ML20206B010

1998 Annual Rept for Firstenergy Corp, for Perry Nuclear Power Plant & Davis-Besse Nuclear Power Station.Form 10-K Annual Rept to Us Securities & Exchange Commission for Fiscal Yr Ending 981231,encl

ML20206B010
Person / Time
Site:	Davis Besse, Perry
Issue date:	12/31/1998
From:	Burg H, Holland W CENTERIOR ENERGY
To:
Shared Package
ML20206B009	List: ML20206B010 PY-CEI-NRR-2382, Forwards 1998 Annual Rept for Firstenergy Corp, for Perry Nuclear Power Plant & Davis-Besse Nuclear Power Station.Form 10-K Annual Rept to Us Securities & Exchange Commission for FY98 Also Encl
References
NUDOCS 9904290121
Download: ML20206B010 (118)

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?ROFIL3 ,m n,3 g i ,'J",_$ FirstEnergy Corp. is a diversified energy services ,i holding company headquartered in Akron, Ohio. Our n' electric utility operating componies-Ohio Edison and g-g its Pennsylvania Power subsidiary, The Illuminating + J Company and Toledo Edison - comprise the notion's Q 12th largest investor-owned electric system, serving 7 2.2 million customers within 13,200 square miles of b __

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northern and centrol Chio and western Pennsylvanio. ] FirstEnergy produces nearly $6 billion in annual revenues m ,s ggm { p and owns rnore than $18 billion in ossets, including J j ownership m 19 power plants. m m ...Ja you.mer, baser.1% dended :n A:M FirstEnergy componies provide a wide range of so mep down anddefasseauve ofRear >,. ] energy and related products and services. Our MARBEL ansieeiAnamelMessingon Agag g J Energy Corporation subsidiory, based in Conton, Ohio, seest on December 31 [ ~g {j is o fully mtegrated natural gas company involved m g g ._3 the exploration and production of oil and natural gos, m l cad the transmission and marketing of natural gas. Iiriheeham leaner andla peiwuny fl Our 11 mechanical construction, contracting and energy gg pag, g:,.,,,$, m, } management companies-port of FirstEnergy Focilities ,..( Services Group, Inc. - provida heating, ventilating, -M

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air conditioning, refrigeration, electrical and facility s eseguir that W ebe foundelica fer auf. control systems, plumbing, process piping and energy anespess'as a lendug meegy and _selsted " 'g monogement, in addition to other products and services. =evion.uppher in Memehe iimma Rd a geodesat afehe Unie d. sine g ~ fAs'ourindmary andagam a - ] pened.afI, ? change,, rm i ' - Id 1 + consdent thei pinimamyyiu' ce==,- 1 .~ y jo suo,med under the t--I-% ofsay ; - Q

===ar her BagX ~ j's 3 5 Mah hee headas the mener- ] wi, 7 4 meat team, your Csunpany wiR connaue j " 30 ]Q penume she manoes ihm see impevins ! its --- : and the wduS } 2 12 l ofyour inw->== ] M c ampea ra {p ssW> F rstEnergy Companies Q

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4. Edwards Electrical & Mechonicol, Inc., Indionopohs, IN

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11. Spectrum Control Systems, Inc., Cincinnati, OH h

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12. Webb Technologies, Inc., Norfolk, VA ij

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'y;. .g us The Illuminating Company a Toledo Edison ,t h] Cover: We provide a wide tonge of products ond services inside and outside y lif of our operstmg componies' troditional service territories. mcludmg mojor , h-a . in ] metropoliton oret 6 such as Cleveland 0hio. and Philodelphso.Pennsylvanio.

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MAK= m.y ^ qq p i ? @r%W Corporate 4 f fr+b-s yM( PROFIIE FirstEnergy Corp. is a diversified energy services holding company headquartered in Akron, Ohio. Our electric utility operating companies - Ohio Edison and its Pennsylvania Power subsidiary, The Illuminating g Company and Toledo Edison - comprise the notion's 9 12th largest investor-owned electric system, serving 1 S Sg - 2.2 million customers within 13,200 square miles of yQ northern and centrol Ohio and western Pennsylvanio. ~ '% FirstEnergy produces nearly $6 billion in annuo' revenues pb and owns more than $18 billion in ossets, including ownership in 19 power plants. 5 g.[ FirstEnergy companies provide a wide range of py energy and related products and services. Our MARBEL g Energy Corporation subsidiary, based in Canton, Ohio, s@kJ is a fully integrated natural gas company involved in the exploration and production of oil and natural gas, .~ fyQ.M M and the transmission and marketing of natural gos. w 7 gg our 11 mechanical construction, contracting and energy J, gp management companies - part of FirstEnergy Focilities d@hhyl dy Services Group, Inc. - provide heating, ventilating, %A air conditioning, refrigeration, electrical and facility v mw control systems, plumbing, process piping and energy ',',3 - y wapjfd monogement, in addition to other products and services. ~ MY

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1. Ancomo, Inc., Rochester, NY

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2. Colonial Mechanical Corporation, Richmond, YR M %cgpc h

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4. Edwards Electrical C Mechonicol, Inc., Indionopolis, IN g

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7. L. H. Cronston C sons, Inc., Timonium, MD M

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9. Roth Bros., Inc., Youngstown, OH

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11. Spectrum Control Systems, Inc., Cincinnoti, OH c

12. Webb Technologies, Inc., Norfolk, VA M;l [.

hh M h a chio Edison a Penn Power Qh h[1k,[jg i" a The Illuminating Company a Toledo Edison e.g;#.0$ 3

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Cov'f: We Provide o wide ronge of products or.d services mside and outside Qt v % mc 4 3. .a of our operating companies' traditional servir.e territories, including major \\l metropoliton oreos such as cleveland.0hio and Philodelphio.Pennsylvoruo.

Highlights 1998 1997 Operating Performana* Retail Kilowatt.Ilour Sales (Millions) 56,545 55,864 Electric Customers Seived 2,166,912 2,159,636 Number of Employees 8,765 10,020 Electric Customers Per Employee 247 216 RnancialPerformana" lbrnings Per Common Sharc Before Nonrecurring Charges $1.95 $2.16 After Nonrecurring Charges $1.82 $1.94 Dividends Per Common Share $1.50 $1.50 llook Value Per Common Share $19.37 $18.71 Dividend Payout Ratio liefore Nonrecurring Charges 77% 69% After Nonrecurring Charges 82% 77% Market Price Per Common Share $32.5625 $29.00

• Ikrludes lhdhries Servias Group andMARBEL "Finanti.Jperformana indudes multsfor The Illuminanng Company and lideJo latisonfrom the N<nsmber 8.1997, actfuisition date throug Ikcember.31. I998.

h .0 2.08 1.99 216 204 164 .f ' / .d ) i i '96 '96 '97 '90 '95 '96 '97 '98 [ARN! hgs Pit SMADE StF0#1 [MPL0ytt Pn0pucT!viry N0netcuentnGCMAaGes (EttCtalt Cost 0 urns 5:nyto (00LLaes) Pan EmeL0rtt) I

b c SH1ss1a e to Our1 EHO AM We changed the face of our Company in 1998. The market-driven event occurred last June when From the continued success of our post-merger integra-a regional electricity shortage during a period of heavy tion to our expansion into new energy-related businesses and customer demand caused drastic increases in wholesale geographic markets, we're achieving our vision of becoming electricity prices, and, as a result, the default of outside a leading regional energy and related services supplier. power suppliers to FirstEnergy and other electricity Our progress in 1998 and future success are rooted providers. in our ongoing commitment to: The default of suppliers, and severe weather conditions

• Maximiz-the value of our core electric business that temporarily shut down two of our large power plants,
• Invest in and grow new and profitable businesses forced us to buy electricity when market prices reached
• Improve our fmancial strength and shareholder value record levels. The resulting increase in purchased power
• Prepare our Company for competition costs and credit and trading losses reduced 1998 camings by $104 million, or 45 cents per share.

Commitment to Excellent Performance Overall, we camed $410.9 million, or $1.82 per share Among our greatest accomplishments m 1998 was g g, g our progress in integrating our operating companies, joined Power, compared with $305.8 million, or 51.94 per share by the 1997 merger of Ohio Edison and Centerior Energy. in 1997. That charge resulted from a Pennsylvania Public Through aggressive cost cutting, we exceeded our 1998 Utility Commission decision in June that essentially meg,er savings goal of $140 million by $33 million. deregulated Penn Power's generation business, reducing We also took several steps that will help us sigmficantly net income by $30.5 million, or 13 cents per share. Despite improve the performance ofour core electric business. the year's fmancial disappointments, Wall Street continues We reached separate agreements with Duquesi.e Light Pouch to se pmgress weVe made sMce t te Company and General Public Utilities, that once completed our merger, as evidenced by the 12.3 percent increase in the and approved by regulators, will give us exclusive ownership market value of our common stock in 1998. and control of six generating plants that we jomtly own with these two companies. We alsc formed a new sub-Improving Financial Strength sidiary, FirstEnergy Nuclear Operating Company, under We also took the necessary steps in 1998 to continue which we are consolidating responsibility for our nuclear improving our financial strength, which is essential to plant operations. achieving our vision and enhancing the value of your j 'these developments better position our employees investment. I to make further improvements in operating rfliciencies that For example, we used our cash flow to redeem or will help maximize the value of our generatmg assets. refinance approximately $659 million in securities, whidi Our employees' ongoing commitment to excellence will produce annual savings of nearly $42 million. And, was demonstrated in operational improvements achieved recognizing that our Company's common stodc represents in 1998, a good value, our Board of Directors authorized the For instance, the Perry Nuclear Power Plant achieved repurchase of up to 15 million shares of the Company's the best performance in its history, including an availability outstanding common stock over a three-year period factor of 99 percent. And, our company-wide emphasis on beginidng in 1999, safety resulted in a 35-percent improvement in a key While our equity ratio is currently 43 percent, our Occupational Safety and Health Administration target is to move it toward the 50 percent level, whidi measurement. should help improve our credit ratings. Unusuol Events Reduce f ornings Positioning for Future Growth While we're proud of our 1998 accomplishments, We're also achieving our vision by purchasing new they were accompanied by some disappointments, energy related businesses in a 13-state region in the including a temporary setback caused by last summer's northeastem quadrant of the U.S. that we have targeted Midwest power supply crisis. for growth. 2

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[_;L ,l %m,' % ;jpQ ' O:, j,C. ', s ~ ~' ,a s o - '",j %Q h, o E. ,1 In 1998, we added nine more leading mechanical con-Y Ofh: j, d struction, contracting and energy management companies. f'[ -:.a N:j'k,$ ". 9 *[ Along with Roth Bros., Inc., of Youngstown, Ohio, and j}y e RPC Mechanical, Inc., of Cincinnati, Ohio, which we 4 V'y 7 ecquired in 1997, these companies form the premier b of ' ' " d, O provider of mechanical construction, contracting and l O b., ' ,f - / energy managernent services in our region, with annual n g" 130.

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sales in excess of $425 million. ,s. JM/h$.,kh(h,4 Ley give us name recognition and new customers hN d, in markets we've targeted for growth. As restructuring efforts .ggjg? [Nk h[fi,jklji4"i open energy markets, these businesses will serve as hubs ?k N from which we can expand our sales of other energy-related NN products and services, as well as electricity and natural gas. hj hp We're providing natural gas services to business and fi} JIs ; m? yy residential customers for the first time in our history g.,. kgW g{ through our acquisition of MARBEL Energy Corporation, J 9[ headquartered in Canton, Ohio. MARBEL owns interests in more than 1,800 oil and gas wells and has oil and gas p M[b, rights to more than 200,000 acres in northeastem Ohio. .. i .%}[$,4,,,% As , m Preporing for Cornpetition ' g yf/,. We're taking other steps to prepare for more ^^ competition.

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We created a new subsidiary, American Transmission p_ <, Systems, Inc., to hold our transmission assets. Our strategies gg include a plan with American Electric Pbwer, Consumers fg4 " Nk Energy and Virginia Power to seek approval from the h Federal Energy Regulatory Commission to create a for-profit transmission business. h would ensure non-g,g K

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m And, we continue to help shape the electric utility k industry restructuring debate in Ohio. O' leadership of the Ohio General Assembly has j @s r identified passage ofrestructuring legislation as a top g i priority this year. We are working aggressively with other investorowned electric utilities to ensure that the state's 3;g 1 s. final plan protects the interests of our shareholders, employees and customers. M.,~ S e = q^ h{: ' ~ We continue stressing our industry's need for a reason-W W 4 .c eble emount of time to recover govemment-mandated costs, or transition costs, that would not be recouped in a ~~J[ ,h % ~ T competitive market. Lese include cypenses associated [/ Eh with methods the govemment required us to use to recover W m unR. h uo 888'\\ financing and other costs related to major facilities, environ-t*ainmaa no taart Secutive errica p Q 4, mental protection equipment and payment assistance pro-w", + @.yy( grams for low-income customers. L s), We intend to continue leading and leaming from ~ yN ' t m industry change. With your support, and the hard work of g [ our employees, we'll continue improving the competitive-P 3: ,,,,,,,,,,,,y,, (, s ness of your Company and the value ofyour investment. h < ed, ,sWt* M,, Mardi 1,1999 [. Y gN " M,, o 1 b 4 .,,w. f I t ) Y hkI &_ f ' ",> q~.7... q 3; V n'

o STRATEGIES FOR SUCCESS In 1998 - our first full year os firstEnergy-we made significant strides in our effort to build a leading regional energy and related services company. Through pursuit of oggressive strategic objectives, we entered new energy-related businesses, improved our core electric business and better prepared our Company to succeed in the rapidly changing energy marketplace. M O X, Blq ,-Q Q-V, U r L,0 r e V Y 2 a su u a Our success is directly linked to the improvement in the number of electric performance of our core electric business, customers served per employee. In 1998, this where we reached several milestones in 1998. number increased to 247 customers served Hi ber RetailSales and Merger Savings Achieved per e pl yee from 216 in 1997. b Our operating companies' retail kilo-Rgreements to Give Us Exclusiv i Ownership watt-hour sales grew for the sixth consecutive and contrcl of our Generation Assets year with a 1.2 percent increase. Commercial During the year, we reached separate and residential sales rose 2.4 percent and 2.0 agreements with Duquesne Light Company percent, respectively, offsetting a 0.1 percent of Pittsburgh, Pennsylvania, and General decline in sales to industrial customers. Total Public Utilities (GPU) of Morristown, New sales decreased 2.6 percent because oflower Jersey, that once completed and approved sales to other utilities. by regulators, will give us exclusive owner-Through aggressive cost cutting, we ship and control ofsix plants we jointly own exceeded our 1998 merger savings goal of with the two companies. $140 million by approximately $33 million. Under the pending agreement with In addition, we redeemed or refmanced Duquesne, we'll acquire its minority share of approximately $659 million in securities, 1,436 megawatts (MW) in eight generating which will produce annual savings of nearly units at five plants. They are Unit 7 of the $42 million. W. H. Sammis Plant; Unit 5 of the Eastlake Part of the year's cost savings resulted Plant; Units 1,2 & 3 of the Bruce Mansfield from the net reduction of 1,255 positions at Plant; Units 1 & 2 of the Beaver Valley Power our operating companies. The staffing reduc. Station; and the Perry Nuclear Power Plant. tions eliminated duplicative positions and In exchange, we'll transfer to made staffing levels at our companies consis. Duquesne ownership of our Avon Lake, tent. These reductions ultimately will pro-New Castle, and Niles plants, which have duce approximately $80 million in annual total capacity of 1,328 MW. Duquesne savings, and contribute to the ongoing intends to include the plants in its planned auction ofits generating assets. 4

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Under our agreement with GPU, New Labor Agreements Help Us we're purchasing its 87 MW of capacity at Achieve Our Goals the Seneca Pumped-Storage Hydroelectric We're achieving additional improve-Generating Station. We already own the ments in safety, as well as productivity, remaining capacity at the 438-MW plant. throughout our Company under six new labor agreements reached in 1998 and three firstinergy Nuc! eor Operating Company Enhancing Productivity and Sofety that were approved this year. Formation of the FirstEnergy Nuclear The agreements cover approximately Operating Company (FENOC) also is help-2,500 employees represented by 11 union ing improve the performance of our core I cats. The agreements provide the flexibility electric business. and performance initiatives necessary to suc-j Under FENOC, we're consolidating ceed in the evolving energy market. j management of our Davis-Besse and Perry We have not reached an agreement on plants. Beaver Valley will become part of a new contract with Utility Workers Union FENOC upon completion of our asset trans. f America Local 270, which represents line and ower plant employees at our Illuminat-P fer with Duquesne Light. Centralizing man-agement better positions us to further reduce ing Company subsidiary. Our contract with nuclear operating expenses and improve pro. L cal 270 originally expired in April 1997. ductivity and safety at the plants. Following numerous meetings, first with Centerior Energy and then with Improvements made in 1998 are get_ ting FENOC off to a good start. Perry FirstEnergy following the merger, a final offer achieved the best performance record in its was submitted to union leadership. Union history, and was recognized by the Nuclear leadership rejected that offer without a Regulatory Commission and the Institute on membership vote. Nuclear Power Operations. Its improvements We declared an impasse and imple-include achieving an availability factor of ented a contract in May that is comparable 99 percent. In addition, employees worked to agreements approved by other union 2.8 million hours without a lost-time accident. I cals that represent employees. Our Davis-Besse plant also achieved Local 270 is challenging our decision, significant accomplishments in 1998,includ. and a hearing before the National Labor ing the completion of one million hours Relations Board (NLRB) is expected to be worked without a lost-time injury, scheduled this year. The hearing is standard Safety improvements were not limited procedure in situations where the parties to our nuclear plants. We're proud to report with issues before the NLRB dispute the that our Occupational Safety and Health facts. We remain committed to resolving our Administration incident rate of 2.5 per differences with union leadership through 100 employees represents a 35-percent neg tration. improvement over 1997. 6

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Minimizing Risk Year 2000 Readiness Disclosure As demonstrated last summer in the The revision and replacement of com-already deregulated wholesale electricity puter hardware, software and embedded market, competition does not guarantee chips during 1998 have us on track to be lower or stable prices. In June, a regional Year 2000 ready by this fall. Without cor-electricity shortage during a period of rection, our computers and relued systems increased customer demand drove the price may recognize the year 2000 as 1900 for wholesale electricity to record highs. instead. v.bich could cause computer To counter future price volatility on failure: ed miscalculations. the wholesale market, we spent more than i hese systems are important to our day- $20 million in 1998 to bring peaking units to-day operations, helping us communicate back into production or improve their reli-with customers and operate power plants and ability. To further improve our power sup-other vital facilities. The development of new ply flexibility, we're investing an additional systems and replacement of others is expect- $60 million this year to upgrade certain ed to cost approximately $92 million,includ-generating plants and to install new peak-ing $54 million spent through 1998. ing capacity. We're also closely monitoring the Year in another step to minimize future 2000 readiness efforts of our vendors, sup-market risks, we implemented more stringent pliers and neighboring utilities with which credit requirements for outside power sup-we are interconnected. While we can't guar-pliers md limited our wholesale electricity antee that problems they experience will not trading activity to transactions that support affect our system, we believe that it is unlike-our sales and marketing efforts. ly. Therefore, we do not expect the Year We're also developing with Automated 2000 issue to materially affect our services to Power Exchange, Inc., (APX) of Cupertino, customers. Califomia, an independent, computerized Protecting the Environment electric power exchange. It will provide a Our operating companies have spent more efficient regional market for buyers more than $4 billion on environmental and sellers of wholesale electricity. APX will r,rotection since 1970. own and operate the exchange, which But we know we'll have to do more. In should be operational by June. Registered September 1998, the U.S. Environmental participants, including FirstEnergy, will have Protection Agency ordered 22 states,includ-access to continuously updated prices for ing Ohio and Pennsylvania, to significantly wholesale electricity up to one week in reduce emissions of nitrogen oxides (NOx). advance of delivery. While the NOx standard will require i electric utilities, including our operating companies, to reduce emissions, we are better positioned than many others because nearly 34 percent of our electricity is generated from nuclear power plants, which don't emit NOx. s

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Pos.t. r1 g" 3r "r. ai e i r aw as Expansion beyond our core business is The companies provide a wide range of essential. If electric utility restructuring is services, including heating, ventilating, air con-enacted in Ohio, our generation business ditioning, refrigeration, process piping,, plumb-will be open to retail competition, which ing, and electrical and facility control systems may cause some revenue losses. As a result, to customers nationwide. And, they give us in 1998 we tapped other revenue sources by name recognition and new customer bases in a diversifying our ponfolio of energy-related 13-state region in the northeastem quadrant of products and services that are helping us the United States that we have targeted for retain and expand our customer base in new growth. As electric utility restructuring effens and existing markets. open these markets to competition, we intend Acquisitions Expand Our Portfolio and to expand our sales of electricity, natural Geographic Reach gas and energy-related products in the region. Through our acquisition of MARBEL The companies are: Energy Corporation, we're providing for the

• Ancoma, Inc., Rochester, New York first time natural gas services to business and
• Colonial Mechanical Corporation, residential customers.

Richmond, Virginia MARBEL, headquanered in Canton,

• Dunbar Mechanical, Inc., Toledo, Ohio Ohio,is involved in the exploration and pro-
• Edwards Electrical & Mechanical, Inc.,

duction of oil and gas and the distribution, Indianapolis, Indiana transmission and marketing of natural gas.

• Elliott-Lewis Corporation, Philadelphia, Through its subsidiaries, MARBEL Pennsylvania owns interests in more than 1,800 oil and gas
• The Hattenbach Company, Cleveland, wells and has oil and gas rights to more than Ohio 200,000 acres in nonheastem Ohio. The com-
• L. H. Cranston & Sons, Inc., Timonium, pany also distributes gas to more than 3,000 Maryland customers in nonheastem and central Ohio.
• Spectrum Control Systems Inc.,

Our acquisition in 1998 of nine leading Cincinnati, Ohio mechanical construction, contracting and

• Webb Technologies, Inc., Norfolk, Virginia energy management companies further diversified our portfolio.

10

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These nonregulated energy services year, and double-digit annual revenue growth companies join Roth Bros., Inc., of over the last five years. Youngstown, Ohio, and RPC Mechanical, in 1998, their impressive list of nation-Inc., of Cincinnati, Ohio, which we acquired al customers expanded with the addition of new clients, including Pep Boys of in 1997, as part of our recently formed FirstEnergy Facilities Services Group, Inc., Philadelphia, Pennsylvania, the nation's subsidiary. Together, they are the premier leading automotive aftermarket retail an

• provider of mechanical construction. contract-services chain, and financial services giant ing and energy management services in our First Union Corporation, headquartered in region, with sales in excess of $425 million a Charlotte, North Carolina.

f Pre arinbor.M E11TIO We continue to play a major role in the And, we continue urging the state to electric utility restructuring debate in Ohio. resolve a potential tax revenue shortfall of Vital issues that we raised when electric $750 million. This shortfall will occur once restructuring was first considered in the state Ohio's investor-owned electric utilities are are at the forefront of discussions in the taxed like other businesses, as required by Ohio General Assembly, whose leaders have state law when regulated utilities compete made enactment of a customer choice plan a with unregulated entities. top priority. We're already gaining valuable experi-To protect the interests of our share-ence in the competitive electric generation holders, we continue stressing our industry's business through our participation in need for a reasonable amount of time to Pennsylvania's Electric Choice Program. recover govemment-mandated costs, or tran-FirstEnergy Services and Penn Power Energy, sition costs, that would not be recovered in a two of our marketing services companies, are competitive market. These include expenses competing with other electric generation associated with methods the government suppliers for customers inside and outside required us to use to recover financing and our Penn Power service area. other costs associated with major facilities, environmental protection equipment and payment assistance programs for low-income customers. n

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Our preparation for a more competi-independent regional transmission company. tive marketplace spans beyond our electric Along with American Electric Power, generation business. For instance, we took Consumers Energy and Virginia Power, we're several significant steps in 1998 to prepare working on a proposal to the Federal Energy our transmission business for a more com-Regulatory Commission to form such an petitive market, including creation of organization. The for-profit business we American Transmission Systems, Inc. envision would provide non-discriminatory We're transferring our trar.. tission access to the transmission grid while assets to this new subsidiary, which we enhancing the value of the transmission intend to ultimately become part of a larger, business. Increasin hareho der 1 1 Our cost-cutting and other perform-annual dividends, produced a total share-ance improvement initiatives increased our holder rerum of 18 percent. Our retum financial flexibility and improved sharehold-exceeded the Edison Electric Institute Utility er value in 1998. Index for the second straight year. We continued to realize the benefits Considering the market value of our of our merger by consolidating our work company, our Board of Directors authorized forces, eliminating duplicative functions the repurchase of up to 15 million shares of and enhancing operating efficiencies. our outstanding common stock over a three-These efforts contributed to $173 million year period beginning this year. We expect to in savings for the year. repurchase approximately 2.5 million shares 'Ibese accomplishments are improving in 1999, depending on our cash flow and shareholder value. In 1998, the value of our market conditions. common stock increased 12.3 percent, which, combined with the reinvestment of I i 14

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Management Report The consolidated financial statements were prepared by the management of FirstEnergy Corp., who takes responsibility for their integrity and objectivity. The statements were prepared in conformity with generally accepted accounting principles and are consistent with other fmancial information appearing dsewhere in this report. Arthur Andersen Lt.P, independent public accoun-tants, have expressed an opinion on he Company's consolidated financial statements. The Company's internal auditors, who are responsible to the Audit Committee of the Board of Directors, review the results and performance of operating units within the Company for adequacy, effectiveness and reliability of accounting and reporting ^ systems, as well as managerial and operating controls. The Audit Commitice consists of five nonemployee directors whose duties include: consideration of the adequacy of the internal controls of the Company and the objectivity of financial reporting: inquiry into the number, extent, adequacy and validity of regular and special audits conducted by independent public accountants and the internal auditors; recommendation to the Board of Directors ofindependent accountants to conduct the normal annual audit and special purpose audits as may be required; and reporting to tLe Board of Directors the Committee's findings and any recommendation for changes in scope, methods or procedures of the auditing functions. %e Committee also reviews the results of management's programs to monitor compliance with the Company's policies on business ethics and risk management. The Audit Coinmittee held four meetings in 1998. Richard 11. Marsh liarvey L Wagner Vice President and Controller and Chief Financial OHicer Chief Accounting Officer Report of Independent Public Accountants To the Stockholders and Board of Directors of firstEnergy Corp.: We have audited the accompanying consolidated balance sheets and consolidated statements of capitalization of FirstEnergy Corp. (an Ohio corporation) and subsidiaries as of December 31,1998 and 1997, and the related consolidated statements ofincome, common stockholders' equity, preferred stock, cash flows and taxes for each of the three years in the period ended December 31,1998. These financial statements ae ' e responsibility of the Company's managemer.t. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supponing the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the fir ancial statements referred to above present fairly, in all material respects, the financial pos; tion of FirstEnergy Corp. and subsidiaries as of December 31,1998 and 1997, and the results of their operations and their cash flows for each of the.hret years in the period ended December 31,1998, in conformity with generally accepted accounting principles. H4 L-ART 11UR ANDERSEN LI.P Cleveland, Ohio Febru. 12,1999 u,

SelecteG Financial Doto FIRsTENE R GY CORP. (in thousands, exceptpershare amounts) For the Year: Ended December 31, 1998 1997 1996 1995 1994 Revenues $ 5,861,285 $ 2,960,196 $ 2,521,788 $ 2,500,770 $ 2,390,957 Income Before Extraordinary ltem $ 441,396 $ 305,774 $ 302,673 $ 274,747 $ 281,852 Ner Income $ 410,874 $ 305,774 $ 302,673 $ 294.747 $ 281,852 Earnings per Share ofCommon Stock: Before Extraordinary item $1.95 $1.94 $2.10 $2.05 $1.97 After Extraordinary ltem $1.82 $1.94 $2.10 $2.05 $1.97 Dividends Declared per Share ofCommon Stock $1.50 $1.50 $1.50 $1.50 $1.50 Total Assets $18,063,507 $18,080,795 $ 9,054,457 $ 8,892,088 $ 9,045,255 Capitalization at December 31: Common Stockholders' Equity $ 4,449,158 $ 4,159,598 $ 2,503,359 $ 2,407,871 $ 2,317,197 Preferred Stock: Not Subject io Mandatory Redemption 660,195 660,195 211,870 211,870 328,240 Subject ro Mandatory Redemption 294,710 334,864 155,000 160,000 40,000 tong-Term Debt 6,352,359 6,969,835 2,712,760 2,786,256 3,166,593 Total Capitalization $11,756,422 $12.124,492 $ 5,582,989 $ 5,565,997 $ 5,852,030 Price Range of Common Stock firstEnergy Corp.'s Common stock is listed on the New York Stock Exchange and is traded on other registered exchanges. Trading of the common stock began on November 10,1997. Prices represent Ohio Edison Company Common Stock before November 10,1997 and FirstEnergy Corp. Common Stock beginning November 10,1997. 1998 1997 First Quaner High-low 31 5/8 27-7/8 23-7/8 20-7/8 Second Quaner High-low 31-7/8 28-1/2 22 19-1/4 Third Quarter High-tow 31-5/16 27-1/16 23-5/8 21-3/4 Founh Quaner High-low 34 1/16 29-3/16 29 22-13/16 Yearly High-low 34-1/16 27-1/16 29 19-1/4' Pricesare basedon reporapublishedin The WallStreerjournalforNew 1'ork Stock Exchange Composite Transactions. Holders of Common Stock As ofDecember 31,1998 and January 31,1999, there were 197,741 and 196.337 holders, respectively, of the 237,069,087 shares of the Company's Common Stock. Information regarding retained earnings available for payment ofcash dividends is given in Note 3A. 17 u a

Monogement's Discussion and Analysis of Results of supply and heavy customer demand in the latter pan ofjune Operotions and Financial Condition 1998, combined with unscheduled generating unit outages, resulted in spor market purchases ofpower at prices which sub-This discussion mcludes forward-loolu.ng statements based on stantially exceeded amounts recovered from retail customers.The . forman.on currently available to management that are subject t recovery shortfall reduced 1998 net income by approximately I m certain risks and uncertainties.These statements typically contam' $50 million or 5.22 per common share. Finally, unprecedented but are not hmited to, the terms anticipate, potential expert, market prices for electricity in June 1998 contributed to credit bdiere, estimateand simdar words. Actual results may differ mate-losses totaling $27 million after taxes or 5.12 per common share. nally due to the speed and nature of.mcreased competition and ,p; p, g

gg g deregulan,on m the electnc utdity mdustry, economic or weather Trading & Power Marketing, Inc. (FETPM) subsidiary had condiuons affecung future sales and margms, changes m markets transactions under contract defaulted as a result ofJune,s pn.ce for energy services, changing energy market prices, legislan.veand g;

399 g regulatory changes, and the availabihty and cost of capital and charges, primarily resulting from merger-related stafling reduc-other s.imdar factors, tions, which decreased basic and diluted earnings by $.22 per common share. Results of Operotions Revenue in 1998 increased by $2.9 billion over the previous FirstEnergy Corp. (Company) was formed when the year, primarily reflecting a full twelve months of results for the merger of Ohio Edison Company (OE) and Centerior Energy former Centerior companies in the Electric Utility Operating Corporation (Centerior) became effective on November 8,1997. Companies (EUOC) business segment compared to seven weeks The merger has been accounted for by using purchase amounting in 1997.The EUOCs represent our vertically integrated electric under the guidelines ofAccounting Principles Board Opinion utility operations. As discussed later, we anticipate future changes No.16, " Business Combinations." Under purchase accounting, to ur business segments to align with our strategy as the electric the results ofoperations for the combined entity are reported from utility industry restructures. The sources of the increases in reve-the point ofconsummation forward. As a result, our financial nue during 1998 and 1997 are summarized in the following table. statements for 1997 reflect twelve months ofoperations for OE 199e 1997 and its wholly owned subsidiary, Pennsylvania Power Company unmalumo (Penn), but include only seven weeks (November 8, to December Electric ula 31,1997) for the former Centerior companies, which include OE companies-Increase in averag, retail prices 27.0 $ 13.3 The Cleveland ElectncIllum.maung Company (CEI) and change in retail kilowan. hour sala (0.1) 7.s TheToledo Edison Company (TE). Results for 1998 include whoteule 13.3 (27.5) operations for the entire year for OE and Penn (OE companies), Net OE companies 40.2 (6.4) CEI and TE. On June 8,1998, we acquired MARBEL Energy centerior acquiiinon 2,196.4 350.6 Corporation (MARBEL), an integrated natural gas company. Iniercumpany salea (31.9) (3.8) Also, during 1998, FirstEnergy Facilities Services Group, Inc. Total ek.ctric ula 2,204.7 340.4 (FE Facilities), a wholly owned subsidiary of the Company, other electric untay revenua 102.3 54.6 acquired eight companies which principally provide heating, ven-Electric utilny operating companici 2.307.o 395.0 tilating and air-conditioning services. See Note I for additional FETPM 367.6 43.1 information. All acquisitions in 1998 were accounted for using other businea acquisitions 226.5 0.3 purchase accounting and are included in our consolidated results Net Revenue Increae $ 2.901.1 $438.4 from their respective acquisition dates. Retail kilowatt-hour sales for the OE companies in 1998 We continued to take steps in 1998 to better position were approximately the same as the previous year at 27.3 billion FirstEnergy as competition continues to expand in the electric kilowatt. hours after setting a new record in 1997. Residential and utility industry. The acquisitions completed in 1998 reflect our commercial kilowatt-hour sales increased 1.7% and 3.5%, respec-strategy to provide customers an expanded portfolio ofenergy-tively, from 1997, offset by a 3.6% decrease in industrial sales. related products and services. We also invested in new information Residential and commercial kilowatt-hour sales benefited from systems with enhanced functionality which also address Year 2000 continued growth in the retail customer base, with over 11,000 application deficiencies. Cash savings of $173 million were new retail customers added in 1998 compared to approximately captured in 1998 from initiatives implemented during the year in 4,900 new retail customers in 1997. The closure of an electric arc connection with our merpr. About one-halfof that amount furnace by a large steel customer in the latter part of 1997 and a resulted from staffing reductions. general decline in electricity demand by steel manufacturers due to Basic and diluted earnings per share of common stock were intense foreign competition contributed to the lower industrial sales. Sales t wholesale customers by the OE companies increased $1.82 for 1998 compared to $ 1.94 for 1947. Results for 1998 were adversely affected by a one-time, extraordinary charge of 8.9% contributing to an increase in total kilowatt-hour sales of 1.4%. In 1997, commercial and industrial kilowatt-hour sales $30.5 million after taxes, or 5.13 per common share, related to Penn's discontinued application of Statement of Financial increased 1.2% and 1.0%, respectively, from 1996, partially offset Accounting Standards No. 71 (SFAS 71), " Accounting for the by a 0.8% decrease in residential sales resulting in a 0.5% increase in retail kilowatt-hour sales. A decrease in kilowatt-hour sales to Effects of Certain Types of Regulation", to its generation business, wimles le cust mers contributed to a 5.0% decline in total as discussed later in this report. Additionally,6 harp increases in the spor market price for electricity occasioned by a constrained power kilowatt-hour sales in 1997 compared to 1996. 18

Total openses increased $2.4 billion in 1998 compared to the redemptions oflong-term debt. Other interest expense increased pr.ior year primarily due to the indusion ofa full twelve months of as a result ofincreased shon-term borrowings. expenses for the former Centerior mmpanies compared to seven wee!cs ofexpense in the 1997 results. Fuel and purchased power costs were up $497.5 million in 1998 compared to 1997. D US*" D..N Excluding the former Centerior companies, fuel and purchased Savings from improved efficiency helped to fund the strategic power costs for the OE companies increased $74.4 million. Most investments we made in 1998 while strengtheningour fmancial of the increase occurred in the second quarter and resulted from a position. We continue to streamline our electric utility operations, combination offacton In lateJune 1998, the midwestern and as evidenced by the 50% increase in our customer /cmployee ratio southern regions of the United States experienced electricity over the past five years, from 165 at the end of 1993 to 247 as of shonages caused mainly by record temperatures and humidity and December 31,1998. We also continued to reduce our capital unxheduled generating unit outages. During that period, the costs. During 1998, net redemptions oflong-term debt and Beaver Valley Plant was out of service and the Davis-Besse Plant preferred stock totaled $430 million, including $176 million of was removed from service as a result ofdamage to transmission optional redemptions. In addition, we completed $230 million of facilities caused by a tornado. Also, Avon Lake Unit 9 experienced refinancings. Combined, these actions wiu produce annualized an unscheduled outage during the period due to lightning-related savings of $42 million.The average cost oflong-term debt was transformer damage. As a result, the EUOCs purchased significant reduced to 7.83% in 1998 from 8.02% at the end of 1997, amounts of power on the spor market at unusually high prices, causing an increase in purchased power costs. In 1997, excluding In dw 6nt quann of1M8, we fonned an auiance wali British the results of the former Centerier companies, fuel and purchased Petroleum (BP) to help ensure the long-term viabihty of BP s power costs were down $ 19.4 million from the previous year due rennery pc at n in d E servicearea whilealsogenerating to lower total kilowatt-hour sales. addmonal revenue for our C.,ompany. Bay Shore Power Company, a FirstEnergy subsidiary, wdl build a new state-of.the-an steam-Other expenses for the EUOCs increased in 1998 and 1997 as generating plant fueled by a waste by-product from a new a result of the indusion of the Centerior results. Escluding the lower-cost refmery process at BP's Oregon, Ohio facility. Steam former Centerior companies,1998 nonnuclear costs decreased from the plant will supply both the refmery and a Bay Shore $34.8 million from the previous year due primarily to the absence generating unit. To fund the project, Bay Shore Ibwer issued ofexpenses related to a 1997 voluntary retirement program and $ 147.5 million ofsolid waste-disposal revenue bonds during the estimated severance costs which increased other expenses for that first quaner of 1998. As of December 31,1998, approximately year. For the OE companies, nudcar costs increased $12.2 million $88 million ofthe funds from the revenue bonds were invested for in 1998 and $20.0 million in 1997 reflecting higher costs at the financing future construction. Beaver Valley Plant. Expenses for the facilities services companies in 1998 reflect costs incurred from their respective acquisition We had about $77.8 miUion ofcash and temporary invest-dates. Other expenses for electric trading and power marketing ments and $254.5 million afshon-term mdebtedness on activities increased in 1998 compared to 1997 due to a substantial Decemb 31,1998. Our unused bormwmg capabihty mduded expansion of activity at FETPM. $146.5 milh,on under revolving lines ofcreda and a $2.0 million bank facility that provides for borrowings on a short-term basis at Depreciation and amortization increased compared to the the bank's discretion. prior year in both 1998 and 1997. Excluding the effect of the former Centerior companies, depreciation and amortization in 0ur cash requirements in 1999 for operating expenses, con-1998 decreased $14.2 million from the prior yen due primarily to struca n expend,tures and scheduled debt maturities are expected be met without issuing new securities. During 1998, we the net effect of the OE and Penn rate plans. The Itnnsylvania t Public Utility Commission's (PPUC) authorization of Penn's rate reduced our total debt by approximately $278 milhon. We have restructuring plan in the second quaner led to discontinued appli-cash requirements ofapproximately $2.6 billion for the 1999-cation of cenain regulatory accounting procedure: (i.e. SFAS 71) 2003 penod to meet scheduled maturities oflong-term debt and to Penn's generation business, resulting in a write down ofits Prefened smck. Of that amount, approximately $712 million nudear generating unit investment and the recognition of a applies t 1999. On November 17,1998, we announced our ponion ofsuch investment, recoverable through future customer intenti n to repurchase up to 15 million shares of the Company,s rates, as a regulatory asset. Net of the Centerior contribution to mmmon st ck over a three-year period begmnm, g m, 1999. results in 1997, the increase in depreciation and amonization Our capital spending for the period 1999-2003 is expected to resuhed from accelerations under the regulatory plans. General be about $2.2 billion (exduding nudear fuel), of which approxi-taxes increased for the OE companies in 1998 compared to 1997 mately $556 million applies to 1999. Investments for additional in pan because ofgross receipts taxes on increased electric sales nudear fuel during the 1999-2003 period are estimated to be revenue. This followed a decrease in 1997 due to lower propeny approximately $399 million, ofwhich about $46 million applies taxes and an adjustment in the second quaner of that year which to 1999. During the same periods, our nudear fuel investments reduced the OE companies' liabilities for gross receipts taxes. are expected to be reduced by approximatdy $438 million and Interest expenses increased due to the indusion of the former $93 rniUi n, mspectively, as de nudear fucHs conmmed Also, we Centerior companies for both 1998 and 1997. Exduding the have operating lease commitments, net of trust cash receipts, of impact of the merger, intettst on long-term debt for the OE

• PP**Imately $765 million for the 1999-2003 period, ofwhich companies continued to trend downward due to refinancings and appnnimately $159 nMon relaws m 19E 19 ws

Nine acquisitions were completed during 1998, representing In a fmal step to achieve complete ownership and operating strategic investments designed to expand our poitfolio ofenergy-control over our power plants, we signed an agreement to purchase related products and services.The acquisition of MARBEL, a fully from GPU, Inc. its 20 percent interest in the Seneca Pumped- ' integrered natural gas company based in Canton, Ohio, was Storage Hydroelectric Plant (87 megawatts).The added capacity completed in June 1998. FE Facilities acquired eight additional will enhance our ability to meet our customers' demand for elec-facilities services coupanies during the year bringing the total tricity during peak periods. number of facilities services acquisitions to ten companies by the end of 199 For 1998, our facilities services companies provided Interest Rate Risk revenue of 5198 million with more than 3,000 employees. During 1998, we established a national sales group within Our exposure to fluctuations in market interest rates is FirstEnergy Services Corp. to pursue sales in the unregulated mitigated since a significant portion ofour debt has fixed interest electric utility market.The national sales group began selling in rates, as noted in the table below. We are subject to the inherent the Pennsylvania market foUowing the restructuring which opened interest rate risks related to refinancing maturing debt by issuing new debt securities. As discussed in Note 2, our investments in the generation business to increased competition. capital trusts efTectively reduce future lease obligations, also FirstEnergy signed an agreement in principle with Duquesne reducing interest rate risk. Changes in the market value ofour Light Company (Duquesne) that would result in the transfer of nuclear decommissioning trust funds are recognized by making a 1,436 megawatts owned by Duquesne at five generating plants in curresponding change to the decommissioning liability, as exchange for 1,328 m g-vms at three plants owned by our described in Note 1. EUOCs (see

• Common Ownership of Generating Facilities" in Note 1). Final agreements relating to the exchange of assets, which will be structured as a tax-free transaction to the extent possible, are being negotiated.The transaction benefits the Company by providing exclusive ownership and operating control of all gener-sting assets that are now joiatly owned and operated under the Central Area Power Coordination Group agreement.

