**OHIO        EDISON        COMPANY**

**2006        ANNUAL        REPORT TO STOCKHOLDERS**

| **Contents**                                                                              | **Page** |
|-------------------------------------------------------------------------------------------|----------|
|                                                                                      |     |
| Glossary                  of                  Terms                                       | i-ii     |
| Report                  of                  Independent Registered Public Accounting Firm | 1        |
| Selected                  Financial Data                                                  | 2        |
| Management's                  Discussion and Analysis                                     | 3-20     |
| Consolidated                  Statements of Income                                        | 21       |
| Consolidated                  Balance Sheets                                              | 22       |
| Consolidated                  Statements of Capitalization                                | 23-24    |
| Consolidated                  Statements of Common Stockholder's Equity                   | 25       |
| Consolidated                  Statements of Preferred Stock                               | 25       |
| Consolidated                  Statements of Cash Flows                                    | 26       |
| Consolidated                  Statements of Taxes                                         | 27       |
| Notes                  to                  Consolidated Financial Statements              | 28-49    |

----

**GLOSSARY            OF TERMS**

| ATSI                                                                                                                                                                    | American                  Transmission Systems, Inc., owns and operates transmission                  facilities                                                                                                              |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| CEI                                                                                                                                                                     | The                  Cleveland                  Electric Illuminating Company, an affiliated Ohio electric                  utility                                                                                           |
| Companies                                                                                                                                                               | OE                  and                  Penn                                                                                                                                                                                 |
| 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                                                                                                           |
| FirstEnergy                                                                                                                                                             | FirstEnergy                  Corp., a public utility holding company                                                                                                                                                          |
| JCP&L                                                                                                                                                               | Jersey                  Central                  Power & Light Company, an affiliated New Jersey electric                  utility                                                                                        |
| Met-Ed                                                                                                                                                                  | Metropolitan                  Edison Company, an affiliated Pennsylvania electric                  utility                                                                                                                    |
| NGC                                                                                                                                                                     | FirstEnergy                  Nuclear Generation Corp., owns nuclear generating                  facilities                                                                                                                    |
| OE                                                                                                                                                                      | Ohio                  Edison                  Company                                                                                                                                                                         |
| Ohio                  Companies                                                                                                                                         | CEI,                  OE and                  TE                                                                                                                                                                              |
| Penelec                                                                                                                                                                 | Pennsylvania                  Electric Company, an affiliated Pennsylvania electric                  utility                                                                                                                  |
| Penn                                                                                                                                                                    | Pennsylvania                  Power Company, OE?s wholly owned Pennsylvania electric utility                  subsidiary                                                                                                      |
| TE                                                                                                                                                                      | The                  Toledo                  Edison Company, an affiliated Ohio electric utility                                                                                                                              |
|                                                                                                                                                                    |                                                                                                                                                                                                                          |   |
| The                  following                  abbreviations and acronyms are used to identify frequently used                  terms in                  this report: |
|                                                                                                                                                                    |                                                                                                                                                                                                                          |   |
| AOCI                                                                                                                                                                    | Accumulated                  Other Comprehensive Income                                                                                                                                                                       |
| AOCL                                                                                                                                                                    | Accumulated                  Other Comprehensive Loss                                                                                                                                                                         |
| ARO                                                                                                                                                                     | Asset                  Retirement Obligation                                                                                                                                                                                  |
| B&W                                                                                                                                                                 | Babcock&                  Wilcox Company                                                                                                                                                                                  |
| Bechtel                                                                                                                                                                 | Bechtel                  Power                  Corporation                                                                                                                                                                   |
| CAT                                                                                                                                                                     | Commercial                  Activity Tax                                                                                                                                                                                      |
| CBP                                                                                                                                                                     | Competitive                  Bid Process                                                                                                                                                                                      |
| DOJ                                                                                                                                                                     | United                  States                  Department of Justice                                                                                                                                                         |
| ECAR                                                                                                                                                                    | East                  Central                  Area Reliability Coordination Agreement                                                                                                                                        |
| EPA                                                                                                                                                                     | U.                  S.                  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                                                                                        | FASB                  Staff                  Position No. 115-1 and SFAS 124-1, "The Meaning of                  Other-Than-TemporaryImpairment                  and                  its Application to Certain Investments" |
| GAAP                                                                                                                                                                    | Accounting                  Principles Generally Accepted in the United States                                                                                                                                                |
| KWH                                                                                                                                                                     | Kilowatt-hours                                                                                                                                                                                                                |
| LOC                                                                                                                                                                     | Letter                  of                  Credit                                                                                                                                                                            |
| MISO                                                                                                                                                                    | Midwest                  Independent Transmission System Operator, Inc.                                                                                                                                                       |
| Moody?s                                                                                                                                                                 | Moody?s                  Investors Service                                                                                                                                                                                    |
| MSG                                                                                                                                                                     | Market                  Support                  Generation                                                                                                                                                                   |
| MW                                                                                                                                                                      | Megawatts                                                                                                                                                                                                                     |
| NERC                                                                                                                                                                    | North                  American                  Electric Reliability Corporation                                                                                                                                             |
| NOx                                                                                                                                                                     | Nitrogen                  Oxide                                                                                                                                                                                               |
| NOPR                                                                                                                                                                    | Notice                  of                  Proposed Rulemaking                                                                                                                                                               |
| NOV                                                                                                                                                                     | Notice                  of                  Violation                                                                                                                                                                         |
| OCC                                                                                                                                                                     | Office                  of the                  Ohio Consumers' Counsel                                                                                                                                                       |
| OCI                                                                                                                                                                     | Other                  Comprehensive Income                                                                                                                                                                                   |
| OPEB                                                                                                                                                                    | Other                  Post-Employment Benefits                                                                                                                                                                               |
| PJM                                                                                                                                                                     | PJM                  Interconnection LLC                                                                                                                                                                                      |
| PLR                                                                                                                                                                     | Provider                  of                  Last Resort                                                                                                                                                                     |

----

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

| PPUC                      | Pennsylvania                  Public Utility Commission                                                                                                                                                                                                        |
|---------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| PSA                       | Power                  Supply                  Agreements                                                                                                                                                                                                      |
| PUCO                      | Public                  Utilities Commission of Ohio                                                                                                                                                                                                           |
| PUHCA                     | Public                  Utility                  Holding Company Act of 1935                                                                                                                                                                                   |
| RCP                       | Rate                  Certainty                  Plan                                                                                                                                                                                                          |
| RSP                       | Rate                  Stabilization Plan                                                                                                                                                                                                                       |
| RTC                       | Regulatory                  Transition Charge                                                                                                                                                                                                                  |
| S&P                   | Standard&                  Poor's Ratings Service                                                                                                                                                                                                          |
| SCR                       | Selective                  Catalytic Reduction                                                                                                                                                                                                                 |
| SEC                       | United                  States                  Securities and Exchange Commission                                                                                                                                                                             |
| SFAC                      | Statement                  of                  Financial Accounting Concepts                                                                                                                                                                                   |
| SFAC                  7   | SFAC                  No.. 7,                  "Using Cash Flow Information and Present Value in Accounting                  Measurements"                                                                                                                     |
| 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,                  ?Disclosures about Fair Value of Financial Instruments?                                                                                                                                                       |
| SFAS                  115 | SFAS                  No.. 115,                  "Accounting for Certain Investments in Debt and Equity                  Securities"                                                                                                                           |
| 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 an                    amendment of FASB Statements No. 115?                     |
| SO2                       | Sulfur                  Dioxide                                                                                                                                                                                                                                |
| VIE(2)                    | Variable                  Interest Entity                                                                                                                                                                                                                      |

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**Report        of        Independent Registered Public Accounting Firm**

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| **OHIO                    EDISON COMPANY**                                           |   |
|--------------------------------------------------------------------------------------|--------|
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |
| **SELECTED                    FINANCIAL DATA**                                       |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |
| **For                    the Years Ended December 31,**                              |   | **2006** |   | **2005** |   | **2004** |   | **2003** |   | **2002** |   |
|                                                                                 |   | ***(Dollars                    in thousands)*** |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |
| **GENERAL                    FINANCIAL INFORMATION:**                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Operating                    Revenues                                                |   | $ | 2,427,456 |   | $ | 2,975,553 |   | $ | 2,945,583 |   | $ | 2,925,310 |   | $ | 2,948,675 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                    Income                                                  |   | $ | 291,132 |   | $ | 632,543 |   | $ | 592,643 |   | $ | 336,936 |   | $ | 453,831 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                    Before                    Cumulative Effect                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       of Accounting Changes                                |   | $ | 211,639 |   | $ | 330,398 |   | $ | 342,766 |   | $ | 292,925 |   | $ | 356,159 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    Income                                                        |   | $ | 211,639 |   | $ | 314,055 |   | $ | 342,766 |   | $ | 324,645 |   | $ | 356,159 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                    on                    Common Stock                       |   | $ | 207,087 |   | $ | 311,420 |   | $ | 340,264 |   | $ | 321,913 |   | $ | 349,649 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    Assets                                                      |   | $ | 5,120,614 |   | $ | 6,097,277 |   | $ | 6,482,627 |   | $ | 7,316,489 |   | $ | 7,789,539 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CAPITALIZATION                    AS OF DECEMBER 31:**                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                    Stockholder?s Equity                                       |   | $ | 1,972,385 |   | $ | 2,502,191 |   | $ | 2,493,809 |   | $ | 2,582,970 |   | $ | 2,839,255 |   |
| Preferred                    Stock-                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Not                    Subject to                    Mandatory Redemption            |   |   | - |   |   | 75,070 |   |   | 100,070 |   |   | 100,070 |   |   | 100,070 |   |
| Subject                    to                    Mandatory Redemption                |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 13,500 |   |
| Long-Term                    Debt                    and Other Long-Term Obligations |   |   | 1,118,576 |   |   | 1,019,642 |   |   | 1,114,914 |   |   | 1,179,789 |   |   | 1,219,347 |   |
| Total                    Capitalization                                              |   | $ | 3,090,961 |   | $ | 3,596,903 |   | $ | 3,708,793 |   | $ | 3,862,829 |   | $ | 4,172,172 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CAPITALIZATION                    RATIOS:**                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                    Stockholder?s Equity                                       |   |   | 63.8 | % |   | 69.6 | % |   | 67.2 | % |   | 66.9 | % |   | 68.1 | % |
| Preferred                    Stock-                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       Not Subject to Mandatory Redemption                  |   |   | - |   |   | 2.1 |   |   | 2.7 |   |   | 2.6 |   |   | 2.4 |   |
|                       Subject to Mandatory Redemption                      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 0.3 |   |
| Long-Term                    Debt                    and Other Long-Term Obligations |   |   | 36.2 |   |   | 28.3 |   |   | 30.1 |   |   | 30.5 |   |   | 29.2 |   |
| Total                    Capitalization                                              |   |   | 100.0 | % |   | 100.0 | % |   | 100.0 | % |   | 100.0 | % |   | 100.0 | % |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **DISTRIBUTION                    KWH DELIVERIES (Millions):**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                          |   |   | 10,500 |   |   | 10,901 |   |   | 10,180 |   |   | 10,009 |   |   | 10,233 |   |
| Commercial                                                                           |   |   | 8,429 |   |   | 8,566 |   |   | 8,276 |   |   | 8,105 |   |   | 7,994 |   |
| Industrial                                                                           |   |   | 11,018 |   |   | 11,058 |   |   | 10,700 |   |   | 10,658 |   |   | 10,672 |   |
| Other                                                                                |   |   | 152 |   |   | 154 |   |   | 144 |   |   | 160 |   |   | 154 |   |
| Total                                                                                |   |   | 30,099 |   |   | 30,679 |   |   | 29,300 |   |   | 28,932 |   |   | 29,053 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CUSTOMERS                    SERVED:**                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                          |   |   | 1,066,582 |   |   | 1,062,665 |   |   | 1,056,560 |   |   | 1,044,419 |   |   | 1,041,825 |   |
| Commercial                                                                           |   |   | 131,188 |   |   | 130,472 |   |   | 129,017 |   |   | 127,856 |   |   | 119,771 |   |
| Industrial                                                                           |   |   | 1,142 |   |   | 1,152 |   |   | 1,149 |   |   | 1,182 |   |   | 4,500 |   |
| Other                                                                                |   |   | 1,937 |   |   | 1,890 |   |   | 1,751 |   |   | 1,752 |   |   | 1,756 |   |
| Total                                                                                |   |   | 1,200,849 |   |   | 1,196,179 |   |   | 1,188,477 |   |   | 1,175,209 |   |   | 1,167,852 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Number                    of Employees**                                           |   |   | 1,432 |   |   | 1,422 |   |   | 1,370 |   |   | 1,521 |   |   | 1,569 |   |

