UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

            For the quarterly period ended...June 30, 1998..........

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

          For the transition period from.........to...................

         Commission file number..................1-1401...................

         .......................PECO Energy Company.......................
         (Exact name of registrant as specified in its charter)

         ..........Pennsylvania................ 23-0970240................
         (State or other jurisdiction of     (I.R.S. Employer
         incorporation or organization)      Identification No.)

         ....2301 Market Street, Philadelphia, PA..........19103..........
         (Address of principal executive offices)       (Zip Code)

               ........................(215)841-4000............................
         (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 during the preceding 12 months (or for such shorter  period
         that the  registrant  was required to file such  reports),  and (2) has
         been subject to such filing requirements for the past 90 days.

                               Yes    X            No   
                                    -----               -----

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
         classes of common stock as of the latest practicable date:

         The Company had 222,896,403  shares of common stock outstanding on 
         June 30, 1998.


<PAGE>


                                                 PART I. FINANCIAL INFORMATION
                                                 ITEM 1. FINANCIAL STATEMENTS
<TABLE>
                                         PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                          CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                          (Unaudited)
                                                     (Millions of Dollars)


<CAPTION>
                                                                    3 Months Ended               6 Months Ended
                                                                         June 30,                    June 30,
                                                              -----------------------         ----------------------
                                                                 1998            1997           1998          1997
                                                              ---------       ----------      ---------    ---------
OPERATING REVENUES
<S>                                                            <C>             <C>            <C>          <C>   
     Electric                                                  $1,132.5        $  943.4       $2,127.8     $1,913.9
     Gas                                                           75.0            88.9          252.8        281.8
                                                              ---------      ----------      ---------    ---------
     TOTAL OPERATING REVENUES                                   1,207.5         1,032.3        2,380.6      2,195.7
                                                              ---------      ----------      ---------    ---------
OPERATING EXPENSES
     Fuel and Energy Interchange                                  350.9           266.1          720.6        600.1
     Operating and Maintenance                                    262.1           296.3          544.1        598.2
     Depreciation and Amortization                                160.9           147.6          315.6        290.1
     Taxes Other Than Income Taxes                                 71.8            72.6          153.9        155.6
                                                              ---------      ----------      ---------    ---------
     TOTAL OPERATING EXPENSES                                     845.7           782.6        1,734.2      1,644.0
                                                              ---------      ----------      ---------    ---------
OPERATING INCOME                                                  361.8           249.7          646.4        551.7
                                                              ---------      ----------      ---------    ---------
OTHER INCOME AND DEDUCTIONS
     Interest Expense                                             (88.8)          (93.3)        (176.0)      (186.1)
     Company Obligated Mandatorily Redeemable
       Preferred Securities of a Partnership                       (8.1)           (6.9)         (15.8)       (13.6)
     Allowance for Funds Used During Construction                   3.5             9.8            6.3         14.4
     Settlement of Salem Litigation                                 -              69.8            -           69.8
     Other, Net                                                   (22.5)           (6.7)         (32.7)        (9.1)
                                                              ---------      ----------      ---------    ---------
     TOTAL OTHER INCOME AND DEDUCTIONS                           (115.9)          (27.3)        (218.2)      (124.6)
                                                              ---------      ----------      ---------    ---------
INCOME BEFORE INCOME TAXES                                        245.9           222.4          428.2        427.1
                                                              ---------      ----------      ---------    ---------
INCOME TAXES                                                       94.4            99.6          163.1        191.3
                                                              ---------      ----------      ---------    ---------
NET INCOME                                                        151.5           122.8          265.1        235.8
PREFERRED STOCK DIVIDENDS                                           3.3             4.5            6.6          9.0
                                                              ---------      ----------      ---------    ---------
EARNINGS APPLICABLE TO COMMON STOCK                            $  148.2        $  118.3       $  258.5     $  226.8
                                                              =========      ==========      =========    =========

AVERAGE SHARES OF COMMON STOCK
     OUTSTANDING (Millions)                                       222.7           222.5          222.6        222.5

BASIC AND DILUTIVE EARNINGS PER AVERAGE
COMMON SHARE (Dollars)                                         $   0.66        $   0.53       $   1.16      $  1.02

DIVIDENDS PER AVERAGE COMMON SHARE (Dollars)                   $   0.25        $   0.45       $   0.50      $  0.90




                                     See Notes to Condensed Consolidated Financial Statements.
</TABLE>


<PAGE>




<TABLE>
                              PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                          (Millions of Dollars)


<CAPTION>
                                                                            June 30,          December 31,
                                                                              1998                1997
                                                                          ------------        ------------
                                                                           (Unaudited)
ASSETS

UTILITY PLANT
<S>                                                                         <C>                 <C>       
Electric - Transmission & Distribution                                      $  3,663.6          $  3,617.7
Electric - Generation                                                          1,437.3             1,434.9
Gas                                                                            1,095.2             1,071.8
Common                                                                           309.9               302.7
                                                                            ----------          ----------
                                                                               6,506.0             6,427.1
Less Accumulated Provision for Depreciation                                    2,786.3             2,690.8
                                                                            ----------          ----------
                                                                               3,719.7             3,736.3
Nuclear Fuel, net                                                                165.9               147.4
Construction Work in Progress                                                    699.8               611.2
Leased Property, net                                                             152.4               175.9
                                                                            ----------          ----------
                                                                               4,737.8             4,670.8
                                                                            ----------          ----------

CURRENT ASSETS
Cash and Temporary Cash Investments                                              105.3                33.4
Accounts Receivable, net
     Customer                                                                    169.3               173.3
     Other                                                                       231.1               140.0
Inventories, at average cost
     Fossil Fuel                                                                  79.4                84.9
     Materials and Supplies                                                       87.4                90.9
Deferred Generation Costs Recoverable in Current Rates                           208.5               424.5
Deferred Energy Costs - Gas                                                        8.6                35.7
Other                                                                            111.0                20.1
                                                                            ----------          ----------
                                                                               1,000.6             1,002.8
                                                                            ----------          ----------
DEFERRED DEBITS AND OTHER ASSETS
Competitive Transition Charge                                                  5,274.6             5,274.6
Recoverable Deferred Income Taxes                                                559.5               590.3
Deferred Non-Pension Postretirement Benefits Costs                                94.2                97.4
Investments                                                                      531.7               515.8
Loss on Reacquired Debt                                                           80.5                83.9
Other                                                                            109.4               121.0
                                                                            ----------          ----------
                                                                               6,649.9             6,683.0
                                                                            ----------          ----------
TOTAL                                                                       $ 12,388.3          $ 12,356.6
                                                                            ==========          ==========



                                     See Notes to Condensed Consolidated Financial Statements.

