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...March 31, 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 
                                April 30, 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
                                                                                            March 31,
                                                                                     --------------------------------
                                                                                   1997                     1996
                                                                                ----------                 ----------

<S>                                                                             <C>                        <C>
OPERATING REVENUES
     Electric                                                                   $   970.5                  $   973.7
     Gas                                                                            192.9                      196.8
                                                                                ----------                 ----------
TOTAL OPERATING REVENUES                                                          1,163.4                    1,170.5
                                                                                ----------                 ----------
OPERATING EXPENSES
     Fuel and Energy Interchange                                                    334.0                      299.5
Operation                                                                           224.4                      231.0
Maintenance                                                                          77.5                       85.4
Depreciation                                                                        142.5                      116.7
     Income Taxes                                                                    93.6                      103.9
     Other Taxes                                                                     83.0                       80.7
                                                                                ----------                 ----------
TOTAL OPERATING EXPENSES                                                            955.0                      917.2
                                                                                ----------                 ----------
OPERATING INCOME                                                                    208.4                      253.3
                                                                                ----------                 ----------
OTHER INCOME AND DEDUCTIONS
     Allowance for Other Funds Used
         During Construction                                                          2.4                        3.0
     Income Taxes                                                                     1.9                        0.6
     Other, net                                                                      (2.4)                      (3.0)
                                                                                ----------                 ----------
     TOTAL OTHER INCOME AND DEDUCTIONS                                                1.9                        0.6
                                                                                ----------                 ----------
INCOME BEFORE INTEREST CHARGES                                                      210.3                      253.9
                                                                                ----------                 ----------
INTEREST CHARGES
     Long-Term Debt                                                                  80.0                       88.7
     Company Obligated Mandatorily Redeemable
         Preferred Securities of a Partnership                                        6.7                        6.7
     Other Interest                                                                  12.8                       10.9
                                                                                ----------                 ----------
     TOTAL INTEREST CHARGES                                                          99.5                      106.3
     Allowance for Borrowed Funds
         Used During Construction                                                    (2.2)                      (2.7)
                                                                                ----------                 ----------
     NET INTEREST CHARGES                                                            97.3                      103.6
                                                                                ----------                 ----------
NET INCOME                                                                          113.0                      150.3
PREFERRED STOCK DIVIDENDS                                                             4.5                        4.5
                                                                                ----------                 ----------

EARNINGS APPLICABLE TO COMMON STOCK                                             $   108.5                  $   145.8
                                                                                ==========                 ==========
AVERAGE SHARES OF COMMON STOCK
     OUTSTANDING  (Millions)                                                        222.5                      222.4

EARNINGS PER AVERAGE COMMON
SHARE  (Dollars)                                                                $    0.49                  $    0.65

DIVIDENDS PER COMMON SHARE  (Dollars)                                           $    0.45                  $   0.435



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


<PAGE>


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


<CAPTION>
                                                                               March 31,                  December 31,
                                                                                 1997                      1996
                                                                           -------------               -------------
                                                                             (Unaudited)
<S>                                                                          <C>                        <C>
ASSETS

UTILITY PLANT
Plant at Original Cost                                                       $   15,116.7                $   14,945.0
Less Accumulated Provision for Depreciation                                       5,177.2                     5,047.0
                                                                           -------------               -------------
                                                                                  9,939.5                     9,898.0
Nuclear Fuel, net                                                                   186.8                       199.6
Construction Work in Progress                                                       589.6                       661.8
Leased Property, net                                                                175.7                       182.1
                                                                           -------------               -------------
                                                                                 10,891.6                    10,941.5
                                                                           -------------               -------------
CURRENT ASSETS
Cash and Temporary Cash Investments                                                  39.7                        29.2
Accounts Receivable, net
     Customer                                                                        37.0                        19.2
     Other                                                                           70.2                        74.4
Inventories, at average cost
     Fossil Fuel                                                                     55.1                        84.6
     Materials and Supplies                                                         115.9                       119.8
Deferred Energy Costs - Gas                                                          18.1                        30.0
Other                                                                               190.6                        63.2
                                                                           -------------               -------------
                                                                                    526.6                       420.4
                                                                           -------------               -------------
DEFERRED DEBITS AND OTHER ASSETS
Recoverable Deferred Income Taxes                                                 2,355.3                     2,325.7
Deferred Limerick Costs                                                             349.3                       361.8
Deferred Non-Pension Postretirement Benefits Costs                                  229.8                       233.5
Deferred Energy Costs - Electric                                                     97.5                        92.0
Investments                                                                         465.7                       432.6
Loss on Reacquired Debt                                                             277.9                       283.8
Other                                                                               164.7                       169.3
                                                                           -------------               -------------
                                                                                  3,940.2                     3,898.7
                                                                             -------------               -------------
TOTAL                                                                        $   15,358.4                $   15,260.6
                                                                             =============               =============


            See Notes to Condensed Consolidated Financial Statements.

