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, 1997..........

                                       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 222,542,087  shares of common stock outstanding on July
31, 1997.


<PAGE>


<TABLE>
                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                  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,
                                           ----------------------      ----------------------
                                             1997         1996           1997         1996
                                           ---------    ---------      ---------    ---------
OPERATING REVENUES
<S>                                        <C>          <C>             <C>         <C>     
     Electric                              $  943.4     $  915.4        $1,913.9    $1,889.1
     Gas                                       88.9         74.0           281.8       270.8
                                           ---------    ---------      ---------    ---------
     TOTAL OPERATING REVENUES               1,032.3        989.4         2,195.7     2,159.9
                                           ---------    ---------      ---------    ---------
OPERATING EXPENSES
     Fuel and Energy Interchange              266.1        211.3           600.1       510.8
     Operation                                223.1        230.5           447.5       461.5
     Maintenance                               73.2         89.7           150.7       175.1
     Depreciation                             147.6        116.4           290.1       233.1
     Income Taxes                              73.0         71.3           166.6       175.2
     Other Taxes                               72.6         74.3           155.6       155.0
                                           ---------    ---------      ---------    ---------
     TOTAL OPERATING EXPENSES                 855.6        793.5         1,810.6     1,710.7
                                           ---------    ---------      ---------    ---------
OPERATING INCOME                              176.7        195.9           385.1       449.2
                                           ---------    ---------      ---------    ---------
OTHER INCOME AND DEDUCTIONS
     Allowance for Other Funds Used
       During Construction                      5.1          3.0             7.5         6.0
     Salem Litigation Settlement               69.8            -            69.8         -
     Income Taxes                             (26.6)        (0.4)           24.7)        0.2
     Other, Net                                (6.7)        (0.2)           (9.1)       (3.2)
                                           ---------    ---------      ---------    ---------
     TOTAL OTHER INCOME AND DEDUCTIONS         41.6          2.4            43.5         3.0
                                           ---------    ---------      ---------    ---------
INCOME BEFORE INTEREST CHARGES                218.3        198.3           428.6       452.2
                                           ---------    ---------      ---------    ---------
INTEREST CHARGES
     Long-Term Debt                            79.7         81.4           159.7       170.1
     Company Obligated Mandatorily Redeemable
       Preferred Securities of a Partnership    6.9          6.7            13.6        13.4
     Other Interest                            13.6         14.1            26.4        25.0
                                           ---------    ---------      ---------    ---------
     TOTAL INTEREST CHARGES                   100.2        102.2           199.7       208.5
     Allowance for Borrowed Funds
       Used During Construction                (4.7)        (2.7)           (6.9)       (5.4)
                                           ---------    ---------      ---------    ---------
     NET INTEREST CHARGES                      95.5         99.5           192.8       203.1
NET INOME                                     122.8         98.8           235.8       249.1
PREFERRED STOCK DIVIDENDS                       4.5          4.5             9.0         9.0
                                           ---------    ---------      ---------    ---------
EARNINGS APPLICABLE TO COMMON STOCK        $  118.3     $   94.3       $   226.8    $  240.1
                                           =========    =========      =========    =========

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

EARNINGS PER AVERAGE COMMON
     SHARE  (Dollars)                      $   0.53     $   0.43       $    1.02    $   1.08

DIVIDENDS PER COMMON SHARE  (Dollars)      $   0.45     $  0.435       $    0.90    $   0.87



            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,
                                                                                 1997                      1996
                                                                           -------------               -------------
                                                                             (Unaudited)
ASSETS

UTILITY PLANT
<S>                                                                          <C>                         <C>         
Plant at Original Cost                                                       $   15,208.8                $   14,945.0
Less Accumulated Provision for Depreciation                                       5,308.9                     5,047.0
                                                                            -------------               -------------
                                                                                  9,899.9                     9,898.0
Nuclear Fuel, net                                                                   171.5                       199.6
Construction Work in Progress                                                       613.6                       661.8
Leased Property, net                                                                172.9                       182.1
                                                                            -------------               -------------
                                                                                 10,857.9                    10,941.5
                                                                            -------------               -------------
CURRENT ASSETS
Cash and Temporary Cash Investments                                                  42.0                        29.2
Accounts Receivable, net
     Customer                                                                        18.6                        19.2
     Other                                                                          154.2                        74.4
Inventories, at average cost
     Fossil Fuel                                                                     64.0                        84.6
     Materials and Supplies                                                         112.4                       119.8
Deferred Energy Costs - Gas                                                           7.1                        30.0
Other                                                                               183.5                        63.2
                                                                            -------------               -------------
                                                                                    581.8                       420.4
                                                                            -------------               -------------
DEFERRED DEBITS AND OTHER ASSETS
Recoverable Deferred Income Taxes                                                 2,348.9                     2,325.7
Deferred Limerick Costs                                                             336.8                       361.8
Deferred Non-Pension Postretirement Benefits Costs                                  226.2                       233.5
Deferred Energy Costs - Electric                                                     99.4                        92.0
Investments                                                                         503.4                       432.6
Loss on Reacquired Debt                                                             272.0                       283.8
Other                                                                               164.5                       169.3
                                                                            -------------               -------------
                                                                                  3,951.2                     3,898.7
                                                                            -------------               -------------
TOTAL                                                                        $   15,390.9                $   15,260.6
                                                                            =============               =============


            See Notes to Condensed Consolidated Financial Statements.

