FORM 10-Q/A
                                 AMENDMENT NO. 2

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

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

                  For the quarterly period ended March 31, 2002

                                       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 No.          Address; and Telephone Number            Identification
---------------       -----------------------------------        ---------------
No.

1-3522                PENNSYLVANIA ELECTRIC COMPANY                 25-0718085
                      (A Pennsylvania Corporation)
                      c/o FirstEnergy Corp.
                      76 South Main Street
                      Akron, OH  44308
                      Telephone (800)736-3402


<PAGE>


                                EXPLANATORY NOTE

        Pennsylvania  Electric Company  (Penelec) is filing this Amendment No. 2
to its  Quarterly  Report on Form 10-Q for the  quarter  ended March 31, 2002 to
amend its  financial  statements  and  management's  discussion  and analysis of
results of  operations  and  financial  condition  contained in Amendment  No. 1
(filed on June 3, 2002) and the fixed  charge  ratios  contained  in the initial
report as filed with the Securities and Exchange  Commission on May 15, 2002, to
solely reflect the potential  adverse impact of a pending  Pennsylvania  Supreme
Court  decision  related to Penelec's  Provider of Last Resort  Obligation  (see
amended Note 4).

        As part of the combined Form 10-Q filing for  FirstEnergy  Corp. and its
subsidiaries, Penelec is including the following in this amended filing:

Part I of Item 1 of Penelec's report as filed in Amendment No. 1 -

        (i)   The  Notes to Financial  Statements appearing on pages 1 through 8
              with  Note 4 - "Regulatory  Matters:  Pennsylvania"  amendment  on
              page 7; and

        (ii)  Its financial statements (as  amended),   the  amended  letter  of
              PricewaterhouseCoopers   LLP  and  Management's   Discussion   and
              Analysis  of  Results of Operations  and  Financial  Condition (as
              amended), appearing on pages 73 through 81.

and Exhibit 12 - fixed charge ratios as originally filed.

        Reference  is made to such report as  originally  filed for the complete
text of all other portions of such report.

<PAGE>

                                TABLE OF CONTENTS


                                                                           Pages

Part I.  Financial Information

         Notes to Financial Statements...................................   1-6

      Pennsylvania Electric Company

         Consolidated Statements of Income...............................   73
         Consolidated Balance Sheets.....................................  74-75
         Consolidated Statements of Cash Flows...........................   76
         Report of Independent Accountants...............................   77
         Management's Discussion and Analysis of Results of Operations
           and Financial Condition.......................................  78-81

<PAGE>

PART I.  FINANCIAL INFORMATION
-------  ---------------------

                       FIRSTENERGY CORP. AND SUBSIDIARIES
                      OHIO EDISON COMPANY AND SUBSIDIARIES
          THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES
                    THE TOLEDO EDISON COMPANY AND SUBSIDIARY
                           PENNSYLVANIA POWER COMPANY
                 JERSEY CENTRAL POWER & LIGHT COMPANY AND SUBSIDIARIES
                  METROPOLITAN EDISON COMPANY AND SUBSIDIARIES
                 PENNSYLVANIA ELECTRIC COMPANY AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1 -   FINANCIAL STATEMENTS:

        The  principal  business  of  FirstEnergy  Corp.  (FirstEnergy)  is  the
holding,  directly or indirectly,  of all of the outstanding common stock of its
eight principal  electric utility  operating  subsidiaries,  Ohio Edison Company
(OE),  The Cleveland  Electric  Illuminating  Company  (CEI),  The Toledo Edison
Company (TE),  Pennsylvania Power Company (Penn), American Transmission Systems,
Inc. (ATSI),  Jersey Central Power & Light Company (JCP&L),  Metropolitan Edison
Company (Met-Ed) and  Pennsylvania  Electric  Company  (Penelec).  These utility
subsidiaries  are referred to throughout as "Companies."  Penn is a wholly owned
subsidiary of OE. FirstEnergy's results include the results of JCP&L, Met-Ed and
Penelec from the November 7, 2001 merger date with GPU,  Inc., the former parent
company of JCP&L,  Met-Ed and  Penelec.  The  merger  was  accounted  for by the
purchase  method of accounting and the applicable  effects were reflected on the
financial  statements  of JCP&L,  Met-Ed  and  Penelec  as of the  merger  date.
Accordingly,  the  post-merger  financial  statements  reflect  a new  basis  of
accounting,  and pre-merger  period and post-merger  period financial results of
JCP&L,  Met-Ed and Penelec  (separated  by a heavy  black  line) are  presented.
FirstEnergy's consolidated financial statements also include its other principal
subsidiaries: FirstEnergy Solutions Corp. (FES); FirstEnergy Facilities Services
Group,  LLC  (FEFSG);   MYR  Group,  Inc.  (MYR);   MARBEL  Energy  Corporation;
FirstEnergy  Nuclear  Operating Company (FENOC);  GPU Capital,  Inc.; GPU Power,
Inc.;  FirstEnergy  Service Company (FECO);  and GPU Service,  Inc. (GPUS).  FES
provides  energy-related  products and  services  and,  through its  FirstEnergy
Generation Corp. (FGCO) subsidiary, operates FirstEnergy's nonnuclear generation
business. FENOC operates the Companies' nuclear generating facilities.  FEFSG is
the parent company of several heating,  ventilating, air conditioning and energy
management companies,  and MYR is a utility infrastructure  construction service
company.  MARBEL is a fully integrated natural gas company. GPU Capital owns and
operates electric  distribution  systems in foreign countries and GPU Power owns
and operates generation  facilities in foreign countries.  FECO and GPUS provide
legal,  financial and other corporate support services to affiliated FirstEnergy
companies.

        The condensed unaudited financial  statements of FirstEnergy and each of
the Companies  reflect all normal recurring  adjustments that, in the opinion of
management,  are  necessary  to fairly  present  results of  operations  for the
interim  periods.  These  statements  should  be read in  conjunction  with  the
financial  statements and notes  included in the combined  Annual Report on Form
10-K for the year ended  December 31, 2001 for  FirstEnergy  and the  Companies.
Significant intercompany  transactions have been eliminated.  The preparation of
financial statements in conformity with accounting principles generally accepted
in the  United  States  requires  management  to  make  periodic  estimates  and
assumptions  that affect the reported amounts of assets,  liabilities,  revenues
and expenses and disclosure of contingent assets and liabilities. Actual results
could differ from those  estimates.  The reported  results of operations are not
indicative of results of operations  for any future  period.  Certain prior year
amounts have been reclassified to conform with the current year presentation.

     Preferred Securities

        Met-Ed and Penelec have each formed  statutory  business  trusts for the
issuance  of $100  million  each of  preferred  securities  due  2039.  However,
ownership  of the  respective  Met-Ed and  Penelec  trusts is  through  separate
wholly-owned limited  partnerships,  of which a wholly-owned  subsidiary of each
company is the sole general partner. In these transactions,  the sole assets and
sources of revenues of each trust are the preferred securities of the applicable
limited  partnership,  whose sole assets are in the 7.35% and 7.34% subordinated
debentures  (aggregate  principal  amount of $103.1  million each) of Met-Ed and
Penelec,   respectively.  In  each  case,  the  applicable  parent  company  has
effectively provided a full and unconditional guarantee of its obligations under
its trust's preferred securities.