The table below presents principal amounts and related weighted average interest rates by year ofmaturity for our investment portfolio, debt obligations and preferred stock with mandatory redemption provisions. 1999 2000 2001 2002 2003 THentarTra ToTnt FnInVatur (Dollamin Milliom) Investments other than Cash and Cash Equivalents: Fixed Income $ 98 $ 91 $ 55 $ 84 $ 97 $1,406 $1,831 $1,942 Average interest rate 6.9% 5.1% 7.7% 7.7% 7.7% 7.7% 7.5% Liabilities long-term Debt: Fixed rate $420 $373 $105 $724 $459 $3,921 $6,002 $6,464 Average interest rate 7.6% 7.0% 8.7% 7.9% 8.0% 7.6% 7.6% Variable rate $252 $4 $3 $ 2 $1 $ 519 $ 781 $ 783 Averageinterest rate 6.0% 6.3% 6.3% 6.2% 6.3% 3.8% 4.6% Short-term Borrowings $254 $ 254 $ 254 Average interest rate 5.7% 5.7% Preferred Stock $ 40 $ 38 $ 85 $ 20 $2 $ 139 $ 324 $ 340 Average dividend rate 8.9% 8.9% 8.9% 8.9% 7.5% 8.8% 8.8% 20

Market Risk -Commodity Prices least $2 billion more than the amounts that would have been . We are exposed to market nsk due to fluctuations in electncity recognized if these regulatory plans were not in effect. These and natural gas prices. To manage the volatihty relating to these additional regulatory charges will be recognized over the rate plan exposures, we use a variety ofderivative instruments, induding puiod. The FirstEnew @mry plan dus not provide for fuU forward contracts, options and futures contracts. These denvan. recovery ofCEl's and TE's nudear operations. Accordingly, ves an used principally for hedging purposes and to a lesser extent, for regulatory assets representing customer receivables for future income taxes related to nudear assets of $794 million were written trading purposes. A sensitmty analysis has been prepared t estimate our exposure to the market nsk ofour commodity offprior to consummation of the merger in 1997 since CEI and position. A hypothetical 10 percent adverse shift m quoted market TE ceased application ofSFAS 71 for their nudear operations pnces m the near term on both our trading and non-trading when implementation of the FirstEnergy regulatory plan became instruments would not have had a material effect on our consoli-probable. At the consummation of the merger in November 1997, dated financial position, resuhs of operations or cash flows as ofor CEI and TE recognized a fair value purchase accounting adjust-for the year ended December 31,1998. ment, which decreased the carrying value of their nudear assets by approximately $2.55 billion.The fair value adjustment recognized for financial reporting purposes will ultimately satisfy the Outlook $2 billion asset reduction commitment contained in the CEI and TE regulatory plan. We face many competitive challenges in the years ahead as the electric utility industry undergoes significant changes, induding Based on the cunern regulamry environment and our changing regulation and the enuance ofmore energy suppliers regulamry plans, we believe we will continue to be able to bill into the marketplace. Retail wheeling, which has begun in our and collect cost-based rates relating to CEI's and TE's nonnudcar Pennsylvania service area, allows retail customers to purchase elec-perations and all ofOE's operations. As a result, we will continue tricity from other energy producers. Our regulatory plans have the application of SFAS 71. However, changes in the regulatory provided a solid foundation to position us to meet the challenges envir nment appear to be on the horizon for electnc unhu,es m, we are facing by significantly reducing fixed costs and lowering Ohio. As funher discussed below, the Ohio legislature is in the rates to a more competitivelevel. discussion stages ofrestructuring the States electric utdaty industry. Although we believe that regulatory changes are possible OE's Rate Reduction snd Economic Development Plan in 1999, we cannot currently estimate the ultimate impact. was approved by the Public Utilities Commission ofOhio (PUCO) in 1995 and FirstEnergy's Rate Reduction and Economic Devel-For Penn, application ofSFAS 71 was discontinued for the opment Plan for CEI and TE was approved in January 1997. gennation ponion ofits business in June 1998 following PPUC These regulatory plans maintain base electric rates for OE, CEI approval of the rate restructuring plan. Customer choice will be and TE through December 31,2005. The plans also revised the phased irma two years with 2 ofeach cusmmer class able to OE, CEI and TE fuel cost recovery methods. Penn's Rate Stability choose alternati e suppliers ofgeneration on January 2,1999, and and Economic Development Plan, which was approved by the aH remaining cusmmers having choice as ofJanuary 2,2000. PPUC in the second quaner of 1996, ended in 1998 with the Under the plan, Penn continues to deliver power to homes and PPUC's authorization of Pends rate restructuring plan. businesses through its transmission and distribution system, which remains regulated. However, Penn's rates have been restructured to As pan of 0E's regulatory plan, transition rate credits were implemented for customers, which are expected to reduce establish separate charges for transmission and distribution: gener-ation, which is subject to competition; and stranded cost recovery. operating revenues by approximately $600 million during the In the event customers obtain power from an alternative source, regulatory plan period, which is to be followed by a base rate the generation ponion of Pends rates will be exduded from their reduction of approximately $300 million in 2006. The base rate freeze for CEI and TE is to be followed by a $310 million base rate bill and the customers will receive a generation charge from the alternative supplier. The stranded cost recovery portion ofrates reduction in 2006; interim reductions which began in June 1998 provides for recovery ofcenain amounts not otherwise considered of $3 per month will increase to $ $ per month per residential customer byJuly 1,2001.%tal savings of $391 million are recoverable in a competitive generation marker, induding regula-tory assets. Penn is entitled to recover $234 million ofstranded anticipated over the term of the plan for CEl's and TE's customers. costs through a competitive transition charge that stans in 1999 CEI and TE have also committed $ 105 million for economic and ends in 2005. development and energy efliciency programs. We continue to actively pursue the enactment of fair legisla-The PUCO has authorized OE to recognize additional rion calling for deregulation of Ohids investor-owned electric capital recovery related to its generating assets (which is reflected utility industry. In early 1998, a deregulation proposal was intro-as additional depreciation expense) and additional amortization duced, leading to the creation of a working group to recommend of regulatory assets during the regulatory plan period of at least legislation. As requested by legislative leadership, investor-owned $2 billion more than the amount that would have been recognized if the regulatory plan was not in effect. This additional amount is utilities introduced a deregulation plan with objectives to (1) treat being recovered through current rates. all major stakeholders in Ohids electric system fairly; (2) protect public schools and local governments from revenue loss; and in the regulatory plan for CEI and TE, the PUCO authorized (3) allow utilities an opportunity to recover costs ofgovernment-for regulatory accounting purposes, additional capital recovery mandated investments.The utilities have submitted proposals related to CEl's and TE's generating assets and additional amorti. which incorporate these objectives and also recognize the com-zation ofregulatory assets during the regulatory plan period ofat plexity ofrestructuring the industry. The overlying objective is v. 21

do the job right the first time. Currently, the working group, entity would be designed to meet the goals of reducing trans-comprised oflegislative leaders, representatives of the electric mission costs that result when transferring power over several utility companies and other interested stakeholders are meeting to transmission systems, ensuring transmission reliability and discuss and mold these proposals. Most recendy, placeholder bills providing non-discriminatory access to the transmission grid. containing statements of principle (that will be replaced by specific proposals as they are agreed upon) have been introduced. Legisla-tive leeden have placed a high priority on enacting a deregulation New Accounting Standord bill by mid-year. In June 1998, the Financial Accounting Standards Board The Clean Air Act Amendments of 1990, discussed in Note 5, issued Statement of Financial Accounting Standards No.133 require additional emission reductions by 2000. We are pursuing (SFAS 133)," Accounting for Derivative Instruments and Hedging cost-efTective compliance strategies for meeting these reduction Activities".The Statement establishes accounting and reporting requirements. standards requiring that every derivative instrument (induding certain derivative instruments embedded in other contracts) be On September 24,1998, the Federal Environmental recorded on the balance sheet as either an asset or liability Protection Agency inued a final rule establishing tighter nitrogen measured at its fair value.The Statement requires that changes in oxide emission requirements for fossil fuel-fired util;ty boilers in the derivative's fair value be recognized currently in earnings unless Ohio, Pennsylvania and twenty other eastern states, induding the specific hedge accounting criteria are met. Special accounting for District of Columbia (see " Environmental Matters" in Note 5). qualifying hedges allows a derh ative's gains and losses to ofTset Controls must be in place by May 2003, with required reductions related results on the hedged item in the income statement. SFAS achieved during the five-month summer ozone season (May 133 is efTective for fiscal yean beginning after June 15,1999. A through September). ne new rule is expected to increase the cost company may implement the Statement for any fiscal quarter ofproducing electricity; however, we believe that we are in a better beginning after June 16,1998. We have not yet quantified the position than a number ofother utilities to achieve compliance impacts of adopting SFAS 133 on our financial statements or due to our diversified nuclear and hydroelectric generation determined the method ofits adoption. We anticipate adopting capacity. the new Statement cfrective January 1,2000. CEI and TE have been named as "potentiauy responsible parties" (PRPs) for three sites listed on the Superfund National Yeor 2000 Reodiness Priorities List and are aware of their potential involvement in the deanup ofseveral other sites. Allegations that CEI and TE The Year 2000 issue is the result ofcomputer programs being disposed of hazardous waste at these sites, and the amount written using two digits rather than four to identify the applicable involved are often unsubstantiated and subject to dispute. Federal year. Any ofour programs that have date-sensitive software may law provides that all PRPs for a particular site be held liable on a recognize a date using "00" as the year 1900 rather than the year joint and several basis. If CEI and TE were held liable for 100% of 2000. Because so many ofour computer functions are date the cleanup costs of all the sites referred to above, the cost could be sensitive, this could cause far-reaching problems, such as system-as high as $313 million. However, we believe that the actual wide computer failures and miscalculations, if no remedial action deanup costs will be substantially lower than $313 million, that is taken, CEI's and TE's share of any cleanup costs will be substantially less M M 0 than 100% and that most of the other PRPs are financially able to c mpliance that consists ofan assessment ofour systems and contribute their share. CEI and TE have accrued a $5.8 million operations that could be affected by the Year 2000 problem; liability as of December 31,1998, based on estimates of the costs remediation or replacement of noncompliant systems and com-ofcleanup and their proportionate responsibility for such costs. b f M foHo di We believe that the ultimate outcome of these matters will not Wi lacemem. We have focused our Year 2000 have a material adverse effect on our financial condinon, cash review on three areas: centralized system applications, noncen-flows or results ofoperan.ons. tralized systems and relationships with third parties (including In connection with the regulatory plans ofour electric suppliers as well as end-use customers). Our review of system utility operating companies to reduce fixed costs and lower readiness extends to systems invohing customer senice, safety, rates, we continue to take steps to restructure our operations. shareholder needs and regulatory obligations. We announced plans to transfer our transmission assets into a new We are committed to taking appropriate actions to eliminate subsidiary, American Transmission Systems, Inc., with the transfer or lessen negative effects of the Year 2000 issue on our operations. expected to be finalized in 1999.The new subsidiary represents a We have completed an invenmry of all computer systems and first step toward the goal of establishing or becoming part of a hardware induding equipment with embedded computer chips larger. dependent transmission company (TransCo).We beh. m eve WW hid g e d h M or that aTransCo better addresses the Federal Energy Regulatory replaced to become T, ear 2000-ready and are.m the process of Comm..issions (FERC) stated transmission obj.ecuves ofproviding remediating them. Based on our timetable, we expect to have all non-discriminatory service, while providing for streamlined and identified repairs, replacements and upgrades completed to cost-efficient operation. In working toward the god of forming a achieve Tear 2000 readiness by September 1999. larger regional transmission entity, FirstEnergy, American Electric Power, Virginia lbwer and Consumers Energy announced in Most ofour Year 2000 issues will be resolved through system November 1998 that they would prepare a FERC filing during the replacement. Ofour major centralized systems, the general ledger first quarter of 1999 for such a regional transmission entity.The system and inventory management, procurement and accounts 22

payable systems were replaced at the end of 1998. Our payroll We believe we are managing the Year 2000 issue in such a way sycem was enhanced to be Year 2000 compliant in July 1998; ad that our customers will not experience any interruption of service. employees have been converted to the new system. The customer We believe the most likely worst-case scenario from the Year 2000 service system is due to be replaced in mid-1999. issue will be disruption in power plant monitoring systems, We have completed formal communications with most ofour thereby producing inaccurate data and potential failures in elec-key suppliers to determine the extent to which we are vulnerable tmnic switching mechanisms at uansmission juncions.This would rolong k>calized outages, as rechn,ician4 would have to P to those third panies' failure to resolve their own Year 2000 problems. For supplien having potential compliance problems, we manually activate switches. Such an event could have a material, are developing alternate sources and services in the event such but currendy undeternunable, effect on our financial results. noncompliance occurs. We are also identifying areas requiring We are developing contmgency plans to address the effeas of higher inventory levels based on compliance uncenainties. There any delay m becoming Year 2000 compliant and expect to have can be no guarantee that the failure ofcompanics to resolve their c nungencyplans c mpleted byJune 1999. own Year 2000 issue will not have a material adverse effea on our The costs of the project and the dates on which we plan to business, financial condition and results of operations. complete the Year 2000 modifications are based on management's We are using both internal and external resources to best estimates, which were derived from numerous assumptions of reprogram and/or replace and test our software for Year 2000 future events mcluding the continued availabihty of cenain modifications. Of the $92 million total project cost, approxi-res urces, and other factors. However, there can be no guarantee mately $74 million will be capitalized since those costs are that this project wdl be completed as planned and aaual results attributable to the purchase of new software for total system C uld differ materially from the estimates. Specific factors that replacements because the Year 2000 solution comprises only a nught cause material differences include but are not hmited to, the ponion of the benefits resulting from the system replacements. availabih,ty and cost of trained personnel, the ability to locate and The remaining $18 million will be expensed as incurred. As of '"' '#" *!I '*l'"*"' ' "P"' '*d ""d ',

• d*' """*I"'I'

December 31,1998, we have spent 554 million for Year 2000 capital pmjects and had expensed approximately $9 million for Year 2000-related maintenance activities. Our total Year 2000 project cost, as well as our estimates of the Gme needed to complete wmedial effons, are based on cunently available infor-marion and do not include the estimated costs and time associated with the impact of third party Year 2000 issues. 23

Consolidated Statements ofIncome Fzastic:tasy ConP. (In thousands, exaptpershare amouba) For che Year: Ended December 31, 1998 1997 1996 REVENUES: Electric sales $ 4,979,718 $2,774,996 $2,434,633 Other-electric utilities 244,129 141,813 87,155 Facilities services 198,336 Electric trading and power marketing 410,728 43,145 Other 28,374 242 Tocai revenues 5,861,285 2,960,196 2,521,788 EXPENSES: Fuel and purchased power 983,735 486,267 456,629 Other expenses: Electric utilities 1,478,840 850,217 670,819 Facilities services 184,440 Electric trading and power marketing 517,001 44,032 Other 41,337 Provision for depreciation and amortization 740,953 475,228 383,441 Generaltaxes 550,908 282,163 241,998 Totalexpenses 4,497,214 2,137,907 1,752,887 INCOME BEFORE INTEREST AND INCOMETAXES 1,364,071 822,289 768,901 NETINTERESTCHARGES: Interest expeme 542,819 284,180 240,146 Allowance for borrowed funds used during construction and capitalized interest (7,642) (3,469) (3,136) Subsidiaries' preferred stock dividends 65,799 27,818 27,923 Net interest charges 600,976 308,529 264,933 INCOMETAXES 321,699 207,966 201,295 INCOME BEFOREEXTRAORDINARYITEM 441,396 305,774 302,673 EXTRAORDIN A RY ITEM (NET OF INCOME TAX l BENEFil OF $21,208,000)(Note 1) (30,522) NETINCOME $ 410,874 $ 305,774 $ 302,673 WEIGHTED AVERAGENUMBEROF COMMON SHARES OLTTSTANDING 226,373 157,464 144,095 BASIC AND DILUTED EARNINGS PER SHARE OF COMMON STOCK (Note 3C): Income before extraordinaryitem $1.95 $1.94 $2.10 Extraordinary item (Net ofincome taxes) (Note 1) (.13) Nerincome $1.82 $1.94 $2.10 DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $1.50 $1.50 $1.50 The axompanying Notes to ConsolidatedFinancialStatemenn are an iurgralpart ofthese statemenn. 24 L

, Consolidaied Bolonce Sheets Frasitwincy cone. (in rhousands) At December 31, t99e 1997 ASSETS CURRENTASSETS: l Cash and cash equivalents 77,798 98,237 Receivables - Customers (less accumulated provisions of $6,397,000 and $5,618,000, respectively, for uncollectible accounts) 239,183 284,162 Other (less accumulated provisions of $46,251,000 and $4,026,000, respectively, for uncollectible accounts) 322,186 219,106 Materials and supplies, at average cost - l Owned 145,926 154,961 Under consignment 110,109 82,839 Prepayments and other 171,931 163,686 1,067,133 1,002,991 PROPERTY, PLANT AND EQUIPMENT: In service 14,961,664 15,104,327 less - Accumulated provision for depreciation 6,012,761 5,668,997 8,948,903 9,435,330 Construction work in propcss 293,671 200,662 9,242,574 9,635,992 INVESTMENTS: Capital trust investments (Note 2) 1,329,010 1,370,177 lettet of credit collateralization (Note 2) 277,763 277,763 Other 812,231 596,380 2,419,004 2,244,320 DEFERRED CHARGES: Regulatory asse:s 2,696,762 2,624,144 Goodwill 2,167,968 2,107,795 Other 470,066 465,553 l 5,334,796 5,197,492 i $18,063,507 $18.080,795 l LIABIUTIES AND CAPITAUZATION CURRENTUABluTIES: Cunsntly payable long-term debt and preferred stock 876,470 470,436 Short-term borrowings (Note 4) 254,470 302,229 Accounts payable 305,326 312,690 Accrued taxes 401,688 381,937 Accrued interest 141,575 147,694 Other 203,460 193,850 2,182,989 1,808,836 CAPITAUZATION (See Consolidated Statements of Capitalization): Common stockholders' equiry 4,449,158 4,159,598 Preferred stock of consolidated subsidiaries-Not subject to rnandatory redemption 660,195 660,195 Subject to mandatory redemption 174,710 214,864 Ohio Edison obligated mandatorily redeemable preferred securities of subsidiary trust holding solely Ohio Edison subordinated debentures 120,000 120,000 long-term debt 6,352,359 6,969,835 l 11,756,422 12,124,492 j DEFERRED CREDITS: l Accumulated deferred income taxes 2,282,864 2,304,305 Accumulated deferred investment tax credits 286,154 324,200 Pensions and other postretirement benefits 525,647 492,425 Other 1,029,431 1,026,537 4,124,096 4,147,467 COMMITMENTS, GUARANTEES AND CONTINGENCIES l (Notes 2 and 5 ) l $18,063,507 $18,080,795 The naompanying Nores to ConsolidaredFinancialSraremenn an an inregralpart ofriese balance sheen. [ 25 l

i Consolidated Statements of Capitalization Frasv$sacy Cogn, (Dollars in tlwusands, exaptper share amounts) At December 31, 1998 1997 COMMON STOCKHOLDERS' EQUITY: Common stock,5.10 par value - authorized 300,000,000 shares 237,069,087 and 230,207,14 I shares outstanding, respectively $ 23,707 $ 23,021 Other paid-in capital 3,846,513 3,637,522 Accumulated other comprehensive income (Note 3D) (439) (614) Retained earnings (Note 3A) 718,409 646,646 Unallocated employee stock ownership plan common stock - 7 A06,332 and 7,829,538 shares, respectively (Note 3B) (139,032) (146,977) Total common stockholders' equity 4,449,158 4,159,598 Number of Shares Optional Outstanding Redemption Price 1998 1997 Per Share Aggregate PREFERRED STOCK OF CONSOLIDATED SUBSIDIARIES (Note 3E) Ohio Edison Company (OE) Cumulative, $100 par value-Authorized 6,000,000 shares Not Subject to Mandatory Redemption: 3.90 % 152,510 152,510 $103.63 $15,804 15,251 15,251 4.40% 176,280 176,280 108.00 19,038 17,628 17,628 4.44 % 136,560 136,560 103.50 14,134 13,656 13,656 4.56 % 144,300 _ 144,300 103.38 14,917 14,430 14,430 609,650 609,650 63,893 60,965 60,965 Cumulative, $25 par value-Authorized 8.000,000 shares Not Subject to Mandatory Redemption: 7.75 % 4,000,000 4,000,000 100,000 100,000 Total Not Subject to Mandatory Redemption 4,609,650 4,609,650 $63,893 160,965 160,965 Cumulative, $100 pas value - Subject to Mandatory Redemption (Note 3F): 8.45% 150,000 200,000 15,000 20,000 Redemption Within One Year (5,000) (5,000) 150,000 200,000 10,000 15,000 IVnnsylvania Power Company Cumulative, $100 par value-Authorized 1,200,000 shares Not Subject to Mandatory Redemption: 4.24 % 40,000 40,000 103.13 $ 4,125 4,000 4,000 4.25 % 41,049 41,049 105.00 4,310 4,105 4,105 4.64 % 60,000 60,000 102.98 6,179 6,000 6,000 7.64 % 60,000 60,000 101.42 6,085 6,000 6,000 7,75 % 250,000 250,000 25,000 25,000 8.00 % 58,000 58,000 102.07 5,920 5,800 5,800 Total Not Subject to Mandatory Redemption 509,049 509,049 $26,619 50,905 50,905 Subject to Mandatory Redemption (Note 3F): 7.625 % 150,000 150,000 106.86 $16,029 15,000 15,000 OE OBLIGATED MANDATDRILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARYTRUST l HOLDING SOLELY OE SUBORDINATED DEBENTURES (Note 3G): Cumulative, $25 par value-Authorized 4,800,000 shares Subject to Mandatory Redemption: 9.00 % 4,800,000 4,800,000 120,000 120,000 26

E i Cqnsolid0ted St0tements of C0pitoliz0 tion (Cont'd) FInsT!we ncy Com p. (Dollars in thosaands, exceptpershare amounts) At Decernber 31, 199e 1997 Number of Shares Optional Outstanding Redemption Price 1998 1997 Per Share Aggregate PREFERRED STUCK OF CONSOLIDATED SUBSIDIARIES (Cont'd) Cleveland Electric Illuminating Company Cumulative, without pu value - Awhorized 4,000,000 shares ' Not Subject to Mandatory Redemption: $ 7.40 Series A 500,000 500,000 $ 101.00 $ 50,500 $0,000 $0,000 $ 7.56 Serie: B 450,000 450,000 102.26 46,017 45,071 45,071 Adjustable Series t 474,000 474,000 100.00 47,400 46,404 46,404 $42.40 Serie:T 200,000 200,000 500.00 100,000 96,850 96,850 Total Not Subject to Mandatory Redemption 1,624,000 1,624,000 $ 243,917 238,325 238,325 Subject to Mandatory Redemption: 5 7.35 SeriesC 100,000 110,000 101.00 $ 10,100 10,110 11,110 $88.00 Serie: E 6,000 9,000 1,003.83 6,023 6,000 9,000 $91.50 Scries Q 32,144 42,858 1,000.00 32,144 32,144 42,858 $88.00 Series R 50,000 50,000 55,000 55,000 $90.00 Series S 74,000 74,000 79,920 79,920 262,144 285,858 48,267 183,174 197,888 Redemption Within One Year (33,464) (14,714) Total Subject to Mandatory Redemption 262,144 285,858 $ 48,267 149,710 183,174 Toledo Edison Company Cumulative, $100 par value-Authorized 3,000,000 shares Not Subject to Mandatory P.edemption: $ 4.25 160,000 160,000 104.63 $ 16,740 16,000 16,000 $ 4.56 50,000 50,000 101.00 5.050 5,000 5,000 $ 4.25 100,000 100,000 102.00 10,200 10,000 10,000 l $ 8.32 100,000 100,000 102.46 10,246 10,000 10,000 $ 7.76 150,000 150,000 102.44 15,366 15,000 15,000 $ 7.80 150,000 150,000 101.45 15,248 15,000 15,000 $10.00 190,000 190,000 101.00 19,190 19,000 19,000 900,000 900,000 92,040 90,000 90,000 Cumulative, $25 par value-i Authorized 12,000,000 shares Not Subject to Mandatory Redemption: $ 2.21 1,000,000 1,000,000 25.25 25,250 25,000 25,000 1 $ 2.365 1,400,000 1,400,000 27.75 38,850 35,000 35,000 Adjustable Series A 1,200,000 1,200,000 25.00 30,000 30,000 30,000 Adjustable Series B 1,200,000 1,200,000 25.00 30,000 30,000 30,000 I 1 4,800,000 4,800,000 124,100 120,000 120,000 Total Not Subject to Mandatory Redemption 5,700,000 5,700,000 $ 216,140 211,000 210,000 Cumulative, $100 par value-i Subject to Mandatory Redemption: $ 9.375 16,900 33,550 100.00 1,690 1,690 3,355 Redemption Within One Year (1,690) (1,665) { Total Subject to l Mandatory Redemption 16,900 33,550 1,690 1,690 1 l l \\ 3 27

T Consolidated Statements of Capitalization (Cont'd) FinsTI,[inu c0y, LONG-TERM DEBT (Note 3H) (Interest rates reflect weighted average rates) (In thousands) FIRST MORTGAGE BONDS SECUREDNOTES UNSECURED NOTES TOTAL j At December 31, 1998 1997 1998 1997 1998 1997 1998 1997 Ohio Ednon Co. - Da: 1998-2003 7.60% $ 659,265 $ 809,265 7.52% $ 144,261 $ 146,201 5.34% $ 564,500 $ 531,500 Dus 2004-2008 6.88% 80,000 80,000 7.68% 106,995 104,445 Due 2009-2013 Due 2014-2018 7.12% 113,725 113,725 Due 2019-2023 7.99% 225,960 225,960 7.32% 209,943 209,943 Due 2024-2028 7.49% 121,522 108,000 Due 2029-2033 5.75% 121,012 121.012 Tot & Ohio Edimn 965,225 1,115,225 817.458 803,326 566,500 531,500 $ 2,349,183 $ 2,450,051 Cleveland Electric !!iuminating Co.- Due 1998-2003 7.54 % 295,000 295,000 7.f4% 424,150 490,180 6,600 Due2004 2008 8.72% 425,000 375,000 7.51 % 400,150 400,150 23,000 Due 2009-2013 200,000 7.62% 230,280 237,630 17,000 Due 2014-2018 6.59% 412,430 413,915 Due 2019-2023 f.00% 150,000 150,000 6.58% 291,860 341,860 Dw 2024-2028 7.59% 148,843 142,050 Due 2029-2033 4.56 % 104,895 Total-Cleveland Electric 870,000 1,020,000 2,012,800 2,024,585 46,600 2.882,808 3,093,185 Toledo Edmon Co.- Due 1998-2003 7.47% 120,325 146,725 7.90% 214,500 253,150 8.62% 138,720 139,020 Due 2004-2008 7.88% 145,000 145,000 7.51 % 100,000 100,000 10.00 % 150 150 Due 2009-2013 4.98% 31,250 31,250 10.00 % 730 730 Due 2014-2018 Due 2019-2023 7.88% 334,000 334,000 Due 2024 2028 5.90% 13,851 10,100 Due 2029-2033 Total-Teledo Edison 265,325 291,725 693,601 728,500 139,600 139,900 1,098,526 1,160,125 Pennsylvania Power Co.- Due 1998-2003 7.72% 44,383 44,383 4.08% 23,000 23,650 Due 2004-2008 6.88% 39,370 39,370 Due 2009-2013 f.74% 4,870 4,870 5.40% 1,000 1,000 Due 2014-2018 9.74 % 4,870 4,870 4.28% 45,325 45,325 Due 2019-2023 8.37% 34,757 34,757 6.91% 32,382 32,382 Due 2024 2028 5.63 % 47,734 46,000 Due 2029-2033 5.95% 218 238 Tod-Penn Power 128,250 !!8,250 149,679 148,795 277,929 277,045 OES Fuel 5.97% 79,524 80,755 79.524 80,755 Bay Shore Power 7.12% 147,500 147,500 MARML Energy Corp. 6.40% 12,418 12,418 FacilaitsScrvice Group 7.38% 10,237 8.52% 3,917 14,154 Total 2,228,800 2,555,200 3,923,225 3,787.961 710.017 718,000 4,842,042 7,061,161 Capitalicase obligations 199,491 204,213 Ner unamortized premium on debi 127,142 153,518 tong-term debt due within one year (836,116) (44f 057) Totallong-term debt 6,352,359 4,969,835 TOTAL CAPITALIZATION $ 11,756,422 $12,124,492 The accompanying Notes to ConsolidatedFinancialStatements are an integralpart ofthese stasements. 4 28

n. C9nstilidated Statements of Common Stockholders' Equity f rasTEwin sy ConP. (Dollanin thousands) Accumulated Unallocated Other Other ESOP Comprehensive Number Par Paid-In Comprehenme Retained Common inconeNer3D ofShares Value Capital Income Nor3D Eanungs Stock l Balance, January l.1996 152,569,437 $1,373,125 $ 726,915 (608) $471,095 $(162,656) i Nerincorce $ 302,673 302,673 l Minimumliability for i unfunded retirement benefits, net of $27,000 ofincome taxes (51) (51) l Comprehensive income $302,622 l Allocation ofESOP Shares 1,346 7,646 Cash dividends on common stock (216,124) Balance, December 31,1996 152,569,437 1,373,125 728,261 (659) 557,642 (155,010) Net income $ 305.774 305,774 Minimumliability for unfunded retirement benefits, l net of$26,000 ofincome taxes 45 45 l Comprehensiveincome $ 305,819 Centerior acquisition 77,637,704 (1,350,104) 2,907,387 Allocation ofESOP Shares 1,874 8,033 Cash dividends on common stock (216,770) Balance, December 31,1997 230,207,141 23,021 3,637,522 (614) 646,646 (146,977) Net income $ 410,874 410,874 Minimumliability for i unfunded retirement benefits, l net of$53,000 ofincome taxes 175 175 Comprehensive income $ 411.049 Busi cssacquisitions 6,861,946 686 203,496 Niocation ofESOP Shares 5,495 7,945 l ~ (339,111) Cash dividends on common stock Balance, December 31,1998 237,069,087 $ 23,707 $3,846,513 (439) $ 718,409 $(139,032) l Consolidated Statements of Preferred Stock FrasTthinGy CORP, (Dollanin thousands) Not Subject to Subject to Mandatory Redemption Mandatory Redemption Par or Par or 1 Number Stated Nurnber Stated i ofShare Value ofShares Wlue Balance, January 1,19% 5,118,699 $211,870 5,200,000 $160,000 j Balance, December 31,1996 5,118,699 211,870 5,200,000 160,000 Centerior acquisition 7,324,000 448,325 319,408 201,243 Redemptions-8.45% Series (50,000) (5,000) Balance, December 31,1997 12,442,699 660,195 5,469,408 356,243 Redemptions-j 8.45% Series (50,000) (5,000) l $ 7.35 Series C (10,000) (1,000) l $88.00 Series E (3,000) (3,000) $91.50 Series Q (10,714) (10,714) $9.375 Series (16,650) (1,665) Balance, December 31,1998 12,442,699 (160,195 5,379,044 $334,864 & accompanying Notes to ConsolidatedFina <cialStasemena are an integralpart ofthese statemenn. l 1 29

7 Consolidated Statements of Cash Flows finsitwinsytone. (in thousands) For the Years Ended December 31, 1998 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Ner Income $ 410,874 $ 305,774 $ 302,673 Adjustments to reconcile net income to net cash from operating activities: Provision for depreciation and amortization 740,953 475,228 383,441 Nuclear fuel and lease amonization 94,348 61,960 52,784 Other amonization, net (13,007) (1,187) (1,700) Deferred income taxes, net (5,851) (29,642) 41,365 Investment tax credits, net (22,070) (16,252) (14,041) Allowance for equity funds used during construction (201) Extraordinary item 51,730 Receivables 35,515 21,846 24,326 Materials and supplies (14,235) (18,909) (736) Accounts payable (73,205) 57,087 962 Other (49,727) 733 (41,317) Net cash provided from operating activities 1,155,325: 856,437 747,757 CASH FLOWS FROM FINANCING ACTIVITIES: New Financing-Common stock 204,182 1,558,237 Long-term debt +99,975 89,773 306,313 Ohio Schools Council prepayment program 116,598 Shon-term borrowings, net 229,515 Redemptions and Repayments-Preferred stock 21,379 5,000 1,016 Long-term debt 804,780 335,909 438,916 Shon-term borrowings, net 48,354 47,251 Common Stock Dividend Payments 339,111 237,848 218,656 Net cash provided from (used for) financing activities (392,869) 1,022,002 (122,760) CASH FL.OWS FROM INVESTING ACTIVITIES: Centerior acquisition 1,582,459 Properry additions 652,852 203,839 143,139 Cash investments 47,804 8,934 487,979 Other 82,239 62,237 13,406 Net cash used for investing activities 782,895 1,857,469 649,574 Net increase (decrease) in cash and cash equivalents (20,439) 20,970 (24,577) Cash and cash equivalents at beginning of period

• 98,237 77,267 29,830 Cash and cash equivalents at end of year 77,798 98,237 5,253 SUPPLEMENTAL CASH FLOWS INFORMATION:

Cash Paid During the Year-Interest (net of amounts capitalized) $ 536,064 $ 281,670 $ 224,541 Income taxes $ 326,268 $ 265,615 $ 157,477

• 1997 beginning balance includes Centerior cash andcash equisalents as ofthe Notember 8,1997 acquisition date.

The accompanying Notes to Consolidated FinancialStatements are an integralpart ofthese statements. 1 I l i 30

. 'Copsolidated Statements of Taxes FRsTENERGY COR P. (la thousands) - For the Years Ended December 31, 1998 1997 1996 GENERALTAXES: Real and personal property $ 292,503 $ 137,816 $ 115,443 State gross receipts 217,633 118,390 104,158 Social security and unemployment 27,363 16,551 14,602 Other 13,409 9,406 7,795 Total general taxes $ 550,908 $ 282,163 $ 241,998 PROVISION FORINCOMETAXLS: Currently payable-Federal ~ $ 313,960 $ 235,728 $ 164,132 State 14,452 18,152 9,839 328,412 253,880 173,971 Deferred, net - Federal 3,356 (23,716) 37,277 State (9,207) (5,926) 4,088 (5,851) (29,642) 41,365 Investment tax credit amortization (22,070) (16,252) (14,041) Total provision for income taxes $ 300,491 $ 207,986 $ 201,295 RECONCILIATION OF FEDERAL INCOMETAX EXPENSE AT STATUTORY RATE TO TOTAL PROVISION FOR INCOMETAXES: Book income before provision for income taxes $ 711.365 $ 513,760 $ 503,968 Federal income tax expense at statutory rate $ 248,978 $ 179,816 $ 176,389 Increases (reductions) in taxes resulting from - Amortization ofinvestment tax credits (22,070) (16,252) (14,041) State income taxes net of federal income tax benefic 3,409 7,947 9.053 Amortization of tax regulatory assets 40,365 30,402 26,945 Amortization ofgoodwill 17,868 2,685 Preferred stock dividends 19,250 5,956 5,993 Other, net (7,309) (2,568) (3,044) Total provision for income taxes $ 300,491 $ 207,986 4 201,295 ACCUMULATED DEFERRED INCOMETAXES AT DECEMBER 31: Propeny basis differences $1,938,735 $ 2,091,207 $1,319,878 Deferred nuclear expense 436,601 454,902 262,123 Customer receivables for Liture income taxes 159,526 262,428 191,537 Competitive transition charge 135.730 Deferred saleand leaseback costs (61,506) (121,974) 78,607 Unamortized investment tax credits (102,085) (116,593) (72,663) Unused alternative minimum tax credits !!90,781) (243,039) Other (33,356) (22,626) (2,396) Net deferred income taxliability $ 2,282,864 $ 2,304,305 $ 1,777,086 l ~ The accompanying Notes to Consolidated FinancialStaremenn are an integralpart ofthese statemena. l l l 31 l

Notes to Consolidated financial Statements customers through separate energy retes. In accordance $vith'the, respective regulatory plans, OE's, CErs end TE's fuel rates will be

1. $UMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

frozen through the regulatory plan period, subject to liraited The consolidated financial statements indude FirstEnergy Periodic adjustments. As pan of0E's and FirstEnergy's regulatory ) P ans, transmon rate credits were implemented for customers, l Corp. (Company) and its principal electric utility operating sub-sidiaries, Ohio Edison Company (OE),ne Cleveland Electric which are expected to reduce operating revenues for OE by appr ximately $600 million and CEI and TE by approximately Illuminating Company (CEI), Pennsylvania Power Company $391 milli n during the regulatory plan period. (Penn) and TheToledo Edison Company (TE).The Company and its utility subsidiaries are referred to throughout as In June 1998, the PPUC authorized a rare restructuring plan " Con'panies."The Company's 1997 results ofoperations indude for Penn, which superseded the regulatory plan which had been in the results of CEI and TE for the period November 8,1997 place for Penn since 1996 and essentiaHy resulted in the deregula. through December 31,1997.The consolidated fmancial state-tion of Penn's generation business as ofJune 30,1998. Penn was ments also indude the Company's other principal subsidiaries: required to remove from its balance sheet all regulatory assets and FirstEnergy Facilities Services Group, Inc. (FE Facilities); liabilities related to its generation business and assess au other FirstEnergyTrading & Power Marketing, Inc. (FETPM): and anets for impairment. The Securities and Exchange Commission MARBEL Energy Corporation. FE Facilities is the parent (SEC) issued interpretive guidance regarding asset impairment company of several heating, ventilating, air conditioning and measurement which conduded that any supplemental regulated energy management companies. FETPM markets and trades elec. cash Bows such as a competitive transition cnarge (CTC) should tricity in nonregulated markets. MARBEL is a fully integrated be excluded from the cash Bows of assets in a portion of the natural gas company. Significant intercompany transactions have business not subject to regulatory accounting practices. If those been climinated. The Companies follow the accounting policies assets are impaired, a regulatory asset should be established if the and practices prescribed by the Public Utilities Commission of costs are recoverable through regulatory cash Bows. Consistent Ohio (PUCO), the Pennsylvania Public Utility Commission with the SEC guidance, Penn reduced its nuclear generating unit (PPUC) and the Federal Energy Regulatory Commission (FERC). investments by approximately $305 miUion, of which approxi-He preparation of fmancial statements in ccnformity with mately $227 million was recognized as a regulatory asset to be generally accepted accounting principles requires management to recovered through a CTC over a seven-year transition period; the make periodic estimates and assumptions that affect the reponed remaining net amount of $78 million was written off. The charge amounts of assets, liabilities, revenues and expenses. Certain prior of $51.7 million ($30.5 million after income taxes) for discontin-year amounts have been redassified to co nform with the current uing the application ofStatement of Financial Accounting year presentation. Standards (SFAS) No. 71, " Accounting for the Effects of Certain R evenue s -The Companies' principal business is providing Types of Regulation" (SFAS 71), to Penn's generation business was electric service to customers in central and nonhern Ohio and nmded as an exuaordinary item on the Consolidated Statement II"' " westem Pennsylvania.The Companies' retail customers are metered on a cyde basis. Revenue is recognized for unbilled All of the Companies' regulatory assets are being recovered electric service through the end of the year. under provisions of the regulatory plans. In addition, the PUCO Receivables from customers indude sales to residential, com. has authorized OE to recognize additional capital recovery related mercial and industrial customers located in the Companies' service I*' E*"'I"E *".(which as reBected as addmonal deprecia-area and sales to wholesale customers.There was no material con-ti n expense) and addmonal amortization of regulatory assets l kSulat ry P an period ofat least $2 billion, and the centration of receivables at December 31,1998 or 1997, with unn8t