                            (continued on next page)











<PAGE>




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


<CAPTION>
                                                                                June 30,                  December 31,
                                                                                 1997                      1996
CAPITALIZATION AND LIABILITIES                                               -------------               -------------
                                                                             (Unaudited)
CAPITALIZATION
Common Shareholders' Equity
<S>                                                                         <C>                         <C>          
     Common Stock (No Par)                                                  $     3,517.6               $     3,517.6
     Other Paid-In Capital                                                            1.2                         1.3
     Retained Earnings                                                            1,153.5                     1,127.0
Preferred and Preference Stock
     Without Mandatory Redemption                                                   199.4                       199.4
     With Mandatory Redemption                                                       92.7                        92.7
Company Obligated Mandatorily Redeemable
     Preferred Securities of a Partnership                                          352.1                       302.2
Long-Term Debt                                                                    3,954.2                     3,935.5
                                                                             -------------               -------------
                                                                                  9,270.7                     9,175.7
                                                                             -------------               -------------
CURRENT LIABILITIES
Notes Payable, Bank                                                                 351.5                       287.5
Long-Term Debt Due Within One Year                                                  256.1                       283.3
Capital Lease Obligations Due Within One Year                                        54.4                        49.4
Accounts Payable  164.5                                                             213.0
Taxes Accrued                                                                        81.9                        71.5
Interest Accrued  80.8                                                               82.0
Dividends Payable 28.9                                                               22.4
Other                                                                               117.1                        94.3
                                                                             -------------               -------------
                                                                                  1,135.2                     1,103.4
                                                                             -------------               -------------
DEFERRED CREDITS AND OTHER LIABILITIES
Capital Lease Obligations                                                           118.5                       132.7
Deferred Income Taxes                                                             3,759.5                     3,745.2
Unamortized Investment Tax Credits                                                  327.1                       336.1
Pension Obligation                                                                  224.5                       224.5
Non-Pension Postretirement Benefits Obligation                                      334.5                       315.1
Other                                                                               220.9                       227.9
                                                                             -------------               -------------
                                                                                  4,985.0                     4,981.5
                                                                             -------------               -------------
COMMITMENTS AND CONTINGENCIES (NOTE 8)
                                                                             -------------               -------------

TOTAL                                                                       $    15,390.9               $    15,260.6
                                                                             =============               =============


            See Notes to Condensed Consolidated Financial Statements.


<PAGE>






</TABLE>
<TABLE>
                  PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                              (Millions of Dollars)

<CAPTION>
                                                                                         6 Months Ended
                                                                                            June 30,
                                                                              ---------------------------------
                                                                                   1997               1996
                                                                                ----------         ----------

CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                                             <C>                <C>      
NET INCOME                                                                      $   235.8          $   249.1
Adjustments to Reconcile Net Income to Net Cash
     Provided by Operating Activities:
Depreciation and Amortization                                                       327.7              270.3
Deferred Income Taxes                                                               (11.7)              81.9
Deferred Energy Costs                                                                15.5                0.4
Salem Litigation Settlement                                                         (69.8)                -
Changes in Working Capital:
     Accounts Receivable                                                             (9.4)              28.6
     Inventories                                                                     28.0               15.1
     Accounts Payable                                                               (48.5)            (120.8)
     Other Current Assets and Liabilities                                           (88.3)            (144.9)
Other Items Affecting Operations                                                     35.9               54.8
                                                                                ----------         ----------

NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                                     415.2              434.5
                                                                                ----------         ----------

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in Plant                                                                (245.9)            (165.1)
Increase in Investments                                                             (70.8)             (88.6)
                                                                                ----------          ----------

NET CASH FLOWS USED BY INVESTING ACTIVITIES                                        (316.7)            (253.7)
                                                                                ----------          ----------

CASH FLOWS FROM FINANCING ACTIVITIES

Change in Short-Term Debt                                                            64.0              355.4
Issuance of Common Stock                                                              -                 10.7
Issuance of Long-Term Debt                                                           17.2               34.0
Retirement of Long-Term Debt                                                        (27.2)            (393.4)
Loss on Reacquired Debt                                                              11.8               12.8
Issuance of Company Obligated Mandatorily
     Redeemable Preferred Securities of a Partnership                                50.0                  -
Dividends on Preferred and Common Stock                                            (209.3)            (205.6)
Change in Dividends Payable                                                           6.5                9.8
Other Items Affecting Financing                                                       1.3               (0.5)
                                                                                ----------          ----------
NET CASH FLOWS USED BY FINANCING ACTIVITIES                                         (85.7)            (176.8)
                                                                                ----------          ----------
INCREASE IN CASH AND CASH EQUIVALENTS                                                12.8                4.0
                                                                                ----------          ----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     29.2               20.6
                                                                                ----------          ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $    42.0           $   24.6
                                                                                ==========          ==========


            See Notes to Condensed Consolidated Financial Statements.

<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, 1997 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 except the settlement of the litigation  against Public Service
Electric  and  Gas  Company  (PSE&G)  with  respect  to the  shutdown  of  Salem
Generating   Station  (Salem)  described  in  note  2.  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  1996  Annual  Report  to
Shareholders,  which are  incorporated by reference in the Company's 1996 Annual
Report on Form 10-K for the year ended December 31, 1996.

2.       SHUTDOWN OF SALEM GENERATING STATION
         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. At that time, PSE&G informed the Nuclear Regulatory  Commission (NRC) that
it had  determined  to keep  the  Salem  units  shut  down  pending  review  and
resolution of certain  equipment and  management  issues and NRC agreement  that
each unit is sufficiently prepared to restart.

         On August 6, 1997,  PSE&G  informed the Company that it received  final
approval  from the NRC to restart Unit No. 2. PSE&G has  indicated  that it will
begin  restart  activities  and that it expects  that Unit No. 2 will  return to
service in the third quarter of 1997.  PSE&G expects that Unit No. 1 will return
to  service in late 1997.  Because  the timing of restart of the Salem  units is
subject to satisfactory  completion of the  requirements of the restart plan, as
determined  by PSE&G and the NRC, no assurance  can be given that the  projected
restart dates will be met.

