   |   | 217 |   |   | 205 |   |
| Interest                    expense                                                                                                                                                         |   |   | (721 | ) |   | (660 | ) |   | (671 | ) |
| Capitalized                    interest                                                                                                                                                     |   |   | 26 |   |   | 19 |   |   | 26 |   |
| Subsidiaries’                    preferred stock dividends                                                                                                                            |   |   | (7 | ) |   | (15 | ) |   | (21 | ) |
|  Total                    other                    expense                                                                                                                                  |   |   | (553 | ) |   | (439 | ) |   | (461 | ) |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **INCOME                    FROM CONTINUING OPERATIONS BEFORE INCOME TAXES**                                                                                                                     |   |   | 2,053 |   |   | 1,628 |   |   | 1,588 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **INCOME                    TAXES**                                                                                                                                                              |   |   | 795 |   |   | 749 |   |   | 681 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **INCOME                    FROM CONTINUING OPERATIONS**                                                                                                                                         |   |   | 1,258 |   |   | 879 |   |   | 907 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Discontinued                    operations (net of income tax benefits of $2 million, $4 million,                                                                                                |   |   |   |   |   |   |   |   |   |   |
| and                    $7                    million, respectively) (Note 2(J))                                                                                                             |   |   | (4 | ) |   | 12 |   |   | (29 | ) |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **INCOME                    BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE**                                                                                                       |   |   | 1,254 |   |   | 891 |   |   | 878 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Cumulative                    effect of a change in accounting principle (net of income tax                    benefit                    of                                                     |   |   |   |   |   |   |   |   |   |   |
| $17                    million)                    (Note 2(K))                                                                                                                              |   |   | - |   |   | (30 | ) |   | - |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **NET                    INCOME**                                                                                                                                                                |   | $ | 1,254 |   | $ | 861 |   | $ | 878 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **BASIC                    EARNINGS PER SHARE OF COMMON STOCK:**                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Income                    from                    continuing operations                                                                                                                          |   | $ | 3.85 |   | $ | 2.68 |   | $ | 2.77 |   |
| Discontinued                    operations (Note 2(J))                                                                                                                                           |   |   | (0.01 | ) |   | 0.03 |   |   | (0.09 | ) |
| Cumulative                    effect of a change in accounting principle (Note 2(K))                                                                                                             |   |   | - |   |   | (0.09 | ) |   | - |   |
| Net                    earnings                    per basic share                                                                                                                               |   | $ | 3.84 |   | $ | 2.62 |   | $ | 2.68 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **WEIGHTED                    AVERAGE NUMBER OF BASIC SHARES**                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **OUTSTANDING**                                                                                                                                                                             |   |   | 324 |   |   | 328 |   |   | 327 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **DILUTED                    EARNINGS PER SHARE OF COMMON STOCK:**                                                                                                                               |   |   |   |   |   |   |   |   |   |   |
| Income                    from                    continuing operations                                                                                                                          |   | $ | 3.82 |   | $ | 2.67 |   | $ | 2.76 |   |
| Discontinued                    operations (Note 2(J))                                                                                                                                           |   |   | (0.01 | ) |   | 0.03 |   |   | (0.09 | ) |
| Cumulative                    effect of a change in accounting principle (Note 2(K))                                                                                                             |   |   | - |   |   | (0.09 | ) |   | - |   |
| Net                    earnings                    per diluted share                                                                                                                             |   | $ | 3.81 |   | $ | 2.61 |   | $ | 2.67 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **WEIGHTED                    AVERAGE NUMBER OF DILUTED SHARES**                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| **OUTSTANDING**                                                                                                                                                                             |   |   | 327 |   |   | 330 |   |   | 329 |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
|  *                  Includes                  $400 million, $395 million and $376 million of excise tax collections                  in                  2006, 2005 and 2004, respectively. |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| The                    accompanying Notes to Consolidated Financial Statements are an                    integral                    part of these statements.                                   |   |
|                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |

----

| **FIRSTENERGY                        CORP.**                                                                                                               |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                           |   |    |   |    |   |
| **CONSOLIDATED                        BALANCE SHEETS**                                                                                                     |   |
|                                                                                                                                                                           |   |    |   |    |   |
|                                                                                                                                                                           |   |    |   |    |   |
| **As                        of                        December 31,**                                                                                                           |   | **2006**  |   | **2005**  |   |
|                                                                                                                                                                           |   | ***(In                        millions)***    |   |
| **ASSETS**                                                                                                                                                                     |   |    |   |    |   |
|                                                                                                                                                                           |   |    |   |    |   |
| **CURRENT                        ASSETS:**                                                                                                                                     |   |    |   |    |   |
| Cash                        and cash                        equivalents                                                                                                        |   | $ | 90 |   | $ | 64 |   |
| Receivables-                                                                                                                                                                   |   |   |   |   |   |   |   |
| Customers                        (less accumulated provisions of $43 million and                                                                                               |   |   |   |   |   |   |   |
| $38                        million,                        respectively, for uncollectible accounts)                                                                           |   |   | 1,135 |   |   | 1,293 |   |
| Other                        (less                        accumulated provisions of $24 million and                                                                            |   |   |   |   |   |   |   |
| $27                        million,                        respectively, for uncollectible accounts)                                                                           |   |   | 132 |   |   | 205 |   |
| Materials                        and                        supplies, at average cost                                                                                          |   |   | 577 |   |   | 518 |   |
| Prepayments                        and other                                                                                                                                   |   |   | 149 |   |   | 237 |   |
|                                                                                                                                                                           |   |   | 2,083 |   |   | 2,317 |   |
| **PROPERTY,                        PLANT AND EQUIPMENT:**                                                                                                                      |   |   |   |   |   |   |   |
| In                        service                                                                                                                                              |   |   | 24,105 |   |   | 22,893 |   |
| Less                        -                        Accumulated provision for depreciation                                                                                    |   |   | 10,055 |   |   | 9,792 |   |
|                                                                                                                                                                           |   |   | 14,050 |   |   | 13,101 |   |
| Construction                        work in progress                                                                                                                           |   |   | 617 |   |   | 897 |   |
|                                                                                                                                                                           |   |   | 14,667 |   |   | 13,998 |   |
| **INVESTMENTS:**                                                                                                                                                               |   |   |   |   |   |   |   |
| Nuclear                        plant                        decommissioning trusts                                                                                             |   |   | 1,977 |   |   | 1,752 |   |
| Investments                        in                        lease obligation bonds (Note 6)                                                                                   |   |   | 811 |   |   | 890 |   |
| Other                                                                                                                                                                          |   |   | 746 |   |   | 709 |   |
|                                                                                                                                                                           |   |   | 3,534 |   |   | 3,351 |   |
| **DEFERRED                        CHARGES AND OTHER ASSETS:**                                                                                                                  |   |   |   |   |   |   |   |
| Goodwill                                                                                                                                                                       |   |   | 5,898 |   |   | 6,010 |   |
| Regulatory                        assets                                                                                                                                       |   |   | 4,441 |   |   | 4,486 |   |
| Prepaid                        pension costs (Note 3)                                                                                                                          |   |   | - |   |   | 1,023 |   |
| Other                                                                                                                                                                          |   |   | 573 |   |   | 656 |   |
|                                                                                                                                                                           |   |   | 10,912 |   |   | 12,175 |   |
|                                                                                                                                                                           |   | $ | 31,196 |   | $ | 31,841 |   |
| **LIABILITIES                        AND CAPITALIZATION**                                                                                                                      |   |   |   |   |   |   |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |
| **CURRENT                        LIABILITIES:**                                                                                                                                |   |   |   |   |   |   |   |
| Currently                        payable long-term debt                                                                                                                        |   | $ | 1,867 |   | $ | 2,043 |   |
| Short-term                        borrowings (Note 13)                                                                                                                         |   |   | 1,108 |   |   | 731 |   |
| Accounts                        payable                                                                                                                                        |   |   | 726 |   |   | 727 |   |
| Accrued                        taxes                                                                                                                                           |   |   | 598 |   |   | 800 |   |
| Other                                                                                                                                                                          |   |   | 956 |   |   | 1,152 |   |
|                                                                                                                                                                           |   |   | 5,255 |   |   | 5,453 |   |
| **CAPITALIZATION**(See                        Consolidated Statements of Capitalization)**:**                                                                                  |   |   |   |   |   |   |   |
| Common                        stockholders’ equity                                                                                                                       |   |   | 9,035 |   |   | 9,188 |   |
| Preferred                        stock of consolidated subsidiaries                                                                                                            |   |   | - |   |   | 184 |   |
| Long-term                        debt                        and other long-term obligations                                                                                   |   |   | 8,535 |   |   | 8,155 |   |
|                                                                                                                                                                           |   |   | 17,570 |   |   | 17,527 |   |
| **NONCURRENT                        LIABILITIES:**                                                                                                                             |   |   |   |   |   |   |   |
| Accumulated                        deferred income taxes                                                                                                                       |   |   | 2,740 |   |   | 2,726 |   |
| Assetretirement                        obligations                                                                                                                             |   |   | 1,190 |   |   | 1,126 |   |
| Power                        purchase                        contract loss liability                                                                                           |   |   | 1,182 |   |   | 1,226 |   |
| Retirement                        benefits                                                                                                                                     |   |   | 944 |   |   | 1,316 |   |
| Lease                        market                        valuation liability                                                                                                 |   |   | 767 |   |   | 851 |   |
| Other                                                                                                                                                                          |   |   | 1,548 |   |   | 1,616 |   |
|                                                                                                                                                                           |   |   | 8,371 |   |   | 8,861 |   |
| **COMMITMENTS,                        GUARANTEES AND CONTINGENCIES (Notes 6 and 14)**                                                                                          |   |   |   |   |   |   |   |
|                                                                                                                                                                           |   | $ | 31,196 |   | $ | 31,841 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |
| The                        accompanying Notes to Consolidated Financial Statements are                        an integral                        part of these balance sheets. |   |

----

| **FIRSTENERGY                              CORP.**                                                                         |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                              STATEMENTS OF CAPITALIZATION**                                                 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                              of                              December 31,**                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **2006** |   |   | **2005** |   |
| ***(Dollars                              in millions)***                                                                   |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **COMMON                              STOCKHOLDERS' EQUITY:**                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                              stock,                              $0.10 par value -authorized 375,000,000 shares-    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 319,205,517                              and 329,836,276 shares outstanding, respectively                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 32 |   | $ | 33 |   |
| Other                              paid-in                              capital                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 6,466 |   |   | 7,043 |   |
| Accumulated                              other comprehensive loss (Note 2(I))                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (259 | ) |   | (20 | ) |
| Retained                              earnings (Note 11(A))                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,806 |   |   | 2,159 |   |
| Unallocated                              employee stock ownership plan common stock-                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 521,818                              and                              1,444,796 shares, respectively (Note 4(B))           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (10 | ) |   | (27 | ) |
| Total                              common                              stockholders’ equity                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 9,035 |   |   | 9,188 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PREFERRED                              STOCK OF CONSOLIDATED SUBSIDIARIES (Note 11(B)):**                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  **Number                              of Shares** |   |   |   |   |   |   |   |
|                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Outstanding                              (Thousands)** |   |   |   |   |   |   |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **2006** |   |   | **2005** |   |   |   |   |   |   |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ohio                              Edison                              Company-                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative,                              $100 par value-authorized 6,000,000 shares                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   | 610 |   |   | - |   |   | 61 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pennsylvania                              Power Company-                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative,                              $100 par value-authorized 1,200,000 shares                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   | 141 |   |   | - |   |   | 14 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Toledo                              Edison                              Company-                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative,                              $100 par value-authorized 3,000,000 shares                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   | 310 |   |   | - |   |   | 31 |   |
| Cumulative,                              $25 par value-authorized 12,000,000 shares                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   | 2,600 |   |   | - |   |   | 65 |   |
| Total                              Toledo                              Edison Company                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   | 2,910 |   |   | - |   |   | 96 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Jersey                              Central                              Power & Light Company-                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative,                              $100 stated value-authorized 15,600,000 shares                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   | 125 |   |   | - |   |   | 13 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                              preferred stock of consolidated subsidiaries                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   | 184 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LONG-TERM                              DEBT AND OTHER LONG-TERM OBLIGATIONS (Note                              11(C)):** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **(Interest                              rates                              reflect weighted average rates)**         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   |  **FIRST                              MORTGAGE BONDS** |   |   |   |   |  **SECURED                              NOTES** |   |   |   |   |  **UNSECURED                              NOTES** |   |  **TOTAL** |   |
|                                                                                                                       |   |   | %  |   |   | **2006** |   |   | **2005** |   |   |  |  |   | %  |   |   | **2006** |   |   | **2005** |   |   |  |  |   | %  |   |   | **2006** |   |   | **2005** |   |   | **2006** |   |   | **2005** |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ohio                              Edison                              Company-                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due                              2006-2011                                                                                 |   |   | - |   | $ | - |   | $ | - |   |   |   |   |   | 7.24 |   | $ | 8 |   | $ | 113 |   |   |   |   |   | 4.79 |   | $ | 331 |   | $ | 331 |   |   |   |   |   |   |   |
| Due                              2012-2016                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 67 |   |   |   |   |   | 6.04 |   |   | 400 |   |   | 150 |   |   |   |   |   |   |   |
| Due                              2017-2021                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 60 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2027-2031                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 4.15 |   |   | 120 |   |   | 250 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2032-2036                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 135 |   |   |   |   |   | 6.88 |   |   | 350 |   |   | - |   |   |   |   |   |   |   |
| Total-Ohio                              Edison                                                                             |   |   |   |   |   | - |   |   | - |   |   |   |   |   |   |   |   | 128 |   |   | 625 |   |   |   |   |   |   |   |   | 1,081 |   |   | 481 |   |   | 1,209 |   |   | 1,106 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cleveland                              Electric Illuminating Company-                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due                              2006-2011                                                                                 |   |   | 6.86 |   |   | 125 |   |   | 125 |   |   |   |   |   | 6.47 |   |   | 351 |   |   | 399 |   |   |   |   |   | - |   |   | - |   |   | 28 |   |   |   |   |   |   |   |
| Due                              2012-2016                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 40 |   |   |   |   |   | 5.72 |   |   | 379 |   |   | 379 |   |   |   |   |   |   |   |
| Due                              2017-2021                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 7.32 |   |   | 433 |   |   | 506 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2027-2031                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 5.38 |   |   | 6 |   |   | 29 |   |   |   |   |   | 9.00 |   |   | 103 |   |   | 103 |   |   |   |   |   |   |   |
| Due                              2032-2036                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 3.94 |   |   | 54 |   |   | 219 |   |   |   |   |   | 5.95 |   |   | 300 |   |   | - |   |   |   |   |   |   |   |
| Total-Cleveland                              Electric                                                                      |   |   |   |   |   | 125 |   |   | 125 |   |   |   |   |   |   |   |   | 844 |   |   | 1,193 |   |   |   |   |   |   |   |   | 782 |   |   | 510 |   |   | 1,751 |   |   | 1,828 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Toledo                              Edison                              Company-                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due                              2006-2011                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 7.13 |   |   | 30 |   |   | 30 |   |   |   |   |   | - |   |   | - |   |   | 54 |   |   |   |   |   |   |   |
| Due                              2022-2026                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 67 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2027-2031                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 5.90 |   |   | 14 |   |   | 14 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2032-2036                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 4.10 |   |   | 45 |   |   | 127 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2037-2041                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 6.15 |   |   | 300 |   |   | - |   |   |   |   |   |   |   |
| Total-Toledo                              Edison                                                                           |   |   |   |   |   | - |   |   | - |   |   |   |   |   |   |   |   | 89 |   |   | 238 |   |   |   |   |   |   |   |   | 300 |   |   | 54 |   |   | 389 |   |   | 292 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pennsylvania                              Power Company-                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due                              2006-2011                                                                                 |   |   | 9.74 |   |   | 5 |   |   | 6 |   |   |   |   |   | - |   |   | - |   |   | 54 |   |   |   |   |   | - |   |   | - |   |   | 15 |   |   |   |   |   |   |   |
| Due                              2012-2016                                                                                 |   |   | 9.74 |   |   | 5 |   |   | 5 |   |   |   |   |   | 5.40 |   |   | 1 |   |   | 1 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2017-2021                                                                                 |   |   | 9.74 |   |   | 3 |   |   | 3 |   |   |   |   |   | - |   |   | - |   |   | 39 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2022-2026                                                                                 |   |   | 7.63 |   |   | 6 |   |   | 6 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                              2027-2031                                                                                 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 5.38 |   |   | 2 |   |   | 8 |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Total-Penn                              Power                                                                              |   |   |   |   |   | 19 |   |   | 20 |   |   |   |   |   |   |   |   | 3 |   |   | 102 |   |   |   |   |   |   |   |   | - |   |   | 15 |   |   | 22 |   |   | 137 |   |