----

**OHIO        EDISON        COMPANY**

**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 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 Energy        Policy Act of 2005 (including, but not limited to, the repeal of the Public        Utility Holding Company Act of 1935), 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        Securities and Exchange Commission, the Nuclear Regulatory Commission and        the        various state public utility commissions as disclosed in our Securities and        Exchange Commission filings, generally, and heightened scrutiny at the Perry        Nuclear Power Plant in particular, the timing and outcome of various proceedings        before the Public Utilities Commission of Ohio (including, but not limited        to,        the successful resolution of the issues remanded to the Public Utilities        Commission of Ohio by the Ohio Supreme Court regarding the Rate Stabilization        Plan), the continuing availability and operation of generating units, 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 risks and other factors discussed from time to        time        in our Securities and Exchange Commission filings, and other similar factors.        Also, a credit rating should not be viewed as a recommendation to buy, sell        or        hold securities and may be revised or withdrawn by a rating agency at any        time.        We expressly disclaim any current intention to update any forward-looking        statements contained herein as a result of new information, future events,        or        otherwise.*

**Reclassifications**

**FirstEnergy        Intra-System Generation Asset Transfers**

----

|                                                                                                                                                                                                              |   |   |   |                                 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------------------------------------|--------|
| **Intra-System                  Generation Asset Transfers**                                                                                                                                                      |   |   |   | **Increase**                         |   |
| **Income                  Statement Effects**                                                                                                                                                                     |   |   |   | **(Decrease)**                       |   |
|                                                                                                                                                                                                              |   |   |   | ***(In                  millions)*** |   |
| Revenues:                                                                                                                                                                                                         |   |   |   |                            |   |
| Non-nuclear                  generating units rent                                                                                                                                                                |   |   | (a     | )                                    | $      | (146 | ) |
| Nuclear-generated                  KWH sales                                                                                                                                                                      |   |   | (b     | )                                    |   | (290 | ) |
| Total                  -                  Revenues Effect                                                                                                                                                         |   |   |   |                                 |   | (436 | ) |
| Expenses:                                                                                                                                                                                                         |   |   |   |                                 |   |   |   |
| Fuel                  costs -                  nuclear                                                                                                                                                            |   |   | (c     | )                                    |   | (44 | ) |
| Nuclear                  operating costs                                                                                                                                                                          |   |   | (c     | )                                    |   | (150 | ) |
| Provision                  for                  depreciation                                                                                                                                                      |   |   | (d     | )                                    |   | (46 | ) |
| General                  taxes                                                                                                                                                                                    |   |   | (e     | )                                    |   | (13 | ) |
| Total                  -                  Expenses Effect                                                                                                                                                         |   |   |   |                                 |   | (253 | ) |
| Operating                  Income Effect                                                                                                                                                                          |   |   |   |                                 |   | (183 | ) |
| Other                  Income                  (expense):                                                                                                                                                         |   |   |   |                                 |   |   |   |
| Interest                  income from notes receivable                                                                                                                                                            |   |   | (f     | )                                    |   | 57 |   |
| Nuclear                  decommissioning trust earnings                                                                                                                                                           |   |   | (g     | )                                    |   | (12 | ) |
| Interest                  expense                                                                                                                                                                                 |   |   | (h     | )                                    |   | (                  7 | ) |
| Capitalized                  interest                                                                                                                                                                             |   |   | (i     | )                                    |   | (9 | ) |
| Total                  - Other                  Income Effect                                                                                                                                                     |   |   |   |                                 |   | 43 |   |
| Income                  Before                  Income Taxes Effect                                                                                                                                               |   |   |   |                                 |   | (140 | ) |
| Income                  Taxes                                                                                                                                                                                     |   |   | (j     | )                                    |   | (57 | ) |
| Net                  Income                  Effect                                                                                                                                                               |   |   |   |                                 | $      | (83 | ) |
|                                                                                                                                                                                                              |   |   |   |                                 |   |  |   |
| (a)                  Elimination of non-nuclear generation assets lease to                  FGCO.                                                                                                                 |
| (b)                  Reduction                  of nuclear-generated wholesale KWH sales to FES.                                                                                                                  |
| (c)                  Reduction                  of nuclear fuel and operating costs.                                                                                                                              |
| (d)                  Reduction                  of depreciation expense and asset retirement obligation accretion                                         related to generation assets.  |
| (e)                  Reduction                  of property tax expense on generation assets.                                                                                                                     |
| (f)                   Interest income on associated company notes receivable from the                  transfer                  of                        generation net assets.   |
| (g)                  Reduction                  of earnings on nuclear decommissioning trusts.                                                                                                                    |
| (h)                  Elimination of interest on pollution control notes redeemed in                  conjunction                  with the                       nuclear asset transfer. |
| (i)                   Reduction of allowance for borrowed funds used during construction                  on                  nuclear                        capital expenditures.  |
| (j)                   Income tax effect of the above                  adjustments.                                                                                                                           |

**Results        of Operations**

----

*Revenues*

|  **Changes                  in Generation****KWH                  Sales** |   | **2006** |   | **2005**     |   |
|--------------------------------------------------------------------------------|--------|----------|--------|--------------|--------|
| **Increase                  (Decrease)**                                       |   |     |   |
|                     Electric Generation:                             |   |     |   |    |   |    |   |
|                     Retail                                           |   |     |        |         |   | 12.4 | % |   | 4.4 | % |
|                     Wholesale*                                       |   |     |        |         |   | (64.7 | )% |   | (5.2 | )% |
| **Net                  Decrease in Generation Sales**                          |   |     |        |         |   | (7.6 | )% |   | **(0.2** | **)%** |

|  **Changes                    in Generation Revenues**                                                                                                                         |   | **2006**                               |   | **2005** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|----------|--------|
| **Increase                    (Decrease)**                                                                                                                                          |   | ***(In                    millions)*** |   |
| Retail                    Generation:                                                                                                                                               |   |                                   |   |     |   |   |   |   |   |   |   |
|                       Residential                                                                                                                                         |   |                                   |        |     | $      | 188 |   |   |   |   | $20 |
|                       Commercial                                                                                                                                          |   |                                   |        |     |   | 153 |   |   |   |   | 9 |
|                       Industrial                                                                                                                                          |   |                                   |        |     |   | 159 |   |   |   |   | 21 |
|                       Total Retail Generation                                                                                                                             |   |                                   |   |     |   | 500 |   |   |   |   | 50 |
|                       Wholesale*                                                                                                                                          |   |                                   |   |     |   | (247 | ) |   |   |   | (37) |
| **Net                    Increase in Generation Revenues**                                                                                                                          |   |                                   |        |     | $      | 253 |   |   |   |   | $13 |
|                                                                                                                                                                                |   |                                   |   |     |   |   |   |   |
| *                    The 2006                    amount excludes impact of generation asset transfers related                    to                    nuclear-generated KWH sales. |

----

| **Changes                        in Distribution KWH Deliveries** |   | **2006** |   | **2005** |   |
|-------------------------------------------------------------------|--------|----------|--------|----------|--------|
| **Increase                        (Decrease)**                    |   |     |   |
| Distribution                      Deliveries:                |   |     |   |     |   |   |   |   |   |   |
|                            Residential             |   |     |   |     | (3.7   | )% |   |   | 7.1 | %  |
|                            Commercial              |   |     |   |     | (1.6   | )% |   |   | 3.5 | % |
|                            Industrial              |   |     |   |     | (0.4   | )% |   |   | 3.3 | % |
| **Net                        Change in Distribution Deliveries**  |   |     |   |     | (1.9   | )% |   |   | 4.7 | % |

| **Changes                  in Distribution Revenues**    |   | **2006**                             |   | **2005** |   |
|----------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|
| **Increase                  (Decrease)**                 |   | ***(In                  millions)*** |   |
|                      Residential          |   |                                 |   | $        | (195   | ) |   | $ | 44 |   |
|                      Commercial           |   |                                 |   |     | (136   | ) |   |   | 2 |   |
|                      Industrial           |   |                                 |   |     | (118   | ) |   |   | (3 | ) |
| **Net                  Change in Distribution Revenues** |   |                                 |   | $        | (449   | ) |   | **$** | **43** |   |

*Expenses*

| **Expenses                  - Changes**                             |   | **2006**                             |   | **2005** |   |
|---------------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|
| **Increase                  (Decrease)**                            |   | ***(In                  millions)*** |   |
| Fuel                  costs                                         |   | $                                    | 1      |     | $      | (3 | ) |
| Purchased                  power costs                              |   |                                 | 337    |     |   | (31 | ) |
| Nuclear                  operating costs                            |   |                                 | (1     | )        |   | (38 | ) |
| Other                  operating costs                              |   |                                 | (26    | )        |   | 68 |   |
| Provision                  for                  depreciation        |   |                                 | 11     |     |   | (14 | ) |
| Amortization                  of regulatory assets                  |   |                                 | (267   | )        |   | 46 |   |
| Deferral                  of                  new regulatory assets |   |                                 | (9     | )        |   | (51 | ) |
| General                  taxes                                      |   |                                 | -      |     |   | 13 |   |
| **Net                  change in expenses**                         |   | **$**                                | **46** |     | $      | **(10** | **)** |
|                                                                |   |                                 |        |     |   |   |   |
|                                                                |   |                                 |   |     |   |   |   |

----

*Other        Income*

*Income        Taxes*

----

*Cumulative        Effect of a Change in Accounting Principle *

*Preferred        Stock        Dividend Requirements and Redemption Premium*

**Capital        Resources and Liquidity**

*Changes        in Cash        Position*

*Cash        Flows From        Operating Activities *

| **Operating                  Cash Flows**                                     |   | **2006**                             |   | **2005** |   | **2004** |   |
|-------------------------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                                          |   | ***(In                  millions)*** |   |
| Net                  income                                                   |   | $                                    | 212    |     | $      | 314      |   | $ | 343 |   |
| Net-cash                  charges (credits)                                   |   |                                 | (2     | )        |   | 441      |   |   | 433 |   |
| Pension                  trust                  contribution*                 |   |                                 | 6      |     |   | (73      | )      |   | (44 | ) |
| Working                  capital and other                                    |   |                                 | 91     |     |   | 233      |   |   | (316 | ) |
| Net                  cash                  provided from operating activities |   | $                                    | 307    |     | $      | 915      |   | $ | 416 |   |

|   | * | Pension                  trust                  contributions in 2005 and 2004 are net of $34 million and $29 million                  of                  related |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Cash        Flows From        Financing Activities*

| **Securities                  Issued or Redeemed**       |   | **2006**                             |   | **2005** |   | **2004** |   |
|----------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                     |   | ***(In                  millions)*** |   |
| ***New                  Issues:***                       |   |                                 |   |     |   |     |   |   |   |   |
| Pollution                  control notes                 |   | $                                    | -      |     | $      | 146      |   | $ | 30 |   |
| Unsecured                  notes                         |   |                                 | 592    |     |   | -        |   |   | - |   |
|                                                     |   | $                                    | 592    |     | $      | 146      |   | $ | 30 |   |
| ***Redemptions:***                                       |   |                                 |   |     |   |     |   |   |   |   |
| Common                  Stock                            |   | $                                    | 500    |     | $      | -        |   | $ | - |   |
| FMB                                                      |   |                                 | 1      |     |   | 81       |   |   | 63 |   |
| Pollution                  control notes                 |   |                                 | 606    |     |   | 271      |   |   | - |   |
| Secured                  notes                           |   |                                 | 5      |     |   | 56       |   |   | 62 |   |
| Preferred                  stock                         |   |                                 | 78     |     |   | 38       |   |   | 1 |   |
| Long-term                  revolving credit              |   |                                 | -      |     |   | -        |   |   | 40 |   |
| Other                                                    |   |                                 | 1      |     |   | 6        |   |   | 6 |   |
|                                                     |   | $                                    | 1,191  |     | $      | 452      |   | $ | 172 |   |
|                                                     |   |                                 |   |     |   |     |   |   |   |   |
| Short-term                  borrowings (repayments), net |   | $                                    | (187   | )        | $      | 26       |   | $ | (4 | ) |