         In accordance with a May 9, 1997 settlement agreement, PSE&G has agreed
to pay the Company $69.8 million to settle a suit filed on March 5, 1996 against
PSE&G concerning the shutdown of Salem. The payment is due on December 31, 1997.
During June 1997, the Company  recorded into income $69.8 million ($41.0 million
net of income taxes) to reflect the settlement. The agreement also provides that
if the outage  exceeds 64 reactor months PSE&G will pay the Company $1.1 million
per  reactor  unit  month.  A reactor  unit month is a month  during the current
outage in which a unit is off-line.  As of June 30,  1997,  the Salem units have
been shut down for a total of 50 reactor unit months.

     For additional  information  regarding the shutdown of Salem, see "PART II.
OTHER  INFORMATION.  ITEM 5. OTHER INFORMATION" in this Quarterly Report on Form
10-Q.
         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
Maintenance $14 and $27 million,  respectively, of maintenance costs relating to
the shutdown of Salem.  For the three and six months  ended June 30,  1996,  the
Company  recorded in the  accompanying  Statements  of Income as Fuel and Energy
Interchange $20 and $38 million,  respectively,  of replacement  power costs and
recorded as Maintenance $19 and $31 million,  respectively, of maintenance costs
relating to the shutdown of Salem.  For the year ending  December 31, 1997,  the
Company expects to incur and expense approximately $155 million of costs related
to the shutdown.

3.       RATE MATTERS
         On April 1,  1997,  the  Company  filed  with the  Pennsylvania  Public
Utility  Commission  (PUC) a  comprehensive  restructuring  plan  detailing  its
proposal to implement full customer choice of electric generation supplier.  The
filing  is  required  under  the  provisions  of  the  Pennsylvania  Electricity
Generation Consumer Choice and Competition Act (Competition Act), which requires
the unbundling of electric services into separate  generation,  transmission and
distribution  services with open retail  competition for generation.  The filing
proposes,  among other things,  procedures to implement  direct customer access,
beginning in 1999,  to all licensed  electric  generation  suppliers;  unbundled
rates for generation,  transmission,  distribution  and other services;  and the
recovery  of $6.8  billion  in net  transition  and  stranded  costs  through  a
Competitive Transition Charge or Intangible Transition Charge.

         On July 18, 1997, the Company filed with the PUC rebuttal  testimony in
its  restructuring  proceeding.  The  testimony  responds  to  previously  filed
alternative  restructuring proposals submitted by various intervening parties in
the   proceeding.   Among  the   proposals   submitted   by   intervenors   were
recommendations that the PUC reduce the Company's recoverable costs and customer
rates through  various  methods,  including but not limited to reductions to the
Company's estimated stranded generation costs; recommendations that shareholders
absorb a percentage  of stranded  generation  costs;  and  recommendations  that
shareholders  forgo  a  return  on  their  investment.  The  rebuttal  testimony
quantifies  the Company's  estimate of the impact of the proposals on its future
financial condition and results of operations.

         On July 30, 1997,  the Company and various other parties filed with the
PUC a  Motion  for  Continuance  of  Hearings  in  the  Company's  Restructuring
Proceeding.  The  purpose  of the  two-week  continuance  is to  facilitate  the
discussions among parties to produce an acceptable settlement of various issues.
The PUC granted the Motion on July 31, 1997. The Company cannot predict  whether
these discussions will produce an acceptable settlement.

         The Company cannot predict what decision the PUC will ultimately  reach
in the  Company's  restructuring  proceeding  or what impact that  decision will
ultimately  have  on  the  Company's  future  financial  condition,  results  of
operations or the common stock  dividend.  The PUC is scheduled to issue a final
decision in the case in January 1998.

         On January  22,  1997,  the Company  filed with the PUC an  application
under the  Competition  Act to securitize $3.6 billion of stranded costs. On May
22, 1997,  the PUC issued an order  authorizing  the Company to securitize  $1.1
billion of its stranded  and related  transaction  and use of proceeds  costs at
this  time.  Thirteen  intervenors  subsequently  appealed  the PUC's  decision.
Issuance of transition bonds by the Company will depend on the resolution of all
pending  appeals  and the  satisfactory  issuance  of a  pending  ruling  by the
Internal Revenue Service.

         For  additional  information  regarding  the  Competition  Act  and the
Company's  securitization  filing, see note 3 of Notes to Consolidated Financial
Statements for the year ended December 31, 1996.

4.    NEW ACCOUNTING PRONOUNCEMENTS
         Given the changing regulatory  environment in the utility industry, the
continued  application of Statement of Financial Accounting Standards (SFAS) No.
71,  "Accounting  for the Effects of Certain Types of Regulation"  for regulated
enterprises is receiving  significant attention from the Securities and Exchange
Commission (SEC). The Financial  Accounting Standards Board (FASB) is addressing
the matter  through  its  Emerging  Issues  Task Force  (EITF)  Issue No.  97-4,
"Deregulation  of the Pricing of Electricity - Issues Related to the Application
of FASB  Statements  No. 71,  Accounting  for the  Effects  of Certain  Types of
Regulation,   and  No.  101,   Regulated   Enterprises  -  Accounting   for  the
Discontinuation  of Application of FASB Statement No. 71." The EITF  tentatively
agreed  that a) an entity  should  cease to apply  SFAS No. 71 no later than the
date the specific  deregulation plan is enacted and the details of that plan are
known,  and b) both stranded costs and regulated  assets and liabilities  should
continue to be  recognized to the extent that the  transition  plan provides for
their recovery through the regulated  transmission  and distribution  portion of
the  business.  In addition,  the EITF  tentatively  agreed that these  entities
should separately disclose  information about both the regulated and unregulated
portions of their business. This does not preclude discontinuation at an earlier
point in time if the entity does not believe  that it meets the criteria of SFAS
No. 71. The Company  believes that it continues to meet the criteria of SFAS No.
71.