----

| **FIRSTENERGY                          CORP.**                                                                                                                                   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                          STATEMENTS OF CAPITALIZATION (Cont'd)**                                                                                                  |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                          of                          December 31,**                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***(Dollars                          in millions)***                                                                                                                             |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LONG-TERM                          DEBT AND OTHER LONG-TERM OBLIGATIONS (Cont'd)**                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **(Interest                          rates reflect weighted average rates)**                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                             |   |  **FIRST                          MORTGAGE BONDS** |   |   |  **SECURED                          NOTES** |   |   |   |  **UNSECURED                          NOTES** |   |  **TOTAL** |   |
|                                                                                                                                                                             |   |   | %  |   |   | **2006** |   |   | **2005** |   |   |  |   | %  |   |   | **2006** |   |   | **2005** |   |   |  |   | %  |   |   | **2006** |   |   | **2005** |   |   | **2006** |   |   | **2005** |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Jersey                          Central                          Power & Light Company-                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due                          2006-2011                                                                                                                                           |   |   | - |   | $ | - |   | $ | 40 |   |   |   |   | 5.28 |   | $ | 152 |   | $ | 267 |   |   |   |   | - |   | $ | - |   | $ | - |   |   |   |   |   |   |   |
| Due                          2012-2016                                                                                                                                           |   |   | 7.10 |   |   | 12 |   |   | 12 |   |   |   |   | 5.71 |   |   | 493 |   |   | 432 |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                          2017-2021                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | 5.12 |   |   | 235 |   |   | 165 |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                          2022-2026                                                                                                                                           |   |   | 7.09  |   |   | 275 |   |   | 275 |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Due                          2032-2036                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | 6.40 |   |   | 200 |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Total-Jersey                          Central                                                                                                                                    |   |   |   |   |   | 287 |   |   | 327 |   |   |   |   |   |   |   | 1,080 |   |   | 864 |   |   |   |   |   |   |   | - |   |   | - |   | $ | 1,367 |   | $ | 1,191 |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Metropolitan                          Edison Company-                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due                          2006-2011                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 4.94 |   |   | 150 |   |   | 250 |   |   |   |   |   |   |   |
| Due                          2012-2016                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 4.90 |   |   | 400 |   |   | 400 |   |   |   |   |   |   |   |
| Due                          2017-2021                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 3.96 |   |   | 28 |   |   | 28 |   |   |   |   |   |   |   |
| Due                          2027-2031                                                                                                                                           |   |   | 5.95 |   |   | 14 |   |   | 14 |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |   |   |   |
| Total-Metropolitan                          Edison                                                                                                                               |   |   |   |   |   | 14 |   |   | 14 |   |   |   |   |   |   |   | - |   |   | - |   |   |   |   |   |   |   | 578 |   |   | 678 |   |   | 592 |   |   | 692 |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pennsylvania                          Electric Company-                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due                          2006-2011                                                                                                                                           |   |   | 5.35 |   |   | 24 |   |   | 24 |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 6.55 |   |   | 135 |   |   | 135 |   |   |   |   |   |   |   |
| Due                          2012-2016                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 5.13 |   |   | 150 |   |   | 150 |   |   |   |   |   |   |   |
| Due                          2017-2021                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 6.25 |   |   | 145 |   |   | 145 |   |   |   |   |   |   |   |
| Due                          2022-2026                                                                                                                                      |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 4.11 |   |   | 25 |   |   | 25 |   |   |   |   |   |   |   |
| Total-Pennsylvania                          Electric                                                                                                                             |   |   |   |   |   | 24 |   |   | 24  |   |   |   |   |   |   |   | - |   |   | -  |   |   |   |   |   |   |   | 455 |   |   | 455 |   |   | 479 |   |   | 479 |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FirstEnergy                          Corp.-                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due                          2006-2011                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 6.45 |   |   | 1,500 |   |   | 2,500 |   |   |   |   |   |   |   |
| Due                          2027-2031                                                                                                                                           |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 7.38 |   |   | 1,500 |   |   | 1,500 |   |   |   |   |   |   |   |
| Total-FirstEnergy                                                                                                                                                                |   |   |   |   |   | - |   |   | - |   |   |   |   |   |   |   | - |   |   | - |   |   |   |   |   |   |   | 3,000 |   |   | 4,000 |   |   | 3,000 |   |   | 4,000 |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bay                          Shore                          Power                                                                                                                |   |   | - |   |   | - |   |   | - |   |   |   |   | 6.25 |   |   | 130 |   |   | 134 |   |   |   |   | - |   |   | - |   |   | - |   |   | 130 |   |   | 134 |   |
| Facilities                          Services Group                                                                                                                               |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | 4 |   |   |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 4 |   |
| FirstEnergy                          Generation                                                                                                                                  |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   | 4.55 |   |   | 624 |   |   | 58 |   |   | 624 |   |   | 58 |   |
| FirstEnergy                          Nuclear Generation                                                                                                                          |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | - |   |   |  |   | 4.61 |   |   | 861 |   |   | 270 |   |   | 861 |   |   | 270 |   |
| FirstEnergy                          Properties                                                                                                                                  |   |   | - |   |   | - |   |   | - |   |   |   |   | - |   |   | - |   |   | 9 |   |   |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 9 |   |
| Total                                                                                                                                                                            |   |   |   |   |   | 469 |   |   | 510 |   |   |   |   |   |   |   | 2,274 |   |   | 3,169 |   |   |   |   |   |   |   | 7,681 |   |   | 6,521 |   |   | 10,424 |   |   | 10,200 |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital                          lease                          obligations                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4 |   |   | 8 |   |
| Net                          unamortized discount on debt                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (26 | ) |   | (10 | ) |
| Long-term                          debt                          due within one year                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,867 | ) |   | (2,043 | ) |
| Total                          long-term debt and other long-term obligations                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 8,535 |   |   | 8,155 |   |
| **TOTAL                          CAPITALIZATION**                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 17,570 |   | $ | 17,527 |   |
|                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                          accompanying Notes to Consolidated Financial Statements                          are an integral                          part of these statements. |   |

----

| **FIRSTENERGY                    CORP.**                                                                                                                       |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                    STATEMENTS OF COMMON STOCKHOLDERS' EQUITY**                                                                                  |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   | **Accumulated** |   |   |   | **Unallocated** |   |
|                                                                                                                                                           |   |   |   |   |   |   |   | **Other** |   | **Other** |   |   |   | **ESOP** |   |
|                                                                                                                                                           |   | **Comprehensive** |   | **Number** |   | **Par** |   | **Paid-In** |   | **Comprehensive** |   | **Retained** |   | **Common** |   |
|                                                                                                                                                           |   | **Income** |   | **of                    Shares** |   | **Value** |   | **Capital** |   | **Income                    (Loss)** |   | **Earnings** |   | **Stock** |   |
|                                                                                                                                                           |   | ***(Dollars                    in millions)*** |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance,                  January 1, 2004                                                                                                                |   |   |   |   |   | 329,836,276 |   |  $ |  33   |   |  $ | 7,063   |   |  $ | (353  | ) |  $ | 1,605  |   |  $ | (58  | ) |
| Net                    income                                                                                                                                  |   | $ | 878 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 878 |   |   |   |   |
| Minimum                    liability for unfunded retirement                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefits,                    net                    of $5 million of income tax benefits                                                                       |   |   | (6 | ) |   |   |   |   |   |   |   |   |   |   | (6 | ) |   |   |   |   |   |   |
| Unrealized                    gain on derivative hedges, net                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                    $10 million                    of income taxes                                                                                           |   |   | 19 |   |   |   |   |   |   |   |   |   |   |   | 19 |   |   |   |   |   |   |   |
| Unrealized                    gain on investments, net of                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $20                    million of                    income taxes                                                                                              |   |   | 27 |   |   |   |   |   |   |   |   |   |   |   | 27 |   |   |   |   |   |   |   |
| Comprehensive                    income                                                                                                                        |   | $ | 918 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                    options                    exercised                                                                                                  |   |   |   |   |   |   |   |   |   |   |   | (24 | ) |   |   |   |   |   |   |   |   |   |
| Allocation                    of                    ESOP shares                                                                                                |   |   |   |   |   |   |   |   |   |   |   | 17 |   |   |   |   |   |   |   |   | 15 |   |
| Common                    stock                    dividends declared in 2004                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| payable                    in                    2005                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (135 | ) |   |   |   |
| Cash                    dividends                    declared on common stock                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (491 | ) |   |   |   |
| Balance,                    December 31, 2004                                                                                                                  |   |   |   |   |   | 329,836,276 |   |   | 33 |   |   | 7,056 |   |   | (313 | ) |   | 1,857 |   |   | (43 | ) |
| Net                    income                                                                                                                                  |   | $ | 861 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 861 |   |   |   |   |
| Minimum                    liability for unfunded retirement                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefits,                    net                    of $208 million of income taxes                                                                            |   |   | 295 |   |   |   |   |   |   |   |   |   |   |   | 295 |   |   |   |   |   |   |   |
| Unrealized                    gain on derivative hedges, net                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                    $9 million                    of income taxes                                                                                            |   |   | 14 |   |   |   |   |   |   |   |   |   |   |   | 14 |   |   |   |   |   |   |   |
| Unrealized                    loss on investments, net of                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $15                    million of                    income tax benefits                                                                                       |   |   | (16 | ) |   |   |   |   |   |   |   |   |   |   | (16 | ) |   |   |   |   |   |   |
| Comprehensive                    income                                                                                                                        |   | $ | 1,154 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                    options                    exercised                                                                                                  |   |   |   |   |   |   |   |   |   |   |   | (41 | ) |   |   |   |   |   |   |   |   |   |
| Allocation                    of                    ESOP shares                                                                                                |   |   |   |   |   |   |   |   |   |   |   | 22 |   |   |   |   |   |   |   |   | 16 |   |
| Restricted                    stock units                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   | 6 |   |   |   |   |   |   |   |   |   |   |
| Cash                    dividends                    declared on common stock                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (559 | ) |   |   |   |
| Balance,                    December 31, 2005                                                                                                                  |   |   |  |   |   | 329,836,276 |   |   | 33 |   |   | 7,043 |   |   | (20 | ) |   | 2,159 |   |   | (27 | ) |
| Net                    income                                                                                                                                  |   | $ | 1,254 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,254 |   |   |   |   |
| Unrealized                    gain on derivative hedges, net                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                    $10 million                    of income taxes                                                                                           |   |   | 19 |   |   |   |   |   |   |   |   |   |   |   | 19 |   |   |   |   |   |   |   |
| Unrealized                    gain on investments, net of                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $40                    million of                    income taxes                                                                                              |   |   | 69 |   |   |   |   |   |   |   |   |   |   |   | 69 |   |   |   |   |   |   |   |
| Comprehensive                    income                                                                                                                        |   | $ | 1,342 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    liability                    for unfunded retirement benefits                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| due                    to the                    implementation of SFAS 158, net                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                    $292                    million of income tax benefits                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (327 | ) |   |   |   |   |   |   |
| Redemption                    premiums on preferred stock                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (9 | ) |   |   |   |
| Stock                    options                    exercised                                                                                                  |   |   |   |   |   |   |   |   |   |   |   | (28 | ) |   |   |   |   |   |   |   |   |   |
| Allocation                    of                    ESOP shares                                                                                                |   |   |   |   |   |   |   |   |   |   |   | 33 |   |   |   |   |   |   |   |   | 17 |   |
| Restricted                    stock units                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   | 11 |   |   |   |   |   |   |   |   |   |   |
| Stock                    based                    compensation                                                                                                 |   |   |   |   |   |   |   |   |   |   |   | 6 |   |   |   |   |   |   |   |   |   |   |
| Repurchase                    of                    common stock                                                                                               |   |   |   |   |   | (10,630,759 | ) |   | (1 | ) |   | (599 | ) |   |   |   |   |   |   |   |   |   |
| Cash                    dividends                    declared on common stock                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (598 | ) |   |   |   |
| Balance,                    December 31, 2006                                                                                                                  |   |   |   |   |   | 319,205,517 |   | $ | 32 |   | $ | 6,466 |   | $ | (259 | ) | $ | 2,806 |   | $ | (10 | ) |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                    accompanying Notes to Consolidated Financial Statements are an                    integral                    part of these statements. |   |   |   |   |   |   |   |   |   |