----

| **Ratings                  of Securities** | **Securities**                    | **S&P** | **Moody?s** | **Fitch** |
|--------------------------------------------|-----------------------------------|-------------|-------------|-----------|
| **FirstEnergy**                            | Senior                  unsecured | BBB-        | Baa3        | BBB       |
|                                       |                              |        |        |      |
| **OE**                                     | Senior                  unsecured | BBB-        | Baa2        | BBB       |
|                                       |                              |        |        |      |
| **Penn**                                   | Senior                  secured   | BBB+        | Baa1        | BBB+      |

*Cash        Flows From        Investing Activities*

----

**Contractual        Obligations**

|                                                         |   |                                       |   |     |   |                    **2008-** |   |                    **2010-** |   |           |   |
|--------------------------------------------------------------|--------|--------------------------------------------|--------|----------|--------|-----------------------------------|--------|-----------------------------------|--------|----------------|--------|
| **Contractual                  Obligations**                 |   | **Total**                                  |   | **2007** |   | **2009**                          |   | **2011**                          |   | **Thereafter** |   |
|                                                         |   | ***(In                  millions)***  |   |
| Long-term                  debt                  (1)         |   | $                                          | 1,294  |     | $      | 4                                 |   | $                                 | 181    |           | $      | 66 |   | $ | 1,043 |   |
| Short-term                  borrowings                       |   |                                       | 117    |     |   | 117                               |   |                              | -      |           |   | - |   |   | - |   |
| Interest                  on                  long-term debt |   |                                       | 1,135  |     |   | 66                                |   |                              | 121    |           |   | 117 |   |   | 831 |   |
| Capital                  leases                              |   |                                       | 1      |     |   | -                                 |   |                              | 1      |           |   | - |   |   | - |   |
| Operating                  leases (2)                        |   |                                       | 1,071  |     |   | 86                                |   |                              | 218    |           |   | 210 |   |   | 557 |   |
| Pension                  funding (3)                         |   |                                       | 20     |     |   | 20                                |   |                              | -      |           |   |  - |   |   | - |   |
| Purchases                  (4)                               |   |                                       | 123    |     |   | 3                                 |   |                              | 41     |           |   | 18 |   |   | 61 |   |
| Total                                                        |   | $                                          | 3,761  |     | $      | 296                               |   | $                                 | 562    |           | $      | 411 |   | $ | 2,492 |   |

|              | (1) | Amounts                  reflected do not include interest on long-term debt.  |
|--------------------------------------------------------------------------|-----|-------------------------------------------------------------------------------------|

|                 | (2) | Operating                    lease payments are net of capital trust receipts of $416.3 million                    (see Note 6).  |
|--------------------------------------------------------------------------------------------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

|                                | (3)   | We                    estimate                    that no 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                    statemenets. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                | (4)    | Fuel                  and power                  purchases under contracts with fixed or minimum quantities and                  approximate                  timing. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Off-Balance        Sheet Arrangements**

**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                                         |   | $                                            | 40     |     | $      | 17       |   | $        | 25     |     | $      | 29         |   | $ | 30 |   | $ | 1,411 |   | $ | 1,552 |   | $ | 1,618 |   |
| Average                  interest rate                                |   |                                         | 8.2    | %        |   | 8.2      | %      |     | 8.5    | %        |   | 8.6        | %      |   | 8.6 | % |   | 5.3 | % |   | 5.6 | % |   |   |   |
|                                                                  |   |                                         |   |     |   |     |   |     |   |     |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |
| LiabilitiesLong-term                  Debt                  and Other |   |                                         |   |     |   |     |   |     |   |     |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-Term                  Obligations:                               |   |                                         |   |     |   |     |   |     |   |     |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                  rate                                           |   | $                                            | 4      |     | $      | 179      |   | $        | 2      |     | $      | 65         |   | $ | 1 |   | $ | 781 |   | $ | 1,032 |   | **$** | 1,075 |   |
| Average                  interest rate                                |   |                                         | 8.2    | %        |   | 4.1      | %      |     | 8.0    | %        |   | 5.5        | %      |   | 9.7 | % |   | 6.5 | % |   | 6.0 | % |   |   |   |
| Variable                  rate                                        |   |                                         |   |     |   |     |   |     |   |     |   |       |   |   |   |   | $ | 262 |   | $ | 262 |   | **$** | 262 |   |
| Average                  interest rate                                |   |                                         |   |     |   |     |   |     |   |     |   |       |   |   |   |   |   | 3.9 | % |   | 3.9 | % |   |   |   |
| Short-term                  Borrowings                                |   | $                                            | 117    |     |   |     |   |     |   |     |   |       |   |   |   |   |   |   |   | $ | 117 |   | **$** | 117 |   |
| Average                  interest rate                                |   |                                         | 4.0    | %        |   |     |   |     |   |     |   |       |   |   |   |   |   |   |   |   | 4.0 | % |   |   |   |

**Equity        Price Risk**

**Outlook**

*Regulatory        Matters *

----

| -    | Maintaining                  the existing level of our base distribution rates through December                  31,                  2008;                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| -    | 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 our authorized costs will occur as of December 31,                  2008;                                                                                                                                                                                                                                                                                                                                                             |
| -    | Reducing our                  deferred shopping incentive balances as of January 1, 2006 by up to                  $75 million by accelerating the application of our 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 of TE?s and our distribution and                  transmission customers through a fuel recovery mechanism. We may                  defer and                  capitalize (for recovery over a 25-year period) increased fuel                  costs above                  the amount collected through the fuel recovery                  mechanism. |

|                                    |   |                                 |   |
|-----------------------------------------|--------|--------------------------------------|--------|
| **Period**                              |   | **Amortization**                     |   |
|                                    |   | ***(In                  millions)*** |   |
|                                    |   |                                 |   |   |
| 2007                                    |   |  $                              | 179    |   |
| 2008                                    |   |                                 | 208    |   |
| **Total                  Amortization** |   | **$**                                | 387    |   |

| -    | 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.  |

----

----

*Environmental        Matters*

*                W. H. Sammis Plant-*

----

*Other        Legal        Proceedings*

*Power        Outage and        Related Litigation-*

----

*Other        Legal        Matters-*

**Critical        Accounting Policies**

*Regulatory        Accounting *

*Revenue        Recognition *

*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 | % | $ | 1.9 |   | $ | 0.2 |   | $ | 2.1 |   |
| Long-term                  return on assets                                    |   |   | Decrease                  by                  0.25 | % | $ | 2.2 |   | $ | - |   | $ | 2.2 |   |
| Health                  care                  trend rate                       |   |   | Increase                  by                  1 | % |   | na |   | $ | 0.7 |   | $ | 0.7 |   |

----

*Ohio        Transition        Cost Amortization *

*Long-Lived        Assets *

*Asset        Retirement        Obligations *

**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. *

*SFAS        157 - ?Fair        Value Measurements?*

----

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

----

| **OHIO                    EDISON COMPANY**                                                                                                                     |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                             |   |
| **CONSOLIDATED                    STATEMENTS OF INCOME**                                                                                                       |   |
|                                                                                                                                                           |   |    |   |    |   |    |   |
|                                                                                                                                                           |   |    |   |    |   |    |   |
|                                                                                                                                                           |   |    |   |    |   |    |   |
| **For                    the Years Ended December 31,**                                                                                                        |   | **2006** |   | **2005** |   | **2004** |   |
|                                                                                                                                                           |   | ***(In                    thousands)*** |   |
|  **REVENUES                  (Note 2(I)):**                                                                                                               |   |    |   |    |   |    |   |
| Electric                    sales                                                                                                                              |   | $            2,312,956 |   | $             2,861,043 |   | $            2,834,538 |   |
| Excise                    tax                    collections                                                                                                   |   |  114,500 |   |  114,510 |   |  111,045 |   |
|                                                                                                                                                                |   |   | 2,427,456 |   |   | 2,975,553 |   |   | 2,945,583 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **EXPENSES                    (Note 2(I)):**                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Fuel                                                                                                                                                           |   |   | 11,047 |   |   | 53,113 |   |   | 56,560 |   |
| Purchased                    power                                                                                                                             |   |   | 1,275,975 |   |   | 939,193 |   |   | 970,670 |   |
| Nuclear                    operating costs                                                                                                                     |   |   | 186,377 |   |   | 337,901 |   |   | 375,309 |   |
| Other                    operating costs                                                                                                                       |   |   | 378,717 |   |   | 404,763 |   |   | 336,772 |   |
| Provision                    for                    depreciation                                                                                               |   |   | 72,982 |   |   | 108,583 |   |   | 122,413 |   |
| Amortization                    of regulatory assets                                                                                                           |   |   | 190,245 |   |   | 457,205 |   |   | 411,326 |   |
| Deferral                    of                    new regulatory assets                                                                                        |   |   | (159,465 | ) |   | (151,032 | ) |   | (100,633 | ) |
| General                    taxes                                                                                                                               |   |   | 180,446 |   |   | 193,284 |   |   | 180,523 |   |
| Total                    expenses                                                                                                                              |   |   | 2,136,324 |   |   | 2,343,010 |   |   | 2,352,940 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **OPERATING                    INCOME**                                                                                                                        |   |   | 291,132 |   |   | 632,543 |   |   | 592,643 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **OTHER                    INCOME (EXPENSE) (Note 2(I)):**                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Investment                    income                                                                                                                           |   |   | 130,853 |   |   | 99,269 |   |   | 96,030 |   |
| Miscellaneous                    expense                                                                                                                       |   |   | 1,751 |   |   | (25,190 | ) |   | (765 | ) |
| Interest                    expense                                                                                                                            |   |   | (90,355 | ) |   | (75,388 | ) |   | (71,491 | ) |
| Capitalized                    interest                                                                                                                        |   |   | 2,198 |   |   | 10,849 |   |   | 7,211 |   |
| Subsidiary's                    preferred stock dividend requirements                                                                                          |   |   | (597 | ) |   | (1,689 | ) |   | (2,560 | ) |
| Total                    other                    income                                                                                                       |   |   | 43,850 |   |   | 7,851 |   |   | 28,425 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **INCOME                    BEFORE INCOME TAXES AND CUMULATIVE**                                                                                               |   |   |   |   |   |   |   |   |   |   |
| **EFFECT                    OF A CHANGE IN ACCOUNTING PRINCIPLE**                                                                                              |   |   | 334,982 |   |   | 640,394 |   |   | 621,068 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **INCOME                    TAXES**                                                                                                                            |   |   | 123,343 |   |   | 309,996 |   |   | 278,302 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **INCOME                    BEFORE CUMULATIVE EFFECT OF**                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| **A                    CHANGE IN ACCOUNTING PRINCIPLE**                                                                                                        |   |   | 211,639 |   |   | 330,398 |   |   | 342,766 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Cumulative                    effect of a change in accounting principle                                                                                       |   |   |   |   |   |   |   |   |   |   |
| (net                    of income                    tax benefit of $9,223,000) (Note 2(G))                                                                    |   |   | - |   |   | (16,343 | ) |   | - |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **NET                    INCOME**                                                                                                                              |   |   | 211,639 |   |   | 314,055 |   |   | 342,766 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **PREFERRED                    STOCK DIVIDEND REQUIREMENTS**                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **AND                    REDEMPTION PREMIUM**                                                                                                                  |   |   | 4,552 |   |   | 2,635 |   |   | 2,502 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **EARNINGS                    ON COMMON STOCK**                                                                                                                |   | $ | 207,087 |   | $ | 311,420 |   | $ | 340,264 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| The                    accompanying Notes to Consolidated Financial Statements are an                    integral                    part of these statements. |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |

----

| **OHIO                    EDISON COMPANY**                                                                                                                         |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                     |
| **CONSOLIDATED                    BALANCE SHEETS**                                                                                                                 |   |
|                                                                                                                                                               |   |
|                                                                                                                                                     |   |
| **As                    of                    December 31,**                                                                                                       |   | **2006** |   | **2005** |   |
|                                                                                                                                                               |   |   **(In                    thousands)** |   |
| **ASSETS**                                                                                                                                                         |   |    |   |   |   |
| **CURRENT                    ASSETS:**                                                                                                                             |   |    |   |   |   |
| Cash                    and cash                    equivalents                                                                                                    |   | $ | 712 |   | $ | 929 |   |
| Receivables-                                                                                                                                                       |   |   |   |   |   |   |   |
| Customers                    (less accumulated provisions of $15,033,000 and $7,619,000,                    respectively,                                          |   |   |   |   |   |   |   |
| for                    uncollectible accounts)                                                                                                                     |   |   | 234,781 |   |   | 290,887 |   |
| Associated                    companies                                                                                                                            |   |   | 141,084 |   |   | 187,072 |   |
| Other                    (less                    accumulated provisions of $1,985,000 and $4,000,                    respectively,                                |   |   |   |   |   |   |   |
| for                    uncollectible accounts)                                                                                                                     |   |   | 13,496 |   |   | 15,327 |   |
| Notes                    receivable from associated companies                                                                                                      |   |   | 458,647 |   |   | 536,629 |   |
| Prepayments                    and other                                                                                                                           |   |   | 13,606 |   |   | 93,129 |   |
|                                                                                                                                                               |   |   | 862,326 |   |   | 1,123,973 |   |
| **UTILITY                    PLANT:**                                                                                                                              |   |   |   |   |   |   |   |
| In                    service                                                                                                                                      |   |   | 2,632,207 |   |   | 2,526,851 |   |
| Less                    -                    Accumulated provision for depreciation                                                                                |   |   | 1,021,918 |   |   | 984,463 |   |
|                                                                                                                                                               |   |   | 1,610,289 |   |   | 1,542,388 |   |
| Construction                    work in progress                                                                                                                   |   |   | 42,016 |   |   | 58,785 |   |
|                                                                                                                                                               |   |   | 1,652,305 |   |   | 1,601,173 |   |
| **OTHER                    PROPERTY AND INVESTMENTS:**                                                                                                             |   |   |   |   |   |   |   |
| Long-term                    notes receivable from associated companies                                                                                            |   |   | 1,219,325 |   |   | 1,758,776 |   |
| Investment                    in                    lease obligation bonds (Note 6)                                                                                |   |   | 291,393 |   |   | 325,729 |   |
| Nuclear                    plant                    decommissioning trusts                                                                                         |   |   | 118,209 |   |   | 103,854 |   |
| Other                                                                                                                                                              |   |   | 38,160 |   |   | 44,210 |   |
|                                                                                                                                                               |   |   | 1,667,087 |   |   | 2,232,569 |   |
| **DEFERRED                    CHARGES AND OTHER ASSETS:**                                                                                                          |   |   |   |   |   |   |   |
| Regulatory                    assets                                                                                                                               |   |   | 741,564 |   |   | 774,983 |   |
| Prepaid                    pension costs                                                                                                                           |   |   | 68,420 |   |   | 224,813 |   |
| Property                    taxes                                                                                                                                  |   |   | 60,080 |   |   | 52,875 |   |
| Unamortized                    sale and leaseback costs                                                                                                            |   |   | 50,136 |   |   | 55,139 |   |
| Other                                                                                                                                                              |   |   | 18,696 |   |   | 31,752 |   |
|                                                                                                                                                               |   |   | 938,896 |   |   | 1,139,562 |   |
|                                                                                                                                                               |   | $ | 5,120,614 |   | $ | 6,097,277 |   |
| **LIABILITIES                    AND CAPITALIZATION**                                                                                                              |   |   |   |   |   |   |   |
| **CURRENT                    LIABILITIES:**                                                                                                                        |   |   |   |   |   |   |   |
| Currently                    payable long-term debt                                                                                                                |   | $ | 159,852 |   | $ | 280,255 |   |
| Short-term                    borrowings-                                                                                                                          |   |   |   |   |   |   |   |
| Associated                    companies                                                                                                                            |   |   | 113,987 |   |   | 57,715 |   |
| Other                                                                                                                                                              |   |   | 3,097 |   |   | 143,585 |   |
| Accounts                    payable-                                                                                                                               |   |   |   |   |   |   |   |
| Associated                    companies                                                                                                                            |   |   | 115,252 |   |   | 172,511 |   |
| Other                                                                                                                                                              |   |   | 13,068 |   |   | 9,607 |   |
| Accrued                    taxes                                                                                                                                   |   |   | 187,306 |   |   | 163,870 |   |
| Accrued                    interest                                                                                                                                |   |   | 24,712 |   |   | 8,333 |   |
| Other                                                                                                                                                              |   |   | 64,519 |   |   | 61,726 |   |
|                                                                                                                                                               |   |   | 681,793 |   |   | 897,602 |   |
| **CAPITALIZATION**(See                    Consolidated Statements of Capitalization):                                                                              |   |   |   |   |   |   |   |
| Common                    stockholder's equity                                                                                                                     |   |   | 1,972,385 |   |   | 2,502,191 |   |
| Preferred                    stock not subject to mandatory redemption                                                                                             |   |   | - |   |   | 60,965 |   |
| Preferred                    stock of consolidated subsidiary not subject to mandatory                    redemption                                               |   |   | - |   |   | 14,105 |   |
| Long-term                    debt                    and other long-term obligations                                                                               |   |   | 1,118,576 |   |   | 1,019,642 |   |
|                                                                                                                                                               |   |   | 3,090,961 |   |   | 3,596,903 |   |
| **NONCURRENT                    LIABILITIES:**                                                                                                                     |   |   |   |   |   |   |   |
| Accumulated                    deferred income taxes                                                                                                               |   |   | 674,288 |   |   | 769,031 |   |
| Accumulated                    deferred investment tax credits                                                                                                     |   |   | 20,532 |   |   | 24,081 |   |
| Asset                    retirement obligations                                                                                                                    |   |   | 88,223 |   |   | 82,527 |   |
| Retirement                    benefits                                                                                                                             |   |   | 167,510 |   |   | 291,051 |   |
| Deferred                    revenues - electric service programs                                                                                                   |   |   | 86,710 |   |   | 121,693 |   |
| Other                                                                                                                                                              |   |   | 310,597 |   |   | 314,389 |   |
|                                                                                                                                                               |   |   | 1,347,860 |   |   | 1,602,772 |   |
| **COMMITMENTS                    AND CONTINGENCIES (Notes 6 and 13)**                                                                                              |   |   |   |   |   |   |   |
|                                                                                                                                                               |   | $ | 5,120,614 |   | $ | 6,097,277 |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |
|                                                                                                                                                               |   |   |   |   |   |   |   |
| The                    accompanying Notes to Consolidated Financial Statements are an                    integral                    part of these balance sheets. |   |   |   |   |

----

| **OHIO                    EDISON COMPANY**                                                                                           |                                      |
|--------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
|                                                                                                                       |
| **CONSOLIDATED                    STATEMENTS OF CAPITALIZATION**                                                                     |                                      |
|                                                                                                                       |
|                                                                                                                       | **Shares                    Outstanding** |   | **Dollars                    in Thousands** |   |
| **As                    of                    December 31,**                                                                         |                                      | **2006** |   | **2005** |   | **2006** |   | **2005** |   |
|                                                                                                                       |                                      |   |   |   |   |   |   |   |
| **COMMON                    STOCKHOLDER'S EQUITY:**                                                                                  |                                      |   |   |   |   |   |   |   |
|  Common                    stock,                    without par value, 175,000,000 shares authorized                           |                                      | 80 |   |   | 100 |   | $ | 1,708,441 |   | $ | 2,297,253 |   |
|  Accumulated                    other comprehensive income (loss) (Note 2(F))                                                   |                                      |   |   |   |   |   |   | 3,208 |   |   | 4,094 |   |
|  Retained                    earnings (Note 10(A))                                                                              |                                      |   |   |   |   |   |   | 260,736 |   |   | 200,844 |   |
|                        Total                                                                                          |                                      |   |   |   |   |   |   | 1,972,385 |   |   | 2,502,191 |   |
|                                                                                                                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **PREFERRED                    STOCK NOT SUBJECT TO MANDATORY REDEMPTION (Note                    10(B)):**                          |                                      |   |   |   |   |   |
| Cumulative,                    $100 par value, 6,000,000 shares authorized-                                                          |                                      |   |   |   |   |   |   |   |   |   |   |   |
|      3.90%                                                                                                  |                                      | - |   |   | 152,510 |   |   | - |   |   | 15,251 |   |
|      4.40%                                                                                                  |                                      | - |   |   | 176,280 |   |   | - |   |   | 17,628 |   |
|      4.44%                                                                                                  |                                      | - |   |   | 136,560 |   |   | - |   |   | 13,656 |   |
|      4.56%                                                                                                  |                                      | - |   |   | 144,300 |   |   | - |   |   | 14,430 |   |
|                       Total                                                                                                |                                      |   | - |   |   | 609,650 |   |   | - |   |   | 60,965 |   |
|                                                                                                                                 |                                      |   |
|                                                                                                                                 |                                      |   |
| **PREFERRED                    STOCK OF CONSOLIDATED SUBSIDIARY NOT SUBJECT TO**                                                     |                                      |   |   |   |   |   |   |   |   |
| **MANDATORY                    REDEMPTION (Note 10(B)):**                                                                            |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **Pennsylvania                    Power Company-**                                                                                   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative,                    $100 par value, 1,200,000 shares authorized-                                                          |                                      |   |   |   |   |   |   |   |   |   |   |   |
|      4.24%                                                                                                  |                                      | - |   |   | 40,000 |   |   | - |   |   | 4,000 |   |
|      4.25%                                                                                                  |                                      | - |   |   | 41,049 |   |   | - |   |   | 4,105 |   |
|      4.64%                                                                                                  |                                      | - |   |   | 60,000 |   |   | - |   |   | 6,000 |   |
|                        Total                                                                                          |                                      | - |   |   | 141,049 |   |   | - |   |   | 14,105 |   |
|                                                                                                                                 |                                      |
|                                                                                                                                 |                                      |   |
| **LONG-TERM                    DEBT AND OTHER LONG-TERM OBLIGATIONS (Note                    10(C)):**                               |                                      |   |   |   |   |   |   |   |   |
| **Ohio                    Edison Company-**                                                                                          |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **Secured                    notes:**                                                                                                |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *3.050%                    due                    2015                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 19,000 |   |
| *3.250%                    due                    2015                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 50,000 |   |
| *3.200%                    due                    2016                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 47,725 |   |
|  7.050%                    due                    2020                                                                          |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 60,000 |   |
|  5.375%                    due                    2028                                                                          |                                      |   |   |   |   |   |   |   |   |   |   | 13,522 |   |   | 13,522 |   |
| *3.780%                    due                    2029                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | 100,000 |   |   | 100,000 |   |
| *3.750%                    due                    2029                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | 6,450 |   |   | 6,450 |   |
| *3.050%                    due                    2030                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 60,400 |   |
| *3.350%                    due                    2031                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 69,500 |   |
| *3.100%                    due                    2033                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 12,300 |   |
|  5.450%                    due                    2033                                                                          |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 14,800 |   |
| *3.350%                    due                    2033                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 50,000 |   |
| *3.100%                    due                    2033                                                                               |                                      |   |   |   |   |   |   |   |   |   |   | - |   |   | 108,000 |   |
|  Limited                    Partnerships-                                                                                       |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  7.24%                    weighted                    average interest rate due 2006-2010                                       |                                      |   |   |   |   |   |   |   |   |   |   | 8,253 |   |   | 12,859 |   |
|                        Total                                                                                          |                                      |   |   |   |   |   |   |   |   |   |   | 128,225 |   |   | 624,556 |   |
|                                                                                                                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *                    Denotes                    variable rate issue with applicable year-end interest rate                    shown. |                                      |   |   |   |   |   |   |   |   |   |   |   |