• d ""E "#'"" ' "'I*** ** I'***

O" respect to any panicular segment of the Companies' customers. more than the amounts that would have been recognized if the CEI and TE sell substantially all of their retail customer regulatory plans were not in effect. These additional amounts are accounts receivable to Centerior Funding Corp. under an asser-being recovered through current rates. As of December 31,1998, backed securitization agreement which expires in 2001. Centerior OE's and Penn's cumulative additional capital recovery and regula-Funding completed a public sale of $ 150 million of receivables-tory asset amortization amounted to $696 million (induding backed investor cenificates in a transaction that qualified for sale Penn's impairment discussed above). CEI and TE recognized a fair accounting treatment. value purchase accounting adjustment of $2.55 billion in connec-Regulotory Plons -The PUCO approved OE's Rate tion with the FirstEnergy merger; that fair value adjustment Reduction and Economic Development Plan in 1995 and recognized for financial reporting purposes will ultimately satisfy the $2 billion asset reduction commitment contained in the CEI FirstEnergy's Rate Reduction and Economic Development Plan for CEI and TE in January 1997. These regulatory plans initially and TE regulatory plan. For regulatory purposes, CEI and TE will maintain cunent base electric rates for OE, CEI and TE through recognize the accelerated amonization over the rate plan period. December 31,2005. At the end of the regulatory plan periods, Application of SFAS 71 was discontinued in 1997 with OE base rates will be reduced by $300 million (approximately respect to CEPs and TE's nudear operations (see

• Regulatory 20 percent below cunent levels) and CEI and TE base rates will be Assets" below) and in 1998 with respect to Penn's generation oper-reduced by a combined $310 million (approximately 15 percent ations (as described above).The following summarizes net assets below current levels).The plans also revised the Companies' fuel induded in propeny, plant and equipment relating to operations cost recovery methods.The Companies formerly recovered fuel-for which the application of SFAS 71 was discontinued, compared related costs not otherwise induded in base rates from retail with the respective company's total assets at December 31,1998.

l t n l

I i l SFA571 (0mmon Ownership of Generating Facilities-The y,,*j'd Companies and Duquesne Light Company (Duquesne) consti-7g 3,,, ggg tute the Central Area Power Coordination Group (CAPCO).The l l CEI $1,064 $6,318 CAPCO companies own and/or lease, as tenants in common, vari- ' TE 579 2,739 ous power generating facilities. Each of the companies is obligated Penn 146 978 to pay a share of the costs associated with any joindy owned Property, Plant ond Equipment - Property, plant and facility in the same proportion as its interest.The Companies' l equipment reflects original cost (except for CEI's.TE's and Penn's Ponions ofoperating expenses associated with jo, tly owned facil-m nudcar generating units which were adjusted to fair value), ines are mduded m the corresponding operating expenses on the Consolidated Statements ofincome.The amounts reflected on the induding payroll and related costs such as taxes, employee benefits, administrative and general costs, and interest costs. Consolidated Balance Sheet under property, plant and equipment at December 31,1998,indude the following: The Companies provide for depreciation on a straight-line Companies' basis at various rates over the estirnated lives of property included Accumuhted Construction Ownership / in plant in service.The annual composite rate for OE's and Penn's Pnwision for Work in 1xasehold U' N'*" I"" electric P ant wws aPProximatel 3.0% in 1998,1997 and 1990. l Y OMW CEl's and TE's composite rates were both approximately 3.4% in 1998. In addition to the straight-line depreciation recognized in [ S^*'njss[ ' 303.3 $ H1.3 $ 2.0 68.80% g,g 1998,1997 and 1996, OE and Penn recognized additional capital s2 and #3 895.1 433.9 11.2 a3.c1% recovery of $ 141 million (exduding Penn's impairment), Bewer Vaucy $172 million and $144 million, respectively, as additional depreci-si and #2 2.052.3 619.6 11.8 49.46% i ation expense in accordance with their regulatory plans. Such Dui> Bene 404.4 4.s 10.3 100.00% additional charges in the accumulated provision for depreciation Peny 2,174.7 790.2 H.1 86.26% Eankke a 5 160.5 116.8 c.7 68.80% were $422 milh.on and $343 million as of December 31,1998 and senua 64.3 25.4 0.1 80.00% Total $6.054.6 $2.o92.0 $ 55.2 Annual depreciation expense includes approximately $30.9 million for future decommissioning costs yplicable to the The Seneca Unit is currently joindy owned by CEI and a Companies' ownership and leaschold interests in four nudear gen-n n-CAPCO company.The Company has agreed to purchase the erating units.The Companies' share of the future obligation to remaining 20% sharein 1999. decommission enex 6 is approximately $1.3 billion in current On October 15,1998, the Con 94ny announced that it dollars and (using a 4.0% escalatmme) approximately signed an agreement in principle with Duquesne that would result $3.4 billion in future dollars. The estimated obligation and the in the transfer of 1,436 megawatts owned by Duquesne at eight escalation rate were developed based on site specific studies. CAPCO generating units in exchange for 1,328 megawatts at Payments for decommissioning are expected to begin in 2016, three non-CAPCO power plants owned by the Companies. A when actual decommissioning work begins. The Companies have definitive agreement on the exchange of assets, whicn~ will be struc-accovered approximately $284 million for decommissioning tured as a tax-free transaction to the extent possible, will provide through their electric rates from customers through December 31, the Companies with exdusive ownership and operating control of 1998. If the actual costs ofdecommissioning the units exceed the all CAPCO generating units. Duquesne will fund decommis-funds accumulated from investing amounts recovered from sioning costs equal to its percentage interest in the three nudear customers, the Companies expect that additional amount to be generating units to be transferred. The asser transfer is expected to l recoverable from their customers.The Companies have approxi. take twelve to eighteen months to close. l mately $358.4 million invested in external decommissioning trust N u cle a r Fu el - OE's and Penn's nudear fuel is recorded at I funds as of December 31,1998. Earnings on these funds are rein-original cost, which indudes material, enrichment, fabrication and vested with a corresponding increase to the decommissioning interest costs incurred prior to reactor load. CEI and TE severally liability.The Companies have also recognized an estimated lease their respective portions of nudear fuel and pay for the fuel as liability of approximately $32.5 million related to decontamina-it is consumed (see Note 2). The Companies amortize the cost of non and decomm,ssiomng of nudear enrichment facih,ues i nuclear fuel based on the rate of consumption. The Companies' operated by the Unned States Department of Energy (DOE), as electric rates indude amounts for the future disposal ofspent required by the Energy Policy Act of 1993 nudear fuel based upon the formula used to compute paymencs to The Financial Accounting Standards Board (FASB) issued a the DUE. l proposed accounting standard for nuclear decommissioning costs In c o m e To x es - Details of the total provision for income in 1996. If the standard is adopted as proposed: (1) annual pr ' taxes are shown on the Consolidated Statements ofTaxes. visions for decommissioning could increase; (2) the net present Deferred income taxes result from timing differences in the recog-value of estimated decommissioning costs could be recorded as a nition of revenues and expenses for tax and accounting purposes. liability; and (3) income from the extemal decommissioning trusts investment tax credits, which were deferred when utilized, are i could be reported as investment income.The FASB subsequendy being amortized over the recovery period of the related property. expanded the scope of the proposed studard to include other The liability method is used to account for deferred income taxes. dcrure and removal obligations related to long-lived assets. A Deferred income tax li oilities related to tax and accounting basis remed proposal may be issued by the FASB in 1999, differences are recognized at the statutory income tax rates in effect ss

when the liabilities are expected to be paid. Alternative minimum Net pension and other postretirement benefit costs [or the o tax credits of $191 million, which may be carried forward indefi-three years ended December 31,1998 were computed as follows: nitely, are available to reduce future federal income taxes. o,he, R etirement B enefits -The Companies' trusteed, 8"' 8"' 8"' 8"' 8"' noncontributory defined benefit pension plans cover almost all full-time employees. Upon retirement, employees receive a monthly pension based on length ofservice and compensation. In Interest cost 92.5 55.9 49.3 37.6 20.4 17.4 1998, the Centerior Energy Corporation (Centerior) pension plan E.xpected return on plan assets (152.7) (99.7) (83.2) (0.3) (0.2) (0.1) was merged into the FirstEnergy pension plans.The Companies Amortiution of transition use the projected unit credit method for funding purposes and obliption (asset) (8.0) (8.0) (8.0) 9.2 0.2 10.1 ^'" "ii " f 'i "'"ic' '"'t 2.3 2.1 2.3 (0.8) 0.3 (1.2) were not required to make pension contributions during the three P Recognized net actuanal loss (gain) (2.6) (0.9) 0.1 years ended December 31,1998.The assets of the pension plans %,,,y,,,iyg,,,,, consist primarily ofcommon stocks United States govemment program expenn 54.5 12.5 1.9 0.5 bonds and corporate bonds. Plan cunailment lou (pin) - (12.8) - 13.1 { The Companies provide a minimum amount of noncontribu. Net bene 6: a $(43.5) $ 19.1 $(25.7) $53.2 $35.2 $44.2 tory life insurance to retired employees in addition to optional in accordance with SFAS 88,

• Employers' Accounting for contributory insurance. Health care benefits, which include Settlements and Curtailments of Defmed Benefit Pension Plans certain employee deductibles and copayments, are also available to and forTermination Benefits," the 1996 net pension costs and retired employees, their dependents and, under certain circum' postretirement benefit costs shown above included cunailment stances, their survivors. The Companies pay insurance premiums effects (significant changes in projected plan assumptions) relating to cover a portion of these benefits in excess ofset limits; all to the pension and postretirement benefit ple.ns. The employee amounts up to the limits are paid by the Companies.The terminations reflected in OE's and Penn's 1996 voluntary early Companies remgnize the expected cost of providing other postre-retirement program represented a plan cunailment that signifi-J tirement benefits to employees and their beneficiaries and covered candy reduced che expected future employee service years and the dependents from the time employees are hired until they become related accrual ofdefined pension and postretirement benefits. In eligible to receive those benefits.

the pension plan, the reduction in the benefit obligation increased The following sets forth the funded status of the plans and the net pension asser and was shown as a plan cunailment gain. In amounts recognized on the Consolidated Balance Sheets as of the postretirement benefit plan, the unrecognized prior service December 31: mst associated with service years no longer expected to be ren-Other dered as a result of the terminations was shown as a plan % Bene 6a wremenien: Bene 6a cunailment loss. 1998 1997 1998 1997 g,,,,,a,,,,,; The health care trend rate assumption is 5.5% in the first year changinbene6 obliption: gradually decreasing to 4.0% for the year 2008 and later. Assumed health care cost trend rates have a significant efTect on the amounts of u 1 $1,327.5 $ 688.5 $ 534.1 $ 241.1 Service cost 25.0 15.2 7.5 4.6 reported for the health care plan. An increase in the health care Interest cost 92.5 55.9 37.6 20.4 trend rate assumption by one percentage point would increase the total service and interest cost components b) $4.0 million and the y a remen rogram expense 5. 1.9 Actuarialloss 101.6 63.3 10.7 17.0 Postretirement benefit obbgat on by $68.1 million. A decrease m Centerior acquisition 508.9 265.9 the same assumption by one percentage point would decrease the Bene 6u paid (90.8) (61.8) (28.7) (16.8) total service and interest cost components by $3.2 million and the Bene 6t obliprion as of postretirement benefit obligation by $55.2 million. December 31 1,500.1 1,327.5 601.3 534.1 chang in plan nseu. Supplemental Cash Flows Information - All Ibir tolue of plan asseu temporary cash investments purchased with an initial maturity of three m nths or less are re ned as cash equivalents on the Act alret a tan aucu 3. 9 Consolidated Balance Sheets.The Compames reflect temporary Company contribution 0.4 0.3 centerior acquisima 464.0 cash investments at cost, which approximates their market value. Bene 6a paid (90.8) (61.8) Noncash financing and invescing activities included capital lease lainalue of plan asseu transactions amounting to $61.8 rnillion, $3.0 million and as of December 31 1,683.0 1,542.5 3.9 2.8 $2.0 million for the years 1998,1997 and 1996, respectively. ) (! ) Commercial paper transactions of OES Fuel, Incorporated .nD Ilou(pin) (1 ) Unrec 6 0 Unrecognized prior service cost 63.0 21.0 27.4 (13.8) (OES Fuel) (a wholly owned subsidia. y of OE) that have initial Unrecognized ner transition maturity periods of three months or less are reported net within ) obliprion (auet) (18.0) (25.9) 129.3 1 (8,9._ financing activities under long-term debt and are reflected as long-Prepaid (accrued) bene 6r cost $ 117.1 $ 73.6 $(410.1) $ (382.2) term debt on the Consolidated Balance Sheets (see Note 3H). Assumptions used as of December 31: All borrowings with initial maturities ofless than one year are Duo.sunt rare 7.00% 7.25% 7.00% 7.25% defined as financial instruments under generally accepted acmunting principles and are reponed on the Consolidated Ian 10.25% 10.00% 10.25% 10.00% Rate compensation increase 4.00% 4.00% 4.00% 4.00% Balance Sheets at cost, which approximates their fair market value. 34 j

4 The fdllowing sets forth the approximate fair value and related SFAS 71 to those respective operations. OE and Penn recognized carrying amounts ofall other long-term debt, preferred stock additional cost recovery of b0 million, $39 raillion and subject to mandatory redemption and investments other than cash $34 million in 1998,1997 and 1996, respectively, as additional and cash equivalents as of December 31: regulatory asset amonization in accordance with their regulatory 3,,g 3,,7 plans. FirstEnergy's regulatory plan does not p ovide for full Carrying Fair Carrying Fair recovery ofCEI's and TE's nuclear operations. As a result, in w ue w ue value value October 1997 CEI and TE discontinued application of SFAS 71 (/n millimu) for their nudear operations and decreased their regulatory assets of long-term debt $6,783 $ 7,247 $6,980 $ 7,334 customer receivables for future income taxes related to the nudcar Preferred stock $ 335 $ 340 $ 356 $ 362 assets by $794 million. Investmenu other than cash and Net regulatory assets on the Consolidated balance Sheets are cash equbalenu: comprised of the following: Debt securities -Maturiry(5-10 years) $ 481 $ 520 $ 487 $ $12 1"8 1"7 - Maturity (more (In millimu) than 10 years) 1,109 1,139 1,134 1,149 Nuclear unit expenses $1,164.8 $1,224.2 Equity securitics 17 17 24 24 Customer recewables for future income taxes 444.0 558.7 All other 520 533 336 337 Race stabilization program deferrals 440.1 460.2 an m 2M W $ 2,127 $ 2,209 $ 1,981 $ 2,022 Competitive transition charge 331.0 The fair values oflong-term debt and preferred stock refixt 1"" " '**'9"I"d deh' 183 5 1'l 1 the present value of the cash outflows relating to those securities [' {' based on the current call price, the yield to maturity or the yield to Itrry Unit 2 termination 36.7 call, as deemed appropriate at the end ofeach respective year. The DOE decommissioning and decontamination oosts 32.9 39.3 yields assumed were based on securities with similar characteristics Other 36.7 44.7 offered by a corporation with credit ratings similar to the Tout $2,696.8 $2.624.1 Companies' ratings. The fair value ofinvestments other than cash and cash 2, LEA 5E5: equivalents represent cost (which approximates fair value) or the present value of the cash inflows based on the yield to maturity. The Companies lease cenain generating facilities, nudear fuel, ne yields assumed were based on financial instruments with cenain transmission facilities, office space and other property and equipment under cancelable and noncancelable leases. similar charactenstics and terms. Investments other than cash and cash equivalents indude decommissioning trust investments. OE sold portions ofits ownership interests in Perry Unit I and Umealized gains and losses applicable to the decommissioning Beaver Valley Unit 2 and emered into operating leases on the trust have been recognized in the trust investment with a corre-Imrtions sold for basic lease terms of approximately 29 years. CEI sponding change to the decommissioning liability.The debt and and TE also sold portions of their ownership interests in Beaver equity securities referred to above are in the held-to-maturity Valley Unit 2 and Bruce Mansfield Units 1,2 and 3 and entered cctegory.The Companies have no securities held for trading into similar operating leases for lease terms of approximately 30 purposes. years. During the terms of their respective leases, OE, CEI and TE continue to be responsible, to the extent of their individual Effecu.ve December 31,1998, the Company began combined ownership and leasehold interests, for costs associated accounting for sts commodity price denvauves, entered m, t specifically for trading purposes, on a marked-to-market bas.. with the units induding construction expenditures, operation and is in maintenance expenses, insurance, nudear fuel, propeny taxes and accordance with Emerging Issues Task Force issue 98-10, decommissioning. They have the right, at the end of the respective Accounting for EnergyTrading and Risk Management Acu...vities' basic lease terms, to renew their respective leases. They also have with gains and losses recognized currently m the Consolidated Statements ofIncome.The contracts that were marked to market the right to purchase the facilities at the expiration of the basic lease term or renewal term (ifelected) at a price equal to the fair are mduded in the 1998 Consolidated Balance Sheets as Deferred market value of the facilities.The basic rental payments are Charges and Deferred Credits at their fair values. The impact on adjusted when applicable federal tax law changes. the coruolidated financial statements was immarenal. OES Finance, Incorporated (OES Finance), a wholly owned Regulotory Assets-TheComparu.es rc:ognize, as subsidiary of OE, maintains deposits pledged as collateral to regulatory assets, costs which the FERC, PUCO and PPUC have secure reimbursement obligations relating to cenain letters of authorized for recovery from customers m future periods. Without credit supporting OE's obligations to lessors under the Beaver such authonzauon, the costs would have been charged to income Valley Unit 2 sale and leaseback arrangements. The deposits as incurred. All regulatory assets are bemg recovered from pledged to the financial institution providing those letters ofcredit i customers under the Compames' respective regulatory plans. are the sole propen' ofOES Finance. In the event ofliquidation, Based on those regulatory plans, at this time, the Compames OES Finance, as a separate corporate entity, would have to satisfy believe they will continue to be able to bill and collect cost-based its obligations to creditors before any ofits assets could be made rates rel:. ting to all of OE's operations, CEI's and TE's nonnudcar available to OE as sole owner of OES Finance common stock. operations, and Penn's nongeneration operations; accordingly, it is appropriate that the Companies continue the application of Nudear fuel is currently financed for CEI and TE through leases with a special-purpose corporation. As of December 31, n i

a 1998, $156 million ofnuclear fuel was fmanced under a lease shares of OE's common stock through market purchases; the*> financing arrangement totaling $175 million ($60 million of shares were converted ir.to the Companie common stock in con-intermediate-term notes and $115 million from bank credit nection with the merger. Dividends on ESOP shares are used to arrangements),The notes mature from 1999 through 2000 and service the debt. Shares are released from the ESOP on a pro rata the bank credit arrangements expire in September 2000. lease basis as debt service payments are made. In 1998,1997 and 1996, rates are based on intermediate-term note rates. bank rates and 423,206 shares,429,515 shares and 404,522 s, hares, sespectively, commercial paper rates. were allocated to employees with the corresponding expense rec-Consistent with the regulatory treatment, the rentals for gnized based on the shares alkicated method. The fair value of 7,406,332 shares unallocated as of December 31,1998, was capital and operating leases are charged to operating expenses on the Consolidated Statements ofIncome. Such costs for the three 8PProximately $241.2 million. Total ESOP-related compensation yeors ended December 31,1998, are summarized as follows: expense was calculated as follows: I"8 I I"' 1998 1997 1996 (in mdlw,u) ggg Base compensatkm $13.5 $ 9.9 $ 9.0 g Interest element $201.2 $149.9 $107.6 Other 147.8 45.2 16.3 used to nervice debt (3.9) (3.4) (2.9) Interest element 17.6 6.1 6.5 Net e pense $ 9.6 $ 6.5 $ 6.1 Other 66.3 6.0 6.3 ~ Totat rentals $432.9 $207.2 $138.7 (C) Stock Compensation Plans-UnderaCenterior Equity Compensation Plan (Centerior Plan) adopted in 1994. The future minimum lease payments as of December restricted stock and common stock options were granted to 31,1998, am management employees. Upon consummation of the merger, 0 " M"=c= 1 outstanding options became exercisable for the Companis capital lease (" a ommon stock with option prices and the number ofshares Imases Paymenu Trusts Net adysted to reflect the merger conversion ratio. A total of 329,493 Ua m&,ul options for the Compan/s common stock were exercised in 1998 y l[ ' 8'31 $ 15y and 222,023 options were exercised in 1997. Unexercised options 8 3g 2001 37.3 307.3 146.0 161.3 totaling 117,004 shares were outstanding as of December 31, 2002 22.8 318.3 169.5 148.s 1998 and at year end 1997, unexercised options totaled 517,388 2003 13.9 326.6 176.5 150.1 shares.The plan ends when all outstanding options are exercised Years thescafter 81.6 3,936.0 1,475.1 2,461.7 or when all options lapse by February 25,2007. There will be no Total minimum lease payments 267.5 $5,487.0 $2.260.7 $3,226.3 additional grants under the Centerior Plan. Executory costs 29.5 On April 30,1998, the Company adopted the Executive and ["m u cane Payinenn 25 Director incentive Compensation Plan (FE Plan). The FE Plan permits awards to be made to key employees m the form of Presen dneunWinum restricted stock, stock options, stock appreciation rights, perfor-3gg3 less current ponion 58.6 mance shans or cash. A total of 189,491 options for the Noncunent ponion $122.5 C mpan s c mmon sr ck and 20,000 shares ofrestricted stock were granted during 1998. Options granted in 1998 are exercis-OE invested in the PNBV Capital Trust, which was able in four years and expire c.fter 10 years. Restrictions on established to purchase a portion of the lease obligation bonds restricted stock lapse in 25% annual increments beginning in the issued on behalfoflessors in OE's Perry Unit I and Beaver Valley founh year. During 1998, options on 7,535 shares were forfeited Unit 2 sale and leaseback transactions. CEI and TE established the under the FE Plan leaving 181,956 options outstanding as of Shippingport Capital Trust in the fourth quaner of 1997 to December 31,1998. No shares of restricted stock were forfeited. purchase the lease obligation bonds issued on behalfoflessors in Computing compensation costs for options consistent with SFAS 1 their Bruce Mansfield Units 1,2 and 3 sale and leaseback transac-123,

• Accounting for Stock-Based Compensation," would not tions. The PNBV and Shippingport capital trust at,c.ngements have materially affected net income in 1998 and basic and diluted effectively reduce lease costs related to those transactions.

earnings per share are the same. (D) Comprehensive Income-In 1998,theCompany

3. CAPITALIZATION *-

adopted SFAS 130, " Reporting Comprehensive Income," and (A) Retoined Earnings-Therearenorestrictionson applied the standard to all periods presented in the Consolidated retained earnings for payment ofcash dividends on the Companis Statements ofCommon Stockholders' Equity. Comprehensive common stock. income includes net income as reported on the Consolidated Statements Inc meandall therchangesin c mm n stock-(B) Emptoyee Stock Ownership Plan-TheCompanies

• #9"
  • • 1. E' * * * ' * * ' " " * * ' ' * " ' ' " " '
• fund the matching contribution for their 401(k) savinE5 P an common stockholders.

I through an ESOP Trust. All full-time employees eligible for panic-ipation in the 401(k) savings plan are covered by the ESOP,The (E) Preferred ond Preference Stock-Penn's7.75% ESOP borrowed $200 million from OE and acquired 10,654,114 series of preferred stock has a restriction which prevents early [

redemption prior toJuly 2003. OE's 8.45% series orpreferred (H) long-Term Debt -The fint mongage indentures and stdckhas no optional redemption provision. CEI's $88.00 series of their supplements, which secure all of the Companies' fini preferred stock is not redeemable before December 2001 and its mangage bonds, serve as direct first mongage liens on substan- $90.00 series has no optional redemption provision. All other cially all propeny and franchises, other than specifically excepted preferred stock may be redeemed by the Companies in whole, or propeny, owned by the Companies. in pan, with 30-90 days' notice. Dased on the amount of bonds authenticated by the Trustees Preference stock authorized for the Companies are 8 million through December 31,1998. OE's and TE's annual sinking and shares without par value for OE; 3 million shares without par improvement fund requirements for all bonds issued under the value for CEl: and 5 million shares, $25 par value for TE. No monpge amounts to $30 million. OE and TE expect to deposit preference shares are currently outstanding. funds in 1999 that will be withdrawn upon the surrender for (F) Preferred Stock Subject To Mondatory cancellation of a like principal amount of bonds, which are specifi-Redemption - Annual sinking fund pmvisions for the cally authenticated for such purposes against unfunded propeny Companies' preferred stock are as follows: additions or against previously retired bonds. This method can result in mirmr increases in the amoum of the annual sinking fund requirement. Series Shares Sher Date Ikginning Sinking [und requirements for first monpge bonds and OE 0.45% 50,000 $ 100 (0 maturing long-term debt (excluding capital leases) for the next five CEI $ 7.35 C 10,000 100 (0 years are: 88.00 E 3,000 1,000 (0 91.50 0 10,714 1,000 (0 90.00 5 18,750 1,000 November 1 1999 1999 $777.7 88.00 R 50,000 1,000 December t 2001 2000 587.2 TE $ 9.375 16,900 100 (0 2001 167.6 IVnn 7.625% 7,500 100 Octobert 2002 2002 726.4 (i) Sinking fund provisions are in effect. mPaniesWgadons to repay cenain poHudon contml Annual sinking fund requirements for the next five years are e $40 million in 1999, $38 million in 2000, $85 million in 2001, revenue bonds are secured by several series of first mortgage bonds $19 million in 2002 and $2 million in 2003. A liability of and,in s me cases, by subordinate liens on the related pollution

1. "** pollution c ntrol revenue bonds are

$19 million was included in the net assets acquired from CEI and TE for preferred dividends declared attributable to the post-entided to the benefit ofirrevocable bank letters ofcredit of merger period. Accordingly, no accruals for CEI and TE preferred $419.0 million. To the extent that drawings are made under those dividends are included in the Company's Consolidated Statement leners fcredit to pay pnncipal of, or interest on, the pollution ofIncome for the period November 8,1997 throuA December c ntml revenue bonds, OE, CEI and/orTE are ent tied to a creda, 31,1997* apmst their obliption to repay those bonds.The Companies pa) annual fees of 0.43% to 1.875% of the amounts of the letters of (G) Ohio Edison obligoted Mondatorily Redeemoble credit to the issuing banks and are oblipted to reimburse the Preferred Securities of SubsidiaryTrust Holding Solely banks for any drawings thereunder. Ohio Edison Subordinoted Debentures -Ohio Edison Financing Trust, a wholly owned subsidiary of 0E, has issued OE had unsecured borrowings of $250 million at $ 120 million of 9% Cumulative Trust Preferred Capital Securities. December 31,1998, supported by a $250 million long-term OE purchased all oftheTiust's Common Securities and simulta-rmiving credit facility agreement which c pires December 30, neously issued to the Trust $ 123.7 milh.on pnncipal amount of 1999. OE must pay an annual facility fee of 0.20% on the total 9% Junior Subordinated Debentures due 2025 in exchange # ethe credit facility amount. In addm..on, the credit agreement provides proceeds that theTrust received from its sale ofPreferred and that OE maintain unused first monpge b<md capability for the Common Securities. The sole assets of the Trust are the Subordi-fuD credit agreement amount under OE s mdenture as potential nated Debentures whose interest and other payment dates secunty f r the unsecured borrowings. coincide with the distribution and other payment dates on the CEI and TE have leners ofcredit of approximately Trust Securities. Under cenain circumstances, the Subordinated $225 million in connection with the sale and leaseback of Beavet Debentures could be distributed to the holders of the outstanding Valley Unit 2 that expire in June 1999. The letters of credit are Trust Securities in the eveut the Trust is liquidated. The Subordi-secured by first mortgage bonds ofCEI and TE in the proponion nated Debentures may be optionally redeemed by OE beginning of40% and 60%, respectively (see Note 2). December 31,2000, at a redemption price of $25 per Subordi-nated Debenture plus accrued interest, in which event the Trust OE's and Penn's nuclear fuel purchases are fmanced thmugh securities will be redeemed on a pro rata basis at $25 per share plus the issuance of OES Fuel commercial paper and loans, both of accumulated distributions. OE's obliptions under the Subordi-which are supported by a $ 180.5 million long-term bank credii nated Debentures along with the related Indenture, amended and agreement which expires March 31,2001. Accordingly, the com-estited Trmt Agreement, Guarantee Agreement and the mercial paper and loans are reflected as long-term debt on the igreement for expenses and liabilities, constitute a full and Consolidated Balance Sheets. OES Fuel must pay an annual facility fee of 0.20% on the total line of credit and an annual unconditional guarantee by OE of payrnents due on the Preferred Securities. commitment fee of 0.0625% on any unused amount. 37

4. SHORT-TERM BORROWINGS RND B ANK LINES OF CREDIT:

arising from a nudear incident at any of the Companies'.plarits exceed the p lig limi;s f the insurance in effect with respect'to 4 Shon-term borrowings outstanding at December 31,1998, consisted of $134.5 million of bank borrowings and $120.0 that plant, to the extent a nudear incident is determined not to be million ofOES Capital, Incorporated (OES Capital) commercial c vered by the Companies' insurance policies, or to the extent such insurance becomes unavailable in the future, the Companies paper. OES Capital is a wholly owned subsidiary of OE whose w uld remain at risk for such costs. borrowings are secured by customer accounts receivable. OES Capital can borrow up to $ 120 million under a receivables G u o r o n te e s - The CAPCO companies have each severally finar.cing agreement at rat:s based on certain bank commercial guaranteed cenain debt and lease obligations in connection with a paper and is required to pay an annual fee of 0.26% on the amount coal supply contract for the Bruce Mansfield Plant. As of Decem-of the entire finance limit.ne receivables financing agnement ber 31,1998, the Companies' shares of the guarantees (which expiresin 1999, approximate fair market value) were $43.2 million.The price The Companies have various credit facilities with domestic under the coal supply contract, which indudes certain minimum banks that provide for borrowings of up to $175 million under Payments, has been determined to be sufEcient to satisfy the debt various interest rate options. OE's short-term borrowings may be and lease bligations.The Companies' total payments under the made under its line ofcredit on its unsecured notes.To assure the mal supply c ntract were $220.1 million, $135.3 million and availability of these lines, the Companics are required to pay $113.8 million during 1998,1997 and 1996, respectively.The anmaal commitment fees that vary from 0.20% to 0.50%. These Companies' minimum payment for 1999 is approximately lines expire at various dmes during 1999.The weighted average $58 million.The contract expires December 31,1999. 1 interest rates on short-term borrowings outstanding at December Environmental M otters -Various federal, state and local 31,1998 and 1997, were 5.67% :nd 6.02%, respectively, authorities regulate the Companies with regard to air and water quality and other environmental matters.The Companies

5. COMMITMENTS, GUARANTEES AND CONTINGENCIES:

utimate additional capital expenditures for environmental com-Ca pitol E x p en ditur es -The Companies' current forecasts pliance f approximately $400 million, which is induded in the reflect expenditures of approximately $2.2 billion for property c nsnucti n f recast pmvided under " Capital Expenditures" for additions and improvements from 1999-2003, ofwhich approxi, 1999 through 2003. mately $556 million is applicable to 1999. Investments for The Companies are in compliance with the current sulfur additional nudear fuel during 0.e 1999-2003 period are estimated dioxide (502) and nitrogen oxides (NOx) reduction requirements to be approximately $399 million, ofwhich approximately under the Clean Air Act Amendments of 1990. SO2 reductions in $46 million applies to 1999. During the same periods, the 1999 will be achieved by burning lower-sulfur fuel, generating Companies' nudear fuel investments are expected to be reduced more electricity from lower-emitting plants, and/or purchasing by approximately $438 million and $93 million, respectively, as emission allowances. Plans for mmplying with reductions the nudear fuelis consumed. required for the year 2000 and thereafter have not been finalized. Nuclear Insuronce -ne Price-Anderson Act limits the In September 1998, the Environmental Protection Agency (EPA) public liability relative to a single incident at a nuclear power plant fmalized regulations requiring additional NO reductions from to 59.7 billion. The amount is covered by a combination ofprivate the Companies' Ohio and Pennsylvania facilities by May 2003. insurance and an industry retrospective rating plan. Based on their he EPA's NOx Transport Rule imposes uniform reductions of present ownership and leasehold interests in the BeaverValley NOx emissions across a region of twenty-two states and the Station, Davis-Bem Plant and the Perry Plant, the Companies, Diswict of Columbia, induding Ohio and Pennsyl ania, based on a condusion that such NO emissions are contributing signifi-maximum potential assessment under the industry retrospective cantly t z ne p !!ution in the castern United States. By f rating plan (assuming the other co-owner contributes its propor. SePtembes 1999, each of the twenty-two states are required to rionate share of any assessments under the retrospective rating plan) would be $286.3 million per incident but not more than submit revised State implementation Plans (SIP) which comply $32.5 million in any one year for each incident. with individual state NO, budgets established by the EPA. These state NO budgets contemplate an 85% reduction in utility plant The Companies are also m.sured as to their respective interests NO, emissions from 1990 cmissions. A proposed Federal m the Beaver Valley Stanon, Davis-Besse Plant and the Perry Plant Implementation Plan accompanied the NO, Transport Rule and under pohcies issued to the operating company for each plant. may be implemented by the EPA in states which fail to revise their Under these policies, up to $2.75 bilhon is provided for property SIP in another separate but related action, eight states filed damage and decontamination and decommissioning costs. The petitions with the EPA under Section 126 of the Clean Air Act Companies have also obtained approximately $1.22 billion of seeking reductions of NO, emissions which are alleged to con-insurance coverage for replacement power costs for their respective tribute to ozone pollution in the eight petitioning states.The EPA interests in Perry, Davis-Besse and Beaver Valley. Under these suggests that the Section 126 petitions will be adequately pohcies, the Companies can be assessed a maximum of approx.- addressed by the NOx Transport Program, but a September 1998 mately $39.9 million for mcidents at any covered nuclear facihty proposed rulemaking established an alternative program which occurring during a policy year which are in excess of accumulated would require nearly identical 85% NO, reductions at the funds available to the insurer for paying losses. Companies' Ohio and Pennsyh2nia plants by May 2003 in the The Companies intend to maintain insurance against nudcar event implementation of the NOx Transport Rule is delayed.The risks as described above as long as it is available.~Ib the extent that Companies continue to evaluate their compliance plans and other replacement power, property damage, decontamination, decom-compliance optioru and currently estimate the additional capital missioning, repair and replacement costs and other such costs expenditures for NO, reductions may reach $500 million. S8

r The Companies are required to meet federally approved SO2 costs ofcleanup and the proprtionate respnsibility ofother regula*tions. Violations of such regulations can resuk in shutdown PRPs for such costs. CEI and TE believe that waste disposal costs of the generating unit involved and/or civil or criminal penalties of will not have a material adverse effect on their fmancial condition, up to $25,000 for each day the unit is in violation.The EPA has cash fhnvs or results ofoperations, an interim enforcement policy for 502 regulations in Ohio that irgislative, administrative and judicial actions will continue to cllows for compliance based on a 30-day averaging period. The change the way that the Companies must operate in order to Companies cannot predict what action the EPA may take in the future with respect to the interim enforcement policy. comply with environmental laws and regulations. With respect to any such changes and to the environmental matters described In July 1997, the EPA promulgated changes in the National above, the Companies expect that while they remain regulated, Ambient Air Quality Standard (NAAQS) for ozone and proposed any resulting additional capital costs which may be required, as a new NAAQS for previously unregulated ultra-fine paniculate well as any required increase in operating costs, would ultimately matter.The cost ofcompliance with these regulations may be sub-be recovered from their customers. stantial and depends on the manner in which they are implemented by the states in which the Companies operate affected facilities.

6. SEGMENTINFORMATION:

CEI and TE have been named as *potentially responsible The Company adopted SFAS 131,

• Disclosure About parties" (PRPs) at waste disposal sites which may require cienup Segments ofan Enterprise and Related Information,"in 1998.

under the Comprehensive Environmental Response, Compensa. The Company's primary segment is its Electric Utility Group tion end Uability Act of 1980. Allegations that CEI and TE which includes four regulated electric utility operating companies disposed ofhazardous substances at historical sites and the liability that provide electric service in Ohio and Pennsylvania. Its other involved, are often unsubstantiated and subject to dispute. Federal material business segment is FETPM which markets and trades law provides that all PRPs for a particular site be held liable on a electricity in nonregulated markets. Financial data for these joint and several basis. CEI and TE have accrued a liability of business segments and products and services are as follown $5.8 million as of December 31,1998, based on estimates of the Segment financialInformation FETrading Electric & Ibwer All Reconciling Uulities Marketing Other Eliminations Totah I998 (In miuiom) Extemal revenues $ 5,201 410 250 $ 5.861 Intersegment revenues 32 27 96 (155) Tod revenues 5,233 437 346 (155) 5,861 Depreciation and amortization 730 11 741 Net interest charges 590 2 69 (60) 601 Income taxes 337 (35) (2) 300 Extraordinary hem: Pennsylvania restructuring (31) (31) l Net income / Earning on common stock 478 (52) 1 (16) 411 Total asseu 18,188 54 1,742 (1,920) 18,064 Property additions 304 64 368 Acquisitions 285 285 1997 Externalrevenues $ 2,843 43 74 $ 2,960 Intersegment revenues 33 106 (139) Totai revenues 2.876 43 180 (139) 2,960 Depreciation and amortization 470 5 475 Net interest charges 300 60 (51) 309 { income taxes 205 3 208 Net income / Earning on common stock 335 (1) 4 (32) 306 Total assets 18,520 32 1,209 (1,680) 18,081 Property additions 166 38 204 Acquisitions 1,582 1.582 1996 External revenuer. $ 2,499 23 $ 2,522 Intenegment revenues 33 109 (142) Tod revenues 2,532 132 (142) 2,522 Depreciation and amortization 378 5 383 Net interest charges 256 57 (48) 265 Income taxes 195 6 201 Netincome/ Earnings on common stock 337 7 (41) 303 Tod assets 9,406 1,013 (1,365) 9,054 Property additions 124 24 148 Products ond Services Od & Gas Ene fes and Related Electricity Sales and Sa Year Sales Production Services Other (in miuiom) 1998 $ 4,980 26 853 2 1997 2,775 185 1996 2,435 87 39

7.

SUMMARY

OF QUARTERLY FINANCIAL DATA (UNAUDITED):8. PR0 FORMA COMBINED CONDENSED FIRSTENERGW,' STATEMENTS OF INCOME (UNAUDITED): i ne following summarizes certain consolidated operatmg results by quarter for 1998 and 1997. The Company was formed on November 8,1997 by the merger of OE and Centerior.ne merger was accounted for as a m,,, g, %, m,,, purchase of Centerior's net assets with 77,637,704 shares of n-Is-h,rw a = m m (la mi#wns, enreptpers/wramm,ma) FirstEnergy Common Stock through the conversion ofeach out-Revenues $1,344.2 $1,410.6 $1,633.6 $1,472.9 standing Centerior Common Stock share into 0.525 of a share of Expensa 988.5 1,140.9 1,203.3 1,164.7 p; g 3 g y g; g Inmme Before Interest Based on an imputed value of $20.125 per share, the purchase Net 4.6 5 52 Price was approximately $1.582 billion, which also induded approximately $20 million ofmerger related costs. Goodwill of IncomeTaxes 88.6 55.1 115.2 62.8

• PProximately $2.0 billion was recognized (to be amoruzed on a I-Before Extraordinaryitem 123.7 60.0 163.0 94.7 straight-line basis over forty years), which represented the excess of I

Extraordinary item the purchase price over Centerior's net assets after fair value (Net ofinmmeTaxes) adjustments. (30.5) (Note 1)

• • #E Net income

$ 123.7 $ 29.5 $ 163.0 $ 94.7 $59 milhon as of December 31,1998. The merger purchase MnPPer SW of accountinE adjustments, which were recorded in the records of Common Stock Centerior's direct subsidiaries, induded recognizing estimated Before Extraordinary Irem 4.56 6.27 $.71 $.41 Entraordinary Irem severance and other compensation liabilities ($80 million).The (Net afincome Taxes) amount charged against the liability in 1998 relating to the costs (Note 1) (.10 ofinvoluntary employee separation was $41 million. In addition, Earning per Share of the liability was reduced to approximately $9 million as of Common Stock $.56 6.13 6.71 6.41 December 31,1998 to represent potential costs associated with the separation of 493 CEI employees.The liability adjustment was s 'wea n Nda St. M=h $t. MR s offset by a corresponding reduction to goodwill r~agnimi in con- " " u. h,r w w w w II" "i#'*"' N/'/"8/*' 8"**) nection with the Centerior acquisition. Revenues $626.2 $614.4 $671.2 $1,048.4 Espenacs 436.9 425.4 459.5 816.1 The following pro forma statements ofincome of FirstEnergy IncomeBeforeIntereste d give effect to the OE/Centerior merger as ifit had been con-IncomeTaxes 189.3 189.0 211.7 232.3 summated on January 1,1996, with the purchase accounting NetInterest Charges 67.0 66.2 64.4 110.9 adjustments actually recognized in the business combination. IncomeTaxes 49.4 49.0 58.6 51.0 Year Ended December 31. Net income $ 72.9 $ 73.8 $ 88.7 $ 70.4 1997 1996 f'I" ],"," m n xi $.51 4.51 $.61 $.36 g Results for CEI and TE are induded from the November 8. Expenses 3,800 3,671 1997 acquisition date through December 31,1998. Income Before Incerest and IncomeTaxes 1,406 1,418 Net Interest Charges 643 634 Income Taxes 336 316 NerIncome $ 427 $ 468 Eaming per Share ofCommon Stock $ 1.92 $ 2.11 Pro forma adjustments reflected above indude: (1) adjusting CEI and TE nuclear generating units to fair value based upon independent appraisals and estimated discounted future cash flows based on management's estimate of cost recovery; (2) goodwill recognized representing the excess of the purchase price over Cene -ior's adjusted net assets; (3) elimination of revenue and expcase trans. dons between OE and Centerior; (4) amortization of the fair value adjusutent for long-term debt; and (5) adjust-ments for estimated tax effects of the above adjustments. l i 40 I

Consol,idsted Financial and Pro Forma Combined Operating Statistics - FrastEntasy comp. 1998 1997 1996 1998 1994 1993 1988 GENERAL FINANCIAL INFORMATION (Dollanis chosaands) Revenue: $ 5,861,285 $2,960,196 $2,521,788 $2,500,770 $ 2,390,957 $ 2,399,794 $ 2,193,962 Net income $ 410,874 $ 305,774 $ 302,673 $ 294,747 $ 281,852 59,017 $ 186,170 SEC Ratio ofEarnings to lhed Chargea 1.77 2.18 2.30 2.32 2.24 1.12 1.65 Ner Property, Plant and Equipment 49,242,574 $ 9,635,992 $5,534,382 $ 5,788,436 $ 5,904,445 $5,930,511 $ 6.055,124 Capitd Expenditures $ 305,577 $ 188,145 $ 145,005 $ 196,041 $ 258,642 $ 263,179 $ 221,583 Tota 1 Capitalization $11,756,422 $12,124,492 $ 5,582,989 $ 5,565,997 $ 5,852,030 $ 5,656,295 $ 6,190,570 Capiedization Ratios: Common Stockholders' Equity 37.9 % 34.3 % 44.8 % 43.3 % 39.6 % 39.7 % 40.9 % l Preferred and Preference Stock: Not Subject to M.ndatory Redemption 5.6 5.5 3.8 3.8 5.6 5.8 5.7 Subject to Mandatory Redemption 2.5 2.7 2.8 2.9 0.7 0.8 1.6 fong-Term Debt $4.0 57.5 48.6 50.0 54.1 53.7 51.8 Total Capitalization 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Avera6e Capital Costs: Preferred and Preference stock 8.01 % 8.02 % 7.59 % 7.59 % 7.15% 6.86 % 6.71 % long-Term Debt 7.83 % 8.02 % 7.76 % 8.00 % 8.17 % 0.27 % 10.26 % COMMON STOCK DATA Earnings per Share * $1.95 $2.16 $2.10 $2.05 $1.97 $1.82 $2.06 Return on Average Common Equity

• 10.3 %

12.2 % 12.4 % 12.5 % 12.4 % 11.4 % 11.8 % Dividends Paid per Share $1.50 $1.50 $1.50 $1.50 $1.50 $1.50 $1.96 Dividend Payout Ratio

• 77 %

69 % 71 % 73 % 76 % 82 % 95 % Dividend Yield 4.6 % 5.2 % 6.6 % 6.4 % 8.1 % 6.6 % 10.4 % Price / Earnings Ratio

• 16.7 13.4 10.8 11.5 9.4 12.5 9.2 Book Value per Share

$19.37 $18.71 $17.35 $16.73 $16.15 $14.70 $16.60 Market Price per Share $32.56 $29.00 $22.75 $23.50 $18.50 $22.75 $18.88 Ratio ofMarket Price to Book Value 168 % 155 % 131 % 140 % 115 % 155 % 114 %

• Before net nonrecurring charga in 1998,1997 and 1993.