----

| **FIRSTENERGY                              CORP.**                                                                                                                                           |         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|                                                                                                                                                                                         |         |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                              STATEMENTS OF PREFERRED STOCK**                                                                                                                  |         |
|                                                                                                                                                                                         |         |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                         |         | **Not                              Subject to** |   | **Subject                              to** |   |
|                                                                                                                                                                                         |         | **Mandatory                              Redemption** |   | **Mandatory                              Redemption** |   |
|                                                                                                                                                                                         |         |   |   | **Par                              or** |   |   |   | **Par                              or** |   |
|                                                                                                                                                                                         |         | **Number** |   | **Stated** |   | **Number** |   | **Stated** |   |
|                                                                                                                                                                                         |         | **of                              Shares** |   | **Value** |   | **of                              Shares** |   | **Value** |   |
|                                                                                                                                                                                         |         | ***(Dollars                              in millions)*** |   |
|                                                                                                                                                                                         |         |   |   |   |   |   |   |   |   |
| Balance,                              January 1, 2004                                                                                                                                        |         |   | 6,209,699 |   | $ | 335 |   |   | 185,000 |   | $ | 19 |   |
| Redemptions-                                                                                                                                                                                 |         |   |   |   |   |   |   |   |   |   |   |   |   |
| 7.625%                              Series                                                                                                                                                   |         |   |   |   |   |   |   |   | (7,500 | ) |   | (1 | ) |
| $7.35                              Series                              C                                                                                                                     |    |   |   |   |   |   |   |   | (10,000 | ) |   | (1 | ) |
| Balance,                              December 31, 2004                                                                                                                                      |         |   | 6,209,699 |   |   | 335 |   |   | 167,500 |   |   | 17 |   |
| Redemptions-                                                                                                                                                                                 |         |   |   |   |   |   |   |   |   |   |   |   |   |
| 7.750%                              Series                                                                                                                                                   |         |   | (250,000 | ) |   | (25 | ) |   |   |   |   |   |   |
| $7.40                              Series                              A                                                                                                                     |         |   | (500,000 | ) |   | (50 | ) |   |   |   |   |   |   |
| Adjustable                              Series L                                                                                                                                             |         |   | (474,000 | ) |   | (46 | ) |   |   |   |   |   |   |
| Adjustable                              Series A                                                                                                                                             |         |   | (1,200,000 | ) |   | (30 | ) |   |   |   |   |   |   |
| 7.625%                              Series                                                                                                                                                   |         |   |   |   |   |   |   |   | (127,500 | ) |   | (13 | ) |
| $7.35                              Series                              C                                                                                                                     |         |   |   |   |   |   |   |   | (40,000 | ) |   | (4 | ) |
| Balance,                              December 31, 2005                                                                                                                                      |         |   | 3,785,699 |   |   | 184 |   |   | - |   |   | - |   |
| Redemptions-                                                                                                                                                                                 |         |   |   |   |   |   |   |   |   |   |   |   |   |
| 3.90%                              Series                                                                                                                                                    |         |   | (152,510 | ) |   | (15 | ) |   |   |   |   |   |   |
| 4.40%                              Series                                                                                                                                                    |         |   | (176,280 | ) |   | (18 | ) |   |   |   |   |   |   |
| 4.44%                              Series                                                                                                                                                    |         |   | (136,560 | ) |   | (14 | ) |   |   |   |   |   |   |
| 4.56%                              Series                                                                                                                                                    |         |   | (144,300 | ) |   | (14 | ) |   |   |   |   |   |   |
| 4.24%                              Series                                                                                                                                                    |         |   | (40,000 | ) |   | (4 | ) |   |   |   |   |   |   |
| 4.25%                              Series                                                                                                                                                    |         |   | (41,049 | ) |   | (4 | ) |   |   |   |   |   |   |
| 4.64%                              Series                                                                                                                                                    |         |   | (60,000 | ) |   | (6 | ) |   |   |   |   |   |   |
| $4.25                              Series                                                                                                                                                    |         |   | (160,000 | ) |   | (16 | ) |   |   |   |   |   |   |
| $4.56                              Series                                                                                                                                                    |         |   | (50,000 | ) |   | (5 | ) |   |   |   |   |   |   |
| $4.25                              Series                                                                                                                                                    |         |   | (100,000 | ) |   | (10 | ) |   |   |   |   |   |   |
| $2.365                              Series                                                                                                                                                   |         |   | (1,400,000 | ) |   | (35 | ) |   |   |   |   |   |   |
| Adjustable                              Series B                                                                                                                                             |         |   | (1,200,000 | ) |   | (30 | ) |   |   |   |   |   |   |
| 4.00%                              Series                                                                                                                                                    |         |   | (125,000 | ) |   | (13 | ) |   |    |   |   |    |  |
| Balance,                              December 31, 2006                                                                                                                                      |         |   | - |   | $ | - |   |   | - |   | $ | - |   |
|                                                                                                                                                                                         |         |   |   |   |   |   |   |   |   |   |   |   |   |
| The                              accompanying Notes to Consolidated Financial Statements                              are an integral                              part of these statements. |

----

| **FIRSTENERGY                  CORP.**                                                                                     |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                     |   |    |   |    |   |    |   |
| **CONSOLIDATED                  STATEMENTS OF CASH                  FLOWS**                                                |   |
|                                                                                                                                                     |   |    |   |    |   |    |   |
| **For                  the Years Ended December 31,**                                                                                                    |   |  **2006** |   |  **2005** |   |  **2004** |   |
|                                                                                                                                                     |   | ***(In                  millions)***      |   |
|                                                                                                                                                     |   |    |   |    |   |    |   |
| **CASH                  FLOWS FROM OPERATING ACTIVITIES:**                                                                                               |   |    |   |    |   |    |   |
| Net                  income                                                                                                                              |   | $ | 1,254 |   | $ | 861 |   | $ | 878 |   |
| Adjustments                  to                  reconcile net income to net cash from operating                  activities-                            |   |   |   |   |   |   |   |   |   |   |
| Provision                  for                  depreciation                                                                                             |   |   | 596 |   |   | 588 |   |   | 585 |   |
| Amortization                  of regulatory assets                                                                                                       |   |   | 861 |   |   | 1,281 |   |   | 1,166 |   |
| Deferral                  of                  new regulatory assets                                                                                      |   |   | (500 | ) |   | (405 | ) |   | (257 | ) |
| Nuclear                  fuel                  and lease amortization                                                                                    |   |   | 90 |   |   | 90 |   |   | 96 |   |
| Deferred                  purchased power and other costs                                                                                                |   |   | (445 | ) |   | (384 | ) |   | (451 | ) |
| Deferred                  income taxes and investment tax credits, net                                                                                   |   |   | 159 |   |   | 154 |   |   | 258 |   |
| Investment                  impairment (Note 2(H))                                                                                                       |   |   | 14 |   |   | 6 |   |   | 28 |   |
| Cumulative                  effect of a change in accounting principle                                                                                   |   |   | - |   |   | 30 |   |   | - |   |
| Deferred                  rents                  and lease market valuation liability                                                                    |   |   | (113 | ) |   | (104 | ) |   | (84 | ) |
| Accrued                  compensation and retirement benefits                                                                                            |   |   | 193 |   |   | 90 |   |   | 156 |   |
| Tax                  refunds                  related to pre-merger period                                                                               |   |   | - |   |   | 18 |   |   | - |   |
| Commodity                  derivative transactions, net                                                                                                  |   |   | 24 |   |   | 6 |   |   | 18 |   |
| Loss                  (gain) on                  asset sales                                                                                             |   |   | (49 | ) |   | (35 | ) |   | 20 |   |
| Loss                  (income)                  from discontinued operations (Note 2(J))                                                                 |   |   | 4 |   |   | (12 | ) |   | 29 |   |
| Cash                  collateral, net                                                                                                                    |   |   | (77 | ) |   | 196 |   |   | (63 | ) |
| Pension                  trust                  contribution                                                                                             |   |   | - |   |   | (500 | ) |   | (500 | ) |
| Decrease                  (increase) in operating assets-                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Receivables                                                                                                                                              |   |   | 105 |   |   | (87 | ) |   | 154 |   |
| Materials                  and                  supplies                                                                                                 |   |   | (25 | ) |   | (32 | ) |   | (9 | ) |
| Prepayments                  and other current assets                                                                                                    |   |   | 3 |   |   | 3 |   |   | 47 |   |
| Increase                  (decrease) in operating liabilities-                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Accounts                  payable                                                                                                                        |   |   | 99 |   |   | 32 |   |   | (111 | ) |
| Accrued                  taxes                                                                                                                           |   |   | (175 | ) |   | 150 |   |   | (5 | ) |
| Accrued                  interest                                                                                                                        |   |   | 7 |   |   | (6 | ) |   | (42 | ) |
| Electric                  service prepayment programs                                                                                                    |   |   | (64 | ) |   | 208 |   |   | (18 | ) |
| Other                                                                                                                                                    |   |   | (22 | ) |   | 72 |   |   | (3 | ) |
| Net                  cash                  provided from operating activities                                                                            |   |   | 1,939 |   |   | 2,220 |   |   | 1,892 |   |
|                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| **CASH                  FLOWS FROM FINANCING ACTIVITIES:**                                                                                               |   |   |   |   |   |   |   |   |   |   |
| New                  Financing-                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Long-term                  debt                                                                                                                          |   |   | 2,739 |   |   | 721 |   |   | 961 |   |
| Short-term                  borrowings, net                                                                                                              |   |   | 386 |   |   | 561 |   |   | - |   |
| Redemptions                  and Repayments-                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Common                  stock                                                                                                                            |   |   | (600 | ) |   | - |   |   | - |   |
| Preferred                  stock                                                                                                                         |   |   | (193 | ) |   | (170 | ) |   | (2 | ) |
| Long-term                  debt                                                                                                                          |   |   | (2,536 | ) |   | (1,424 | ) |   | (1,572 | ) |
| Short-term                  borrowings, net                                                                                                              |   |   | - |   |   | - |   |   | (351 | ) |
| Net                  controlled                  disbursement activity                                                                                   |   |   | (27 | ) |   | (18 | ) |   | (2 | ) |
| Stock-based                  compensation tax benefit                                                                                                    |   |   | 13 |   |   | - |   |   | - |   |
| Common                  stock                  dividend payments                                                                                         |   |   | (586 | ) |   | (546 | ) |   | (491 | ) |
| Net                  cash used                  for financing activities                                                                                 |   |   | (804 | ) |   | (876 | ) |   | (1,457 | ) |
|                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| **CASH                  FLOWS FROM INVESTING ACTIVITIES:**                                                                                               |   |   |   |   |   |   |   |   |   |   |
| Property                  additions                                                                                                                      |   |   | (1,315 | ) |   | (1,208 | ) |   | (846 | ) |
| Proceeds                  from                  asset sales                                                                                              |   |   | 162 |   |   | 104 |   |   | 223 |   |
| Proceeds                  from                  certificates of deposits                                                                                 |   |   | - |   |   | - |   |   | 278 |   |
| Nonutility                  generation trusts contributions                                                                                              |   |   | - |   |   | - |   |   | (51 | ) |
| Proceeds                  from                  nuclear decommissioning trust fund sales                                                                 |   |   | 1,571 |   |   | 1,715 |   |   | 1,131 |   |
| Investments                  in                  nuclear decommissioning trust funds                                                                     |   |   | (1,586 | ) |   | (1,816 | ) |   | (1,232 | ) |
| Cash                  investments and restricted funds (Note 5)                                                                                          |   |   | 121 |   |   | (42 | ) |   | 27 |   |
| Other                                                                                                                                                    |   |   | (62 | ) |   | (86 | ) |   | (26 | ) |
| Net                  cash used                  for investing activities                                                                                 |   |   | (1,109 | ) |   | (1,333 | ) |   | (496 | ) |
|                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Net                  increase                  (decrease) in cash and cash equivalents                                                                   |   |   | 26 |   |   | 11 |   |   | (61 | ) |
| Cash                  and cash                  equivalents at beginning of year                                                                         |   |   | 64 |   |   | 53 |   |   | 114 |   |
| Cash                  and cash                  equivalents at end of year                                                                               |   | $ | 90 |   | $ | 64 |   | $ | 53 |   |
|                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| **SUPPLEMENTAL                  CASH FLOW INFORMATION:**                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                  Paid                  During the Year-                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Interest                  (net                  of amounts capitalized)                                                                                  |   | $ | 656 |   | $ | 665 |   | $ | 704 |   |
| Income                  taxes                                                                                                                            |   | $ | 688 |   | $ | 406 |   | $ | 512 |   |
|                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying Notes to Consolidated Financial Statements are an                  integral                  part of these statements. |   |

----

**NOTES        TO        CONSOLIDATED FINANCIAL STATEMENTS **

**1.**
**ORGANIZATION        AND BASIS OF PRESENTATION**

**2.**
**SUMMARY        OF        SIGNIFICANT ACCOUNTING POLICIES**

**          (A)**
**ACCOUNTING        FOR THE EFFECTS OF REGULATION-**

|   | · | are                  established by a third-party regulator with the authority to set                  rates                  that bind customers; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | are                  cost-based; and |
|--------|--------|--------------------------------------|

|   | · | can                  be charged                  to and collected from customers. |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | restructuring                  the electric generation business and allowing the Companies' customers                  to                  select a competitive electric generation supplier other than the                  Companies; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | establishing                  or defining the PLR obligations to customers in the Companies'                  service                  areas; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | providing                  the                  Companies with the opportunity to recover potentially stranded                  investment                  (or transition costs) not otherwise recoverable in a competitive                  generation market; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | continuing                  regulation of the Companies' transmission and distribution systems;                  and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | requiring                  corporate separation of regulated and unregulated business                  activities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

----

**Regulatory        Assets**

|                                                            |   | **2006**                             |   | **2005**     |   |
|-----------------------------------------------------------------|--------|--------------------------------------|--------|--------------|--------|
|                                                            |   | ***(In                  millions)*** |   |
| Regulatory                  transition costs                    |   | $3,266                               |   | $3,576       |   |
| Customer                  shopping incentives                   |   |  603                            |   |  884    |   |
| Customer                  receivables for future income taxes   |   |  217                            |   |  217    |   |
| Societal                  benefits charge                       |   |  11                             |   |  29     |   |
| Loss                  on                  reacquired debt       |   |  43                             |   |  41     |   |
| Employee                  postretirement benefit costs          |   |  47                             |   |  55     |   |
| Nuclear                  decommissioning, decontamination       |   |                            |   |    |   |
| and                  spent fuel                  disposal costs |   |  (145)                          |   |  (126)  |   |
| Asset                  removal                  costs           |   |  (168)                          |   |  (365)  |   |
| Property                  losses and unrecovered plant costs    |   |  19                             |   |  29     |   |
| MISO/PJM                  transmission costs                    |   |                                 | 213    |         |   | 91 |   |
| Fuel                  costs -                  RCP              |   |                                 | 113    |         |   | - |   |
| Distribution                  costs - RCP                       |   |                                 | 155    |         |   | - |   |
| Other                                                           |   |                                 | 67     |         |   | 55 |   |
| Total                                                           |   | $                                    | 4,441  |         | $      | 4,486 |   |

**Transition        Cost Amortization**

| **Amortization**                          |   |                                   |   |    |   |   |   | **Total** |   |
|-------------------------------------------|--------|----------------------------------------|--------|---------|--------|--------|--------|-----------|--------|
| **Period**                                |   | **OE**                                 |   | **CEI** |   | **TE** |   | **Ohio**  |   |
|                                      |   | ***(In                    millions)*** |   |
| 2007                                      |   | **$**                                  | 179    |    | **$**  | 108    |   | **$**     | 93     |   | **$** | 380 |   |
| 2008                                      |   |                                   | 208    |    |   | 124    |   |      | 119    |   |   | 451 |   |
| 2009                                      |   |                                   | -      |    |   | 216    |   |      | -      |   |   | 216 |   |
| 2010                                      |   |                                   | -      |    |   | 273    |   |      | -      |   |   | 273 |   |
| **Total                    Amortization** |   | **$**                                  | 387    |    | **$**  | 721    |   | **$**     | 212    |   | **$** | 1,320 |   |