                                                     (continued on next page)
</TABLE>


<PAGE>



<TABLE>
                                        PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                             CONDENSED CONSOLIDATED BALANCE SHEETS
                                                     (Millions of Dollars)
                                                          (continued)


<CAPTION>
                                                                            June 30,          December 31,
                                                                              1998                1997
                                                                          ------------        ------------
                                                                           (Unaudited)
CAPITALIZATION AND LIABILITIES

CAPITALIZATION
Common Shareholders' Equity
<S>                                                                         <C>                 <C>       
     Common Stock (No Par)                                                  $  3,527.0          $  3,517.7
     Other Paid-In Capital                                                         1.2                 1.2
     Retained Deficit                                                           (649.9)             (792.2)
Preferred and Preference Stock
     Without Mandatory Redemption                                                137.5               137.5
     With Mandatory Redemption                                                    92.7                92.7
Company Obligated Mandatorily Redeemable
     Preferred Securities of a Partnership                                       349.3               352.1
Long-Term Debt                                                                 3,593.7             3,853.1
                                                                            ----------          ----------
                                                                               7,051.5             7,162.1
                                                                            ----------          ----------
CURRENT LIABILITIES
Notes Payable, Bank                                                              346.0               401.5
Long-Term Debt Due Within One Year                                               498.5               247.1
Capital Lease Obligations Due Within One Year                                     77.1                55.8
Accounts Payable                                                                 295.6               306.9
Taxes Accrued                                                                     89.3                66.4
Interest Accrued                                                                  78.8                77.9
Dividends Payable                                                                 21.0                17.0
Deferred Income Taxes                                                             85.9               185.7
Other                                                                            258.7               260.4
                                                                            ----------          ----------
                                                                               1,750.9             1,618.7
                                                                            ----------          ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Capital Lease Obligations                                                         75.3               120.1
Deferred Income Taxes                                                          2,327.3             2,297.1
Unamortized Investment Tax Credits                                               309.0               318.1
Pension Obligation                                                               211.6               211.6
Non-Pension Postretirement Benefits Obligation                                   342.0               324.8
Other                                                                            320.7               304.1
                                                                            ----------          ----------
                                                                               3,585.9             3,575.8
                                                                            ----------          ----------
COMMITMENTS AND CONTINGENCIES (NOTE 6)

TOTAL                                                                       $ 12,388.3          $ 12,356.6
                                                                            ==========          ==========


                                     See Notes to Condensed Consolidated Financial Statements.
</TABLE>


<PAGE>





<TABLE>
                                         PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          (Unaudited)
                                                     (Millions of Dollars)
<CAPTION>
                                                                                             6 Months Ended
                                                                                                June 30,
                                                                                    ---------------------------------
                                                                                    1998                      1997
                                                                                    ----------          ----------


CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                                             <C>                      <C>      
NET INCOME                                                                      $   265.1                $   235.8
Adjustments to Reconcile Net Income to Net Cash
     Provided by Operating Activities:
Depreciation and Amortization                                                       343.0                    327.7
Deferred Income Taxes                                                               (38.3)                   (11.7)
Deferred Energy Costs                                                                27.1                     15.5
Salem Litigation Settlement                                                           -                      (69.8)
Changes in Working Capital:
     Accounts Receivable                                                            (87.1)                    (9.4)
     Inventories                                                                      9.0                     28.0
     Accounts Payable                                                               (11.3)                   (48.5)
     Other Current Assets and Liabilities                                           (68.8)                   (88.3)
Other Items Affecting Operations                                                     71.3                     35.9
                                                                                ----------                  ---------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                                     510.0                    415.2
                                                                                ----------                  ---------

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in Plant                                                                (229.1)                  (245.9)
Increase in Investments                                                             (35.8)                   (70.8)
                                                                                ----------                 ----------
NET CASH FLOWS USED BY INVESTING ACTIVITIES                                        (264.9)                  (316.7)
                                                                                ----------                 ----------

CASH FLOWS FROM FINANCING ACTIVITIES

Change in Short-Term Debt                                                           (55.5)                    64.0
Issuance of Common Stock                                                              9.3                      -
Issuance of Long-Term Debt                                                            6.4                     17.2
Retirement of Long-Term Debt                                                        (15.9)                   (27.2)
Loss on Reacquired Debt                                                               3.4                     11.8
Issuance of Company Obligated Mandatorily
     Redeemable Preferred Securities of a Partnership                                78.1                     50.0
Retirement of Company Obligated Mandatorily
     Redeemable Preferred Securities of a Partnership                               (80.9)                     -
Dividends on Preferred and Common Stock                                            (117.8)                  (209.3)
Change in Dividends Payable                                                           4.0                      6.5
Other Items Affecting Financing                                                      (4.3)                     1.3
                                                                                ----------                 ----------
NET CASH FLOWS USED BY FINANCING ACTIVITIES                                        (173.2)                   (85.7)
                                                                                ----------                 ----------
INCREASE IN CASH AND CASH EQUIVALENTS                                                71.9                     12.8
                                                                                ----------                 ----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     33.4                     29.2
                                                                                ----------                 ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $   105.3                 $   42.0
                                                                                ==========                 ==========


                                     See Notes to Condensed Consolidated Financial Statements.
</TABLE>

<PAGE>





                                                     

                  PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION
         The accompanying condensed consolidated financial statements as of June
30, 1998 and for the three and six months then ended are unaudited,  but include
all adjustments  that PECO Energy Company  (Company)  considers  necessary for a
fair presentation of such financial statements. All adjustments are of a normal,
recurring nature.  The year-end condensed  consolidated  balance sheet data were
derived from audited  financial  statements  but do not include all  disclosures
required by generally accepted accounting principles. Certain prior-year amounts
have been reclassified for comparative  purposes.  These notes should be read in
conjunction with the Notes to Consolidated Financial Statements in the Company's
1997 Annual Report to  Shareholders,  which are incorporated by reference in the
Company's  Annual Report on Form 10-K for the year ended December 31, 1997 (1997
Form 10-K).