                            (continued on next page)
</TABLE>











<PAGE>



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


<CAPTION>
                                                                               March 31,                  December 31,
                                                                                 1997                      1996
<S>                                                                         <C>                         <C> 
CAPITALIZATION AND LIABILITIES                                             -------------               -------------
                                                                             (Unaudited)
CAPITALIZATION
Common Shareholders' Equity
     Common Stock (No Par)                                                  $     3,517.1               $     3,517.6
     Other Paid-In Capital                                                            1.3                         1.3
Retained Earnings                                                                 1,135.4                     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                                          302.2                       302.2
Long-Term Debt                                                                    3,936.2                     3,935.5
                                                                            -------------               -------------
                                                                                  9,184.3                     9,175.7
                                                                            -------------               -------------
CURRENT LIABILITIES
Notes Payable, bank                                                                 302.5                       287.5
Long-Term Debt Due Within One Year                                                  283.3                       283.3
Capital Lease Obligations Due Within One Year                                        52.5                        49.4
Accounts Payable                                                                    126.3                       213.0
Taxes Accrued                                                                       164.9                        71.5
Interest Accrued                                                                     88.4                        82.0
Dividends Payable                                                                    29.8                        22.4
Other                                                                               127.4                        94.3
                                                                            -------------               -------------
                                                                                  1,175.1                     1,103.4
                                                                            -------------               -------------
DEFERRED CREDITS AND OTHER LIABILITIES
Capital Lease Obligations                                                           123.2                       132.7
Deferred Income Taxes                                                             3,767.5                     3,745.2
Unamortized Investment Tax Credits                                                  331.6                       336.1
Pension Obligation                                                                  224.5                       224.5
Non-Pension Postretirement Benefits Obligation                                      324.8                       315.1
Other                                                                               227.4                       227.9
                                                                            -------------               -------------
                                                                                  4,999.0                     4,981.5
                                                                            -------------               -------------
COMMITMENTS AND CONTINGENCIES (NOTE 7)
                                                                            -------------               -------------

TOTAL                                                                       $    15,358.4               $    15,260.6
                                                                            =============               =============


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


<PAGE>





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

<CAPTION>
                                                                                        3 Months Ended
                                                                                            March 31,
                                                                                    ---------------------------------
                                                                                   1997                     1996
                                                                                ----------                 ----------

<S>                                                                             <C>                      <C>    
CASH FLOWS FROM OPERATING ACTIVITIES

NET INCOME                                                                      $   113.0                $   150.3
Adjustments to Reconcile Net Income to Net Cash
     Provided by Operating Activities:
Depreciation and Amortization                                                       149.9                    133.7
Deferred Income Taxes                                                                (4.7)                    39.5
Deferred Energy Costs                                                                 6.4                     (8.1)
Changes in Working Capital:
     Accounts Receivable                                                            (13.6)                     7.3
     Inventories                                                                     33.4                      8.2
     Accounts Payable                                                               (86.7)                   (59.6)
     Other Current Assets and Liabilities                                             5.5                    (67.6)
Other Items Affecting Operations                                                     18.0                     42.0
                                                                                ----------                 ----------

NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                                     221.2                    245.7
                                                                                ----------                 ----------

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in Plant                                                                (101.4)                   (57.7)
Increase in Investments                                                             (33.1)                   (81.8)
                                                                                ----------                 ----------

NET CASH FLOWS USED BY INVESTING ACTIVITIES                                        (134.5)                  (139.5)
                                                                                ----------                 ----------