         In June 1997,  the FASB issued SFAS No. 130,  "Reporting  Comprehensive
Income" to establish standards for reporting and display of comprehensive income
and its components in financial statements.  The new standard requires an entity
to a)  classify  items of  other  comprehensive  income  by  their  nature  in a
financial   statement   and  b)  display  the   accumulated   balance  of  other
comprehensive  income  separately from retained  earnings and additional paid in
capital in the equity  section of a statement  of  financial  position.  The new
standard is effective for fiscal years  beginning  after  December 15, 1997. The
Company  will  adopt  SFAS No.  130 in 1998.  Adoption  of SFAS No. 130 will not
materially  affect the Company's  financial  condition or results of operations.
The Company is evaluating the impact on its disclosures.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related  Information" to establish  standards for reporting
information  about  operating  segments in annual  financial  statements  and to
require reporting of selected  information  about operating  segments in interim
financial  reports issued to  shareholders.  It also  establishes  standards for
related  disclosures about products and services,  geographical  areas and major
customers.  The new  standard is  effective  for fiscal  years  beginning  after
December  15,  1997.  Adoption  of SFAS No. 131 will not  materially  affect the
Company's  financial  condition  or  results  of  operations.   The  Company  is
evaluating the impact on its operating segment disclosures.

5.       SALES OF ACCOUNTS RECEIVABLE
         The Company is party to an agreement with a financial institution under
which it can sell with limited recourse an undivided  interest,  adjusted daily,
in up to $425 million of designated  accounts  receivable  through  November 14,
2000. At June 30, 1997, the Company had sold a $425 million interest in accounts
receivable   under  this   agreement.   The  Company   retains   the   servicing
responsibility  for these  receivables.  At June 30,  1997,  the average  annual
service-charge  rate,  computed on a daily basis on the portion of the  accounts
receivable sold but not yet collected, was 5.61%.

         By terms of this agreement,  under certain circumstances,  a portion of
Limerick  Generating  Station  (Limerick)  deferred costs may be included in the
pool of  eligible  receivables.  At June 30,  1997,  $19.4  million of  Deferred
Limerick Costs were included in the pool of eligible receivables.

6.       DECLARATORY ACCOUNTING ORDER
         On October 1, 1996, the Company implemented changes approved by the PUC
to the estimated  depreciable lives of certain of the Company's  electric plant.
As a result,  depreciation  and  amortization on certain assets  associated with
Limerick increased by approximately $100 million per year while depreciation and
amortization  on certain other Company  assets  decreased by  approximately  $10
million per year, for a net increase of approximately  $90 million per year. For
the three and six months ended June 30, 1997, the Company expensed an additional
$23 and $46 million,  respectively,  for increased depreciation and amortization
related to this order.

7.       STOCK REPURCHASE
         On June 23,  1997,  the  Company's  Board of Directors  authorized  the
repurchase of up to twenty  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. This  authorization  is in addition to the
authorization  granted  by the  Board in  April  1997 to  repurchase  up to five
million shares of common stock pursuant to the April authorization.

         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 were settled on a net share basis at June 30, 1997, the Company
would have received approximately 310,000 shares of Company common stock.

8.       COMMITMENTS AND CONTINGENCIES
         Except as described  below,  the  information  regarding  the Company's
capital commitments,  nuclear insurance,  nuclear decommissioning and spent fuel
storage, energy purchases,  environmental issues and litigation at June 30, 1997
is  substantially  the same as  described  in note 4 of  Notes  to  Consolidated
Financial Statements for the year ended December 31, 1996.

         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,  1997,  the Company had accrued $29
million for  environmental  investigation and remediation  costs,  including $15
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 that they
are properly valued in its financial statements.  Due to circumstances  involved
in  the  Federal   Communication   Commission's   auctioning   of  the  personal
communications  systems  "C-block"  licenses,  the Company  continues to closely
monitor the value of its  telecommunications  investments.  The Company believes
that  these   investments  are  not  impaired,   but  will  continue  to  assess
developments in this area.


<PAGE>


     ITEM 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
                             RESULTS OF OPERATIONS
FINANCIAL CONDITION
         The  Company's  future  financial  condition  and its future  operating
results  are  substantially  dependent  upon  the  effects  of the  Pennsylvania
Electricity Generation Consumer Choice and Competition Act (Competition Act) and
other  competitive  initiatives.  On April 1, 1997,  the Company  filed with the
Pennsylvania Public Utility Commission (PUC) a comprehensive  restructuring plan
detailing its proposal to implement full customer choice of electric  generation
supplier,  including the recovery of $6.8 billion in net transition and stranded
costs.  The Company's filing proposes to collect the net transition and stranded
costs over a period of up to ten years  through  annual  competitive  transition
charges  and/or  intangible  transition  charges.  Under the  provisions  of the
Competition  Act,  the  Company's   unbundled   charges  for  transmission-  and
distribution-related  services  will be capped for 4-1/2 years from December 31,
1996;  until  recovery of the Company's net stranded and transition  costs,  the
Company will be subject to a rate cap (which cannot  extend beyond  December 31,
2005) in which the total charges to customers for generation cannot exceed rates
in place as of December 31, 1996, subject to certain exceptions.

         On July 30, 1997,  the Company and various other parties filed with the
PUC a  Motion  for  Continuance  of  Hearings  in  the  Company's  Restructuring
Proceeding.  The  purpose  of the  two-week  continuance  is to  facilitate  the
discussions among parties to produce an acceptable settlement of various issues.
The PUC granted the Motion on July 31, 1997. The Company cannot predict  whether
these discussions will produce an acceptable settlement.

