UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q



(Mark One)

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

For the quarterly period ended September 30, 2001
                               -------------------

                                       OR

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

For the transition period from                   to
                               -----------------    --------------





Commission        Registrant, State of Incorporation,     I.R.S. Employer
File Number       Address and Telephone Number            Identification No.
-----------       -----------------------------------     ------------------

1-446             Metropolitan Edison Company               23-0870160
                  (a Pennsylvania corporation)
                  2800 Pottsville Pike
                  Reading, Pennsylvania 19640-0001
                  Telephone (610) 929-3601





      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
                                              ---


      The number of shares  outstanding of each of the  registrant's  classes of
voting stock, as of November 13, 2001, was as follows:

                                                                     Shares
Registrant                             Title                         Outstanding
-------------------------------------  ----------------------------  -----------
Metropolitan Edison Company            Common Stock, no par value     859,500



<PAGE>






                           Metropolitan Edison Company
                          Quarterly Report on Form 10-Q
                               September 30, 2001



                                Table of Contents
                                -----------------

                                                                         Page
                                                                         ----
PART I - Financial Information

      Management's Discussion and Analysis
        of Financial Condition and Results of
        Operations                                                         1

      Consolidated Financial Statements:

            Balance Sheets                                                10
            Statements of Income                                          12
            Statements of Cash Flows                                      13

      Notes to Consolidated Financial Statements                          14

PART II - Other Information                                               25

Signature                                                                 26



      The financial statements (not examined by independent accountants) reflect
all adjustments (which consist of only normal recurring accruals), which are, in
the opinion of management, necessary for a fair statement of the results for the
interim periods presented.

      This  Quarterly  Report  on Form  10-Q is  filed  by  Metropolitan  Edison
Company.  This Form 10-Q  supplements and updates the 2000 Annual Report on Form
10-K, filed by the registrant with the Securities and Exchange  Commission,  and
should be read in conjunction therewith.




<PAGE>


              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


      We caution  you that this Form 10-Q  contains  forward-looking  statements
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the  Securities  Exchange  Act of 1934.  They  are  statements  about  future
performance  or results (such as statements  including,  but not limited to, the
terms "potential,"  "estimate," "believe," "expect" and "anticipate" and similar
words)  when we discuss  our  financial  condition,  results of  operations  and
business.  Forward-looking  statements  involve  certain risks,  assumptions and
uncertainties.  They are not guarantees of future performance. Factors may cause
actual   results   to  differ   materially   from  those   expressed   in  these
forward-looking statements. These factors include:

      -     changes in national and regional economic  conditions;

      -     changes in markets for energy services;

      -     changing  commodity  market prices;

      -     the availability and cost of capital;

      -     inability to accomplish or realize anticipated benefits of strategic
            goals;

      -     legislative and regulatory changes (including revised  environmental
            requirements);

      -     economic or weather conditions affecting future sales and margins;

      -     the speed and nature of increased  competition  and  deregulation in
            the electric utility industry; and

      -     outcomes of legal proceedings.

      We  believe  that  the  expectations   reflected  in  our  forward-looking
statements are reasonable. However, we cannot assure you that these expectations
will prove to be correct. You should consider the factors we have noted above as
you read the  forward-looking  statements  in this Form 10-Q.  We  undertake  no
obligation to release publicly any revisions to such forward-looking  statements
to reflect events or circumstances after the date of this document or to reflect
the occurrence of unanticipated events.



<PAGE>



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


      Metropolitan  Edison Company  (Met-Ed) is a wholly-owned  electric utility
subsidiary of FirstEnergy Corp. (FirstEnergy), an Ohio corporation headquartered
in Akron,  Ohio.  Met-Ed conducts  business under the name GPU Energy along with
its affiliates  Pennsylvania Electric Company (Penelec) and Jersey Central Power
& Light  Company  (JCP&L),  which  are also  electric  utility  subsidiaries  of
FirstEnergy.

      In August 2000,  FirstEnergy  entered into an agreement to merge with GPU,
Inc.,  under which  FirstEnergy  would acquire all of the outstanding  shares of
GPU, Inc.'s common stock for approximately  $4.5 billion in cash and FirstEnergy
common  stock.  The merger  became  effective on November 7, 2001  and is being
accounted  for  by the  purchase  method.  Prior  to  that  time,  Met-Ed  was a
wholly-owned subsidiary of GPU, Inc.



                              RESULTS OF OPERATIONS
                              ---------------------


      Met-Ed's earnings for the third quarter 2001 were $24.5 million,  compared
to a loss for the third quarter 2000 of $3.8  million.  The increase in earnings
was primarily due to the Pennsylvania Public Utility  Commission's  (PaPUC) June
2001 order that allows Met-Ed to defer, for future rate recovery from customers,
energy costs in excess of its fixed  generation  tariff rates,  starting June 1,
2001,  in  connection  with its  provider of last resort (PLR)  obligation.  For
additional  information  on the PaPUC's  order,  see the Provider of Last Resort
section of the Supply Plan. As a result,  in the third quarter 2001,  Met-Ed was
able to  defer  approximately  $86  million  pre-tax  of  energy  costs  that it
otherwise would have had to expense.

      For the nine months ended September 30, 2001, Met-Ed's earnings were $56.4
million,  compared to $31.4  million  for the same  period in 2000.  Excluding a
non-recurring  charge of $5.4 million  after-tax  for costs related to Voluntary
Enhanced   Retirement   Programs  (VERP)  offered  to  certain  bargaining  unit
employees, earnings for the nine months ended September 30, 2001 would have been
$61.8 million.  The same factors affecting the comparable quarterly results also
affected the year to date comparison on this basis.  Also,  there was a negative
impact on year to date 2001 earnings prior to June 1, 2001,  when Met-Ed did not
defer its excess energy costs incurred in connection with its PLR obligation.

OPERATING REVENUES:
-------------------

      Operating  revenues for the third quarter 2001 increased  $56.1 million to
$283.5 million, as compared to the third quarter 2000. For the nine months ended
September  30,  2001,  operating  revenues  increased  $98.8  million  to $727.1
million,  compared to the same period last year.  The  components of the changes
are as follows:

                                        1

<PAGE>


                                            2001 vs. 2000 (in millions)
                                     ----------------------------------------
                                      Three Months Ended    Nine Months Ended
                                         September 30,        September 30,
                                      ------------------    -----------------
KWH revenues                                $57.5                $104.6
CTC revenues                                  1.4                   2.2
Other revenues                               (2.8)                 (8.0)
                                             ----                 -----
     Increase in revenues                   $56.1                $ 98.8
                                             ====                 =====

KWH revenues
------------

      The increase for both periods was  primarily due to the return of numerous
shopping customers from alternate generation suppliers in 2001, partially offset
by a decrease of sales to other  utilities.  Starting June 1, 2001, there was no
impact on earnings  associated with these returning customers since Met-Ed had a
deferral mechanism for its over/under-recovered  energy costs in accordance with
the PaPUC's June 2001 order.

Other revenues
--------------

      The  decrease  for both periods was  primarily  due to lower  transmission
revenues as a result of fewer customers shopping for their energy supply.

OPERATING INCOME:
-----------------

      Operating  income for the third  quarter 2001  increased  $37.1 million to
$46.9 million, as compared to the third quarter 2000. The increase was primarily
due to the PaPUC's June 2001 order that allows Met-Ed to defer,  for future rate
recovery from customers,  energy costs in excess of its fixed generation  tariff
rates (approximately $86 million).

      For the nine months ended September 30, 2001,  operating  income increased
$25.2 million to $109.5  million,  as compared to the same period last year. The
increase for the nine months ended  September 30, 2001 reflects a  non-recurring
charge  to other  operation  and  maintenance  (O&M)  expenses  of $9.2  million
pre-tax, for costs related to the VERP. In addition, the year to date comparison
was  significantly  impacted by the  deferral of energy costs in excess of fixed
generation tariff rates (approximately $108 million, beginning June 1, 2001).

OTHER INCOME AND DEDUCTIONS:
----------------------------

      Other income and  deductions  for the third quarter 2001  increased  $13.7
million to $9.9 million,  as compared to the third  quarter  2000.  For the nine
months ended  September 30, 2001,  other income and deductions  increased  $20.0
million to $27.3 million,  versus the same period last year. The increase in the
third  quarter was  primarily  due to the absence in 2001 of the  write-down  of
regulatory  assets  by  $7.9  million  for  Three  Mile  Island  Unit 2  (TMI-2)
decommissioning,  representing the net realized gain previously  recorded on the
accident-related  portion  of the TMI-2  decommissioning  trust;  and higher CTC
interest  income of  approximately  $5 million.  The same factors  affecting the
comparable quarterly results also affected the year to date comparison.  For the
nine  months  ended   September  30,  2001,   CTC  interest   income   increased
approximately  $15 million;  partially  offset by lower other interest income of
approximately $4 million.