PRO PORMA COMBINED OHIO EDISON AND CENTERIOR STATISTICS I Kilocrt-Hour Sales (Millions): Residential 15,873 15,562 15,807 15,773 15,101 15,211 14,548 Commercial 16,255 15,868 14,944 14,845 14,366 14,093 12,637 Industrial 24,039 24,062 23,367 22,681 21,910 21,561 22,665 Other 378 372 1,158 1,196 1,218 1,166 1,089 Tota! Retail 56,545 55,844 55,276 54,495 52,675 52,031 50,93' t Total Wholesale 5,557 7,870 9,470 9,295 7,039 7,967 10,8It TotalSales 62,102 63,734 64,946 63,790 59,714 59,998 61,765 Customers Served: Residential 1,938,259 1,929,371 1,912,850 1,907,850 1,893,827 1,882,094 1,820,340 Commercial 214,698 215,307 212,092 210,745 207,362 203,892 192,940 Industrid 11,888 12,918 12,974 12,763 12,618 13,298 11.984 Other 2,067 2,040 3,913 3,869 3,760 3,805 3,863 Totd 2,166,912 . 2,159,636 2,141,829 2,135,227 2,117.567 e,103,089 2,029,127 Number of Employees (Excludes Facilities Services Group and MARBEL) 8,765 10,020 10,477 !!,633 11,933 12,726 16,283 41

p Investor Services, Transfer Agent and Registrar InstitutionalInvestor and Security Analyst Inquigies We act as our own transfer cgent and registrar for all stock issues of Institutional investon and security analysts should direct inquir'ies co: FirstEnergy and its subsidiaries. Shareholden wanting to transfer Ronald E. Seeholzer, Manager, Investor Relations,330-384-5500. stock, or who nced assistance or information, can send their stock or Annual Meetin9 of Shoreholders l write to investor Services, FirstEnergy Corp.,76 South Main Street, Akron, Ohio 44308-1890. Shareholders can also call the following Shareholders are invited to attend the 1999 Annu.! Meeting of { coll-free telephone number, which is valid in the United States, Shareholders on Thunday, April 29, at 10 a.m., at the John S. Knight Canada, Puerto Rico and the Virgin Islands: 1-800-736-3402. Center in Akron, Ohio. Registered holders ofcommon stock nor attending can vote on the items of business by completing and Stock listings and Tradm9 returning th card that is sent to them. Shareholders whose Newspapers generally report FirstEnergy common stock under the shares are he ir e name of a broker can attend the meeting if they abbreviation FSTENGY, but this can vary depending upon the news-present a letter from their broker indicating ownership of FirstEnergy paper.ne common stock of FirstEnergy and preferred stock ofits common stock on the record date of March 11,1999. electric utility subsidiaries are listed on the following stock exchanges: Board of Directors Changes Company Stock Exchange Symbol The Board elected Robert B. Heisler, Jr., President of Key Capital j FiatEnergy NewYork FE Panners, Cleveland, Ohio, and Group Vice hident of KeyCorp., to I The Illuminating Company New York.OTC CVX serve as a Director of FirstEnergy, effecti<e May 19,1998. f, ' , h, Robert M. Caner, a partner of Caner & Associates, Cleveland, Ohio,

j p ;,

resigned from the Board, effect ve August 24,1998. Mr. Carter was a Toledo Edison New York, OTC TED Director of FirstEnergy since 1997 and of Ohio Edison Company ^**'IC"" from 1994 to 1997.The Board appreciated his counsel and service. Dividends Pmposed dates for the payment of FirstEnergy common stock F rstEner9E Officers Staff Officers dividends in 1999 are as follows: ard R. Holland John P. Stecz Ex-Dividend Date Record Date Payment Date Chairman and Chief President and ChiefNuclear February 3 February 5 March 1 Executive Officer Officer May 5 May 7 June 1 H. Peter B FENOC* August 4 August 6 September 1 President a Guy G. Campbell November 3 November 5 December 1 ChiefOperatingOfficer Vice President FENOC-Davis-Besse Direct Dividend Deposit AnthonyJ. Alexander Executive Vice hident lewW. M rs Shareholders can have their dividends electronically deposited into and GeneralCounsel VicePresi ent their bank account.To receive an authorization form, contact Investor FENOC - Perry Services. John A. Gill Senior Vice President John K. Wood Stock Investment Plan Vice President Richani H. Manh Shareholders and others can purchase or sell shares of FirstEnergy Vice Presidmt and FENOC common stock through the Company's Stock investment Plan-Chief Financial Officer Regional 0fficers Individuals who are not registered shareholders can enroll with an Ed T4 W MMier minal cash investment of $250. Panicipants may mvest all or some of Vice President Regional President-Eastern i their dividends or make opuonal cash payments of up to $ 100,000 Ma Be Canoll m Ci annually.To receive an enrollment form, contact Investor Services. d Mm Safekeeping of Shores KathrynW. Dindo R. Joseph Hrach The Company will hold shares of FirstEnergy common stock in Vice President hident, Penmylvania Power safekeeping at a shareholder's request.To take advantage of this Douglas S. Elliott Charles E. Jones service, shareholders should forward their stock certificate (s) to the Vice President Regional President-Northern Company along with a signed letter requesting that the Company Arthur R. Garfield Stephen E. Mor hold the shares.They should also state whether future dividends for Vice hident Regional Preside - Central the shares are to be remvested or paid m cash.The certificate (s) should ted. Shares held in Guy L P..ipitone James M. Murray not be endorsed, and registered mail irsukc ks or Stock Investment Vice President Regional President-Western safekeeping will be reported on dividend Plan statements. Stanley E Szwed John E. Paganie Vice President RegionalVice President - Duplicate Moilings of the AnnualReport Nancy C. Ashcom Western Ifyou hold stock in more than one registration and do not wish to Corporate Secretary David W. Whitehead combine accounts, you can eliminate duplicate mailings ofour annual Thomas C. Navin Regional Vice President - repon by requesung m wntmg to Investor Services that the mailing of Treasurer Northern an annual repon to a particular account be stopped. Be sure to provide the exact registration of the account for which you want the Harvey L Wagner Cmumiler mailing discontinued. Randy Scilla Comb..mmg Stock Accounts Assistant Treasurer l If you have more than one stock account and want to combine them, EdwardJ.Udmich please write or call Investor Services and specify the account that you Assistant Corporate Secretary I would like to retain as well as the registration of each of your accounts. f form 10-K Annual Report

• FirstEnergy Nuclear Operating Company I

Form 10-K. the Annual Report to the Securities and Exchange Commission, will be sent without charge by writing to Nancy C. Ashcom, Corporate Secretary, FirstEnergy Corp.,76 South Main Street, Akron, Ohio 44308-1890. @ Printed on Recycled Paper

'Bhr D_ tp ORS riaste iacv coaa. 1 pmg 4 vm y a >a j Ji L .f gA ' JlP

i..

s s e, WT' 49 4 R k J . a sw . w.; w Poul J. Powers (lef t); Robert B.Heisler, Jr.; Jesse T. Williams, Sr.(left); Robert L. Loughhead; Willard R. Holland (lef t); Glenn H. Meadows; Dr. Corol R. Cortwright; George M. Smart H. Peter Burg; Robert C. Savoye Wilhom f. Conway; Russell W. Maier H. Peter Burg,52 Willard R. Holland, 62 Paul J. Powers, 64 President and ChiefOperating Omcer Chairman of the Board and Chief Chairman of the Board and Chief of FirstEnergy. Director of FirstEnergy Executive Omcer of FirstEnergy and Executive Omccr of Commercial Intertech since 1997 and ofOhio Edison since 1989. Pennsylvania Power. Director of Corp., Youngstown. Ohio. Chairman, FirstEnergy since 1997 and ofOhio Edison Finance Committee; hiember, Compen-Dr, Carol A, Cartwright,57 since 1991. sation Committee. Director of FirstEnergy President, Kent State University, Kent, since 1997 and ofOhio Edison from Ohio. Chair, Nominating Committee; Robert L. Loughheod, 69 1992-1997 hiember, Finance Committee. Director Retired, formerly Chairman of the Board, of FirstEnergy since 1997 and ofOhio President and Chief Executive Omccr of Robert C. Savage, 61 Edison from 1992-1997. Weirton Steel Corporation. Weirton, West President and Chief Executive Omcer of Virginia. Chairman, Compensation Savage & Associates, Inc., Toledo, Ohio. William F. Conway, 68 Committee; hiember, Audit Committee. hiember, Finance and Nominating com-President of William E Conway & Direct r of FirstEnergy since 1997 and of mittces. Director of FirstEnergy since Associates, Inc., Scottsdale, Arizona. Chio Edison from 1980-1997. 1997 and of the former Centerior Energy Chairman, Nuclear Committee; hiember, Corporation from 1990-1997. Russell W. Ma.:er,62 Audit Committee. Director of FirstEnergy since 1997 and of the former Centerior Retired, formerly Chairman of the Board George M. Smart, 53 Energy Corporation from 1994-1997, and Chief Executive Omccr of Republic Chairman of the Board and President of Engineered Steels, Inc., hiassillon, Ohio. Phoenix Packaging Corporation, North Robert B. Heisler, Jr., 50 hiember, Compensation and Nuclear com-Canton, Ohio. hiember, Audit and President of Key Capital Partners, minees. Direcmr of HruEnergy since 1997 Rnancemnuninees. DirecronifErnEnergy and ofOhio Edison from 1995-1997. since 1997 and ofOhio Edison from Cleveland, Ohio, and Group Executive Vice President of KeyCorp. Aiember, 1988-1997. Glenn H. Meadows, 69 Compensation and Nominating commit, 'SS' L # UIUS' b'" 59 tees. Director of FirstEnergy since 1998. Retired, formerly President and Chief Executive Omcer of hicNeil Corporation, Retired, formerly Vice President of Human Akron, Ohio. Chairman, Audit Committee; Resources Policy Employment Practices hiember, Compensation and Nuclear com-and Systems of The Gomlycar Tire & mittees. Director of FirstEnergy since 1997 Rubber Company, Akron, Ohio. Aiember, and of 0hio lMison from 1981-1997. Audit and Nominating committees. Director of FirstEnergy since 1997 and of Ohio Edison from 1992-1997.

l f e h Z J z C a F3 Es m i O 9 6' N A H h a 8 3' E 5r 2.2 2 y -

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0I

NW Form 10-K ANNUAL REPORT TO THE SEClJRITIES AND EXCHANGE COMMISSION For the Year Ended December 31,1998

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURmES EXCHANGE ACTOF1934 For the fiscal year ended December 31,1998 OR [ ] TRAN8 MON REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURmES EXCHANGE ACT OF 1934 For the transition period from to Commission KvNetrant; State ofincorporation; 1.R.S. Employer File Number A-. 2: and Teinnhone Number identification No. 333-21011 FIRSTENERGY CORP. 34-1843785 (An Ohio Corporshon) 76 South Main Street Akron,OH 44308 Telephone (800)736-3402 1-2578 OHIO EDISON COMPANY 34 0437786 (An Ohio Corporshon) 76 South Main Street Akron,OH 44306 Telephone (800)736-3402 1 2323 THE CLEVELAND ELECTRIC ILLUMINATING COMPANY 34-0150020 (An Ohio Corporabon) i clo FiretEnergy Corp. 76 South Main Street Alcon,OH 44308 Telephone (800)736-3402 1-3583 THE TOLEDO EDISON COMPANY 34-4375005 (An Ohio Corp.;;vn) clo FiretEnergy Corp. 76 South Main Street Akron,OH 44308 Telephone (800)736-3402 1-3491 PENNSYLVANIA POWER COMPANY 25 0718810 (A Pennsylvanie Corporshon) 1 EastWashington Street P. O. Box 891 New Castle, PA 16103 Telephone (412)652-5531

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None indicate by check merk if disclosure of delinquent fliers pursuant to item 405 of Regulaton S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or informaton statements incorporated by reference in Part til of this Form 10-K or any amendment to this Form 10-K. g) Indicale by check merk whether the re0 strant (1) has filed all reports required to be flied by Section 13 or i 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registent was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes g) No (,.,) State the a00 regale market value of the voting stock held by non-afIlleles of the registrant. $7,197,332,945 as of March 17,1999. Indicate the number of shares outstandmg of each of the registrant's classes of common stock, as of the latest prar**hla date: OUTSTANDING f4833 AT MARCH 23.1999 I.Cwgy Corp.,8.10 per value 236,008,687 Ohio Edison Company, $9 per value 100 The Cleveiend Electric illuminating Company, no per value 79,590,689 The Toledo Edison Company, $5 per value 39,133,887 Pennsylvania Power Company, $30 per value 6,290,000 FirstEnergy Corp. is the sole holder of Ohio Edison Company, The Cleveland Elecinc illummetmp Company and The Toledo Edison Company common stock: Ohio Edison Company is the sole holder of Pennsylvania Power Company common stock. Documents incorporated by reference (10 the eJdent hdicoded herein): PART OF FORM 10 KINTO WHICH DOCURENT DOctMENTIS INCORPORTED FirstEnergy Corp. Annual Report to Stockholders for the fiscal year ended December 31,1998 (PeGes 1640) Part11 Proxy Statement for 1998 Annual Meeting of Stockholders to be held April 29,1999 Part111

SECUHf11ES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of Each Exchange Ranistrant Time of e, e --- on fr.u - - FirstEnergy Corp. Common Stock, $.10 per value New York Stock Exctange Ohio Edison Company Cumulative Preferred Stock, $100 par value 3.90% Series M series registerets on New 4.40% Senes York Stock Exchange and 4.44% Series Chica0o Stock Exchange 4.56% Senes Cumulative Profoned Stock, $25 par value 7.75% Sortes Registered on New York Stock ExchanDe and Chica0o Stock Exchange The Cleveland Electric Cumulative Serial Preferred Stock, without illuminabng Company per value: $7.40 Series A Allseries registered on New $7.56 Series B York Stock Exchange Adjustable Rats, Series L De=% Shares 1993 Series A, each share New York Stock ExchanDe represenhn01/20 of a share of Serial Preferred Stock, $42.40 Series T (without per value) First Mortpape Bonds. 8-3/4% Series due 2005 New York Stock Exchange 8-3/8% Series due 2011 New York Stock Exchen0e 8-3/8% Series due 2012 New York Stock Exchange The Toledo Edison Cumulative Preferred Stock, per value Company $100 per share: 4-1/4% Series M sortes registered on 8.32% Series American Stock Exchange 7.76% Series 1 10% Series Cumulellve Preferred Stock, per value $25 porshare: 8.84% Series Allseries registered on $2.365 Series New York Stock Exchange A4 =*mhl= Rats, Series A A@=*=hia Rate, Series B First Mor10a06 Bonds-8% Series due 2003 M estes registered on New York Stock Enhange Pennsylvania Power Cumuleuvo Preferred Stock,$100 Company par value: 424% Senes Allseries registered on 425% Senes Philado4Ala Stock Exchange, 4.64% Series Inc. 7.64% Series 8.00% Senes

SECURmES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: (Cont'd) This comtuned Fomi 10-K is separately flied by FirstEnergy Corp., Ohio Edison Company, Pennsylvania Power Company, The Cleveland Electric lilummahng Company and The Toledo Edison Company. Informabon contained herein relatmg to any indrvidual registrant is f2ed by such registrant on its own behalf. No registrant makes any i+ _ _i-e,n as to informahon reistmg to any other registrant, except that informabon relating to any of the four FirstEnergy sid=daries is also altributed to FirstEnergy.

c: 4 - 1 i FORM 10-K TABLE OF CONTEW 4 P.Alli Parti ) Item.1. Business. 1 .... ~..... The Company. 1 UMty Repulebon 1 PUCO Rate Metlors 2 PPUC Rate Matters... 2 FERC Rate Malbers.. 3 Fuel Recovery Procedures. _........... 3 Capital Requirements._.. ..........._.-.. 4 Centrol Aree Power Coordinabon Group........ 5 Nucieer Regulation _... 6 Nuclearinsurance... _ ~. 6 Environmental Matters .....~............ 7 Air Regulation..... 7 Water Regulation. 8 3 Waele Disposal _... 8 j Summary. 9 j Fuel Supply...... 9 i System Capecity and Reserves... 10 I Regional Rohat2ty..... ............~ 10 Compemon... 10 Research and _s.- _ ---. 11 Execubve Olhoors. 11 i Item 2. Properties . 13 hem 3. Legal ProceedinOs._ . 14 hem 4. Submiselon of Matters to a Vote of Securley Holders ~. 14 1 i Part11 hem 5. Market for Registrants Common Equity and Reisted Stockholder Matters.. .._..-. 14 item 6. Selected Financial Data. 14 leem 7. Managements Dwmahn and Analysis of Financial Condition and Results of Operations .. 14 hem 8. Finandal Statements and Supplementary Data 15 Item 9. Changes in and Disagreements with Accountants on Accounhng and Financial Disclosure.... 15 Part til hem 10. Directors and Exemove Omcors of the RegieWant. 15 hem 11. Execuuve Compensanon 15 hem 12. Securtty Ownership of Certain eenencialOwners and Management _._ 15 hem 13. Certain Relabonships and Reisted Transac6ons. 15 Part IV hem 14. Exhibits, Financial Statement Schedules and Reports on Form 8.K. 16

i PARTI ITEM 1. BUSINESS The Company FirstEnergy Corp. (Company) was organized under the laws of the State of Ohio in 1996 and became a holdmg company on November 8,1997 in connection with the merger of Ohio Edison Company (OE) and Centenor Enugy Corporebon (Centerior). The Company's principal business is the holding, direcuy or indinecey, of aH of the outstandmg common stock of its four principal electric udmy opwahng = hies, OE, The Cleveland Electric liluminabng Company (CEI), Pennsylvane Power Company (Penn) and The Toledo Edison Company (TE). These utiuty = manos are referred to throughout as " Companies." The Company's coneohdaled revenues are primar#y derived from electric service provided by Hs utgity operating subsidiaries and the revenues of its other principal subsideries: FirstEnergy FacNibes Services Group, Inc. (FE Faculbes); FirstEnergy Trading & Power Marketing, Inc. (FETPM), and MARBEL Energy Corporsuon (MARBEL). In addition, the Company holds an of the outstandmg common stock of six other direct = manos: FirstEnergy Services Corp. (FE Services), FirstEnergy Proportes, Inc., FirstEnergy Ventures, j Corp., FirstEnergy Nuclear Operating Co. (FENOC), Amencen Transmission Systems, Inc., and FirstEnergy Securlbes Transfer Compony. The Companies' combined service areas encompees approximately 13,200 square mues in central and i northern Ohio and westem Pennsylvania. The armes toy serve have combined populebons of approximately 5,548,000. OE was organized u. Ier the laws of tie State of Ohio in 1930 and owns property and does business as an electric pubuc uglity in that state. OE also ha6 ownership interests in certain generating faciulles located in the l Commonwenith of Pennsylvanin. OE fumiehes electric service to communities in a 7,500 square mue area of central and j northeastem Ohio, it also provides transmission services and electric energy for resale to certain rnunicipaNties in OE's savice area and transmiselon savices to certain rural e-:--Z=. OE also engages in the sale, purchase and interchange of electnc energy with other eiedric companies The area it serves has a populebon of approximately 2,474,000. OE owns aR of the outstanding common stock of Penn, a Pennsylvania corporsuon, which fumishes electnc service to communities in a 1,500 square mile area of weelem Pennsylvania. Penn also provides transmesion services and electric energy for resale to certain municipaudes in Pennsylvanie. The aree served by Penn has a population of appeoximately 377,000. CEI was ceganized under the laws of the State of Ohio in 18g2 and does business as an electric pubuc utsty in that state. It also has ownership interests ir. certain generseng facNWes in Penneyhenia. CEI fumshes electric service in an area of --;- - /1,700 square miles in northeastem Ohio, including the City of Cleveland. The ares CEI serves has a populaeon of approximately 2,011,000. TE was organized under the laws of the State of Ohio in 1901 and does business as an elodric public utility in that state. It aino has ownership interests in certain genormUng fadities in Pennsylvania. TE fumiehes electric service in an area of we,- i 2,500 square rniles in northwootem Ohio,induding the City of Toledo. The ares TE serves has a population of we, - - / 686,000. FE Faculties is the perent company of several heating, venesung, air conditoning and energy management companies. FETPM, which was organized as a corporellon in Delaware in 1995, markets and trades elocincity in nonregulated markets MARBEL, which was acquired by the Company in June 1998,is a fup integrated y natural gas company. usuley Regulation The Compones are subject to broad reguisbon as to rates and othw meters by the Putsc UWhos Commission of Ohio (PUCO) and the Pennsylvanie Putic Utgity Commission (PPUC). With respect to their wholesale and interstate electric opwouons and rates, the Companies are subsect to reguisbon, induding regulabon of their accounung poscies and practices, by the Federal Energy Regulatory Commason (FERC). Under Ohio law, municipalmes may reguiste rates, subject to appeal to the PUCO if not acceptable to the utiny. In 1986, a law was passed which extended the jurisdction of the PUCO to nonutsty affiliates of holdmg companies exempt under Secten 3(a)(1) and 3(a)(2) of the PubEc Utsty Holdng Company Act of 1935 (1935 Act) to the extent that the actrvities of such affiliates affect or relate to the cost of providmg electnc utnity service in Ohio. The law, 1 m.-__

among other things, requires PUCO approval of investments in, or the trar:sfer of assets to, nonutiuty afflhetes investments in such alHhates are Irnited to 15% of the a00regate capitalizaton of the holdiag company on a cor=airidari beels. The Company is an exempt holding company under Secten 3(a)(1) of the 1935 Act, but the law has not had any eNect on its operatens as they are currenUy conducted. The Energy Policy Act of 1992 (1992 Act) amended portions of the 1935 Act, providm0 ndependent power i producers and other nonre0ulated generating facilibes casier entry into electric genershon markets. The 1992 Act also amended portens of the Federal Power Act, authortzing the FERC, under certain circumstances, to mandate access to c:::::y+s,.d transmisson facNities. Following the enactment of the 1992 Act, tne FERC has ordered aH ulHibes to flie open access tartifs apphraMa to transmission faculties, includmg provisions which require utihbes to oller comparable services on a nondocrimensecry beeis. The FirstEnergy system has such an open access tertif in e0ect (see "FERC Rate Metiers"). PUCO Reie Meners The PUCO approved OE's Rate Padrean and Economic Development Plan in 1995 and a Rate Reducten and Economic Development Plan for CEI and TE la January 1997. These plans are designed to enhance and =ccalarate econome development within the Companies' Ohio servme areas and to assure the Companies' customers in those ouvice areas of long-term compeduve priemg for energy awvmes. These plans initiaNy maintain cunent bene electnc rates for OE, CEI and TE through December 31,2005, unions additional revenues are needed to recover the costs of changes in environmental, regulatory or tax inws or reguistions. At the end of the plan periods, OE bene rates wlN be reduced by $300 melon (.ww4,T- - / 20 percent below current levels) and CEI and TE base rates wNl be reduced by a combined $310 mEen (approximately 15 percent below current levels). As part of these plans, taneillon rate credNs were impiomonted for customers, which are awf=r*M to reduce operating revenues for OE by approximately $600 mulon and CEI and TE by approximately $391 mEen during the plan period. The piens also estetished revised fuel recovery rate formulas which eNminated the automouc pess-through of fuel costs to their rotas customers (see " Fuel Recovery Procedures"). AN of OE's regulatory assets and CEl's and TE's re0uistory assets reisted to their nonnuclear opershons are twing recowwed under provisens or awee plans. In addhon, the PUCO has authorized OE to recognize addmonal capital recovay reisted to as generobrt sosts (which is renected as addmonal depreciamon exponee) and addmonal amortizemon of reouistory assets during the pian per%d of at least $2 belon more than the amount that would have been recognized if OE's plan wwo not in eAmet. Thees addmonal amounts are being recowwed through cunent rates. CEI and TE recognized fair value purchase accoundno agustments to reduce nucteer plant by $1.71 belon and 8.84 biton, respecWvely, in connec6on wnh the FirstEnergy mor0er. These fair value adjustments reco0nized for financial reportng purposes wm unimately senefy the asset reducson commNments of at ionet $1.4 belon for CEI and $0.6 bimon for TE contened in the CEI and TE plan. For reguistory purposes, CEI and TE we recognize accelerated amortizaten over the pianpaed. Based on the Ohio plans, at this emo, OE, CEl and TE behove they we congnue to be able to bR and couect cost-based rates (wNh the awa=paiari of CErs and TE's nuclear operauons); accordingly, it is appropriate that they continue the appur man of Statement of Financial Accounung Standards (SFAS) No. 71 ' Accounting for the Effects of Certain Types of Regulation" (SFAS 71). However, as dae"==ad under *Compeution" below, changes in the regulatory environment are on the hortzon in Ohio. The Compernes believe that changes in Ohio reguiallon are poselble P 1999 but cannot assoas what the unimate impact may be. CEl's and TE's plan does not provide for fun recover; M their nucieer operations. As a result, in October 1997 CEI and TE discongnued appocasian of SFAS 71 for their nuclear operations and decreened their regulatory aseels of customer receivables for future income taxes reisted to the nuclear assets by $499 mimon and $295 mWlon, rampare ly, in addidon to the fair value adjustments referred to above. we PPUC Refe Manus in December 1996. Pennsylvania enacted 'The Electricity Generation Customer Choice and CompetWon Act," which permitted customers, including Penn's customers, to choose their electric generston suppher, while tranonussion and distribubon services wlN congnue to be suppiled by their cunent providers. In June 1998, the PPUC authortzed a rate-restructurtnD plan for Penn in accordance with this law, which superseded the re0ulatory plan which had been in piece for Penn since 1996 and essentally resulted in the deregulation of Penn's generation business rs of June 30,1998. Penn was required to remove from its belant)e sheet au regulatory assets and liabilities related to its genershon buoness and aseees all other assets for impairment. The Securities and Exchange Commission (SEC) issued interpretive guidance regarding asset impermont measurement which concluded that any supplemental regulated cash flows such as a w g -in transiten charge (CTC) should be excluded from the cash flows of assets in a porbon of the business not subject to reguistory accounting practices. If those assets are impaired, a reDulatory asset 2

should be established N the costs are recoverable through reguistory cash flows. Consistent with the SEC guklance, Penn reduced its nuclear generahne unit investments by approximately $305milhon, of which approximately $227 mHlon was recognized as a regulatory asset to be recovered through a CTC over a seven-year transition period, the remaining not amount of $78 mulon was written off. The charge of $51.7 maion ($30.5 maion aflor incx>me taxes) for discontinuing the apphoshon of SFAS 71 to Penn's genersten haama== mas socorded as an extraordinary item on the Company's, OE's and Penn's respective Statement of income Customer choece will be phased in over two years with 66% of each customer class abb to choose sitemative suppliers of generation on January 2,1999, and au remaming customers having choce as of January 2, 2000. Under the plan, Penn conhnues to dehvor power to homes and bus.nesses through its transmission and detribubon system, which remains regulated by the PPUC. Penn is also sehng electricity and ensgy-related services in its own territory and throughout N. ,ti;,;a as an altamebve suppuer through its nonregulated anheirmasy, Penn Power Energy, Inc. Pam's rates have been restructured to estabhsh separate charges for transmesion and detribubon; genershon, which is subject to w..-; _ ' -i, and stranded cost recovery. In the event customers obtain power from an allemabve source, the generston portion of Penn's roles wig be avr4"riari from their bill and the customers wiu receive a genwebon charge from the aNemedve suppher. The stranded cost recovery porton of rates provides for recovey of certain amounts not otherwise considered recoverable in a compatibve genersbon market, including regulatory assets Penn is entitled to recover $234 mBon of stranded costs through a ww-; ' ;; transiten charge that starts in 1999 and J ends in 2005. FERCRete Meners Rates for wholesale customers are regulated by the FERC.The FirstF.norgy merger was approved by the i FERC on Odober29,1997, and the Companies have operated as a single udilty system since December 1997. An open access transerdesion tartif and joint dispeech agreement for the FiretEnergy system are curren8y in e5ect, subject to refund, pending the outcome of hearings before the FERC. A dociolon is aupartart on this proceeding in early 1999. In October 1998, the Company announced piens to transfer the Companies' transmission assets into a new =harmary, Amortcen Transmission Systems, Inc., wah the transfer - parears to be nnetzed in 1999. The now = hire =ry represents a first step toward the goal of estabushing or becoming port of a larger independent transmission company (TransCo). The Company believes that a TraneCo better addrsones the FERC's stated transmiselon objectives of providing norsseenminatory sonnae, while providing for otroomuned and cost-ofScient operauon. In working toward the goal of forming a larger regional transmission entity, wie Company, American Electric Power, Virginia Power and Consumers Energy announced in November 1998 that they would propero a FERC flung during the first part of 1999 for such a regional transmission einty. The ensty would be designed to meet om goals of reducing transmission costs that result when transferring power over newwal tronomineion systems, ensuring transmission rehabaty and providing non. deatminatory ar== to the transmission grid. FuelRecoseryProceciures in accordance with their respective plans, OE's, CEI's and TE's fuel recovery rates have been frozen, subject only to hmited periodic equelments. The respecove rates are aqueted annuany bened on changes in the GDP implicit Prios Donator, unless egnincent changes in environmental, regulatory or tax laws or reguladons incromos or decrease the cost of fuel. Such changes in inws, regulebons and/or taxes would require PUCO approval in order to to renected as an aquelmont to the Electric Fuel Component (EFC) rale. Furthermore, for the period through June 30,2000, the OE EFC rate wm be imited to the average fuel cost rate of certain udIbes within the state. Commencing July 1,2000, the OE EFC rate wul be limited to between 97% to 99% of em avance fuel cost rate of ewee of these companies. The avwege fuel cost rate for those three uWWos may be arihatari by the PUCO to renset any signiScent changes in the Phoes ll environmental complance plans of audi companies imotving capital addibons or equipment utaration. On March 1,2000, the rampar*6ve EFC rates in eNect for CEI and TE we be reduced to reRect the eliminsuon of annual Ibad charges related to a Etruce Menensid Plant cool supply contract (see " Fuel Supply"), which amounts to $13.96 mINon for CEI and $8.74 mWion for TE. The resulting reduced EFC rates would be used as the basis for the annual GDP aquetment, but, in to event, would either company's annual EFC rate exceed 1.465 cords por kWh dunng the plan period Under its 1996 plan, Penn ohminated its energy cost rate for the recovery of fuel and not purchased power costs as a separate component of customer charges. Energy costs were toned into Penn's base electric rates at their projected 1996-1997 level. 3

Ca# Aequirements The Company and the Companies' respeceve capital expenditures for the years 1998 through 2003, excluding nuclear fuel, are shown on the following table. Such costs included expenditures for the betterment of existmg ) fadlibes and ior the construchon of transmissionlines, detribubon lines, substabons and other addibons See i " Environmental Matters" below with regard to possible environment-related expenditures not included in the forecast. 1900 193940o3 Canital Esnanditums Forecent 818131 M 20o04oo3 Igigl (k minenW OE $150 3141 8 715 8 856 Penn. 16 28 139 167 CEl 72 150 551 701 TE 46 58 199 257 Company.._ ,_ 31 12 3 ___,.ji __ 263 Totel $348 $556 $1.888 $2.244 i l During the 1999-2003 portod, maturtbes of, and sinidnD und requirements for, bng-term debt and f preferred stock of the Comparues and the Company's other subsidiaries are: Preferred Stock and Long-Tenn Debt 19004oo3 Itedemallen Schedido 13 20o04oo3 IW Immansnm OE $418 8 730 $1,148 Penn 1 68 09 CEl .~ 178 708 886 TE 106 300 475 Oswr subsidleries _,_ g ._,,,,20 ___23 Total _ $712 $1.895 $2,007 OE's and Penn's nucieer fuel purtheses are financed through MS Fuel (a whony owned =d=Hi-y of OE) commercial paper and loans, both of which are supported by a $180.5 mWon lon0-term bank credit agreement. CEI and TE severaNy loses their respectNe portions of nuclear fuel and pay for the fuel as it is consumed. The Companies' respeceve investments for addidonal nuclear fuel, and nudear fuel inveelmont t=*rhans as the fuel is consumed, during the 1999-2003 period are represented in the foNowing table. The table also shows the Companies' operating lease commitments, not of capital trust cash roosiple for the 1999-2003 period. The Companies recover the cost of nudear fuel consumed and operating ineses through their electric rates. Other Not u, -- Fuel - - - **** "_ Operating 1.anse C.ommitments m.-- ,, m m m lagt 20o04o03 Isist 1913 20o04o03 Iglet 1913 2condoo3 Islal Im meneng OE $20 $119 $130 $29 $111 $140 $ 82 $282 $364 Penn 3 25 28 6 23 20 1 1 CEI 14 116 130 32 117 149 7 33 40 TE 2 ,93 _.102 M ji 13 _ IQ 2E E Tote! $46 $353 $300 $93 $345 $438 $159 $606 $765 Short-term borrowings outstanding at December 31,1998, consisted of $134.5 milion of bank borrowings (OE-5129.5 and FE Facilities - $5.0) and $120.0 mlDion of OES Capital, incorporated commerdal paper. OES Capital is a wholly owned sid=irG=y of OE whose txrrowings are secured by customer accounts receivable. OES Capital can borrow up to $120 mNlion under a receivables financing agreement at rates based on certain bank commerdal paper. The Company and its utility operahng subsidiaries also had $147 mmon (Company-$100 mRion and OE-$47 milion) available under revoMng lines of credit as of December 31,1998. The Company plans to transfer any of its bonowings 4

under its $100 muhon line of credit to CEI and/or TE. In addition, Penn had a $2 mWion bank facility available that provides for bonuwings on a short-term basis at the bank's discrebon Based on their present plans, the Companies could provide for their cash requirements in 1999 from the following sources: funds to be received from operations, avauable cash and temporary cash investments (approximate l amounts as of December 31,1998: Company's nonutility subsidiaries-825 mWion, OE-822 milon, Penn-87 million, CEl- $20 milhon and TE-$4 millon); the issuance of long-term debt (for refunding purposes) and funds avauable under revolving credit arrangements The extent and type of future financings will depend on the need for extemal funds as weg as market conditons, the maintenance of an appropriate capital structure and the abiuty of the Companies to comply with coverage requirements in order to issue first mort 0 ape bonds and profoned stock. The Companies wRI continue to monitor financial market conditons and, whme appropriate, may take advantage of econorme opportunites to refund debt and pretened stock to the extent that their financial resources permit. The covera 0e requirements contained in the first mort 0 age indentures under wnich the Compones issue first mortDage bonds provide that, except for certain refundmg purposes, the Compames mov not issue first mortpage bonds unless arriscahia rwt semings (before income taxes), nelMalad as provided in the indentures, for any period of twelve consecutive months within the flheen calender months procedin0 the month in which such addrbonal bonds are issued, are at least twice annual interest requirements on outstanding first mortDage bonds, includmg those being issued Under OE's first mortpape indenture, the availabaty of property addWons is more restrictive than the enmin0s test at the present time and would Hmit the amount of first mortDa0e bonds laanahia a0ainst property addWons to $377 minen. OE is cuneney able to issus $857 mimon principal amount of first mortpape bonds aGainst previously rebred bonds without the need to most the above restrictons. Under Penn's first mortpape indenture, othw requirements sieo apply and are more restriceve than the enmin0s test at the present time. Penn is cunendy able b issus $255 miton principal amount of first mortDa0e bonds, wth up to $120 mWion of such amount issuable aGainst propaty addidons; the remainder could be issued against previously retired bonds. Purchase accounung revoluston apphed to CEl's and TE's not assets under the merger reduced CEl's and TE's avaliable bondable property so that first mort 0ege bonds cannot cuneney be issued aGainst nroperty addWons. CEI and T5 can issus $156 melon and $117 malon, i--f+M;, principal amount of first mortpape bonde aGainst previously retwed bonds. OE's, Penn's and TE's respecthe articles of incorporebon prohibit the sale of profoned stock uniees art rahla gross income, calculated as provided in the artcies of incorporaton, is equal to at loest 1-1/2 times the i aggregate of the annual interest requirements on indebtedness and annual dividend requirements on pretened stock outstanding immediately therseher. Based upon camings for 1998 and an assumed devidend rate of 8.25%, OE and Penn would tw pamlued, under the caminOs cowwaDe test contained in their respeceve charters, to issue at ioast $1.6 buuon and $175 muuon of pretened stock, respectively. Based on its 1998 eamings, TE could issus $296 milion of addWonal preferad stock. There are no restrictions on CEl's abuity to leeue proforred stock. To the extent that coverage requirements or market condWons restrict the Companies' abiHbes to issue desired amounts of f9st mortpage bonds or prolened stock, the Companies may seek other methods of f!nancing. Sus j financings could include the este of pretened and/or preferena stock or of such other types of securthos as might be i authortzed by arpleahim reguiStory authorties which would not otherwise be sold and could result in annumi interest charges and/or dividend requirements in excess of those that would olhorwise be incuned Central Area Power Coordination Group (CAPCO) in September 1967, the CAPCO cxwnpanies, which consists of the Companies and Duquesne Ught Company (Duquesne), announced a program for joint t " -,.; of power generation and transmission facNWes included in the program are Unit 7 at the W. H. Sommis Plant, Unit 5 at the Esodeke Pierf., Units 1,2 and 3 at the Bruce Meneneid Plant, Units i and 2 at the Beever Vasey Power Station, the Pony Nucieer Power Plant and the Davie-Besee Nucieer Power Station, and now in service The present CAPCO Basic Operating Agreement provides, amon0 other thin 0s, for coordinated maintenance responsibluties among the CAPCO companies, a ilmited and quatfled mutual backup arrangement in the event of outage of CAPCO units and certain capadty and enagy transacsons among the CAPCO compones The agreements amon0 the CAPCO companies generaHy treat OE and Penn as a sin 0le system as between them and the other three CAPCO companies, but, in agreements between the CAPCO companies and others, all five compamos are treated as separate entibes. Subpect to any rights that might arise among the CAPCO companies as such, each member company, severaNy and not jointly, is obligated to pay only its proportionate share of the costs associated with the facMibes and the cost of required fuel. The CAPCO companies have agreed that any modificaton of 5