CASH FLOWS FROM FINANCING ACTIVITIES

Change in Short-Term Debt                                                            15.0                    174.9
Issuance of Common Stock                                                              -                       10.5
Repurchase of Common Stock                                                           (0.5)                     -
Issuance of Long-Term Debt                                                            -                       34.0
Retirement of Long-Term Debt                                                          -                     (184.4)
Loss on Reacquired Debt                                                               5.9                      6.7
Dividends on Preferred and Common Stock                                            (104.7)                  (104.3)
Change in Dividends Payable                                                           7.4                     10.3
Other Items Affecting Financing                                                       0.7                     (3.0)
                                                                                ----------                 ----------
NET CASH FLOWS USED BY FINANCING ACTIVITIES                                         (76.2)                   (55.3)
                                                                                ----------                 ----------
INCREASE IN CASH AND CASH EQUIVALENTS                                                10.5                     50.9
                                                                                ----------                 ----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     29.2                     20.6
                                                                                ----------                 ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $    39.7                 $   71.5
                                                                                ==========                 ==========


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





<PAGE>


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

1.       BASIS OF PRESENTATION
         The  accompanying  condensed  consolidated  financial  statements as of
March 31, 1997 and for the three  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 for a one-time credit of $19 million to Fuel and Energy
Interchange Expense on the Company's Income Statement for the three months ended
March 31, 1996 to reflect a billing  credit from a  non-utility  generator.  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
Annual  Report on Form 10-K for the year  ended  December  31,  1996  (1996 Form
10-K).

2.       SHUTDOWN OF SALEM GENERATING STATION (SALEM)
         Public Service Electric and Gas Company (PSE&G),  the operator of Salem
Units No. 1 and No. 2 which are 42.59% owned by the  Company,  removed the units
from service in the second  quarter of 1995.  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.  PSE&G  estimates the  projected  restart of Unit No. 2 to occur in the
third  quarter  of 1997 and of Unit No. 1 to  occur 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.  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.
<PAGE>
         For the three  months  ended  March  31,  1997 and  1996,  the  Company
recorded in the accompanying Statements of Income as Fuel and Energy Interchange
$29 and $18 million,  respectively,  of replacement  power costs and $13 and $12
million,  respectively, of Maintenance related to the shutdown of Salem. For the
year  ended  December  31,  1997,  the  Company  expects  to incur  and  expense
approximately $125 million for increased 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 January  22,  1997,  the Company  filed with the PUC an  application
under the  Competition Act for  securitizing  $3.6 billion of stranded costs. On
April 14,  1997,  a PUC  Administrative  Law Judge  (ALJ)  issued a  non-binding
decision  recommending that the Company's request to securitize a portion of its
stranded costs at this time be denied. The ALJ's recommended  decision was based
on the  insufficient  time  available for the PUC to evaluate the proposal under
the expedited review provision expressly provided for in the Competition Act. In
the event the PUC does not agree with the legal  basis of his  opinion,  the ALJ
alternatively  recommended  that the Company be authorized  to  securitize  $328
million of its stranded costs at this time. On April 23, 1997, the Company filed
exceptions  to the  recommended  decision.  On May 8, 1997,  the PUC conducted a
non-binding polling of the Commissioners regarding the Company's application. If
the PUC adopts a final order  consistent with the polling,  the Company would be
<PAGE>
authorized  to securitize  $1.1 billion of its stranded and related  transaction
and use of proceeds costs at this time consisting of the following  items:  $607
million of generation plant; $373 million of regulatory  assets;  $96 million of
1996  deferred  fuel  balance;  and $22 million of issuance and  use-of-proceeds
costs (for debt and preferred  stock).  The PUC is required to issue an order by
May 22, 1997.
         The PUC  Commissioners  deferred without prejudice all other aspects of
the Company's securitization application.  The Company continues to believe that
it will be given  the  opportunity  for full  recovery  of its  retail  electric
stranded  costs.  The Company  expects  that the PUC will  consider  any further
securitization  of stranded  and other costs in  connection  with the  Company's
restructuring  plan.  Although  an order  regarding  that  filing is required by
December  31,  1997,  the Company has agreed to extend the time period for a PUC
order to January 8, 1998. To the extent the Company is not ultimately  permitted
by the PUC to recover its retail  electric  stranded  costs,  this amount  could
result in a charge to earnings.
         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 PRONOUNCEMENT
         In February  1997,  the  Financial  Accounting  Standards  Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," to simplify the existing  computational  guidelines for the earnings per
share  (EPS)  information  provided  in  financial  statements,  to  revise  the
disclosure  requirements  and to increase  the  comparability  of EPS data on an
international  basis.  The new standard is effective for fiscal years  beginning
after December 15, 1997.  Adoption of SFAS No. 128 will not impact the Company's
amount of EPS currently  reported for financial  statement  purposes,  and there
would be no difference in the amounts calculated as basic EPS and dilutive EPS.