                                       1

<PAGE>

     Derivative Accounting

        On  January 1,  2001,  FirstEnergy  adopted  SFAS 133,  "Accounting  for
Derivative  Instruments  and  Hedging  Activities",  as  amended  by  SFAS  138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities --
an amendment of FASB  Statement No. 133".  The  cumulative  effect to January 1,
2001 was a charge of $8.5 million (net of $5.8 million of income  taxes) or $.03
per share of common stock.

        FirstEnergy is exposed to financial risks resulting from the fluctuation
of interest rates and commodity prices,  including electricity,  natural gas and
coal. To manage the volatility  relating to these exposures,  FirstEnergy uses a
variety  of  non-derivative  and  derivative   instruments,   including  forward
contracts,  options,  futures  contracts  and swaps.  The  derivatives  are used
principally for hedging purposes,  and to a lesser extent, for trading purposes.
FirstEnergy's Risk Policy Committee,  comprised of executive officers, exercises
an independent risk oversight  function to ensure compliance with corporate risk
management policies and prudent risk management practices.

        FirstEnergy uses  derivatives to hedge the risk of price,  interest rate
and  foreign  currency  fluctuations.   FirstEnergy's  primary  ongoing  hedging
activity involves cash flow hedges of electricity and natural gas purchases. The
maximum  periods over which the  variability of electricity and natural gas cash
flows are hedged are two and three  years,  respectively.  Gains and losses from
hedges of commodity  price risks are included in net income when the  underlying
hedged  commodities  are  delivered.  The  current net  deferred  loss of $133.6
million included in Accumulated Other  Comprehensive Loss (AOCL) as of March 31,
2002,  for  derivative  hedging  activity,  as compared to the December 31, 2001
balance  of $169.4  million  in AOCL,  resulted  from a $18.9  million  increase
related to current  hedging  activity  and a $16.9  million  increase due to net
hedge losses included in earnings during the quarter. Approximately $7.1 million
(after tax) of the current net deferred loss on derivative  instruments  in AOCL
is expected to be  reclassified  to  earnings  during the next twelve  months as
hedged  transactions  occur.   However,  the  fair  value  of  these  derivative
instruments will fluctuate from period to period based on various market factors
and will  generally  be more than  offset by the  margin  on  related  sales and
revenues.

        FirstEnergy  engages  in  the  trading  of  commodity   derivatives  and
periodically  experiences  net open  positions.  FirstEnergy's  risk  management
policies limit the exposure to market risk from open positions and require daily
reporting to management of potential financial exposures.

2 -   COMMITMENTS, GUARANTEES AND CONTINGENCIES:

     Capital Expenditures

        FirstEnergy's  current forecast  reflects  expenditures of approximately
$3.2 billion (OE-$195  million,  CEI-$256  million,  TE-$129  million,  Penn-$45
million,   JCP&L-$572  million,   Met-Ed-$336  million,   Penelec-$387  million,
ATSI-$118  million,  FES-$814 million and other  subsidiaries-$309  million) for
property additions and improvements from 2002-2006,  of which approximately $863
million (OE-$39  million,  CEI-$57  million,  TE-$27 million,  Penn-$9  million,
JCP&L-$144 million,  Met-Ed-$79 million,  Penelec-$84 million, ATSI-$20 million,
FES-$261  million and other  subsidiaries-$143  million) is  applicable to 2002.
Investments  for  additional  nuclear  fuel  during  the  2002-2006  period  are
estimated to be approximately  $502 million (OE-$136 million,  CEI-$166 million,
TE-$113  million  and  Penn-$87  million),  of which  approximately  $35 million
(OE-$10 million,  CEI-$12 million, TE-$8 million and Penn-$5 million) applies to
2002.

     Environmental Matters

        Various federal, state and local authorities regulate the Companies with
regard to air and water  quality and other  environmental  matters.  FirstEnergy
estimates  additional  capital  expenditures  for  environmental  compliance  of
approximately  $235  million,  which is  included in the  construction  forecast
provided under "Capital Expenditures" for 2002 through 2006.

        The Companies are required to meet  federally  approved  sulfur  dioxide
(SO2) regulations.  Violations of such regulations can result in shutdown of the
generating unit involved and/or civil or criminal penalties of up to $27,500 for
each day the unit is in violation. The Environmental Protection Agency (EPA) has
an  interim  enforcement  policy  for SO2  regulations  in Ohio that  allows for
compliance based on a 30-day averaging period. The Companies cannot predict what
action the EPA may take in the future with  respect to the  interim  enforcement
policy.

        The Companies  believe they are in  compliance  with the current SO2 and
nitrogen oxides (NOx) reduction  requirements under the Clean Air Act Amendments
of 1990.  SO2  reductions  are being  achieved  by  burning  lower-sulfur  fuel,
generating more electricity from  lower-emitting  plants,  and/or using emission
allowances.  NOx reductions are being achieved through  combustion  controls and
the generation of more electricity at lower-emitting  plants. In September 1998,
the EPA finalized  regulations  requiring  additional  NOx  reductions  from the
Companies'  Ohio and  Pennsylvania  facilities.  The  EPA's NOx  Transport  Rule
imposes  uniform  reductions of NOx emissions (an  approximate  85% reduction in
utility plant NOx emissions from projected  2007  emissions)  across a region of
nineteen  states and the District of Columbia,

                                       2

<PAGE>

including New Jersey, Ohio and Pennsylvania, based on a conclusion that such NOx
emissions  are  contributing  significantly  to ozone  pollution  in the eastern
United States. State Implementation Plans (SIP) must comply by May 31, 2004 with
individual state NOx budgets  established by the EPA.  Pennsylvania  submitted a
SIP that requires compliance with the NOx budgets at the Companies' Pennsylvania
facilities  by May 1,  2003 and  Ohio  submitted  a  "draft"  SIP that  requires
compliance  with the NOx budgets at the  Companies'  Ohio  facilities by May 31,
2004.

        In July 1997, the EPA  promulgated  changes in the National  Ambient Air
Quality  Standard  (NAAQS)  for ozone  emissions  and  proposed  a new NAAQS for
previously  unregulated  ultra-fine  particulate  matter.  In May 1999, the U.S.
Court of Appeals for the D.C. Circuit found  constitutional and other defects in
the new NAAQS rules.  In February  2001,  the U.S.  Supreme Court upheld the new
NAAQS rules  regulating  ultra-fine  particulates  but found  defects in the new
NAAQS rules for ozone and  decided  that the EPA must revise  those  rules.  The
future cost of compliance  with these  regulations  may be substantial  and will
depend if and how they are  ultimately  implemented  by the  states in which the
Companies operate affected facilities.

        In 1999  and  2000,  the EPA  issued  Notices  of  Violation  (NOV) or a
Compliance Order to nine utilities covering 44 power plants, including the W. H.
Sammis  Plant.  In addition,  the U.S.  Department  of Justice filed eight civil
complaints against various investor-owned utilities,  which included a complaint
against OE and Penn in the U.S.  District  Court for the  Southern  District  of
Ohio.  The NOV and  complaint  allege  violations  of the Clean Air Act based on
operation and maintenance of the Sammis Plant dating back to 1984. The complaint
requests  permanent  injunctive  relief to  require  the  installation  of "best
available  control  technology"  and civil penalties of up to $27,500 per day of
violation.  Although  unable  to  predict  the  outcome  of  these  proceedings,
FirstEnergy  believes the Sammis Plant is in full  compliance with the Clean Air
Act and the NOV and complaint are without merit.  Penalties  could be imposed if
the Sammis Plant continues to operate without  correcting the alleged violations
and a court  determines  that  the  allegations  are  valid.  The  Sammis  Plant
continues to operate while these proceedings are pending.