2.       RATE MATTERS
         On May 14, 1998,  the  Pennsylvania  Public  Utility  Commission  (PUC)
issued a final order (Final  Restructuring Order) approving a Joint Petition for
Settlement (Global  Settlement) filed by the Company and numerous parties to the
Company's  restructuring  proceeding.  The  Final  Restructuring  Order  and its
associated terms for restructuring  supersede the restructuring orders issued by
the PUC in December 1997, January 1998 and February 1998 (Original Restructuring
Orders).

         The Final  Restructuring  Order  concludes the Company's  restructuring
proceeding  filed on April  1,  1997,  pursuant  to the  Electricity  Generation
Competition  and  Customer  Choice Act  (Competition  Act).  In its filing,  the
Company identified $7.5 billion of stranded costs. The Final Restructuring Order
provides  for the  recovery of $5.26  billion of  stranded  costs over a 12-year
period  beginning  in 1999.  The  stranded  cost  balance  will earn a return of
10.75%.

         The Final  Restructuring  Order  provides  for the phase-in of customer
choice of electric  generation  suppliers (EGS) for all customers:  one-third of
the peak load of each customer class on January 1, 1999; one-third on January 2,
1999 and the  remainder on January 2, 2000.  The order also  establishes  market
share thresholds to ensure that a  preestablished  minimum number of residential
and  commercial  customers  choose  their  EGS.  If  less  than  35%  and 50% of
residential  and commercial  customers have chosen an EGS by January 1, 2001 and
January 1, 2003, respectively, then a number of customers sufficient to meet the
necessary  threshold levels shall be randomly  selected and assigned to licensed
suppliers through a PUC-determined process.

         Beginning  January 1, 1999,  electric  rates will be  unbundled  into a
transmission and distribution  component,  a "transition charge" for recovery of
stranded costs and an energy and capacity charge.  Eligible customers who choose
an EGS will not be charged  the  energy and  capacity  charge and  instead  will
purchase their electric energy supply at  market-based  rates.  Also,  beginning
January 1, 1999,  the Company will  unbundle its retail  electric  rates for its
metering,  meter reading and billing and collection  services to provide credits
to those  customers  who elect to have an  alternative  supplier  perform  these
services.

         In accordance with the Competition Act, the Final  Restructuring  Order
caps all customers'  kilowatthour  (kWh) rates at the year-end 1996  system-wide

<PAGE>

average of 9.96  cents/kWh  through June 2005.  On January 1, 1999,  the Company
will reduce its retail  electric rates by 8% from the 1996  system-wide  average
rate.  The rate  decrease  will become 6% from January 1, 2000 until  January 1,
2001,  when  system-wide  average  rates  will  revert  to 9.96  cents/kWh.  The
transmission  and  distribution  rate  component  will remain frozen at a system
average rate of 2.98 cents/kWh through June 30, 2005. Additionally, a generation
rate cap,  defined as the sum of the transition  charge and the shopping credit,
will remain in effect through 2010.

         The Final  Restructuring Order requires that on January 1, 2001, 20% of
all of the Company's residential  customers,  determined by random selection and
without regard to whether such customers are obtaining  generation  service from
an EGS,  shall be assigned to a provider of last resort  default  supplier other
than the Company through a PUC-approved bidding process.

         The Final  Restructuring  Order authorizes the Company to securitize up
to $4  billion  of its  recoverable  stranded  costs  through  the  issuance  of
transition  bonds.  The  Company  may  issue  the  transition  bonds at any time
following  the PUC's  May 14,  1998  issuance  of a  Qualified  Rate  Order.  In
preparation for the issuance of transition bonds, the Company formed PECO Energy
Transition  Trust, a special  purpose entity which on June 26, 1998,  filed with
the Securities and Exchange  Commission  (SEC) a registration  statement for the
issuance  of  transition  bonds.  The  Company  has made no final  determination
regarding the timing or amount of such issuance.  The proceeds of the transition
bonds are required to be used principally to reduce qualified stranded costs and
related  capitalization.  The Company cannot predict the ultimate  effect of the
issuance of transition bonds on its capital structure.

         As  previously  reported  in the 1997  Form  10-K,  the  Company  filed
complaints  in federal and state courts  relating to the Original  Restructuring
Orders.  In addition,  numerous other parties filed appeals and cross appeals of
the Original  Restructuring  Orders.  In accordance  with the terms of the Final
Restructuring  Order, all appeals and cross-appeals  filed by the signatories to
the Global  Settlement have been placed in a pending but inactive  status.  Such
appeals and cross  appeals will be  permanently  withdrawn at such time that the
Final  Restructuring  Order is no longer subject to  administrative  or judicial
challenge.

         On June 12,  1998,  an  intervenor  that was not a party to the  Global
Settlement filed an appeal of the Final  Restructuring Order to the Commonwealth
Court of Pennsylvania (Commonwealth Court). The basis of the appeal was that the
stranded cost  provisions of the Competition Act violated the Commerce Clause of
the United  States  Constitution.  On May 7, 1998,  the  Commonwealth  Court had
unanimously  rejected the same claim raised by the  intervenor in another action
challenging the Competition Act. The intervenor has petitioned the Supreme Court
of Pennsylvania for allowance of appeal in that action.