                                        2


<PAGE>


                         LIQUIDITY AND CAPITAL RESOURCES
                         -------------------------------

Capital Expenditures and Investments
------------------------------------

      Capital  spending  for the nine months  ended  September  30, 2001 was $38
million and was used primarily to expand and improve  existing  transmission and
distribution  facilities and for new customer  connections.  Met-Ed's  remaining
capital  expenditures  for 2001 are  estimated to be $17 million,  primarily for
ongoing  transmission and distribution system development.  Management estimates
that a substantial  portion of Met-Ed's  2001 capital  spending will be supplied
through internally generated funds.

Financing
---------

      Upon the November 7, 2001 effective date of the  FirstEnergy and GPU, Inc.
merger,  Met-Ed's available short-term bank borrowing facilities (these included
a revolving  credit  agreement and various bank lines of credit) were terminated
by their  terms  and  conditions.  As a  result,  on this  date all of  Met-Ed's
outstanding bank borrowings from these  facilities,  totaling $98 million,  were
repaid by FirstEnergy.  FirstEnergy is in the process of establishing a new $1.5
billion revolving credit facility to meet the short-term liquidity  requirements
of the new combined company,  including those requirements of Met-Ed.  Met-Ed is
limited by SEC  authorization  to $150 million of short-term debt outstanding at
any one time.

      Met-Ed has regulatory  approval to issue senior notes through December 31,
2002 in the amount of $50 million.  Met-Ed's  financing program is designed such
that it would issue secured senior notes (collateralized by first mortgage bonds
(FMBs)  issued to the senior note  trustee)  until such time as more than 80% of
its outstanding FMBs are held by the senior note trustee. At that time, the FMBs
will be  cancelled  and the  outstanding  senior  notes  will  become  unsecured
obligations.  Met-Ed will not issue any additional FMBs other than as collateral
for the senior  notes  since the senior  note  indenture  prohibits  (subject to
certain  exceptions)  Met-Ed from issuing any debt which is senior to the senior
notes.

      Met-Ed's bond indenture includes provisions that limits the amount of FMBs
the company may issue.  Met-Ed's  interest coverage ratio is currently in excess
of indenture restrictions.

      In September  2001,  Met-Ed issued $100 million of 5.72%  five-year  fixed
rate senior notes.

      In 2002,  Met-Ed has  scheduled  long-term  debt  maturities  totaling $30
million.


                    COMPETITIVE ENVIRONMENT AND RATE MATTERS
                    ----------------------------------------

      In March 2001, 101 Met-Ed employees accepted Voluntary Enhanced Retirement
Programs  offered to certain  bargaining  unit employees in  Pennsylvania.  As a
result,  Met-Ed  recorded a pre-tax  charge of $9.2  million  in 2001  Operating
Income for the cost of pension and other postretirement benefits.

                                        3
<PAGE>


Recent Regulatory Actions
-------------------------

      With the transition to a competitive marketplace for generation service in
Pennsylvania,   certain  generation-related  costs,  which  generally  would  be
recoverable  in a regulated  environment,  may no longer be  recoverable.  These
costs are generally referred to as stranded costs.

Restructuring Orders

      In  1998,  the  PaPUC  issued  amended   Restructuring   Orders  approving
Settlement Agreements entered into by Met-Ed which, among other things,  provide
for customer choice of electric  generation  supplier  beginning January 1, 1999
and a one-year (1999) reduction in retail  distribution rates for all consumers.
The Orders also provide for recovery of a substantial  portion of what otherwise
would have become stranded costs, subject to Phase II proceedings  following the
completion  of  Met-Ed's  generating  asset   divestitures,   to  make  a  final
determination  of the extent of that stranded  cost  recovery.  In 2000,  Met-Ed
submitted Phase II Reports to the PaPUC  supporting their actual net divestiture
proceeds and providing a  reconciliation  of stranded costs pursuant to the 1998
Restructuring Orders.

      In 2000,  the PaPUC  issued a Phase II Order  which,  among other  things,
disallowed  a portion of the  requested  additional  stranded  costs above those
amounts  granted in the 1998 Orders.  The Order  requires  Met-Ed to seek an IRS
ruling  regarding the return of certain  unamortized  investment tax credits and
excess deferred income tax benefits to ratepayers.  If the IRS ruling ultimately
supports  returning  these tax benefits to ratepayers,  Met-Ed would then reduce
stranded costs by $17 million plus interest and record a corresponding charge to
income.

Provider of Last Resort ("PLR")

      Met-Ed customers have been permitted to shop for their generation supplier
since  January  1, 1999  under the 1998 PaPUC  Restructuring  Orders.  The PaPUC
approved a  competitive  bid process  designed to assign PLR service to licensed
generation suppliers,  referred to as Competitive Default Service (CDS), for 20%
of Met-Ed's  retail  customers on June 1, 2000, 40% on June 1, 2001, 60% on June
1, 2002 and 80% on June 1, 2003. Any retail customers assigned to CDS may return
to Met-Ed as the default PLR.  Met-Ed may meet any remaining  PLR  obligation at
rates not less than the lowest rate charged by the winning CDS provider,  but no
higher than Met-Ed's rate cap.

      Due to the  absence of  acceptable  bids in 2000,  Met-Ed was  required to
supply  250  megawatts  (MW) of  electric  power  more than it had  planned.  In
addition,  customers requiring  approximately 240 MW of power returned to Met-Ed
from their  alternate  suppliers  for the peak Summer  months.  During that same
period,  market prices at which Met-Ed was required to purchase  electricity for
their retail supply customers at times substantially  exceeded the amount Met-Ed
was  allowed  to charge  for that  electricity  under  its  capped  rates.  This
situation  resulted in Met-Ed's supply business  recording an after-tax loss for
2000  of  approximately  $14  million.  Under  the  terms  of its  restructuring
settlement,  in 2001 Met-Ed again  sought  alternative  providers  through a CDS
bidding process for 40% of its customers;  however,  the company did not receive
any bids in response to its request.

      In  November  2000,  Met-Ed  filed  a  petition  with  the  PaPUC  seeking
permission  to defer for future  recovery  its energy costs in excess of amounts
reflected in its capped generation rates. In January 2001, the PaPUC

                                        4
<PAGE>


consolidated this petition with the FirstEnergy/GPU, Inc. merger proceeding for
consideration and resolution in accord with the merger procedural schedule.

      In June 2001,  Met-Ed,  Penelec and FirstEnergy  entered into a Settlement
Stipulation  with all of the major  intervenors in the combined  merger and rate
relief proceedings, that, in addition to resolving certain issues concerning the
PaPUC's approval of the  FirstEnergy/GPU,  Inc. merger,  also addressed Met-Ed's
request  for PLR rate  relief.  On June  20,  2001,  the  PaPUC  entered  orders
approving the  Settlement  Stipulation,  thus approving the merger and providing
Met-Ed PLR rate  relief.  Accordingly,  Met-Ed is  permitted to defer for future
recovery the difference  between its actual energy costs and those  reflected in
its  capped  generation  rates,  retroactive  to  January  1,  2001.  These "PLR
deferrals" will continue  through December 31, 2005. If energy costs incurred by
Met-Ed during this period are below its respective  capped generation rates, the
difference would be used to reduce its PLR deferrals.

      Met-Ed has  established  regulatory  assets on its  balance  sheet for the
deferral of excess  energy costs  incurred  during the period of January 1, 2001
through  September  30,  2001.  In  the  second  quarter  of  2001,  Met-Ed  had
established a reserve of $13 million against its PLR deferrals for the period of
January 1, 2001  through  May 31,  2001,  which  would have been  written off in
accordance with the Settlement  Stipulation had the merger not been consummated.
Upon consummation of the merger, this reserve was reversed.

      Under the  Settlement  Stipulation,  Met-Ed's  PLR  obligations  have been
extended through December 31, 2010. Met-Ed's Competitive Transition Charge (CTC)
revenues will be applied first to PLR costs,  then to non-NUG stranded costs and
lastly to NUG stranded costs through December 31, 2010.  Remaining PLR deferrals
not recovered as of December 31, 2010 would have to be written off.

      The  Settlement  Stipulation  also requires a revised  calculation  of NUG
stranded costs being  recovered  under the terms of Met-Ed's 1998  Restructuring
Orders, retroactive to January 1, 2001.

      Several  parties  have filed  Petitions  for Review with the  Commonwealth
Court of Pennsylvania  regarding the PaPUC's order.  The Court has  consolidated
these appeals,  and has granted an expedited schedule.  Oral arguments were held
in November 2001. There can be no assurance as to the outcome of these matters.

Supply Plan and Market Risk
---------------------------

      As a result of the PaPUC's Restructuring Orders, Met-Ed is required to act
as provider of last resort (PLR) by supplying  electricity  to customers  who do
not  choose  an  alternate  supplier.  In 1999,  Met-Ed  completed  the sales of
substantially all of its electric generating stations.  As a result,  Met-Ed now
has to  supply  electricity  to  non-shopping  customers  almost  entirely  from
contracted and open market purchases.