        In  December   2000,  the  EPA  announced  it  would  proceed  with  the
development of  regulations  regarding  hazardous air  pollutants  from electric
power  plants.  The EPA  identified  mercury as the  hazardous  air pollutant of
greatest  concern.  The EPA  established  a schedule to propose  regulations  by
December 2003 and issue final  regulations  by December 2004. The future cost of
compliance with these regulations may be substantial.

        As a result of the Resource  Conservation  and Recovery Act of 1976,  as
amended,  and the  Toxic  Substances  Control  Act of 1976,  federal  and  state
hazardous  waste   regulations  have  been  promulgated.   Certain   fossil-fuel
combustion waste products,  such as coal ash, were exempted from hazardous waste
disposal  requirements  pending  the  EPA's  evaluation  of the need for  future
regulation.   The  EPA  has  issued  its  final  regulatory  determination  that
regulation of coal ash as a hazardous waste is  unnecessary.  In April 2000, the
EPA announced that it will develop  national  standards  regulating  disposal of
coal ash under its authority to regulate nonhazardous waste.

        Various   environmental   liabilities   have  been   recognized  on  the
Consolidated Balance Sheet as of March 31, 2002, based on estimates of the total
costs of cleanup, the Companies' proportionate responsibility for such costs and
the financial ability of other nonaffiliated entities to pay. The Companies have
been named as "potentially  responsible  parties" (PRPs) at waste disposal sites
which may  require  cleanup  under  the  Comprehensive  Environmental  Response,
Compensation  and  Liability Act of 1980.  Allegations  of disposal of hazardous
substances   at  historical   sites  and  the   liability   involved  are  often
unsubstantiated and subject to dispute. Federal law provides that all PRPs for a
particular site be held liable on a joint and several basis. In addition,  JCP&L
has accrued liabilities for environmental remediation of former manufactured gas
plants  in New  Jersey;  those  costs  are being  recovered  by JCP&L  through a
non-bypassable  societal  benefits  charge.  The  Companies  have total  accrued
liabilities  aggregating   approximately  $58.2  million  (JCP&L-$50.3  million,
CEI-$2.9 million, TE-$0.2 million, Met-Ed-$0.2 million, Penelec-$0.9 million and
other-$3.7  million)  as  of  March  31,  2002.  FirstEnergy  does  not  believe
environmental  remediation  costs  will have a  material  adverse  effect on its
financial condition, cash flows or results of operations.

3 -   PENDING DIVESTITURES:

        FirstEnergy  identified certain former GPU international  operations for
divestiture within twelve months of the merger date. These operations constitute
individual "lines of business" as defined in Accounting Principles Board Opinion
(APB) 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," with physically and operationally  separable
activities.  Application  of Emerging  Issues Task Force (EITF) Issue No. 87-11,
"Allocation  of Purchase  Price to Assets to Be Sold,"  required that  expected,
pre-sale cash flows, including incremental interest costs on related acquisition
debt, of these  operations be considered part of the purchase price  allocation.
Accordingly,   subsequent  to  the  merger  date,   results  of  operations  and
incremental interest costs related to these international  subsidiaries were not
included  in  FirstEnergy's  Consolidated  Statements  of Income.  Additionally,
assets and liabilities of these  international  operations were segregated under
separate captions in the Consolidated Balance Sheet as "Assets Pending Sale" and
"Liabilities Related to Assets Pending Sale."

                                       3

<PAGE>

        In October  2001,  FirstEnergy  and  Aquila,  Inc.  (formerly  UtiliCorp
United)  announced  that Aquila made an offer to  FirstEnergy  to purchase  Avon
Energy Partners Holdings, FirstEnergy's wholly owned holding company of Midlands
Electricity  plc, for $2.1 billion  including the  assumption of $1.7 billion of
debt.  FirstEnergy accepted the offer upon completion of its merger with GPU and
regulatory  approvals for the transaction were received by Aquila.  On March 18,
2002,  FirstEnergy  announced that the terms of the initial offer by Aquila were
modified such that Aquila would now acquire a 79.9 percent  interest in Avon for
approximately  $1.9 billion  (including the assumption of $1.7 billion of debt).
FirstEnergy and Aquila  together will own all of the outstanding  shares of Avon
through a jointly owned subsidiary, with each company having a 50-percent voting
interest.  The transaction  closed on May 8, 2002. In accordance with applicable
accounting  guidance,  the earnings of those foreign operations were capitalized
in advance of the sale and not  recognized in current  earnings from the date of
the GPU acquisition until February 6, 2002. However, the revision to the initial
offer by Aquila  caused a reversal of this  accounting  in the first  quarter of
2002,  resulting  in the  recognition  of a  cumulative  effect  of a change  in
accounting  which increased net income by $31.7 million.  This resulted from the
application of guidance provided by EITF Issue No. 90-6, "Accounting for Certain
Events Not Addressed in Issue No. 87-11  relating to an Acquired  Operating Unit
to Be Sold,"  accounting under EITF Issue No. 87-11,  recognizing the net income
of Avon from  November  7, 2001 to  February  6,  2002 that  previously  was not
recognized by FirstEnergy in its  consolidated  earnings as discussed  above. In
addition, Avon's financial statements are no longer presented as "Assets Pending
Sale"  and  "Liabilities  Related  to  Assets  Pending  Sale"  in  FirstEnergy's
Consolidated Balance Sheet at March 31, 2002.

4 -   REGULATORY MATTERS:

        In Ohio,  New Jersey  and  Pennsylvania,  laws  applicable  to  electric
industry  deregulation  included the following provisions which are reflected in
the Companies' respective state regulatory plans:

        o  Allowing the Companies' electric customers to select their generation
           suppliers;

        o  establishing  provider  of  last  resort  (PLR)  obligations  to non-
           shopping customers in the Companies' service areas;

        o  allowing  recovery of potentially  stranded investment (or transition
           costs);

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

        o  deregulating  the  Companies'  electric  generation  businesses;  and

        o  continuing regulation of the Companies' transmission and distribution
           systems.

     Pennsylvania

        The Pennsylvania  Public Utility  Commission (PPUC) authorized 1998 rate
restructuring plans for Penn, Met-Ed and Penelec. In 2000, the PPUC disallowed a
portion of the requested  additional  stranded costs above those amounts granted
in Met-Ed's and Penelec's 1998 rate restructuring plan orders. The PPUC required
Met-Ed  and  Penelec  to seek an IRS  ruling  regarding  the  return of  certain
unamortized  investment tax credits and excess  deferred  income tax benefits to
customers. Should the IRS ruling ultimately support returning these tax benefits
to customers,  there would be no effect to FirstEnergy's,  Met-Ed's or Penelec's
net income since the contingency existed prior to the merger.

        As a result of their generating asset  divestitures,  Met-Ed and Penelec
obtain their supply of electricity to meet their PLR obligations almost entirely
from contracted and open market  purchases.  In 2000, Met-Ed and Penelec filed a
petition with the PPUC seeking permission to defer, for future recovery,  energy
costs in excess of amounts  reflected in their capped generation rates; the PPUC
subsequently consolidated this petition in January 2001 with the FirstEnergy/GPU
merger proceeding.