5.       SALES OF ACCOUNTS RECEIVABLE
         The Company is party to an agreement with a financial institution under
which it sold with limited recourse an undivided interest, adjusted daily, in up
to $425 million of designated  accounts receivable through November 14, 2000. At
<PAGE>
March 31,  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 March 31, 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 5.43%.
         By the 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 March 31,  1997,  $21.1  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 months ended March 31, 1997,  the Company  expensed an additional  $23
million of increased depreciation and amortization related to this order.

7.       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 March 31, 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 March 31,  1997,  the Company had accrued $29
million for  environmental  investigation and remediation  costs,  including $16
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
<PAGE>
whether such costs will be recoverable from third parties.

8.       SUBSEQUENT EVENTS
         On April 1, 1997,  the Board of Directors  authorized the repurchase of
up to five  million  shares of the  Company's  common stock from time to time in
open  market,  privately  negotiated  and/or  other  types  of  transactions  in
conformity with the rules of the Securities and Exchange Commission.
                                     * * * *


<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.
         In its  restructuring  filing,  the  Company  estimates  that  its  net
electric  generation-related  costs at December  31,  1998 will be $9.7  billion
including $2.6 billion of regulatory and other deferred charges,  $32 million of
other transition  costs,  $237 million of under-funded  nuclear  decommissioning
costs and $127  million of costs for  retiring  fossil  generating  plants.  The
Company estimates that the market value of its existing generating facilities at
December 31, 1998 will be $2.9  billion.  This estimate is based on the expected
net after-tax margin of each generating unit over its remaining life, discounted
to a present  value basis as of December  31, 1998 (at the  Company's  after-tax
cost of capital of 8.41%).  The  Company's  restructuring  filing  proposes  the
recovery of the resulting $6.8 billion of net stranded and transition costs over
a period of up to ten years through annual competitive transition charges and/or
intangible   transition  charges  of  approximately  $1.4  billion.   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.
         The Company  continues to believe 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 filing. To
the extent the  Company is not  ultimately  permitted  by the PUC to recover its
<PAGE>
retail  electric  stranded  costs,  this  amount  could  result  in a charge  to
earnings.
         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 roughly
in  proportion to the current  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 (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, through its Emerging
Issues  Task  Force   (EITF),   has   undertaken   the   initiative  to  develop
implementation guidance for SFAS No. 71 and SFAS No. 101, "Regulated Enterprises
- Accounting for the  Discontinuance of SFAS No. 71." The EITF has announced its
intention to discuss this issue at its May 22, 1997 meeting.  The Company cannot
predict the outcome of the deliberations on this accounting guidance.
                                     * * * *
         Total construction program  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  Unit  No.  1  steam
generators,  including  installation  and the cost of  disposal  of the four old
steam   generators  at  Salem  Generating   Station   (Salem).   For  additional
information, see "PART II. OTHER INFORMATION. ITEM 5. OTHER INFORMATION" in this
Quarterly Report on Form 10-Q.
         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
<PAGE>
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 7 of  Notes  to  Condensed
Consolidated  Financial  Statements in this Quarterly  Report on Form 10-Q under
"PART 1. 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 $125 million
as a result of the Salem shutdown.  See note 2 of Notes to Condensed 
Consolidated Financial Statements of 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."
                                     * * * *
         At March 31, 1997,  the Company and its  subsidiaries  had  outstanding
$303 million of  short-term  borrowings,  including  $215 million of  commercial
paper. The Company has formal and informal lines of bank credit aggregating $275
million.  At March 31, 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 March 31, 1997 was 4.20 times compared to 5.07 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 March 31,  1997,  was 2.38 times  compared to 2.79
times for the corresponding period in 1996. For the three months ended March 31,
1997, the Company's Ratio of Earnings to Fixed Charges (SEC Method) and Ratio of
Earnings to Combined  Fixed Charges and Preferred  Stock  Dividends (SEC Method)
were 3.24 times and 2.97  times,  respectively,  compared to 3.59 times and 3.33
<PAGE>
times,  respectively,  for the  corresponding  period in 1996. See the Company's
Annual  Report on Form 10-K for the period  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 April 1, 1997,  the Board of Directors  authorized the repurchase of
up to five  million  shares of the  Company's  common stock from time to time in
open  market,  privately  negotiated  and/or  other  types  of  transactions  in
conformity with the rules of the SEC. The Company's  repurchase of shares is not
dependent on the proceedings currently before the PUC under the Competition Act.
                                     * * * *
         Except for the historical  information contained herein, certain of the
matters  discussed  in this  Report  are  forward-looking  statements  which are
subject to risks and uncertainties.  The factors that could cause actual results
to differ  materially  include those discussed herein as well as those listed in
notes 3 and 7 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 months
ended  March 31,  1997 were $0.49 per share  compared to $0.65 per share for the
corresponding period in 1996. The decline in first quarter 1997 earnings was due
primarily to increased fuel and energy  interchange  expense of $0.09 per share,
resulting primarily from additional  interchange  purchases needed for increased
sales to other utilities and higher  replacement power costs due to the shutdown
of Salem;  to milder  weather  conditions  of $0.06 per share;  and to increased
depreciation of assets associated with Limerick Generating Station (Limerick) of
$0.06 per share.  These  decreases were partially  offset by lower operating and
<PAGE>
maintenance expenses at Company-operated nuclear plants and lower administrative
and general expenses.
                                     * * * *
OPERATING REVENUES
         Electric  revenues  were  substantially  unchanged for the three months
ended March 31, 1997 compared to the corresponding period in 1996.  Residential,
commercial and industrial revenues decreased  slightly,  primarily due to milder
weather  conditions,  partially offset by increased revenue from increased sales
to other utilities.
         Gas  revenues  decreased  2% for the three  months ended March 31, 1997
compared  to  1996.   The  decrease  was  primarily  due  to  reduced  sales  to
interruptible  customers  as  they  switched  to  transportation  service.  This
decrease was partially offset by higher revenues from sales to other commercial,
house  heating and  residential  customers  due to higher  fuel-clause  revenues
charged in 1997 compared to 1996,  despite lower sales due to milder  weather in
1997.
                                     * * * *
FUEL AND ENERGY INTERCHANGE EXPENSES
         Fuel and energy interchange expenses increased 12% for the three months
ended March 31, 1997 compared to the corresponding  period 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 this increase was a one-time billing credit in 1996
from a non-utility generator.
                                     * * * *
OPERATING AND MAINTENANCE EXPENSES
         Operating and  maintenance  expenses  decreased 5% for the three months
ended March 31, 1997 compared to the corresponding  period in 1996. The decrease
was  primarily  due  to  lower  operating  and   maintenance   expenses  at  the
Company-operated nuclear plants and lower administrative and general expenses.
                                     * * * *
DEPRECIATION
         Depreciation expense increased 22% for the three months ended March 31,
1997 compared to the corresponding period in 1996 primarily due to