         The Company  believes  that it will be given the  opportunity  for full
recovery  of its retail  electric  stranded  costs.  The amount of  recovery  is
subject to the decision of the PUC in the  Company's  restructuring  proceeding.
The Company's  financial condition and results of operations could be materially
effected to the extent the Company is not  ultimately  permitted  to recover its
retail electric stranded costs.

         The Company  expects that its future  liquidity  and capital  resources
will be reduced as a result of the  Competition  Act.  The Company is pursuing a
strategy to reduce its stranded costs and the associated  capitalization,  which
would reduce the Company's  liquidity  and capital  resource  requirements.  The
Company  cannot  predict  the  level of  stranded-cost  recovery  which  will be
permitted  under the  Competition  Act,  the impact of any such  recovery on the
Company's  capitalization or whether internally  generated cash will continue to
meet or exceed the Company's capital requirements and dividend payments.

                                     * * * *

         Given the changing regulatory  environment in the utility industry, the
continued  application  of Statement of Financial  Accounting  Standards No. 71,
"Accounting  for the  Effects  of Certain  Types of  Regulation"  for  regulated
enterprises is receiving  significant attention from the Securities and Exchange
Commission (SEC). The Financial  Accounting Standards Board (FASB) is addressing
the matter through its Emerging Issues Task Force Issue No. 97-4,  "Deregulation
of the  Pricing  of  Electricity  - Issues  Related to the  Application  of FASB
Statements  No. 71,  Accounting  for the Effects of Certain Types of Regulation,
and No. 101,  Regulated  Enterprises  - Accounting  for the  Discontinuation  of
Application of FASB Statement No. 71." For additional  information see note 4 of
Notes to Condensed Consolidated Financial Statements in this Quarterly Report on
Form 10-Q under "PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS."

                                     * * * *

         On July 18, 1997, the Company filed with the PUC rebuttal  testimony in
its  restructuring  proceeding.  The  testimony  responds  to  previously  filed
alternative  restructuring proposals submitted by various intervening parties in
the proceeding.  The rebuttal testimony quantifies the Company's estimate of the
impact of the  proposals  on its  future  financial  condition  and  results  of
operations.  The PUC is  scheduled  to  issue a final  decision  in the  case in
January  1998.  For  further  information,  see  note 3 of  Notes  to  Condensed
Consolidated  Financial  Statements in this Quarterly  Report on Form 10-Q under
"PART I. FINANCIAL INFORMATION.  ITEM 1. FINANCIAL STATEMENTS" and the Company's
Current Report on Form 8-K dated July 18, 1997.

                                     * * * *

         Total  construction  expenditures,  primarily  for utility  plant,  are
estimated  to be $560  million  for 1997 and $1.6  billion  for the period  1998
through 2001.  The  estimated  expenditures  include the Company's  share of the
remaining  expenditures  relating to the replacement of Salem Generating Station
(Salem)  Unit No. 1 steam  generators,  including  installation  and the cost of
disposal of the four old steam generators.

         The Company's  construction  program is subject to periodic  review and
revision  to  reflect  changes  in  economic  conditions  and other  appropriate
factors. Certain facilities under construction and to be constructed may require
permits and licenses which the Company has no assurance will be granted.

         For the period 1997  through  2000,  the  Company  also plans to invest
approximately  $200 to $300  million in new  ventures,  principally  through its
Telecommunications Group.

                                     * * * *

         For  a  discussion  of  commitments  and   contingencies   relating  to
environmental  matters, see note 4 of Notes to Consolidated Financial Statements
for  the  year  ended  December  31,  1996  and  note 8 of  Notes  to  Condensed
Consolidated  Financial  Statements in this Quarterly  Report on Form 10-Q under
"PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS."

                                     * * * *

     For the  year  ended  December  31,  1997,  the  Company  expects  to incur
replacement power and additional maintenance costs of approximately $155 million
as a result of the Salem shutdown. See note 2 of Notes to Condensed Consolidated
Financial  Statements  in this  Quarterly  Report  on Form 10-Q  under  "PART I.
FINANCIAL  INFORMATION.  ITEM 1.  FINANCIAL  STATEMENTS"  and  "PART  II.  OTHER
INFORMATION. ITEM 5. OTHER INFORMATION."
                                     * * * *

         The Company has and will continue to make modifications to its computer
software systems and  applications to ensure that year 2000  transactions can be
processed. Expenditures for these modifications will be expensed as incurred and
are  not  expected  to  have a  material  impact  on the  Company's  results  of
operations or financial position.

                                     * * * *

         On  June  5,  1997,  the  Indiana  County   (Pennsylvania)   Industrial
Development  Authority  issued for the  benefit of the  Company  $17.24  million
floating rate, tax-exempt pollution control bonds due June 1, 2027. The proceeds
from the  issuance of the bonds were used on June 10, 1997 to refund  short-term
tax-exempt bank loans.

                                     * * * *

         On June 6, 1997,  the  Company  issued $50  million of Trust  Receipts,
representing  8%  Cumulative  Monthly  Income  Preferred  Securities,  Series C,
through PECO Energy  Capital Trust II (Trust).  The sole assets of the Trust are
8% Cumulative  Monthly  Income  Preferred  Securities,  Series C, issued by PECO
Energy  Capital  L.P., a Delaware  limited  partnership  of which a wholly owned
subsidiary  of the  Company  is the  sole  general  partner.  Proceeds  from the
issuance  will be used by the Company in connection  with its  redemption of $50
million  aggregate  liquidation  value of the Company's  outstanding  depositary
shares each  representing a one-fourth  interest in a share of $7.96  Cumulative
Preferred  Stock,  after such depositary  shares become subject to redemption at
the election of the Company on October 1, 1997.