3 their arrangements or of their agreed-upon programs requires their unanimous consent. Should any member become unable to contmue 6 pay its share of the costs associated with a CAPCO faciitty, each of the other CAPCO companies could be Es-sQ affected in varyng degrees because it may become necessary for the remaining members to assume suc^t costs for the account of the defaulting member. Under the agreements goveming the construchon and opershon of CAPCO generating units, the responsibility is assigned to a specille CAPCO company. FENOC has such is;-Mt"" r for Pony and Davis-Besse, CEI for Eastlake Unit 5 Duquesne h responsible for Beaver Vaney Units 1 and 2. OE for Sammis Unit 7 and Penn for Bruce Menelleid Units 1,2 and 3. T1e Companies monitor activities in connochon with Beaver Valley Units 1 and 2 but must rely to a significant degree on Duquesne for necessary iniormehon. The Companies in their oversight role as a practical matter cannot be privy to every detail; it is Duquesne that must duectly supervise achvibes and then exercise its reporting responsibWhos to the ock ownws. The Companies cribooty review the informahon given to it by Duquesne, but they cannot be M *; certain that things they would have considwed significant have been reported or that they always would have reached execuy the same conciumon about matters that are reported. In addmon, the time that is necessarily part of the compiling and analyzing process creates a hg between the occunance of events and the time the Companies become aware of their significance On October 15,1998, the Comporry announced that it signed an agreement in penciple with Duquesne that would result in the transfer of 1,436 megawans owned by Duquesne at eight CAPCO generating units in exchange for 1,328 megawatts at three non-CAPCO t wr plants owned by the Comperwes. A definitive agreement on the F exchange of assets, which wiH be structured t a a tax-free transecuon to the extent possible, wiu provide the Comparwes wNh exdvsive ownership and operaung conbol of aH CAPCO genwohng unks. Duquesne wW fund '+:+,. t-A,u cools equel to its pacentage interest in the three nudeer gennsung units to be tronoloned. Tiu aaset tranetw is e to take twelve to eighteen months to close. Under the agreement in principle, the CAc arrangement discussed above wW terminate upon transfer of the assets. Nucteer Regulaeon The construchon and opersuon of nuclear genereung unks are sut$ct to the reguistory juiirAeun of the Nucieer Regulatory Commission (NRC) including the leeuence by it of construction pwmits and operating bconses. The NRC's procedures with respect to apr e=nart for construdion permits and operating licenses allord opportunities for u interested parties to request puhuc hearings on heeNh esiety, environmental and anutrust issues. In this connecton, the NRC may require a**=ntial changes in operation or the instausbon of addibonal equipment to meet safety or environmental standards wRn resumno deisy and added costs. The pa==emy ateo exists for modNicebon, denial or revocanon of licenses or permits Devis-Besee was pieced in commercies operamon in 1977, and its operating acense expires in 2017. Beaver VaRoy Una 1 was placed in commercial opershon in 1976, and its c perating license expires in 2016. Pony Unit 1 and Beaver Valley Unit 2 were pieced in commercial operation in 1987, and their operating licenses expire in 2026 and 2027,is;+rd;, The NRC has promulgated and continues to promulpets reguisuons related to the sole operston of nucteer power plants. The Companies cannot predict what addWonal reguistons wW be promulosted or design changes required or the eGect that any such reguistons or design changes, or the considerabon thereof, may have upon Beaver vasey, Davis-Besee and Pwry ANhough the Companies have no reason to anucipste an accident at any nuclear plant in which they have an interest, if such an accident did happen, it could have a meterial but cummtly undstorminable adverse effect on the Company's corimaMatare financial poolbon. In addWon, such an accident at any operating nuclear plant, whether or not owned by the Companies, could result in reguistions or requirements that could affect the operabon or licensing of plants that the Companies do own with a consequent but currently undeterminable adverse impact, and could affect the Companies' abanes to raise funds in the capual markets. Nuclearinsurance The Prtoo-Anderson Act umits the public ilabluty which can be assessed wHh respect to a nucieer power plant to $9.7 bHEon (sesuming 108 units Hoenced to operato) for a single nuclear incident, which amount is covered by: (1) private insurance amounting to $200 mWlon; and (I) 89.5 bElon provided by an industry retroepochve rating plan required by the NRC pursuant thereto Under auch retrospective reling plan, in the event of a nucieer incident at any unit in the United States reeuiting in Icsees in excess of private insurance, up to $88.1 mEon (but not more then $10 milion pw unit per year in the event of more than one incident) must be contributed for each nuclear unit licensed to opwate in the country by the bcensees thereof to cover liabillbes arising out of the incident. Based on their present ownership and leasehold interests in Beaver Vaney, Pony and Deve-Besse, the Companies' maximum potential assessment under these provisions (assummg Duquesne were to contribute its proportionate share of any assessments under the retrospective rating plan) would be $286.3 miuion (OE-$94.2 mulion, Penn-$20.0 mWion, CEl-894.2 milion and TE-$77.9 l 6

mulon) per lecident but not more than $32.5 muhon (OE-810.7 mIhon, Penn-$2.3 meon, CEl-$10.7 milion and TE-88.8 mulon) in any one year for each incident. In addition to the public liability insurance provided pu suant to the Price-Anderson Act, the Companies have also obtained insurance coverage in limited amounts for economic loss and property damage arising out of nuclear incidents. The Companies ra members of Nuclear Electric insurance Limited (NEIL) which provides coverage (NEll 1) for the extra expense of replacement power incurred due to prolonged accidental ocages of nuclear units. Under NEll I, the Companies have pobcies, renewable yearly, corresponding to their respective ireprests in Beaver Valley, Perry and Davis-Besse, which provide an aggregate indemnity of up to approximately $122 balion (OE-$239 milion, Penn- $69 milhon, CEl4558 minion and TE4354 muhon) for replacement power costs irmned during an outage after an initial 17 week waiting period Members of NEIL l pay annual premiums and are subjec'. to assessments if losses exceed the accumulated funda available to the insurer. The Companies' present maximum aggropole===== ament for incidents at any covered nuclear faculty occumng during a policy year would be approximately $8.4 milion (OE41.7 milion, Penn- $.5 million, CEl-$3.8 milhon and TE42.4 muhon). The Companies are insured as to their respective interests in Beaver VaBey, Pony and Davis-Besse under property damage insurance provided by NEIL to the operstmg company for each plant. Under these anangements, $2.75bil! ion of coverage for decontamination costs, C+y-i.T ',;,s costs, debris removal and repair and/or I replacement of property is provided for Beaver VaRoy, Pony and Davis.4 esse. The Companies pay annual premiums for this coverage and are Emble for retrospective assessments of up to approximately $31.5 mmon (OE410.9 milion, Penn- $22 milhon, CEl-$10.3 mRhon and TE48.1 milon) during a policy year. The Companies intend to maintain insurance against nucieer risks as described atxwe as long as it is avaRable. To the extent that replarament power, property damage, decontamination, C+7 i..- '.;cs, repair and replacement costs and other such costs arising from a nuclear incident at any of the Companies' plants exceed the ' policy Emits of the insurance in effect with resped to that plant, to the extent a nudear incident is detemiined not to be covered by the Companies' insurance pohcies, or to the extent such insurance becomes unavaHable in the future, the Companies would remain at risk for such costs. The NRC requres nuclear power plant liconeeos to obtem minimum property insurance coverage of $1.06 bubon or the amount generauy avalable from private sources, whichever is loss. The proceeds of this insurance are required to be used first to ensure that the Hoensed reactor is in a sale and stable condition end can be maintained in that condNon so as to prevent any signNicent risk to the pubuc heeNh and safety. WNhm 30 days of stabitzabon, the bconsee is requwed to propero and submit to the NRC a cleanup plan for approval. The plan is required to idenHfy al cleanup opershons necessary to decontaminate the reactor susciency to permit the resumpeon of operations or to comnwoo C+x,.T '=;cs. Any property insurance prn=a* not already expended to place the reactor in a safe and stath condition must be used first to complete those decontaminsuon opershons that are ordered by the NRC. The Cor ponies are unable to predict what effect these tsquwements may have on the availobuity of insurancs proceeds to tb0 Companies for the Companies' bondholders Environmental Matters various federal, state and local authorites reguists the Companies wNh regard to air and water quauty and j other environmental meners. The Companies have estimated capital expenditures for environmental comphance of approximately $400 munon, which is included in the constructen estimate given under

• Capital Requirements" for 1999 through 2003.

ArRegulation Under the provisions of the Clean Air Act of 1970, both the State of Ohio and the Commonwealth of P. ,tc.,.;. adopted ambient air quality standards, and related emission Nmits, including limits for sulfur dioxide (SO2) and perhiataa. In addition, the U.S. Environmental Protection Agency (EPA) promulgated an SO regulatory plan for Ohio which became effective for OE's, CErs and TE's plants in 1977. Genormung plants to be constructed in the future ano some future modifications of existing factibes wiu be covered not only by 91e apt *=hla stato standards but alen by CPA emisson performance standards for now sources, in both Ohio and Pennsylvania the construdion or modification of emission sources requires approval from appropriate environmental authortbes, and the faciHlies invoked may not be operated unless a permit or vartence to do so has been issued by those same authorities The Compamos are in cw.W nce with the cunent SO2 and nitrogen oxides (NO ) reduction requirements under the Clean Air Act Amendments of 1990. SO2 reduchons in 1999 will be achieved by buming lower-sulfur fuel, generetng more electricity from lower-emitting plants, and/or purchasing emission allowances. Plans for complying with reductons required for the year 2000 and thereafter have not been finalized. In September 1998, the EPA finalized 7 l

regulatons requiring additional NO, reductions from the Companies' Ohio and PennsyNania facilities by May 2003. The EPA's NO, Transport Rule imposes uniform reductons of NO,ermosions across a region of M. ; tra states and the District of Columbia, including Ohio and Pennsylvania, based on a conclusion that st-5 NO, ermssions are contributing si nincently to ozone pollution in the emetem United States. By September 1999, each of the twenty-two states are 0 - requirecHo submit revised State ;>>- M1,6.,i. Plans (SIP) which comply with individual state NO, budgets established . by the EPA. These state NO budgets w,/e,C an 85% reduchon in utility plant NO, emissions from 1990 emissions A proposed Federal implementation Plan accompanied the NO, Transport Rule and may be implomonted by the EPA in states which fail to revise their SlP. In a separate but related action, eight states filed petibons with the EPA under Section 126 of the Clean A'r Act seeldnD reductions of NO, emissions which are alleged to contribute to ozone pollution in the eight petinomng states. The EPA suggests that the Section 126 peutons wiH be +f+ - 4 addressed by the NO, Transport Program, but a September 1998 proposed rulemeldng estabbshed an altamative program which would requwe nearly idenbcal 85% NO, reduceons at the Companies' Ohio and Pennsylvania plants by May 2003 in the event j implementauon of the NO, Transport Rule is doisyed. The Companies continue to evaluate their compliance plans and i other comphance opbons and currently estimate the additional capital expenditures for NO reductions may reach $500 millon The Companies are required to meet federally approved SO2 regulabons. Vk ations of such regulebons can result in shutdown of the generating unit involved and/or cMi or criminal penalties of up to $25,000 for each day the unit is in violabon. The EPA has an interim enforcement policy for SOr eguistions in Ohio that anows for comphance r based on a 30-day averaging period. The Companies cannot prodot what action the EPA may take in the future with respect to proposed regulabons or the interim enforcement policy. In July 1997 EPA promulgated changes in the Nabonal Ambient Air Quality Standard (NAAQS) for ozone and proposed a new NAAQS for provously unregulated ultre-flas parwala matter. The cost of comphance with these regulations may be substanbal and depends on the manner in which they are implemented by the states in which the Companies operate affected fadlities waterReguisbon various water queuty reguianore, the majority of which are the result of the federal Clean Water Act and its amendments, apply to the Companies' plants. In addidon, Ohio and Pennsylvania have water quaHty standards apphcable to the Companies' opwebons. As provided in the Clean Water Act, authoety to grant federal Nabonal Pouutant Discharge Elmination System (NPIXS) water decharge permits can be assumed by a state. Ohio and Pennsylvania have assumed such authority. wess napoew As a result of the Resource Conservaten and Recovery Act of 1976, as amended, and the Toxic Substances Control Act of 1976, federal and state hazardous waste reputations have been promul ated Certain fosall-G fuel combustion waste products, such as coal ash, were exempted from hazardous waste reapamal requirements pendmg EPA's evaluation of the need for future regulation. EPA has issued its final regulatory determinabon that regulation of coal ash as a hazardous waste is unnecessary. CEI and TE have been named as "potenhally responsibio par 6es" (PRPs) at waste reapaani sites which may require cesanup under the Comprehensive Erwironmental Response, Compensation and Uebaty Act of 1980. Feders: law providos that au PRPs for a particular slie be held Habie on a joint and several beeis. CEI and TE have accrued a liebsty totalinD $5.8 mulon at December 31,1998 beood on estimates of the costs of cleanup and the proportionate responalbsty of other PRPs for such costs. CEI and TE believe that waste deposal costs we not have a material adverse Wrect on their financisi condnion, cash sows or resuns of operanons. In 1980, Congress panned the t.ow-l.evel Parenadve Waste Poucy Act which provides that the deposal of low-level redoactive waste is the responsibility of the state where auch waste is generated. The Act encoura0es states to form compacts among themselves to develop regional disposal facilNies. FaHure by a state or compact to begin implementaten of a program could result in access denial to the two faciuties currently accepting low-level redoachve waste. Ohio is part of the Midwest Compact and has responsibluty for siting and construchng a starnant faciNty. On June 26,1997, the Midwest Compact Commission (Compact) voted b) coese all siting activibes in the host state of Ohio and to dementle the Ohio Low-Level Redoaceve Weste Facility CQ,e ; Authority, the statutory agency charged with siting and constructing the low-level radioactive waste disposal facility. While the Compact remains intact, it has no plans to site or construct a low-level radoactive waste disposal facility in the Midwest. The Companies continue to ship low-level redcactrve waste from their nucieer facetos to em Bamwell, South Caronna waste disposai facmty. 8

l i Summary i Environmental controls are ets in the process of development and require, in many instanus, belancog the noods for addibonal quantibes of energy in future years and the need to protect the environment. As a result, the Compenses cannot now eshmete the proces eNectof existing and potenbal regulations and legislabon upon any of their exishn0 and proposed facillbos and operations or upon their ability to issue addebonal first mort 0 age bonds under their respechve mortgages. These mort 0 ages contain covenants by the Companies to observe and conform to all valid gover1 mental requirements at the time appbcable unless in course of contest, and provisions which, in effect, prevent the issuance of soditional bonds if there is a completed default under the rnortgage. The provisions of each of the mortgages, in eNect, also require, in the opmion of counsel for the roepechve Companies, that cert $cabon of property addibons as the beels for the issuance of bonds or other acdon under the mort 0eDos be accompanied by an opinion of counsel that the company costifying such property additions has all govemmental permosions at the time necessary for its then current ownership and operation of such property additions. The Companies intend to contest any requrements they deem unressonable or imtweihim for compliance or otherwise contrary to the public interest. Developments in these and other areas of regulation may require the Companies to modify, supplement or replace equipment and factues, and may delay or impede the construchon and operation of new facWhos, at costs whis muld be substanbal j Fuel Supply The Companies'sourms of genershon during 1998 were: Gael MinnieK OE. 81.9 % 18.1% Penn 76.9 % 23.1 % CEI 65.3 % 34.7 % TE............... 47.9% 52.1 % The Compamos have lon0-term coal contracts providing for annual tons of approximately: OE - 6,008,000: Penn-1,241,000; CEl-4,146,000; and TE-623,000. These contracts include the Companies' portion of the coal purchase contract relednD to the Bruce Menensid Plant discussed below. This contract coal is prh primer 9y from mines located in Ohio, Pennsylvania, Kentucky, Wyommg and West Virginia; the mnbects expire et various emos through December 31,2003. The Companies estimate their 1999 cool requirements to be approximately 17,005,000 tons (includmg their respedive eheres of the cool requirements of CAPCO's Easuoko Unit 5, Sommis Unit 7 and the Bruce Menensid Plant). See "Envwonmental Matters" for factors pertaining to meebng environmental repulsuons aNecung coeL6 red genereung units. The Companies have each severagy guaranteed (OE's, CErs, TE's and Penn's composite percentages being approximately 46.8%,17.6%,10.3% and 6.7%, roepedively) certain debt and lease obilgelions in connecton with a coal supply contract for the Bruce Menensid Plant (see " Commitments, Guarantees and Conungandes" notes to the respecove financial statements). As of December 31,1998, the Companies' shares of the guarantees were $432 mibon The price under the coal supply contract, whid includes certain minimum payments, has been deter'runed to be sumcient to solisfy the debt and loses obligelions. This contract expires December 31,1999. l l The Companies' fuel costs (aududng disposal costs) for each of the five years ended December 31,1998, were as follows: 393R 1REZ 21108 1910 1981 j Cost of fusi consumed per migion BTUs: Coel: M $ 1.33 $1.31 $1.33 $1.37 $ 1.36 Penn-1.35 1.27 1.31 1.30 1.34 CEl 1.50 1.41 1.50 1.56 1.50 -TE 1.46 1.54 1.79 1.86 1.76 Nudeer-0E $.55 8.58 $.86 8.79 8.94 Penn .54 .61 .64 .77 .88 CEl .63 .76 .84 .98 .96 TE .54 .86 .74 .91 .92 Average fuel cost per kNowee hour generated (conts): OE._ 1.19 1.17 1.20 1.27 1.31 Penn. 1.16 1.17 1.15 120 129 CEI 1.20 1.23 1.35 1.42 1.35 TE 1.03 1.06 1.26 1.32 1.35 9

OES Fuel is the solo lessor for OE's and Penn's nuclear fuel requwements (see " Capital Requrements" and i Note 3G of Notes to OE's Cor=rM=amel Financel Statements). Nucieer fuel is cummtfy financed for CEI and TE through leases with a epocal-purpose corporation-The Company has contracts formaniummeterial through 2000 and conversion services through 2001. The ennchment services are contracted for the mejority of the enrichment requirements for nuclear fuel through 2005. Fabrication menness for fuel assembhos are contracted for the next four reloads for Beaver Valley Unit 1, three reloads b Beever Valley Unit 2 (through approximately 2005 and 2006, i--+r: ce;), the next four reloads for Davis-Besse (through approximately 2004) and through the ille of the plant for Perry (through approximately 2026). In addinon to the existing commitments, the Company intends to make additional ammgements for the supply of uranium and for the ="h=aryiant i conversion, enrichment, fabrication, and waste deposal services. Due to the present lack of availabiuty of domeonc ivc--- ' services, to the contmuing absence of any program to begin development of such reprocessing capabiuty and questions as to the economics of reprocessing, nuclear fuel costs are r*latari bened on the assumption that spent fuel wHl not be i.pic-mi Orwise opent fuel storage facMbes are expected to be m'imry=t= for Perry through 2010; faciuties at Beaver Vaney Units 1 and 2 are aupar4mri to be adequate through 2016 and 2012, i=;+r 2j. After scheduled plant modificagons are completed in 2002, Davls-Bases wiu have adarriana storage through 2020. After on-sNe storage capacity is exhausted, addibonal storage capacity wlN have to be obtained which could result in significant addhonst costs unless reproceseng services, interim off-site reapaani, or permanent waste disposal faculties become aveNable. The Federal Nudest Weste Policy Act i of 1982 provides for the construction of faciNbes for the disposal of high-level nuclear wastes, including spent fuel from nuclear power plants operated by electne ummes; however, the sehdion of a suitable site hos become embroued in the poMical process Duquesne and the Company have contracts wth the U.S. Department of Energy (DOE) for the tsapr==l of spent fuel from Beaver Vaney, Pony and Davis-Besse. On December 17,1996, the DOE notmed the Companies that it would be unable to begin =rapiance of spent fuel for disposal by January 31,1998 as mondebod by Secuon 302(a)(5)(B) of the Nuclear Waste Policy Act (NPA). The permanent disposal faclNty is currendy projected to stort receiving spent fuel in 2010. The Companies along with over 40 olhar nucieer unuties and more than 50 state agencies have asked for federal I court approval to stop payments into the Nuck Neste Fund and for an order requiring DOE to take immodate action to accept do8very of spent nucieer fuel. system capacity ano noenves The reapardive 1998 not maximum hourly demand on each of the Companies was OE-6,130,000 kilowatts 1 (kW) (including 387,000 kW of firm power sales which extend through 2005 as rema==ad under "Compelmon") on June 24,1998; PenrKl18,000 kW on June 22,1998; CEl-4,248,000 kW (including 12,000 kW of firm power sales which extend through 2005 as smaa mmari suler "Compathlon") on July 21,1998; and TE-1,978,000 kW on July 21,1998. i 4 Based on exceng cepecity piens, sie load forecast made in December 1998 and arMpanad term power i sales to other utillbes, the cepecity mergins during the 1999-2003 period are aupartart to range from about 10% to 12% for the FirstEnergy system. Regional Hollability The Compones participate wah 24 other electric compenas operaung in nine states in the East Central Area Rouabuty Coordmobon Agrooment (ECAR), which was organized for the purpose of furthering the rehabWty of bulk i power supply in the ares through coordinebon of the planning and operaton by the ECAR members of their bulk power supply facades. The ECAR members have estebushed principles and procedures regarding matters alloding the reliabiNty of the b Ak power supply wNhin the ECAR region. Procedures have been adopted regarding: i) the evalumbon and simutated toedng of systems' performanos; H) the estabilshment of minimum levels of deHy operating reestves; lii) the development of a program regarding emergency procedures during condisons of declining system frequency; and iv) the basis for unworm raung of genwanno equipment. competition The Companies compete wnh cour ummes for intersystem bulk poww sales and for sales to municipaubes and cooperseves. The Companies compete wNh suppEers of nahral gas and othw forms of enagy in connechon with their industrial and commweial selos and in the home chmete control market, both with respect to new customers and convasions, and with aN other supphus of electridty. To date, thwe has been no substantial copenwebon by the Companies' customers Technological advances and regulatory changes are driving forces toward increasing competition in the . energy market. Pennsyhenia legisla6on, which phases in customw choice for their electricity genwebon suppher to 66% 10

of Pennsylvania's residents in January 1ggg and the remaining customus in January 2000 (see " Utility Regulation-- PPUC Rate Mamers")is one such reguistory change. In addibon, many large elockicity users continue to push for some form of retaH wheeung, which would enable retaB cuebmers to purchase electncity fmm producers other than the boel uWty. In February 1996, the PUCO approved a change abowng large industrial customers that have inlanuptible service controds to buy their power imm other sources when they have been advised by their local upty that service wul be intenupted. In earty 1gge, a proposal for the deregulation of Ohio's investor-owned electnc upty industry was introduced, leading to the creehon of a working Omup to recommend legislabon, As requested by state legislative leadership, investor-owned uWties inboduced a dwegulation plan with objectives to (1) treat au major stakeholders in Ohio's electric system fairty; (2) protect putse schools and beel govemments imm revenue loss; and (3) allow upbes an opportunity to recover costs of govemment-mandated investments. The uenos have submined proposals which incorporate these objectives and sino recognize the complexity of restructuring the industry Cunenby, the wo king group, compneed of legisiebve lendas, iv . _;= of the elechic uWty compones and other interested stalwholders are meebng to discuss and mold these proposals. Most recen0y, placeholder bNis contaning statements of principle (that wlN be replaced by specific proposals as they are agreed upon) have boon intmduced Legisletrve leaders have piamd a high priority on enaceng a dereguladon but by mid-year 1999. in an effort to more fuby utHire their facMilies and hold down rates to their other customers, OE and Penn j have entered into a long-term power sales agreement with another utlNty. Cunently, OE and Penn are solung 450,000 kW annueNy under this contract through December 31,2005. OE and Penn have the op6on to reduce this commitment by 150,000 kW, with three years' advance notice. In addition, CEI has entered into a long4erm power sales contract with another utlNty and is cunently selling up to 20,000 kW under this contract through December 31,2002. Research and Development The Compones parem in fundmg the Electic Power Reneerd institute (EPRI), which was fomed for the purpose of expending eleckte resserch and development under the voluntary sponsorship of the nemon's electric uWty industry - putWe, private and coopwebwe. Ns goal is e mutueNy benent umges and their customers by promobng the e. ,a.: of row and impmved technologies to help the uWty industry most present and future eleckic enugy needs in environmentasy.and economicauy -l*N= ways. EPRI conducts ineserch on al aspects of elockte power pmducson and use, including fuels, genormung, desvery, energy management and conservoson, envimnmental slisets and enugy analysis. The major portion of EPRI resserch and C; '=i r. projects is directed toward prachcal solusons and their appieshans to problems cupenty facing the electric uWty indusby. In 1998,.w,M, : _ ; 72% of the Companies' research and c. ,: expenditures were related to EPRI. Executive Omcors The execubve ofRoers are elected at the annual organization moeung of the Board of Directors, held

,,,,i+' y after the anrwel meeting of stockholders, and hold ofilco untH the next such organizadon meeting, uniees the Board of Directors shen otherwise determine, or unless a resignation is submlued 1

l 11

Peedelen Held Durh8 Name g poet pewo y-nonna W.R Holland 62 Chairman of the Boemd and Chief Emmouthe Omoor 1997-present Chairman of tie Board and Chief Emeouthe OmoorG 1996-1997 Presidersand Chief Emommho OmoorG

• 1996

) H. P. Burg 52 President and Chief Operetng Oscar 1991@ resent Preenient and Chief Finandel Omoor 1997-1998 President, Chief Operegno Omoor and Chief Finandel OficerG 1996 1997 SeniorVlas Prealdent and Chief Finandel Omoor OE

• 1996 A.J. Alexander 47 Execumve Vice Proeident and Guneral Counsel 1997 present Esecuthe Vlos President and General Counsel OE 1997-1996 Senior Vice Preeldent and General Counsel OE
• 1996 E.T. Carey 56 Vice President Diottbuelon 1997-present Vice -

-" ^ Operellons and Customer Service OE 1996 1997 Vlos T !"_:A and Customer Service Support-OE 1994-1996 Mene9er, Performance initehee OE

• 1994 M. B. Cerros 47 Vlas Preeldent Corporate AIInirs 1997-present Manager SenduskyAree OE 1994-1997 Diracer, Communicegons and hession Services Providence Hospital
• 1994 K W.Dindo 49 Vice Peeldent-Energy Services 19969 resent Vkm Pmeident and Contator-Cegber-System ho, 1994-1996 Partier-Emot & Young LLP
• 1994 D. S. Esiott 44 Vlos President Sales and Markseng 1997 present i

Manager FirstEnergyServices OE 1997 Manager EastamDivision OE 1996-1997 Manager YoungstownDMelon DE

• 1996 A R Garteld 60 Vlas President Business C;, - - _

1997 present j VlosPmeident SyelemOperemons OE

• 1997 J. A. Gil 62 Senior Vlos President Administeswo Sendoes 19089meent Vlos President-Administethe Sendoes 1997-1906 VicePresident Administemon OE
• 1997 R H. Maren 48 Vlas Pmeiderd and Chief Fhenoiel Omoor 190S$meent VlosPresident Finance 1997 1908 Treasuor DE
• 1997 G.L Papiene 49 ViasPeeldent FaselProduchon 1997 present

'J:cePeeldent GenerstonandTrenommelon OE 1996 1997 Manager AkronDh4mion DE

• 1996 S.F.Srwed 46 Vks President Trenamiselon 1997-present Vks Proeident Enghoortng & Plannhg-CSC 1906 1997 Desotar SystemPlannhg&Operamens CSC
• 1996 N. C. Ashoom 51 Corporate Soomtery 1997 present Secrewy-OE 1994-1997 Aeontent Secretary-OE
• 1994 T. C. Nevin 41 Trescuer 19989meent Assistent Teesauer 1908 1998 Director,Treeeury Servioes 1998 1908 Director, Aeost Stalogy 1997 1998 Sten Business Analyst 1997 1997 Senior Business Analyst 1996 1997 Senior Plannbig Analyst
• 1995 H.L Wagner 46 Contator 1997 present Comptomer OE
• 1997 Except for W. R Hohend, M. B. Canot, K. W. Dhdo and D. S. Eulott,9ie omoore above hold 9ie some omcas for FirstEnergy, OE. CEI and TE.

Emospt for R Joseph Hrach, A. J. Alexander, J. A. GiB and H. L Wagner holding the oRicos of Proeident, Vice President and General Coursel. Vice Preenient and Cornptomer,. rf, and except for H. P. Burg, M. B. Canon, K W. Dindo and D. S. ENiott, the oGloors abova hcf d the same omeos for Penn.

• indicates posinon held at leest ainos January 1,1994.

12

At December 31,1998, the Company's nonutility subsidiaries and the Companies had a total of 11,918 employees consisting of the fotowing* Company - 1,604, OE 1,944, CEI - 1,796, TE - 997, Penn - 888. FE Services - 375, FENOC - 1,159, FE Facilities - 3,012 and MARBEL - 141 employees ITEM 2. PROPERTIES The Companies' respective first mortgage indentures constitute, in the opinion of the Companies' counsel, direct first liens on M---_ Z, al of the respective Companies' physical property, subject only to excepted encumbrances, as deAnod in the indentures See " Leases" and "Capitalizabon" notes to the respective financial statements for information w.;.., leases and financing encumbrances anecung certain of the Compones' proportes The Companies own, individually or bgether with other companies as tenants in common, and/or lease, the generating units in service as of March 1,1999, shown on the table below. Not Demonstrated c-gg,n OE Pnnn CEl TE M M 1 E 1 M 1 M 1 M pg,,g, m comieked unas 100.00% 332 AeNebulo-5.8,9 332 332 AeNebuis.OH 100.00% 717 Avon late-6,7,9 717 717 Avon Lehe.OH (d) 100.00 % 631 l Boy Shure-14 631 631 Toledo,OH R. E. Burger-3-5 406 406 100.00 % 406 Shadyeide,OH 100.00% 636 FN-a, OH (e) 14 636 838' 88.80% 411 5 507 411 100.00 % 245 Lahoshoe-18 245 246 Cloniend,OH B. MeneAsid-1 780 552 80.00% 488 420% 33 6.50%(b) 51 Shippinport,PA(e) 2 700 718 38.30 % 307 6.80% 53 28.80%(b) 223 17.30%(b) 135 j 3 000 880 35.80% 285 6 28 % 50 24.47%(b) 196 19.91%(b) 150 New Casse-35 333 333 - 100.00 % 333 W. Peeburg, PA (d) Mino4 dies,OH (d) 1-2 216 216 100.00 % 216 W.H. Samrne-16 1,820 1,820 100.00% 1,820 ,OH (s) 7 800 48.00% 20.80 % 1 810 425 36.00 % 283 17.90% 142 24.47 % 201 19.91%(c) 163 SNppingport PA(e) 2 820 707 41.80%(a) 343 51.38 % 454 46m% 429 oncessee. i 883 883 Ook Herbor,OH 1 1,194 1,030 30.00 %(s) 386 524% 63 31.11 % 371 19.91 % 238 PerryPony Vitage, OH (e) N. Toisi M N E M 2 000eo Piredf 4 100 100 100.00% 100 80.00 % 361 8ensco-Wanen, PA 439 361 West Larmin-tarem,OH 1 120 120 100.00 % 120 Tois. .u m m a a = Notes: (e) OE's interests conelet of 20.22% owned and 21.80% leased for Beowr VeAsy Unit 2; and 17.42% owned (represenung j portion loseed from a whaty owned subeldiary of DE) and 12.50% loosed for Per'y. (b) CEl's and TE's Bruce Monsteld intemets are leased. j (c) TE's interests consist of 1.85% owned and 18.26% leased. (d) Compones' interests in 9iese plants and ot/ges-fired units at 9 toes plants to be treneferred to Duquesne (see

• Central Area Power Coontnogon Group").

(e) Duqueerw's interests in theos plants we be seguired by the Compenas (see " Central Area Power Coordineton Group"). 1 I i I 13

Prolonged outages of existing generahng units might make it necessary for the Companies, depending upon the demand for electric service upon their system, to use to a greater extent than otherwise, less efficient and less economic generating units, or purchased power, and in some cases may require the reduction of load during peak penods under the Companies'interruptible programs, all to an extent not presently determinable. The Companies' generating plants and load centers are connected by a transtnession syciem consisting of elements having various voltage ratings ranging from 23 kilovolts (kV) to 345 kV. The Companir? overhead and underground transmesion lines aggregate 8,691 miles. The Companies' electric distribution systems include 55,591 miles of overhead pole line and underground conduit carrymg primary, somndary and street lighting cucuits. They own, indwiduauy or together with one or more of the other CAPCO compones as tenants in common =ihatalinng wllh 3 total instaled transformer Capacity of 49,387,086 kilovoit-amperes The Comparuss' tronommelon lines also interconnect with those of AEP, The Dayton Power and Ught Company, Duquesne, Monongahela Power Company, West Penn Power Company, Detroit Edison Company and Pennsylvania Electric Company. These interconnections make possible ulikzation by the Compones of generahng capacity mnstructed as a part of the CAPCO program, as well as providing opportunities for the sale of power to other utillbes Simesouon Distribution Tronomission Treneformer t.inas Lines Canacity (asfee) (w.ernperes) OE. 26.475 4.019 20,603,056 Penn 5.105 808 3.792.250 CEl _ 23,505 3,016 17,228,300 TE ._,,.jM tGB 7.763.48D Total 55.501 8,q1 40,387,0es MARBEL is a fully integrated natural gas company. MARBEL owns interests in more then 1,800 gas and oil wells and holds interests in more then 200,000 undeveloped acres in eastern and central Ohio. MARBEL's =% include Ms Operaung Company, Inc., a natural gas explorstm and produchon company whie has the =shadanos J. R. Nominee Corp., J. R. Nominee Corp.11 and Natural Gas Ib.okerage Corporebon and Northeast Ohio Operahng Companies, Inc. which has the =shaearies Gas Transport, Inc., NEO Construdion Company, Ohio intrastete Gas Transmesion Company and Northeast Ohio Gas Marketing, Inc. FE Faciubes is the parent company of ten direct suhadanos which are heshng, ventlioling, air condluoning and energy management compones. The Faciety Services companies own or lease various offices, shops, maintenance and warehouse faciNiles, equipment and vehicles ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None, PART11 ITEM 5.

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS j The information required for this llom for Firellinergy and OE (through November 7,1997) is included on page 17 of FirstEnergy's 1998 Annual Report to Stodholdes (Exhibit 13). The informenon required for OE (= shaaquent l to November 7,1997), CEl, TE and Penn is not appir=hla because they are wholly owned anhadanos ITEM 6, SELECTED FINANCIAL DATA ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYS18 OF FINANCIAL CONDITION i AND RESULTS OF OPERATIONS 14

e t ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by items 6 through 8 is incorporated herein by reference to Selected Financial Data, Management's Discussion and Analysis of Results of Operations and Financial Condition, and Financial Statements included on the pages shown in the followang table in the respective company's 1998 Annual Report to Stockholders (Exhibit 13). tam.t nam 2 amm.a FirstEnergy 17 18 23 24 40 0E 1 2-6 7-25 Penn 1 2-6 7-22 CEI-1 2-7 8 27 TE 1 26 7-26 { ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING { AND FINANCIAL DISCLOSURE None. PART 111 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REQlSTRANT FirstEnemy The informaton required by item 10, with respect to identificabon of FirstEnergy's Directors and with rW to reports required to be filed under Sechon 16 of the Secunbes Exchange Act of 1934,is ;6&nwiet d herein by reference to the Company's 1999 Proxy Statement filed with the Securibes and Exchange Commisson (SEC) pursuant to Regulaton 14A and, with respect to identificabon of Executive Omcors, to "Part 1, item 1. Business - Execubve Officers" heren OE. Penn. CEI and TE W. R. Holland, H. P. Burg and A. J. Alexander are the Drectors of OE, Penn, CEl, and TE. lituni ;wn K,6r.4=TJng these individuals is shown in the "Execubve Officers" sechon of item 1. ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS FirstEnergy, OE, CEl, TE and Penn - The informaton required by items 11,12 and 13 is kwrpurek,d herein by reference to the Company's 1999 Proxy Statement filed with the SEC pursuant to Regulabon 14A. 15

I l L l PARTW ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 1 (a)1. MnancialStonements l l Included in Part il of this report and irc+ i.d herein by reference to the respecbve company's 1998 Annual Report to Stockholders (Exhibit 13 below) at the pe9es indcated. H QE Ben a H Report of independent Putic Accountants. 16 25 22 27 26 l Statements ofincome-Three Years Ended December 31.1996.. - 24 7 7 6 7 Bolence Sheets-December 31,1996 and 1997 25 6 8 9 6 Statements of Capitekzason-December 31,1996 and 1997. 26-26 9-10 9 10 11 9-10 Statements of Common Stoddmiders' Equity-Three Years Ended December 31,1996-29 11 10 12 11 Statements of Preferred Skxk-Three Years Ended December 31,1996 29 11 10 12 11 Statements of Cash Flows-Three Years Ended December 31,1996 30 12 11 13 12 Statements of Taxes-Three Years Ended December 31,1996 31 13 12 14 13 Notes to Financlel Statements 32-40 14 13 15 14 2. AnencialSentementScheduies { included in Part IV of this report. H QE East E H Report of independent Putic Accountants-. 44 45 48 46 47 Smedule - Three Years Ended December 31,1996: 11 - Consolidated Valusion and Quellfying Accounts 49 50 53 51 52 Schedules other then the schedule listed above are omited for the reason that they are not required or are not appleable, or the requwed information is shown in the financial statements or notes thereto 2. Exhhns-ArseEnugy Exhibit Number 3-1 - Articles of lr.wrpui.uis constituting FirstEnergy Corp's Artcies of ir,riipc,i.es, dated September 17,1996. (September 17,1996 Form 8.K, Exhibit C) l 3-1(a) - Amended Arteles of ;riciipui.ui, of FirstEnergy Corp. (Registration No. 333-21011 Exhibit (3).1.) 1 1 3-2 - Regulations of F;r.:Cr,.rgy Corp. (September 17,1996 Form 8-K, Exhibit D) l 3-2(a) - FirstEnergy Corp. Amended Code of Regulations. (Registration No. 333 21011, Exhibit (3) 2.) - Ri9his A reement (December 1,1997 Form 8-K, Exhibit 4.1) 41 9 l (A) 10-1 - FirstEnergy Corp. Fran dive and Director incentive Compensabon Plan. l (A) 10-2 - Amended FirstEnergy Corp. Delerred Compensation Plan for Dwoctors, amended February 15, 1 1999. 1 (A) 13 - 1998 Annual Report to Stockholders. (Only those portions expressly incorporated by reference in this Form 10-K are to be deemed " filed

• with the SEC.)

l l 16 L

Ex, thlEdl8[ (A) 21 - List of Subsidenes of the Registrant at December 31,1998. (A) 23 - Consent of independent Public Accountants (A) 27 - Financial Data Schedule (A) Provided herein in eledronic fonnet as an exhibit. 3. Exhites-Ohio Edloon 2-1 - A reement and Plan of Merger, dated as of September 13,1996, between Ohio Edison Company 9 (OE) and Centerior Energy Corporabon. (September 17,1996 Form 8-K, Exhibit 2-1.) 3-1 - Amended Articles of incorporabon, Eflectne June 21, 1994, constituting OE's Artides of incorporebon. (1994 Form 1(M(, Exhibit 3-1.) 3-2 - Code of Regulebons of OE as amended April 24,1986. (Regstration No. 33 5081, Exhibit (4)(d).) (B) 4-1 - Indenture dated as of Au9ust 1,1930 between OE and Bankers Trust Company, (now the Bank of New York), as Trustee, as amended and supplomonted by Supplemental indentures-l Dated as of Flie itsforenas Exhibit No. March 3,1931 2 1725 B-1,B-1(a),B 1(b) November 1,1935 2-2721 B-4 January 1,1937 2-3402 B-5 September 1,1937 Form 8 A B4 June 13,1939 2-5462 7(a)7 August 1,1974 Form 8-A, Au9ust 28,1974 2(b) July 1,1976 Form ILA, July 28,1976 2(b) December 1,1976 Form 8-A, December 15,1976 2(b) June 15,1977 Form 8 A, June 27,1977 2(b) SupplementalAmdentures: September 1,1944 2 41146 2(bX2) April 1,1945 2 41146 2(b)(2) September 1,1948 241146 2(b)(2) May 1,1950 2 41146 2(b)(2) January 1,1954 2 41146 2(b)(2) 4 May 1,1955 241146 2(bX2) August 1,1956 2 41146 2(b)(2) March 1,1958 2 4 1146 2(bX2) l April 1,1959 241146 2(bX2) June 1,1961 2 41146 2(b)(2) September 1,1989 2 34351 2(bX2) May 1,1970 2 37146 2(bX2) September 1,1970 2-38172 2(b)(2) June 1,1971 2-40379 2(bX2) Au9ust 1,1972 2-44803 2(bX2) September 1,1973 2-48867 2(bX2) May 15,1978 2 60957 2(b)(4) February 1,1980 2-68957 2(b)(5) Apr515,1980 2 4 6957 2(b)(6) June 15,1980 2 68023 (b)(4)(b)(5) October 1,1981 2-74059 (4)(d) October 15,1981 2-75917 (4)(e) February 15,1982 2-75917 (4)(e) July 1,1982 2 4 9360 (4)(d) 17

r-O lhalldl8[ ~ Desed as of Fue Reference ExhRdt Nr. March 1,1983 2-89300 (4)(e) March 1,1964 2-89360 (4)(f) September 15,1984 2-92918 (4)(d) September 27,1984 33-2576 (4)(d) Noverrber 8,1984 33-2576 (4)(d) December 1,1964 33-2576 (4)(d) December 5,1964 33-2576 (4)(e) January 30,1985 33-2576 (4)(e) - February 25,1985 33-2576 (4)(e) July 1,1985 33-2576 (4)(e) October 1,1985 33-2576 (4)(e) January 15,1986 33 8791 (4)(d) May 20,1986 33-8791 (4)(d) June 3,1986 33-8791 (4)(e) October 1,1986 33-29827 (4)(d) Au0ust 25,1989 33-34663 (4)(d) February 15,1991 33-39713 (4)(d) May 1,1991 33 45751 (4)(d) May 15,1991 33-45751 (4)(d) September 15,1991 33 45751 (4)(d) AprE 1,1992 33 48931 (4)(d) June 15,1992 33-48931 (4)(d) September 15,1992 33-48931 (4)(e) AprH 1,1993 33-51139 (4)(d) June 15,1993 33-51139 (4)(d) September 15,1993 33 51139 (4)(d) November 15,1993 1-2578 (4)(2) AprN 1,1995 1-2578 (4)(2) May 1,1995 1-2578 (4)(2) July 1,1995 1 2578 (4)(2) June 1,1997 (A) (4)(2) AprH 1,1996 (A) (4)(2) June 1,1998 (A) (4)(2) (B) 4-2 - General Mortgage indenture and Deed of Trust dated as of January 1,1998 betecen OE and the Bank of New York, as Trustee (Registradon No. 333 05277 Exhibit 4(9).) 10-1 - Administration Agreement between the CAPCO Group dated as of September 14,1967. (Registrabon No. 2-43102 Exhibit 5(c)(2).) 10-2 - Amendment No.1 deled January 4,1974 to Administradon Agreement between the CAPCO Group deled us of September 14,1967. (Registrabon No. 2 60006, Exhibit 5(c)(3).) 10 - Transmiselon FacNibes Agreement between the CAPCO Group dated as of September 14,1967. (Registradon No. 2-43102, Exhibit 5(c)(3).) 10 4 - Amendment No.1 dated as of January 1,1993 to Transmiselon Faciudes Agreement between the CAPCO Group deind as of September 14,1967, (1993 Form 10-K, Exhbit 10-4.). 10-5 - Agreement for the Terminston or Construdion of Certain Aorsemeno enedive September 1,1980 amon0 tha CAPCO Group (Registrabon No. 2 68006, Exhibit 10 4-) 10 6 - Amendment deled as of Deosmber 23,1993 to A0reement for the Termination or Construction of ) i Certain A0reements elledive September 1,1980 among the CAPCO Group. (1993 Form 10 K, Exhibit 10-6.) 10-7 - CAPCO Basic Operahng A9teement, as amended September 1,1980. (Registrabon No. 2 68906, Exhibit 10-5.) 18