Generation Agreements

      Electricity supply planning is currently performed on a combined basis for
Met-Ed  and its GPU Energy  affiliates,  with the goal of  supplying  all of the
energy requirements of their non-shopping  customers at a reasonable cost. As of
September  30, 2001,  Met-Ed and its GPU Energy  affiliates  had only 285 MW (of
which Met-Ed's share is 19 MW) of owned  generation  capacity and related energy
remaining to meet customer needs. The companies also had

                                        5
<PAGE>


contracts with nonutility  generators totaling 1,595 MW (of which Met-Ed's share
is 273 MW) and  agreements  with other  parties to  provide  varying  amounts of
capacity  through May 31, 2004.  These capacity  amounts from third parties vary
from a  monthly  high of  approximately  4,500 MW in 2002 to 500 MW in May 2004.
Based on the exercise of call options,  Met-Ed and its GPU Energy affiliates may
take the energy  associated with up to 150 MW of this capacity through May 2003.
The  companies  have also  purchased  all of the  capacity and energy from their
previously  owned  Three Mile Island  Unit 1 (TMI-1)  and Oyster  Creek  nuclear
generating stations through December 31, 2001 and March 31, 2003,  respectively.
In addition,  through May 31, 2002,  the companies have the right to 3,970 MW of
capacity  associated with  generating  stations they sold in 1999. The remaining
capacity and energy needs of Met-Ed and its GPU Energy affiliates will be met by
short- to  intermediate-term  commitments  (one month to three  years),  and any
residual  needs will be purchased  from the  short-term  market (one hour to one
month). Payments pursuant to these agreements, which include firm commitments as
well  as  certain   assumptions   regarding,   among  other   things,   call/put
arrangements,  are estimated to be $282 million for the remainder of 2001,  $781
million in 2002, $115 million in 2003, and $5 million in 2004.

      Pursuant to the mandates of the Public Utility Regulatory Policies Act and
state regulatory  directives,  Met-Ed was required to enter into long-term power
purchase  agreements  with NUGs for the purchase of energy and  capacity,  which
agreements  have  remaining  terms of up to 19 years.  The  PaPUC  Restructuring
Orders  provide Met-Ed full recovery of its  above-market  NUG costs and certain
NUG buyout costs.  Met-Ed has recorded,  on a present value basis,  an estimated
liability of $479 million on its Consolidated Balance Sheet for above-market NUG
costs, which is offset by corresponding  regulatory assets. Met-Ed is continuing
efforts to reduce the above-market costs of these agreements; however, there can
be no assurance as to the extent to which these efforts will be successful.

Supply Market Risk

      With the divestiture of all but one of its generating plants, Met-Ed is in
a net short  position  (load in excess of  supply).  Consequently,  Met-Ed  must
manage its  purchase and sale of installed  capacity and  ancillary  services to
minimize  business risk associated  with its  reliability  obligation in the PJM
Interconnection,  LLC (PJM). As discussed above,  Met-Ed  currently  manages its
electricity  supply planning on a combined basis with its GPU Energy affiliates.
Supply/risk  management  transactions  will be made  based on the  objective  of
decreasing  price  uncertainty.  Met-Ed  will enter into  supply/hedging  market
arrangements for hedging purposes only.

      Met-Ed  is  generally  at  risk  of  rising  prices  for  electricity  and
electricity-related  products and  services.  These risks may differ during some
months of the year. To manage these risks,  Met-Ed employs a portfolio  approach
which  primarily  consists of two party forward  purchases and options,  but may
also include New York Mercantile  Exchange PJM  electricity  futures and similar
instruments,   as  they  become  widely  available.   This  portfolio   includes
transactions  of various  durations  ranging  from one hour to greater  than one
year.

      Met-Ed's electricity market risks can be price-related,  volume-related or
cost recovery-related as follows:

-     Price-related risk refers to the price exposure  associated with having to
      purchase amounts of electricity, installed capacity and ancillary services
      for load requirements from the PJM interchange spot market. To

                                        6
<PAGE>


      the extent Met-Ed must rely on the PJM pool to satisfy load  requirements,
      financial  exposure  exists for the difference  between the PJM energy and
      installed  capacity  spot  market  prices  and  the  fixed  rates  paid by
      customers.

-     Volume-related  risk refers to the uncertainty  associated with the amount
      of load Met-Ed is required to serve.  Deregulation of the electric utility
      industry has resulted in the ability of customers to purchase  electricity
      from other  electric  suppliers.  This  customer  shopping,  combined with
      weather  changes,  which affect customer energy usage, can affect Met-Ed's
      position.

-     Cost  recovery-related  risk refers to the prudency risk  associated  with
      future NUG cost recovery under the  Restructuring  Orders  approved by the
      PaPUC, which require continued mitigation of above-market NUG costs.


                              ENVIRONMENTAL MATTERS
                              ---------------------

      As a result of existing  and proposed  legislation  and  regulations,  and
ongoing legal proceedings dealing with environmental matters including,  but not
limited to, air and water quality,  global warming,  electromagnetic fields, and
storage and disposal of hazardous and/or toxic wastes, Met-Ed may be required to
incur  substantial  additional  costs to  construct  new  facilities;  modify or
replace existing and proposed equipment; or remediate,  decommission or clean up
waste disposal and other sites currently or formerly used by it, including, coal
mine refuse piles and generation facilities. In addition,  federal and state law
provide for payment by responsible parties for damage to natural resources.

      Met-Ed records environmental  liabilities (on an undiscounted basis) where
it is probable  that a loss has been  incurred and the amount of the loss can be
reasonably  estimated,  and  adjusts  these  liabilities  as required to reflect
changes in circumstances. At September 30, 2001, Met-Ed had liabilities recorded
on its Consolidated Balance Sheet for environmental remediation of $2 million.

      For more  information,  see the  Environmental  Matters section of Note 1,
Commitments  and   Contingencies,   of  the  Notes  to  Consolidated   Financial
Statements.


                      LEGAL MATTERS - TMI-2 ACCIDENT CLAIMS
                      -------------------------------------

      As a  result  of the 1979  Three  Mile  Island  Unit 2  (TMI-2)  accident,
individual  claims for alleged  personal injury  (including  claims for punitive
damages),  which are material in amount, were asserted against Met-Ed,  Penelec,
JCP&L and GPU, Inc. (the  defendants).  Approximately  2,100 of such claims were
filed in the US District Court for the Middle District of Pennsylvania.  Some of
the  claims  also  seek  recovery  for  injuries   from  alleged   emissions  of
radioactivity before and after the accident.

      In 1996, the District Court granted a motion for summary judgment filed by
the  defendants,  and  dismissed  the ten initial  "test  cases"  which had been
selected for a test case trial,  as well as all of the  remaining  2,100 pending
claims. The Court ruled that there was no evidence which created a genuine issue
of material fact  warranting  submission of  plaintiffs'  claims to a jury.  The
plaintiffs  appealed the District Court's ruling to the Court of Appeals for the
Third Circuit. In November 1999, the Third Circuit affirmed the

                                        7
<PAGE>


District Court's  dismissal of the ten "test cases," but set aside the dismissal
of the  additional  pending  claims,  remanding  them to the District  Court for
further proceedings.  In remanding these claims, the Third Circuit held that the
District Court had erred in extending its summary judgment decision to the other
plaintiffs and imposing on these  plaintiffs the District  Court's  finding that
radiation  exposures  below 10 rems were too  speculative  to establish a causal
link to cancer.  The Court of Appeals  stated that the non-test case  plaintiffs
should be permitted to present  their own  individual  evidence that exposure to
radiation from the accident  caused their cancers.  In June 2000, the US Supreme
Court denied petitions for review filed by the defendants and the plaintiffs.

      In September 2000, the defendants  filed a Motion for Summary  Judgment in
the District Court.  Meanwhile,  the plaintiffs took an interlocutory  appeal to
the Third Circuit seeking review of the District Court's  determination that the
remaining  plaintiffs should be allowed to advance causation theories based only
on the  admissible  evidence of record at the close of discovery in the case. On
April 30, 2001, the Third Circuit  affirmed the District  Court's  decision.  In
July 2001,  the  defendants  renewed  their  motion for Summary  Judgment of the
remaining 2,100 claims in the District Court.

      There can be no assurance as to the outcome of this litigation.

      Met-Ed  believes that any liability to which it might be subject by reason
of the  TMI-2  accident  will not  exceed  its  financial  protection  under the
Price-Anderson Act.