                                     * * * *

         At June 30, 1997, the Company and its subsidiaries had outstanding $352
million of notes  payable,  including  $264  million of  commercial  paper.  The
Company has formal and informal lines of bank credit  aggregating  $275 million.
At  June  30,  1997,  the  Company  and  its   subsidiaries  had  no  short-term
investments.

                                     * * * *

         The Company's Ratio of Earnings to Fixed Charges  (Mortgage Method) for
the twelve months ended June 30, 1997 was 4.31 times  compared to 4.72 times for
the  corresponding  period in 1996. The Company's  Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends  (Articles of Incorporation  Method)
for the twelve months ended June 30, 1997, was 2.35 times compared to 2.63 times
for the  corresponding  period in 1996.  For the six months ended June 30, 1997,
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 3.32 times and 3.05 times, respectively, compared to
3.20 times and 2.97 times,  respectively,  for the corresponding period in 1996.
See the  Company's  Annual  Report on Form 10-K for the year ended  December 31,
1996 (1996 Form 10-K) under "PART I. ITEM 1.  BUSINESS-Capital  Requirements and
Financing Activities," for a discussion of the ratio methods.

                                     * * * *

         On June 23,  1997,  the  Company's  Board of Directors  authorized  the
repurchase of up to twenty  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. This  authorization  is in addition to the
authorization  granted  by the  Board in  April  1997 to  repurchase  up to five
million shares of common stock pursuant to the April authorization.

         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 were settled on a net share basis at June 30, 1997, the Company
would have received approximately 310,000 shares of Company common stock.

                                     * * * *

         Except for the historical  information contained herein, certain of the
matters   discussed  in  this  Quarterly   Report  on  Form  10-Q  (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 8 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.

                                     * * * *

RESULTS OF OPERATIONS
EARNINGS
         Earnings  per average  common share  outstanding  for the three and six
months  ended  June 30,  1997 were  $0.53 and  $1.02  per  share,  respectively,
compared to $0.43 and $1.08 per share for the corresponding periods in 1996. The
increase in second quarter 1997 earnings was due primarily to the recognition of
the  settlement of litigation  arising from the Salem outage,  which added $0.18
per share, and from lower operating and maintenance costs, which added $0.05 per
share.  Offsetting these benefits were increased depreciation of $0.08 per share
primarily resulting from the increase in depreciation and amortization of assets
associated with Limerick Generating Station (Limerick);  the negative effects of
cooler weather  compared to last year of $0.03 per share;  and  additional  fuel
costs resulting from the ongoing shutdown of Salem of $0.02 per share.
         The  decline in  earnings  for the six months  ended June 30,  1997 was
primarily due to increased  depreciation of $0.15 per share primarily  resulting
from the increase in depreciation  and  amortization  of assets  associated with
Limerick;  milder weather  conditions  compared to last year of $0.09 per share;
and ongoing costs resulting from the shutdown of Salem of $0.04 per share. These
decreases  were  partially  offset by the  recognition  of the Salem  litigation
settlement of $0.18 per share and lower operating and maintenance  costs,  which
added $0.09 per share.  The balance is primarily due to reduced tax depreciation
benefits from plant and  regulatory  assets which are not fully  normalized  for
ratemaking.

                                     * * * *

OPERATING REVENUES
         Electric  revenues  increased  3% and 1% for the three  and six  months
ended June 30, 1997, respectively, compared to the corresponding periods in 1996
primarily  due to higher sales to other  utilities.  This increase was partially
offset  by  lower  residential   revenues,   primarily  due  to  milder  weather
conditions.

         Gas  revenues  increased  20% and 4% for the three and six months ended
June 30, 1997, respectively,  compared to the corresponding periods in 1996. The
increase was primarily due to higher  revenues from sales to  commercial,  house
heating and residential  customers due to higher purchased  gas-clause  revenues
charged in 1997 compared to 1996,  partially offset by lower sales due primarily
to milder  weather  conditions in 1997.  For the six months ended June 30, 1997,
this increase was partially offset by reduced sales to  interruptible  customers
as they switched to transportation service.

                                     * * * *

FUEL AND ENERGY INTERCHANGE EXPENSES
         Fuel and  energy  interchange  expenses  increased  26% and 17% for the
three  and six  months  ended  June  30,  1997,  respectively,  compared  to the
corresponding periods in 1996 primarily due to additional  interchange purchases
needed for increased sales to other utilities and higher replacement power costs
resulting  from the  shutdown  of  Salem.  Also  contributing  to the  six-month
increase was a one-time billing credit in 1996 from a non-utility generator.

                                     * * * *

OPERATING AND MAINTENANCE EXPENSES
         Operating and  maintenance  expenses  decreased 7% and 6% for the three
and six months ended June 30, 1997, respectively,  compared to the corresponding
periods in 1996. The decreases were primarily due to lower electric distribution
system  operating and  maintenance  expenses,  lower  operating and  maintenance
expenses at Company-operated nuclear plants and lower administrative and general
expenses.

                                     * * * *

DEPRECIATION
         Depreciation expense increased 27% and 24% for the three and six months
ended June 30, 1997, respectively, compared to the corresponding periods in 1996
primarily due to increased  depreciation and  amortization of assets  associated
with Limerick.

                                     * * * *

INCOME TAXES
         Income taxes charged to operating  expenses  increased 2% for the three
months  ended June 30,  1997  compared to the  corresponding  period in 1996 and
decreased  5%  for  the  six  months  ended  June  30,  1997   compared  to  the
corresponding  period in 1996.  The increase for the three months ended June 30,
1997 was  primarily  due to reduced  tax  depreciation  benefits  from plant and
regulatory  assets  which are not fully  normalized  for  ratemaking,  partially
offset by a decrease in pre-tax  income.  The  decrease for the six months ended
June 30,  1997 was  primarily  due to a decrease  in pre-tax  income,  which was
partially offset by reduced tax depreciation  benefits from plant and regulatory
assets which are not fully normalized for ratemaking.