        In  June  2001,  the  PPUC  entered  orders   approving  the  Settlement
Stipulation with all of the major parties in the combined merger and rate relief
proceedings  which approved the merger and provided  Met-Ed and Penelec PLR rate
relief.  The PPUC permitted  Met-Ed and Penelec to defer for future recovery the
difference between their actual energy costs and those reflected in their capped
generation rates, retroactive to January 1, 2001. Correspondingly,  in the event
that energy  costs  incurred  by Met-Ed and  Penelec are below their  respective
capped  generation  rates,  that  difference  will  reduce  costs  that had been
deferred for recovery in future periods. This deferral accounting procedure will
cease on December 31, 2005.  Thereafter,  costs which had been deferred  through
that date would be recoverable  through  application  of competitive  transition
charge (CTC) revenues  received by Met-Ed and Penelec through December 31, 2010.
Met-Ed's and Penelec's PLR obligations  extend through December 31, 2010; during
that  period  CTC  revenues  will  be  applied  first  to  PLR  costs,  then  to
non-nonutility  generation  (NUG)  stranded  costs and  finally to NUG  stranded
costs.  Met-Ed and Penelec would be permitted to recover any remaining  stranded
costs through a continuation of the CTC after

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<PAGE>

December  31, 2010  through no later than  December  31,  2015.  Any amounts not
expected to be  recovered  by December 31, 2015 would be written off at the time
such  nonrecovery  becomes  probable.

        Several  parties  had filed  Petitions  for Review in June and July 2001
with the Commonwealth Court of Pennsylvania regarding the June 2001 PPUC orders.
On February  21,  2002,  the Court  affirmed  the PPUC  decision  regarding  the
FirstEnergy/GPU merger,  remanding the decision to the PPUC only with respect to
the issue of merger savings.  The Court reversed the PPUC's  decision  regarding
the PLR  obligations  of Met-Ed and  Penelec,  and  rejected  those parts of the
settlement  that  permitted the companies to defer for  accounting  purposes the
difference  between their non-NUG wholesale power costs and the amount that they
collect from retail  customers.  FirstEnergy  and the PPUC each filed a Petition
for Allowance of Appeal with the  Pennsylvania  Supreme Court on March 25, 2002,
asking it to review the Commonwealth Court decision. Also on March 25, 2002, one
intervenor filed a motion seeking an appeal of the Commonwealth Court's decision
to affirm the FirstEnergy and GPU merger with the Supreme Court of Pennsylvania.
In  September  2002,  Met-Ed  and  Penelec  established  reserves  for their PLR
deferred energy costs.  The reserves  reflect the potential  adverse impact of a
pending  Pennsylvania Supreme Court decision as to whether or not it will review
the Commonwealth Court ruling. In the original interim financial  statements for
the quarter ended March 31, 2002, FirstEnergy, Met-Ed and Penelec had previously
disclosed,   in  consultation  with  its  independent   accountants,   that  the
finalization  of that  potential  pre-acquisition  contingency  relating  to the
FirstEnergy/GPU  merger would be reflected as an adjustment to the allocation of
the purchase price prior to the end of the third quarter of 2002.

        During the third  quarter  of 2002 and in  connection  with  FirstEnergy
finalizing  the  purchase  accounting  relating to the  FirstEnergy/GPU  merger,
Met-Ed  and  Penelec  revised  the  previously  disclosed  accounting  for  this
potential  pre-acquisition  contingency  after  further  consultation  with  its
independent accountants.  Accordingly,  Met-Ed and Penelec amended their interim
financial   statements   for  the  quarter  ended  March  31,  2002  to  reflect
establishment  of the  reserves  in the first  quarter of 2002  totaling  $103.0
million at Met-Ed and $111.1 million at Penelec,  with a corresponding  increase
in goodwill,  net of tax ($60.3 million at Met-Ed and $65.0 million at Penelec).
In  addition,  net income for the quarter  ended March 31, 2002  increased  $7.5
million  for Met-Ed and $4.7  million for  Penelec  from the amounts  previously
reported. The increase in net income reflects the difference between the non-NUG
cost of power and the  amounts  that  Met-Ed and  Penelec  collected  from their
customers  for the  quarter  ended  March 31,  2002.  That  difference  had been
previously  reflected  as a  change  in  regulatory  assets  based  on the  PPUC
decision.   Since  these   revisions  are  not   significant  to   FirstEnergy's
consolidated  financial statements for this period, there will be no restatement
of  FirstEnergy's   consolidated  financial  statements.  The  following  tables
summarize  the impact on net income for Met-Ed and Penelec for the first quarter
of 2002.


           Met-Ed                               3 Months Ended,
           ------                               ---------------
                                                 March 31, 2002
                                                 --------------

           Net income as previously reported....    $19,118
           Effect of revision...................      7,494
                                                    -------
           Net income as revised................    $26,612
                                                    =======


           Penelec                              3 Months Ended,
           -------                              ---------------
                                                 March 31, 2002
                                                 --------------

           Net income as previously reported....    $14,147
           Effect of revision...................      4,692
                                                    -------
           Net income as revised................    $18,839
                                                    =======


5 -   NEW ACCOUNTING STANDARDS:

        The  Financial  Accounting  Standards  Board (FASB)  approved  SFAS 141,
"Business Combinations" and SFAS 142, "Goodwill and Other Intangible Assets," on
June 29, 2001. SFAS 141 requires all business combinations  initiated after June
30, 2001, to be accounted for using purchase  accounting.  The provisions of the
new standard  relating to the  determination  of goodwill  and other  intangible
assets  have  been  applied  to the GPU  merger,  which was  accounted  for as a
purchase  transaction,  and have not materially affected the accounting for this
transaction. Under SFAS 142, amortization of existing goodwill ceased January 1,
2002.  Instead,  goodwill  will be tested for  impairment  at least on an annual
basis -- no impairment of goodwill is  anticipated  as a result of a preliminary
analysis.  Prior to the adoption of SFAS 142,  FirstEnergy  amortized  about $57
million  ($.25 per share of common  stock) of  goodwill  annually.  There was no
goodwill  amortization  in  2001  associated  with  the  GPU  merger  under  the
provisions of the new standard. FirstEnergy's net income in the first quarter of
2001 and the year 2001 of $98 million and $646 million, respectively, would have
been  $111  million  and  $701   million,   respectively,   excluding   goodwill
amortization.

                                       5

<PAGE>


        In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations."  The new statement  provides  accounting  standards for retirement
obligations  associated with tangible  long-lived assets, with adoption required
by January 1, 2003.  SFAS 143 requires that the fair value of a liability for an
asset  retirement  obligation be recorded in the period in which it is incurred.
The associated  asset  retirement  costs are capitalized as part of the carrying
amount of the long-lived  asset. Over time the capitalized costs are depreciated
and the present value of the asset retirement liability increases,  resulting in
a period expense.  Upon retirement,  a gain or loss will be recorded if the cost
to  settle  the  retirement   obligation   differs  from  the  carrying  amount.
FirstEnergy  is currently  assessing the new standard and has not yet determined
the impact on its financial statements.

        In  September  2001,  the FASB  issued  SFAS  144,  "Accounting  for the
Impairment or Disposal of  Long-Lived  Assets."  SFAS 144  supersedes  SFAS 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 APB  30.  FirstEnergy's  adoption  of this  Statement,  effective
January 1, 2002,  will result in its  accounting  for any future  impairments or
disposals of  long-lived  assets under the  provisions of SFAS 144, but will not
change  the  accounting   principles  used  in  previous  asset  impairments  or
disposals.  Application of SFAS 144 is not anticipated to have a major impact on
accounting  for  impairments  or  disposal  transactions  compared  to the prior
application of SFAS 121 or APB 30.