----

|   | **(B)** | **CASH                  AND SHORT-TERM FINANCIAL                  INSTRUMENTS-** |
|--------|---------|----------------------------------------------------------------------------------|

|   | **(C)** | **REVENUES                  AND RECEIVABLES-** |
|--------|---------|------------------------------------------------|

|   | **(D)** | **ACCOUNTING                  FOR CERTAIN WHOLESALE ENERGY                  TRANSACTIONS-** |
|--------|---------|---------------------------------------------------------------------------------------------|

**(E)           **
**EARNINGS        PER        SHARE OF COMMON STOCK-**

----

| **Reconciliation                  of Basic and Diluted**                                              |                                                        |                                                                  |   |     |   |     |   |
|-------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|-----------------------------------------------------------------------|--------|----------|--------|----------|--------|
| **Earnings                  per Share of Common Stock**                                               |                                                        | **2006**                                                              |   | **2005** |   | **2004** |   |
|                                                                                                  |                                                        | ***(In                  millions, except per share amounts)***        |   |
|                                                                                                  |                                                        |                                                                  |   |     |   |     |   |
| Income                  from                  continuing operations                                   |                                                        | $                                                                     | 1,258  |     | $      | 879      |   | $ | 907 |   |
| Less:                  Redemption premium on subsidiary preferred stock                               |                                                        |                                                                  | (9     | )        |   | -        |   |   | - |   |
| Income                  from                  continuing operations available to common shareholders  |                                                        |                                                                  | 1,249  |     |   | 879      |   |   | 907 |   |
| Discontinued                  operations                                                              |                                                        |                                                                  | (4     | )        |   | 12       |   |   | (29 | ) |
| Income                  before                  cumulative effect of a change in accounting principle |                                                        |                                                                  | 1,245  |     |   | 891      |   |   | 878 |   |
| Cumulative                  effect of a change in accounting principle                                |                                                        |                                                                  | -      |     |   | (30      | )      |   | - |   |
| Net                  income                  available for common shareholders                        |                                                        | $                                                                     | 1,245  |     | $      | 861      |   | $ | 878 |   |
|                                                                                                  |                                                        |                                                                  |   |     |   |     |   |   |   |   |
| Average                  shares                  of common stock outstanding - Basic                  |                                                        |                                                                  | 324    |     |   | 328      |   |   | 327 |   |
| Assumed                  exercise of dilutive stock options and awards                                |                                                        |                                                                  | 3      |     |   | 2        |   |   | 2 |   |
| Average                  shares                  of common stock outstanding - Dilutive               |                                                        |                                                                  | 327    |     |   | 330      |   |   | 329 |   |
|                                                                                                  |                                                        |                                                                  |   |     |   |     |   |   |   |   |
| Earnings                  per                  share:                                                 |                                                        |                                                                  |   |     |   |     |   |   |   |   |
|                                                                                                  | Basic                  earnings                  per share: |                                                                  |   |     |   |     |   |   |   |   |   |
|                                                                                                  |                                                        | Earnings                  from                  continuing operations |   | $        | 3.85   |     | $      | 2.68 |   | $ | 2.77 |   |
|                                                                                                  |                                                        | Discontinued                  operations                              |   |     | (0.01  | )        |   | 0.03 |   |   | (0.09 | ) |
|                                                                                                  |                                                        | Cumulative                  effect of change in accounting principle  |   |     | -      |     |   | (0.09 | ) |   | - |   |
|                                                                                                  |                                                        | Net                  earnings                  per basic share        |   | $        | 3.84   |     | $      | 2.62 |   | $ | 2.68 |   |
|                                                                                                  |                                                        |                                                                  |   |     |   |     |   |   |   |   |
|                                                                                                  | Diluted                  earnings per share:                |                                                                  |   |     |   |     |   |   |   |   |   |
|                                                                                                  |                                                        | Earnings                  from                  continuing operations |   | $        | 3.82   |     | $      | 2.67 |   | $ | 2.76 |   |
|                                                                                                  |                                                        | Discontinued                  operations                              |   |     | (0.01  | )        |   | 0.03 |   |   | (0.09 | ) |
|                                                                                                  |                                                        | Cumulative                  effect of change in accounting principle  |   |     | -      |     |   | (0.09 | ) |   | - |   |
|                                                                                                  |                                                        | Net                  earnings                  per diluted share      |   | $        | 3.81   |     | $      | 2.61 |   | $ | 2.67 |   |
|                                                                                                  |                                                        |                                                                  |   |     |   |     |   |   |   |   |

|   | **(F)** | **PROPERTY,                  PLANT AND EQUIPMENT-** |
|--------|---------|-----------------------------------------------------|

|      |   | **Annual                  Composite**  |   |
|-----------|--------|----------------------------------------|--------|
|      |   | **Depreciation                  Rate** |   |
|      |   | **2006**                               |   | **2005** |   | **2004** |   |
| OE        |   |                                   |   |   |   | 2.8 | % |   |   |   |   | 2.1 | % |   |   |   |   | 2.3 | % |
| CEI       |   |                                   |   |   |   | 3.2 |   |   |   |   |   | 2.9 |   |   |   |   |   | 2.8 |   |
| TE        |   |                                   |   |   |   | 3.8 |   |   |   |   |   | 3.1 |   |   |   |   |   | 2.8 |   |
| Penn      |   |                                   |   |   |   | 2.6 |   |   |   |   |   | 2.4 |   |   |   |   |   | 2.2 |   |
| JCP&L |   |                                   |   |   |   | 2.1 |   |   |   |   |   | 2.2 |   |   |   |   |   | 2.1 |   |
| Met-Ed    |   |                                   |   |   |   | 2.3 |   |   |   |   |   | 2.4 |   |   |   |   |   | 2.4 |   |
| Penelec   |   |                                   |   |   |   | 2.3 |   |   |   |   |   | 2.6 |   |   |   |   |   | 2.5 |   |
| FGCO      |   |                                   |   |   |   | 4.1 |   |   |   |   |   | N/A |   |   |   |   |   | N/A |   |
| NGC       |   |                                   |   |   |   | 2.7 |   |   |   |   |   | N/A |   |   |   |   |   | N/A |   |

*Jointly-Owned        Generating Stations*

*Asset        Retirement        Obligations*

----

*Nuclear        Fuel*

|   | **(G)** | **STOCK-BASED                  COMPENSATION-** |
|--------|---------|------------------------------------------------|

**(H)          **
**ASSET        IMPAIRMENTS-**

*Long-Lived        Assets*

*Goodwill*

----

|                                                              |   |          |   | **Power**      |   |                                 |   |      |   |             |   |
|-------------------------------------------------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-----------|--------|------------------|--------|
|                                                              |   |          |   | **Supply**     |   |                                 |   |      |   |             |   |
|                                                              |   | **Regulated** |   | **Management** |   | **Facilities**                       |   |      |   |             |   |
|                                                              |   | **Services**  |   | **Services**   |   | **Services**                         |   | **Other** |   | **Consolidated** |   |
|                                                              |   |          |   |           |   | ***(In                  millions)*** |   |      |   |             |   |
| Balance                  as of                  January 1, 2004   |   | $             | 5,993  |           | $      | 24                                   |   | $         | 36     |             | $      | 75 |   | $ | 6,128 |   |
| Impairment                  charges                               |   |          |   |           |   |                                 |   |      | (36    | )                |   |   |   |   | (36 | ) |
| Adjustments                  related to GPU acquisition           |   |          | (42    | )              |   |                                 |   |      |   |             |   |   |   |   | (42 | ) |
| Balance                  as of                  December 31, 2004 |   |          | 5,951  |           |   | 24                                   |   |      | -      |             |   | 75 |   |   | 6,050 |   |
| Impairment                  charges                               |   |          |   |           |   |                                 |   |      |   |             |   | (9 | ) |   | (9 | ) |
| Non-core                  asset                  sales            |   |          |   |           |   |                                 |   |      |   |             |   | (12 | ) |   | (12 | ) |
| Adjustments                  related to GPU acquisition           |   |          | (10    | )              |   |                                 |   |      |   |             |   |   |   |   | (10 | ) |
| Adjustments                  related to Centerior acquisition     |   |          | (9     | )              |   |                                 |   |      |   |             |   |   |   |   | (9 | ) |
| Balance                  as of                  December 31, 2005 |   |          | 5,932  |           |   | 24                                   |   |      | -      |             |   | 54 |   |   | 6,010 |   |
| Non-core                  asset                  sale             |   |          |   |           |   |                                 |   |      |   |             |   | (53 | ) |   | (53 | ) |
| Adjustments                  related to Centerior acquisition     |   |          | (1     | )              |   |                                 |   |      |   |             |   |   |   |   | (1 | ) |
| Adjustments                  related to GPU acquisition           |   |          | (58    | )              |   |                                 |   |      |   |             |   |   |   |   | (58 | ) |
| Balance                  as of                  December 31, 2006 |   | $             | 5,873  |           | $      | 24                                   |   | $         | -      |             | $      | 1 |   | $ | 5,898 |   |

*Investments*

**(I)**
**COMPREHENSIVE        INCOME-**

|                                                                             |                                 |   |     |   |     |   |
|----------------------------------------------------------------------------------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                                             | **2006**                             |   | **2005** |   | **2004** |   |
|                                                                             | ***(In                  millions)*** |   |
| AOCL                  balance                  as of January 1,                  | $                                    | (20    | )        | $      | (313     | )      | $ | (353 | ) |
|                                                                             |                                 |   |     |   |     |   |   |   |   |
| Minimum                  liability for unfunded retirement benefits              |                                 | -      |     |   | 503      |   |   | (11 | ) |
| Unrealized                  gain (loss) on available for sale securities         |                                 | 109    |     |   | (31      | )      |   | 46 |   |
| Unrealized                  gain on derivative hedges                            |                                 | 29     |     |   | 23       |   |   | 29 |   |
| Other                  comprehensive income                                 |                                 | 138    |     |   | 495      |   |   | 64 |   |
| Income                  taxes                  related to OCI                    |                                 | 50     |     |   | 202      |   |   | 24 |   |
| Other                  comprehensive income, net of tax                     |                                 | 88     |     |   | 293      |   |   | 40 |   |
| Net                  liability                  for unfunded retirement benefits |                                 |   |     |   |     |   |   |   |   |
| due                  to the                  implementation of SFAS 158, net     |                                 |   |     |   |     |   |   |   |   |
| of                  $292                  million of income tax benefits         |                                 | (327   | )        |   | -        |   |   | - |   |
| AOCL                  balance                  as of December 31,                | $                                    | (259   | )        | $      | (20      | )      | $ | (313 | ) |

----

**(J)           **
**ASSETS        HELD        FOR SALE AND DISCONTINUED OPERATIONS- **

|                                                                         |   | **2006**                             |   | **2005** |   | **2004** |   |
|------------------------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                                         |   | ***(In                  millions)*** |   |
| FES                  natural                  gas business                   |   | $                                    | -      |     | $      | 5        |   | $ | 4 |   |
| FSG                  subsidiaries                                            |   |                                 | (7     | )        |   | 8        |   |   | (29 | ) |
| MYR                                                                          |   |                                 | 3      |     |   | (1       | )      |   | (4 | ) |
| Income                  (loss)                  from discontinued operations |   | $                                    | (4     | )        | $      | 12       |   | $ | (29 | ) |

|   | **(K)** | **CUMULATIVE                  EFFECT OF A CHANGE IN ACCOUNTING                  PRINCIPLE-** |
|--------|---------|----------------------------------------------------------------------------------------------|