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                                        9
<PAGE>
<TABLE>
<CAPTION>





              METROPOLITAN EDISON COMPANY AND SUBSIDIARY COMPANIES

                           Consolidated Balance Sheets
                           ---------------------------


                                                                    In Thousands
                                                          ---------------------------
                                                          September 30,  December 31,
                                                              2001           2000
                                                          -------------  ------------
                                                           (Unaudited)

ASSETS
Utility Plant:
<S>                                                        <C>            <C>
  Utility plant in service                                 $1,601,371     $1,561,252
  Accumulated depreciation                                   (518,794)      (489,607)
                                                            ---------      ---------
      Net utility plant in service                          1,082,577      1,071,645
  Construction work in progress                                13,472         22,437
  Other, net                                                      596            596
                                                            ---------      ---------
      Net utility plant                                     1,096,645      1,094,678
                                                            ---------      ---------


Other Property and Investments:
  Nuclear decommissioning trusts, at market (Note 1)          155,735        154,068
  Other, net                                                   38,443          4,472
                                                            ---------      ---------
      Total other property and investments                    194,178        158,540
                                                            ---------      ---------


Current Assets:
  Cash and temporary cash investments                          23,889          3,234
  Special deposits                                                153            205
  Accounts receivable:
    Customers, less provision for doubtful accounts
      of $11,689 for 2001 and $13,004 for 2000                 80,493         70,118
    Affiliates                                                  2,496         37,313
    Other                                                      35,252         28,525
  Unbilled revenues                                            35,778         38,688
  Deferred income taxes                                         1,471          1,838
  Prepayments                                                  17,561          7,556
                                                            ---------      ---------
      Total current assets                                    197,093        187,477
                                                            ---------      ---------


Deferred Debits and Other Assets:
  Regulatory assets, net (Note 1)                           1,063,440      1,224,370
  Deferred income taxes                                       435,183        447,868
  Other                                                        45,392         44,835
                                                            ---------      ---------
      Total deferred debits and other assets                1,544,015      1,717,073
                                                            ---------      ---------






      Total Assets                                         $3,031,931     $3,157,768
                                                            =========      =========



The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>

                                       10
<PAGE>
<TABLE>
<CAPTION>


              METROPOLITAN EDISON COMPANY AND SUBSIDIARY COMPANIES

                           Consolidated Balance Sheets
                           ---------------------------


                                                                    In Thousands
                                                          ---------------------------
                                                          September 30,  December 31,
                                                              2001          2000
                                                          -------------  ------------
                                                           (Unaudited)

LIABILITIES AND CAPITALIZATION
Capitalization:
<S>                                                        <C>            <C>
   Common stock                                            $   66,273     $   66,273
   Capital surplus                                            400,200        400,200
   Retained earnings                                          111,909         70,476
   Accumulated other comprehensive income (Note 4)                166             64
                                                            ---------      ---------
      Total common stockholder's equity                       578,548        537,013
   Company-obligated trust preferred securities (Note 5)      100,000        100,000
   Long-term debt                                             566,833        496,860
                                                            ---------      ---------
      Total capitalization                                  1,245,381      1,133,873
                                                            ---------      ---------


Current Liabilities:
   Securities due within one year                              30,029             27
   Notes payable                                               60,000         46,600
   Accounts payable:
    Affiliates                                                  4,894         69,462
    Other                                                      47,282         37,399
   Taxes accrued                                                7,591         20,768
   Interest accrued                                            10,353         14,375
   Other                                                       10,514         13,858
                                                            ---------      ---------
      Total current liabilities                               170,663        202,489
                                                            ---------      ---------


Deferred Credits and Other Liabilities:
   Deferred income taxes                                      765,527        728,344
   Unamortized investment tax credits                          13,522         14,159
   Power purchase contract loss liability (Note 1)            478,924        727,503
   Three Mile Island Unit 2 future costs (Note 1)             263,578        257,367
   Nuclear fuel disposal fee                                   36,689         35,456
   Other                                                       57,647         58,577
                                                            ---------      ---------
      Total deferred credits and other liabilities          1,615,887      1,821,406
                                                            ---------      ---------


Commitments and Contingencies (Note 1)






      Total Liabilities and Capitalization                 $3,031,931     $3,157,768
                                                            =========      =========



The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>

                                       11
<PAGE>
<TABLE>
<CAPTION>


              METROPOLITAN EDISON COMPANY AND SUBSIDIARY COMPANIES

                        Consolidated Statements of Income
                        ---------------------------------
                                   (Unaudited)

                                                           In Thousands
                                             ----------------------------------------
                                                Three Months          Nine Months
                                             Ended September 30,  Ended September 30,
                                             -------------------  -------------------
                                               2001      2000        2001     2000
                                               ----      ----        ----     ----

<S>                                          <C>       <C>        <C>       <C>
Operating Revenues                           $283,519  $227,442   $727,075  $628,312
                                              -------   -------    -------   -------

Operating Expenses:
  Power purchased and interchanged:
    Affiliates                                  5,664        79      8,051     1,427
    Others                                    238,140   149,958    513,749   370,513
  Deferred costs, net                         (74,600)    6,969    (98,994)   (9,522)
  Other operation and maintenance              33,144    32,838     99,984    99,043
  Depreciation and amortization                21,554    16,519     60,783    48,264
  Taxes, other than income taxes               12,713    11,235     33,946    34,211
                                              -------   -------    -------   -------
      Total operating expenses                236,615   217,598    617,519   543,936
                                              -------   -------    -------   -------

Operating Income                               46,904     9,844    109,556    84,376
                                              -------   -------    -------   -------

Other Income and Deductions:
  Allowance for other funds used during
    construction                                  -         -          -          28
  Other income/(expense), net                   9,897    (3,825)    27,282     7,195
                                              -------   -------    -------   -------
      Total other income and deductions         9,897    (3,825)    27,282     7,223
                                              -------   -------    -------   -------

Income Before Interest Charges                 56,801     6,019    136,838    91,599
                                              -------   -------    -------   -------

Interest Charges:
  Long-term debt and notes payable             11,998    11,900     34,449    35,240
  Company-obligated trust
    preferred securities                        1,837     1,143      5,512     4,818
  Other interest                                  457       579      1,688     1,665
  Allowance for borrowed funds used
    during construction                          (305)     (137)      (491)     (405)
                                              -------   -------    -------   -------
      Total interest charges                   13,987    13,485     41,158    41,318
                                              -------   -------    -------   -------

Income/(Loss) Before Income Taxes              42,814    (7,466)    95,680    50,281
  Income taxes                                 18,290    (3,675)    39,247    18,912
                                              -------   -------    -------   -------
Net Income/(Loss)                            $ 24,524  $ (3,791)  $ 56,433  $ 31,369
                                              =======   =======    =======   =======











The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>

                                       12

<PAGE>
<TABLE>
<CAPTION>


              METROPOLITAN EDISON COMPANY AND SUBSIDIARY COMPANIES

                      Consolidated Statements of Cash Flows
                      -------------------------------------
                                   (Unaudited)

                                                                    In Thousands
                                                           ------------------------
                                                                  Nine Months
                                                              Ended September 30,
                                                           ------------------------
                                                              2001            2000
                                                              ----            ----
Operating Activities:
<S>                                                        <C>             <C>
  Net income                                               $  56,433       $  31,369
  Adjustments to reconcile income to cash provided:
    Depreciation and amortization                             61,787          55,699
    Provision for doubtful accounts                            6,782          10,360
    Regulatory assets, net                                   (26,657)        (19,407)
    Voluntary enhanced retirement programs                     9,189             -
    Deferred income taxes and investment tax
      credits, net                                            44,342           1,077
    Deferred costs, net                                      (98,994)         (9,522)
  Changes in working capital:
    Receivables                                              (20,973)        (15,001)
    Special deposits and prepayments                          (9,954)          6,278
    Payables and accrued liabilities                         (10,660)        (26,299)
    Due to/from affiliates                                   (38,939)        (40,214)
  Nonutility generation contract buyout costs                    -            (1,250)
  Other, net                                                     127          (1,576)
                                                            --------        --------
      Net cash required by operating activities              (27,517)         (8,486)
                                                            --------        --------

Investing Activities:
  Capital expenditures and investments                       (37,614)        (38,989)
  Contributions to decommissioning trusts                     (7,113)         (6,328)
  Other, net                                                  (5,001)            -
                                                            --------        ---------
      Net cash required by investing activities              (49,728)        (45,317)
                                                            --------        --------

Financing Activities:
  Issuance of long-term debt                                  99,500             -
  Increase in notes payable, net                              13,400         121,100
  Retirement of long-term debt                                   -           (50,000)
  Dividends paid on common stock                             (15,000)        (25,000)
                                                            --------        --------
      Net cash provided by financing activities               97,900          46,100
                                                            --------        --------

Net increase/(decrease) in cash and temporary cash
  investments from above activities                           20,655          (7,703)
Cash and temporary cash investments, beginning of year         3,234          10,899
                                                            --------        --------
Cash and temporary cash investments, end of period         $  23,889       $   3,196
                                                            ========        ========

Supplemental Disclosure:
  Interest and preferred dividends paid                    $  42,970       $  45,153
                                                            ========        ========
  Income taxes paid                                        $   2,363       $  52,230
                                                            ========        ========
  New capital lease obligations incurred                   $     -         $     -
                                                            ========        ========





The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>

                                       13
<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Metropolitan Edison Company (Met-Ed) is a wholly-owned electric utility
subsidiary of FirstEnergy Corp. (FirstEnergy), an Ohio corporation headquartered
in Akron,  Ohio.  Met-Ed conducts  business under the name GPU Energy along with
its affiliates  Pennsylvania Electric Company (Penelec) and Jersey Central Power
& Light  Company  (JCP&L),  which  are also  electric  utility  subsidiaries  of
FirstEnergy.