Exhibit m 10-8 - Amendment No.1 dated August 1,1981, and Amendment No. 2 dated September 1,1982 to CAPCO Basic Operahng Agreement, as amended September 1,1980. (September 30,1981 Form 10 0, Exhibit 20-1 and 1982 Fonn 10 K, Exhibit 19-3, iWd.) i 10-9 - Amendment No.3 dated July 1, F84 to CAPCO Basic Operating A0reement, as amended September 1,1980. (1985 Form 10 1., Exhibit 10 7.) 10 Basic Operating Agreement between the CAPCO Companies as amended October 1,1991. (1991 Form 10-K, Exhibit 10 8.) 10 Basic Opereeng Agreement between the CAPCO Companies as amended January 1,1993. (1993 Form 10-K, Exhibit 10-11.) 10 Memorandum of Agreement eNective as of September 1,1980 among the CAPCO Group. (1982 Form 10-K, Exhibit 19-2.) 10 Operadno Agreement for Beaver Vousy Power Stabon Units Nos.1 and 2 as Amended and Restated September 15,1987, by and between the CAPCO Companies (1987 Form 10K, Exhibit 10-15.) ] 10 Construction Agreement wl*i roepect to Pony Plant between the CAPCO Group dated as of July 22,1974. (Registradon No. 242251 of Toledo Edloon Company, Exhibit 5(yy).) 4 10 Parecipedon A0reement No.1 relating to the finandng of the dni-;. a of certain cool mines, dated as of October 1,1973, among Quarto Mining Company, the CAPCO Group, Energy Properties, Inc., General Electric Credit Corporsuon, the Loan Participenis listed in Schedules A and B thereto, Central Nabonel Bank of Cleveland, as Owner Trustee, National City Bank, as Loon Trustee, and Owner Trustee, Neuonal City Bank, as Loan Trustee, and Nadonal City Bank, as Bond i Trustee (Registrt4 ton No.2 61146, Exhibit 5(e)(1).) 10 Ametuiment No.1 dated as of September 15,1978 to Parecipaton Agreement No.1 dated as of October 1,1973 amon0 Quarto Minin0 Company, the CAPCO Group, Energy Properties, Inc., General Electric Credit Corporabon, the Loan Participants listed in Schedules A and B thereto, Central National Bank of Cleveland as Owner Trustee, Neuonal City Bank as Loan Trustee and Nagonal City Bar,k as Bond Trustos. (Registradon No. 2 68906 of Pennsylvania Power Company, Exhibit 5(eX2).) 10 Participegon Agreement No.2 reisen0 to the financing of the development of certain cool mines, dated as of August 1,1974, among Quarto Minin0 Company, the CAPCO Group, Energy Properties, Inc., General Electric Credit Corporation, the Loan Participants listed in Schedules A and B thereto, Central Nadonal Bank of Cleveland, as Owner Trustee, Nalional City Bank, as Loan Trustee, and Natonal City Bank, as Bond Trustos (Registrabon No. 2-53069. Exhbit 5(hX2).) 10 Amendment No.1 dated as of September 15,1978 to Pa% A0reement No. 2 deled as of August 1,1974 amon0 Quarto Minin0 Company, the CAPCO Group, Energy Properties, Inc., General Elodric Credit Corporation, the Loan Participants Reled in Schedules A and B thereto, Central Natenal Bank of Cleveland as Owner Trustee, National City Bank as Loen Truelse and Nabonel CNy Bank as Bond Trustee (Registraton No. 2 68006 of Pennsylvania Power Company, Exhibit 5(e)(4).) 10 Participedon Agreement No. 3 dated as of September 15,1978 among Quarto Mining Company,

1. ie CAPCO Companies, Energy Properties, Inc., General Electric Credit Corporation, the Loan Partidpents listed in Schedules A and B #iersto, Central National Bank of Cleveland as Owner Trustee, and National City Bank as Loan Trustee and Bond Trustee (Registrabon No. 2 68906 of Pennsylvania Power Company, Exhibit 5(e)(5).)

10 Parhrtasian Agreement No. 4 dated as of October 31,1980 among Quarto MminD Company, the CAPCO Group, the Loan Participants listed in Schedule A thoroto and Nabonal City Bank as Bond Trustee. (Registradon No. 2-68906 of Pennsylvania Power Company, Exhibit 1016.) 19

Number 10-21 - Pa% A reement deled as of May 1,1986, among Quarto Mming Company, the CAPCO 0 Companies, the t.oen Pa'ticipants thereto, and Nabonel City Bank as Bond Trustee (1986 Form 10-K, Exhibit 10 22.) 10 ParHeip=Han Agreement No.6 deled as of December 1,1991 among Quarto Moing Company, The Cleveiend Electric illuminabng Company, Duquesne Light Company, Ohio Edison Company, l Pennsylvania Power Company, the Toledo Edison Company, the Loan Participants listed in Schedule A thereto, National City Bank, as Mortpape Bond Trustee and Nabonal City Bank, as Refunding Bond Trustee. (1991 Form 10 K, Exhibit 1019.) 10 Agreement entered into as o October 20,1981 among the CAPCO Companies regarding the use - of Quarto coal at Manensid Units 1,2 and 3. (1981 Form 10-K, Exhibit 201.) 10 24 - Resteled Option A0reement deled as of May 1,1983 by and between the North American Coal Corporation and the CAPCO Comperwes. (1983 Form 10 K, Exhibit 19-1.) 10 Trust indenture and Mortpage dated as of October 1,1973 between Quarto Mining Company and National City Bank, as Bond Trustee, togelhor with Guaranty dated as of October 1,1973 with respect thereto by the CAPCO Group (Registration No. 2-61146, Exhibit 5(e)(5).) ) l 10 Amendment No.1 dated AuGuet 1,1974 to Trust indenture and Mortgage dated as of October 1, 1973 between Quarto Mining Company and Nodonal City Bank, as Bond Trustee, together with Amendment No.1 deled August 1,1974 to Guaranty dated as of October 1,1973 with respect thereto by the CAPCO Group (Registration No. 2-53059, Exhibit 5(h)(2).) 10 Amendment No.2 dated as of September 15,1978 to 9te Trust indenkne and Mortpage deled as of October 1,1973, as amended, between Quarto Mining Company and National City Bank, as Bond Trustee, together with Amendment No. 2 dated as of September 15,1978 to Guaranty dated as of October 1,1973 with respect to 9 e CAPCO Group. (Re0etration No.2-68006 of i Permeylvanie Power Company, Exhibits 5(e)(11) and 5(e)(12).) 10 Amendment No.3 deled as of October 31,1980, to Trust indenture and Mortgage dated as of October 1,1973, as amended between Quarto Minin0 Company and National City Bank as Bond Trustos (Registration No. 2-66006 of Pennsylvania Power Company, Exhibit 10-16.) j 10-29 -- Amendment No. 4 dated as of July 1,1985 to the Trust indenture and Mor10 age dolod as of October 1,1973, as amended between Quarto Mining Company and National City Bank as Bond Trustee. (1965 Form 10-K, Exhibit 10 28.) 10 Amendment No. 5 deled as of May 1,1986, to the Trust indenture and Mortga0e between Quarto and National City Bank as Bond Trustos. (1986 Form 10-K, Exhibit 10 30.) 10 Amendment No. 6 dated as of December 1,1991, to the Trust indenture and Mor Da0e deled as of i October 1,1973, between Quarto Mining Company and Nodonal City Bank, as Bond Truetas (1991 Form 10 K, Exhibit 10-28.) 10 Trust indenture dated as of December 1,1991, between Quarto Mining Company and National City Bank, as Bond Trustee. (1991 Form 10 K, ExNbit 10-29.) 10 Amendment No. 3 detod as of Odober 31,1980 to the Bond Guaranty deled as of October 1,1973, as amended, with respect to 9te CAPCO Group (Registradon No. 2-68906 of Pennsylvania Power Company, Exhibit 10-16.) 10-34 ~ - Amendment No. 4 dated as of July 1,1985 to the Bond Guaranty dated as of October 1,1973, as amended, by the CAPCO Companies to Nadonal City Bank as Bond Trustee. (1985 Form 10 K, Exhibit 10-30.) 10 35 - Amendment No. 5 dated as of May 1,1986, to the Bond Guaranty by the CAPCO Comparues to National City Bank as Bond Trustee. (1986 Form 10-K, Exhibit 10 33.) 10 36 - Amendment No. 6A dated as of December 1,1991, to the Bond Guaranty dated as of October 1, 1973, by The Cleveland Electric luuminating Company, Duquesne Light Company, Ohio Edison 20

r-------------------------------------- m Company, Pennsylvania Power Company, tne Toledo Edison Company to National City Bank, as Bond Trustee. (1991 Form 10-K, Exhibit 10 33.) 10 Amendment No. 6B dated as of secember 30,1991, to the Bond Guaranty dated as of October 1, 1973 by The Cleveland Electric luuminating Company, Duquesne Light Company, Ohio Edison Company, Pennsylvanie Power Company, the Toledo Edison Company to Nabonel City Bank, as Bond Trustee. (1991 Form 10-K, Exhibit 10 34.) 10 Bond Gu.ranty dated as of December 1,1991, by The Cleveland Electric luuminabng Company, Duquesne Light Comporg Ohio Edison Company, Pennsylvania Puwer Company, the Toledo Edson Company to Nationid City Bank, as Bond Trustee. (1991 Form 10-K, Exhibit 10-35.) 10 39 - Open and MorigeGe dated as of October 1,1973 between Quarto Mining Company and the CAPCO Companies and Amendment No.1 thereto, dated as of September 15,1978. (Registration No. 2 68906 of Pennsylvanie Power Company, Exhibit 10-23.) 10 40 - Repayment and Security A0reement and Assignment of Lease dated as of October 1,1973 between Quarto Mining Company and Ohio Edison Company as A0ent for the CAPCO Comperwes and Amendment No.1 thereto, deled as of September 15,1978. (1980 Form 10 K, Edbit 20-2.) 10 41 - Restructuring Agreement dated as of April 1,1985 among Quarto Mining Comper'y, the Company and the other CAPCO Companies, Energy Properties, Inc., General Electric Credit Corporabon, the Loan Parecipants signatories thereto, Central Neuonal Bank of Cleveland, as Owner Trustee and National City Bank as Loan Trustee and Bond Trustee. (1985 Form 10 K, Exhibit 10-33.) 1N2 - Unsecured Note Guaranty dated as of July 1,1985 by the CAPCO Comph to General Electric Credit Corporebon. (1985 Form 10 K, Exhibit 10 34.) 10 43 - Memorandum of Understanding detod March 31,1985 among the CAPCO Companies. (1985 ' Form 10-K, Exhibit 10-35.) (C) 10 44 - Ohio Edloon System Executive Supplemental Life insurance Plan. (1995 Form 10 K, Exhibit 10 44.) (C) 10 45 - Ohio Edloon System Execumve inooneve C,.,,,,r.,-- - Plan. (1995 Form 10 K, Exhibit 10 45.) (C) 10 46 - Ohio Edison System Resteled and Amended Execullve Defemed Compense6on Plan. (1995 Form 10-K, Exhibit 1046.) (C) 10 Ohio Edison System Resteled and Amended Supplemental Execuuve Reeroment Plan. (1995 Form 10 K, Exhibit 10 47.) (C) ' 10 48 - Severance pay apreement between Ohio Edloon Company and W. R. Hohend. (1995 Form 10-K, Exhibit 10 48.) (C) 10 49 - Severance pay agreement between Ohio Edison Company and H. P. Burg. (1995 Form 10-K, Exhibit 10 49.) (C) 10 Severance pay agreement between Ohio Edison Company and A. J. Alexander. (1995 Form 10-K, Exhibit 10-50.) (C) 10 Severance pay agreement between Ohio Edison Company and J. A. G81. (1995 Form 10K, Exhibit 10-51.) (D) 10 Parkva8ian A0reement dated as of March 16,1987 among Perry One Alphe Limited Partnership, as Owner Participant, the Original Loan Participants listed in Schedule 1 Hereto, as OrI inal Loan 0 Participants PNPP Funding Corporation, as Funding Corporellon, The First Nanonal Penk of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee and Ohio Edloon Company, as Lessee. (1986 Form 10-K, Exhibit 28-1.) (D) 10 53 - Amendment No.1 dated as of September 1,1987 to Par *t=*ian A0reement dated as of March 16,1987 among Pony One Alpha Limited Partnership, as Owner Participant, the Original Loan Participants listed in Schedule 1 thereto, as OrtDnal Loan Parbcipants, PNPP Funding i 21

E 4 Nianhat Corporation, as Funding CorporaNon, The First National Bank of Boston, as Owner Trustee, Irving Trust Company (now The Bank of New York), as indenture Trustee, and Ohio Edison Company, as Lessee. (1991 Form 10 K, ExNtWt 10-46.) (D) 10 Amendment No. 3 deled as of May 16,1988 to Partmipation Agreement deled as of March 16, 1987, as amended amon0 Pony One Alphe Limited Partnership, as Owner Participant, PNPP j Fundng Corporation, The First National Bank of Boelon, as Owner Trustee, Irving Trust Company, as indenture Trustee, and Ohio Edison Company, as Ledese. (1992 Form 10-K, Exhibit 10-47.) (D) 10 Amendment No. 4 deled as of November 1,1991 to Parecipsbon Agreement dated as of March 16, 1987 among Pony One Alphe L4nited Partnership, as Owner Participent, PNPP Funding Corporation, as Fundin0 Corporallon, PNPP ll Funding Corporaton, as New Funding Corporaton, The First Nallonel Bank of Boston, as Owner Trustee, The Bank of New York, as indenture Trustee and Ohio Edison Company, as Lessee. (1991 Form 10-K, Exhibit 10 47.) (D) 1036 - Amendment No. 5 dated as of November 24, 1992 to Parecipation A0reement dated as of March 16,1987, as amended, among Perry One Alphe Limited Partnership, as Owner Parecipant, i PNPP Funding Corporellon, as Funding Corporation, PNPPil Funding Corporshon, as New Fundmg Corporation. The First Natlone Bank of Boston, as Owner Trustee, The Bank of New Yosk, as indenture Trustee and Ohio Edison 0,ompany as Lassee. (1992 Form 10 K, Exhibit 10 49.) (D) 10 Amendment No. 6 dated as of Januar/12,1993 to Participshon A0reement dated as of March 16, 1987 among Pony One Alphs Umited Partnership, as Owner Participant, PNPP Funding Corporation, as Fundin0 Corporellon, PNPP 11 Funding Corporation, as New Fundmg CorporaHon, i The First Nabonel Bank of Boston, as owner Trustee, The Bank of New York, as indenture Trustee and Ohio Edison Company, as Lessee. (1992 Form 10 K, Exhibit 10-50.) (D) 10 Amendment No. 7 deled as ed Odober 12,1994 to Participe6on Agreement dated as of March 16, ) 1987 as amended, among Pony One Alphe Limited Partnership, as Owner Parecipent, PNPP j Funding Corporegon, as Funding CorporaHon, PNPP 11 Funding Corpornbon, as New Funding i Corporegon, The First Nobonel Bank of Boston, as Owner Trustee, The Bank of New York, as Indenture Trustes and Ohio Edison Company, as Lessee. (1994 Form 10 K, Exhibit 10-54.) (D) 10 Facety Lease dated as of March 16,1987 between The First Negonal Bank of Boston, as Owner Trustee, wilh Perry One Alphe Limited Parmership, Lassor, and Ohio Edison Company, Lesses (1986 Form 10-K, ExNbit26-2.) (D) 1MO - Amendment No.1 dated as of September 1,1987 to FacEly Lasse dated as of March 16,1987 between The First Neuonal Bank of Boston, as Owner Trustee, Leesor and Ohio Edloon Company, Lessee. (1991 Form 10 K, Exhibit 10 49.) (D) 1041 - Amendment ho. 2 dated as of November 1,1991, to Facety Lease dated as of Maren 16,1987, i between The First Nellonel Bank of Boston, as Owner Trustee, t.comor and Ohio Edloon Company, Lasses. (1991 Form 10 K, Exhibit 10 60.) (D) 1042 - Amendment No. 3 dated as of November 24,1992 to Faciky Lease dated as of March 16,1987, as amended, between The First Nellonel Bank of Boston, as Owner Trustee, wilh Pony One Alphe Limited Partnership, as Owner Participent and Ohio Edison Company, as Lassee (1992 Form 10-K, Exhibit 10 54.) (D) 1M3 - Amendment No. 4 dated as of January 12,1993 to FacAly Lasse dated as of March 16,1987 as amended, between, The First Negonal Bank of Boston, as Owner Trustee, with Pony One Alphe Limited Partnership, as Owner Partcipent, and Ohio Edison Company, as Lasses. (1994 Form 10-K, Exhibit 10-59.) (D) 1044 - Amendment No. 5 dated as of October 12,1994 to Facety Laene deled as of March 16,1987 as amended, between The First National Bank of Boston, as Owner Trustee, wnn Perry One Alphe Umited Partnership, as Owner Parbcipant, and Ohio Edison Company, as Lassee. (1994 Form 10-K, Exhibit 1040.) (D) 1043 - Later A0reement deled as of March 19,1987 between Ohio Edison Company, Lessee, and The First Nellonel Bank of *elosion, as Owner Trustee under a Trust dated March 16,1987 with Chase 22

~ Exhibit ~ Neandlar Manhellen Realty Lemoin0 Corporation, required by Sechon 3(d) of the Faciuty Lease. (1986 Form 10 K, Exhibit 28-3.) (D) 10 66 - Ground Lasse dated as of March 16,1987 between Ohio Edson Company, Ground Lessor, and The First Notonal Bank of Boston, as Owner Trustee under a Trust Agreement, date6 as of March 16,1987, with the Ow isr Paredpent, Tenant (1986 Form 10-K, Exhibit 28 4.) (D) 10 67 - Trust A0reement dated as of March 16,1987 between Perry One Alpha Limited Partnership, as Owner Parecipant, and The First Nahonal Bank of Boston. (1986 Form 10-K, Exhibit 28-5.) (D) 10 68 -Trust indenhare, Mortge0s, Security Aeroement and Assignment of Faciuty Lease deled as of March 16,1987 between The First Notonal Bank of Boston, as Owner Trustee under a Trust Aeroement deled as of March 16,1987 with Pony One Alpha Limited Partnership, and Irving Trust Company, as indenture Trustee. (1986 Form 10-K, Exhibit 28-6.) (D) 1069 - Supplemental ir, denture No.1 dated as of September 1,1987 to Trust indenture, Mortoa08, Security A0reement and Assignment of Faciuty Lease dated as of March 16,1987 between The First Nabonel Bank of Boston as Owner Trustee and Irving Trust Company (now The Bank of New j York), as indenture Trustos. (1991 Form 10-K Exhibit 10 55.) l (D) 10 Supplemental indenture No. 2 dated as of November 1,1991 to Trust indenture, Mortgage, Securtly Agreement and Assignment of Faculty Lasse deled as of March 16,1987 between The First Natonal Bank of Boston, as Owner Trustee and The Bank of New York, as indenture Trustee. (1991 Form 10-K, Exhibit 10 68.) (D) 10 Tax IndemnlRoebon Agreement dated as of Mardi 16,1987 between Pony One, Inc. and PARock Limited Partnerehlp as General Partners and Ohio Edison Company, as Lessee. (1986 Form 10 K, Exhibit 28-7.) (D) 10 Amendment No.1 dated as of Novemtier 1,1991 to Tax IndemnlAcabon Agreement detod as of March 16,1987 between Perry One, Inc. and Perock Limited Partnership and Ohio Edison Company. (1991 Form 10 K, Exhibit 10 68.) (D) 10 Amendment No. 2 dated as of.lenuary 12,1993 to Tax IndemnlRoellon Agreement deled as of March 16,1987 between Pony One, Inc. and Perock Limited Partnership and Ohio Edison Company. (1994 Form 10 K, Exhibit 1069.) (D) 10 Amendment No. 3 dated as of October 12,1994 to Tax IndemnlRcedon Agreement dated as of March 16,1987 between Pony One, Inc. and Perock Umited Partnership and Ohio Edison Company (1994 Form 10 K, Exhibit 10 70.) (D) 10 75 - Partial Mortgage Release dated as of March 19,1987 under the Indenture between Ohio Edloon Company and Bankers Trust Company, as Trustee, dated as of the 1st day of August,1930. (1986 Form 10-K, Exhibit 28 8.) (D) 10 76 - Assignment, Assumpeon and Fis1her Agreement deled as of March 16,1987 among The First Notonal Bank of Boston, as Owner Trustee under a Trust Agreement, dated as of March 16,1987, wilh Pony One Alphe Limited Partnership, The Cleveland Electric luuminating Company, Duquesne Ught Company, Ohio Edison Company, Pennsylvania Power Company and Toledo Edloon Company. (1986 Form 10 K, Exhibit 28 9.) (D) 10 Addleonel Support Agreement dated as of March 16,1987 between The First Neuonal Bank of Boston, as Owner Trustee under a Trust Agreement, dated as of March 16,1987, with Pony One Alphe Umited Partnership, and Ohio Edison Company. (1986 Form 104, Exhibit 28-10.) (D)- 10 BNI of Sale, instrument of Transfer and Severence A0reement deled as of March 19,1987 between Ohio Edloon Company, Sener, and The First Nabonal Bank of Boston, as Owner Trustee under a Trust Agreement, deled as of March 16,1987, with Pony One Alphe Limited Partnership. (1986 Form 10 K, Exhibit 28-11.) (D) 10 79 - Easement dated as of March 16,1987 from Ohio Edloon Company, GrarAr, to The First Nabonel ) Bank of Boston, as Owner Trustee under a Trust Agreement, dated as of March 16,1987, with ]- Perry One Alpha Limited Partnership, Grante6. (1986 Form 10 K, File Exhibit 28-12.) 23

r a Exhildt Number i 10 Parhrmahan A0reement dated as of March 16, 1987 among Security Pacine Capital Leasing Corporabon, as Owner Parecipant, the Original toen Partopents listed in Schedule 1 Hereto, as i Ortonal Loan Parecipants, PNPP Funding Corporation, as Fundmg Corporshon, The First Nabonal Bank of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee and Ohio Edison Company, as Lessee. (1986 Form 10-K, as Exhibit 28-13.) 10 Amendment No.1 dated as of September 1,1987 to Par ey=Han A reement dated as of n 0 March 16,1987 amon0 Security Pacille Cepital Laosin0 Corporation, as Owner Parecipant, The Original Loan Parecipants Listed in Schedule 1 thereto, as Original Loan Participants, PNPP Fundmg Corporebon, as Fundmg Corporation, The First Nabonel Bank of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee and Ohio Edison Company, as Lessee. (1991 Form 10-K, Exhibit 10 85.) 10 Amendment No. 4 dated as of Ncwomber 1,1991, to Participebon A0reement deled as of March 16,1987 amon0 Securty PaclAc Capital Lansing Corporabon, as Owner Pa,16apant, PNPP Funding Corporadon, as Funding Corporenon, PNPP 11 Funding Corparation, as New Funding Corporebon, The First Nabonel Bank of Boston, as Owner Trustee, The Bank of New York, as indenture Trustee and Ohio Edloon Company, as lassee. (1991 Form 10-K, Exhibit 10 66.) 1043 - Amendment No. 5 dated as of November 24, 1992 to Participsbon Aeroement dated as of March 16,1987 as amended among Security PaclAc Capital Laesing Corporebon, as Owner l Participant, PNPP Fundin0 Corporation, as Funding Corporshon, PNPP 11 Fundmg Corporation, as New Funding Corporshon, The First Nabonel Bank of Boston, as Owner Trustee, The Bank of New York, as indenture Trustee and Ohio Edison Company, as Lasses (1992 Form 10K, Exhibit 10 71.) 10 Amendment No. 6 dated as of January 12,1993 to Partcipsbon Agreement dated as of Marcti 16, 1987 as amended amon0 Securtly PaolAc Capital Laesing Corporellon, as Owner Partcipent, PNPP Funding Corporagon, as Fundmp Corporanon, PNPP 11 Funding Corporebon, as New Funding Corporation, The First Notonal Bank of Boston, as Owner Trustee, The Bank of New York, 1 as indenture Trustee and Ohio Edison Company, as Lassee. (1994 Form 10-K, Exhibit 1040.) 10 85 - Amendment No. 7 detod as of October 12,1994 to Participsbon Agreement dated as of March 16, i 1987 as amended among Security PacdRc Capital Laosing Corporegon, as Owner Pgecipant, j l PNPP Funding Corporegon, as Funding Corporagon, PNPP 11 Funding Corporation, as New Fundmo Corporellon, The First Netonal Bank of Boston, as Owner Trustos, The Bank of New York, as Indenture Trustee and Ohio Edison Company, as Lasses. (1994 Form 10 K, Exhibit 10-81.) 10 86 - Facluty Lasse dated as of Monti 16,1967 between The First Nedonal Bank of Boston, as Owner Trustee, wth Securty PacNic Capital Laesing Corporegon, Leesor, and Ohio Edison Company, as Lassee. (1986 Form 10 K, Exhbit 2814.) 10 87 - Amendment No.1 dated as of September 1,1987 to Faculty Lease dated as of March 16,1987 between The First Neuonal Bank of Boston as Owner Trustee, Leesor and Ohio Edloon Company, Lassee. (1991 Form 10 K, Exhibit 1048.) 1046 - Amendment No. 2 dated as of November 1,1991 to Facduty Lasse dated as of March 16,1987 between The First Nellonel Bank of Boston as Owner Trustee, Lassor and Ohio Edloon Company, Lassee. (1991 Form 10 K, Exhibit 1049.) 1049 - Amendment No. 3 dated as of November 24,1992 to FacAlty Lasse dated as of March 16,1987, as amended, between, The First Nabonel Bank of Boston, as Owner Trustee, with Security PacdHe Capitol Lansing Corporation, as Owner Parecipent and Ohio Edison Company, as Lasses. (1992 Form 10 K, Exhibit 10 75.) 10 Amendment No. 4 dated as of January 12,1993 to Factity Lasse dated as of March 16,1987 as amended between The First National Bank of Boston, as Owner Trustee, with Security Pacinc Capital Leasing Corporshon, as Owner Partcipent, and Ohio Edison Company, as Lassee. (1992 Form 10-K, Exhibit 10-76.) 24

1 ExhitWt NtIndier 10 Amendment No. 5 deled as of Odober 12,1994 to Faculty Lasse dated as of March 16,1987 as amended between, The First National Bank of Boston, as Owner Trustee, with Security Pacific Capital Laosing Corporselon, as Owner Partdpant, and Ohio Edison Company, as Lassee. (1994 Form 10-K, Exhibit 1047.) 10 Latter Agreement dated as of March 19,1987 between Ohio Edison Company, as Lessee, and The First Nabonel Bank of Boston, as Owner Trustee under a Trust, dated as of March 16,1987, with Security Padre Capital Laesing Corporebon, required by Section 3(d) of the Faciuty Lesse. (1986 Form 10-K, Exhibit 28-15.) 10 Ground Lasse dated as of March 16,1987 between Ohio Edison Company, Ground Lessor, and The First Nabonal Bank of Boston, as Owner Trustee under a Trust A0reement, dated as of March 16, 1987, with Pony One Alphe Umited Partnership, Tenent. (1986 Form 10-K. Exhibit 28-16.) 10 Trust A0reement deled as of March 16,1987 between Security Padlic Capital Leasing C04,s wun, i as Owner Parecipent, and The First Nagonal Bank of Boston. (1986 Form 10-K, Exhibit 2817.) 10 Trust indenture, Morte9e, Security Agreement and Aeol nment of FacNity Lease dated as of 0 March 16,1987 between The First Notonal Bank of Boston, as Owner Trustee smder a Trust Agreement, dated as of March 16,1987, wth Security PedRc Capital Leasing Corporshon, and Irving Trust Company, as indenture Trustee. (1988 Form 10-K, Exhibit 28-18.) 10 Supplemental indenture No.1 dated as of September 1,1987 to Trust indenture, Mortgees, I Security Agreement and Assignment of FacAty Lasse detod as of March 16,1987 between The First National Bank of Boston, as Owner Trustee and Irving Trust Company (now The Bank of New York), as indenture Trustee. (1991 Form 10 K, Exhibit 10-74.) 10 Suppiomontal Indenture No. 2 deled as of November 1,1991 to Trust indenture, Mortpape, Securtty Agreement and Assignment of Facety Lasse dated as of March 16,1987 between The First Neuonal Bank of Boston, as Owner Trustee and The Bank of New York, as indenture Truelme (1991 Form 10-K, ExNbit 1075.) 10-98 -Tax IndemnlAceton Agreement dated as of March 16, 1987 between Security PaclAc Capital Leeming Corporation, as Owner Partidpent, and Ohio Edison Company, as Lassee- (1986 Form 10 K, Exhibit 28-19.) 10 Amendment No.1 dated as of November 1,1991 to Tax IndemnlAceton Aeroement deled as of March 16,1987 between Security PaclRc Capital Laosing Corporadon and Ohio Edison Company. (1991 Form 10 K, ExNbit 10-77.) 10100 - Amendment No. 2 dated as of.lenuary 12,1993 to Tax IndemnlAceuon Agreement dated as of More 16,1987 between Security PedRc Cephal Laesing Corporeton and Ohio Edison Company. (1994 Form 10 K, Exhtait 10-06.) 10-101 - Amendment No. 3 dated as of Odober 12,1994 to Tax Indemnincetion Agreement dated as of More 16,1987 between Security PaclAc Capital Leasing Corporation and Ohio Edson Company. (1994 Form 10-K, Exhibit 10 97.) 10-102 - Assignment, Assumption and Further Agreement dated as of March 16,1987 among The First National Bank of Boston, as Owner Trustee under a Trust Agreement, dated as of March 16,1987, with Security PaolAc Capliel Laesing Corporebon, The Cleveiend Electric Numineeng Company, Duquesne WOht Comper'y, Ohio Edloon Company, Pennsylvanie Power Company and Toledo Edison Company. (1986 Form 10-K, ExNbit 28-20.) 10-103 - Additional Support A0rooment dated as of March 16,1987 between The First National Bank of Boston, as Owner Trustee under a Trust A0reement, dated as of March 16,1987, with Security PaolRc Capital LaosinD Corporebon, and Ohio Edson Company. (1986 Form 10-K, ExNbit 28-21.) 10-104 - BW of Sole, instrument of Transfer and Severance Aeroement dated as of March 19,1987 between Ohio Edison Company, Seger, and The First National Bank of Boston, as Owner Trustee under a 25

n Exhibit m Trust Agreement, dated as of March 16,1987, with Security Padnc Capital Leasin0 Corporaton, Buyer, (1986 Form 10-K, Exhibit 28-22.) 10105 - Emesment dated as of Mardi 16,1987 from Ohio Edison Company, Grantor, to The First Nahonal Bank of Boston, as Owner Trustes under a Trust Agreement, debod as of March 16,1987, with Security PaolAc Capital l seeing Corporation, Grantee. (1986 Form 10-K, Exhibit 28-23.) 10-106 - ReAnancin0 A0reement dated as of November 1,1991 amon0 Perry One Alpha Limited , Partnership, as Owner Partidpant, PNPP Funding Corporaton, as Funding Corporation, PNPP ll Funding Corporshon, as New Funding Corporellon, The First National Ber* of Boston, as Owner Trustee, The Bank of New York, as indenture Trustee, The Bank of New York, as Collaboral Trust Trustee, The Bank of New York, as New CoRetoral Trust Trustee and Ohio Edison Company, as Lessee. (1991 Form 10 K, Exhibit 10 82.) 10-107 - Rennancing Agreement deled as of November 1.1991 among Security Pacinc Laesing Corporation, as Owner Participent, PNPP Funding Corporation, as Funding Corporation, PNPP ll Fundin0 orporation, as New Funding Corporebon, The First Neuonti Bank of Boston, as Owner C Trustee, The Bank of New York, as indenture Trustee. The Bank of New York, as Cousteral Trust Trustee, The Bank of New York, as New Collaboral Trust Trustes and Ohio Edison Company, as Leesee. (1991 Form 10K, Exhibit 1043.) 10108 - Ohio Edison Company Master +;__,,,,_ r _,;,,, Trust Agreement for Pony Nuclear Power Plant Unit One, Perry Nuclear Power Plant Unit Two, Beever Vousy Power Station Unit One and Beever Valley Power Stebon Unit Two dated July 1,1993. (1993 Form 10 K, Exhibit 10 94.) 10109 - Nucieer Fuel Lease dated as of Mardi 31,1989, between OES Fuel, incorporated, as Lessor, and Ohio Edison Company, as Lasses. (1989 Form 10-K, Exhibit 1042.) 10110 - Receivables Purchase Agreement dated as November 28,1989, as amended and restated as of AprN 23,1993, between OES Capital, incorporated, Corporate Aseat Funding Company, Inc. and Citicorp North Americe, Inc. (1994 Form 10-K, Exhibit 10106.) 10111 - Guarantee Agreement entered into by Ohio Edison Company dated as of January 17,1991, (1990 Form 10 K, Exhibit 1044). 10-112 - Transfer and Aeol nment Agreement among Ohio Edloon Company and Chemical Bank, as trustee 0 under the OE Power Contract Trust. (1990 Form 10 K, Exhibit 1045). 10-113 - Renunciation of Payments and Assignment among Ohio Edloon Company, Monongehele Power Company, West Penn Power Company, and the Potomac Edison Company dated as of January 4, 1991. (1990 Form 10 K, ExNbit 1046). 10-114 - Transfer and Assignment Agreement deled May 20,1994 amon0 Ohio Edison Company and Chemical Bank, as trustee under the OE Power Contract Trust. (1994 Form 10 K, ExNbit 10-110.) 10-115 - Renundsson of Payments and Aselonment among Ohio Edison Company, Monongahele Power Company, West Penn Power Company, and the Potomac Edloon Company dated as of May 20, 1994. (1994 Form 10 K, Exhibit 10-111.) 10116 - Transfer and.t...i Agreement dated October 12,1994 among Ohio Edison Company and Chemical Bank, as trustee under the OE Power Contred Trust. (1994 Form 10-K, Exhibit 10112.) 10 117-Renunciabon of Payments and Assignment amon0 Ohio Edison Company, Monongehele Power Company, West Penn Power Company, and the Potomac Edison Company dated as of October 12,1994. (1994 Form 10 K, Exhibit 10113.) (E) 10-118 - Participation A0reement dated as of September 15,1987, among Beaver Valley Two Pi Limited PartneroNp, as Owner Participent, the OrtDinal Loan Participants Ested in Schedule 1 Thereto, as Original Loan Participants, BVPS Funding Ceipo..L, as Funding Curpui.Li, The First National Ber* of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee and Ohio Edison Company, as Lessee. (1987 Form 10-K, Exhibit 28-1.) 26