<PAGE>

increased depreciation and amortization of assets associated with Limerick.
                                     * * * *
INCOME TAXES
         Income taxes charged to operating  expenses decreased 10% for the three
months  ended  March  31,  1997  compared  to the  corresponding  period in 1996
primarily due to a decrease in pre-tax income. The decrease 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  increased 3% for the three
months  ended  March  31,  1997  compared  to the  corresponding  period in 1996
primarily due to increased capital stock and payroll taxes. These increases were
partially  offset by decreased  gross receipts taxes resulting from lower retail
revenue and decreased real estate taxes.
                                     * * * *
OTHER INCOME AND DEDUCTIONS
         Other income and deductions were substantially  unchanged for the three
months ended March 31, 1997 compared to the corresponding period in 1996.
                                     * * * *
TOTAL INTEREST CHARGES
         Total  interest  charges  decreased 6% for the three months ended March
31,  1997  compared to the  corresponding  period in 1996  primarily  due to the
Company's ongoing program to reduce and refinance  higher-cost,  long-term debt,
partially offset by increased interest charges on short-term borrowings.
                                     * * * *
PREFERRED DIVIDENDS
     Preferred  stock  dividends were unchanged for the three months ended March
31, 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  reversed a lower court
ruling and held for the  Company in a class  action  suit  against  the  Company
involving the Company's 1990 Early Retirement Plan. The plaintiffs' petition for
review by the United States Supreme Court was denied on March 17, 1997.
                                     * * * *
         As  previously   reported  in  the  1996  Form  10-K,  two  shareholder
derivative  lawsuits have been filed against several present and former officers
of the Company  relating to the Company's past credit and collection  practices.
On April 21, 1997, the Supreme Court of Pennsylvania  (Supreme Court) issued its
opinion on the appeal  regarding  the issue of "whether the  `business  judgment
rule' permits the board of directors of a Pennsylvania  corporation to terminate
derivative  lawsuits brought by minority  shareholders." The Supreme Court, in a
unanimous  opinion,  held  that  the  business  judgment  rule  is  the  law  of
Pennsylvania,  that the lower  courts  committed  error and that an  independent
board may  terminate  shareholder  derivative  actions.  The Supreme  Court also
established a procedure for determining  whether the criteria for application of
the business judgment rule have been met in a specific case, reversed the orders
of the Court of  Common  Pleas and  remanded  the  matter to the Court of Common
Pleas for further proceedings consistent with its opinion.
                                     * * * *
         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 scheduled to go to trial
at the end of May 1997.
                                     * * * *
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         On  April  9,  1997,  the  Company  held its  1997  Annual  Meeting  of
Shareholders.  
<PAGE>
        The  following  Class I directors  of the  Company  were re-elected for 
terms expiring in 2000:
                                            Votes For            Votes Withheld
         Richard G. Gilmore                 183,956,308                6,949,110
         Richard H. Glanton                 182,353,582                8,551,836
         Joseph J. McLaughlin               184,211,500                6,693,918
         Corbin A. McNeill, Jr.             184,334,741                6,570,677
         Robert Subin                       184,461,809                6,443,609
        