         In August  2000,  FirstEnergy  entered into an agreement to merge with
GPU, Inc., under which FirstEnergy  would acquire all of the outstanding  shares
of GPU,  Inc.'s  common  stock  for  approximately  $4.5  billion  in  cash  and
FirstEnergy common stock. The merger became effective on November 7, 2001 and is
being  accounted for by the purchase  method.  Prior to that time,  Met-Ed was a
wholly-owned subsidiary of GPU, Inc.




1.  COMMITMENTS AND CONTINGENCIES


               COMPETITION AND THE CHANGING REGULATORY ENVIRONMENT
               ---------------------------------------------------


Stranded Costs and Regulatory Restructuring Orders:
--------------------------------------------------

         With the transition to a competitive marketplace for generation service
in  Pennsylvania,  certain  generation-related  costs,  which generally would be
recoverable  in a regulated  environment,  may no longer be  recoverable.  These
costs are generally referred to as stranded costs.

         In 1998,  the  Pennsylvania  Public Utility  Commission  (PaPUC) issued
amended  Restructuring  Orders approving  Settlement  Agreements entered into by
Met-Ed  which,  among  other  things,  provide for  customer  choice of electric
generation supplier beginning January 1, 1999 and a one-year (1999) reduction in
retail  distribution  rates for all  consumers.  The  Orders  also  provide  for
recovery of a substantial  portion of what otherwise  would have become stranded
costs,  subject to Phase II  proceedings  following  the  completion of Met-Ed's
generating asset  divestitures,  to make a final  determination of the extent of
that stranded cost recovery.  In 2000,  Met-Ed submitted Phase II Reports to the
PaPUC  supporting  their  actual  net  divestiture   proceeds  and  providing  a
reconciliation of stranded costs pursuant to the 1998 Restructuring Orders.

         In 2000,  the PaPUC issued a Phase II Order which,  among other things,
disallowed  a portion of the  requested  additional  stranded  costs above those
amounts  granted in the 1998 Orders.  The Order  requires  Met-Ed to seek an IRS
ruling  regarding the return of certain  unamortized  investment tax credits and
excess deferred income tax benefits to ratepayers.  If the IRS ruling ultimately
supports  returning  these tax benefits to ratepayers,  Met-Ed would then reduce
stranded costs by $17 million plus interest and record a corresponding charge to
income.

                                       14
<PAGE>


Supply of Electricity:
---------------------

         As a result of the PaPUC's  Restructuring Orders, Met-Ed is required to
act as provider of last resort (PLR) by supplying  electricity  to customers who
do not choose an alternate  supplier.  Given that Met-Ed has essentially  exited
the  generation  business and will have to supply  electricity  to  non-shopping
customers almost entirely from contracted and open market purchases,  there will
be increased risks associated with supplying that electricity.

         Met-Ed  has been  unable to recover  energy  costs in excess of amounts
reflected  in its  capped  generation  rates,  which are in effect  for  varying
periods,  under its 1998  Restructuring  Orders.  During 2000,  market prices at
which  Met-Ed  was  required  to  purchase  electricity  for its  retail  supply
customers  at times  substantially  exceeded  the amounts  Met-Ed was allowed to
charge for that  electricity  under its capped rates.  In November 2000,  Met-Ed
filed a petition with the PaPUC seeking  permission to defer for future recovery
its energy costs in excess of amounts  reflected in its capped generation rates.
In January 2001, the PaPUC consolidated this petition with the  FirstEnergy/GPU,
Inc.  merger  proceeding  for  consideration  and  resolution in accord with the
merger procedural schedule.

         In June 2001, Met-Ed, Penelec and FirstEnergy entered into a Settlement
Stipulation  with all of the major  intervenors in the combined  merger and rate
relief proceedings, that, in addition to resolving certain issues concerning the
PaPUC's approval of the  FirstEnergy/GPU,  Inc. merger,  also addressed Met-Ed's
request  for PLR rate  relief.  On June  20,  2001,  the  PaPUC  entered  orders
approving the  Settlement  Stipulation,  thus approving the merger and providing
Met-Ed PLR rate  relief.  Accordingly,  Met-Ed is  permitted to defer for future
recovery the difference  between its actual energy costs and those  reflected in
its  capped  generation  rates,  retroactive  to  January  1,  2001.  These "PLR
deferrals" will continue  through December 31, 2005. If energy costs incurred by
Met-Ed during this period are below its respective  capped generation rates, the
difference would be used to reduce its PLR deferrals.

         Met-Ed has established  regulatory  assets on its balance sheet for the
deferral of excess  energy costs  incurred  during the period of January 1, 2001
through  September  30,  2001.  In  the  second  quarter  of  2001,  Met-Ed  had
established a reserve of $13 million against its PLR deferrals for the period of
January 1, 2001  through  May 31,  2001,  which  would have been  written off in
accordance with the Settlement  Stipulation had the merger not been consummated.
Upon consummation of the merger, this reserve was reversed.

         Under the Settlement  Stipulation,  Met-Ed's PLR obligations  have been
extended through December 31, 2010. Met-Ed's Competitive Transition Charge (CTC)
revenues will be applied first to PLR costs,  then to non-NUG stranded costs and
lastly to NUG stranded costs through December 31, 2010.  Remaining PLR deferrals
not recovered as of December 31, 2010 would have to be written off.

         The Settlement  Stipulation also requires a revised  calculation of NUG
stranded costs being  recovered  under the terms of Met-Ed's 1998  Restructuring
Orders, retroactive to January 1, 2001.

         Several parties have filed  Petitions for Review with the  Commonwealth
Court of Pennsylvania  regarding the PaPUC's orders.  The Court has consolidated
these appeals,  and has granted an expedited schedule.  Oral arguments were held
in November 2001. There can be no assurance as to the outcome of these matters.

                                       15

<PAGE>


Generation Agreements:
---------------------

         The  evolving  competitive  generation  market has created  uncertainty
regarding the  forecasting of energy supply needs,  which has caused the company
to seek  shorter-term  agreements  offering more  flexibility.  Met-Ed currently
manages its electricity  supply planning on a combined basis with its GPU Energy
affiliates.   The   current   supply   plan   generally   utilizes   short-   to
intermediate-term  commitments  (one month to three  years),  with any  residual
needs being purchased from the short-term market (one hour to one month).

         Met-Ed and its GPU Energy  affiliates have entered into agreements with
third party  suppliers  to purchase  capacity  and energy  through  2004.  As of
September 30, 2001,  payments pursuant to these  agreements,  which include firm
commitments  as well as  certain  assumptions  regarding,  among  other  things,
call/put  arrangements,  are  estimated to be $282 million for the  remainder of
2001, $781 million in 2002, $115 million in 2003 and $5 million in 2004.

         Pursuant  to the  mandates  of the federal  Public  Utility  Regulatory
Policies Act and state regulatory directives,  Met-Ed was required to enter into
long-term  power  purchase  agreements  with NUGs for the purchase of energy and
capacity,  which  agreements have remaining  terms of up to 19 years.  The rates
under  virtually  all of these NUG  agreements  are  substantially  in excess of
current and projected prices from alternative  sources,  except for periods when
Met-Ed is required to meet high customer  demand,  typically  during  periods of
extremely hot weather or when power  supplies are limited.  The following  table
shows  Met-Ed's  actual  payments  from 1999 through  September  30,  2001,  and
estimated payments thereafter through 2006:

                        Calendar                   Payments Under NUG Agreements
                          Year                             (in millions)
                          ----                             -------------

                          1999                                 $167
                          2000                                  153
                          2001                                  147
                          2002                                  149
                          2003                                  153
                          2004                                  158
                          2005                                  162
                          2006                                  167

         The  PaPUC  Restructuring  Orders  provide  Met-Ed  assurance  of  full
recovery  of its  above-market  NUG costs  and  certain  NUG  buyout  costs.  At
September 30, 2001, Met-Ed had recorded,  on a present value basis, an estimated
liability of $479 million on its Consolidated Balance Sheet for above-market NUG
costs, which was offset by corresponding regulatory assets. Met-Ed is continuing
efforts to reduce the above-market costs of these agreements; however, there can
be no assurance as to the extent to which these efforts will be successful.