3.       RESTART OF SALEM GENERATING STATION (SALEM)
     Public  Service  Electric  and Gas Company  (PSE&G),  the operator of Salem
Units No. 1 and No. 2, which are 42.59% owned by the Company,  removed the units
from service in the second  quarter of 1995.  Unit No. 2 returned to  commercial
operation  in the third  quarter of 1997 and Unit No. 1 returned  to  commercial
operation on April 17, 1998.
         For the three and six months ended June 30, 1998, the Company  recorded
in the accompanying  Statements of Income as Fuel and Energy  Interchange $3 and
$19 million,  respectively, of replacement power costs and recorded as Operating
and Maintenance $3 and $11 million,  respectively, of maintenance costs relating
to the shutdown of Salem.  For the three and six months ended June 30, 1997, the
Company  recorded in the  accompanying  Statements  of Income as Fuel and Energy
Interchange $28 and $57 million,  respectively,  of replacement  power costs and
recorded as Operating  and  Maintenance  $14 and $27 million,  respectively,  of
maintenance  costs  relating  to the  shutdown  of  Salem.  For the year  ending
December 31, 1998, the Company  expects to incur and expense  approximately  $35
million of costs related to the shutdown.
<PAGE>

4.       SALES OF ACCOUNTS RECEIVABLE
         The  Company is party to an  agreement  with a  financial  institution,
under which it can sell or finance with limited recourse an undivided  interest,
adjusted daily, in up to $425 million of designated  accounts  receivable  until
November 2000. At June 30, 1998, the Company had sold a $425 million interest in
accounts  receivable,   consisting  of  a  $306  million  interest  in  accounts
receivable which the Company accounts for as a sale under Statement of Financial
Accounting  Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities," and a $119 million interest
in special agreement accounts receivable which were accounted for as a long-term
note  payable.  The  Company  retains  the  servicing  responsibility  for these
receivables.  The  agreement  requires  the Company to maintain its $425 million
interest,  which,  if not met,  requires the Company to deposit cash in order to
satisfy such requirements.  The Company, at June 30, 1998 met such requirements.
At June 30, 1998, the average annual  service-charge  rate,  computed on a daily
basis on the portion of the accounts receivable sold but not yet collected,  was
5.60%.

5.       STOCK REPURCHASE
         During 1997, the Company's Board of Directors authorized the repurchase
of up to 25  million  shares  of its  common  stock  from  time to time  through
open-market,   privately  negotiated  and/or  other  types  of  transactions  in
conformity with the rules of the SEC.

         Pursuant to these authorizations,  the Company has entered into forward
purchase  agreements to be settled from time to time, at the Company's election,
on either a  physical,  net share or net cash  basis.  The amount at which these
agreements can be settled is dependent  principally upon the market price of the
Company's  common stock as compared to the forward  purchase price per share and
the number of shares to be settled.  If these  agreements  had been settled on a
net share basis at June 30, 1998,  based on the closing  price of the  Company's
common  stock on that  date,  the  Company  would  have  received  approximately
2,357,000 shares of Company common stock.

6.       COMMITMENTS AND CONTINGENCIES
         For information  regarding the Company's capital  commitments,  nuclear
insurance,  nuclear  decommissioning and spent fuel storage, energy commitments,
environmental  issues  and  litigation,  see  note 5 of  Notes  to  Consolidated
Financial Statements for the year ended December 31, 1997.

         As  previously  reported,  the  Company has  identified  27 sites where
former  manufactured  gas plant (MGP)  activities  have or may have  resulted in
actual  site  contamination.  As of June 30,  1998,  the Company had accrued $62
million for  environmental  investigation and remediation  costs,  including $34
million for MGP  investigation  and remediation that currently can be reasonably
estimated.  The Company cannot predict  whether it will incur other  significant
liabilities  for  additional  investigation  and  remediation  costs at these or
additional sites identified by the Company, environmental agencies or others, or
whether all such costs will be recoverable from third parties.

         The Company  periodically  reviews its investments to determine whether
they are properly valued in its financial  statements.  As previously  reported,
due to the  changes in the  electric  deregulation  environment  throughout  the
United States,  the Company has been evaluating its investment in EnergyOne.  In
June 1998, the Company  determined that its investment in EnergyOne was impaired
and,  accordingly,  charged $10 million to Other Income and  Deductions to write
off its investment in EnergyOne.

         Under the  Price-Anderson  Act, all nuclear  reactor  licensees  can be
assessed up to $79 million ($88 million,  effective August 20, 1998) per reactor
per incident, payable at no more than $10 million per reactor, per incident, per
year.  The  change in the  maximum  assessment  is the  result of the  inflation
adjustment, required under the Price-Anderson Act, for the period September 1993
to December 1997.
<PAGE>

7.       ACCOUNTING MATTERS
         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting for Derivative
Instruments  and Hedging  Activities,"  to establish  accounting  and  reporting
standards for derivatives. The new standard requires recognizing all derivatives
as either  assets or  liabilities  on the balance  sheet at their fair value and
specifies the accounting  for changes in fair value  depending upon the intended
use of the derivative.  The new standard is effective for fiscal years beginning
after  June 15,  1999.  The  Company  expects to adopt SFAS No. 133 in the first
quarter of 2000.  The Company is in the process of evaluating the impact of SFAS
No. 133.

<PAGE>


     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

GENERAL
         The  Electricity   Generation   Customer  Choice  and  Competition  Act
(Competition  Act) was enacted in December 1996 providing for the  restructuring
of the electric utility industry in Pennsylvania,  including the deregulation of
utility  generation  operations and the  institution of retail  competition  for
generation  supply beginning in 1999.  Pursuant to the Competition Act, in April
1997, the Company filed with the Pennsylvania  Public Utility Commission (PUC) a
restructuring  plan in which it  identified  $7.5  billion  of  retail  electric
generation-related  stranded  costs. On May 14, 1998, the PUC entered an Opinion
and Order (Final  Restructuring  Order) which deregulates the Company's electric
generation  operations and  authorizes the Company to recover  stranded costs of
$5.26 billion over 12 years beginning January 1, 1999.  Additionally,  the Final
Restructuring Order provides for the phase-in of customer choice between January
1, 1999 and January 2, 2000.  Following  completion of the phase-in,  all of the
Company's  customers will have the ability to choose their  electric  generation
supplier.  For additional  information  concerning the Competition Act and Final
Restructuring  Order,  see  "Management's  Discussion  and Analysis of Financial
Condition  and  Results  of  Operations"  in  the  Company's  Annual  Report  to
Shareholders for the year 1997; the Company's Annual Report on Form 10-K for the
year  ended  December  31,  1997  (1997  Form  10-K)  under  "PART  I.  ITEM  1.
BUSINESS-Deregulation   and  Rate   Matters";   and  "PART  II.  ITEM  5.  OTHER
INFORMATION"  of the  Company's  Quarterly  Report on Form 10-Q for the  quarter
ended  March 31,  1998  (March 31,  1998 Form  10-Q) and under  "PART I. ITEM 1.
FINANCIAL STATEMENTS" in this Quarterly Report on Form 10-Q (Report).