----

| **OHIO                    EDISON COMPANY**                                                                                                                     |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                           |   |   |   |    |   |    |   |   |   |
| **CONSOLIDATED                    STATEMENTS OF CAPITALIZATION (Cont'd)**                                                                                      |   |
|                                                                                                                                                           |   |   |   |    |   |    |   |   |   |
|                                                                                                                                                           |   |   |   |    |   |  **Dollars                    in Thousands** |   |
| **As                    of                    December 31,**                                                                                                   |   |  **2006** |   | **2005** |   |
|                                                                                                                                                           |   |   |   |    |   |    |   |
| **LONG-TERM                    DEBT AND OTHER LONG-TERM OBLIGATIONS (Cont'd)**                                                                                 |   |    |   |   |   |
| **Ohio                    Edison Company-**                                                                                                                    |   |    |   |   |   |
|    **Unsecured                  notes:**                                                                                                        |   |    |   |   |   |
|  4..000%                    due 2008                                                                                                                      |   |   |   |   |   |   |   | $ | 175,000 |   | $ | 175,000 |   |
|                      * 3.900%                    due 2014                                                                                            |   |   | 50,000 |   |   | 50,000 |   |
|  5..450%                    due 2015                                                                                                                      |   |   |   |   |   |   |   |   | 150,000 |   |   | 150,000 |   |
|  6..400%                    due 2016                                                                                                                      |   |   |   |   |   |   |   |   | 250,000 |   |   | - |   |
|  *                    4.020%                    due 2018                                                                                                  |   |   | 33,000 |   |   | 33,000 |   |
|  *                    3.960%                    due 2018                                                                                                  |   |   | 23,000 |   |   | 23,000 |   |
|  *                    3.950%                    due 2023                                                                                                  |   |   | 50,000 |   |   | 50,000 |   |
|  6..875%                    due 2036                                                                                                                      |   |   |   |   |   |   |   |   | 350,000 |   |   | - |   |
|    Total                                                                                                                                        |   |   |   |   |   |   |   |   | 1,081,000 |   |   | 481,000 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Pennsylvania                    Power Company-**                                                                                                             |   |   |   |   |   |   |
| **First                    mortgage bonds:**                                                                                                                   |   |   |   |   |   |   |   |
|  9..740%                    due 2007-2019                                                                                                                 |   | 12,695 |   |   | 13,669 |   |
|  7..625%                    due 2023                                                                                                                      |   | 6,500 |   |   | 6,500 |   |
|    Total                                                                                                                                        |   | 19,195 |   |   | 20,169 |   |
|                                                                                                                                                           |   |   |   |   |   |   |
| **Secured                    notes:**                                                                                                                          |   |   |   |   |   |   |
|  5..400%                    due 2013                                                                                                                      |   |   |   |   |   |   |   |   | 1,000 |   |   | 1,000 |   |
|  5..400%                    due 2017                                                                                                                      |   |   |   |   |   |   |   |   | - |   |   | 10,600 |   |
|  *                    3.300%                    due 2017                                                                                                  |   |   | - |   |   | 17,925 |   |
| 5.900%                    due                    2018                                                                                                          |   |   |   |   |   |   |   |   | - |   |   | 16,800 |   |
|  *                    3.300%                    due 2021                                                                                                  |   |   | - |   |   | 10,525 |   |
|  6..150%                    due 2023                                                                                                                      |   |   |   |   |   |   |   |   | - |   |   | 12,700 |   |
|  *                    3.610%                    due 2027                                                                                                  |   |   | - |   |   | 10,300 |   |
|  5..375%                    due 2028                                                                                                                      |   |   |   |   |   |   |   |   | 1,734 |   |   | 1,734 |   |
|  5..450%                    due 2028                                                                                                                      |   |   |   |   |   |   |   |   | - |   |   | 6,950 |   |
|  6..000%                    due 2028                                                                                                                      |   | - |   |   | 14,250 |   |
|    Total                                                                                                                                        |   | 2,734 |   |   | 102,784 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Unsecured                    notes:**                                                                                                                        |   |   |   |   |   |   |   |   |
|   * 3.500%                    due 2029                                                                                                          |   |   | - |   |   | 14,500 |   |
|  5..390%                    due 2010 to associated company                                                                                                |   | 62,900 |   |   | 62,900 |   |
|    Total                                                                                                                                        |   | 62,900 |   |   | 77,400 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital                    lease                    obligations (Note 6)                                                                                       |   |   |   | 362 |   |   | 3,312 |   |
| Net                    unamortized discount on debt                                                                                                            |   | (15,988 | ) |   | (9,324 | ) |
| Long-term                    debt                    due within one year                                                                                       |   |   | (159,852 | ) |   | (280,255 | ) |
|    Total                    long-term debt and other long-term obligations                                                                      |   | 1,118,576 |   |   | 1,019,642 |   |
| **TOTAL                    CAPITALIZATION**                                                                                                                    | $      | 3,090,961 |   | $ | 3,596,903 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *                    Denotes                    variable rate issue with applicable year-end interest rate                    shown.                           |   |   |   |   |   |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                    accompanying Notes to Consolidated Financial Statements are an                    integral                    part of these statements. |   |   |   |   |   |   |

----

| **OHIO                      EDISON COMPANY**                                                                   |   |
|----------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                      STATEMENTS OF COMMON STOCKHOLDER'S EQUITY**                                |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   | **Accumulated** |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   | **Other** |   |   |   |
|                                                                                                           |   | **Comprehensive** |   | **Number** |   | **Carrying** |   | **Comprehensive** |   | **Retained** |   |
|                                                                                                           |   | **Income** |   | **of                      Shares** |   | **Value** |   | **Income                      (Loss)** |   | **Earnings** |   |
|                                                                                                           |   | ***(Dollars                      in thousands)*** |   |
| Balance,                      January 1, 2004                                                                  |   |   |   |   |   | 100 |   | $ | 2,098,729 |   | $ | (38,693 | ) | $ | 522,934 |   |
| Net                      income                                                                                |   | $ | 342,766 |   |   |   |   |   |   |   |   |   |   |   | 342,766 |   |
| Minimum                      liability for unfunded retirement                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    benefits,                      net                      of $5,516,000 of income tax benefits |   |   | (7,552 | ) |   |   |   |   |   |   |   | (7,552 | ) |   |   |   |
| Unrealized                      loss on investments, net of                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    $533,000                      of                      income tax benefits                    |   |   | (873 | ) |   |   |   |   |   |   |   | (873 | ) |   |   |   |
| Comprehensive                      income                                                                      |   | $ | 334,341 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                      dividends                      on preferred stock                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2,502 | ) |
| Cash                      dividends                      on common stock                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (421,000 | ) |
| Balance,                      December 31, 2004                                                                |   |   |   |   |   | 100 |   |   | 2,098,729 |   |   | (47,118 | ) |   | 442,198 |   |
| Net                      income                                                                                |   | $ | 314,055 |   |   |   |   |   |   |   |   |   |   |   | 314,055 |   |
| Minimum                      liability for unfunded retirement                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    benefits,                      net                      of $49,027,000 of income taxes       |   |   | 69,463 |   |   |   |   |   |   |   |   | 69,463 |   |   |   |   |
| Unrealized                      loss on investments, net of                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    $13,068,000                      of                      income tax benefits                 |   |   | (18,251 | ) |   |   |   |   |   |   |   | (18,251 | ) |   |   |   |
| Comprehensive                      income                                                                      |   | $ | 365,267 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affiliated                      company asset transfers                                                        |   |   |   |   |   |   |   |   | 198,147 |   |   |   |   |   | (106,774 | ) |
| Restricted                      stock units                                                                    |   |   |   |   |   |   |   |   | 32 |   |   |   |   |   |   |   |
| Preferred                      stock redemption adjustment                                                     |   |   |   |   |   |   |   |   | 345 |   |   |   |   |   |   |   |
| Cash                      dividends                      on preferred stock                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2,635 | ) |
| Cash                      dividends                      on common stock                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (446,000 | ) |
| Balance,                      December 31, 2005                                                                |   |   |   |   |   | 100 |   |   | 2,297,253 |   |   | 4,094 |   |   | 200,844 |   |
| Net                      income                                                                                |   | $ | 211,639 |   |   |   |   |   |   |   |   |   |   |   | 211,639 |   |
| Unrealized gain                      on investments, net of                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    $4,455,000                      of                      income taxes                         |   |   | 7,954 |   |   |   |   |   |   |   |   | 7,954 |   |   |   |   |
| Comprehensive                      income                                                                      |   | $ | 219,593 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                      liability                      for unfunded retirement benefits                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    due                      to the                      implementation of SFAS 158, net         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    of                      $22,287,000                      of income tax benefits              |   |   |   |   |   |   |   |   |   |   |   | (8,840 | ) |   |   |   |
| Affiliated                      company asset transfers (Note 14)                                              |   |   |   |   |   |   |   |   | (87,893 | ) |   |   |   |   |   |   |
| Restricted                      stock units                                                                    |   |   |   |   |   |   |   |   | 58 |   |   |   |   |   |   |   |
| Stock                      based                      compensation                                             |   |   |   |   |   |   |   |   | 82 |   |   |   |   |   |   |   |
| Repurchase                      of                      common stock                                           |   |   |   |   |   | (20 | ) |   | (500,000 | ) |   |   |   |   |   |   |
| Preferred                      stock redemption adjustments                                                    |   |   |   |   |   |   |   |   | (1,059 | ) |   |   |   |   | 604 |   |
| Preferred                      stock redemption premiums                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2,928 | ) |
| Cash                      dividends                      on preferred stock                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,423 | ) |
| Cash                      dividends                      on common stock                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (148,000 | ) |
| Balance,                      December 31, 2006                                                                |   |   |   |   |   | 80 |   | $ | 1,708,441 |   | $ | 3,208 |   | $ | 260,736 |   |

| **CONSOLIDATED                        STATEMENTS OF PREFERRED STOCK**                                                                                                                             |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                              |   |    |   |   |   |   |   |   |   |
|                                                                                                                                                                                              |   |  **Not                        Subject to** |   | **Subject                        to** |   |
|                                                                                                                                                                                              |   |  **Mandatory                        Redemption** |   | **Mandatory                        Redemption*** |   |
|                                                                                                                                                                                              |   |  **Number** |   | **Par** |   | **Number** |   | **Par** |   |
|                                                                                                                                                                                              |   |  **of                        Shares** |   | **Value** |   | **of                        Shares** |   | **Value** |   |
|                                                                                                                                                                                              |   |  ***(Dollars                        in thousands)*** |   |
|                                                                                                                                                                                              |   |    |   |   |   |   |   |   |   |
| Balance,                        January 1, 2004                                                                                                                                                   |   |   | 1,000,699 |   | $ | 100,070 |   |   | 135,000 |   | $ | 13,500 |   |
| Redemptions-                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            7.625% Series                                                                                                                                           |   |   |   |   |   |   |   |   | (7,500 | ) |   | (750 | ) |
| Balance,                        December 31, 2004                                                                                                                                                 |   |   | 1,000,699 |   |   | 100,070 |   |   | 127,500 |   |   | 12,750 |   |
| Redemptions-                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   7.750%                        Series                                                                                                                                                  |   |   | (250,000 | ) |   | (25,000 | ) |   |   |   |   |   |   |
|                            7.625% Series                                                                                                                                           |   |   |   |   |   |   |   |   | (127,500 | ) |   | (12,750 | ) |
| Balance,                        December 31, 2005                                                                                                                                                 |   |   | 750,699 |   |   | 75,070 |   |   | - |   |   | - |   |
| Redemptions-                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   3.90%                        Series                                                                                                                                                   |   |   | (152,510 | ) |   | (15,251 | ) |   |   |   |   |   |   |
|   4.40%                        Series                                                                                                                                                   |   |   | (176,280 | ) |   | (17,628 | ) |   |   |   |   |   |   |
|   4.44%                        Series                                                                                                                                                   |   |   | (136,560 | ) |   | (13,656 | ) |   |   |   |   |   |   |
|   4.56%                        Series                                                                                                                                                   |   |   | (144,300 | ) |   | (14,430 | ) |   |   |   |   |   |   |
|   4.24%                        Series                                                                                                                                                   |   |   | (40,000 | ) |   | (4,000 | ) |   |   |   |   |   |   |
|   4.25%                        Series                                                                                                                                                   |   |   | (41,049 | ) |   | (4,105 | ) |   |   |   |   |   |   |
|   4.64%                        Series                                                                                                                                                   |   |   | (60,000 | ) |   | (6,000 | ) |   |   |   |   |   |   |
| Balance,                        December 31, 2006                                                                                                                                                 |   |   | - |   | $ | - |   |   | - |   | $ | - |   |
|                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *                        Preferred                        stock subject to mandatory redemption is classified as debt                        under SFAS                        150.               |   |   |   |
|                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                        accompanying Notes to Consolidated Financial Statements are                        an integral                        part of these                        statements. |