                               ACCOUNTING MATTERS
                               ------------------

         In 1998, Met-Ed  discontinued the application of Statement of Financial
Accounting  Standards  No. 71 (FAS 71),  "Accounting  for the Effects of Certain
Types of  Regulation,"  and adopted the  provisions  of  Statement  of Financial
Accounting Standards No. 101 (FAS 101), "Regulated  Enterprises - Accounting for
the  Discontinuation  of  Application  of FASB  Statement  No. 71," and Emerging
Issues Task Force (EITF) Issue 97-4, "Deregulation of the Pricing of

                                       16
<PAGE>


Electricity  - Issues  Related to the  Application  of FAS 71 and FAS 101," with
respect to its electric generation operations. The transmission and distribution
portion of Met-Ed's operations  continues to be subject to the provisions of FAS
71. Regulatory  assets,  net as reflected in the September 30, 2001 and December
31, 2000 Consolidated Balance Sheets in accordance with the provisions of FAS 71
and EITF Issue 97-4 were as follows:

                                                             In Thousands
                                                      -------------------------
                                                     September 30, December 31,
                                                         2001          2000
                                                     ------------- ------------


CTC                                                    $  880,276   $1,053,085
Costs recoverable through distribution rates:
 Income taxes recoverable through future rates, net       120,525      114,543
 Three Mile Island Unit 2 decommissioning costs            35,723       27,610
 Other, net                                                26,916       29,132
                                                        ---------    ---------
     Total regulatory assets, net                      $1,063,440   $1,224,370
                                                        =========    =========


         As of September 30, 2001,  Regulatory  assets, net shown above included
$112  million  of  deferred   energy-related   costs  plus   interest   (net  of
collections).  This  deferred  balance  includes  the  under-recovered  costs of
supplying  electricity to customers who did not choose an alternate supplier, as
well  as  above-market   NUG  costs,  but  excludes  the  net  generation  asset
divestiture  gains  which were used to reduce  stranded  costs.  For  additional
information, see Competition and the Changing Regulatory Environment section.


                               NUCLEAR FACILITIES
                               ------------------

Investments:
-----------

         In 1999,  Met-Ed and its GPU Energy  affiliates  sold Three Mile Island
Unit 1 (TMI-1) to AmerGen Energy Company,  LLC (AmerGen) for approximately  $100
million.  As part of the sale,  AmerGen  has  assumed  full  responsibility  for
decommissioning  the  plants,  and  Met-Ed and its GPU  Energy  affiliates  have
transferred  $320  million of TMI-1  decommissioning  trust funds to AmerGen (of
which Met-Ed's share was $160 million).  Three Mile Island Unit 2 (TMI-2), which
was  damaged  during a 1979  accident,  is  jointly  owned by Met-Ed and its GPU
Energy  affiliates,  with Met-Ed  having a 50%  ownership  percentage.  Met-Ed's
remaining  investment  in TMI-2 was  written  off in 1998  after  receiving  the
PaPUC's Restructuring Orders.

TMI-2:
------

         As a result of the 1979 TMI-2 accident,  individual  claims for alleged
personal injury (including claims for punitive  damages),  which are material in
amount,  were  asserted  against  Met-Ed,  Penelec,  JCP&L  and GPU,  Inc.  (the
defendants).  Approximately  2,100 of such  claims were filed in the US District
Court for the Middle  District  of  Pennsylvania.  Some of the claims  also seek
recovery for injuries from alleged  emissions of radioactivity  before and after
the accident.

         At  the  time  of  the  TMI-2   accident,   as  provided   for  in  the
Price-Anderson  Act,  Met-Ed,  Penelec  and  JCP&L  had  (a)  primary  financial
protection in the form of insurance policies with groups of insurance  companies
providing  an  aggregate  of $140  million of primary  coverage,  (b)  secondary
financial protection in the form of private liability insurance under an

                                       17
<PAGE>


industry  retrospective  rating plan  providing  for up to an  aggregate of $335
million in premium  charges under such plan and (c) an indemnity  agreement with
the Nuclear  Regulatory  Commission (NRC) for up to $85 million,  bringing their
total  financial  protection  up to an  aggregate  of $560  million.  Under  the
secondary  level,  Met-Ed,  Penelec  and JCP&L are  subject  to a  retrospective
premium  charge of up to $5 million per reactor,  or a total of $15 million,  of
which Met-Ed's share is $5 million.

         In 1995,  the US Court of Appeals for the Third  Circuit ruled that the
Price-Anderson  Act provides coverage under its primary and secondary levels for
punitive as well as compensatory damages, but that punitive damages could not be
recovered  against the  Federal  Government  under the third level of  financial
protection. In so doing, the Court of Appeals referred to the "finite fund" (the
$560 million of financial  protection  under the Price-  Anderson  Act) to which
plaintiffs must resort to get compensatory as well as punitive damages.

         The Court of Appeals  also ruled that the  standard of care owed by the
defendants  to a plaintiff  was  determined  by the specific  level of radiation
which was  released  into the  environment,  as measured  at the site  boundary,
rather than as measured at the specific  site where the plaintiff was located at
the time of the accident (as the defendants proposed). The Court of Appeals also
held that each plaintiff still must demonstrate  exposure to radiation  released
during the TMI-2  accident and that such  exposure had resulted in injuries.  In
1996,  the US Supreme Court denied  petitions  filed by the defendants to review
the Court of Appeals' rulings.

         In 1996, the District Court granted a motion for summary judgment filed
by the  defendants,  and  dismissed  the ten initial "test cases" which had been
selected for a test case trial,  as well as all of the  remaining  2,100 pending
claims. The Court ruled that there was no evidence which created a genuine issue
of material fact  warranting  submission of  plaintiffs'  claims to a jury.  The
plaintiffs  appealed the District Court's ruling to the Court of Appeals for the
Third Circuit. In November 1999, the Third Circuit affirmed the District Court's
dismissal of the ten "test cases," but set aside the dismissal of the additional
pending claims, remanding them to the District Court for further proceedings. In
remanding these claims, the Third Circuit held that the District Court had erred
in extending its summary judgment  decision to the other plaintiffs and imposing
on these plaintiffs the District Court's finding that radiation  exposures below
10 rems were too speculative to establish a causal link to cancer.  The Court of
Appeals stated that the non-test case plaintiffs  should be permitted to present
their own  individual  evidence  that  exposure to  radiation  from the accident
caused their cancers.  In June 2000,  the US Supreme Court denied  petitions for
review filed by the defendants and the plaintiffs.

         In September 2000, the defendants  filed a Motion for Summary  Judgment
in the District Court. Meanwhile, the plaintiffs took an interlocutory appeal to
the Third Circuit seeking review of the District Court's  determination that the
remaining  plaintiffs should be allowed to advance causation theories based only
on the  admissible  evidence of record at the close of discovery in the case. On
April 30, 2001, the Third Circuit  affirmed the District  Court's  decision.  In
July 2001,  the  defendants  renewed  their  motion for Summary  Judgment of the
remaining 2,100 claims in the District Court.

         There can be no assurance as to the outcome of this litigation.

                                       18
<PAGE>


         Met-Ed  believes  that any  liability  to which it might be  subject by
reason of the TMI-2 accident will not exceed its financial  protection under the
Price-Anderson Act.


                         NUCLEAR PLANT RETIREMENT COSTS
                         ------------------------------

         Retirement  costs  for  nuclear  plants  include   decommissioning  the
radiological  portions of the plants and the cost of removal of  nonradiological
structures  and  materials.  The  disposal  of  spent  nuclear  fuel is  covered
separately by contracts with the US Department of Energy (DOE).

         In 1995, a  consultant  performed a  site-specific  study of TMI-2 that
considered   various   decommissioning   methods  and   estimated  the  cost  of
decommissioning  the  radiological  portion  and  the  cost  of  removal  of the
nonradiological  portion  of the plant,  using the prompt  removal/dismantlement
method.  Management has reviewed the methodology  and  assumptions  used in this
study, is in agreement with them, and believes the results are  reasonable.  The
TMI-2  funding  completion  date is 2014,  consistent  with TMI-2  remaining  in
long-term  storage.  Met-Ed's share of the estimated  retirement costs under the
1995  site-specific  study,  assuming  decommissioning of TMI-2 in 2014, is $231
million for radiological  decommissioning and $18.7 million for non-radiological
removal  costs (net of $6.3 million  spent as of  September  30,  2001)(in  2001
dollars).

         Met-Ed  and  its  GPU  Energy   affiliates  are  each  responsible  for
retirement  costs in  proportion to its  respective  ownership  percentage.  The
ultimate  cost of  retiring  TMI-2  may be  different  from  the  cost  estimate
contained in this site-specific study. The NRC has established a decommissioning
funding target which,  while not an actual cost estimate,  is a reference  level
designed to assure that licensees demonstrate adequate financial  responsibility
for  decommissioning.  The current NRC funding target exceeds the  site-specific
study cost estimate by $10 million.

         Met-Ed's   estimated   liability  for  future  TMI-2  retirement  costs
(reflected as Three Mile Island Unit 2 future costs on the Consolidated  Balance
Sheet) as of September  30, 2001 was $263  million,  and as of December 31, 2000
was $257  million.  This  liability is based upon the 1995  site-specific  study
estimate  (in  2001 and  2000  dollars,  respectively)  discussed  above  and an
estimate for remaining  incremental monitored storage costs of $15 million, both
as of September  30, 2001 and December 31, 2000,  as a result of TMI-2  entering
long-term monitored storage in 1993.