                                     * * * *

OTHER TAXES
         Other taxes  charged to operating  expenses  decreased 2% for the three
months ended June 30, 1997 compared to the corresponding period in 1996 and were
substantially  unchanged  for the six months ended June 30, 1997 compared to the
corresponding  period in 1996.  The decrease for the three months ended June 30,
1997 was primarily due to decreased payroll taxes.

                                     * * * *

OTHER INCOME AND DEDUCTIONS
         Other income and deductions  increased  substantially for the three and
six months ended June 30, 1997  compared to the  corresponding  periods in 1996.
This increase was primarily due to the  settlement  reached with Public  Service
Electric  and Gas Company  (PSE&G) in the second  quarter of 1997 related to the
shutdown of Salem.

                                     * * * *

NET INTEREST CHARGES
         Net interest  charges  decreased 4% and 5% for the three and six months
ended June 30, 1997, respectively, compared to the corresponding periods in 1996
primarily  due  to  the  Company's  ongoing  program  to  reduce  and  refinance
higher-cost,  long-term  debt.  For the six  months  ended June 30,  1997,  this
decrease  was  partially  offset by  increased  interest  charges on  short-term
borrowings.

                                     * * * *

PREFERRED DIVIDENDS
     Preferred stock dividends were unchanged for the three and six months ended
June 30, 1997 compared to the corresponding period in 1996.

                                     * * * *


<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
         As previously  reported in the 1996 Form 10-K, on October 1, 1996,  the
United States Court of Appeals for the Third Circuit (Third Circuit)  reversed a
lower court  ruling and held for the Company in a class  action suit against the
Company  involving the Company's 1987 amendment to the Company's Service Annuity
Plan.  Three  plaintiffs  who were  members  of the  class  filed a  motion  for
reconsideration  with the Third Circuit,  which was denied. On July 31, 1997 the
plaintiffs filed a petition for review with the United States Supreme Court.

                                     * * * *

         As previously reported in the 1996 Form 10-K, the Company and the three
other  co-owners  of Salem  filed suit in  February  1996 in the  United  States
District  Court for the  District of New Jersey  against  Westinghouse  Electric
Corporation  seeking  damages  to  recover  the  cost  of  replacing  the  steam
generators at Salem Units No. 1 and No. 2. The case is still in discovery.

                                     * * * *

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         Information  regarding the  submission of matters to a vote of security
holders was presented in the Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 (March 31, 1997 Form 10-Q).

                                     * * * *

ITEM 5.  OTHER INFORMATION
         On May 9, 1997,  the Nuclear  Regulatory  Commission  (NRC)  issued its
periodic Systematic  Assessment of Licensee  Performance (SALP) for Limerick for
the period April 2, 1995 to March 29, 1997.  Limerick  achieved  ratings of "1,"
the  highest  of the  three  rating  categories,  in the  areas  of  Operations,
Maintenance and Plant Support. The area of Engineering achieved a rating of "2."

         The NRC  stated  that the  overall  performance  of  Limerick  remained
excellent.  Strong management  involvement and conservative decision making were
exhibited  in  day-to-day  activities.  Self-assessment  and  quality  assurance
activities  continued  to be  effective.  The  Performance  Enhancement  Process
continued to be an effective program for identifying,  evaluating and correcting
issues with  appropriate  thresholds and  priorities.  Oversight and independent
review committees contributed to the corrective actions program effectiveness.

         While noting strengths in design,  analysis and modifications,  the NRC
stated that earlier  engineering  intervention  could have  prevented  equipment
problems that resulted in a number of plant trips and forced shutdowns.  The NRC
also noted that  management has  recognized  this  performance  weakness and has
initiated  remedial  actions.  The Company  continues to take actions to improve
performance at Limerick.

         On July 17,  1997,  the NRC issued its  periodic  SALP Report for Peach
Bottom Atomic Power Station  (Peach  Bottom) for the period  October 15, 1995 to
June 7,  1997.  Peach  Bottom  achieved  ratings  of "1," in the  areas of Plant
Operations,  Maintenance and Plant Support.  The area of Engineering  achieved a
rating of "2." Overall,  the NRC observed excellent  performance at Peach Bottom
during the assessment period.  The NRC stated that station  management  provided
excellent oversight and control of engineering activities throughout the period.
The NRC noted that, while overall  engineering  performance was good, there were
several instances where operating procedures,  surveillances, and tests were not
consistent with the design and licensing  bases.  The Company  continues to take
actions to improve performance at Peach Bottom.

                                     * * * *

     As  previously  disclosed,  Salem Units No. 1 and No. 2, operated by PSE&G,
were  taken out of service  in the  second  quarter of 1995.  On August 6, 1997,
PSE&G  informed  the Company  that it received  final  approval  from the NRC to
restart Unit No. 2. PSE&G has indicated  that it will begin  restart  activities
and that it expects that Unit No. 2 will return to service in the third  quarter
of 1997.  PSE&G  expects  that Unit No. 1 will  return to  service in late 1997.
Restart  of Unit  No.  1 is also  subject  to NRC  approval.  The  inability  to
successfully  return  these units to  continuous,  safe  operation  could have a
material  adverse  effect on the  Company's  financial  condition and results of
operations.
                                     * * * *

         On March 27, 1997, gas  competition  legislation  was introduced in the
Pennsylvania General Assembly. The legislation calls for gas utilities to submit
restructuring  plans to the PUC that would totally  unbundle  natural gas supply
from distribution service by April 1, 1999. As of that date, gas utilities would
no longer provide traditional bundled sales service. Although the legislation is
loosely modeled after the electric competition  legislation,  it is less complex
and contains no provisions for pilots, phase-in, stranded costs, securitization,
rate caps, or tax adjustments.  Legislative hearings on the proposed legislation
are ongoing and are scheduled through the third quarter of 1997.