         The rate reductions of the Final Restructuring Order (8% in 1999 and 6%
in 2000) are  expected  to reduce the  Company's  revenues  from  future  retail
electric  sales.  The Company  believes that its revenues  from retail  electric
sales will be further reduced by competition for electric  generation  services,
which will be available to two-thirds of its retail customers by January 2, 1999
and all retail customers by January 2, 2000.

         In light  of the  expected  impact  on  future  revenues  of the  Final
Restructuring  Order and  competition  for  electric  generation  services,  the
Company is continuing its cost  management  efforts  through a Competitive  Cost
Review (CCR).  Through CCR, the Company is  conducting an in-depth  analysis and
assessment of all Company expenses,  capital expenditures,  programs,  processes
and  staffing  levels.  The goal of CCR is to achieve  significant  cost savings
while  maintaining  high  levels of  service  quality,  reliability,  safety and
overall performance.

<PAGE>

         In  accordance  with the  cost-control  targets of CCR,  the Company is
committed to reducing annual operating and maintenance  expense by at least $150
million by 2001. The expense  reductions will be realized,  in part, through the
elimination of approximately 1,200 positions over the next 12 to 18 months.

         On April 8, 1998, the Board of Directors  authorized the implementation
of a retirement  incentive program and an enhanced  severance benefit program to
accompany targeted workforce  reductions.  The retirement incentive program will
allow employees age 50 and older,  who have been designated as excess or who are
in job  classifications  facing  reduction,  to  retire  from the  Company.  The
enhanced  severance benefit program will provide  non-retiring  excess employees
with fewer than ten years of service,  benefits  equal to two weeks pay per year
of service.  Non-retiring  excess  employees with more than ten years of service
will receive benefits equal to three weeks pay per year of service.

         The  Company  anticipates  that it  will  incur a  one-time  charge  to
earnings in 1998 to recognize  costs related to CCR;  however,  the magnitude of
such charge is not known at this time.

         The Company's future financial  condition and results of operations are
also  affected by other  factors,  such as the  operation of nuclear  generating
facilities,  wholesale sales,  weather  conditions and the Company's  ability to
develop its investments in new ventures into profitable enterprises.

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting for Derivative
Instruments  and Hedging  Activities,"  to establish  accounting  and  reporting
standards for derivatives. The new standard requires recognizing all derivatives
as either  assets or  liabilities  on the balance  sheet at their fair value and
specifies the accounting  for changes in fair value  depending upon the intended
use of the derivative.  The new standard is effective for fiscal years beginning
after  June 15,  1999.  The  Company  expects to adopt SFAS No. 133 in the first
quarter of 2000.  The Company is in the process of evaluating the impact of SFAS
No. 133.

RESULTS OF OPERATIONS
EARNINGS

         Basic and dilutive  earnings per average common share for the three and
six  months  ended June 30,  1998 were $0.66 and $1.16 per share,  respectively,
compared to $0.53 and $1.02 per share in 1997.  The  increase in second  quarter
earnings was due primarily to increased  operating  revenues net of related fuel
costs. Revenues from wholesale sales increased significantly compared to 1997.

         Second quarter 1998 earnings also benefitted from the return to service
of Salem Generating Station (Salem),  which decreased the cost of fuel purchases
and outage-related  costs compared to 1997,  decreased operating and maintenance
expense,  which was due  primarily  to  reduced  costs at the  Company's  fossil
generating  stations  and  improved  performance  by  the  Company  in  reducing
uncollectible  expenses for the quarter.  Income tax expense also decreased as a
result  of  full  normalization  of  deferred  taxes  associated  with  electric
generation  plant which  results from the December 31, 1997  discontinuation  of
regulatory   accounting  for  electric  generation  plant.  These  factors  were
partially  offset by the benefit in 1997 of the recognition of the settlement of
litigation  arising from the Salem outage,  and in 1998, losses from investments
in  subsidiaries,  and higher  depreciation  expense due to the amortization and
recovery of certain  assets during 1998,  preceding the Company's  transition to
market-based pricing of electric generation in 1999.
<PAGE>

         The  increase  in  earnings  for the six months  ended June 30, 1998 is
primarily  due to increased  wholesale  revenues net of related fuel costs,  the
return to service of the Salem units,  continued  containment  of operating  and
maintenance  costs, and lower income taxes due to full normalization of deferred
taxes associated with electric  generation plant which results from the December
31, 1997 discontinuation of regulatory accounting for electric generation plant.
These factors were partially offset by the benefit in 1997 of the recognition of
the  Salem  litigation  settlement,  and in 1998,  losses  from  investments  in
subsidiaries,  increased depreciation expense and the negative impacts of milder
weather conditions in the first quarter.

OPERATING REVENUES
         Electric  revenues  increased  20% and 11% for the three and six months
ended June 30, 1998, respectively,  compared to 1997. The increase for the three
months was primarily due to higher  revenues from wholesale sales resulting from
an increase in energy  prices in the spot market as well as an increase in sales
volume.  Also contributing to the increase was warmer weather  conditions in the
second quarter of 1998 compared to 1997.  Partially  offsetting  these increases
were  lower  average  retail  rates as a result  of the  customer  choice  pilot
program.