         Offsetting the $263 million liability for future TMI-2 retirement costs
as of September 30, 2001 was $98 million which  management  believes is probable
of recovery  from  customers  and  included  in  Regulatory  assets,  net on the
Consolidated  Balance  Sheet,  and $156  million  in trust  funds  for TMI-2 and
included  in  Nuclear  decommissioning  trusts,  at market  on the  Consolidated
Balance Sheet.

         The  PaPUC  Restructuring  Orders  granted  Met-Ed  recovery  of  TMI-2
decommissioning  costs as part of the CTC.  The 1996  Customer  Choice  Act also
allows  Met-Ed to defer as a regulatory  asset those  amounts that are above the
level provided for in the CTC for future recovery.

         As of  September  30,  2001,  the  accident-related  portion  of  TMI-2
radiological  decommissioning  costs was estimated to be $41 million for Met-Ed,
which is based on the 1995 site-specific study (in 2001 dollars).  In connection
with rate case resolutions, Met-Ed made contributions to an

                                       19
<PAGE>


irrevocable external trust for its share of the accident-related  portion of the
decommissioning  liability in the amount of $40 million.  This  contribution was
not recoverable from customers and was expensed in 1991.

         Met-Ed  intends to seek recovery for any increases in TMI-2  retirement
costs, but recognizes that recovery cannot be assured.

         Met-Ed and its GPU Energy affiliates own all of the common stock of the
Saxton  Nuclear  Experimental  Corporation,  which  owns a  small  demonstration
nuclear  reactor.  Decommissioning  of the plant is expected to be  completed in
2002.  Met-Ed's estimated liability for future Saxton  decommissioning  costs at
September 30, 2001 was $5 million,  net of $13 million  spent by Met-Ed  through
September 30, 2001.


                                    INSURANCE
                                    ---------

         Met-Ed has insurance  (subject to retentions and  deductibles)  for its
operations and facilities  including coverage for property damage,  liability to
employees  and  third  parties,  and  loss of use  and  occupancy.  There  is no
assurance that Met-Ed will maintain all existing insurance coverages.  Losses or
liabilities  that are not  completely  insured,  unless  allowed to be recovered
through  ratemaking,  could  have a  material  adverse  effect on the  financial
position of Met-Ed.

         Met-Ed  and its GPU  Energy  affiliates  have  purchased  property  and
decontamination insurance coverage for TMI-2 totaling $150 million.

         The  Price-Anderson  Act limits an owner's  liability to third  parties
resulting from a nuclear  incident to approximately  $9.5 billion.  Coverage for
the first $200 million of such liability is provided by private  insurance.  The
remaining  coverage,   or  secondary  financial   protection,   is  provided  by
retrospective premiums payable by all nuclear reactor owners.  Although TMI-2 is
exempt from retrospective premium assessments, the plant is still covered by the
provisions  of the  Price-Anderson  Act. In addition,  Met-Ed and its GPU Energy
affiliates are subject to other  retrospective  premium  assessments  related to
policies applicable to TMI-1 prior to its sale to AmerGen.


                              ENVIRONMENTAL MATTERS
                              ---------------------

         As a result of existing and proposed  legislation and regulations,  and
ongoing legal proceedings dealing with environmental matters including,  but not
limited to, air and water quality,  global warming,  electromagnetic fields, and
storage and disposal of hazardous and/or toxic wastes, Met-Ed may be required to
incur  substantial  additional  costs to  construct  new  facilities;  modify or
replace existing and proposed equipment; or remediate,  decommission or clean up
waste disposal and other sites currently or formerly used by it,  including coal
mine refuse piles and generation facilities. In addition, federal and state laws
provide for payment by responsible parties for damage to natural resources.

         At  September  30,  2001,  Met-Ed  had  liabilities   recorded  on  its
Consolidated  Balance  Sheet for  environmental  remediation  of $2 million,  as
discussed below.

         Met-Ed has been formally  notified by the US  Environmental  Protection
Agency (EPA) and state environmental authorities that it is among the

                                       20
<PAGE>


potentially  responsible  parties (PRPs) who may be jointly and severally liable
to pay for the costs associated with the  investigation  and remediation at four
hazardous and/or toxic waste sites.

         In  addition,   Met-Ed  has  been   requested  to  participate  in  the
remediation or supply information to the EPA and state environmental authorities
on  several  other  sites  for  which it has not been  formally  named as a PRP,
although the EPA and/or state  authorities may  nevertheless  consider it a PRP.
Met-Ed has also been named in lawsuits requesting damages (which are material in
amount) for  hazardous  and/or  toxic  substances  allegedly  released  into the
environment. As of September 30, 2001, a liability of approximately $0.2 million
had  been  recorded  for PRP  sites  where it is  probable  that a loss has been
incurred and the amount could be reasonably estimated.

         The ultimate cost of remediation of all these and other hazardous waste
sites will depend upon changing  circumstances as site investigations  continue,
including  (a) the  existing  technology  required  for  site  cleanup,  (b) the
remedial  action  plan chosen and (c) the extent of site  contamination  and the
portion attributed to Met-Ed.


                       OTHER COMMITMENTS AND CONTINGENCIES
                       -----------------------------------

         In accordance with the Nuclear Waste Policy Act of 1982 (NWPA),  Met-Ed
has  entered  into  contracts  with,  and paid fees to,  the DOE for the  future
disposal of spent nuclear fuel in a repository or interim storage  facility.  In
1996, the DOE notified Met-Ed and other Standard  Contract holders that it would
be unable to begin  acceptance of spent nuclear fuel for disposal by January 31,
1998, as mandated by the NWPA. The DOE requested  recommendations  from contract
holders  for  handling  the  delay.  In June  1997,  a  consortium  of  electric
utilities,  including  GPU  Nuclear,  Inc.  (GPUN),  the former  operator of the
nuclear plants previously owned by Met-Ed and its GPU Energy affiliates, filed a
license  application  with  the NRC  seeking  permission  to  build  an  interim
above-ground storage facility for spent nuclear fuel in Utah.

         At September  30, 2001,  Met-Ed had recorded a liability of $37 million
owed to the Nuclear Waste Fund, related to spent nuclear fuel generated prior to
the sale of TMI-1 to AmerGen.  AmerGen has assumed all  liability  for  disposal
costs  related to spent  nuclear fuel  generated  following  its purchase of the
plant.

         On July 26, 2000, GPUN filed suit in the United States Court of Federal
Claims  seeking to recover  damages as a result of the DOE's failure to commence
disposal of GPUN's spent  nuclear  fuel by January 31, 1998,  as required by the
terms of the  Standard  Contracts  between  GPUN and DOE.  The  complaint  seeks
damages from the  Government in an amount to be  determined  at trial.  GPUN has
alleged that it is entitled to damages  attributable  to operations at TMI-1. In
an  August  20,  2001  pleading,  the  Government  acknowledged  that the  DOE's
inability to begin providing the services  required by the Standard  Contract by
January 31, 1998 constituted a partial breach of the Standard  Contract.  In the
same pleading, the Government stated that GPUN may lack standing to maintain its
suit because it assigned its Standard  Contracts  and title to its spent nuclear
fuel to the buyer of TMI-1.  By order dated September 24, 2001, the Court stated
that it would hold in abeyance  any final  determination  on standing  until the
completion of discovery,  which is currently underway. There can be no assurance
as to the outcome of this matter.

                                       21
<PAGE>


         During the normal course of the operation of its business,  in addition
to the  matters  described  above,  Met-Ed is,  from time to time,  involved  in
disputes,  claims and, in some cases,  as a  defendant  in  litigation  in which
compensatory  and  punitive  damages  are  sought  by  the  public,   customers,
contractors,  vendors and other  suppliers  of  equipment  and  services  and by
employees  alleging  unlawful  employment  practices.  While management does not
expect that the outcome of these matters will have a material effect on Met-Ed's
financial position or results of operations, there can be no assurance that this
will continue to be the case.



2.  ACCOUNTING FOR NON-RECURRING ITEMS

         In  March  2001,  101  Met-Ed  employees  accepted  Voluntary  Enhanced
Retirement   Programs   offered  to  certain   bargaining   unit   employees  in
Pennsylvania. As a result, in the quarter ended March 31, 2001, a pre-tax charge
of $9.2 million ($5.4 million  after-tax)  was recorded in Operating  Income for
the cost of pension and other postretirement benefits.



3.  NEW ACCOUNTING STANDARDS

         Met-Ed's use of derivative  instruments  is intended to manage the risk
of price fluctuations.  Met-Ed does not hold or issue derivative instruments for
trading purposes.

         Effective  January 1,  2001,  Met-Ed  adopted  Statement  of  Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by FAS 137,  "Accounting for Derivative  Instruments and
Hedging  Activities - Deferral of the Effective  Date of FASB Statement No. 133"
and FAS 138, "Accounting for Certain Derivative  Instruments and Certain Hedging
Activities - An Amendment of FASB  Statement No. 133"  (collectively,  FAS 133).
FAS  133   establishes   accounting  and  reporting   standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and for hedging activities.