----

| **OHIO                    EDISON COMPANY**                                                                                                                     |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                           |   |   |   |   |   |    |   |    |   |
| **CONSOLIDATED                    STATEMENTS OF CASH FLOWS**                                                                                                   |   |
|                                                                                                                                                           |   |   |   |   |   |    |   |    |   |
|                                                                                                                                                           |   |   |   |   |   |    |   |    |   |
| **For                    the Years Ended December 31,**                                                                                                        |   |   |   | **2006** |   | **2005** |   | **2004** |   |
|                                                                                                                                                           |   | ***                                    (In thousands)*** |   |
|                                                                                                                                                           |   |   |   |   |   |    |   |    |   |
| **CASH                    FLOWS FROM OPERATING ACTIVITIES:**                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    income                                                                                                                                  |   |   |   |   | $ | 211,639 |   | $ | 314,055 |   | $ | 342,766 |   |
| Adjustments                    to                    reconcile net income to net cash from operating                    activities-                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Provision                    for depreciation                                                                                                            |   |   |   |   |   | 72,982 |   |   | 108,583 |   |   | 122,413 |   |
|  Amortization                    of regulatory assets                                                                                                     |   |   |   |   |   | 190,245 |   |   | 457,205 |   |   | 411,326 |   |
|  Deferral                    of new regulatory assets                                                                                                     |   |   |   |   |   | (159,465 | ) |   | (151,032 | ) |   | (100,633 | ) |
|  Nuclear                    fuel and lease amortization                                                                                                   |   |   |   |   |   | 735 |   |   | 45,769 |   |   | 42,811 |   |
|  Amortization                    of lease costs                                                                                                           |   |   |   |   |   | (7,928 | ) |   | (6,365 | ) |   | (5,170 | ) |
|  Deferred                    income taxes and investment tax credits, net                                                                                 |   |   |   |   |   | (68,259 | ) |   | (29,750 | ) |   | (44,469 | ) |
|  Accrued                    compensation and retirement benefits                                                                                          |   |   |   |   |   | 5,004 |   |   | 14,506 |   |   | 35,840 |   |
|  Cumulative                    effect of a change in accounting principle                                                                                 |   |   |   |   |   | - |   |   | 16,343 |   |   | - |   |
|  Pension                    trust contribution                                                                                                            |   |   |   |   |   | - |   |   | (106,760 | ) |   | (72,763 | ) |
|  Decrease                    (increase) in operating assets-                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Receivables                                                                                                                                              |   |   |   |   |   | 103,925 |   |   | 84,688 |   |   | 209,130 |   |
|  Materials                    and supplies                                                                                                                |   |   |   |   |   | - |   |   | (3,367 | ) |   | (10,259 | ) |
|  Prepayments                    and other current assets                                                                                                  |   |   |   |   |   | 1,275 |   |   | (1,778 | ) |   | 1,286 |   |
|  Increase                    (decrease) in operating liabilities-                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Accounts                    payable                                                                                                                      |   |   |   |   |   | (53,798 | ) |   | 45,149 |   |   | (80,738 | ) |
|  Accrued                    taxes                                                                                                                         |   |   |   |   |   | 23,436 |   |   | 10,470 |   |   | (406,945 | ) |
|  Accrued                    interest                                                                                                                      |   |   |   |   |   | 16,379 |   |   | (3,659 | ) |   | (6,722 | ) |
|  Electric                    service prepayment programs                                                                                                  |   |   |   |   |   | (34,983 | ) |   | 121,692 |   |   | - |   |
|  Other                                                                                                                                                    |   |   |   |   |   | 5,882 |   |   | (464 | ) |   | (21,519 | ) |
|  Net                    cash                    provided from operating activities                                                                        |   |   |  |   |   | 307,069 |   |   | 915,285 |   |   | 416,354 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CASH                    FLOWS FROM FINANCING ACTIVITIES:**                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New                    Financing-                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Long-term                    debt                                                                                                                        |   |   |   |   |   | 592,180 |   |   | 146,450 |   |   | 30,000 |   |
|  Short-term                    borrowings, net                                                                                                            |   |   |   |   |   | - |   |   | 26,404 |   |   | - |   |
| Redemptions                    and Repayments-                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Common                    stock                                                                                                                          |   |   |   |   |   | (500,000 | ) |   | - |   |   | - |   |
|  Preferred                    stock                                                                                                                       |   |   |   |   |   | (78,480 | ) |   | (37,750 | ) |   | (750 | ) |
|  Long-term                    debt                                                                                                                        |   |   |   |   |   | (613,002 | ) |   | (414,020 | ) |   | (170,997 | ) |
|  Short-term                    borrowings, net                                                                                                            |   |   |   |   |   | (186,511 | ) |   | - |   |   | (4,015 | ) |
| Dividend                    Payments-                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Common                    stock                                                                                                                          |   |   |   |   |   | (148,000 | ) |   | (446,000 | ) |   | (421,000 | ) |
|  Preferred                    stock                                                                                                                       |   |   |   |   |   | (1,423 | ) |   | (2,635 | ) |   | (2,502 | ) |
| Net                    cash used                    for financing activities                                                                                   |   |   |  |   |   | (935,236 | ) |   | (727,551 | ) |   | (569,264 | ) |
|                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CASH                    FLOWS FROM INVESTING ACTIVITIES:**                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Property                    additions                                                                                                                    |   |   |   |   |   | (123,210 | ) |   | (266,823 | ) |   | (235,022 | ) |
|  Proceeds                    from nuclear decommissioning trust fund sales                                                                                |   |   |   |   |   | 42,021 |   |   | 428,954 |   |   | 173,976 |   |
|  Investments                    in nuclear decommissioning trust funds                                                                                    |   |   |   |   |   | (44,095 | ) |   | (460,494 | ) |   | (205,516 | ) |
|  Loan                    repayments from (loans to) associated companies, net                                                                             |   |   |   |   |   | 78,101 |   |   | (35,553 | ) |   | 120,706 |   |
|  Collection                    of principal on long-term notes receivable                                                                                 |   |   |   |   |   | 553,734 |   |   | 199,848 |   |   | 7,348 |   |
|  Cash                    investments                                                                                                                      |   |   |   |   |   | 112,584 |   |   | (49,270 | ) |   | 28,877 |   |
|  Proceeds                    from certificates of deposit                                                                                                 |   |   |   |   |   | - |   |   | - |   |   | 277,763 |   |
|  Other                                                                                                                                                    |   |   |   |   |   | 8,815 |   |   | (4,697 | ) |   | (15,875 | ) |
| Net                    cash                    provided from (used for) investing activities                                                                   |   |   |  |   |   | 627,950 |   |   | (188,035 | ) |   | 152,257 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    decrease                    in cash and cash equivalents                                                                                |   |   |   |   |   | (217 | ) |   | (301 | ) |   | (653 | ) |
| Cash                    and cash                    equivalents at beginning of year                                                                           |   |   |   |   |   | 929 |   |   | 1,230 |   |   | 1,883 |   |
| Cash                    and cash                    equivalents at end of year                                                                                 |   |   |   |   | $ | 712 |   | $ | 929 |   | $ | 1,230 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **SUPPLEMENTAL                    CASH FLOW INFORMATION:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                    Paid                    During the Year-                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Interest                    (net of amounts capitalized)                                                                                                 |   |   |   |   | $ | 57,243 |   | $ | 67,239 |   | $ | 65,765 |   |
|  Income                    taxes                                                                                                                          |   |   |   |   | $ | 156,610 |   | $ | 285,819 |   | $ | 419,123 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                    accompanying Notes to Consolidated Financial Statements are an                    integral                    part of these statements. |   |   |   |