Exhibit Number l (E) 10-119 - Amendment No.1' deled as of February 1,1988, to Partcipolon Agreement dated as of September 15,1987, among Beaver Valley Two Pi umited Partnership, as Owner Partmipant, the Original 1.oen Portolpents hated in Schedule 1 Thweto, as Original Loan Partcipants, BVPS Funding Corporation, as Funding Corporanon, The First Nabonel Bank of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee and Ohio Edison Company, as Lessee. (1987 Form 10-K, Exhibit 28-2.) (E) 10120 - Amendment No. 3 dated as of March 16, 1988 to Participation A0reement dateo as of September 15,1987, sa amended among Beaver VaRoy Two Pi Limited Partnership, as Owner Participent, BVPS Funding Corporation, The First Nabonal Bank of Boston, as Owner Trustee, Irving Trust Company, a6 'enture Trustee and Ohio Edison Company, as Lessee (1992 Form 10-K, Exhibit 10-99.) (E) 10-121 - Amendment No. 4 deled as of November 5,1992 to Participolon A0raement dated as of September 15,1987, as amended, among Beaver Valley Two Pi Limited Partnership, as Owner Parteipant, BVPS Funding Corporaton, BVPS ll Funding Corporation. The First Nabonel Bank of Boston, as Owner Trustee, The Bank of New York, as indriture Trustee and Ohio Edison Company, as Lessee. (1992 Form 10-K, Exhibit 10100.) (E) 10-122 - Amendment No. 5 dated as of September 30,1994 to Par *tanan A0reement dated as of September 15,1987, as amended, among Beever VaHoy Two Pi Limited Partnership, as Owner Participant, BVPS Funding Corporation, SVPS 11 Funding Corporation, The First Neuonal Bank of Boston, as Owner Trustee, The Bank of New York, as indenture Trustee and Ohio Edison Company, as Lassee. (1994 Form 10-K, Exhibit 10118.) (E) 10-123 - FaciNty Laseo dated as of September 15,1987, between The First Natonal Bank of Boston, as Owner Trustos, with Beever Vatoy Two Pi Umited Partnership, Lassor, and Ohio Edloon Company, Lessee. (1987 Form 10-K, Exhibit 28-3.) (E) 10-124 - Amendment No.1 dated as of February 1,1988, to Facility Lease dated as of September 15,1987, between The First Negonal Bank of Boston, as Owner Trustee, with Beever Vousy Two Pi umited Partnership, Lassor, and Ohio Edison Company, l Assee. (1987 Form 10 K, Exhibit 28 4.) (E) 10-125 - Amendment No. 2 dated as of November 5,1992 to Fac81ty Lanes dated as of September 15 1987, as amended, between The First National Bank of Boston, as Owner Trustee, with Beever Vaby Tm P! bmited i(%, as Owner Partidport. and Ohio Edison Company, as Lessee. (1992 Form 10-K, Exhibit 10103.) (E) 10-126 - Amendment No. 3 dated as of Septerre 30,1994 to Faciuty Lease dated as of September 15, 1987, as amended, between The First Nationd 'L~* of Boston, as Owner Trustee, wnh Beaver Valley Two Pi umiled Partnership, as Owner Parecipent, and Ohio Edloon Company, as Lassee. (1994 Form 10.K, Exhibit 10122.) (E) 10127 - Ground Lasse and Easement Agreement dated as of September 15,1987, between Ohio Edison Company, Ground Leesor, and The First Notonal Bank of Boston, as Owner Trustee under a Trust Agreement, dated as of September 15,1987, wth Beever VaRoy Two Pi Umited Partnership, Tenent.(1987 Form 10.K Exhibit 28-5.) (E) 10-128 -Trust Agreement dated as of September 15, 1987, between Beaver Vatey Two Pi Umited Partnership, as Owner Participent, and The First Nobonel Bank of Boston. (1987 Form 10-K, Exhibit 28-6.) (E) 10-129 -Trust indenture, Mortge0s, Security Aeroement ard Assignment of Faciety Lease dated as of September 15,1987, between The First Notonal Bank of Boston, as Owner Trustee under a Trust Agreement dated as of September 15,1987, wth Beaver VaRoy Two Pi umiled Partnership, and Irving Trust Company, as indenture Trustee. (1987 Form 10-K, Exhibit 28-7.) (E) 10-130 - Supplemental indenture No.1 dated as of February 1,1988 to Trust indenture, Mortpage, Securtty Agreement and." ;.,; of Faculty Lease dated as of September 15,1987 between The First Neuonal Bank of Boston, as Owner Trustee under a Trust Agreement $sted as of September 15, 1987 with Beever VaNoy Two Pi Limited Partnership and Irving Trust Company, as indenture Trustee. (1987 Form 10 K, Exhibit 28-8.) 27

i Exhildt m (E)~ 10131 - Tax Indemnincotion Agreement dated as of September 15,1987, between Beaver Vaney Two Pi inc. and PARock Lirnited Partnership as General Partners and Ohio Edison Company, as Lassee (1987 Form 10-K, Exhibit 28-9.) (E) 132 - Amendment No.1 dated as of November 5,1992 to Tax IndemnlRoadon Agreement dated as of September 15,1987, between Beever Vaney Two Pi inc. and PARock Umited Partnership as General Partners and Ohio Edison Company, as Lessee. (1994 Form 10-K, Exhibit 10-128.) (E) 10-133 - Amendment No. 2 dated as of September 30,1994 to Tax Indemnircanon A reement dated as of 0 September 15,1987, between Beaver Vabey Two Pi inc. and PARock Limited Partnership as General Partness and Ohio Edkoon Company, as Lassee. (1994 Form 10-K, Exhibit 10-129.) (E) 10-134 - Tax IndemnlAcetion Agreement dated as of September 15,1987, between HG Power Plant, Inc., as Limited Partner and Ohio Edloon Company, as Lessee. (1987 Form 10-K, Exhibit 2810.) (E) 10135 - Amendment No.1 dated as of November 5,1992 to Tax IndemnlAcadon Agreement dated as of September 15,1987, between HG Power Plant, Inc., as Umbed Partner and Ohio Edison Company, as Lassee. (1994 Form 10-K, Exhibit 10131.) -(E) 10-136 - Amendment No. 2 dated as of September 30,1994 to Tax IndemnlRcation Agreement dated as of I September 15,1987, between HG Power Plant, Inc., as Limited Partner and Ohio Edison Company, as Lessee. (1994 Form 10-K, Exhibit 10-132.) (E) 10-137 - Assignment, Assumpton and Further Agreement dated as of September 15,1987, among The First Nabonel Bank of Boston, as Owner Trustee under a Trust Agreement, dated as of September 15,1987, wilh Beever Vatey Two Pi umited Partnership, The Cleveland Electric luuminaling Company, Duquesne Upht Company, Ohio Edloon Company, Pennsylvanie Power Company and Toledo Edison Company. (1987 Form 10 K, Exhibit 28-11.) (E) 10-138 - Addhional Support Agreement deled as of September 15,1987, between The First Nelional Bank of Boston, as Owner Trustee under a Trust Agreement, dated as of September 15,1987, with Beever Vaney Two Pi Umbed Partnership, and Ohio Edison Company. (1987 Form 10-K, Exhibit 2812.) (F) 10-139 - Participeton A0reement detod as of September 15,1987, among Chrysler Consortum Corporation, as Owner Participant, the Orlpinal Laen Parecipants lleled in Schedule 1 Thereto, as Original Loen Participants, SVPS Funding Corporation, as Funding Corporellon, The First Nedonal Bank of Boston, as Owner Trustos, Irving Trust Company, as indenture Truelse and Ohio Edloon Company, as Lesses. (1987 Form 10K, Exhibit 28-13.) (F) 10-140 .9nendment No.1 dated as of February 1,1988, to Participadon A0reement dated as of September 15,1987, among Chryolor Consortium Corporellon, as Owner Participent, the Orlpinal Loan Parecipenis lleled in Schedule i Thereto, as Ortpinal Laon Partdpants, BVPS Funding Corporation, as Fundin0 Corporaton, The First Nabonel Bank of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee, and Ohio Edison Company, as tossee. (1987 Form 10 K, Exhibit 28-14.) (F) 10-141 - Amendment No. 3 detod as of March 18,1988 to Parecipegon Agreement deled as of September 15,1987, as amended, amon0 Chrysler Consortium Corporellon, as Owner Porteipent, BVPS Fundm0 Corporellon, The First Nelional Bank of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee, and Ohio Edison Company, as t.sesse. (1992 Form 10-K, Exhibit 10 114.) (F) 10-142. - Amendment No. 4 deled as of November 5,1992 to Participadon A reement deled as of 0 September 15,1987, as amended, among Chrysler Consortum Corporebon, as Owner Participant, BVPS Fundin0 Corporebon, BVPS 11 Fundng Corporation The First Nobonal Bank of Boston, as Owner Trustee, The Bank of New York, as indenture Trustee and Ohio Edison Company, as Lessee. (1992 Form 10-K, Exhibit 10115.) (F) 10-143 - Amendment No. 5 deled as of January 12,1993 to Participation Agreement dated as of September 15,1987, as amended, among Chrysler Consortium Corporebon, as Owner Parbcipent, 28 1 j

Exhibit Number BVPS Fundmg Cerci.Li, BVPS ll Funding Corporation, The First National Bank of Boston, as e Owner Trustee, The Bank of New York, as indenture Trustee and Ohio Edison Company, as Lessee. (1994 Form 10-K, Exhibit 10-139.) (F) 10-144 - Amendment No. 6 dated as of September 30,1994 to Participation A0reement dated as of September 15,1987, as amended, among Chrysler Consortium Corporation, as Owner Participant, BVPS Fundng Corporaton, BVPS 11 Funding Corporation, The First National Bank of Boston, as Owner Trustee, The Bank of New York, as indenture Trustee and Ohio Edison Company, as Lessee. (1994 Form 10-K, Exhibit 10-140.) (F) 10-145 - Facility Lease dated as of September 15,1987, between The Finst National Bank of Boston, as Owner Trustee, with Chrysler Consortium Corpoi.Li, Lessor, and Ohio Edison Company, as Lessee. (1987 Form 10-K, Exhibit 2815.) (F) 10-146 - Amendment No.1 dated as of February 1,1988, to Facility Lease dated as of September 15,1987, between The First Natonal Bank of Boston, as Owner Trustee, with Chrysler Consortium Corpc..Li, Lessor, and Ohio Edison Company, Lessee. (1987 Form 10-K, Exhibit 28-16.) (F) 10-147 - Amendment No. 2 dated as of November 5,1992 to Facility Lease dated e of September 15, 1987, as amended, between The First National Bank of Boston, as Owner Trastee, with Chrysler Consortium Corpui.Li, as Owner Participant and Ohio Edison Company, as Lessee. (1992 Form 10-K, Exhibit 118.) (F) 10-148 - Amendment No.3 dated as of January 12,1993 to Facility Lasse dated as of September 15,1987, as amended, between lho First National Bank of Boston, as Owner Trustee, with Chrysler Consortium Corgv Li, as Owner Participant, and Ohio Edson Company, as i manaa. (1992 Form 10-K, Exhibit 10119.) (F) 10-149 - Amendment No. 4 dated as of September 30,1994 to Facility I amma dated as of September 15, 1987, as amended, between The First Natonal Bank of Boston, as Owner Trustee, with Chrysler Consortium Corporation, as Owner Participant, and Ohio Edson Company, as Lessee. (1994 Form 10-K, Exhibit 10-145.) (F) 10150 - Ground Lease and Easement A0reement dated as of September 15,1987, between Ohio Edison Company, Ground Leesor, and The First Natonal Bank of Boston, as Owner 1 rustee under a Trust Agreement, dated as of September 15,1987, with Chrysler Consortium Cergvi.Li, Tenant (1987 Form 10-K, Exhibit 2817.) (F) 10-151 - Trust A0reement dated as of September 15,1987, between Chrysler Consortium Coryvi.Li, as Owner Participant, and The First Nabonal Bank of Boston. (1987 Form 10-K, Exhibit 28-18.) (F) 10-152 -Trust indenture, Mortpage, Security Agreement and Assignment of Faciitty Lease dated as of September 15,1987, between the First National Bank of Boston, as Owner Trustee under a Trust A0reement, dated as of September 15, 1987, with Chrysler Consortium Corporaton and Irving Trust Company, as indenture Trustee. (1987 Form 10-K, Exhibit 28-19.) (F) 10-153 - Supplemental indenture No.1 dated as of February 1,1988 to Trust indenture, Mortga00, Security A0reement and Assignment of Facility Lease dated as of September 15,1987 between The First National Bank of Boston, as Owner Trustee under a Trust A0rearrant dated as of September 15, 1987 with Chrysler Consortium Cv po 67 and Irving Trust Company, as indenture Trustee. (1987 Form 10-K, Exhibit 28-20.) (F) 10154 - Tax Indemnificahon A0reement dated as of September 15,1987, between Chrysler Consortium Corporation, as Owner Parbcipant, and Ohio Edson Company, as Lessee. (1987 Form 10-K, Exhibit 28-21.) (F) 10-155 - Amendment No.1 dated as of November 5,1992 to Tax In&T.-#,u.L. Agreement dated as of September 15,1987, between Chrysler Consortium Corporation, as Owner Participant, and Ohio Edison Company, as Lessee. (1994 Form 10-K, Exhibit 10-151.) 29 u

Exhadt thambat . (F) = 10-158 - Amendment No. 2 dated as of January 12,1993 to Tax IndemnlResten Agreement dated as of September 15,1987, between Chrysler Consorhum Corporshon, as Owner Partcipant, and Ohio Edison Company, as Lessee. (1994 Form 10 K, Exhibit 10152.) (F) 10157 - Amendment No. 3 dated as of September 30,1994 toTax Indemnl6 cation A0reemer't dated as of September 15,1987, between Chryolor Consortium Cu,i,v. uni, as Owner Participant, and Ohio Edison Company, as Lassee. (1994 Form 10-K, Exhibit 10-153.) (F) 10-158 - Assignment, Aneumpton and Further Agreement dated as of September 15,1987, among The First NaNonal Bank of Hooton,' as Owner Trustee under a Trust A0reement, dated as of September 15,1987, with Chrysler Consortium Corporshon, The Cleveiend Electric inuminating Company, Duquesne Light Cupony, Ohio Edison Company, Pennsylvanie Power Company, and Toledo Edison Company, (1987 Form 10 K, Exhibit 28-22.) (F) ' 10150 - Additional Support Agreement dated as of September 15,1987, between The First National Bank of Boston, as Owner Trustee under a Trust Agreement, debod as of September 15,1987, with Chrysler Consortium Corporshon, and Ohio Edison Company. (1987 Form 10-K, Exhibit 28-23.) 10180 - Operatino A0reement dated March 10,1987 with roepect to Pony Unit No.1 between the CAPCO Companies. (1987 Form 10-K, Exhibit 28-24.) 10-161 - Operating Agreement for Bruce Menensid Units Nos.1,2 and 3 dated as of June 1,1976, and executed on September 15,1987, by and between the CAPCO Companies. (1987 Fcwm 10 K, Exhibit 28-25.) 10-182 - Operating Aeroement for W. H. Sommis Unit No. 7 dated as of September 1,1971 by and between the CAPCO Companies. (1987 Form 10-K, Exhibit 28-28.) 10183 - OE-APS Power interchange Agreement debod March 18, 1987, by and among Ohio Edison Company and Pennsylvanie Power Company, and Monon0ehele Power Company and West Penn Power Company and The Potomac Edison Company. (1987 Form 10 K, Exhibit 28-27.) 10164 - OE PEPCO Power Supply Agreement dated March 18, 1987, by and among Ohio Edison Company and Pennsylvania Power Company and Potomac Electric Power Company. (1987 Form 10 K, Exhibit 28 28.) 10185 - Supplement No.1 dated as of Apr8 28,1987, to the OE-PEPCO Power Supply Agreement dated March 18,1987, by and among Ohio Edson Company, Pennsylvania Power Company, and Potomac Electric Power Company. (1987 Form 10 K, Exhibit 28-29.) 10-166 - APS-PEPCO Power Rossie A0rooment dated March 18,1987, by and amon0 Monongahele Power Company, West Penn Power Company, and The Potomac Edison Company and Potomac Electric Power Company. (1987 Form 10 K, Exhibit 28-30.) (A) 12.1 - Corm flued charge ratios. (A) 13.1 - 1998 Annual Report to Stockholders. (Only those portions expressly incorporated by reference in this Form 10 K are to be deemed 'llier wNh the SEC.) (A) 21.1 - List of %hahrtes of the Registrant at December 31,1998. (A) 23.1 - Consent of independent Pubbe Accountants (A) 27.1 - Financial Data Schedule '(A) Provided herein in electronic format as an exhibit. (B) Pursuant to peregraph (b)(4)(lii)(A) of item 601 of Rs0uishon S-K, OE has not flied as an exhibit to this Form 10-K any instrument with respect la long-term debt if the total amount of securities authorized thereunder does not exceed 10% of the total assets of OE and its subsidianos on a consoldsted basis, but hereby agrees to fummh to the SEC on request any such instruments [

Exhibit Number -(C) Management contract or www"=y plan contract or anongement flied pursuant to nem 601 of Regulabon S-K. (D) SubetontiaNy simRer documents have been entered into relating to three addebonal Owner Partopants (E) SubstantiaNy similar documents have been entered into reichng to five additional Owner Participants. (F) Substantially similar documents have been entered into relahng to two addibonal Owner Parbcipants Note: Reports of OE on Forms 10-Q and 10-K are on file with the SEC under number 12578. Pursuant to Rule 14a - 3 (10) of the Securities Exchange Act of 1934, the Company win fumish any exhibit in this Report upon the payment of the Company's exponess in fumiehin0 such exhibit. 3. Exhibits Penn 31 - Agreement of Merger and CorsarMahrwi deled AprH 1,1929, among Pennsylvania Power Company (Penn), Harmony Electric Company and Peoples Power Ccmpany (consummeled May 31,1930), copies of Letters Patent issued the' son, together wHh the Fler*wi Retum and Treasurer's Retum, relative to decrease o' capital stock; Election Retum authorizin0 change of capital stock and increcee of indebtedness; Election Retum authortrin0 chen0e of capital skx*; Flar*wn Retum authortzing increase of capital stock; Elodion Retum adahhhing 4.24% Profened Stock, CatNicots wNh respect to the estabhehment of the 4.64% Profened Stock, Elodion Retums and CatWicotes of Actual Sale in connection with the purdiese by Penn Power of a8 the property of Pine-Mercer Electric Company, industry Borough Electic Company, Ohio Tcwnship Electic Company, and Shippingport Borough Electric Company; Cerghosts of Change of Locedon of Penn Powers pr;bpel omes; Cathcote of Consent authortring increses in sulhortred Common Stock; CwdRcate of Consent wNh respect to the removal of umitations on the aushortred amount of indebtedness of Penn Power; Electen Retums and CanRostes of Actual Seie in conneden wah em purchase by Penn Power of au the proputy of Bomisk Pubuc Service Company, Easdex Public Servios Company, Norango Pubuc Swvice Company, Sedwick Pubhc Service Company, Soesn00 Pubbe Service Company, Surrick Pubuc Savice Company, Wesen00 Pubbe Savios Company, and Weedax Pubuc Service Company: Cwgnosto of Change of Locedon of Penn Power's principal ofRoe; Amendment to the Charter extending the territory in which Penn Power may operate in the Bomugh of Shippingport, Beever County, Pennsylvania; Cannoots of Consent authortzing incraees in authortred Common Stock.; CoreAcete wHh respect to the estabbehment of the 8% Prefened Stock; Cer9 Aceto accepen0 Business Corporshon Law of Pennsylvania for govemment and regulebon of aNeirs of Penn Power; Articles of Amendment incorporann0 certain protoceve provisions rotseng to Prefened Stock,incrossin0 amount of aulhorized Prefened Skxk and aulhortring future increases in amounts of aulhortred Prefened Skxk wNhout e vote of the holders of Pretened Stock; Articles of Amendment incrossing the aulhortred number of sharea of Common Stock; Statement Afleceng Ctses or Series of Shares wth respect to the estabNehment of the 7.64% Preferred Stock; Articles of Amendment increening the authortred number of skwes of Common Stock: Artidos of Amendment incrossing the number of authortred shores of Prolened Stock: Statement Affecting Class or Series of Shores with respect to the establishment of the.8.48% Prefened Stock; Artcles of Amendment authortring einidnD fund requwoments for Prefened Stock, Statement Affecting Class or Series of Shares with roeped to the estehushment of the 11% Pmforred Stock: Articles of Amendment increasing the authorized number of shares of Common Stod; Statement Afteding Class or Series of Shares with respect to the estabashment of the 9.10% Preferred Stock; Articles of Amendment increasin0 aulhortzed number of shares of Common Stock; Articles of Amendment increasin0 authortred number of shares of Profoned Stock; Statement Aflecting Class or Series of Shares with resped to the estabushment of the 8.24% Profoned Stock: Stolement Affeceng Class or Series of Shares with respect to the establishment of the 10.50% Pretened Stock; Articles of Amendment increasin0 authortred number of shares of Common Stock; Articles of Amendment increasing authortred number of shares of Pretened Stock; Statement Afteding Class or Series of Shares with respect to the establishment of the 15.00% Profoned Stock; Statement Affecting Class or Series of Shares with respect to the establehment I of the 11.50% Prolened Stock; Artcies of Amendment increasing authorized number of shares of Pretened Stock; Statement Affeceng Class or Series of Shares with respect to the estabhehment of the 13.00% Preferred Stock, Statement Affochng Class or Series of Shares with respect to the establishment of the 11.50% Preferred Stock, Series B; Articles of Amendment effecove AprH 2,1987, adding a standard of care for, and hmibng the personal liability of, officers and drectors, Articles of Amendment effecbve AprH 1,1992, setting forth cx>rporate purposes of the Company; Statement With Respect to Shares with respect to the estabushment of the 7.625% Pretened Stock and Statement wNh Respect to 1 I 31

l { Exhibit y.mnbar Shares with respect to the estabishment of the 7.75% Preferred Stock.(Piryke,;;f lied and designated f respedively, as fonows: in Form A-2, Registrahon No. 2-3889, as Exhibit A-1; in Form 1-MD for 1938, Fue No2-3889, as Exhibit (a) 1; in Form 1-MD for 1945, File No. 2 3889, as Exhbit A; in Form U-1, File No. 70-2310, as Exhibit A-3 (d); in Form 8-K for March 1951, File No.1-3491, as Exhibit B; in Form 8-K for June 1958, Flie No. 1 34918, as Exhibit 1; in Form 10-K for 1959 as Exhibits 1,2,3 and 4; in Form 8-K for Mord 1980, Fue No.13491B as Exhibit A; in Form U-1. File No. 70-3971, as Exhibit A-2; in Form U-1, Fue No. 70-4055, as Exhibit A 2; as Exhibits 1 through 8 in Form 8-K for January 1982, Fue { No.1-3491; as Exhibit A in Form 8-K for Au9ust 1983 File No.13491; as Exhibits A and B in Form 8-K for September 1989, File No.13491; as Exhibit B in Form 8 K for April 1971 File No.1-3491; as ExNbit B in Form 8-K for September 1971, Fue No.1-3491; in Form U-1, Re No. 70-5264, as ExNbit A-2; as ExNbit A in Form 8-K for September 1972, File No.1-3491; as Exhitut A in Form 8-K for December 1972. Fue No.1-3491; as Exhibit A in Form 8-K for March 1973, File No.13491; as Exhibit A i in Form 8-K for December 1973, File No.1-3491; as Exhibits A and C in Form 8-K for February 1974, File No.13491; as Exhibits A and B in Form 8 K for January 1975, File No.1-3491; as Exhibit F in Form 8-K for May 1975, File No.1-3491; as Exhibt A in Form 8 K for Aprg 1976, Fue No.13491; as ExNbit G in Form 10-Q for quarter ended June 30,1977 File No.1-3491; as Exhibit C in Form 10 K for i 1977, File No.13491; as Exhibit A in Form 10-K for 1977 Fue No.13491; as Exhibit D in Form 10-Q for j quarter ended June 30,1980, File No.1-3491; as ExNbit (4) in Form 10-Q for quarter ended June 30, 1981, File No.1-3491; as Exhibit 4 in Form 10 Q for quarter ended June 30,1982, File No.1-3491; as Exhibit 4 in Form 10-Q for quarter ended September 30, 1982, File No.1-3*91; as Exhibit 4 in Form 10-Q for quarter onded September 30,1983, File No.1-3491; as Exhibit 4 in Form 100 for quarter j onded March 31,1984, File No.1-3491; as Exhibit 4 in Form 10-Q for quarter ended June 30,1984, File No.1 3491; as Exhibit 4 in Form 10-Q for quarter ended September 30,1985, File No.1 3491; as Exhibit 3-2 in Form 10-K for 1987 File No.1-3491; as Exhibit 3-2 in Form 10-K for 1992 FHe No.1-3491; as Exhibit 19-2 in Form 10-K for 1992 File No.1-3491; and as Exhibit 3-2 in Form 10-K for 1993 Fue No.1-3491.) 3-2 - By-Laws of Penn as amended March 25,1992. (1992 Form 10-K, Exhibit 3-3, File No.13491.) A-1* - Indenture deled as of November 1,1945, between Penn and The First National Bank of the City of New York (now Citibank, NA), as Trustee, as supplemented and amended by Supplemental indentures dated as of May 1,1948, March 1,1950, February 1,1952, October 1,1957, September 1,1982, June 1,1983, June 1,1989, May 1,1970, Aprd 1,1971, October 1,1971 May 1,1972, December 1, 1974, Odober 1,1975, September 1,1978, AprR 15,1978, June 28,1979, January 1,1980, June 1, 1981 January 14,1982, Au0ust 1,1982, December 15,1982, December 1,1983, September 8,1984, December 1,1984, May 30,1985, October 29,1985, Au0ust 1,1987, May 1,1988, November 1,1989, i December 1,1990, September 1,1991, May 1,1992, July 15,1992, Au0ust 1,1992, and May 1,1993, July 1,1993, Au9ust 31,1993, September 1,1993, September 15,1993, October 1,1993, November 1, 1993 and Au0ust 1,1994. (Physically filed and desi9noted as Exhibits 2(b) (1)1 throu9h 2(b) (I) 15 in Re9istration Statement File No. 2 80837; as Exhibus 2(b) (2), 2(b) (3), and 2 (b) (4) in Re9istration Statement File No. 2 68908; as Exhibit 4-2 in Form 10 K for 1981 Fue No.1-3491; as Exhibit 19-1 in Form 10-K for 1982 FNe No.13491; as Exhibit 191 in Form 10-K for 1983 Fue No.13491; as Exhibit 19-1 in Form 10 K for 1984 Flie No.13491; as Exhibit 191 in Form 10-K for 1985 File No.1-3491; as Exhibit 19-1 in Form 10-K for 1987 File No.13491; as Exhbit 19-1 in Form 10-K for 1988 Fue No.1-3491; as Exhibit 19 in Form 10-K for 1989 Fue No.13491; as ExNbit 19 in Form 10-K for 1990 File No. 13491; as Exhibit 19 in Form 10-K for 1991 Flie No.13491; as Exhitzt 19-1 in Form 10-K for 1992 Flie No.1-3491; as Exhibit 4-2 in Form 10-K for 1993 File No.13491; and as Exhbit 4-2 in Form 10-K for 1994 Fue No.1-3491.) 4-2 - Suppiamental indenture dated as of September 1,1995, between Penn and Citibank, NA, as Trustee (1995 Form 10-K, Exhibit 4-2.) 43 ' - Suppiemontal indenture detod as of June 1,1997, between Penn and Citibank, NA, as Trustee. (1997 Form 10-K, Exhibit 4-3.) Pursuant to paragraph (b) (4) (iii) (A) of item 601 of Regulation S-K, Penn has not flied as an exhibit to this Form 10-K any instrument with respect to lon9-term debt if the total amount of securities authorized thereunder does not exceed 10% of the total assets of Penn, but hereby agrees to fumish to the Commission on request any such instruments 32

Exhildt Nanbar (A) 44 - Supplemental indenture detod as of June 1,1998, between Penn and Citibank, N.A., as Trustee 10 Administration Agreement between the CAPCO Group deled as of September 14,1967. (Regletraton Statement of Ohio Edison Company, File No. 2-43102, Exhibit 5 (c) (2).) 10 Amendment No.1 deled January 4,1974 to Administration Agreement between the CAPCO Group dated as of September 14,1967. (Registration Statement No. 2-68906, Exhibit 5 (c) (3).) .10 Tranernission Factitles Agreement between he CAPCO Group dated as of September 14, 1967. (Registration Statement of Ohio Edison Company, File No. 2 43102, Exhibit 5 (c) (3).) 104 - Amendment No.1 dated as of January 1,1993 to Transmiselon Faculbes Agreement between the CAPCO Group dated as of September 14,1967. (1993 Form 10-K, Exhibit 10 4, Ohio Edison Company.) 10 A0reement for the Terminellon or Construction of Certain AO'eements eRechve September 1,1980 among the CAPCO Group (Registration Statement No. 2-68906, Exhibit 104.) 104 - Amendment dated as of December 23,1993 to Agreement for the Termination or Constructon of Certain A0reements eGective September 1,1980 among the CAPCO Group. (1993 Form 10-K, Exhibit 104, Ohio Edison Company.) 10 7 - CAPCO Basic Operating A0reement, as amended September 1,1980. (Registration Statement No. 2-88906, as Exhbit 10-5.) 104 - Amendment No.1 dated August 1,1981 and Amendment No. 2 dated September 1,1982, to CAPCO Basic Operatin0 A0reement as amended September 1,1980. (September 30,1981 Form 10-Q, Exhibit 20-1, end 1982 Form 10-K, Exhibit 19-3, File No.1-2578, of Ohio Edison Company.) 10 Amendment No. 3 dated as of July 1,1984, to CAPCO Basic Operaung Agreement as amended September 1,1980. (1985 Form 10 K, Exhibit 10-7, FBe No.1 2578, of Ohio Edloon Company.) 10 Basic Operaeng Agreement between the CAPCO Companies as amended October 1,1991. (1991 Form 10 K, Exhibit 104, fro No.1-2578, of Ohio Edison Company.) 10 Basic Operating Agreement between the CAPCO Companies, as amended January 1,1993. (1993 Form 10 K, Exhibit 1011, Ohio Edison Company.) 10 Memorandum of Agreement eGeceve as of September 1,1980, among the CAPCO Group. (1991 Form 10 K, Exhibit 15k2, Ohio Edison Company.) 10 Operating Agreement for Beever Vaney Power Stadon Units Nos.1 and 2 as Amended and Restated September 15,1987, by and between the CAPCO Companies. (1987 Form 10 K, Exhibit 10-15 Fue No.1-2578, of Ohio Edloon Company.) 10 Construcean A0reement with roeped to Perry Plant between the CAPCO Group dated as of July 22, 1974. (Registration Sletament of Toledo Edloon Company, Fue No. 2-52251, as Exhibit 5 (yy) ) 10 Participation Agreement No.1 reisene to the financing of the development of certain coal mines, dated as of October 1,1973, among Quarto Minin0 Company, the CAPCO Group, Energy Properties, Inc., General Electric Credit Corporadon, the Lmen Portelpents listed in Schedules A and B thereto, Central National Bank of Cleveland, as Owner Trustee, Nabonel City Bank, as taan Trustos, and Notonal City Bank, as Bond Trustee (Registrabon Statement of Ohio Ediran Company, FBe No. 241146, Exhibit 5 (e)(1).) 10 Amendment No.1 dated as of September 15,1978, to ParMrdan Agreement No.1 dated as of October 1,1973, among Quarto Mming Company, the CAPCO Group, Energy Properties, Inc., General Electric Credit Corporaton, the Loan Participants listed in Schedules A and B thereto, Central Nathal Bank of Cleveiend, as Owner Trustee, Nelional City Bank, as Loan Trustos, and National City Bank, as Bond Trustee. (Registration Statement No. 248906, Exhibit 5 (e) (2).) 10 ParMpahnn A0reement No. 2 relehng to the financmg of the development of certain coal mines, dated as of August 1,1974, among Quarto Mining Company, the CAPCO Group, Energy Proportes, Inc., 33

) ~ Exhibit Nia:Idin General Electric Credit Corporation, the Loen Participants Hoted in Sdiedules A and B thereto, Central National Bank of Cleveland, as Owner Trustee, Nanonal City Bank, as Laon Trustee, and National City - Bank, as Bond Trustee. (Ohio Edison Company, File No. 2-53050, Exhibit 5 (h) (2).) i 10 Amendment No.1 dated as of September 15, 1978, to Par iripman't A0reement No. 2 dated as of e August 1,1974, among Quarto Minin0 Company, the CAPCO Group, Energy Properties, Inc., General Electric Credit Corporatior the Loan Participants Rated in Schedules A and B thereto, Central National 1 Bank of Cleveland, as Ows.or Tr'#.x Nelional City Bank, as Loan Trustee, and National City Bank, as i Bond Trustee. (Registratkm Statement No. 248906, Exhibit 5 (e) (4).) 1019 - Parlicipadon Agreement No. 3 relebnD to the finendn0 of the e_ ' -..ua of certain coal mines, dated as of September 15,1978, among Quarto Mining Company, the CAPCO Group, Energy Proper 6es, Inc., Gerarel Electric Credit Corporebon, the Loan Participants hated in Schedules A and B thereto, Central Nabonel Bank of Cleveland, as Owner Trustee, Nadonal cry Bank, as Loan Trustes, and National City Bank, as Bond Trustee (Registrabon Statement No. 248006, ExNbit 5 (e) (5).) 10 Participebon Agreement No. 4 relehne to the financin0 of the C. T-. 4 of certers coal mines, deled as of October 31,1980, among Quarto Mming Company, the CAPCO Group, the Loan Participants listed in Schedule A thereto and Nobonel City Bank, as Bond Trustee (Registrabon Statement No. 248906, Exhibit 10-16.) 10 Participetlon A0reement No. 5 deled as of May 1,1986, among Quarto Mining Company, the CAPCO Companies, the Loan Parecipants listed in Schedule A thereto and National City Bank, as Bond Trustee. (1986 Form 10-K, Exhibit 1022, Fue No.1-2578, Ohio Edloon Company.) 10 Participabon Agreement No. 6 detod as of December 1,1991, among Quarto Minin0 Company, the CAPCO Companies, the Loan Participants listed in Schedule A thereto, National City Bank, as MortDage j Bond Trustee, and Neuonal City Bank, as Refunding Bond Trustee. (1991 Forr,i 10-K, Exhibit 10-19, Fue j No.1-2578, Ohio Edison Company.) 1023 - A0reement entered into as of Odober 20,1981, amon0 the CAPCO Companies regardine the use of Quarto Cool at Menegold Units Nos.1,2 and 3. (1981 Form 10 K, Exhbit 20-1, Fue No.12578, Ohio Edloon Company.) 10 Ros,ated Opeon Agreement deled as of May 1,1983, by and between The North American Coal Corpora 8on and the CAPCO Companies. (1983 Form 10-K, ExNbit 19-1. File No.1-2578, Ohio Edloon Company.) '10 Trust indenture and MortDe0s dated as of October 1,1973, between Quarto Minin0 Company and National City Bank, as Bond Trustee, together wth Guaranty, dated as of Odober 1,1973, wth respect i thereto by the CAPCO Group. (Registraton Statement of Ohio Edison Company, FNs No. 2 41146, Exhibit 5 (e)(5).) 10 Amendment No.1 deled August 1,1974, to Trust indenture and Mortgego dated as of October 1,1973, between Quarto Mining Company and Nabonel City Bank, as Bond Trustee, together wth Amendment No.1 deled August 1,1974, to Guaranty deled as of October 1,1973, with respect thereto by the 1 CAPCO Group. (Regib,trabon Statement of Ohio Edloon Company, Fue No. 2-53059, Exhibit 5 (h) (2).) 10 Amendment No. 2 dated as of September 15,1978, to Trust indenture and Mortgage debod as of October 1,1973, as amended, between Quarto Mining Company and National City Bank, as Bond Trustee, together with Amendment No. 2 deled as of September 15,1978, to Bond Guaranty deled as of Ar**ar 1,1973, as amended, between the CAPCO Group and Nagonal C,ity Bank, as Bond Trustee (Regietnedon Stelement Nc 2-68006, ExNbits 5 (e) (11) and 5 (e) (12).) 10-28 _- Amendment 02. 3 dated as of October 31,1980, to Trust indenture and MortDeGe dated as of October 1, 1973, as amended, between Quarto Mining Company and National City Bank, as Bond Trustee. (Ragistration Statement No. 2-68906, Exhibit 1016.) 10 Amendment No. 4 deled as of July 1,1985, to Trust indenture and Mortgage dated as of October 1, 1973, as amended, between Quarto Mming Company and National City Bank, as Bond Trustee. (1985 Form 10 K, Exhbit 10-28, Fue No.12578, Ohio Edison Company.) 34

1 Exhibit Number 10 Amendment No. 5 dated as of May 1,1986, to Trust indenture and Mortgage dated as of October 1, 1973, as amended, between Quarto Mining Company and National City Bank, as Bond Trustee. (1986 Form 10-K, Exhibit 10-30, File No.1-2578, Ohio Edison Company.) 10 Amendment No. 6 dated as of December 1,1991, to Trust inderiture and Mort 0aDe dated as of October 1,1973, as amended, between Quarto Mining Company and National City Bank, as Bond Trustos. (1991 Form 10-K, Exhibit 10-28, File No.1-2578, Ohio Edison Company.) 10 Trust indenture deled as of December 1,1991, between Quarto Mining Company and National City Bank, as Bond Trustee. (1991 Form 10-K, Exhibit 10-29, File No.1 2578, Ohio Edison Company.) 10 Amendment No. 3 deled as of October 31,1980, to the Bond Guaranty dated as of October 1,1973, as amended, with respect to the CAPCO Group. (Registrabon Statement No. 2 68906, Exhibit 10-16.) 10 Amendment No. 4 deled as of July 1,1985, to the Bond Guaranty dated as of October 1,1973, as amended, by the CAPCO Companies to Naikmal City Bank, as Bond Trustee. (1965 Form 10K, Exhibit 10-30, File No.1-2578. Ohio Edison Company.) 1 10 Amendment No. 5 deled as of May 1,1986, to the Bond Guaranty dated as of October 1,1973, as amanded, by the CAPCO Companies to National City Bank, as Bond Trustee (1986 Form 10-K, Exhibit 10 33, File No.1-2578, Ohio Edison Company.) 10 36 - knendment No. 8A dated as of December 1,1991, to the Bond Guaranty dated as of October 1,1973, as amended, by the CAPCO Companies to Nabonal City Bank, as Bond Trustee. (1991 Form 10 K, 8 Exhibit 10-33, File No.1-2578, Ohio Edison Company.) i 10 Amendment No. 6.:., deled as of December 30,1991, to the Bond Gunanty dated twi of October 1,1973, as amended, by the CAPCO Companies to National City Bank, as Bond Trustne. (1991 Form 10-K, Exhibit 10-34, File No.1-2578, Ohio Edison Company.) 10 Bond Guaranty dated as of December 1,1991, by the CAPCO Companies to National City Bank, as Bond Trustee. (1991 Form 10 K, Exhibit 10-35, Fue No.1-2578, Ohio Edison Company.) 10 Open End Mor10a9e dated as of October 1,1973, between Quarto Mming Company and the CAPCO Companies and Amendment No.1 thereto debod as of September 15,1978. (Registrallon Statement No. 2-68008, Exhibit 10 23.) 10 40 - Restructuring Agreement dated as of AprI 1,1985, among Quarto Mining Company, the CAPCO Companies, Energy Pmporties, Inc., General Electric Credit Corporation, the Loan Partidpenis listed in schedules thereto, Central National Bank of Cleveland, as Owner Trustee, Neuonal City Bank, as Loan Trustee, and National City Bank, as Bond Trustee. (1985 Form 10 K, Exhibit 10-33,' File No.1-2578, Ohio Edison Company.) I 10 41 - Unsecured Note Guaranty dated as of July 1,1985, by the CAPCO Companies b General Electric ) Credit Corporalen. (1985 Form 10-K, Exhibit 10 34, Fue No.1-2578, Ohio Edison Company.) 1 10 42 - Memorandum of Understanding dated as of March 31,1985, among the CAPCO Companies. (1985 Form 10 K, Exhibit 10-35, File No.1-2578, Ohio Edloon Company.) (B) 10 43 - Ohio Edison System Execupve Supplemental Life insuranos Plan. (1995 Form 10-K, Exhibit 10 44, File No.1-2578, Ohio Edison Company.) (B) 10 Ohio Edison System Execullve inconWve Compensation Plan. (1995 Form 10-K, Exhibit 10 45, File No. 12578, Ohio Edison Company.) (B) 1045 - Ohio Edison System Restated and Amended Executive Deferred Compensabon Plan. (1995 Form 10-K, Exhibit 10 46, File No.1 2578, Ohio Edison Company.) (B) 10 Ohio Edison System Restated and Amended Supplemental Executive Retirement Plan. (1995 Form 10-K, Exhibit 10 47, File No.12578, Ohio Edison Corrpeny.) 36

Exhibit Number 1047 - Operstmg A reement for Pony Unit No.1 dated March 10, 1987, by and between the CAPCO 0 Companies. (1987 Form 10-K, Exhibit 28-24, File No.1-2578, Ohio Edison Company.) 10 48 - Operating /W for Bruce Manensid Units Nos.1,2 and 3 dated as of June 1,1976, and executed on September 15,1987, by end between the CAPCO Companies. (1987 Form 10-K, Exhibit 28-25, File No.12578, Ohio Edison Company.) 10 Operaung A0reement for W. H. Sommis Unit No. 7 dated as of September 1,1971, by and between the CAPCO Companies. (1987 Form 10-K, Exhibit 28-26, File No.12578, Ohio Edison Company.) 10 OE-APS Power interchan0e A0reement deled March 18,1987, by and among Ohio Edison Company and Pennsylvania Power Company, and Monongahele Power Company and West Penn Power Company er4 The Potomsc Edison Company. (1987 Form 10-K, Exhibit 28-27, File No.1-2578, of Ohio Edison Company.) 10 51 - OE-PEPCO Power Supply A0reement dated March 18,1987, by and amon0 Ohio Edison Company and Pennsylvania Power Company and Potomac Electric Power Company. (1987 Form 10-K, Exhibit 28-28, File No.1-2578, of Ohio Edison Company.) 10 Supplement No.1 dated as of Apru 28, 1987, to the OE PEPCO Power Supply Agreement dated March 18,1987, by and among Ohio Edison Company, Pennsylvanie Power Company and Potomac Electric Power Company. (1987 Form 10 K, ExhitNt 28-29, File No.1-2578, of Ohio Edison Company.) 10 APS PEPCO Power Resale Agreement dated March 18,1987, by and among Monon0ahele Power Company, West Penn Power Company, and The Potomac Edison Company and Potomac Electric Power Company. (1987 Form 10-K, Exhibit 28-30, File No.1-2578, of Ohio Edison Company.) 10 Pennsylvania Power Company Master C++,. t,l,,, Trust Agreement for Beever Valley Power Staten and Pony Nucieer Power Plant dated as of AprW 21,1995. (Quarter ended June 30,1995 Form 10-Q, Exhibit 10, Fue No.1-3491.) 10 Nuclear Fuel Leses dated as of March 31, 16189, between OES Fuel, incorporated, as i.eesor, and Pennsylvania Power Company, as Lassee. (1989 Form 10 K, Exhibit 10 39, File No.1-3491.) (A) 12.2 - Fixed Charge Rabos (A) 13.4 - 1998 Annual Report to Stockholders. (Only those portons expressly incorporated by reference in this Form 1(MC are to be doomed '1lled"with the Securities and Exchange Commission.) (A) 23.3 - Consent of independent Public Accountants. (A) 27.4 - Finandel Data Schedule (A) Provided herein in electronic formet as an exhibit. (b) Management contract or compensatory plan contract or arrangemord Wed pursuant to item 601 of Reguisbon S-K. Pursuant to Rule 14a - 3(10) of the Securtbes Exchange Act of 1934, the Company wul fumish any exhibit in this Report upon the payment of the Company's expenses in fumiehin0 auch exhibit. 3. Exhibits Common Exhibits to CEI and TE Exhibit Number 2(a) - A reement and Plan of Merger between Ohio Edison and Centerior Energy dated as of September 13, 0 1998 (Exhibit (2)-1, Form S-4 File No. 333-21011, flied by FirstEnergy). 2(b) - Merger Agreement by and among Centerior Acquisibon Corp., FL.O,er y and Centerior (Exhibit (2) 3, v Form S-4 File No. 333-21011, filed by FirstEnergy. 36