----

|   | **(L)** | **TAXES-** |
|--------|---------|------------|

| **GENERAL                        TAXES**                                                                                                                                                        |   | **2006**                            |                                     | **2005** |   | **2004** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|------------------------------------------|----------|--------|----------|--------|
|                                                                                                                                                                                                 |   | ***(In                      millions)*** |                                     |
| Kilowatt-hour                      excise*                                                                                                                                                      |   | $                                        | 241                                      |     | $      | 244      |   | $ | 236 |   |
| State                        gross                        receipts*                                                                                                                             |   |                                     | 159                                      |     |   | 151      |   |   | 140 |   |
| Real                      and                      personal property                                                                                                                            |   |                                     | 222                                      |     |   | 222      |   |   | 208 |   |
| Social                      security and unemployment                                                                                                                                           |   |                                     | 83                                       |     |   | 79       |   |   | 76 |   |
|  Other                                                                                                                                                                                     |   |                                     | 15                                       |     |   | 17       |   |   | 18 |   |
| Total                      general                      taxes                                                                                                                                   |   | $                                        | 720                                      |     | $      | 713      |   | $ | 678 |   |
|                                                                                                                                                                                            |   |                                     |                                     |     |   |     |   |   |   |   |
|  *                      Collected from customers through regulated rates and included                    in revenue                    in the Consolidated Statements of Income. |   |
|                                                                                                                                                                                            |   |
| **PROVISION                      FOR INCOME TAXES**                                                                                                                                             |   |                                     | **2006**                                 |     |   | **2005** |   |   | **2004** |   |
|                                                                                                                                                                                            |   |                                     | ***(In                      millions)*** |     |
| Currently                      payable-                                                                                                                                                         |   |                                     |                                     |     |   |     |   |   |   |   |
| Federal                                                                                                                                                                                         |   | $                                        | 519                                      |     | $      | 452      |   | $ | 289 |   |
| State                                                                                                                                                                                           |   |                                     | 116                                      |     |   | 142      |   |   | 135 |   |
|                                                                                                                                                                                            |   |                                     | 635                                      |     |   | 594      |   |   | 424 |   |
|                                                                                                                                                                                            |   |                                     |                                     |     |   |     |   |   |   |   |
| Deferred,                        net-                                                                                                                                                           |   |                                     |                                     |     |   |     |   |   |   |   |
| Federal                                                                                                                                                                                         |   |                                     | 147                                      |     |   | 72       |   |   | 245 |   |
| State                                                                                                                                                                                           |   |                                     | 28                                       |     |   | 110      |   |   | 39 |   |
|                                                                                                                                                                                            |   |                                     | 175                                      |     |   | 182      |   |   | 284 |   |
| Investment                      tax                      credit amortization                                                                                                                    |   |                                     | (15                                      | )        |   | (27      | )      |   | (27 | ) |
| Total                      provision for income taxes                                                                                                                                           |   | $                                        | 795                                      |     | $      | 749      |   | $ | 681 |   |
|                                                                                                                                                                                            |   |                                     |                                     |     |   |     |   |   |   |   |
|                                                                                                                                                                                            |   |                                     |                                     |     |   |     |   |   |   |   |
| **RECONCILIATION                      OF FEDERAL INCOME TAX EXPENSE AT**                                                                                                                        |   |                                     |                                     |     |   |     |   |   |   |   |
| **STATUTORY                      RATE TO TOTAL PROVISION FOR INCOME TAXES:**                                                                                                                    |   |                                     |                                     |     |   |     |   |   |   |   |
| Book                      income                      before provision for income taxes                                                                                                         |   | $                                        | 2,053                                    |     | $      | 1,628    |   | $ | 1,588 |   |
| Federal                      income                      tax expense at statutory rate                                                                                                          |   | $                                        | 719                                      |     | $      | 569      |   | $ | 556 |   |
| Increases                      (reductions) in taxes resulting from-                                                                                                                            |   |                                     |                                     |     |   |     |   |   |   |   |
| Amortization                      of investment tax credits                                                                                                                                     |   |                                     | (15                                      | )        |   | (27      | )      |   | (27 | ) |
| State                      income                      taxes, net of federal income tax benefit                                                                                                 |   |                                     | 94                                       |     |   | 165      |   |   | 111 |   |
| Penalties                                                                                                                                                                                       |   |                                     | -                                        |     |   | 14       |   |   | - |   |
| Amortization                      of tax regulatory assets                                                                                                                                      |   |                                     | 2                                        |     |   | 38       |   |   | 33 |   |
| Preferred                      stock dividends                                                                                                                                                  |   |                                     | 5                                        |     |   | 5        |   |   | 8 |   |
| Other,                      net                                                                                                                                                                 |   |                                     | (10                                      | )        |   | (15      | )      |   | - |   |
| Total                      provision for income taxes                                                                                                                                           |   | $                                        | 795                                      |     | $      | 749      |   | $ | 681 |   |
|                                                                                                                                                                                            |   |                                     |                                     |     |   |     |   |   |   |   |
|                                                                                                                                                                                            |   |                                     |                                     |     |   |     |   |   |   |   |
| **ACCUMULATED                      DEFERRED INCOME TAXES AS OF**                                                                                                                                |   |                                     |                                     |     |   |     |   |   |   |   |
| **DECEMBER                      31:**                                                                                                                                                           |   |                                     |                                     |     |   |     |   |   |   |   |
| Property                      basis                      differences                                                                                                                            |   | $                                        | 2,595                                    |     | $      | 2,368    |   | $ | 2,348 |   |
| Regulatory                      transition charge                                                                                                                                               |   |                                     | 457                                      |     |   | 537      |   |   | 785 |   |
| Customer                      receivables for future income taxes                                                                                                                               |   |                                     | 141                                      |     |   | 131      |   |   | 103 |   |
| Deferred                      customer shopping incentive                                                                                                                                       |   |                                     | 219                                      |     |   | 321      |   |   | 252 |   |
| Deferred                      sale                      and leaseback costs                                                                                                                     |   |                                     | (86                                      | )        |   | (86      | )      |   | (92 | ) |
| Nonutility                      generation costs                                                                                                                                                |   |                                     | (122                                     | )        |   | (177     | )      |   | (174 | ) |
| Unamortized                      investment tax credits                                                                                                                                         |   |                                     | (50                                      | )        |   | (54      | )      |   | (61 | ) |
| Other                      comprehensive income                                                                                                                                                 |   |                                     | (260                                     | )        |   | (18      | )      |   | (219 | ) |
| Retirement                      benefits                                                                                                                                                        |   |                                     | 10                                       |     |   | (135     | )      |   | (280 | ) |
| Lease                      market                      valuation liability                                                                                                                      |   |                                     | (331                                     | )        |   | (361     | )      |   | (420 | ) |
| Oyster                      Creek                      securitization (Note 10(D))                                                                                                              |   |                                     | 162                                      |     |   | 173      |   |   | 184 |   |
| Loss                      carryforwards                                                                                                                                                         |   |                                     | (426                                     | )        |   | (417     | )      |   | (463 | ) |
| Loss                      carryforward valuation reserve                                                                                                                                        |   |                                     | 415                                      |     |   | 402      |   |   | 420 |   |
| Asset                      retirement obligations                                                                                                                                               |   |                                     | 45                                       |     |   | 65       |   |   | 71 |   |
| Nuclear                      decommissioning                                                                                                                                                    |   |                                     | (116                                     | )        |   | (105     | )      |   | (100 | ) |
| All                      other                                                                                                                                                                  |   |                                     | 87                                       |     |   | 82       |   |   | (30 | ) |
| Net                      deferred                      income tax liability                                                                                                                     |   | $                                        | 2,740                                    |     | $      | 2,726    |   | $ | 2,324 |   |
|                                                                                                                                                                                            |   |                                     |                                     |     |   |     |   |   |   |   |

----

| **Expiration                  Period** |   | **Amount**                           |
|----------------------------------------|--------|--------------------------------------|
|                                   |   | ***(in                  millions)*** |
| 2007-2011                              |   | $                                    | 332 |   |   |
| 2012-2016                              |   |                                 | 37 |   |   |
| 2017-2021                              |   |                                 | 297 |   |   |
| 2022-2026                              |   |                                 | 368 |   |   |
|                                   |   | $                                    | 1,034 |   |   |

**3.**
**PENSION        AND        OTHER POSTRETIREMENT BENEFIT PLANS**

----

| **Obligations                  and Funded Status**                             |   | **Pension                  Benefits** |   | **Other                  Benefits** |   |
|--------------------------------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|--------|
| **As                  of                  December 31**                        |   | **2006**                              |   | **2005**                            |   | **2006** |   | **2005** |   |
|                                                                           |   | ***(In                  millions)***  |   |
| **Change                  in benefit obligation**                              |   |                                  |   |                                |   |   |   |   |   |
| Benefit                  obligation as of January 1                            |   | $                                     | 4,750  |                                | $      | 4,364 |   | $ | 1,884 |   | $ | 1,930 |   |
| Service                  cost                                                  |   |                                  | 83     |                                |   | 77 |   |   | 34 |   |   | 40 |   |
| Interest                  cost                                                 |   |                                  | 266    |                                |   | 254 |   |   | 105 |   |   | 111 |   |
| Plan                  participants’ contributions                        |   |                                  | -      |                                |   | - |   |   | 20 |   |   | 18 |   |
| Plan                  amendments                                               |   |                                  | 3      |                                |   | 15 |   |   | (620 | ) |   | (312 | ) |
| Medicare                  retiree drug subsidy                                 |   |                                  | -      |                                |   | - |   |   | 6 |   |   | - |   |
| Actuarial                  (gain) loss                                         |   |                                  | 33     |                                |   | 310 |   |   | (119 | ) |   | 197 |   |
| Benefits                  paid                                                 |   |                                  | (274   | )                                   |   | (270 | ) |   | (109 | ) |   | (100 | ) |
| Benefit                  obligation as of December 31                          |   | $                                     | 4,861  |                                | $      | 4,750 |   | $ | 1,201 |   | $ | 1,884 |   |
|                                                                           |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Change                  in fair value of plan assets**                       |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Fair                  value of                  plan assets as of January 1    |   | $                                     | 4,524  |                                | $      | 3,969 |   | $ | 573 |   | $ | 564 |   |
| Actual                  return                  on plan assets                 |   |                                  | 568    |                                |   | 325 |   |   | 69 |   |   | 33 |   |
| Company                  contribution                                          |   |                                  | -      |                                |   | 500 |   |   | 54 |   |   | 58 |   |
| Plan                  participants’ contribution                         |   |                                  | -      |                                |   | - |   |   | 20 |   |   | 18 |   |
| Benefits                  paid                                                 |   |                                  | (274   | )                                   |   | (270 | ) |   | (109 | ) |   | (100 | ) |
| Fair                  value of                  plan assets as of December 31  |   | $                                     | 4,818  |                                | $      | 4,524 |   | $ | 607 |   | $ | 573 |   |
|                                                                           |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Funded                  status**                                             |   | $                                     | (43    | )                                   | $      | (226 | ) | $ | (594 | ) | $ | (1,311 | ) |
|                                                                           |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Accumulated                  benefit obligation**                            |   | $                                     | 4,447  |                                | $      | 4,327 |   |   |   |   |   |   |   |
|                                                                           |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Amounts                  Recognized in the Statement of**                    |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Financial                  Position**                                        |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Noncurrent                  assets                                             |   | $                                     | -      |                                | $      | 1,023 |   | $ | - |   | $ | - |   |
| Current                  liabilities                                           |   |                                  | -      |                                |   | - |   |   | - |   |   | - |   |
| Noncurrent                  liabilities                                        |   |                                  | (43    | )                                   |   | - |   |   | (594 | ) |   | (1,057 | ) |
| Net                  asset                  (liability) as of December 31 |   | $                                     | (43    | )                                   | $      | 1,023 |   | $ | (594 | ) | $ | (1,057 | ) |
|                                                                           |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Amounts                  Recognized in**                                     |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Accumulated                  Other Comprehensive Income**                    |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Prior                  service                  cost (credit)                  |   | $                                     | 63     |                                | $      | - |   | $ | (1,190 | ) | $ | - |   |
| Actuarial                  loss                                                |   |                                  | 982    |                                |   | - |   |   | 702 |   |   | - |   |
| Net                  amount                  recognized                        |   | $                                     | 1,045  |                                | $      | - |   | $ | (488 | ) | $ | - |   |
|                                                                           |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Assumptions                  Used to Determine**                             |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Benefit                  Obligations As of December 31**                     |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Discount                  rate                                                 |   |                                  | 6.00   | %                                   |   | 5.75 | % |   | 6.00 | % |   | 5.75 | % |
| Rate                  of                  compensation increase                |   |                                  | 3.50   | %                                   |   | 3.50 | % |   |   |   |   |   |   |
|                                                                           |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Allocation                  of Plan Assets**                                 |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **As                  of                  December 31**                        |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Asset                  Category                                                |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Equity                  securities                                             |   |                                  | 64     | %                                   |   | 63 | % |   | 72 | % |   | 71 | % |
| Debt                  securities                                               |   |                                  | 29     |                                |   | 33 |   |   | 26 |   |   | 27 |   |
| Real                  estate                                                   |   |                                  | 5      |                                |   | 2 |   |   | 1 |   |   | - |   |
| Private                  equities                                              |   |                                  | 1      |                                |   | - |   |   | - |   |   | - |   |
| Cash                                                                           |   |                                  | 1      |                                |   | 2 |   |   | 1 |   |   | 2 |   |
| Total                                                                          |   |                                  | 100    | %                                   |   | 100 | % |   | 100 | % |   | 100 | % |

----

|  **Estimated                    Items to be Amortized in 2007 Net** |   |                              |         |   |   |
|--------------------------------------------------------------------------|--------|----------------------------------------|--------------|--------|--------|
| **Periodic                    Pension Cost from Accumulated**            |   |                                   | **Pension**  |   |   | **Other** |   |
| **Other                    Comprehensive Income**                        |   |                                   | **Benefits** |   |   | **Benefits** |   |
|                                                                     |   | ***(In                    millions)*** |
| Prior                    service                    cost (credit)        |   | $                                      | 10           |   | $      | (149 | ) |
| Actuarial                    loss                                        |   | $                                      | 41           |   | $      | 45 |   |

|                                                            |   | **Pension                  Benefits** |     | **Other                  Benefits** |                                |
|-----------------------------------------------------------------|--------|---------------------------------------|----------|-------------------------------------|-------------------------------------|
| **Components                  of Net Periodic Benefit Costs**   |   | **2006**                              |     | **2005**                            |                                | **2004** |   | **2006** |   | **2005** |   | **2004** |   |
|                                                            |   | ***(In                  millions)***  |     |
| Service                  cost                                   |   | $                                     | 83       |                                | $                                   | 77 |   | $ | 77 |   | $ | 34 |   | $ | 40 |   | $ | 36 |   |
| Interest                  cost                                  |   |                                  | 266      |                                |                                | 254 |   |   | 252 |   |   | 105 |   |   | 111 |   |   | 112 |   |
| Expected                  return on plan assets                 |   |                                  | (396     | )                                   |                                | (345 | ) |   | (286 | ) |   | (46 | ) |   | (45 | ) |   | (44 | ) |
| Amortization                  of prior service cost             |   |                                  | 10       |                                |                                | 8 |   |   | 9 |   |   | (76 | ) |   | (45 | ) |   | (40 | ) |
| Recognized                  net                  actuarial loss |   |                                  | 58       |                                |                                | 36 |   |   | 39 |   |   | 56 |   |   | 40 |   |   | 39 |   |
| Net                  periodic                  cost             |   | $                                     | 21       |                                | $                                   | 30 |   | $ | 91 |   | $ | 73 |   | $ | 101 |   | $ | 103 |   |
|                                                            |   |                                  |     |                                |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Weighted-Average                  Assumptions Used**          |   |                                  |     |                                |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **to                  Determine Net Periodic Benefit Cost**     |   | **Pension                  Benefits** |     |                                | **Other                  Benefits** |   |
| **for                  Years Ended December 31**                |   |                                  | **2006** |                                |                                | **2005** |   |   | **2004** |   |   | **2006** |   |   | **2005** |   |   | **2004** |   |
| Discount                  rate                                  |   |                                  | 5.75     | %                                   |                                | 6.00 | % |   | 6.25 | % |   | 5.75 | % |   | 6.00 | % |   | 6.25 | % |
| Expected                  long-term return on plan assets       |   |                                  | 9.00     | %                                   |                                | 9.00 | % |   | 9.00 | % |   | 9.00 | % |   | 9.00 | % |   | 9.00 | % |
| Rate                  of                  compensation increase |   |                                  | 3.50     | %                                   |                                | 3.50 | % |   | 3.50 | % |   |   |   |   |   |   |   |   |   |

| **Assumed                  Health Care Cost Trend Rates**                         |   |     |      |     |   |
|-----------------------------------------------------------------------------------|--------|----------|-----------|----------|--------|
| **As                  of                  December 31**                           |   | **2006** |      | **2005** |   |
| Health                  care                  cost trend rate assumed for next    |   |     |      |     |   |
| year                  (pre/post-Medicare)                                         |   |     | 9-11      | %        |   | 9-11 | % |
| Rate                  to which                  the cost trend rate is assumed to |   |     |      |     |   |   |   |
| decline                  (the                  ultimate trend rate)               |   |     | 5         | %        |   | 5 | % |
| Year                  that the                  rate reaches the ultimate trend   |   |     |      |     |   |   |   |
| rate                  (pre/post-Medicare)                                         |   |     | 2011-2013 |     |   | 2010-2012 |   |

|                                                                                      |   | **1-Percentage-**                    |   | **1-Percentage-**                   |   |
|-------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|-------------------------------------|--------|
|                                                                                      |   | **Point                  Increase**  |   | **Point                  Decrease** |   |
|                                                                                      |   | ***(In                  millions)*** |   |
| Effect                  on                  total of service and interest cost            |   | $                                    | 6      |                                | $      | (5 | ) |
| Effect                  on                  accumulated postretirement benefit obligation |   | $                                    | 33     |                                | $      | (29 | ) |

----

|                                               | **Pension**                          |   | **Other**    |
|----------------------------------------------------|--------------------------------------|--------|--------------|
|                                               | **Benefits**                         |   | **Benefits** |
|                                               | ***(In                  millions)*** |
| 2007                                               | $                                    | 247    |         | $ | 91 |
| 2008                                               |                                 | 249    |         |   | 91 |
| 2009                                               |                                 | 256    |         |   | 94 |
| 2010                                               |                                 | 269    |         |   | 98 |
| 2011                                               |                                 | 280    |         |   | 101 |
| Years                  2012-                  2016 |                                 | 1,606  |         |   | 537 |

|                                               | **Benefit**                          |   |
|----------------------------------------------------|--------------------------------------|--------|
|                                               | **Payments**                         |   |
|                                               | ***(In                  millions)*** |   |
| 2007                                               | $                                    | 7      |   |
| 2008                                               |                                 | 9      |   |
| 2009                                               |                                 | 8      |   |
| 2010                                               |                                 | 8      |   |
| 2011                                               |                                 | 9      |   |
| Years                  2012-                  2016 |                                 | 61     |   |