----

| **OHIO                    EDISON COMPANY**                                                                                                                                                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                       |   |
| **CONSOLIDATED                    STATEMENTS OF TAXES**                                                                                                                                         |   |
|                                                                                                                                                                                            |   |   |   |    |   |   |   |   |   |
|                                                                                                                                                                                            |   |   |   |    |   |   |   |   |   |
| **For                    the Years Ended December 31,**                                                                                                                                         |   |  **2006** |   | **2005** |   | **2004** |   |
|                                                                                                                                                                                            |   |   |   |  ***(In                    thousands)*** |   |
| **GENERAL                    TAXES:**                                                                                                                                                           |   |    |   |   |   |   |   |
| Ohio                    kilowatt-hour excise*                                                                                                                                                   | $ | 95,154 |   | $ | 94,085 |   | $ | 91,811 |   |
| State                    gross                    receipts*                                                                                                                                     |   | 19,346 |   |   | 20,425 |   |   | 19,234 |   |
| Real                    and                    personal property                                                                                                                                |   | 54,908 |   |   | 67,438 |   |   | 58,000 |   |
| Social                    security and unemployment                                                                                                                                             |   | 7,419 |   |   | 7,481 |   |   | 7,048 |   |
| Other                                                                                                                                                                                           |   | 3,619 |   |   | 3,855 |   |   | 4,430 |   |
|  Total                    general taxes                                                                                                                                                    | $ | 180,446 |   | $ | 193,284 |   | $ | 180,523 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PROVISION                    FOR INCOME TAXES:**                                                                                                                                              |   |   |   |   |   |   |   |   |   |
| Currently                    payable-                                                                                                                                                           |   |   |   |   |   |   |   |   |   |
|  Federal                                                                                                                                                                                   |   |   |   |   | $ | 161,880 |   | $ | 274,676 |   | $ | 246,864 |   |
|  State                                                                                                                                                                                     |   | 29,722 |   |   | 74,293 |   |   | 75,907 |   |
|                                                                                                                                                                                            |   | 191,602 |   |   | 348,969 |   |   | 322,771 |   |
| Deferred,                    net-                                                                                                                                                               |   |   |   |   |   |   |   |   |   |
|  Federal                                                                                                                                                                                   |   |   |   |   |   | (57,330 | ) |   | (60,252 | ) |   | (23,668 | ) |
|  State                                                                                                                                                                                     |   | (7,241 | ) |   | 36,798 |   |   | (5,512 | ) |
|                                                                                                                                                                                            |   | (64,571 | ) |   | (23,454 | ) |   | (29,180 | ) |
| Investment                    tax                    credit amortization                                                                                                                        |   | (3,688 | ) |   | (15,519 | ) |   | (15,289 | ) |
|  Total                    provision for income taxes                                                                                                                                       |   |   |   |   | $ | 123,343 |   | $ | 309,996 |   | $ | 278,302 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **RECONCILIATION                    OF FEDERAL INCOME TAX**                                                                                                                                     |   |   |   |   |   |   |   |   |   |
| **EXPENSE                    AT STATUTORY RATE TO TOTAL**                                                                                                                                       |   |   |   |   |   |   |   |   |   |
| **PROVISION                    FOR INCOME TAXES:**                                                                                                                                              |   |   |   |   |   |   |   |   |   |
| Book                    income                    before provision for income taxes                                                                                                             | $ | 334,982 |   | $ | 640,394 |   | $ | 621,068 |   |
| Federal                    income                    tax expense at statutory rate                                                                                                              | $ | 117,244 |   | $ | 224,138 |   | $ | 217,374 |   |
| Increases                    (reductions) in taxes resulting from-                                                                                                                              |   |   |   |   |   |   |   |   |   |
|  Amortization                    of investment tax credits                                                                                                                                 |   | (3,688 | ) |   | (15,519 | ) |   | (15,289 | ) |
|  State                    income taxes, net of federal income tax benefit                                                                                                                  |   | 14,613 |   |   | 72,209 |   |   | 45,757 |   |
|  Amortization                    of tax regulatory assets                                                                                                                                  |   | 3,744 |   |   | 7,341 |   |   | 6,130 |   |
|  Penalties                                                                                                                                                                                 |   | - |   |   | 2,975 |   |   | - |   |
|  Competitive                    transition charge                                                                                                                                          |   | 2,685 |   |   | 31,934 |   |   | 27,889 |   |
|  Low                    income housing and franchise credits                                                                                                                               |   | (7,001 | ) |   | (6,796 | ) |   | (8,615 | ) |
|  Other,                    net                                                                                                                                                             |   | (4,254 | ) |   | (6,286 | ) |   | 5,056 |   |
|  Total                    provision for income taxes                                                                                                                                       | $ | 123,343 |   | $ | 309,996 |   | $ | 278,302 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **ACCUMULATED                    DEFERRED INCOME TAXES AS OF**                                                                                                                                  |   |   |   |   |   |   |   |   |   |
| **DECEMBER                    31:**                                                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Property                    basis                    differences                                                                                                                                | $ | 496,670 |   | $ | 480,859 |   | $ | 451,269 |   |
| Allowance                    for                    equity funds used during construction                                                                                                       |   | 22,738 |   |   | 25,470 |   |   | 27,730 |   |
| Regulatory                    transition charge                                                                                                                                                 |   | (28,341 | ) |   | 6,653 |   |   | 154,015 |   |
| Asset                    retirement obligations                                                                                                                                                 |   | 9,928 |   |   | - |   |   | 21,253 |   |
| Customer                    receivables for future income taxes                                                                                                                                 |   | 31,283 |   |   | 33,946 |   |   | 39,266 |   |
| Deferred                    sale                    and leaseback costs                                                                                                                         |   | (54,515 | ) |   | (59,225 | ) |   | (63,432 | ) |
| Unamortized                    investment tax credits                                                                                                                                           |   | (8,291 | ) |   | (9,605 | ) |   | (23,510 | ) |
| Deferred                    gain                    on asset sales to affiliated companies                                                                                                      |   | 46,809 |   |   | 50,304 |   |   | 51,716 |   |
| Other                    comprehensive income                                                                                                                                                   |   | (15,143 | ) |   | 2,689 |   |   | (33,268 | ) |
| Retirement                    benefits                                                                                                                                                          |   | 30,334 |   |   | 30,849 |   |   | (6,202 | ) |
| Deferred                    customer shopping incentive                                                                                                                                         |   | 68,457 |   |   | 123,029 |   |   | 94,002 |   |
| Other                                                                                                                                                                                           |   | 74,359 |   |   | 84,062 |   |   | 53,437 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net                    deferred income tax liability                                                                                                                                      |   |   |   |   | $ | 674,288 |   | $ | 769,031 |   | $ | 766,276 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Collected                    from                    customers through regulated rates and included in revenue in                    the                    Consolidated Statements of Income. |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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. |
|--------|---|-----------------------------------------------------------------------------------|

*Regulatory        Assets-*

----

|                                                          |   | **2006***                            |   | **2005*** |   |
|---------------------------------------------------------------|--------|--------------------------------------|--------|-----------|--------|
|                                                          |   | ***(In                  millions)*** |   |
| Regulatory                  transition costs                  |   | $                                    | 280    |      | $      | 369 |   |
| Customer                  shopping incentives                 |   |                                 | 174    |      |   | 325 |   |
| Customer                  receivables for future income taxes |   |                                 | 81     |      |   | 88 |   |
| Loss                  on                  reacquired debt     |   |                                 | 24     |      |   | 22 |   |
| Asset                  removal                  costs         |   |                                 | (3     | )         |   | (80 | ) |
| MISO                  transmission costs                      |   |                                 | 44     |      |   | 49 |   |
| Fuel                  costs?RCP                               |   |                                 | 57     |      |   | - |   |
| Distribution                  costs?RCP                       |   |                                 | 74     |      |   | - |   |
| Other                                                         |   |                                 | 10     |      |   | 2 |   |
| Total                                                         |   | $                                    | 741    |      | $      | 775 |   |

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

*Transition        Cost        Amortization- *

| **Amortization**                        |   |                                 |    |
|-----------------------------------------|--------|--------------------------------------|---------|
| **Period**                              |   | **Amortization**                     |    |
|                                    |   | ***(In                  millions)*** |    |
| 2007                                    |   |  $                              | 179     |   |
| 2008                                    |   |                                 | 208     |   |
| **Total                  Amortization** |   | ** $**                          | **387** |   |

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

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

----

**(D)**
**UTILITY        PLANT AND DEPRECIATION-**

*Asset        Retirement        Obligations*

**(E)**
**ASSET        IMPAIRMENTS-**

*Long-Lived        Assets-*

*Investments-*

**(F)**
**COMPREHENSIVE        INCOME-**

----

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

**(H)**
**INCOME        TAXES-**

**(I)**
**TRANSACTIONS        WITH AFFILIATED COMPANIES-**

|                                                     | **2006**                             |   | **2005** |   | **2004** |   |
|----------------------------------------------------------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                     | ***(In                  millions)*** |   |
| **Revenues:**                                            |                                 |   |     |   |     |   |
| PSA                  revenues                  from FES  | $                                    | 80     |     | $      | 355      |   | $ | 416 |   |
| Generating                  units rent from FES          |                                 | -      |     |   | 146      |   |   | 178 |   |
| Ground                  lease                  with ATSI |                                 | 12     |     |   | 12       |   |   | 12 |   |
|                                                     |                                 |   |     |   |     |   |   |   |   |
| **Expenses:**                                            |                                 |   |     |   |     |   |   |   |   |
| Purchased                  power under PSA               |                                 | 1,264  |     |   | 938      |   |   | 970 |   |
| FESC                  support                  services  |                                 | 94     |     |   | 90       |   |   | 91 |   |
|                                                     |                                 |   |     |   |     |   |   |   |   |
| **Other                  Income:**                       |                                 |   |     |   |     |   |   |   |   |
| Interest                  income from ATSI               |                                 | 15     |     |   | 16       |   |   | 16 |   |
| Interest                  income from FGCO and NGC       |                                 | 59     |     |   | 9        |   |   | 9 |   |
| Interest                  income from FirstEnergy        |                                 | 25     |     |   | 22       |   |   | - |   |

----

**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                         |   |                                  | 567    |                                |   | 325 |   |   | 69 |   |   | 33 |   |
| Company                  contribution                                                  |   |                                  | -      |                                |   | 500 |   |   | 54 |   |   | 58 |   |
| Plan                  participants? contribution                                       |   |                                  | -      |                                |   | - |   |   | 20 |   |   | 18 |   |
| Benefits                  paid                                                         |   |                                  | (273   | )                                   |   | (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                  pension                  asset (liability) as of December 31 |   | $                                     | (43    | )                                   | $      | 1,023 |   | $ | (594 | ) | $ | (1,057 | ) |
| Companies?                  share of net pension asset (liability) at end of year      |   | $                                     | 68     |                                | $      | 225 |   | $ | (167 | ) | $ | (291 | ) |
|                                                                                   |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **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 |   |
| Companies?                  share of net periodic cost (credit) |   | $                                     | (6       | )                                   | $      | - |   | $ | 7 |   | $ | 17 |   | $ | 28 |   | $ | 28 |   |
|                                                            |   |                                  |     |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **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 |

**4.**
**ESOP:**

| **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 |   | $                                          | 1,294           |     | $      | 1,337 |   | $ | 1,306 |   | $ | 1,308 |   |

**(B)**
**INVESTMENTS-**

|                                    |   | **2006**                             |   | **2005**  |   |
|-----------------------------------------|--------|--------------------------------------|--------|-----------|--------|
|                                    |   | **Carrying**                         |   | **Fair**  |   | **Carrying** |   | **Fair** |   |
|                                    |   | **Value**                            |   | **Value** |   | **Value** |   | **Value** |   |
|                                    |   | ***(In                  millions)*** |   |
| Notes                  receivable       |   | $                                    | 1,219  |      | $      | 1,251 |   | $ | 1,758 |   | $ | 1,798 |   |
| Lease                  obligation bonds |   |                                 | 291    |      |   | 325 |   |   | 326 |   |   | 368 |   |
| Equity                  securities      |   |                                 | 3      |      |   | 3 |   |   | 3 |   |   | 3 |   |
|                                    |   | $                                    | 1,513  |      | $      | 1,579 |   | $ | 2,087 |   | $ | 2,169 |   |

----

|                               |   | **2006**                             |   | **2005**       |          |
|------------------------------------|--------|--------------------------------------|--------|----------------|---------------|
|                               |   | **Cost**                             |   | **Unrealized** |          | **Unrealized** |   | **Fair** |   | **Cost** |   | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                               |   | **Basis**                            |   | **Gains**      |          | **Losses** |   | **Value** |   | **Basis** |   | **Gains** |   | **Losses** |   | **Value** |   |
|                               |   | ***(In                  millions)*** |   |
| Debt                securities     |   |  $                              | 291    |           |  $  | 34 |   | $   |  - |   |  $  | 325 |   |  $  | 326 |   |  $ | 42 |   |  $ | - |   |  $ | 368 |   |
| Equity                  securities |   |                                 | 3      |           |          | - |   |   | - |   |   | 3 |   |   | 3 |   |   | - |   |   | - |   |   | 3 |   |
|                               |   | $                                    | 294    |           | $             | 34 |   | $ | - |   | $ | 328 |   | $ | 329 |   | $ | 42 |   | $ | - |   | $ | 371 |   |

**(C)**
**NUCLEAR        DECOMMISSIONING TRUST FUND INVESTMENTS-**

|                                           |                                         | **2006** |   | **2005** |
|------------------------------------------------|----------------------------------------------|----------|--------|----------|
| Debt                    securities             |  ***(In                    millions)*** |
| ?Government                    obligations     |                                         | $        | 25     |     | $ | 32 |
| ?Corporate                    debt securities  |                                         |     | 6      |     |   | 5 |
| ?Mortgage-backed                    securities |                                         |     | 7      |     |   | - |
|                                           |                                         |     | 38     |     |   | 37 |
| Equity                    securities           |                                         |     | 80     |     |   | 67 |
|                                           |                                         | $        | 118    |     | $ | 104 |

|                               |   | **2006**                                                 |            | **2005**       |   |
|------------------------------------|--------|----------------------------------------------------------|-----------------|----------------|--------|
|                               |   | **                       Cost** |            | **Unrealized** |   | **Unrealized** |   | **Fair** |   | **Cost** |   | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                               |   |                                                     | **Basis**  |           |   | **Gains** |   |   | **Losses** |   |   | **Value** |   |   | **Basis** |   |   | **Gains** |   |   | **Losses** |   |   | **Value** |   |
|                               |   | ***(In                  millions)***                |
| Debt                  securities   |   | $                                                        | 38              |           | $      | - |   | $ | - |   | $ | 38 |   | $ | 37 |   | $ | - |   | $ | - |   | $ | 37 |   |
| Equity                  securities |   |                                                     | 61              |           |   | 19 |   |   | - |   |   | 80 |   |   | 61 |   |   | 9 |   |   | 3 |   |   | 67 |   |
|                               |   | $                                                        | 99              |           | $      | 19 |   | $ | - |   | $ | 118 |   | $ | 98 |   | $ | 9 |   | $ | 3 |   | $ | 104 |   |

|                                                           |   | **2006**                             |   | **2005** |   | **2004** |   |
|----------------------------------------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                                                           |   | ***(In                  millions)*** |   |
| Proceeds                  from                  sales          |   | $                                    | 39     |     | $      | 227      |   | $ | 154 |   |
| Gross                  realized                  gains         |   |                                 | 1      |     |   | 35       |   |   | 25 |   |
| Gross                  realized                  losses        |   |                                 | 1      |     |   | 7        |   |   | 7 |   |
| Interest                  and                  dividend income |   |                                 | 3      |     |   | 13       |   |   | 13 |   |