         In general,  FAS 133 requires that companies  recognize all derivatives
as either assets or  liabilities  on the balance  sheet,  measured at their fair
value.  Derivatives not designated as hedges must be adjusted to fair value with
an offset to income.  If the  derivative is designated as a hedge,  depending on
the nature of the hedge,  changes  in fair  value of the  derivative  are either
offset  against  the  change  in fair  value of the asset or  liability  through
income, or recognized in accumulated other comprehensive income until the hedged
item is  recognized  in  income.  To the extent  the hedge is  determined  to be
ineffective,   that  portion  of  the  derivative's  change  in  fair  value  is
immediately  recognized  in income.  FAS 133 provides an  exemption  for certain
contracts  that  qualify as "normal  purchases  and  sales." To qualify for this
exclusion,  certain  criteria,  including  that  it must be  probable  that  the
contract will result in physical delivery, must be met.

         The adoption of FAS 133 on January 1, 2001 resulted in the  recognition
of derivative assets on the Consolidated Balance Sheet at January 1, 2001 in the
amount of $13  million,  with a  substantially  offsetting  amount  recorded  in
Regulatory  assets,  net, of $12.2 million.  As of January 1, 2001, a cumulative
effect of accounting change was recognized as an expense in Other income, net on
the Consolidated Statement of Income in the amount of $0.1 million.

                                       22
<PAGE>


         Met-Ed uses  Over-the-Counter  forward contracts and options on forward
contracts to manage the risk of fluctuations in the market price of electricity.
The majority of the forward commodity contracts are considered "normal purchases
and sales," as defined by FAS 133, and  therefore are excluded from the scope of
FAS 133.

         The energy options and forward  contracts  determined to be derivatives
under FAS 133 are  accounted for as cash flow hedges and expire on various dates
through  November  2002.  These  contracts  are  recorded  at fair  value on the
September 30, 2001 Consolidated Balance Sheet in the amount of $0.2 million. The
offset  of  the  change  in  fair  value  is  recorded  in   Accumulated   other
comprehensive income, net of tax, and subsequently  recognized as a component of
Power purchased and  interchanged on the  Consolidated  Statement of Income when
the underlying power being hedged is purchased. The ineffective portion of these
commodity contracts was immaterial for the quarter ended September 30, 2001.

         When Met-Ed and its GPU Energy  affiliates  sold TMI-1 to AmerGen,  the
parties  entered into an agreement which calls for an adjustment to the purchase
price of TMI-1 in the event of future  energy  price  increases.  If the  future
price of energy exceeds the strike price during the contract year as defined per
the agreement,  Met-Ed and its GPU Energy  affiliates will receive payments from
AmerGen,  subject to a market price cap. However,  if the future price of energy
is less than the  strike  price  during a  contract  year,  a credit is  applied
against  future  contract  payments that would be received  from  AmerGen.  This
agreement  qualifies  as a  derivative  as defined by FAS 133,  and its value is
recorded on the  Consolidated  Balance  Sheet based on the present  value of the
contract's projected future cash flows. As of September 30, 2001, Met-Ed's share
of this  amount  was $27.4  million,  and was  included  in Other  Property  and
Investments  - Other,  net on the  Consolidated  Balance  Sheet.  An  offsetting
regulatory  liability  in the  amount  of $27.2  million  was  recorded  against
Regulatory assets, net,  representing the obligation to treat the retail portion
of payments  received as stranded cost revenues when  received.  The  non-retail
portion is recorded on the  Consolidated  Statement  of Income in Other  income,
net. This amount was immaterial for the quarter ended September 30, 2001.

         In June 2001, the Financial  Accounting Standards Board (FASB) approved
Statement  of  Financial  Accounting  Standards  No.  141 (FAS  141),  "Business
Combinations,"  and  Statement of Financial  Accounting  Standards  No. 142 (FAS
142), "Goodwill and Other Intangible Assets".  These new standards are effective
beginning  July 1, 2001.  FAS 141 requires all business  combinations  initiated
after June 30, 2001, to be accounted for using  purchase  accounting.  Under FAS
142, amortization of existing goodwill will cease on January 1, 2002 and instead
goodwill  will be  tested  for  impairment  at least on an annual  basis.  As of
September  30,  2001,  Met-Ed did not have any  goodwill on its  balance  sheet,
however,  as a result of the merger of  FirstEnergy  and GPU, Inc.  which became
effective  on November  7, 2001,  there will be  goodwill  associated  with this
merger applied to Met-Ed. The amount of goodwill to be applied to Met-Ed has not
yet been determined.

         In July  2001,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 143 (FAS 143), "Accounting for Asset Retirement  Obligations." FAS
143 provides the accounting  requirements for retirement  obligations associated
with tangible long-lived assets. FAS 143 is effective for fiscal years beginning
after  June 15,  2002,  with  early  adoption  encouraged.  Met-Ed is  currently
assessing  the  new  standard  and  has not yet  determined  the  impact  on its
financial statements.

                                       23
<PAGE>


         In September  2001, the FASB issued  Statement of Financial  Accounting
Standards  No. 144 (FAS 144),  "Accounting  for the  Impairment  or  Disposal of
Long-Lived  Assets."  FAS  144  supersedes  Statement  of  Financial  Accounting
Standards No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets  to Be  Disposed  Of."  The  Statement  also  supersedes  the
accounting and reporting  provisions of Accounting  Principles Board Opinion No.
30,  "Reporting the Results of Operations - Reporting the Effects of Disposal of
a Segment of a Business and  Extraordinary,  Unusual and Infrequently  Occurring
Events and  Transactions." FAS 144 is effective for fiscal years beginning after
June 15, 2001, with early adoption encouraged. Met-Ed is currently assessing the
new standard and has not yet determined the impact on its financial statements.







4.  COMPREHENSIVE INCOME

      For the nine  months  ended  September  30,  2001 and 2000,  comprehensive
income is summarized below.
                                                              In Thousands
                                                        ----------------------
                                                             Nine months
                                                          Ended September 30,
                                                        -----------------------
                                                           2001        2000
                                                           ----        ----
Net income                                              $ 56,433    $ 31,369
                                                         -------     -------
Other comprehensive income/(loss), net of tax:
     Net unrealized gain/(loss) on investments                 8     (21,233)
     Net unrealized gain on derivative instruments            94         -
                                                         -------     -------
       Total other comprehensive income/(loss)               102     (21,233)
                                                         -------     -------
Comprehensive income                                    $ 56,535    $ 10,136
                                                         =======     =======



5.  COMPANY-OBLIGATED TRUST PREFERRED SECURITIES

      In 1999, Met-Ed Capital Trust, a wholly-owned subsidiary of Met-Ed, issued
$100 million of trust preferred  securities (Met-Ed Trust Preferred  Securities)
at 7.35%,  due 2039.  The sole  assets  of  Met-Ed  Capital  Trust are the 7.35%
Cumulative  Preferred  Securities of Met-Ed Capital II, L.P. (Met-Ed Partnership
Preferred Securities) and its only revenues are the quarterly cash distributions
it receives on the Met-Ed Partnership  Preferred  Securities.  Each Met-Ed Trust
Preferred Security represents a Met-Ed Partnership  Preferred  Security.  Met-Ed
Capital  II,  L.P.  is a  wholly-owned  subsidiary  of Met-Ed and the sponsor of
Met-Ed  Capital  Trust.  The sole assets of Met-Ed Capital II, L.P. are Met-Ed's
7.35%  Subordinated  Debentures,  Series A, due 2039,  which  have an  aggregate
principal  amount  of $103.1  million.  Met-Ed  has  fully  and  unconditionally
guaranteed the Met-Ed Partnership  Preferred  Securities,  and,  therefore,  the
Met-Ed Trust Preferred Securities.

                                       24
<PAGE>



                                     PART II

ITEM 1 -    LEGAL PROCEEDINGS
            -----------------

            Information   concerning   the  current   status  of  certain  legal
            proceedings  instituted  against Met-Ed  discussed in Part I of this
            report  in  the  Notes  to  Consolidated   Financial  Statements  is
            incorporated herein by reference and made a part hereof.

ITEM 6 -    EXHIBITS AND REPORTS ON FORM 8-K
            --------------------------------

            (a) Exhibits

                 (12) Statements  Showing  Computation  of Ratio of  Earnings to
                      Fixed Charges Based on SEC Regulation S-K, Item 503

            (b) Reports on Form 8-K

                Dated  September 28, 2001,  under Item 5 (Other  Events)

                Dated October 30, 2001, under Item 5 (Other Events)

                Dated  November  9, 2001,  under Item 1 (Changes in Control of
                Registrant)   and  under  Item  4  (Changes  in   Registrant's
                Certifying Accountant)





                                       25
<PAGE>



                                    Signature
                                    ---------

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



November 14, 2001


                                        METROPOLITAN EDISON COMPANY
                                        ---------------------------
                                               Registrant



                                        /s/ Harvey L. Wagner
                                        ----------------------------
                                            Harvey L. Wagner
                                        Vice President and Controller
                                        (Principal Accounting Officer)




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