**4.**
**STOCK-BASED        COMPENSATION PLANS**

----

|   | **(A)** | **LTIP** |
|--------|---------|----------|

*Restricted        Stock        and Restricted Stock Units*

|                                                     |   | **2006** |   | **2005** |   | **2004** |   |
|----------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Restricted                  common shares granted        |   | 229,271  |   | 356,200  |   | 62,370   |   |
| Weighted                  average market price           |   | $        | 53.18  |     | $      | 41.52    |   | $ | 40.69 |   |
| Weighted                  average vesting period (years) |   |     | 4.47   |     |   | 5.4      |   |   | 2.7 |   |
| Dividends                  restricted                    |   |     | Yes    |     |   | Yes      |   |   | Yes |   |

|                                                             |   |       |   |                            |   |   |
|------------------------------------------------------------------|--------|------------|--------|---------------------------------|--------|--------|
|                                                             |   |       |   | **Weighted**                    |
|                                                             |   | **Number** |   | **Average**                     |
|                                                             |   | **of**     |   | **Grant-Date**                  |
| **Restricted                  Stock**                            |   | **Shares** |   | **Fair                  Value** |
| Nonvested                  at                  January 1, 2006   |   | 424,411    |   | $                               | 41.43  |
| Nonvested                  at                  December 31, 2006 |   | 629,482    |   |                            | 45.79  |
| Vested                  in                  2006                 |   | 19,200     |   |                            | 38.80  |

|                                                     |   | **2006** |    | **2005** |   | **2004** |   |
|----------------------------------------------------------|--------|----------|---------|----------|--------|----------|--------|
| Restricted                  common share units granted   |   |     | 440,676 |     |   | 477,920  |   |   | - |   |
| Weighted                  average vesting period (years) |   |     | 3.32    |     |   | 3.32     |   |   | - |   |

|                                                             |   |          |   |                            |   |   |
|------------------------------------------------------------------|--------|---------------|--------|---------------------------------|--------|--------|
|                                                             |   |          |   | **Weighted**                    |
|                                                             |   | **Number**    |   | **Average**                     |
|                                                             |   | **of**        |   | **Grant-Date**                  |
| **Restricted                  Stock Units**                      |   | **Shares**    |   | **Fair                  Value** |
| Nonvested                  at                  January 1, 2006   |   | 464,924       |   | $                               | 41.44  |
| Nonvested                  at                  December 31, 2006 |   | 887,794       |   |                            | 45.97  |
|  Granted                during                2006          |   |  440,676 |   |                            | 50.92  |
| Vested                  in                  2006                 |   | 6,026         |   |                            | 41.42  |

----

*Stock        Options*

|                                             |   |        |       | **Weighted** |
|--------------------------------------------------|--------|-------------|------------|--------------|
|                                             |   | **Number**  |       | **Average**  |
|                                             |   | **of**      |       | **Exercise** |
| **Stock                  Option Activities**     |   | **Options** |       | **Price**    |
| Balance,                  January 1, 2004        |   | $           | 13,648,869 |         | $ | 29.27 |
| (1,919,662                  options exercisable) |   |        |       |         |   | 29.67 |
|                                             |   |        |       |         |   |   |
| Options                  granted                 |   |        | 3,373,459  |         |   | 38.77 |
| Options                  exercised               |   |        | 3,622,148  |         |   | 26.52 |
| Options                  forfeited               |   |        | 167,425    |         |   | 32.58 |
| Balance,                  December 31, 2004      |   |        | 13,232,755 |         |   | 32.40 |
| (3,175,023                  options exercisable) |   |        |       |         |   | 29.07 |
|                                             |   |        |       |         |   |   |
| Options                  granted                 |   |        | -          |         |   | - |
| Options                  exercised               |   |        | 4,140,893  |         |   | 29.79 |
| Options                  forfeited               |   |        | 225,606    |         |   | 34.37 |
| Balance,                  December 31, 2005      |   |        | 8,866,256  |         |   | 33.57 |
| (4,090,829                  options exercisable) |   |        |       |         |   | 31.97 |
|                                             |   |        |       |         |   |   |
| Options                  granted                 |   |        | -          |         |   | - |
| Options                  exercised               |   |        | 2,221,417  |         |   | 32.65 |
| Options                  forfeited               |   |        | 26,550     |         |   | 33.36 |
| Balance,                  December 31, 2006      |   |        | 6,618,289  |         |   | 33.88 |
| (4,160,859                  options exercisable) |   |        |       |         |   | 32.85 |

|                               |   |                                   |                                                   | **Options                    Outstanding** |   | **Options                    Exercisable** |   |
|------------------------------------|--------|----------------------------------------|--------------------------------------------------------|--------------------------------------------|--------|--------------------------------------------|--------|
|                               |   |                                   |                                                   |                                       |   | **Weighted**                               |   |   |   |   |   | **Weighted** |   |
|                               |   | **Range                    of**        |                                                   |                                       |   | **Average**                                |   | **Remaining** |   |   |   | **Average** |   |
| **FE                    Program**  |   | **Exercise                    Prices** |                                                   | **Shares**                                 |   | **Exercise                    Price**      |   | **Contractual                    Life** |   | **Shares** |   | **Exercise                    Price** |   |
|  **FE                  plan** |   |  $                                | 19.31                  -                  $29.87  |                                       |   | 2,744,608                                  |   | $ | 29.16 |   |   | 5.49 |   |   | 1,887,458 |   | $ | 28.90 |   |
|                                    |   | $                                      | 30.17                    -                    $39.46   |                                       |   | 3,848,267                                  |   | $ | 37.31 |   |   | 6.49 |   |   | 2,247,987 |   | $ | 36.27 |   |
| **GPU                    plan**    |   | $                                      | 23.75                    -                    $35.92   |                                       |   | 25,414                                     |   | $ | 24.29 |   |   | 3.37 |   |   | 25,414 |   | $ | 24.29 |   |
| **Total**                          |   |                                   |                                                   |                                       |   | 6,618,289                                  |   | $ | 33.88 |   |   | 6.07 |   |   | 4,160,859 |   | $ | 32.85 |   |

|                                                     |   | **2004** |   |   |
|----------------------------------------------------------|--------|----------|--------|--------|
| Fair                  value per                  option  |   | $        | 6.72   |   |   |
| Weighted                  average valuation assumptions: |   |     |   |   |   |
| Expected                  option term (years)            |   |     | 7.6    |   |   |
| Expected                  volatility                     |   |     | 26.25  | %      |   |
| Expected                  dividend yield                 |   |     | 3.88   | %      |   |
| Risk-free                  interest rate                 |   |     | 1.99   | %      |   |

----

|                                                                     |   | **2005**                                                       |   | **2004** |   |
|--------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|----------|--------|
|                                                                     |   | ***(In                  millions, except per share amounts)*** |   |
| Net                  Income, as                  reported                |   |  $                                                        | 861    |     |   |   |   |  $ | 878 |   |
|                                                                     |   |                                                           |   |     |   |   |   |   |   |   |
| Add                  back                  compensation expense          |   |                                                           |   |     |   |   |   |   |   |   |
| reported                  in                  net income, net of tax     |   |                                                           |   |     |   |   |   |   |   |   |
| (based                  on APB                  25)*                     |   |                                                           | 32     |     |   |   |   |   | 21 |   |
|                                                                     |   |                                                           |   |     |   |   |   |   |   |   |
| Deduct                  compensation expense based                       |   |                                                           |   |     |   |   |   |   |   |   |
| upon                  estimated                  fair value, net of tax* |   |                                                           | (39    | )        |   |   |   |   | (35 | ) |
|                                                                     |   |                                                           |   |     |   |   |   |   |   |   |
| Pro                  forma net                  income                   |   | $                                                              | 854    |     |   |   |   | $ | 864 |   |
| Earnings                  Per                  Share of Common Stock -   |   |                                                           |   |     |   |   |   |   |   |   |
| Basic                                                                    |   |                                                           |   |     |   |   |   |   |   |   |
| As                  Reported                                             |   | $                                                              | 2.62   |     |   |   |   | $ | 2.68 |   |
| Pro                  Forma                                               |   | $                                                              | 2.60   |     |   |   |   | $ | 2.64 |   |
| Diluted                                                                  |   |                                                           |   |     |   |   |   |   |   |   |
| As                  Reported                                             |   | $                                                              | 2.61   |     |   |   |   | $ | 2.67 |   |
| Pro                  Forma                                               |   | $                                                              | 2.59   |     |   |   |   | $ | 2.63 |   |

*Performance        Shares*

**(B)           **
**ESOP**

|                                                                                                                                    |   | **2006**                             |   | **2005** |   | **2004** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                                                                                                    |   | ***(In                  millions)*** |   |
| Base                  compensation                                                                                                      |   | $                                    | 50     |     | $      | 39       |   | $ | 32 |   |
| Dividends                  on                  common stock held by the ESOP                  and used                  to service debt |   |                                 | (11    | )        |   | (10      | )      |   | (9 | ) |
| Net                  expense                                                                                                            |   | $                                    | 39     |     | $      | 29       |   | $ | 23 |   |

----

**(C)**
**EDCP**

|   | **(D)** | **DCPD** |
|--------|---------|----------|

**5.           **
**FAIR        VALUE        OF FINANCIAL INSTRUMENTS**

|   | **(A)** | **Long-term                  Debt and Other Long-term                  Obligations** |
|--------|---------|--------------------------------------------------------------------------------------|

|                                                          |   | **2006**                             |   | **2005**  |   |
|---------------------------------------------------------------|--------|--------------------------------------|--------|-----------|--------|
|                                                          |   | **Carrying**                         |   | **Fair**  |   | **Carrying** |   | **Fair** |   |
|                                                          |   | **Value**                            |   | **Value** |   | **Value** |   | **Value** |   |
|                                                          |   | ***(In                  millions)*** |   |
| Long-term                  debt                               |   | $                                    | 10,321 |      | $      | 10,725 |   | $ | 10,097 |   | $ | 10,576 |   |
| Subordinated                  debentures to affiliated trusts |   |                                 | 103    |      |   | 105 |   |   | 103 |   |   | 140 |   |
|                                                          |   | $                                    | 10,424 |      | $      | 10,830 |   | $ | 10,200 |   | $ | 10,716 |   |

|   | **(B)** | **Investments** |
|--------|---------|-----------------|

----

|                                                    |                                                           | **2006**                             |   | **2005**  |   |
|---------------------------------------------------------|----------------------------------------------------------------|--------------------------------------|--------|-----------|--------|
|                                                    |                                                           | **Carrying**                         |   | **Fair**  |   | **Carrying** |   | **Fair** |   |
|                                                    |                                                           | **Value**                            |   | **Value** |   | **Value** |   | **Value** |   |
|                                                    |                                                           | ***(In                  millions)*** |   |
| Restricted                  funds                       |                                                           | $                                    | 11     |      | $      | 11 |   | $ | - |   | $ | - |   |
| Notes                  receivable                       |                                                           |                                 | 70     |      |   | 67 |   |   | 68 |   |   | 67 |   |
| Debt                  securities:                       |                                                           |                                 |   |      |   |   |   |   |   |   |   |   |   |
|                                                    | -                  Government                  obligations (1) |                                 |   | 383       |   |   | 379 |   |   | 374 |   |   | 370 |   |
|                                                    | -                  Corporate                  debt securities  |                                 |   | 3         |   |   | 5 |   |   | 3 |   |   | 40 |   |
|                                                    | -                  Lease                  obligation bonds     |                                 |   | 811       |   |   | 908 |   |   | 890 |   |   | 997 |   |
| Total                  debt                  securities |                                                           |                                 | 1,197  |      |   | 1,292 |   |   | 1,267 |   |   | 1,407 |   |
| Equity                  securities                      |                                                           |                                 | 9      |      |   | 9 |   |   | 20 |   |   | 20 |   |
|                                                    |                                                           | $                                    | 1,287  |      | $      | 1,379 |   | $ | 1,355 |   | $ | 1,497 |   |

|     (1)   | Excludes                  $5                  million of cash in 2006 |
|-----------------------------------------|-----------------------------------------------------------------------|

|                               |   | **2006**                             |   | **2005**       |   |
|------------------------------------|--------|--------------------------------------|--------|----------------|--------|
|                               |   | **Cost**                             |   | **Unrealized** |   | **Unrealized** |   | **Fair** |   | **Cost** |   | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                               |   | **Basis**                            |   | **Gains**      |   | **Losses** |   | **Value** |   | **Basis** |   | **Gains** |   | **Losses** |   | **Value** |   |
|                               |   | ***(In                  millions)*** |   |
| Debt                  securities   |   | $                                    | 1,197  |           | $      | 100 |   | $ | 5 |   | $ | 1,292 |   | $ | 1,267 |   | $ | 145 |   | $ | 5 |   | $ | 1,407 |   |
| Equity                  securities |   |                                 | 9      |           |   | - |   |   | - |   |   | 9 |   |   | 20 |   |   | - |   |   | - |   |   | 20 |   |
|                               |   | $                                    | 1,206  |           | $      | 100 |   | $ | 5 |   | $ | 1,301 |   | $ | 1,287 |   | $ | 145 |   | $ | 5 |   | $ | 1427 |   |

|                                                           |   | **2006**                             |   | **2005** |   | **2004** |   |
|----------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                           |   | ***(In                  millions)*** |   |
| Proceeds                  from                  sales          |   | $                                    | 1,442  |     | $      | 4,732    |   | $ | 17,564 |   |
| Realized                  gains                                |   |                                 | -      |     |   | -        |   |   | 4 |   |
| Realized                  losses                               |   |                                 | 4      |     |   | 2        |   |   | 1 |   |
| Interest                  and                  dividend income |   |                                 | 15     |     |   | 14       |   |   | 11 |   |