----

**6.**
**LEASES:**

|                              |   | **2006**                             |   | **2005** |   | **2004** |   |
|-----------------------------------|--------|--------------------------------------|--------|----------|--------|----------|--------|
|                              |   | ***(In                  millions)*** |   |
| Operating                  leases |   |                                 |   |     |   |     |   |
| Interest                  element |   | $                                    | 87.1   |     | $      | 93.3     |   | $ | 94.8 |   |
| Other                             |   |                                 | 57.5   |     |   | 52.3     |   |   | 50.4 |   |
| Capital                  leases   |   |                                 |   |     |   |     |   |   |   |   |
| Interest                  element |   |                                 | 0.3    |     |   | 0.8      |   |   | 1.0 |   |
| Other                             |   |                                 | 1.3    |     |   | 1.9      |   |   | 1.6 |   |
| Total                  rentals    |   | $                                    | 146.2  |     | $      | 148.3    |   | $ | 147.8 |   |

|                                                                                          |   |                                       |   | **Operating                  Leases** |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|---------------------------------------|--------|
|                                                                                          |   |                                       |   |                                  |   | **PNBV** |   |   |   |
|                                                                                          |   | **Capital**                                |   | **Lease**                             |   | **Capital** |   |   |   |
|                                                                                          |   | **Leases**                                 |   | **Payments**                          |   | **Trusts** |   | **Net** |   |
|                                                                                          |   | ***(In                  millions)***  |
| 2007                                                                                          |   | $                                          | 0.1    |                                  | $      | 146.1 |   | $ | 59.9 |   | $ | 86.2 |   |
| 2008                                                                                          |   |                                       | 0.1    |                                  |   | 147.3 |   |   | 34.9 |   |   | 112.4 |   |
| 2009                                                                                          |   |                                       | 0.1    |                                  |   | 147.6 |   |   | 42.1 |   |   | 105.5 |   |
| 2010                                                                                          |   |                                       | 0.1    |                                  |   | 148.3 |   |   | 43.2 |   |   | 105.1 |   |
| 2011                                                                                          |   |                                       | 0.1    |                                  |   | 147.3 |   |   | 42.7 |   |   | 104.6 |   |
| Years                  thereafter                                                             |   |                                       | 0.5    |                                  |   | 750.3 |   |   | 193.5 |   |   | 556.8 |   |
| Total                  minimum                  lease payments                                |   |                                       | 1.0    |                                  | $      | 1,486.9 |   | $ | 416.3 |   | $ | 1,070.6 |   |
| Executory                  costs                                                              |   |                                       | -      |                                  |   |   |   |   |   |   |   |   |   |
| Net                  minimum                  lease payments                                  |   |                                       | 1.0    |                                  |   |   |   |   |   |   |   |   |   |
| Interest                  portion                                                             |   |                                       | 0.6    |                                  |   |   |   |   |   |   |   |   |   |
| Present                  value                  of net minimumlease                  payments |   |                                       | 0.4    |                                  |   |   |   |   |   |   |   |   |   |
| Less                  current                  portion                                        |   |                                       | 0.1    |                                  |   |   |   |   |   |   |   |   |   |
| Noncurrent                  portion                                                           |   | $                                          | 0.3    |                                  |   |   |   |   |   |   |   |   |   |

----

**7.**
**VARIABLE        INTEREST ENTITIES:**

**8.**
**OHIO        TAX LEGISLATION:**

**9. **
**REGULATORY        MATTERS:**

----

*First*
*First*
*First*

----

| -    | Maintaining                  the existing level of base distribution rates through December 31,                  2008 for the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| -    | 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                  the Company;                                                                                                                                                                                                                                                                                                                                                   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| -    | Reducing                  the                  deferred shopping incentive balances as of January 1, 2006 by up to                  $75 million for the Company by accelerating the application of                  the                  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 of TE?s and the Company?s distribution                  and transmission customers through a fuel recovery mechanism. The                  Company                  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.  |

----

**10.**
**CAPITALIZATION:**

**          (A)**
**RETAINED        EARNINGS-**

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

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

* Other        Long-term Debt-*

----

|   |   | ***(In                  millions)*** |   |
|--------|--------|--------------------------------------|--------|
| 2007   |   | $                                    | 160    |   |
| 2008   |   |                                 | 179    |   |
| 2009   |   |                                 | 2      |   |
| 2010   |   |                                 | 65     |   |
| 2011   |   |                                 | 1      |   |

**11.**
**ASSET        RETIREMENT OBLIGATIONS:**

** **
** **

----

|                                                                |   | **2006**                             |     | **2005** |   |
|---------------------------------------------------------------------|--------|--------------------------------------|----------|----------|--------|
| **ARO                  Reconciliation**                             |   | ***(In                  millions)*** |     |
| Balance                at                beginning of year          |   | $                                    | 83  |     | $      |  339  |   |
| Transfers                  to                  FGCO and NGC         |   |                                 | -        |     |   | (293 | ) |
| Accretion                                                           |   |                                 | 5        |     |   | 21 |   |
| Revisions                  in                  estimated cash flows |   |                                 | -        |     |   | (11 | ) |
| FIN                  47 ARO                  upon adoption          |   |                                 | -        |     |   | 27 |   |
| Balance                  at end                  of year            |   | $                                    | 88       |     | $      | 83 |   |

**12.             **
**SHORT-TERM        BORROWINGS AND BANK LINES OF CREDIT:**

**13.**
**COMMITMENTS        AND CONTINGENCIES:**

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

----

**(B)**
**ENVIRONMENTAL        MATTERS-**

*W.        H. Sammis        Plant*

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**(C)**
**OTHER        LEGAL        PROCEEDINGS-**

*Power        Outages        and Related Litigation*

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*Other        Legal        Matters *

**14.           **
**FIRSTENERGY        INTRA-SYSTEM GENERATION ASSET TRANSFERS:**

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|                                                             |   |   |   |
|------------------------------------------------------------------|--------|--------|--------|
|                                                             |   |
| **Assets                  Transferred (In millions)**            |   |   |   |
|                                                             |   |   |   |
| Property,                  plant and equipment                   |   | $      | 1,592  |   |
| Other                  property                  and investments |   |   | 372    |   |
| Current                  assets                                  |   |   | 94     |   |
| Deferred                  charges                                |   |   | -      |   |
|                                                             |   | $      | 2,058  |   |
|                                                             |   |   |   |   |
| **Liabilities                  Related to Assets Transferred**   |   |   |   |   |
|                                                             |   |   |   |   |
| Long-term                  debt                                  |   | $      | 104    |   |
| Current                  liabilities                             |   |   | -      |   |
| Noncurrent                  liabilities                          |   |   | 261    |   |
|                                                             |   | $      | 365    |   |
|                                                             |   |   |   |   |
| **Net                  Assets Transferred**                      |   | $      | 1,693  |   |

**15.**
**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. *

|  |  | *SFAS                  157 -                  ?Fair Value Measurements?* |
|--|--|--------------------------------------------------------------------------|

----

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

**16.              **
**SUMMARY        OF        QUARTERLY FINANCIAL DATA (UNAUDITED):**

| **Three                  Months Ended**                      |   | **March                  31,****2006** |        | **June                  30,****2006** |   | **September                  30, 2006** |   | **December                  31,**** 2006** |   |
|--------------------------------------------------------------|--------|----------------------------------------|-------------|---------------------------------------|--------|-----------------------------------------|--------|-------------------------------------------------|--------|
|                                                         |   | ***(In                  millions)***   |        |
| Revenues                                                |   | $                                      | 582.2  |                                  | $      | 573.1                                   |   | $                                          | 673.7  |   | $ | 594.5 |   |
|                                                         |   |                                   |        |                                  |   |                                    |   |                                            |   |   |   |   |   |
| Expenses                                                     |   |                                   | 499.4       |                                  |   | 493.8                                   |   |                                            | 622.9  |   |   | 520.3 |   |
| Operating                  Income                            |   |                                   | 86.8        |                                  |   | 79.3                                    |   |                                            | 50.8   |   |   | 74.2 |   |
| Other                  Income                                |   |                                   | 15.3        |                                  |   | 14.9                                    |   |                                            | 10.6   |   |   | 3.0 |   |
| Income                  Before                  Income Taxes |   |                                   | 102.1       |                                  |   | 94.2                                    |   |                                            | 61.4   |   |   | 77.2 |   |
| Income                  Taxes                                |   |                                   | 38.3        |                                  |   | 35.0                                    |   |                                            | 17.9   |   |   | 32.1 |   |
| Net                  Income                                  |   | $                                      | 63.8        |                                  | $      | 59.2                                    |   | $                                               | 43.5   |   | $ | 45.1 |   |
| Earnings                  on                  Common Stock   |   | $                                      | 63.2        |                                  | $      | 55.6                                    |   | $                                               | 43.4   |   | $ | 44.8 |   |

| **Three                  Months Ended**                                                                                                   |   | **March                  31,****2005** |                        | **June                  30,****2005** |   | **September                  30, 2005** |   | **December                  31,**** 2005** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|-----------------------------|---------------------------------------|--------|-----------------------------------------|--------|-------------------------------------------------|--------|
|                                                                                                                                      |   | ***(In                  millions)***   |                        |
| Revenues                                                                                                                             |   | $                                      | 726.3                       |                                  | $      | 716.6                                   |   | $                                               | 825.8  |   | $ | 706.8  |   |
| Expenses                                                                                                                                  |   |                                   |                  598.3 |                                  |   | 576.1                                   |   |                                            | 600.4  |   |   | 568.2 |   |
| Operating                  Income                                                                                                         |   |                                   | 128.0                       |                                  |   | 140.5                                   |   |                                            | 225.4  |   |   | 138.6 |   |
| Other                  Income                  (Expense)                                                                                  |   |                                   | (17.8                       | )                                     |   | 1.2                                     |   |                                            | 11.3   |   |   | 13.1 |   |
| Income                  Before                  Income Taxes                                                                              |   |                                   | 110.2                       |                                  |   | 141.7                                   |   |                                            | 236.7  |   |   | 151.7 |   |
| Income                  Taxes                                                                                                             |   |                                   | 53.4                        |                                  |   | 94.6                                    |   |                                            | 105.3  |   |   | 56.6 |   |
| Income                  Before                  Cumulative Effect of a Change in Accounting                  Principle                    |   |                                   | 56.8                        |                                  |   | 47.1                                    |   |                                            | 131.4  |   |   | 95.1 |   |
| Cumulative                  Effect of a Change in Accounting Principle(Net                  of Income                  Taxes) (Note 2(G)) |   |                                   | -                           |                                  |   | -                                       |   |                                            | -      |   |   | 16.3 |   |
| Net                  Income                                                                                                               |   | $                                      | 56.8                        |                                  | $      | 47.1                                    |   | $                                               | 131.4  |   | $ | 78.8 |   |
| Earnings                  on                  Common Stock                                                                                |   | $                                      | 56.1                        |                                  | $      | 46.4                                    |   | $                                               | 130.7  |   | $ | 78.1 |   |

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