         The  increase  for the six months was  primarily  due to an increase in
wholesale  sales.  Partially  offsetting  the  increases for the six months were
lower average retail rates as a result of the customer choice pilot program. For
the six months,  warmer  weather  conditions in the second  quarter of 1998 were
fully offset by the milder weather conditions in the first quarter of 1998.

         Gas revenues  decreased  16% and 10% for the three and six months ended
June 30, 1998 compared to 1997  primarily due to a decrease in sales volume as a
result of milder weather conditions.

FUEL AND ENERGY INTERCHANGE
         Fuel and energy interchange expense increased 32% and 20% for the three
and six months ended June 30, 1998 compared to 1997  primarily due to additional
off-system   purchases  associated  with  increased  wholesale  electric  sales.
Although volume increased to meet the Company's sales commitments,  the increase
in fuel and energy  interchange  was primarily due to an increase of the average
cost paid by the Company for purchased  power. The increase was partially offset
by the return to service of Salem, which decreased the need to purchase power to
replace the output from these units.

OPERATING AND MAINTENANCE
         Operating and  maintenance  expense  decreased 12% and 9% for the three
and six months ended June 30, 1998 compared to 1997.  The decrease for the three
and  six  months  was  primarily  due to  lower  expenses  at  Salem  due to the
conclusion  of the  outage,  improved  performance  by the  Company in  reducing
uncollectible  expenses  and lower  expenses at fossil  generating  units due to
cost-control efforts. Contributing to this decrease for the six months was lower
electric transmission and distribution system expenses.

DEPRECIATION EXPENSE
         Depreciation  expense  increased  9% for the three and six months ended
June 30, 1998 compared to 1997,  primarily due to the  amortization  of Deferred
Generation  Costs  Recoverable  in Current  Rates  during  1998,  preceding  the
Company's  transition to  market-based  pricing of electric  generation in 1999.
Included in this  amortization  are charges that were  included in Operating and
Maintenance expense and Interest Charges in 1997.
<PAGE>

OTHER INCOME AND DEDUCTIONS
         Other  income  and  deductions  excluding  interest  charges  decreased
substantially for the three and six months ended June 30, 1998 compared to 1997.
The  decrease  for the three and six  months  was  primarily  due to the  second
quarter 1997  settlement  reached with Public  Service  Electric and Gas Company
(PSE&G)  related to the shutdown of Salem,  and in 1998,  increased  losses from
investments in  subsidiaries  and the second quarter  write-off of the Company's
investment in EnergyOne.


INTEREST CHARGES
         Interest charges  increased 3% for the three months ended June 30, 1998
compared to 1997 and were substantially  unchanged for the six months ended June
30, 1998  compared to 1997.  Interest  charges  increased  for the three  months
primarily due to a second  quarter 1997  adjustment to record AFUDC on a project
not  previously  in AFUDC base,  fewer  projects  in AFUDC base in 1998,  higher
average  short-term  debt balances  compared to 1997 and the  replacement of $62
million  of  preferred  stock  with  Company  Obligated  Mandatorily  Redeemable
Preferred  Securities  of a  Partnership  (COMRPS) in the third quarter of 1997.
These increases were partially offset by lower  amortization  expense due to the
write-off of electric generation-related debt discounts at December 31, 1997 and
the Company's ongoing program to reduce and/or refinance higher cost,  long-term
debt.

INCOME TAXES
         Total  income  taxes  decreased 5% and 15% for the three and six months
ended June 30, 1998 compared to 1997.  The decrease for the three and six months
was  primarily  due to full  normalization  of deferred  taxes  associated  with
electric   generation   plant  which   results   from  the   December  31,  1997
discontinuation of regulatory  accounting for electric generation plant. For the
three months, this decrease was partially offset by higher pre-tax income.

PREFERRED STOCK DIVIDENDS
     Preferred stock dividends  decreased 27% for the three and six months ended
June 30, 1998 compared to 1997,  primarily due to the replacement of $62 million
of preferred stock with COMRPS in the third quarter of 1997.

DISCUSSION OF LIQUIDITY AND CAPITAL RESOURCES
         Total  construction  expenditures,  primarily  for utility  plant,  are
estimated  to be $600  million  for 1998.  The  estimated  expenditures  include
approximately   $150  million  for  new   ventures,   principally   through  the
Telecommunications  Group. Due to the expected impact of the Final Restructuring
Order and  competition  for electric  generating  services on its future capital
resources,  the Company is currently evaluating its capital commitments for 1999
and beyond.  Certain  facilities  under  construction  and to be constructed may
require permits and licenses which the Company has no assurance will be granted.

         At June 30, 1998, the Company and its subsidiaries had outstanding $346
million of notes payable,  all of which were commercial paper. At June 30, 1998,
the  Company  had formal and  informal  lines of bank  credit  aggregating  $100
million.  At June 30, 1998, the Company and its  subsidiaries  had no short-term
investments.

         As a result of an  extraordinary  charge to earnings in December  1997,
the Company did not meet the earnings  test under the Mortgage  required for the
issuance of additional  bonds against  property  additions for the twelve months
ended  June 30,  1998.  In  addition,  the  Company  does not expect to meet the
earnings  test under the Mortgage for any  twelve-month  period  ending prior to
December  31,  1998.  At June  30,  1998,  the  Company  was  entitled  to issue
approximately $3.7 billion of mortgage bonds against previously retired mortgage
bonds without regard to the earnings and property additions tests.
<PAGE>

         As a result of an  extraordinary  charge to earnings in December  1997,
the Company did not meet the earnings test of the Company's Amended and Restated
Articles of  Incorporation  (Articles),  required for the issuance of additional
preferred stock without an affirmative  vote of the holders of two-thirds of all
preferred  shares  outstanding,  for the twelve  months ended June 30, 1998.  In
addition,  the  Company  does not  expect to meet the  earnings  test  under the
Articles for any twelve-month period ending prior to December 31, 1998.