**(C)         **
**Nuclear        Decommissioning Trust Fund Investments**

----

|                                                         |   |                             |   | **2006** |   |   |   | **2005** |   |
|--------------------------------------------------------------|--------|----------------------------------|--------|----------|--------|--------|--------|----------|--------|
|                                                         |   | *(In                  millions)* |   |
| Debt                  securities:                            |   |                             |   |     |   |   |   |     |   |   |   |
| -Government                  obligations                     |   |                             | $      | 526      |   |   |   |     | $      | 561 |   |
| -Corporate                  debt                  securities |   |                             |   | 153      |   |   |   |     |   | 125 |   |
| -Mortgage-backed                  securities                 |   |                             |   | 12       |   |   |   |     |   | - |   |
|                                                         |   |                             |   | 691      |   |   |   |     |   | 686 |   |
| Equity                  securities                           |   |                             |   | 1,284    |   |   |   |     |   | 1,066 |   |
|                                                         |   |                             | $      | 1,975    | (1)    |   | (1     | )        | $      | 1,752 |   |

|                                 |   | **2006**                               |   | **2005**       |   |
|--------------------------------------|--------|----------------------------------------|--------|----------------|--------|
|                                 |   | **Cost**                               |   | **Unrealized** |   | **Unrealized** |   | **Fair** |   | **Cost** |   | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                 |   | **Basis**                              |   | **Gains**      |   | **Losses** |   | **Value** |   | **Basis** |   | **Gains** |   | **Losses** |   | **Value** |   |
|                                 |   | ***(In                    millions)*** |   |
| Debt                    securities   |   | $                                      | 681    |           | $      | 10 |   | $ | - |   | $ | 691 |   | $ | 681 |   | $ | 12 |   | $ | 7 |   | $ | 686 |   |
| Equity                    securities |   |                                   | 952    |           |   | 332 |   |   | - |   |   | 1,284 |   |   | 898 |   |   | 190 |   |   | 22 |   |   | 1,066 |   |
|                                 |   | $                                      | 1,633  |           | $      | 342 |   | $ | - |   | $ | 1,975 | (1)1) | $ | 1,579 |   | $ | 202 |   | $ | 29 |   | $ | 1,752 |   |

|                                                           |   | **2006**                             |   | **2005** |   | **2004** |   |
|----------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                           |   | ***(In                  millions)*** |   |
| Proceeds                  from                  sales          |   | $                                    | 1,569  |     | $      | 1,419    |   | $ | 1,234 |   |
| Realized                  gains                                |   |                                 | 121    |     |   | 133      |   |   | 144 |   |
| Realized                  losses                               |   |                                 | 101    |     |   | 58       |   |   | 43 |   |
| Interest                  and                  dividend income |   |                                 | 55     |     |   | 49       |   |   | 45 |   |

|   | **(D)** | **DERIVATIVES-** |
|--------|---------|------------------|

----

| **6.** | **LEASES** |
|--------|------------|

|                              |   | **2006**                             |   | **2005** |   | **2004** |
|-----------------------------------|--------|--------------------------------------|--------|----------|--------|----------|
|                              |   | ***(In                  millions)*** |
| Operating                  leases |   |                                 |   |     |   |     |
| Interest                  element |   | $                                    | 160    |     | $      | 171      |   | $ | 175 |
| Other                             |   |                                 | 190    |     |   | 162      |   |   | 140 |
| Capital                  leases   |   |                                 |   |     |   |     |   |   |   |
| Interest                  element |   |                                 | 1      |     |   | 1        |   |   | 1 |
| Other                             |   |                                 | 2      |     |   | 2        |   |   | 3 |
| Total                  rentals    |   | $                                    | 353    |     | $      | 336      |   | $ | 319 |

----

|                                                           |   |                                 |   |  **Operating                  Leases** |   |
|----------------------------------------------------------------|--------|--------------------------------------|--------|---------------------------------------------|--------|
|                                                           |   | **Capital**                          |   | **Lease**                                   |   | **Capital** |   |   |   |
|                                                           |   | **Leases**                           |   | **Payments**                                |   | **Trusts** |   | **Net** |   |
|                                                           |   | ***(In                  millions)*** |   |
| 2007                                                           |   | $                                    | 1      |                                        | $      | 335 |   | $ | 131 |   | $ | 204 |   |
| 2008                                                           |   |                                 | 1      |                                        |   | 332 |   |   | 105 |   |   | 227 |   |
| 2009                                                           |   |                                 | 1      |                                        |   | 334 |   |   | 112 |   |   | 222 |   |
| 2010                                                           |   |                                 | 1      |                                        |   | 334 |   |   | 121 |   |   | 213 |   |
| 2011                                                           |   |                                 | 1      |                                        |   | 324 |   |   | 121 |   |   | 203 |   |
| Years                  thereafter                              |   |                                 | 2      |                                        |   | 1,748 |   |   | 519 |   |   | 1,229 |   |
| Total                  minimum                  lease payments |   |                                 | 7      |                                        | $      | 3,407 |   | $ | 1,109 |   | $ | 2,298 |   |
| Executory                  costs                               |   |                                 | -      |                                        |   |   |   |   |   |   |   |   |   |
| Net                  minimum                  lease payments   |   |                                 | 7      |                                        |   |   |   |   |   |   |   |   |   |
| Interest                  portion                              |   |                                 | 2      |                                        |   |   |   |   |   |   |   |   |   |
| Present                  value                  of net minimum |   |                                 | 5      |                                        |   |   |   |   |   |   |   |   |   |
| lease                  payments                                |   |                                 |   |                                        |   |   |   |   |   |   |   |   |   |
| Less                  current                  portion         |   |                                 | 1      |                                        |   |   |   |   |   |   |   |   |   |
| Noncurrent                  portion                            |   | $                                    | 4      |                                        |   |   |   |   |   |   |   |   |   |

| **7.** | **VARIABLE                  INTEREST ENTITIES** |
|--------|-------------------------------------------------|

**Leases**

----

**Power        Purchase Agreements**

**8. **
**DIVESTITURES**

*Applying        the        Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether        to        Report Discontinued Operations*
* *

----

**9.**
**OHIO        TAX        LEGISLATION**

| OE                                              |   | $      | 32 |   |
|-------------------------------------------------|--------|--------|----|--------|
| CEI                                             |   |   | 4  |   |
| TE                                              |   |   | 18 |   |
| Other                  FirstEnergy subsidiaries |   |   | (2 | )      |
| Total                      FirstEnergy          |   | $      | 52 |   |

| OE                                              |   | $      | 3  |   |
|-------------------------------------------------|--------|--------|----|--------|
| CEI                                             |   |   | 5  |   |
| TE                                              |   |   | 1  |   |
| Other                  FirstEnergy subsidiaries |   |   | (3 | )      |
| Total                  FirstEnergy              |   | $      | 6  |   |

**10. **
**REGULATORY        MATTERS**

** (A)**
**RELIABILITY        INITIATIVES-**

----

*First*
*First*
*First*

----

**(B)**
**OHIO-**

| -    | Maintaining                  the existing level of base distribution rates through December 31,                  2008 for OE and TE, and April 30, 2009 for CEI;                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| -    | Deferring                  and                  capitalizing for future recovery (over a 25-year period) with carrying                  charges certain distribution costs to be incurred during the period                  January 1, 2006 through December 31, 2008, not to exceed                  $150 million in each of the three years;                                                                                                                                                                                                                                    |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| -    | Adjusting                  the                  RTC and extended RTC recovery periods and rate levels so that full                  recovery of authorized costs will occur as of December 31, 2008 for                  OE and TE and as of December 31, 2010 for CEI;                                                                                                                                                                                                                                                                                                                 |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| -    | Reducing                  the                  deferred shopping incentive balances as of January 1, 2006 by up to                  $75 million for OE, $45 million for TE, and $85 million for CEI                  by accelerating the application of each respective company's accumulated                  cost of removal regulatory liability; and                                                                                                                                                                                                                           |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| -    | Recovering                  increased fuel costs (compared to a 2002 baseline) of up to                  $75 million, $77 million, and $79 million, in 2006, 2007,                  and 2008, respectively, from all OE and TE distribution and transmission                  customers through a fuel recovery mechanism. OE, TE, and CEI may                  defer and                  capitalize (for recovery over a 25-year period) increased fuel                  costs above                  the amount collected through the fuel recovery                  mechanism. |

| -    | Recognize                  fuel                  and distribution deferrals commencing January 1,                  2006;                                        |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                 |
| -    | Recognize                  distribution deferrals on a monthly basis prior to review by the                  PUCO                  Staff;                            |
|      |                                                                                                                                                                 |
| -    | Clarify                  that                  the types of distribution expenditures included in the Supplemental                  Stipulation may be deferred; and |
|      |                                                                                                                                                                 |
| -    | Clarify                  that                  distribution expenditures do not have to be “accelerated” in order to be                  deferred.       |

----

**(C)**
**PENNSYLVANIA-**

----

----

**(D)**
**NEW          JERSEY-**

----

      -   Reduce              the total              projected electricity demand by 20% by 2020; 
      -   Meet              22.5% of the              State’s electricity needs with renewable energy resources by that              date; 
      -   Reduce              air              pollution related to energy use; 
      -   Encourage              and              maintain economic growth and development;  
      -   Achieve              a              20% reduction in both Customer Average Interruption Duration Index              and System              Average Interruption Frequency Index by 2020; 
      -   Unit              prices for electricity should              remain no more than +5% of the regional average price (region includes              New              York, New Jersey, Pennsylvania,  Delaware, Maryland and              the District of Columbia); and 
      -  Eliminate              transmission congestion by 2020 

**(E)        **
**FERC        MATTERS-**

----

*** ***
*** ***

----

**11.**
**CAPITALIZATION**
** **

**             (A)          **
**COMMON        STOCK-**

*     Retained        Earnings and Dividends*

**              (B)**
**PREFERRED        AND PREFERENCE STOCK-**

----

|   | **(C)** | **LONG-TERM                    DEBT AND OTHER LONG-TERM                    OBLIGATIONS-** |
|--------|---------|-------------------------------------------------------------------------------------------|

*Subordinated          Debentures to Affiliated Trusts*

*Securitized        Transition Bonds*

*Other        Long-term        Debt*

----

|   |   | ***(In                  millions)*** |
|--------|--------|--------------------------------------|
| 2007   |   | $                                    | 1,867 |
| 2008   |   |                                 | 418 |
| 2009   |   |                                 | 287 |
| 2010   |   |                                 | 214 |
| 2011   |   |                                 | 1,540 |

| **12.     ** | **ASSET                  RETIREMENT OBLIGATIONS-** |
|---------------------------------------|----------------------------------------------------|

----

** **
** **

|                                                                |   | **2006**                             |   | **2005** |   |
|---------------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|
| **ARO                  Reconciliation**                             |   | ***(In                  millions)*** |   |
| Balance                  at                  beginning of year      |   | $1,126                               |   | $1,078   |   |
| Liabilities                  incurred                               |   |                                 | -      |     |   | - |   |
| Liabilities                  settled                                |   |                                 | (6     | )        |   | - |   |
| Accretion                                                           |   |                                 | 72     |     |   | 70 |   |
| Revisions                  in                  estimated cash flows |   |                                 | (2     | )        |   | (79 | )  |
| FIN                  47 ARO                  upon adoption          |   |                                 | -      |     |   | 57 |   |
| Balance                  at end                  of year            |   | $                                    | 1,190  |     | $      | 1,126 |   |

| **Adjusted                  ARO Reconciliation**                         |   | **2005**                             |   |
|--------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                     |   | ***(In                  millions)*** |   |
| Beginning                  balance as of January 1, 2005                 |   | $                                    | 54     |   |
| Accretion                                                                |   |                                 | 3      |   |
| Ending                  balance                  as of December 31, 2005 |   | $                                    | 57     |   |

**13. **
**SHORT-TERM        BORROWINGS AND BANK LINES OF CREDIT **

----

| **Subsidiary                  Company**                     |   | **Parent****Company**                |    |   |   | **Capacity** |   | **Annual****Facility                  Fee** |   |   |
|-------------------------------------------------------------|--------|--------------------------------------|---------|--------|--------|--------------|--------|---------------------------------------------|--------|--------|
|                                                        |   | ***(In                  millions)*** |    |   |
| OES                  Capital,                  Incorporated |   |                                 | OE      |   |   |         |   | $                                           | 170    |   |   | 0.15 | % |   |   |
| Centerior                  Funding Corp.                    |   |                                 | CEI     |   |   |         |   |                                        | 200    |   |   | 0.15 |   |   |   |
| Penn                  Power                  Funding LLC    |   |                                 | Penn    |   |   |         |   |                                        | 25     |   |   | 0.13 |   |   |   |
| Met-Ed                  Funding                  LLC        |   |                                 | Met-Ed  |   |   |         |   |                                        | 80     |   |   | 0.13 |   |   |   |
| Penelec                  Funding LLC                        |   |                                 | Penelec |   |   |         |   |                                        | 75     |   |   | 0.13 |   |   |   |
|                                                        |   |                                 |    |   |   |         |   |  $                                     | 550    |   |   |   |   |

**14.         **
**COMMITMENTS,        GUARANTEES AND CONTINGENCIES**

** (A) **
**NUCLEAR        INSURANCE-**

** (B) **
**GUARANTEES        AND OTHER ASSURANCES-**

----

**(C)**
**ACCELERATED        SHARE REPURCHASE PROGRAM-**

**(D)**
**ENVIRONMENTAL        MATTERS-**

*Clean        Air Act        Compliance*

----

*National        Ambient        Air Quality Standards*

*Mercury        Emissions*

----

*W.        H. Sammis        Plant*

*Climate        Change*

*Clean        Water        Act*

----

*Regulation        of        Hazardous Waste*

|   | **(E)** | **OTHER                  LEGAL PROCEEDINGS-** |
|--------|---------|-----------------------------------------------|