6 -   SEGMENT INFORMATION:

        FirstEnergy operates under the following reportable segments:  regulated
services,  competitive  services and other (primarily corporate support services
and  international  operations).  FirstEnergy's  primary  segment  is  regulated
services,  which include eight  electric  utility  operating  companies in Ohio,
Pennsylvania and New Jersey that provide electric  transmission and distribution
services.  Its other material business segment consists of the subsidiaries that
operate  unregulated  energy and energy-related  businesses.  Certain prior year
amounts have been reclassified to conform with the current year presentation.

        The  regulated  services  segment  designs,  constructs,   operates  and
maintains FirstEnergy's regulated transmission and distribution systems. It also
provides  generation  services to  regulated  franchise  customers  who have not
chosen an alternative,  competitive  generation supplier. The regulated services
segment  obtains a portion  of its  required  generation  through  power  supply
agreements with the competitive services segment.

   Segment Financial Information
   -----------------------------

                              Regulated Competitive     Reconciling
                              Services   Services Other Adjustments Consolidated
                              --------   -------- ----- ----------- ------------
                                              (In millions)
Three Months Ended:
-------------------

     March 31, 2002
     --------------
External revenues............. $  1,995   $  678   $123  $    6 (a)   $ 2,802
Internal revenues.............      355      410    117    (882)(b)        --
  Total revenues..............    2,350    1,088    240    (876)        2,802
Depreciation and amortization.      244        7     12      --           263
Net interest charges..........      161       10    103     (14)(b)       260
Income taxes..................      162      (41)   (40)     --            81
Income before cumulative
  effect of a change in
  accounting..................      198      (60)   (53)     --            85
Net income (loss).............      198      (60)   (22)     --           116
Total assets..................   29,147    2,706  6,288    (836)(b)    37,305
Property additions............      144       37     14      --           195


     March 31, 2001
     --------------
External revenues............. $  1,309   $  633 $    1  $   43 (a)   $  1,986
Internal revenues.............      334      500     65    (899)(b)         --
  Total revenues..............    1,643    1,133     66    (856)         1,986
Depreciation and amortization.      215        4      8      --            227
Net interest charges..........      145       (4)     8     (23)(b)        126
Income taxes..................       67       13      4      --             84
Income before cumulative
  effect of a change in
  accounting..................      123      (24)     7      --            106
Net income (loss).............      123      (32)     7      --             98
Total assets..................   15,624    1,896    481      --         18,001
Property additions............       53       94      4      --            151

Reconciling  adjustments to segment operating  results from internal  management
reporting to consolidated external financial reporting:

(a)  Principally  fuel  marketing  revenues which are reflected as reductions to
     expenses for internal management reporting purposes.
(b)  Elimination of intersegment transactions.

                                       6

<PAGE>

<TABLE>
<CAPTION>


                                                    PENNSYLVANIA ELECTRIC COMPANY

                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)


                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                       -------------------------
                                                                                         2002             2001
                                                                                       --------         --------
                                                                                      (Restated)
                                                                                            (In thousands)

<S>                                                                                    <C>              <C>
OPERATING REVENUES..............................................................       $242,820    |    $243,827
                                                                                       --------    |     --------
                                                                                                   |
OPERATING EXPENSES AND TAXES:                                                                      |
   Purchased power..............................................................        138,129    |      169,064
   Other operating costs........................................................         33,800    |       43,083
                                                                                       --------    |     --------
       Total operation and maintenance expenses.................................        171,929    |      212,147
   Provision for depreciation and amortization..................................         14,831    |       14,529
   General taxes................................................................         15,030    |       11,690
   Income taxes (benefit).......................................................         12,499    |       (3,336)
                                                                                       --------    |     --------
       Total operating expenses and taxes.......................................        214,289    |      235,030
                                                                                       --------    |     --------
                                                                                                   |
OPERATING INCOME................................................................         28,531    |        8,797
                                                                                                   |
OTHER INCOME....................................................................            298    |          605
                                                                                       --------    |     --------
                                                                                                   |
INCOME BEFORE NET INTEREST CHARGES..............................................         28,829    |        9,402
                                                                                       --------    |     --------
                                                                                                   |
                                                                                                   |
NET INTEREST CHARGES:                                                                              |
   Interest on long-term debt...................................................          8,421    |        8,241
   Allowance for borrowed funds used during construction........................           (120)   |         (144)
   Deferred interest............................................................           (751)   |           --
   Other interest expense ......................................................            605    |        1,575
   Subsidiaries' preferred stock dividend requirements..........................          1,835    |        1,835
                                                                                       --------    |     --------
       Net interest charges.....................................................          9,990    |       11,507
                                                                                       --------    |     --------
                                                                                                   |
NET INCOME (LOSS)...............................................................       $ 18,839    |     $ (2,105)
                                                                                       ========    |     ========


<FN>



The preceding Notes to Financial Statements as they relate to the Pennsylvania Electric Company are an integral part of these
statements.

</FN>
</TABLE>

                                                       73

<PAGE>

<TABLE>
<CAPTION>

                                            PENNSYLVANIA ELECTRIC COMPANY

                                             CONSOLIDATED BALANCE SHEETS


                                                                                  (Unaudited)
                                                                                   March 31,       December 31,
                                                                                      2002             2001
                                                                                   ----------      ------------
                                                                                   (Restated)
                                                                                         (In thousands)

                              ASSETS
                              ------
<S>                                                                                <C>              <C>
UTILITY PLANT:
   In service................................................................      $1,851,968       $1,845,187
   Less--Accumulated provision for depreciation..............................         644,012          630,957
                                                                                   ----------       ----------
                                                                                    1,207,956        1,214,230
  Construction work in progress-
     Electric plant..........................................................          15,578           12,857
                                                                                   ----------       ----------
                                                                                    1,223,534        1,227,087
                                                                                   ----------       ----------

OTHER PROPERTY AND INVESTMENTS:
   Non-utility generation trusts.............................................         121,686          154,067
   Nuclear plant decommissioning trusts......................................          96,293           96,610
   Long-term notes receivable from associated companies......................          15,515           15,515
   Other.....................................................................          11,410            2,265
                                                                                   ----------       ----------
                                                                                      244,904          268,457
                                                                                   ----------       ----------

CURRENT ASSETS:
   Cash and cash equivalents.................................................          18,460           39,033
   Receivables-
     Customers (less accumulated provisions of $12,215,000 and $14,719,000
        respectively, for uncollectible accounts)............................          95,093          107,170
     Associated companies....................................................          40,493           40,203
     Other...................................................................          14,825           14,842
   Prepayments and other.....................................................          37,449            8,605
                                                                                   ----------       ----------
                                                                                      206,320          209,853
                                                                                   ----------       ----------

DEFERRED CHARGES:
   Regulatory assets.........................................................         649,758          769,807
   Goodwill..................................................................         862,335          797,362
   Accumulated deferred income taxes.........................................          38,262               --
   Other.....................................................................          27,664           27,703
                                                                                   ----------       ----------
                                                                                    1,578,019        1,594,872
                                                                                   ----------        ---------
                                                                                   $3,252,777       $3,300,269
                                                                                   ==========       ==========


<FN>


The preceding Notes to Financial Statements as they relate to the Pennsylvania Electric Company are an integral part of these
balance sheets.