         The incumbent Class II directors, with terms expiring in 1998, are 
Susan W. Catherwood, G. Fred DiBona, Jr., R. Keith Elliott, John M. Palms and 
Joseph F. Paquette, Jr.  The incumbent Class III directors, with terms expiring
in 1999, are M. Walter D'Alessio, James A. Hagen, Kinnaird R. McKee and Ronald 
Rubin. 
         Other items voted on by holders of common  stock at the Annual  Meeting
were as follows:
     (1)          The  appointment  of the firm of  Coopers  &  Lybrand  L.L.P.,
                  independent  certified public accountants,  as auditors of the
                  Company for 1997, was approved with 187,387,615  common shares
                  (84.20% of common shares  outstanding)  voting for;  1,450,476
                  common  shares  (0.65% of common  shares  outstanding)  voting
                  against;  and 2,063,227  common shares (0.93% of common shares
                  outstanding) abstaining;
     (2)          A management  proposal for approval of a Management  Incentive
                  Compensation  Plan,  to make the Awards  performance-based  in
                  order to satisfy  the  requirements  of Section  162(m) of the
                  Internal Revenue Code and to provide  flexibility in executive
                  compensation   practices  as  the  electric  utility  industry
                  becomes more competitive,  was passed with 151,860,576  common
                  shares  (68.24%  of common  shares  outstanding)  voting  for;
                  15,104,744 common shares (6.79% of common shares  outstanding)
                  voting  against;  4,930,705  common  shares  (2.22%  of common
                  shares outstanding)  abstaining;  and 19,009,393 common shares
                  (8.54% of common shares outstanding) broker non-votes;
     (3)          A management  proposal  for  approval of an amended  Long-Term
                  Incentive Plan, to make the Grants  performance-based in order
                  to satisfy the  requirements of Section 162(m) of the Internal
<PAGE>
                  Revenue   Code  and  to  provide   flexibility   in  executive
                  compensation   practices  as  the  electric  utility  industry
                  becomes more competitive,  was passed with 143,771,099  common
                  shares  (64.60%  of common  shares  outstanding)  voting  for;
                  21,281,159 common shares (9.56% of common shares  outstanding)
                  voting  against;  5,407,059  common  shares  (2.43%  of common
                  shares outstanding)  abstaining;  and 20,446,101 common shares
                  (9.19% of common shares outstanding) broker non-votes;
     (4)          A shareholder proposal requiring lawyers deriving compensation
                  from a law firm providing legal services to the Company not be
                  selected for the slate of endorsed candidates for director was
                  defeated with 21,459,815 common shares (9.64% of common shares
                  outstanding) voting for;  140,320,103 common shares (63.05% of
                  common shares  outstanding)  voting against;  8,379,396 common
                  shares (3.77% of common shares  outstanding)  abstaining;  and
                  20,746,104 common shares (9.32% of common shares  outstanding)
                  broker non-votes; and
     (5)          A  shareholder  proposal  for term  limits for  members of the
                  Board of  Directors  which  would  not  exceed  six  years was
                  defeated with 13,942,453 common shares (6.27% of common shares
                  outstanding) voting for;  147,952,386 common shares (66.48% of
                  common shares  outstanding)  voting against;  8,564,475 common
                  shares (3.85% of common shares  outstanding)  abstaining;  and
                  20,446,104 common shares (9.19% of common shares  outstanding)
                  broker non-votes.
                                     * * * *
ITEM 5.  OTHER INFORMATION
         As  previously  disclosed,  Salem  Units No. 1 and No. 2,  operated  by
Public Service  Electric and Gas Company  (PSE&G),  were taken out of service in
the  second  quarter  of 1995.  PSE&G  has  informed  the  Company  that the NRC
Readiness  Assessment Team Inspection for Unit No. 2, a requirement for Unit No.
2 restart, will commence in early June 1997. PSE&G expects that Salem Unit No. 2
will return to service in the third  quarter of 1997.  PSE&G  expects that Salem
Unit No. 1 will  return to service  in late 1997.  Restart of each Salem Unit is