*Power        Outages        and Related Litigation*

----

----

*Nuclear        Plant        Matters*

*Other        Legal        Matters*

----

**15.**
**FIRSTENERGY        INTRA-SYSTEM GENERATION ASSET TRANSFERS**

**16.**
**SEGMENT        INFORMATION**

----

----

|                                                                           |   |                                 |   |           |   |      |   |            |   |             |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------|--------|----------------|--------|-----------|--------|-----------------|--------|------------------|--------|
|                                                                           |   |                                 |   | **Power**      |   |      |   |            |   |             |   |
|                                                                           |   |                                 |   | **Supply**     |   |      |   |            |   |             |   |
|                                                                           |   | **Regulated**                        |   | **Management** |   |      |   | **Reconciling** |   |             |   |
| **Segment                    Financial Information**                           |   | **Services**                         |   | **Services**   |   | **Other** |   | **Adjustments** |   | **Consolidated** |   |
|                                                                           |   | **(In                    millions)** |   |           |   |      |   |            |   |             |   |
| **2006**                                                                       |   |                                 |   |           |   |      |   |            |   |             |   |
| External                    revenues                                           |   | $                                    | 4,441  |           | $      | 7,029     |   | $               | 103    |             | $      | (72 | ) | $ | 11,501 |   |
| Internal                    revenues                                           |   |                                 | -      |           |   | -         |   |            | -      |             |   | - |   |   | - |   |
| Total                    revenues                                              |   |                                 | 4,441  |           |   | 7,029     |   |            | 103    |             |   | (72 | ) |   | 11,501 |   |
| Depreciation                    and amortization                               |   |                                 | 1,001  |           |   | (70       | )      |            | 4      |             |   | 22 |   |   | 957 |   |
| Investment                    income                                           |   |                                 | 270    |           |   | 36        |   |            | 1      |             |   | (158 | ) |   | 149 |   |
| Net                    interest                    charges                     |   |                                 | 410    |           |   | 215       |   |            | 6      |             |   | 71 |   |   | 702 |   |
| Income                    taxes                                                |   |                                 | 632    |           |   | 310       |   |            | (20    | )                |   | (127 | ) |   | 795 |   |
| Income                    from                    continuing operations        |   |                                 | 932    |           |   | 465       |   |            | 44     |             |   | (183 | ) |   | 1,258 |   |
| Discontinued                    operations                                     |   |                                 | -      |           |   | -         |   |            | (4     | )                |   | - |   |   | (4 | ) |
| Net                    income                                                  |   |                                 | 932    |           |   | 465       |   |            | 40     |             |   | (183 | ) |   | 1,254 |   |
| Total                    assets                                                |   |                                 | 23,336 |           |   | 6,976     |   |            | 297    |             |   | 587 |   |   | 31,196 |   |
| Total                    goodwill                                              |   |                                 | 5,873  |           |   | 24        |   |            | 1      |             |   | - |   |   | 5,898 |   |
| Property                    additions                                          |   |                                 | 633    |           |   | 644       |   |            | 1      |             |   | 37 |   |   | 1,315 |   |
|                                                                           |   |                                 |   |           |   |      |   |            |   |             |   |   |   |   |   |   |
| **2005**                                                                       |   |                                 |   |           |   |      |   |            |   |             |   |   |   |   |   |   |
| External                    revenues                                           |   | $                                    | 5,155  |           | $      | 6,067     |   | $               | 115    |             | $      | 21 |   | $ | 11,358 |   |
| Internal                    revenues                                           |   |                                 | 270    |           |   | -         |   |            | -      |             |   | (270 | ) |   | - |   |
| Total                    revenues                                              |   |                                 | 5,425  |           |   | 6,067     |   |            | 115    |             |   | (249 | ) |   | 11,358 |   |
| Depreciation                    and amortization                               |   |                                 | 1,483  |           |   | (46       | )      |            | 2      |             |   | 25 |   |   | 1,464 |   |
| Investment                    income                                           |   |                                 | 217    |           |   | -         |   |            | -      |             |   | - |   |   | 217 |   |
| Net                    interest                    charges                     |   |                                 | 389    |           |   | 54        |   |            | 6      |             |   | 207 |   |   | 656 |   |
| Income                    taxes                                                |   |                                 | 784    |           |   | (28       | )      |            | 12     |             |   | (19 | ) |   | 749 |   |
| Income                    (loss)                    from continuing operations |   |                                 | 1,174  |           |   | (41       | )      |            | 14     |             |   | (268 | ) |   | 879 |   |
| Discontinued                    operations                                     |   |                                 | -      |           |   | -         |   |            | 12     |             |   | - |   |   | 12 |   |
| Cumulative                    effect of accounting change                      |   |                                 | (21    | )              |   | (9        | )      |            | -      |             |   | - |   |   | (30 | ) |
| Net                    income                    (loss)                        |   |                                 | 1,153  |           |   | (50       | )      |            | 26     |             |   | (268 | ) |   | 861 |   |
| Total                    assets                                                |   |                                 | 23,975 |           |   | 6,556     |   |            | 605    |             |   | 705 |   |   | 31,841 |   |
| Total                    goodwill                                              |   |                                 | 5,932  |           |   | 24        |   |            | 54     |             |   | - |   |   | 6,010 |   |
| Property                    additions                                          |   |                                 | 788    |           |   | 375       |   |            | 8      |             |   | 37 |   |   | 1,208 |   |
|                                                                           |   |                                 |   |           |   |      |   |            |   |             |   |   |   |   |   |   |
| **2004**                                                                       |   |                                 |   |           |   |      |   |            |   |             |   |   |   |   |   |   |
| External                    revenues                                           |   | $                                    | 4,885  |           | $      | 6,510     |   | $               | 201    |             | $      | 4 |   | $ | 11,600 |   |
| Internal                    revenues                                           |   |                                 | 318    |           |   | -         |   |            | -      |             |   | (318 | ) |   | - |   |
| Total                    revenues                                              |   |                                 | 5,203  |           |   | 6,510     |   |            | 201    |             |   | (314 | ) |   | 11,600 |   |
| Depreciation                    and amortization                               |   |                                 | 1,422  |           |   | 35        |   |            | 3      |             |   | 34 |   |   | 1,494 |   |
| Investment                    income                                           |   |                                 | 205    |           |   | -         |   |            | -      |             |   | - |   |   | 205 |   |
| Net                    interest                    charges                     |   |                                 | 363    |           |   | 37        |   |            | 15     |             |   | 251 |   |   | 666 |   |
| Income                    taxes                                                |   |                                 | 698    |           |   | 75        |   |            | (24    | )                |   | (68 | ) |   | 681 |   |
| Income                    from                    continuing operations        |   |                                 | 1,047  |           |   | 112       |   |            | 38     |             |   | (290 | ) |   | 907 |   |
| Discontinued                    operations                                     |   |                                 | -      |           |   | -         |   |            | (29    | )                |   | - |   |   | (29 | ) |
| Net                    income                                                  |   |                                 | 1,047  |           |   | 112       |   |            | 9      |             |   | (290 | ) |   | 878 |   |
| Total                    assets                                                |   |                                 | 28,308 |           |   | 1,488     |   |            | 760    |             |   | 479 |   |   | 31,035 |   |
| Total                    goodwill                                              |   |                                 | 5,951  |           |   | 24        |   |            | 75     |             |   | - |   |   | 6,050 |   |
| Property                    additions                                          |   |                                 | 572    |           |   | 246       |   |            | 7      |             |   | 21 |   |   | 846 |   |

----

|  | **Products                  and Services*** |
|--|---------------------------------------------|

|     |   |            |   | **Energy                  Related** |   |
|----------|--------|-----------------|--------|-------------------------------------|--------|
|     |   | **Electricity** |   | **Sales                  and**      |   |
| **Year** |   | **Sales**       |   | **Services**                        |   |
| 2006     |   | $               | 10,671 |                                | $      | 48 |   |
| 2005     |   |            | 10,546 |                                |   | 77 |   |
| 2004     |   |            | 10,831 |                                |   | 91 |   |

| **17.** | **NEW                  ACCOUNTING STANDARDS AND INTERPRETATIONS**  |
|---------|-------------------------------------------------------------------------|

|  | *SFAS                  159 -                  The Fair Value Option for Financial Assets and Financial Liabilities                  -                  Including an amendment of FASB Statement No.                  115* |
|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Fair        Value        Measurements, *
*Disclosures        about Fair Value of Financial Instruments. *

|  | *FSP                  EITF                  00-19-2 - “Accounting for Registration Payment                  Arrangements”* |
|--|----------------------------------------------------------------------------------------------------------------------------------------|

*Accounting        for        Contingencies. *

*EITF        06-5 -“Accounting for Purchases of Life Insurance-Determining the Amount That Could        Be        Realized in Accordance with FASB Technical Bulletin No. 85-4, Accounting        for        Purchases of Life Insurance”*

*SFAS        157 - “Fair        Value Measurements”*

----

*FSP        FIN 46(R)-6        - “Determining the Variability to Be Considered in Applying FASB interpretation        No. 46(R)”*

|         Step                  1:       | Analyze                  the                  nature of the risks in the entity                                                                                                                                                      |
|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          Step                  2: | Determine                  the                  purpose(s) for which the entity was created and determine the variability                  the entity is designed to create and pass along to its interest                  holders. |

*FIN        48 -“Accounting for Uncertainty in Income Taxes - an interpretation of FASB        Statement No. 109”*

----

**18.        **
**SUMMARY        OF        QUARTERLY FINANCIAL DATA (UNAUDITED) **

|                                                                                    |   | **March                  31,**                                 |   | **June                  30,** |    | **September                  30,** |   | **December                  31,** |   |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|-------------------------------|---------|------------------------------------|--------|-----------------------------------|--------|
| **Three                  Months Ended**                                                 |   | **2006**                                                       |   | **2006**                      |    | **2006**                           |   | **2006**                          |   |
|                                                                                    |   | ***(In                  millions, except per share amounts)*** |   |
| Revenues                                                                                |   | $                                                              | 2,705  |                          | $       | 2,751                              |   | $                                 | 3,365  |   | $ | 2,680 |   |
| Expenses                                                                                |   |                                                           | 2,233  |                          |    | 2,081                              |   |                              | 2,505  |   |   | 2,076 |   |
| Operating                  Income                                                       |   |                                                           | 472    |                          |    | 670                                |   |                              | 860    |   |   | 604 |   |
| Other                  Expense                                                          |   |                                                           | 117    |                          |    | 142                                |   |                              | 134    |   |   | 160 |   |
| Income                  From                  Continuing Operations Before Income Taxes |   |                                                           | 355    |                          |    | 528                                |   |                              | 726    |   |   | 444 |   |
| Income                  Taxes                                                           |   |                                                           | 136    |                          |    | 216                                |   |                              | 274    |   |   | 170 |   |
| Income                  From                  Continuing Operations                     |   |                                                           | 219    |                          |    | 312                                |   |                              | 452    |   |   | 274 |   |
| Discontinued                  Operations                                                |   |                                                           |   |                          |    |                               |   |                              |   |   |   |   |   |
| (Net                  of Income                  Taxes) (Note 2(J))                     |   |                                                           | 2      |                          |    | (8                                 | )      |                              | 2      |   |   | - |   |
| Net                  Income                                                             |   | $                                                              | 221    |                          | $  | 304                                |   |  $                           | 454    |   |  $ | 274 |   |
|                                                                                    |   |                                                           |   |                          |    |                               |   |                              |   |   |   |   |   |
| Basic                  Earnings                  Per Share of Common Stock:             |   |                                                           |   |                          |    |                               |   |                              |   |   |   |   |   |
| Income                  From                  Continuing Operations                     |   | $                                                              | 0.67   |                          | $       | 0.94                               |   | $                                 | 1.41   |   | $ | 0.85 |   |
| Discontinued                  Operations                                                |   |                                                           | -      |                          |    | (0.02                              | )      |                              | -      |   |   | - |   |
| Net                  Earnings                  Per Basic Share                          |   | $                                                              | 0.67   |                          | $       | 0.92                               |   | $                                 | 1.41   |   | $ | 0.85 |   |
|                                                                                    |   |                                                           |   |                          |    |                               |   |                              |   |   |   |   |   |
| Diluted                  Earnings Per Share of Common Stock:                            |   |                                                           |   |                          |    |                               |   |                              |   |   |   |   |   |
| Income                  From                  Continuing Operations                     |   | $                                                              | 0.67   |                          | $       | 0.93                               |   | $                                 | 1.40   |   | $ | 0.84 |   |
| Discontinued                  Operations                                                |   |                                                           | -      |                          |    | (0.02                              | )      |                              | -      |   |   | - |   |
| Net                  Earnings                  Per Diluted Share                        |   | $                                                              | 0.67   |                          | $       | 0.91                               |   | $                                 | 1.40   |   | $ | 0.84 |   |
|                                                                                    |   |                                                           |   |                          |    |                               |   |                              |   |   |   |   |   |

|                                                                                                    | ** ** | ** March                          31, **                    | ** ** | ** June                          30, ** | ** ** | ** September                          30, ** | ** ** | ** December                          31, ** | ** ** |
|---------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** Three                        Months Ended**                                                     | ** ** | ** 2005 **                                                  | ** ** | ** 2005 **                              | ** ** | ** 2005 **                                   | ** ** | ** ****2005**                               |       |
|                                                                                                    |       | ***(In                          millions, except per shar amounts)*** |       |
| Revenues                                                                                                |       | $                                                                     | 2,627      |                                              | $          | 2,678                                                  |       | $                                                     | 3,333      |   | $ | 2,721 |   |
| Expenses                                                                                                |       |                                                                  | 2,234      |                                              |       | 2,146                                                  |       |                                                  | 2,692      |   |   | 2,220 |   |
| Operating                          Income                                                               |       |                                                                  | 393        |                                              |       | 532                                                    |       |                                                  | 641        |   |   | 501 |   |
| Other                          Expense                                                                  |       |                                                                  | 129        |                                              |       | 114                                                    |       |                                                  | 75         |   |   | 122 |   |
| Income                          From                          Continuing Operations Before Income Taxes |       |                                                                  | 264        |                                              |       | 418                                                    |       |                                                  | 566        |   |   | 379 |   |
| Income                          Taxes                                                                   |       |                                                                  | 122        |                                              |       | 238                                                    |       |                                                  | 236        |   |   | 153 |   |
| Income                          From                          Continuing Operations                     |       |                                                                  | 142        |                                              |       | 180                                                    |       |                                                  | 330        |   |   | 226 |   |
| Discontinued                          Operations                                                        |       |                                                                  |       |                                              |       |                                                   |       |                                                  |       |   |   |   |   |
| (Net                          of Income                          Taxes) (Note 2(J))                     |       |                                                                  | 18         |                                              |       | (2                                                     | )          |                                                  | 2          |   |   | (6 | ) |
| Cumulative                          Effect of a Change in Accounting Principle                          |       |                                                                  |       |                                              |       |                                                   |       |                                                  |       |   |   |   |   |
| (Net                          of Income                          Taxes) (Note 2(K))                     |       |                                                                  | -          |                                              |       | -                                                      |       |                                                  | -          |   |   | (30 | ) |
| Net                          Income                                                                     |       | $                                                                     | 160        |                                              | $     | 178                                                    |       |  $                                               | 332        |   |  $ | 190 |   |
|                                                                                                    |       |                                                                  |       |                                              |       |                                                   |       |                                                  |       |   |   |   |   |
| Basic                          Earnings                          Per Share of Common Stock:             |       |                                                                  |       |                                              |       |                                                   |       |                                                  |       |   |   |   |   |
| Income                          From                          Continuing Operations                     |       | $                                                                     | 0.43       |                                              | $          | 0.55                                                   |       | $                                                     | 1.00       |   | $ | 0.69 |   |
| Discontinued                          Operations (Note 2(J))                                            |       |                                                                  | 0.06       |                                              |       | (0.01                                                  | )          |                                                  | 0.01       |   |   | (0.02 | ) |
| Cumulative                          Effect of a Change in Accounting Principle                          |       |                                                                  | -          |                                              |       | -                                                      |       |                                                  | -          |   |   | (0.09 | ) |
| Net                          Earnings                          Per Basic Share                          |       | $                                                                     | 0.49       |                                              | $          | 0.54                                                   |       | $                                                     | 1.01       |   | $ | 0.58 |   |
|                                                                                                    |       |                                                                  |       |                                              |       |                                                   |       |                                                  |       |   |   |   |   |
| Diluted                          Earnings Per Share of Common Stock:                                    |       |                                                                  |       |                                              |       |                                                   |       |                                                  |       |   |   |   |   |
| Income                          From                          Continuing Operations                     |       | $                                                                     | 0.43       |                                              | $          | 0.55                                                   |       | $                                                     | 1.00       |   | $ | 0.69 |   |
| Discontinued                          Operations                                                        |       |                                                                  | 0.05       |                                              |       | (0.01                                                  | )          |                                                  | 0.01       |   |   | (0.02 | ) |
| Cumulative                          Effect of a Change in Accounting Principle                          |       |                                                                  | -          |                                              |       | -                                                      |       |                                                  | -          |   |   | (0.09 | ) |
| Net                          Earnings                          Per Diluted Share                        |       | $                                                                     | 0.48       |                                              | $          | 0.54                                                   |       | $                                                     | 1.01       |   | $ | 0.58 |   |

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