</FN>
</TABLE>
                                                       74
<PAGE>

<TABLE>
<CAPTION>

                                            PENNSYLVANIA ELECTRIC COMPANY

                                             CONSOLIDATED BALANCE SHEETS


                                                                                  (Unaudited)
                                                                                   March 31,       December 31,
                                                                                     2002              2001
                                                                                  -----------      ------------
                                                                                  (Restated)
                                                                                         (In thousands)

             CAPITALIZATION AND LIABILITIES
             ------------------------------
<S>                                                                                <C>              <C>
CAPITALIZATION:
   Common stockholder's equity-
     Common stock, par value $20 per share, authorized 5,400,000
       shares, 5,290,596 shares outstanding..................................      $  105,812       $  105,812
     Other paid-in capital...................................................       1,188,190        1,188,190
     Accumulated other comprehensive income..................................             929            1,779
     Retained earnings.......................................................          29,634           10,795
                                                                                   ----------       ----------
         Total common stockholder's equity...................................       1,324,565        1,306,576
   Company-obligated trust preferred securities .............................          92,000           92,000
   Long-term debt............................................................         471,918          472,400
                                                                                   ----------       ----------
                                                                                    1,888,483        1,870,976
                                                                                   ----------       ----------


CURRENT LIABILITIES:
   Currently payable long-term debt and preferred stock......................          50,769           50,756
   Accounts payable-
     Associated companies....................................................         114,706          126,390
     Other...................................................................          38,582           38,720
   Notes payable to associated companies.....................................          38,050           77,623
   Accrued taxes.............................................................          44,517           29,255
   Accrued interest..........................................................          18,373           12,284
   Other.....................................................................           7,600           10,993
                                                                                   ----------       ----------
                                                                                      312,597          346,021
                                                                                   ----------       ----------


DEFERRED CREDITS:
   Accumulated deferred income taxes.........................................              --           21,682
   Accumulated deferred investment tax credits...............................          11,671           11,956
   Nuclear plant decommissioning costs.......................................         135,795          135,483
    Nuclear fuel disposal costs..............................................          18,533           18,453
   Power purchase contract loss liability....................................         855,759          867,046
   Other.....................................................................          29,939           28,652
                                                                                   ----------       ----------
                                                                                    1,051,697        1,083,272
                                                                                   ----------       ----------


COMMITMENTS AND CONTINGENCIES (Note 2).......................................
                                                                                   ----------       ----------
                                                                                   $3,252,777       $3,300,269
                                                                                   ==========       ==========

<FN>


The preceding Notes to Financial Statements as they relate to the Pennsylvania Electric Company are an integral part of
these balance sheets.

</FN>
</TABLE>
                                                      75

<PAGE>


<TABLE>
<CAPTION>


                                            PENNSYLVANIA ELECTRIC COMPANY

                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (Unaudited)


                                                                                        Three Months Ended
                                                                                             March 31,
                                                                                   ----------------------------
                                                                                      2002               2001
                                                                                    ---------          --------
                                                                                   (Restated)
                                                                                          (In thousands)
<S>                                                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................................       $ 18,839    |      $ (2,105)
   Adjustments to reconcile net income (loss) to net                                            |
     cash from operating activities-                                                            |
       Provision for depreciation and amortization...........................         14,831    |        13,154
       Other amortization....................................................            782    |           462
       Deferred costs, net...................................................        (18,434)   |       (10,367)
       Deferred income taxes, net............................................         (6,304)   |           797
       Investment tax credits, net...........................................           (285)   |          (285)
       Receivables...........................................................         11,803    |         2,882
       Accounts payable......................................................        (11,822)   |        (5,317)
       Other.................................................................        (14,185)   |       (20,742)
                                                                                    --------    |      --------
         Net cash used for operating activities..............................         (4,775)   |       (21,521)
                                                                                    --------    |      --------
                                                                                                |
CASH FLOWS FROM FINANCING ACTIVITIES:                                                           |
   New Financing-                                                                               |
     Short-term borrowings, net..............................................             --    |        30,700
   Redemptions and Repayments-                                                                  |
     Short-term borrowings, net..............................................         39,573    |            --
                                                                                    --------    |      --------
   Net cash used for (provided from) financing activities....................         39,573    |       (30,700)
                                                                                    --------    |      --------
                                                                                                |
CASH FLOWS FROM INVESTING ACTIVITIES:                                                           |
   Property additions........................................................         10,194    |        14,223
   Proceeds from non-utility generation trusts...............................        (34,208)   |        (8,465)
   Contributions to decommissioning trusts...................................             --    |            12
   Other.....................................................................            239    |         3,319
                                                                                    --------    |      --------
         Net cash used for (provided from) investing activities..............        (23,775)   |         9,089
                                                                                    --------    |      --------
                                                                                                |
Net increase (decrease) in cash and cash equivalents.........................        (20,573)   |            90
Cash and cash equivalents at beginning of period ............................         39,033    |           580
                                                                                    --------    |      --------
Cash and cash equivalents at end of period...................................       $ 18,460    |      $    670
                                                                                    ========    |      ========

<FN>



The preceding Notes to Financial Statements as they relate to the Pennsylvania Electric Company are an integral part of these
statements.

</FN>
</TABLE>
                                                      76

<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and
Shareholders of Pennsylvania
Electric Company:

We have reviewed the  accompanying  consolidated  balance sheet of  Pennsylvania
Electric  Company and its  subsidiaries  as of March 31,  2002,  and the related
consolidated  statements  of income  and cash flows for the  three-month  period
ended March 31, 2002. These financial  statements are the  responsibility of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the accompanying consolidated interim financial statements, after the
restatement  described in Note 4, for them to be in conformity  with  accounting
principles generally accepted in the United States of America.




PricewaterhouseCoopers LLP
Cleveland, Ohio
May 15, 2002, except as to
Note 4, which is as of November 26, 2002

                                       77
<PAGE>


                          PENNSYLVANIA ELECTRIC COMPANY

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


        Penelec is a wholly owned electric  utility  subsidiary of  FirstEnergy.
Penelec  conducts  business in northern,  western,  and south  central  parts of
Pennsylvania,  offering regulated electric distribution  services.  Penelec also
provides  power  to those  customers  electing  to  retain  them as their  power
supplier.  Penelec's  regulatory plan requires it to itemize,  or unbundle,  the
price of  electricity  into  its  component  elements  -  including  generation,
transmission, distribution and transition charges. Penelec was formerly a wholly
owned  subsidiary of GPU,  Inc.,  which merged with  FirstEnergy  on November 7,
2001.

Results of Operations
---------------------

Operating  revenues  decreased by $1.0  million or 0.4% in the first  quarter of
2002  compared  to the first  quarter of 2001.  The  sources  of the  changes in
operating  revenues,  as compared to the same period in 2001,  are summarized in
the following table.