subject to NRC approval. The cost of replacement of Unit No. 1 steam generators,
including  installation  and  the  cost  of  disposal  of  the  four  old  steam
generators,  is  estimated  to be  $180  million  (the  Company's  share  is $77
<PAGE>
million).  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.
         The Company expects to incur and expense  approximately $125 million in
1997 for replacement power and operating and maintenance  expense related to the
Salem shutdown. The estimated cost of replacement power for Salem in 1997 is $95
million;  the estimated cost of replacement power per Salem unit per month is $5
million.  Operating and maintenance expense related to the shutdown of Salem for
1997 is still estimated to be $30 million.
                                     * * * *
         As  previously  reported in the  Company's  Current  Report on Form 8-K
dated  February  27,  1997,  the Company has made an offer to acquire from Cajun
Electric Power Cooperative,  Inc. (Cajun) a thirty percent ownership interest in
River Bend  Nuclear  Station,  a 936 megawatt  unit which is majority  owned and
operated by  subsidiaries  of Entergy Corp. The Company would be entitled to the
electric output from the unit in proportion to its ownership  interest and would
be responsible for sharing in ongoing costs  proportionate to its interest.  The
offer is  conditioned  on, among other  things,  the receipt by the Company of a
fund  to  fully   cover  the   Company's   estimated   share  of  the  costs  of
decommissioning  the unit. On April 24, 1997, the Company's  offer was submitted
for approval to the United States  Bankruptcy  Court for the Middle  District of
Louisiana, which is overseeing the bankruptcy of Cajun.
                                     * * * *
         As  previously  reported in the  Company's  Current  Report on Form 8-K
dated  April  1,  1997,  on  that  date,  the  Company  filed  with  the  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 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
<PAGE>
Intangible  Transition Charge, which will not increase customer bills. Under the
Competition Act, the PUC is required to issue an order accepting,  modifying, or
rejecting the Company's restructuring plan by December 31, 1997. The Company has
agreed to extend the time period for a PUC order to January 8, 1998.  If the PUC
rejects the Company's  restructuring plan, the Company would be required to file
a revised plan addressing the PUC's  objections  within 30 days of the PUC order
and the PUC  would be  required  to issue a final  order  within  45 days of the
filing of the revised plan.
         As  previously  reported in the  Company's  Current  Report on Form 8-K
dated January 23, 1997,  on January 22, 1997,  the Company filed with the PUC an
application for securitizing  $3.6 billion of stranded costs. On April 14, 1997,
a PUC Administrative Law Judge (ALJ) issued a non-binding decision  recommending
that the Company's request to securitize a portion of its stranded costs at this
time be denied.  The ALJ's  recommended  decision was based on the  insufficient
time available for the PUC to evaluate the proposal  under the expedited  review
provision  expressly  provided for in the Competition  Act. In the event the PUC
does not  agree  with the  legal  basis of his  opinion,  the ALJ  alternatively
recommended  that the Company be authorized  to  securitize  $328 million of its
stranded costs at this time. On April 23, 1997, the Company filed  exceptions to
the  recommended  decision.  On May 8, 1997,  the PUC  conducted  a  non-binding
polling of the  Commissioners  regarding the Company's  application.  If the PUC
adopts  a final  order  consistent  with  the  polling,  the  Company  would  be
authorized  to securitize  $1.1 billion of its stranded and related  transaction
and use of proceeds costs at this time consisting of the following  items:  $607
million of generation plant; $373 million of regulatory  assets;  $96 million of
1996  deferred  fuel  balance;  and $22 million of issuance and  use-of-proceeds
costs (for debt and preferred  stock).  The PUC is required to issue an order by
May 22, 1997.
         The PUC  Commissioners  deferred without prejudice all other aspects of
the Company's securitization application.  The Company expects that the PUC will
consider any further  securitization  of stranded and other costs in  connection
with the Company's restructuring plan.
         For  additional  information  regarding  the  Competition  Act  and the
Company's securitization filing, see note 3 of Notes to Consolidated