         For the six months ended June 30, 1998, the Company's Ratio of Earnings
to Fixed Charges (SEC Method)  (Exhibit  12-1) and Ratio of Earnings to Combined
Fixed Charges and Preferred  Stock  Dividends  (SEC Method)  (Exhibit 12-2) were
3.47 times and 3.27 times, respectively,  compared to 3.32 times and 3.05 times,
respectively,  in  1997.  See  the  1997  Form  10-K  under  "PART  I.  ITEM  1.
BUSINESS-Capital Requirements and Financing Activities," for a discussion of the
ratio methods.

         As previously  disclosed,  the Company's Board of Directors  authorized
the  repurchase of up to 25 million shares of its common stock from time to time
through open market,  privately negotiated and/or other types of transactions in
conformity with the rules of the Securities and Exchange Commission (SEC).

         The Company has entered into forward purchase  agreements to be settled
from time to time, at the Company's election, on either a physical, net share or
net cash basis. The amount at which these agreements can be settled is dependent
principally  upon the market price of the Company's  common stock as compared to
the forward purchase price per share and the number of shares to be settled.  If
these  agreements had been settled on a net share basis at June 30, 1998,  based
on the closing  price of the  Company's  common stock on that date,  the Company
would have received approximately 2,357,000 shares of Company common stock.





FORWARD-LOOKING STATEMENTS
         Except for the historical  information contained herein, certain of the
matters  discussed  in this  Report  are  forward-looking  statements  which are
subject to risks and uncertainties.  The factors that could cause actual results
to differ  materially  include those discussed herein as well as those listed in
notes 2, 3 and 6 of Notes to Condensed  Consolidated  Financial  Statements  and
other  factors  discussed in the  Company's  filings  with the SEC.  Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Report.  The Company  undertakes no obligation
to publicly release any revision to these forward-looking  statements to reflect
events or circumstances after the date of this Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
         None.


<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
         As previously reported in the March 31, 1998 Form 10-Q, the Grays Ferry
Cogeneration  Partnership  sued the  Company  in the  Court of  Common  Pleas in
Philadelphia County (Common Pleas Court) to enjoin the Company's  termination of
the power purchase agreements  relating to the Grays Ferry Cogeneration  Project
(Project).  On May 5,  1998,  the  Common  Pleas  Court  entered  a  preliminary
injunction  enjoining the Company from terminating the power purchase agreements
and  requiring  the  Company  to  abide  by  all  terms  and  conditions  of the
agreements,  including  paying for electric  energy and capacity at the contract
rates pending  resolution of the litigation.  In a separate  action,  on May 29,
1998, Westinghouse Power Generation, a lender to the Project, filed an action in
the Common Pleas Court against the Company  alleging breach of contract  arising
out of the Company's  termination of the power purchase agreements.  The Company
cannot predict the outcome of these matters.

         On May 27, 1998, the United States Department of Justice,  on behalf of
the Rural  Utilities  Service and the Chapter 11 Trustee for the Cajun  Electric
Power  Cooperative,  Inc.  (Cajun),  filed an action claiming breach of contract
against the Company in the United States  District Court for the Middle District
of  Louisiana  arising  out of the  Company's  termination  of the  contract  to
purchase Cajun's interest in the River Bend nuclear power plant.
The Company cannot predict the outcome of these matters.

See also "ITEM 5. OTHER INFORMATION."

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Information  regarding the  submission of matters to a vote of security
holders is presented in the March 31, 1998 Form 10-Q.

ITEM 5.  OTHER INFORMATION

         As  previously  reported in the  Company's  Current  Report on Form 8-K
dated May 14, 1998,  the PUC approved a Joint  Petition for  Settlement  (Global
Settlement)  and entered the Final  Restructuring  Order.  On June 12, 1998,  an
intervenor that was not a party to the Global Settlement, filed an appeal of the
Final   Restructuring   Order  to  the   Commonwealth   Court  of   Pennsylvania
(Commonwealth  Court).  The  basis of the  appeal  was that  the  stranded  cost
provisions  of the  Competition  Act violated the Commerce  Clause of the United
States  Constitution.  On May 7, 1998, the  Commonwealth  Court had  unanimously
rejected the same claim raised by the intervenor in another  action  challenging
the  Competition  Act.  The  intervenor  has  petitioned  the  Supreme  Court of
Pennsylvania for allowance of appeal in that action.

         In  accordance  with the terms of the Final  Restructuring  Order,  all
appeals and cross-appeals filed by the signatories to the Global Settlement have
been placed in a pending but inactive  status.  Such  appeals and cross  appeals
will be withdrawn at such time that the Final  Restructuring  Order is no longer
subject to administrative or judicial challenge.

         As  previously  reported  in the 1997 Form 10-K and the March 31,  1998
Form 10-Q, the Nuclear  Regulatory  Commission (NRC) issued a Bulletin proposing
the installation of large capacity  passive  strainers to resolve the problem of
clogging of emergency core cooling system suction strainers  experienced at some
GE  Boiling  Water  Reactors.  Strainers  were  installed  at Unit  No. 1 at the
Company's Limerick Generating Station (Limerick) during the April 1998 refueling
outage.  Installation  of strainers at Unit No. 2 at the Company's  Peach Bottom
Atomic Power  Station  (Peach  Bottom) and Limerick Unit No. 2 are scheduled for
the units' planned October 1998 and April 1999 refueling outages, respectively.
<PAGE>

         As  previously  reported in the 1997 Form 10-K,  in August 1997 the NRC
informed  the  Company  that it was  satisfied  with the  Company's  progress in
addressing  the  Thermo-Lag  330  issue.  On May  19,  1998,  the NRC  issued  a
confirmatory  order  modifying  the licenses for Limerick  Units No. 1 and No. 2
requiring that the Company complete final  implementation of corrective  actions
on this matter by  completion  of the planned  April 1999  refueling  outage for
Limerick Unit No. 2. A similar order was issued for Peach Bottom Units No. 2 and
No. 3 with the  implementation of corrective  actions required by the completion
of the planned October 1998 refueling outage for Peach Bottom Unit No. 2.