        Sources of Operating Revenue Changes
        ---------------------------------------------------------------------
             Increase (Decrease)                                 (In millions)

        Change in kilowatt-hour sales due to level of retail
           customers shopping for generation service .............  $ 35.4
        Change in other retail kilowatt-hour sales................    (5.5)
        Decrease in wholesale sales...............................   (27.9)
        Provision for rate refunds................................    (0.8)
        All other changes.........................................    (2.2)
        ---------------------------------------------------------------------

        Net Decrease in Operating Revenues........................  $ (1.0)
        =====================================================================

Electric Sales

        In the first quarter of 2002, a  significant  reduction in the number of
customers who received their power from alternate suppliers continued to have an
effect on  operating  revenues.  During  the  first  quarter  of 2001,  25.9% of
kilowatt-hour  deliveries  were from  shopping  customers,  whereas only 4.4% of
kilowatt-hour  deliveries  during the first  quarter of 2002 were from  shopping
customers.  More than  offsetting  this  increase  in  revenues  from  returning
shopping customers was lower kilowatt-hour  deliveries to residential customers,
primarily due to milder weather during the first quarter of 2002 compared to the
first quarter of 2001.  Sales to industrial  customers  also  decreased due to a
decline in economic conditions;  lower sales to wholesale customers in the first
quarter  of 2002 also  reduced  operating  revenues.  Changes  in  kilowatt-hour
deliveries  by customer  class during the first  quarter of 2002, as compared to
the same period of 2001, are summarized in the following table:


            Changes in Kilowatt-hour Deliveries
            ------------------------------------------------
                 Increase (Decrease)

            Residential..................          (3.8)%
            Commercial...................          (0.1)%
            Industrial...................         (16.5)%
            ------------------------------------------------

            Total Retail.................         (10.8)%
            Wholesale....................         (81.4)%
            ------------------------------------------------

            Total Deliveries.............         (20.4)%
            ------------------------------------------------


     Operating Expenses and Taxes

        Total operating  expenses and taxes decreased $20.7 million in the first
quarter of 2002  compared  to the same  period of 2001.  Purchased  power  costs
decreased  $30.9  million  in the first  quarter of 2002  compared  to the first
quarter of 2001  primarily due to the absence in 2002 of a $16.0 million  charge
related to the  termination  of a  wholesale  energy  contract  in 2001.  A $9.3
million  decrease in other operating costs in the first quarter of 2002 compared
to the same period of 2001 was  primarily  attributable  to the absence of costs
related  to  early  retirement  programs  offered  to  certain  bargaining  unit
employees in 2001.

                                       78

<PAGE>

     Net Interest Charges

        Net interest charges decreased by $1.5 million in the first three months
of 2002,  compared to the same period in 2001.  The decrease was  attributed  to
higher deferred  interest  related to Penelec's  deferred energy costs and lower
short-term borrowing levels.

     Financial Statements Revision

        During the third  quarter of 2002,  Penelec  established  a reserve  and
recorded a non-cash charge for deferred energy costs incurred  subsequent to the
merger (see Pennsylvania Regulatory Matters). The reserve reflects the potential
adverse  impact of a pending  Pennsylvania  Supreme  Court  decision  whether to
review the Commonwealth  Court ruling. In the originally filed interim financial
statements  for the  quarter  ended  March  31,  2002,  Penelec  had  previously
disclosed,   in  consultation  with  its  independent   accountants,   that  the
finalization  of that  potential  pre-acquisition  contingency  relating  to the
FirstEnergy/GPU  merger would be reflected as an adjustment to the allocation of
the  purchase  price prior to the end of the third  quarter of 2002.  During the
third quarter of 2002 and in connection with FirstEnergy finalizing the purchase
accounting  relating  to  the  FirstEnergy/GPU   merger,   Penelec  revised  the
previously disclosed accounting for this potential  pre-acquisition  contingency
after further  consultation with its independent  accountants.  This resulted in
the  recognition  of a reserve  related to deferred  energy costs.  Accordingly,
Penelec amended its interim  consolidated  financial  statements for the quarter
ended March 31, 2002 to reflect an increase of net income by approximately  $4.7
million  related to changes in PLR related  energy costs  incurred that had been
previously  reflected as changes to its  regulatory  assets (see Note 4). Should
the  Pennsylvania  Supreme Court ultimately  uphold  FirstEnergy's  appeal,  the
charge relating to 2002 would be reversed into earnings.

Capital Resources and Liquidity
-------------------------------

        Penelec  has   continuing   cash   requirements   for  planned   capital
expenditures  and maturing  debt.  During the remaining  three quarters of 2002,
capital  requirements for property  additions and capital leases are expected to
be about $75 million.  Penelec also has sinking fund  requirements  for maturing
long-term debt of $50.2 million during the remainder of 2002. These requirements
are  expected  to be  satisfied  from  internal  cash and/or  short-term  credit
arrangements.

        As of March 31,  2002,  Penelec  had  about  $18.5  million  of cash and
temporary investments and $38.1 million of short-term indebtedness.  Penelec may
borrow from its affiliates on a short-term  basis.  Penelec will not issue first
mortgage  bonds  (FMBs) other than as  collateral  for senior  notes,  since its
senior note indentures  prohibit (subject to certain exceptions) it from issuing
any debt which is senior to the senior notes. As of March 31, 2002,  Penelec had
the  capability to issue $450 million of additional  senior notes based upon FMB
collateral. Penelec has no restrictions on the issuance of preferred stock.

Market Risk Information
-----------------------

        Penelec uses various market sensitive instruments,  including derivative
contracts,  primarily to manage the risk of price  fluctuations.  Penelec's Risk
Policy  Committee,  comprised of FirstEnergy  executive  officers,  exercises an
independent  risk oversight  function to ensure  compliance  with corporate risk
management policies and prudent risk management practices.

     Commodity Price Risk

        Penelec is exposed  to market  risk  primarily  due to  fluctuations  in
electricity and natural gas prices.  To manage the volatility  relating to these
exposures,  Penelec uses a variety of derivative instruments,  including options
and  futures  contracts.  The  derivatives  are  used  principally  for  hedging
purposes. The change in the fair value of commodity derivative contracts related
to energy  production  during  the first  quarter of 2002 is  summarized  in the
following table:

            Change in the Fair Value of Commodity Derivative Contracts
            ----------------------------------------------------------
                                                       (In millions)

            Outstanding as of December 31, 2001. ......     $1.3
            Contract value when entered................      0.2
            Increase in value of existing contracts....      9.0
            ----------------------------------------------------------
            Outstanding as of March 31, 2002...........    $10.5
            ==========================================================

        The  valuation of  derivative  contracts is based on  observable  market
information  to the extent that such  information  is available.  In cases where
such  information is not available,  Penelec relies on model-based  information.
The model provides  estimates of future  regional  prices for electricity and an
estimate  of  related  price  volatility.  Penelec  utilizes  these  results  in
developing estimates of fair value for the later years of applicable electricity
contracts  for both  financial  reporting  purposes and for internal  management
decision  making.  Sources  of  information  for  the  valuation  of  derivative
contracts by year are summarized in the following table:

                                       79

<PAGE>

   Source of Information - Fair Value by Contract Year
   ---------------------------------------------------

                                 2002*    2003    2004  Thereafter   Total
   ---------------------------------------------------------------------------
                                             (In millions)

   Prices actively quoted....   $ --      $0.9    $0.9     $ --      $1.8
   Prices based on models**..     --        --      --      8.7       8.7
   ---------------------------------------------------------------------------

     Total........... .......   $ --      $0.9    $0.9     $8.7     $10.5
   ===========================================================================

   *  For the remaining quarters of 2002.
   ** Relates to an embedded option that is offset by a regulatory liability and
      does not affect earnings.


        Penelec  performs  sensitivity  analyses to estimate its exposure to the
market risk of its  commodity  position.  A  hypothetical  10% adverse  shift in
quoted market prices in the near term on derivative  instruments  would not have
had a material effect on Penelec's consolidated financial position or cash flows
as of March 31, 2002.