<PAGE>


Financial Statements for the year ended December 31, 1996.
                                     * * * *
         On March 27, 1997, gas  competition  legislation  was introduced in the
Pennsylvania General Assembly. The legislation calls for gas utilities to submit
to the PUC  restructuring  plans 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  Competition  Act, 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 scheduled
for late May 1997.
                                     * * * *
         As previously  reported in the 1996 Form 10-K, on October 2, 1995,  the
Utility  Workers  Union of America,  AFL-CIO  (UWUA),  filed a petition  seeking
certification  of a bargaining unit consisting of all production and maintenance
employees of the Consumer Energy  Services Group (CESG).  On April 23, 1997, the
National Labor Relations Board (NLRB) issued its decision that a bargaining unit
consisting of job classifications  with the Power Delivery and Customer Services
Divisions of CESG would be appropriate.  On April 30, 1997, the NLRB established
May 21,  1997 as the  date  for  the  UWUA/CESG  election.  As a  result  of the
restructuring  of the  Company,  which  will  result in the  combining  of Power
Delivery, Customer Service and the Gas Services Group into one organization,  on
May 2, 1997, the Company requested the NLRB to reconsider its decision regarding
employees  eligible to vote in the  election  and include  employees  in the Gas
Services Group. On May 9, 1997, the Acting Regional  Director of the NLRB denied
the Company's  request.  On May 13, 1997, the Company  appealed this decision to
the NLRB in Washington,  DC. The UWUA has filed a motion  opposing the Company's
appeal.
                                     * * * *
         As  previously  reported in the Current  Report on Form 8-K dated April
25,  1997,  the  Company's  Power  Generation  Group  employees  voted not to be
represented  by a union in secret  balloting  conducted  by the NLRB.  On May 6,
1997, the NLRB certified the results of this election.
                                     * * * *
<PAGE>
         As  previously  reported  in the 1996 Form 10-K,  on July 9, 1996,  the
Company  executed a consent  decree in which the  Company  agreed to pay the New
Jersey Department of Environmental  Protection and Energy (NJDEPE) approximately
$240,000  in  exchange   for  a  release  from   liability  at  the   Gloucester
Environmental  Management  Services,  Inc.  (GEMS) site. On January 2, 1997, the
consent  decree  was  entered  with the  United  States  District  Court for the
District of New Jersey. The Company has made the required payment to the NJDEPE.
                                     * * * *
         As previously  reported in the 1996 Form 10-K, the Company was named as
a  defendant  in the  Superfund  matter  involving  the Greer  Landfill in South
Carolina.  The plaintiff's  motion to dismiss the complaint  against the Company
was  granted,  although the  third-party  defendants'  cross-claims  against the
Company remain. The Company is currently involved in settlement discussions with
the third-party defendants.
                                     * * * *
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 January 23, 1997, reporting information under
                  "ITEM 5. OTHER EVENTS"  relating to the Company's  filing with
                  the  Pennsylvania  Public  Utility  Commission  regarding  the
                  Company's  application  for  securitizing  a  portion  of  its
                  stranded and other costs  through the  issuance of  Transition
                  Bonds.
         Report, dated January 24, 1997, reporting information under
                  "ITEM 5. OTHER EVENTS" relating to Salem Generating Station 
                 operated by Public Service Electric and Gas Company.
<PAGE>
         Report, dated January 30, 1997, reporting information under
                 "ITEM 5. OTHER EVENTS" relating to Salem Generating Station 
                 operated by Public Service Electric and Gas Company.
         Report, dated February 21, 1997, reporting information under
                 "ITEM 5. OTHER EVENTS" relating to the National Labor Relations
                 Board's decision regarding certification elections.
         Report, dated February 27, 1997, reporting information under
                 "ITEM 5.  OTHER  EVENTS"  relating  to the  Company  filing its
                 electric   competition   pilot  program,   the  National  Labor
                 Relations  Board's order  setting the date for a  certification
                 election and the  Company's  offer to purchase an interest in a
                 nuclear operating facility.
         Report, dated March 25, 1997, reporting information under
                 "ITEM 5. OTHER EVENTS" relating to the results of the National 
                 Labor Relations Board's certification election.

         Reports on Form 8-K (filed subsequent to 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.
<PAGE>
         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.






<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:  May 14, 1997