         By letter dated June 11, 1998, the NRC issued a notice of violation and
proposed  imposition of civil  penalty in the amount of $55,000  relating to the
operation and  maintenance of the emergency  cooling system at Peach Bottom Unit
No. 3. The incidents were identified and investigated by the Company, corrective
actions were  promptly  implemented  and the matter was reported to the NRC. The
Company has agreed to pay the fine.

         By letter dated July 7, 1998,  the NRC issued a notice of violation and
proposed  imposition of civil  penalty in the amount of $55,000  relating to the
failure of  certain  valves at  Limerick  to  operate  in  conformance  with NRC
technical  specifications and the Company's failure to promptly address the root
cause of these failures. The Company has taken corrective actions and has agreed
to pay the fine.

         As  previously  reported in the 1997 Form 10-K, in December  1997,  the
Environmental Protection Agency (EPA) finalized its record of decision (ROD) for
the Metal Bank of America site. On June 26, 1998, the EPA issued  administrative
orders to each  member  of the group of  potentially  responsible  parties  (PRP
Group), including the Company,  requiring that they perform the remedial work at
the site as described in the ROD. The EPA also issued  administrative  orders to
the  owner/operator  of the site and to several  other parties who have not been
cooperating  with the EPA and the PRP Group.  The  Company and the PRP Group are
evaluating their options.  In a related matter, the United States District Court
for  the  Eastern  District  of  Pennsylvania   (Eastern   District  Court)  has
reactivated   a  case  brought  by  the  EPA  in  the  late  1980s  against  the
owner/operator  of the site and  several of the  members of the PRP Group.  This
suit  could  be  a  vehicle  for  deciding   the   ultimate   liability  of  the
owner/operator  for cleanup of the site. As a result, the Company is involved in
both the  administrative  proceeding and the Eastern  District Court  proceeding
relating to the site.

         On July 1, 1998 the NRC closed the Confirmatory Action Letter (CAL) for
Salem  Units No. 1 and No. 2 that had been  issued in June of 1995.  Through the
closure the NRC has indicated that PSE&G,  the operator of Salem,  has completed
all action items identified in the CAL.

         As previously  reported in the 1997 Form 10-K, in January 1997, the NRC
placed Salem Units No.1 and No.2 on the NRC Watch List and  designated the units
as Category 2  facilities.  The Company has been informed by PSE&G that, on July
29, 1998, the NRC removed the Salem units from the NRC Watch List and designated
the units as Category 1 facilities.

         As previously  reported in the 1997 Form 10-K,  the NRC had proposed to
issue a generic  letter  which  would  require all nuclear  plant  operators  to
provide the NRC with information concerning the operators' programs,  planned or
implemented,  to address Year 2000 computer and system issues at its facilities.
On May 11, 1998, the NRC issued a Generic  Letter  requiring (1) submission of a
written response within 90 days, indicating whether the operator has pursued and
continues to pursue  implementation  of Year 2000  programs and  addressing  the
program's  scope,  assessment  process,  plans for corrective  actions,  quality
assurance  measures,  contingency  plans  and  regulatory  compliance,  and  (2)
submission of a written  response,  no later than July 1, 1999,  confirming that

<PAGE>

such  facilities  are Year 2000 ready,  or will be Year 2000 ready,  by the year
2000 with regard to compliance  with the terms and  conditions of the license(s)
and NRC  regulations.  The  Company is in the process of  preparing  its written
response.

         An Order was entered on July 17, 1998, by the PUC, instituting a formal
investigation by the Office of Administrative  Law Judge on Year 2000 compliance
by jurisdictional fixed utilities and mission-critical service providers such as
the PJM Interconnection. The Order requires, (1) a written response to a list of
compliance program questions by August 6, 1998 and, (2) all jurisdictional fixed
utilities be Year 2000  compliant by March 31, 1999 or, if a utility  determines
that  mission-critical  systems cannot be Year 2000 compliant on or before March
31, 1999, the utility is required to file a detailed  contingency  plan. The PUC
adopted the federal government's definition for Year 2000 compliance and further
defined  Year  2000   compliance  as  a   jurisdictional   utility   having  all
mission-critical  Year 2000 hardware and software  updates  and/or  replacements
installed and tested on or before March 31, 1999.  The Company is in the process
of preparing its written response.
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a)      Exhibits:

         12-1     -        Statement regarding computation of ratio of
                           earnings to fixed charges.
         12-2     -        Statement regarding computation of ratio of
                           earnings to combined fixed charges and preferred
                           stock dividends.
         27       -        Financial Data Schedule.

(b)      Reports on Form 8-K filed during the reporting period:
         Report,  dated  April 30,  1998  reporting  information  under "ITEM 5.
                  OTHER  EVENTS"  regarding  the  Company's  filing  of a  Joint
                  Petition for Settlement with the  Pennsylvania  Public Utility
                  Commission regarding the Company's restructuring proceeding.

         Report,  dated May 14, 1998 reporting  information under "ITEM 5. OTHER
                  EVENTS" regarding the Pennsylvania Public Utility Commission's
                  issuance  of  final  order  approving  a  Joint  Petition  for
                  Settlement in the Company's restructuring proceeding.

         Report,  dated May 22, 1998 reporting  information under "ITEM 5. OTHER
                  EVENTS"  regarding  the  Company's   Competitive  Cost  Review
                  program.

         Reports on Form 8-K filed subsequent to the reporting period:

         Report,  dated July 17, 1998 reporting information under "ITEM 5. OTHER
                  EVENTS"  regarding  AmerGen  Energy  Company,  LLC,  the joint
                  venture between the Company and British Energy,  entering into
                  a Letter of Intent to purchase  the Three Mile Island Unit No.
                  1 Nuclear Generating Station from GPU, Inc.



<PAGE>



                                   Signatures

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




                                                             PECO ENERGY COMPANY
                                                             /s/ Michael J. Egan
                                                      --------------------------
                                                                 MICHAEL J. EGAN
                                                       Senior Vice President and
                                                         Chief Financial Officer
                                                        (Principal Financial and
                                                             Accounting Officer)

Date:  July 30, 1998