                                     * * * *

         As  previously  reported in the March 31,  1997 Form 10-Q,  the Utility
Workers Union of America (UWUA) had filed  objections,  which were  subsequently
withdrawn,  to the March 24,  1997  election  conducted  by the  National  Labor
Relations  Board  (NLRB)  in  which  PECO  Nuclear  employees  voted  not  to be
represented  by a union.  In addition,  the UWUA had filed unfair labor practice
charges with the NLRB. On July 23, 1997,  the NLRB  certified the results of the
election.  The  NLRB,  however,  has  issued a  complaint  against  the  Company
regarding the unfair labor practice charges. A hearing

<PAGE>


before an administrative law judge is set for December 1, 1997.

                                     * * * *

         As previously  reported in the Current Report on Form 8-K dated May 22,
1997, the Company's  Consumers  Energy  Services Group employees voted not to be
represented  by a union in secret  balloting  conducted by the NLRB.  On June 2,
1997, the NLRB certified the results of this election.

                                     * * * *

     On May 23, 1997,  the Company's  Board of Directors  elected  President and
Chief Executive Officer,  Corbin A. McNeill,  Jr., to the additional position of
Chairman of the Board.  Mr.  McNeill  assumed the position on July 1, 1997,  and
succeeded  Joseph F. Paquette,  Jr., who retired from the Company.  Mr. Paquette
will remain on the Board of Directors  and will serve as Chairman of the Board's
Executive Committee.

                                     * * * *

         On July 15, 1997,  the  Company's  single-hour  peak load reached 7,390
megawatts (MW),  surpassing the previous peak of 7,244 MW set on August 4, 1995.
Also, on July 15, 1997, the  single-hour  peak load for the PJM  Interconnection
L.L.C. reached 49,820 MW. The PJM's previous peak was 48,750 MW set on August 2,
1995.

                                     * * * *

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 1, 1997, reporting information under
                  "ITEM 5. OTHER EVENTS" relating to the Company's  intention to
                  repurchase  common stock and relating to the Company's  filing
                  with  the   Pennsylvania   Public  Utility   Commission  of  a
                  comprehensive   restructuring  plan  detailing  the  Company's
                  proposed plan to implement  full  customer  choice of electric
                  generation supply.

         Report, dated April 14, 1997, reporting information under
                 "ITEM 5. OTHER EVENTS"  relating to a recommended  decision and
                 an alternative recommendation issued by the Pennsylvania Public
                 Utility  Commission's  Administrative Law Judge assigned to the
                 Company's   application  for  securitizing  a  portion  of  its
                 stranded and other costs.






         Report, dated April 25, 1997, reporting information under
                 "ITEM 5. OTHER EVENTS"  relating to the results of the National
                 Labor  Relations   Board's   certification   election  for  the
                 Company's Power Generation Group.

         Report, dated May 8, 1997, reporting information under "ITEM 5. OTHER
                  EVENTS"  relating  to the polling of the  Pennsylvania  Public
                  Utility Commissioners  regarding the Company's application for
                  securitizing a portion of its stranded and other costs.

         Report,  dated May 12, 1997, reporting information under "ITEM 1. LEGAL
                  PROCEEDINGS"  relating  to the  settlement  of the  litigation
                  regarding Salem Generating  Station operated by Public Service
                  Electric and Gas Company and reporting information under "ITEM
                  5. OTHER EVENTS"  relating to the preliminary  decision of the
                  Pennsylvania Public Utility Commission regarding the Company's
                  and other utilities' electric competition pilot programs.

         Report, dated May 22, 1997, reporting  information under "ITEM 5. OTHER
                 EVENTS" relating to the results of the National Labor Relations
                 Board's  certification  election  for  the  Company's  Consumer
                 Energy Services  Group,  and also under "ITEM 5. OTHER EVENTS",
                 relating to the Pennsylvania Public Utility  Commission's order
                 allowing the Company to securitize $1.1 billion of its stranded
                 and other costs.

         Report, dated June 23, 1997, reporting information under "ITEM 5. OTHER
                 EVENTS"  relating to the Company's  intention to repurchase its
                 common stock.

         Report, dated June 24, 1997, reporting information under "ITEM 5. OTHER
                 EVENTS" relating to the formation of EnergyOne, L.L.C.


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


         Report,  dated July 10,  1997,  reporting  information  under  "ITEM 5.
                  OTHER EVENTS" relating to the Company's  decision to terminate
                  an  offer to  purchase  an  interest  in  River  Bend  Nuclear
                  Station.

         Report, dated July 18, 1997, reporting information under "ITEM 5. OTHER
                 EVENTS"  regarding the Company's  filing of rebuttal  testimony
                 with the Pennsylvania Public Utility Commission  supporting its
                 comprehensive  restructuring  plan to implement  full  customer
                 choice of electric generation supply.

         Report, dated July 31, 1997, reporting information under "ITEM 5.
                  OTHER EVENTS"  regarding a motion filed with the  Pennsylvania
                  Public Utility Commission for a continuance of hearings in the
                  Company's restructuring proceeding.


<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/ Kenneth G. Lawrence
                                                      --------------------------
                                                          Kenneth G. Lawrence
                                                       Senior Vice President and
                                                        Chief Financial Officer
                                                       (Principal Financial and
                                                          Accounting Officer)

Date:  August 11, 1997











</TABLE>