Pennsylvania Regulatory Matters
-------------------------------

        In June and July 2001,  several  parties had filed  Petitions for Review
with the Commonwealth Court of Pennsylvania  regarding the June 2001 PPUC orders
which approved the FirstEnergy/GPU  merger and provided rate relief for Penelec.
On February  21,  2002,  the Court  affirmed  the PPUC  decision  regarding  the
FirstEnergy/GPU merger,  remanding the decision to the PPUC only with respect to
the issue of merger savings.  The Court reversed the PPUC's  decision  regarding
Penelec's  PLR  obligation,  and  rejected  those parts of the  settlement  that
permitted the Company to defer for accounting  purposes the  difference  between
its  wholesale  power  costs and the amount  collected  from  retail  customers.
Penelec  and PPUC  each  filed a  Petition  for  Allowance  of  Appeal  with the
Pennsylvania  Supreme  Court  on  March  25,  2002,  asking  it  to  review  the
Commonwealth  Court's decision.  Also on March 25, 2002,  Citizens Power filed a
motion  seeking an appeal of the  Commonwealth  Court's  decision  to affirm the
FirstEnergy/GPU  merger with the Supreme Court of  Pennsylvania  (see  Financial
Statements Revision and Note 4).

Significant Accounting Policies
-------------------------------

        Penelec  prepares its  consolidated  financial  statements in accordance
with accounting principles generally accepted in the United States.  Application
of these  principles  often  requires a high degree of judgment,  estimates  and
assumptions  that affect its  financial  results.  All of  Penelec's  assets are
subject  to their own  specific  risks and  uncertainties  and are  periodically
reviewed  for  impairment.  Assets  related to the  application  of the policies
discussed  below are  similarly  reviewed  with  their  risks and  uncertainties
reflecting  these  specific  factors.   Penelec's  more  significant  accounting
policies are described below.

     Purchase Accounting - Acquisition of GPU

        On  November  7, 2001,  the merger  between  FirstEnergy  and GPU became
effective,  and Penelec  became a wholly owned  subsidiary of  FirstEnergy.  The
merger was accounted for by the purchase  method of  accounting,  which requires
judgment regarding the allocation of the purchase price based on the fair values
of the  assets  acquired  (including  intangible  assets)  and  the  liabilities
assumed.  The fair values of the acquired  assets and assumed  liabilities  were
based primarily on estimates.  The adjustments  reflected in Penelec's  records,
which are subject to adjustment in 2002 when  finalized,  primarily  consist of:
(1)  revaluation  of  certain  property,  plant  and  equipment;  (2)  adjusting
preferred stock subject to mandatory  redemption and long-term debt to estimated
fair  value;  (3)  recognizing  additional  obligations  related  to  retirement
benefits;  and  (4)  recognizing  estimated  severance  and  other  compensation
liabilities.  The excess of the purchase price over the estimated fair values of
the assets  acquired and liabilities  assumed was recognized as goodwill,  which
will be reviewed for impairment at least annually. As of March 31, 2002, Penelec
had recorded goodwill of approximately $862.3 million related to the merger.

     Regulatory Accounting

     Penelec  is  subject  to  regulation  that sets the  prices  (rates)  it is
permitted to charge customers based on costs that regulatory  agencies determine
Penelec is permitted to recover. At times, regulators permit the future recovery
through  rates of costs  that  would  be  currently  charged  to  expense  by an
unregulated  company.  This  rate-making  process  results in the  recording  of
regulatory assets based on anticipated  future cash inflows.  As a result of the
changing  regulatory   framework  in  Pennsylvania,   a  significant  amount  of
regulatory  assets  have been  recorded - $649.8  million as of March 31,  2002.
Penelec regularly  reviews these assets to assess their ultimate  recoverability
within the approved regulatory guidelines. Impairment risk associated with these
assets  relates to  potentially  adverse  legislative,  judicial  or  regulatory
actions in the future.

                                       80

<PAGE>

     Derivative Accounting

        Determination  of appropriate  accounting  for  derivative  transactions
requires the involvement of management representing operations, finance and risk
assessment.  In order to determine the  appropriate  accounting  for  derivative
transactions,  the  provisions of the contract need to be carefully  assessed in
accordance  with  the  authoritative   accounting  literature  and  management's
intended use of the derivative.  New authoritative  guidance  continues to shape
the  application  of  derivative  accounting.   Management's   expectations  and
intentions  are key factors in  determining  the  appropriate  accounting  for a
derivative  transaction and, as a result,  such expectations and intentions must
be documented. Derivative contracts that are determined to fall within the scope
of SFAS 133, as amended,  must be  recorded at their fair value.  Active  market
prices are not always  available to determine  the fair value of the later years
of a contract, requiring that various assumptions and estimates be used in their
valuation. Penelec continually monitors its derivative contracts to determine if
its  activities,  expectations,  intentions,  assumptions  and estimates  remain
valid.  As  part of its  normal  operations,  Penelec  enters  into  commodities
contracts, which increase the impact of derivative accounting judgments.

     Revenue Recognition

        Penelec   follows  the  accrual   method  of  accounting  for  revenues,
recognizing  revenue for  kilowatt-hours  that have been  delivered but have not
been billed  through  March 31, 2002.  The  determination  of unbilled  revenues
requires management to make various estimates including:

        o  Net energy generated or purchased for retail load
        o  Losses of energy over transmission and distribution lines
        o  Mix of kilowatt-hour usage by residential, commercial and industrial
           customers
        o  Kilowatt-hour usage of customers receiving electricity from
           alternative suppliers

Recently Issued Accounting Standards Not Yet Implemented
--------------------------------------------------------

        In June 2001, the Financial  Accounting Standards Board issued SFAS 143,
"Accounting  for  Asset  Retirement  Obligations."  The new  statement  provides
accounting  standards  for  retirement   obligations  associated  with  tangible
long-lived  assets  with  adoption  required  as of January  1,  2003.  SFAS 143
requires that the fair value of a liability for an asset  retirement  obligation
be  recorded  in the  period  in  which it is  incurred.  The  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset.  Over  time the  capitalized  costs are  depreciated  and the
present value of the asset retirement  liability increases resulting in a period
expense. Upon retirement,  a gain or loss will be recorded if the cost to settle
the retirement obligation differs from the carrying amount. Penelec is currently
assessing its asset  retirement  obligations  under the new standard and has not
yet determined the impact on its financial statements.

                                       81

<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 26, 2002




                                        PENNSYLVANIA ELECTRIC COMPANY
                                        -----------------------------
                                                  Registrant



                                             /s/Harvey L. Wagner
                                        -------------------------------
                                                Harvey L. Wagner
                                           Vice President, Controller
                                          and Chief Accounting Officer

                                       83

<PAGE>


                                  Certification


I, H. Peter Burg, certify that:

1.   I have  reviewed  this  quarterly  report on Form  10-Q/A  of  Pennsylvania
     Electric Company;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report.



Date:  November 26, 2002

                                                 /s/H. Peter Burg
                                              ------------------------
                                                    H. Peter Burg
                                               Chief Executive Officer

                                      83.1

<PAGE>


                                  Certification


I, Richard H. Marsh, certify that:

1.   I have  reviewed  this  quarterly  report on Form  10-Q/A  of  Pennsylvania
     Electric Company;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report.



Date:  November 26, 2002

                                               /s/Richard H. Marsh
                                              -----------------------
                                                  Richard H. Marsh
                                               Chief Financial Officer

                                      83.2