Exhibit Nialidaat 4(a) - Rights Agreement (Exhibit 4, June 25,1996 Form 8-K, File Nos.1-9130,12323 and 1-3583). 4(b)(1) - Form of Note indenture between Cleveland Electric, Toledo Edison and The Chase Manhattan Bank, as Trustos dated as of June 13,1997 (Exhibit 4(c), Form S 4 File No. 333-35931, filed by Clevolend Elodnc and Toledo Edison). j 4(b)(2) - Form of First Supplemental Note indenture between Cleveland Electric, Toledo Edison and The Cnase Manhattan Bank, as Trustee dated as of June 13,1997 (Exhibit 4(d), Form S-4 File No. 333-35931, filed by Cleveland Electric and Toledo Edison). 10b(1)(a) - CAPCO Administration Agreement debod November 1,1971, as of September 14,1967, among the CAPCO Group members regardmg the organizahon and procedures for implementing the objectives of the CAPCO Group (Exhibit 5(p), Amendment No.1. File No. 2-42230, filed by Cleveland Electne). 1 10b(1)(b) - Amendment No.1, dated January 4,1974, to CAPCO Administration Agreement among the CAPCO Group members (Exhibit 5(c)(3), File No. 2-68906, filed by Ohio Edison). 3 j 10b(2) - CAPCO Transmiselon Facinues A0reement dated November 1,1971, as of September 14,1967, among the CAPCO Group members regarding the instensbon, opershon and maintenanos of transmission fadNues to carry out the objeckves of the CAPCO Group (Exhibit 5(q), Amendment No.1, File No. 2-42230, filed by Cleveland Electnc). 4 10b(2)(1) - Amendment No.1 to CAPCO Transrmoecn Faciubes Agreement, deled December 23,1993 and effective as of January 1,1993, among the CAPCO Group rnombers regarding requirements for payment of invoices at speemed times, for payment of interest on non-umely paid invoices, for reevicting adpuotment of invoces ener a four-year penod, and for revismo the method for compuung the investment Responsibitty charge for use of a member's transmission faculties (Exhibit 10b(2)(1),1993 Form 10-K, File Nos.1-9130,1-2323 and 13583). 10b(3) - CAPCO Basic Operahng Agreement As Amended January 1,1993 among the CAPCO Group members regarding coordneted opershon of the members' systems (Exhibit 10b(3),1993 Form 10 K, File Nos.1-9130,1-2323 and 1-3583). - A reement for the Termination or Construction of Certain A reement By and Among the CAPCO Group 10b(4) 0 0 members, dated Deoomber 23,1993 and eNec#ve as of September 1,1980 (Exhibit 10b(4),1993 Form 10 K, Fue Nos.1-9130,1-2323 and 13583). 10b(5) - Construcean Agreement, detod July 22,1974, among the CAPCO Group members and relating to the Perry Nucteer Plant (Exhibit 5 (yy), Flie No. 2-52251, filed by Toledo Edison). 10b(6) - Contract, deled as of December 5,1975, among the CAPCO Group members for the construction of Beever Vaney Unit No. 2 (Exhibit 5 (g), File No. 2-52996, fled by Cleveiend Electic). 10b(7) - Amendment No.1, dated May 1,1977, to Contract, dated as of December 5,1975, among the CAPCO Group members for the coneeuchon of Beever Vatey Unit No. 2 (Exhibit 5(d)(4), Fue No. 2-60109, filed i by Ohio Edison). 10d(1)(a) -- Form of t'anaantal Trust indenture among CTC Beaver Vaney Funding Corporadon, Cleveland Electric, Toledo Edison and Irving Trust Company, as Trueles (Exhibit 4(a), Fue No. 33-18756, fuod by Cleveland Electric and Toledo Edison). 10d(1)(b) - Form of Supplemental indenture to Collsteral Trust indenture constNueng Exhibit 10d(1)(a) above, including form of Secured Lasse Obugadon Bond (Exhibit 4(b), Fue No. 3318755, fled by Cleveland Electric and Toledo Edison). 10d(1)(c). - Form of Consteral Trust indenture among Beaver Vaney ll Funding Corporation, The Cleveland Elechte lituminating Company and The Toledo Edison Company and The Bank of New York, as Trustee (Exhibit (4) (a), File No. 33 46665, flied by Cleveland Electric and Toledo Edison). 10d(1)(d) - Form of Supplemental indenture to Counteral Trust indenture consstuting Exhibit 10d(1)(c) above, includmg form of Secured Lease Obugation Bond (Exhibit (4) (b), File No. 33-46665, filed by Cleveland Eleckic and Toledo Edison). 37

Exhhlt m 10d(2)(a) - Form of CoNeteral Trust indenture among CTC Mansileid Funding Ce,Tev,= sun, Cleveland Electric, Toledo Edison and IBJ Schroder Bank & Trust Company, as Trustee (Exhibit 4(a), Fue No. 33-20128, filed by Cleveland Electric and Toledo Edison). 10d(2)(b) - Form of Supplemental indenture to Counteral Trust indenture constituting Exhibit 10d(2)(a) above, including forms of Secured Lease OblI0ation Bonds (Exhibit 4(b), FHe No. 33-20128, filed by Cleveland Electric and Toledo Edison). 10d(3Xa) - Form of FaciNty Lease dated as of September 15,1987 between The First Nabonal Bank of Boston, as Owner Trustee under a Trust Agreement dated as of September 15,1987 with the limited partnership Owner Participant named therein, Leesor, and Cleveiend Electric and Toledo Edison, Lessess (Exhibit 4(c), FNe No. 33-18755, flied by Cleveland Electric and Toledo Edison). 10d(3)(b) - Form of Amendment No.1 to FaciNty Lease constitutinD Exhibit 10d(3)(a) above (Exhibit 4(e), File No. 3318755, filed by Cleveland Electric and Toledo Edloon). 10d(4)(a) - Form of Facihty Lones dated as of September 15,1987 between The First National Bank of Boston, as Owner Trustos under a Trust Agreement dated as of September 15,1987 with the corporate Owner Participent named therein, Lessor, and Cleveiend Electric and Toledo Edison, I maa== (Exhibit 4(d) File No. 33-18755, fHed by Cleveland Electric and Tolode Edloon). 10d(4Xb) - Form of Amendment No.1 to Faciuty Lease constNubng Exhibit 10d(4)(a) above (Exhibit 4(f), Fue No. 33-18755, filed by Cleveiend Electric and Toledo Edison). 10d(5)(a) - Form of FaciNty Lease dated as of September 30,1987 between Meridian Trust Company, as Owner Trustee under a Trust A0reement dated as of September 30,1987 with the Owner Participant named therem, Lessor, and Cleveland Electric and Toledo Edloon, Leseoes (Exhibit 4(c), FBe No. 33-20128, i filed by Cleveland Electric and Toledo Edison). 10d(5)(b) - Form of Amendment No.1 to the Facluty Lemos conedtuene Exhibit 10d(5)(a) above (Exhibit 4(f), File No. 33-20128, filed by Cleveland Eisele and Toledo Edloon). 10d(6)(a) - Form of Participation Agreement dated as of September 15,1987 among the limited partnership Owner participent named therein, he Original Loon Participants Ested in Schedule 1 thereto, as Original Loon Parecipants, CTC Beever Vausy Fund Corporation, as Funding Corporadon, The First National Bank of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee, and Cleveland Electric and Toledo Edison, as Lessess (Exhibit 28(a), File No. 33-18755, filed by Cleveland Electric and Toledo Edison). 10d(6)(b) - Form of Amendment No.1 to Participollon A0reement conettutin0 Exhibit 10d(6) (a) above (Exhibit 28(c), File No. 33-18755, filed by Cleveland Electric and Toledo Edison). 10d(7)(a) - Form of Participehon Agreement dated as of September 15, 1987 among the corporate Owner Participant named therein, the Original Loan Parecipants Noted in Schedule 1 thereto, as Owner Loen Participants, CTC Beever Valley Funding Corporation, as Funding CorporaHon, The First Neuonal Bank of Boston, as Owner Trustee, Irving Trust Company, as indenture Trustee, and Cleveland Electric and Toledo Edison, as Leeseos (Exhibit 28(b), File No. 33-18755, filed by Cleveiend Electric and Toledo Edison). 10d(7)(b) - Form of Amendment No.1 to Participaticn Agreement consutuung Exhibit 10d(7) (a) above (Exhibit 28(d), FNe No. 33-18755, filed by Cleveland Elodric and Toledo Edloon). 10d(8)(a) - Form of Participebon A0reement dated as of September 30,1987 amon0 the Owner Participent named therein, the Ortpinal Loan Partidpents listed in Schedule 11 thereto, as Owner Loan Participants, CTC Manefleid Funding Corporation, Meridian Trust Company, as Owner Trustee, IBJ Schroder Bank & Trust Company, as indenture Trustee, and Cleveland Electric and Toledo Edison, as Lassees (Exhibit 28(a), FHe No. 33-20128, filed by Clevolend Electric and Toledo Edison). 10d(8)(b) - Form of Amendment No.1 to the Participation A0reement consutuung Exhibit 10d(8)(a) above (Exhibit 28(b), File No. 33-20128, filed by Cleveland Electric and Toledo Edison). 38

Exhibit Niladiat i l 10d(9) - Form of Ground Lease dated as of September 15,1987 between Toledo Edison, Ground Leesor, and The First National Bank of Boston, as Owner Trustee under a Trust A0reement dated as of September 15,1987 with the Owner Partkupant named therein, Tenant (Exhibit 28(e), File No. 33-18755, filed by Cleveland Electne and Toledo Edison). 10d(10) - Form of Site Lease dated as of September 30,1987 between Toledo Edison, Lessor, and Mendlan Trust Company, as Owner Trustee under a Trust Agreement dated as of September 30,1987 with the Owner Participent named therein, Tenant (Exhibit 28(c) File No. 33-20128, flied by Cleveland Electric and Toledo Edison). 10d(11) - Form of Site Lease dated as of September 30,1987 between Cleveland Electric, Leesor, and Mendian Trust Company, as Owner Trustee under a Trust A0reement dated as of September 30,1987 with the Owner Participant named therein, Tenant (Exhibit 28(d), File No. 33-20128, filed by Cleveland Electric and Toledo Edison). 10d(12) - Form of Amendment No.1 to the Site Lesses constitubnD Exhibits 10d(10) and 10d(11) above (Exhibit 4 (f), Fue No. 33-20128, filed by Cleveland Electric and Toledo Edison). 10d(13) - Fomi of Assignment, Assumption and Further A0reement dated as of September 15,1987 among The First National Bank of Boston, as Owner Trustee under a Trust Agreement dated as of September 15, 1987 with the Owner Panidpant named therein, Cleveland Electric, Duquesne, Ohio Edison, Pennsylvanie Power and Toledo Edloon (Exhibit 28(f), Fue No. 33-18755, filed by Cleveland Electric and Toledo Edison). 10d(14) - Form of Addibonal Support Agreement dated as of September 15,1987 between The First National Bank of Boston, as Owner Trustee under a Trust A0rooment dated as of September 15,1987 with the Owner Parbeipant named therein, and Toledo Edison (Exhibit 28(g), File No. 33-18755, flied by Cleveland Electric and Toledo Edison). 10d(15) - Form of Support Agreement detri as of September 30,1987 between Meridirin Trust Company, as Owner Trustee under a Trust Agreement dated as of September 30,1987 with the Owner Participent named therein, Toledo Edison, Cleveland Electric, Duquesne, Ohio Edloon and Pennsylvania Power (Exhibit 28(e). File No. 33-20128, filed by Cleveland Electric and Toledo Edison). 10d(18) - - Form of indenture, bin of Sale, instrument of Transfer and Severance Agreement dated as of September 30,1987 between Toledo Edison, Seller, and The First Nalional Bank of Boston, as Owner Trustee under a Trust Agreement dated as of September 15,1987 with the Owner Parbeipant named therein, Buyer (Exhibit 28 (h), File No. 33-18755, flied by Cleveland Elodric and Toledo Edison). 10d(17) - Form of bin of Sale, instrument of Treneler and Severence A0nsement dated as of September 30,1987 between Toledo Edison, SeNer, and Meridien Trust Company, as Owner Trustee under a Trust Agreement deled as of September 30,1987 with the Owner Participent named therein, Buyer (Exhusit 28(f), File No. 33-20128, filed by Cleveland Electric and Toledo Edloon). 10d(18) - Form of BNI of Sale, instrument of Traneler and Severance A0reement dated as of September 30,1987 between Cleveland Elecinc, SeNer, and Meridien Trust Company, as Owner Trustee under a Trust Agreement debod as of September 30,1987 with he Owner Participent named therain, Buyer (Exhibit 28(g), Fue No. 33-20128, filed by Clevolend Electric and Toledo Edloon). 10d(19) - Forms of Rennancing A0reement, including exhibits thereto, among the Owner Participent named therein, as Owner Participent, CTC Beaver Valley Funding Corporation, as Funding Corporation, Beaver Vaney 11 Funding CorporaNon, as New Funding Corporahon, The Bank of New York, as indenture Trustee, The Bank of New York, as New Cousteral Tmet Trustee, and The Cleveland Electric Niuminating Company and The Toledo Edson Company, as Lessess (Exhibit (28) (e) (i), Fue No. 33-48885, flied by Cleveland Electric and Toledo Edison). 10d(20)(a) - Form of Amendment No. 2 to FacNity Lease among Citicorp Lescamen, Inc., Cleveland Electric and Toledo Edison (Exhibit 10(a), Form S 4 File No. 333 47851, filed by Cleveland Electric). 10d(20)(b) - Form of Amendment No. 3 to FaciNty Lease among Citicorp Leocamen, Inc., Cleveland Electric and Toledo Edison (Exhibit 10(b), Form S 4 File No. 333-47851, filed by Cleveland Electric). 39 i )

I 4 Exhmet .j Number J 10d(21)(a) - Form of Amendment No. 2 to Faciuty Lease amon9 US West Financial Services, Inc., Cleveland Electric and Toledo Edison (Exhibit 10(c), Form S.4 Fue No. 333-47651, filed by Cleveland Electric). 10d(21)(b) - Form of Amendment No. 3 to Faculty Lasse amon9 US West Financial Servio e, Inc., Cleveland Electric and Toledo Edloon (Exhibit 10(d), Form S 4 Fue No. 333-47651,111ed by Cleve end Electnc). 10d(22) - Form of Amendment No. 2 to Faciuty Lease among Midwest Power Company, Cleveland Elechic and Toledo Edison (Exhibit 10(e), Form S-4 File No. 333-47651, flied by Cleveland Elodric). 10e(1) - Centerior Energy Corporshon Equity Compensabon Plan (Exhibit 99, Form S-8, File No. 33-59835). 3. Exhibits - Cleveland Electric Numinmung (CEI) 3a - Amended Arboles of incorporshon of CEl, as amended, e8ective May 28,1993 (Exhibit Sa,1993 Form 10-K, File No.1-2323). 3b - Re9uisbons of CEl, deled April 29,1981, as amended e8echve October 1,1988 and April 24,1990 (Exhibit 3b,1990 Form 1(M, File No.1-2323). (B)4b(1) - Mort 9a9e and Dood of Trust between CEI and Guaranty Trust Company of New York (now The Chase Manhattan Bank (Neuonal Amandahan)), as Trustee, deled July 1,1940 (Exhibit 7(a), File No. 2-4450). Supplemental indentures between CEI and the Trustee, supplemental to Exhibit 4b(1), dated as fonows 4b(2) - July 1,1940 (Exhibit 7(b), File No. 2 4450). 4b(3) - Au9ust 18,1944 (ExNbit 4(c), Fue No. 2-9887). 4b(4) - December 1,1947 (Exhibit 7(d), Fue No. 2-7308). 4b(5) - September 1,1950 (Exhibit 7(c), Flie No. 2-8587). 4b(6) - June 1,1951 (Exhibit 7(f), Fue No. 2-8994). 4b(7) - May 1,1954 (Exhibit 4(d), File No. 210830). 4b(8) - March 1,1958 (Exhibit 2(aM4), Fue No. 2-13839). i 4b(9) - Apr81,1959 (Exhibit 2(a)(4) Fue No. 2-14753). 1 4b(10) - December 20,1987 (Exhibit 2(a)(4), FNs No. 2-30759). 4b(11) - January 15,1989 (Exhtilt 2(a)(5), FNs No. 2-30759). Cb(12) - November 1,1989 (Exhibit 2(a)(4), File No. 2-35006). 4b(13) - June 1,1970 (Exhibit 2(a)(4), Fue No. 2-37235). 4b(14) - November 15,1970 (Exhibit 2(a)(4), File No. 2-38480). 4b(15) - May 1,1974 (Exhibit 2(a)(4), FNs No. 2-50537). 4b(16) - AprH 15,1975 (Exhibit 2(a)(4), FNs No. 2-52995). 4b(17) - Apr816,1975 (Exhibit 2(a)(4), File No. 2-53309). 4h(18) - May 28,1975 (Exhibit 2(c), June 5,1975 Form 8-A, File No.1-2323). 4b(19) - February 1,1976 (Exhibit 3(d)(6),1975 Form 10 K, Fue No.1-2323). 4b(20) - November 23,1976 (Exhibit 2(a)(4), FNs No. 2-57375). 4b(21) - July 26,1977 (Exhibit 2(a)(4), File No. 2-59401). 4b(22) - September 27,1977 (Exhibit 2(a)(5), FNs No. 2-67221). 4b(23) - May 1,1978 (Exhibit 2(b), June 30,1978 Form 10-Q, File No.1-2323). 4b(24) - September 1,1979 (Exhibit 2(a) September 30,1979 Form 10-Q, FNe No.12323). 4b(25) - Apr81,1980 (ExNbit 4(aX2), September 30. W80 Form 10.Q FNs No.12323). 4b(26) - Apr815,1980 (Exhibit 4(b), September 30,1980 Form 10-Q, File No.1-2323). 4b(27) - May 28,1980 (Exhibit 2(a)(4), Amendment No.1 Fue No. 2 67221). 4b(28) - June 9,1980 (Exhibit 4(d), September 30,1980 Form 10-Q, FNe No.1-2323). 4b(29) - December 1,1980 (Exhibit 4(b) (29),1980 Form 10-K, Fue No.1-2323). 4b(30) - July 28,1981 (Exhibit 4(a), September 30,1981 Form 10-Q, File No.1-2323). 4b(31) - Au9uot 1,1981 (Exhibit 4(b), September 30,1981, Form 10-Q, File No.1-2323). 4b(32) - March 1,1982 (Exhibit 4(b)(3), Amendment No.1. FNe No. 2-78029). 4b(33) - July 15,1982 (ExNbit 4(a), September 30,1982 Form 10-Q, FNe No.1 2323). 4b(34) - September 1,1982 (ExNbit 4(a)(1), September 30,1982 Form 10-Q, File No.1-2323). 4b(35) - November 1,1982 (ExNbit 4(a)(2), September 30,1982 Form 10-Q, File No.1-2323). 4b(36) - November 15,1982 (Exhibit 4(b)(36),1982 Form 1(W. File No.1-2323). 4b(37) - May 24,1983 (Exhibit 4(a), June 30,1983 Form 10-Q, File No.1-2323). 4b(38) - May 1,1984 (ExNbit 4 June 30,1984 Form 10-Q, File No.1-2323). 40

ExhitWt Numbu 4b(39) - May 23,1984 (ExNbit 4, May 22,1984 Form 6-K, Fue No.1-2323). 4b(40) - June 27,1964 (ExNbit 4, June 11,1964 Form 8.K. File No.1 2323). 4b(41) - September 4,1964 (Exhibit 4b(41),1964 Form 10 K, File No.1-2323). 4b(42) - November 14,1964 (ExNbit 4b(42),1984 Form 10-K, Fue No.1-2323). Ab(43) - November 15,1984 (Exhibit 4b(43),1984 Form 10-K, File No.12323). 4b(44) - AprH 15,1985 (ExNbit 4(a), May 8,1985 Form 8-K, File No.1-2323). 4b(45) - May 28,1985 (ExNbit 4(b), May 8,1985 Form 8-K, File No.1-2323). 4b(46) - Au9ust 1,1985 (ExNbit 4, September 30,1985 Form 10-Q, Fue No.1-2323). 4b(47) - September 1,1985 (ExNbit 4, September 30,1985 form 8-K, File No.1 2323). 4b(48) - November 1,1985 (Exhibit 4, Jam 31,1986 Form 8 K, Fue No.1-2323). 4b(49) - Aprl 15,19 86 (Exhibit 4. March 31,1986 Form 10-Q, File No.1-2323). 4b(50) - May 14,1986 (Exhibit 4(a), June 30,1986 Form 10-Q, Fde No.1-2323). 4b(51) - May 15,1986 (Exhibit 4(b), June 30,1986 Form 10-Q, Fue No.1-2323). 4b(52) - February 25,1987 (Exhibit 4b(52),1986 Form 10 K, Fue No.1-2323). 4b(53) r*har 15,1987 (ExNbit 4, September 30,1987 Form 10-Q, Fue No.1 2323). 4b(54) - February 24,1988 (Exhibit 4b(54),1967 Form 10 K, File No.1-2323). 4b(55) - September 15,1988 (ExNbit 4b(55),1988 Form 10 K, Fue No.1-2323). 4b(56) - May 15,1989 (ExNbit 4(aM2XI), Fue No. 33-32724). 4b(57) - June 13,1989 (Exhibit 4(aM2XH), Fue No. 33-32724). 4b(58) - October 15,1989 (Exhibit 4(a)(2Xil), Flo No. 33-32724). 4b(50) - January 1,1990 (Exhibit 4b(50),1989 Form 10 K, File No.1-2323). 4b(60) - June 1,1990 (Exhibit 4(a), September 30,1990 Form 10-Q, Fue No.1 2323). 4b(61) - Au9ust 1,1990 (ExNbit 4(b), September 30,1990 Form 10-Q, Fue No.1 2323). 4b(62) - May 1,1991 (Exhibit 4(a), June 30,1991 Form 10-Q, Fue No. 4b(63) - May 1,1992 (ExNbit 4(aX3), Fue No. 33 48845). 4b(64) - July 31,1992 (Exhibit 4(a)(3), Fue No. 33-57292). 4b(65) - January 1,1993 (Exhibit 4b(65),1992 Form 10-K, Fue No.1-2323). 4b(66) - February 1,1993 (Exht it 4b(66),1992 Form 10 K, FRe No.1-2323). 4b(67) - May 20,1993 (ExNbit 4(a), July 14,1993 Form 8-K, FHe No.1-2323). 4b(66) - June 1,1993 (ExNtWt 4(b), July 14,1993 Form 8 K, Fue No.1-2323). 4b(90) - September 15,1994 (ExNtWt 4(a), September 30,1994 Form 1M, Fue No.1-2323). 4b(70) - May 1,1995 (ExNtWt 4(a), September 30,1995 Form 10-Q, File No.1-2323). 4b(71) - May 2,1995 (Exhibit 4(b), September 30,1995 Form 10-Q, F5e No.1-2323). 4b(72) - June 1,1995 (ExNbit 4(c), September 30,1995 Form 10-Q, Fue No.1-2323). 4b(73) - July 15,1995 (ExNbit 4b(73),1995 Form 10-5 File No.1-2323). 4b(74) - Au9ust 1,1995 (Exhibit 4b(74),1995 Form 10 K, File No.1-2323). 4b(75) - June 15,1997 (ExNbit 4(a), Form S 4 File No. 333-35931, Sled by Cleveland Electric and Toledo Edloon). 4b(76) - October 15,1997 (Exhibit 4(a), Form S 4 Fue No. 333 47651,9 led by Cleveend Elecirtd. 4b(77) - June 1,1998 (ExNtWt 4b(77), Form S 4 Fue No. 333-72891). 4b(78) - October 1,1998 (ExNbit 4b(78), Form S 4 Fue No. 333-72891). 4b(79) - Odober 1,1998 (Exhibit 4b(79), Form S 4 Fue No. 333-72801). Ab(80) - February 24,1999 (Exhibit 4b(80), Form S 4 Fue No. 333-72801). 4c - Open End Subongnate indenture of Mor19e9e between The Cleveiend Elodric luuminatin0 Company and Bank One, Columbus, N.A., as Trustos, Deted as of June 1,1994 (ExNbit 4(a), August 26,1994 Form B K, File No.1-2323). 4d - Form of Note indenture between Cleveland Electric and The Chase Manhattan Bank, as Trustee dated as of October 24,1997 (ExNbit 4(b), Form S 4 File No. 333 47651, filed by Cleveland Electric). 4d(1) - Form of Supplemental Note indenture between Cleveland Electric and The Chase Manhattan Bank, as Trustee dated es of October 24,1997 (ExNbit 4(c), Form S 4 Fue No. 333 47651, fuod by Cleveland Elodric). 10 Administrabon A9teement between the CAPCO Group dated as of September 14,1967. (Registration No. 2 43102, Exheit 5(c)(2).) 10 Amendment No.1 dated January 4,1974 to Admirustration A9reement between the CAPCO Group dated as of September 14,1967. (Registration No. 2-68906, Exhibit 5(cX3).) 41

4 Exhtdt 10 3 - Transmiselon Fooluties A reement between the CADCO Group dated as of September 14, 1967, 0 (Regletration No. 2-43102, ExNbit 5(c)(3).) 10 4 - Amendment No.1 deled as of January 1,1993 to Transmiselon Faculties Agreement between the CAPCO Group dated as of September 14,1967. (1993 Form 10-K, Exhibit 10-4.) '10 A0reement for the Termination or Constnxmon of Certain A reements effectrve September 1,1980 0 October 15,1997 (Exhibit 4(a), Form S 4 File No. 333-47651, filed by Cleveland Electric). (A)13.2 - 1998 Annual Report to Stockholders. (only those porbons expressly incorporated by referonos in this Form 10-K are to be deemed 'Illed" wuh the SEC.) (A)21.2 - List of M-*= ries of the Registrant et December 31,1998. (A)23.2 - Consent of Independent Pubuc Acxcuntants (A)27.2 - Fir,andal Data Schedule (A) - Provided herein in electronic format as an exhibit. (B) - Pursuant to paragraph (b) (4) (iii) (A) of item 001 of Regulation S-K, CEI has not flied as an exhibit to this Form 10-K any instrument with respect to long-term debt if the total amount of securthes authorized thereunder does not exceed 10% of the total assets of the CEl, but hereby agrees to fumish to the Commission on request any such instruments. 3. Exhibits -Toledo Edloon (TE) ExhitWt Number 3a - Amended Articles of incorporallon of TE, as amended eNective October 2,1992 (Exhibit 3a,1992 Form 10 K, FRe No.13583). 3b - Code of Reguissons of TE dated January 28,1987, as amended eNoceve July 1 and October 1,1988 and Apr8 24,1990 (Exhbit 3b,1990 Form 10 K, Fue No.1-3583). (B)4b(1) - indenture, dated as of AprN 1,1947, between TE and The Chase National Bank of the City of New York (now The Chase Manhattan Bank (Notonal AmmarMan))(ExNbit 2(b), Fue No. 2-20006). Supplemental indentures between TE and the Trustee, Supplemental to Exhibit 4b(1), dated as fotows 4b(2) - September 1,1948 (Exhibit 2(d), File No. 2-20006). 4bf3) - Apr# 1,1949 (Exhibit 2(e), Fue No. 2-20008). 4b(4) - December 1,1950 (Exhits 2(f), Flie No. 2 20006). 4b(5) - March 1,1954 (Exhibit 2(g), File No. 2-20006). 4b(6) - February 1,1956 (Exhbit 2(h), Fue No. 2-20006). 4b(7) - May 1,1958 (Exhibit 5(g), File No. 2 50794). 4b(8) - Au9ust 1,1967 (Exhibit 2(c), File No. 2-20008). 4b(9) - November 1,1970 (Exhibit 2(c), File No. 2 38589). 4b(10) - August 1,1972 (Exhibit 2(c), Fue No. 2-44873). 4b(11) - November 1,1973 (Exhibit 2(c), Fue No. 2 49428). 4b(12) - July 1,1974 (Exhibit 2(c), FRe No. 2-51429). 4b(13) - October 1,1975 (Exhibit 2(c), F5e No. 2 54627). 4b(14) - June 1,1976 (Exhibit 2(c), File No. 2-56398). 4b(15) - October 1,1978 (Exhibit 2(c), Flo No. 2-62568). 4b(16) - September 1,1979 (Exhibit 2(c), Fue No. 2 65350). 4b(17) - September 1,1980 (Exhibit 4(s), Fue No. 2 09190). 4b(18) - October 1,1980 (Exhibit 4(c), File No. 2-09190). 4b(19) - AprN 1,1981 (Exhibit 4(c), File No. 2 71580). 4b(20) - November 1,1981 (Exhibit 4(c), Flie No. 2-74485). 4b(21) - June 1,1982 (Exhibit 4(c) File No. 2-77763). 4b(22) - September 1,1982 (Exhibit 4(x), File No. 2 87323). 4b(23) - Apr# 1,1983 (Exhibit 4(c), March 31,1983 Form 1(N"1. File No.13583). 4b(24) - Dooomber 1,1983 (Exhibit 4(x),1983 Form 10-K, File No.1 3583). 4b(25) - Apr# 1,1984 (Exhibit 4(c), File No. 2 90059). 42

Exhibit m 4b(26) - October 15,1984 (ExNbit 4(z),1984 Form 10 K, Fue No.1 3583). 4b(27) - October 15,1984 (ExNbit 4(se),1984 Form 10-K, File No.13583). 4b(28) - August 1,1985(Exhibit 4(dd) File No.331889). 4b(29) - August 1,1985 (Exhibit 4(ee), Fue No. 33-1689). 4b(30) - December 1,1985 (ExNbit 4(c), Fue No. 33-1889). 4b(31) - Mard 1,1988 (Exhibit 4b(31),1988 Form 10-K, File No.1-3583). 4b(32) - October 15,1987 (ExNbit 4. September 30,1987 Form 10-Q, File No.1-3583). 4b(33) - September 15,1988 (ExNbit 4b(33),1988 Form 10-K, File No.13583). 4b(34) - June 15,1989 (Exhibit 4b(34),1989 Form 10 K. File No.1 3583). 4b(35) - October 15,1989 (ExNbit 4b(35),1989 Form 10K, File No.1-3583). 4b(36) - May 15,1990 (ExNbit 4. June 30,1990 Forra 10-Q, File No.1 3583). ] 4b(37) - March 1,1991 (Exhibit 4(b), June 30,1991 form 10-Q, File No.1-3583). 4b(38) - May 1,1992 (ExNbit 4(a)(3), File No. 33 4L844), 4b(39) - Au0ust 1,1992 (ExNbit 4b(39),1992 For n 10 K. File No.1 3583). 4b(40) - Ocsober 1,1992 (Exhitdt 4b(40),1992 Form 10K, File No.1 3583). 4b(41) - January 1,1993 (Exhibit 4b(41),1992 Form 10-K, File No.1-3583). 4b(42) - September 15,1994 (Exhibit 4(b), September 30,1994 Form 10-Q, File No.1 3583). 4b(43) - May 1,1995 (Exhibit 4(d), September 30,1995 Form 1(K1, Fue No.1 3583). 4b(44) - June 1,1995 (ExNbit 4(e), September 30,1995 Form 10-Q File No.1 3583). 4b(45) - July 14,1995 (Exhibit 4(f), September 30,1995 Form 10-Q, File No.1 3583). 4b(46) - July 15,1995 (Exhibit 4(g), September 30,1995 Form 10-Q, File No.1 3583). (A)4b(47) - August 1,1997 (A)4b(48) - June 1,1998 4c - Open-End Subordinale indenture of MortD80s between The Toledo Edison Company and Bank One, Columbus, N.A., as Trustee, dated as of June 1,1994 (Exhibit 4(b), AuDust 26,1994 Form 8-K, File No. 1 3583). (A) 13.3 - 1998 Annual Report to Stockholders. (Only those portions expressly incorporated by rolerence in this Form 10 K are to be doomed '111er with the SEC.) (A) 21.3 -4 Jet of unearles of the Registrant at December 31,1998. (A) 27.3 - Financial Date Schedule. (A) Provided hafeln in electronic kwmot as an exhibit. (B) Pursuant to paraproph (b) (4) (IH) (A) of item 801 of Repulebon SK, TE has not fHed as an exNbit to this Form 10-K any instrument with roepect to long term debt if the total amount of escurtees authorized thereunder does not exceed 10% of the total assets of TE, but hereby agrees to fumish to the Commiselon on request any such instruments. (b) Reports on Form 8 K FirstEnernv. OE. CEL TE. Penn-One combined report on Form 6-K was flied since September 30,1998. A report dated October 15, 1998 reported that FirstEnergy wHl transfer he tranemlesion assets into a new subsidiary and has signed an agreement in principle with Duquesne IJ9ht Company (Duquesne) that would result in an exchenGe of certain generating assets between FirstEnergy's operabn0 "***"'les and Duquesne. FirstEngggg-The Company filed two reports on Fcwm 6-K sinom September 30,1998. A report dated November 9,1998 reported a Comprmy common stod repurchase program and a report deled December 17,1998, reported ashmeled adverse effects 01 fourth quarter 1996 eamings ggJfil. TE and Penn l ) 43 l

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Dwecbes of FirstEnergy Corp.: We have audited, in accordance with generally accepted auditing standards, the coneohdated financial statements included in FirstEnergy Com/s Annual Report to Stockholders incorporated by reference in this Form 10-K and have issued our report thereon dated February 12,1999. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule of coneohdated valuation and qualifying accounts hated in item 14 is the responsibihty of the Company's management and is presented for the purpose of complying with the Securtbes and Exchange Commisson's rules and is not part of the beele coneohdated financial statements. This schedule has been subsected to the auditinD procedures applied in the audit of the basic coneohdated financial statements and, in our opinion, fairty sestes in su material re the financial data required to be set forth therein in relation to the besic consolidated financial statements taken as a whole. l ARTHUR ANDERSEN LLP Cleveland, Ohio February 12,1999 44

i REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Duectors of ONo Edson Company: We have audited, in accordance with generaNy. accepted auditing standards, the coneohdated Anancial statements included in Ohio Edison Company's Annual Report to Stockholders incorporated by reference in this Form 10-K and have issued our report thereon dated February 12,1999. Our audit was inade for the purpose of fonning an opinion on those statements taken as a whole. The schedule of coneohdated valuation and qualifyin0 accounts listed in item 14 is the responsibility of the Company's mana0ement and is presented for the purpose of complying with the Secudbes and Exchange Commission's rules and is not part of the basic coneoidated financial statements. This schedule has been =W to the auditing procedures apphed in the audit of the basic coneohdated financial statements and, in our opinion, fairty states in all material respeds the financial data requwed to be set forth therehl in relabon to the basic coneohdated financial statements taken as a whole. ARTHUR ANDERSEN LLP l l C .Oso February 12,1999 l 1 i 45

r_. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the SkxM&s and Board of Directors of The Cleveland Electric luuminating Company We have audited, in accordance with generaNy accepted auditing standards, the consondated financial statements included in The Cleveland Electric luuminating Cornpany's Annual Report to Stockholders incorporated by reference in this Form 104 and have issued our report thereon dated February.12,1999. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule of coneohdated valuation and quellfying accounts listed in llem 14 is the responsibiNty of the Company's management and is presented for the purpose of complying with the Securtbes and Exchange Commesion's rules and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditmg procedures applied in tne audit of the basic consnhdated financial statements and, in our opinion, fairty states in all material respects the financial data required to be set forth therein in relation to the basic coneohdated financial statements taken as a whole. ARTHUR ANDERSEN LLP Cleveland, Ohio February 12,1999 46

1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS l To the Stockholders and Board of Directors of The Toledo Edison Company: We have audited, in acmrdance with generally accepted auditing standards, the consolidated financial staternents included in The Toledo Edison Company's Annual Report to Stockholders incorporated by reference in this Form 1N< and have issued our report thereon dated February 12,1999. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule of consolidated valuation and qualifying amounts listed in item 14 is the responsitAty of the Company's manaDement and is presented for the purpose of Knifying with the Securibes and Exchange Commission's rules and is not part of the basic consoldated financial statements, This schedule has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly states in all metenal respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. ARTHUR ANDERSEN LLP l Cleveland, Ohio February 12,1999 47

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholuers and Board of Drectors of Pennsylvania Power Company: We have audited, in accordance with generaNy accepted auditmg standards, the financial statements included in Pennsylvania Power Company's Annual Report to Stockholders incorporated by reference in this Form 10-K and have issued our report thereon dated February 12,1999. Our audit was inade for the purpose of forming an opinion on those statements taken as a whole. The schedule of valuebon and quaHfying accounts listed in item 14 is the responsibiNty uf the Company's mana9ement and is presented for the purpose of complying with the Securthos and Excir,ge Commesion's rules and is not part of the basic financial statements. This schedule has been miW to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairty states in all material respects the financial data required to be set forth therein in relabon to tfm basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Cleveland, Ohio February 12,1999 i 48

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n. s.. SIGNATURES Pursuant to the requirements of Sedkm 13 or 15(d) of the Securlbes Ed p Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undereigned, thereunto duly authorized. FNtSENERGY CORP. BY M W. R. Hama vi W. R. Houand Chairman of the Board and Chief Exacuthe Officer Dele: March 16,1999 Pursuant to the requirements of the SecurWes Exchange Act of 1934, this report has been egned below by the fobowing persons on beheN of the re0istrant and in the e and on the dele W. M W. R. W W H. P. Burn W. R. Holland H. P. Burg Chairmen of the Board President and Chief OperebnD and Chief Execupwe Omoor Omoorand Diredor and Director (Principal Execupwe Ollicer) /s/ Ri&ard H. Marah M Harvev L Wannar Richard H. Marsh Harvey L Wagner . Vice President and Chief Finandel Omcor Conironer (PrincipalFinenr%lOlnoor) (Prindpol Accounting Omoer) M r. H. ' ' ^ ' - - -- Carol A. Cartwright Glenn H. Meadows Director Director M Wullam F. Conway M Paul J. Powara Winam F. Conway PaulJ. Powers Director Director M ? d--1 B. ' ' * . Jr. M Pahaat C. h Rotort 8. Heisler, Jr. Robert C. Sava0s Director Director M Pahast L i =ddmad M % M. sammet Robert L Laughheed George M. Smart Director Director M Pr-"W." /s/ ' - - - T. '."_'"".. Sr. Russell W. Maior Jesse T. Wuhams, Sr. Director Director Date: March 16,1999 54

1 1 1 SIGNATURES Pursuant to the requirements of Sechon 13 or 15(d) of the Securibes Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OHIO EDISON COMPANY BY M H. P. Buro H. P. Burg President 1 Date: March 16,1999 j Pursuant to the requiremens of the Securlbes Exchen0e Act of 1934, this report has been signed below by the following persons on behalf of the re0istrant and in the e and on the dele indicated M H. P. Burn W R. H. Marsh H. P. Burg R. H. Marsh Prooident and Director Vice President (Principal F==% Omcor) (PrincipalFinancialOmcor) M Harvey L. Wanner M W. R. Hamand Haney L Wagner W. R. HoueM Controller Director (Prindpol Accounting Omcor) M Anthony J. Abander Anthony J. Alexander M i ) Date: March 16,1999 )

O b e SIGNATURES l Pursuant to the requirements of Sechon 13 or 15(d) of the Securities Exchange Act of 1934, the registrant l has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE CLEVELAND ELECTRIC ILLUMINATING COMPANY BY /s/ H. P. Bura H. P. Burg President Date: March 16,1999 Pursuant to the requirements of the Securibes Exchan0e Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacibes and on the date indicated /s/ H. P. Buro la/ R. H. Marsh H. P. Burg R. H. Marsh President and Director Vice President (Principal Execubve Officer) (PrincipalFinancialOfficer) /s/ Harvev L. Waaner la/ W. R. Holland Harvey L Wagner W. R. Holland Controller Director l (Pnncipal Accounhng Officer) /s/ Anthony J. Alexander Anthony J. Alexander Director Date: March 16,1999 56

SIGNATURES 1 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duty caused this report to be signed on its behalf by the undersigned, thereunio duty authorized. i THE TOLEDO EDISON COMPANY BY /s/ H. P. Bura j H. P. Burg President i Date: March 16,1999 1 Pursuant to the requirements of the Securtbes Exchange Act of 1934, this report has been si ned below D by the following persons on behalf of the registrant and in the capacibos and on the date indicated j /s/ H. P. Buro la/ R. H. Marsh H. P. Burg R H. Marsh President and Director Voe President (PrincipalExecutrve Officer) (Principal Financ'al Officer) /s/ Harvev L. Waoner la/ W. R. Holland Harvey L Wagner W. R Holland Controller Drector (Principal Accounbng Officer) /s/ Anthony J. Alexander Anthony J. Alexander Director 4 Date: Mardi 16,1999 57

g. u. I SIGNATURES Pursuant to the requiremerts of Secdon 13 or 15(d) of the Securthes Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersagr'ad, thereunto duly authorized. PENNSYLVANIA POWER COMPANY BY M Waard R. Han=ruf WNiard R. Holland Chairman of the Board and Chief ExecutNe Officer Date: March 16,1999 Pursuant to the requirements of the Securides Exden08 Act of 1934. this report has been eipned below by the following persons on behalf of the red'strant and in the e and on the debe indicated M WBlard R. W W Ridmed H. Marsh Wiberd R. Hogend Richard tt, Marsh Chairman of the Eloerd and Vice President Chief Executive Omcor (Principal FinancialOfficer) (Principal Executhe Officer) M Harvev L Wanner M H. Peter Burn Harvey L Wagner H. Peter Burg Comptroner Director (Principal AccountinD Omcor) M Anthony J..h4 AnthonyJ. Alexander Director Date: March 16,1999 3 58

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o ~ t EXHIBIT 23 FIRSTENERGY CORP. CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountams, we hereby consent to the kw,,peuw. of our reports included or incorporated by reference in this Form 1K into FirstEnergy Corp.'s previously filed Re9 stration Statements, File No. i 333 40065, No. 33348587, No. 33348651, No. 333-58279 and No. 33345400 ARTHUR ANDERSEN LLP Cleveland, Ohio March 29,1999 63

t 0 % EXHIBIT 23.1 / OHIO EDISON COMPANY CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent putic accountants, we hereby consent to tw lncorporation of our reports included or ir,00ipci.M by reference in Ws Form 1040. into Ohio Edison Company's previoasly filed Registrabon Statements, File No. 33-49135, No. 33-49259, No. 33-49413, No. 33-51139, No. 333 01489 and No. 333-05277. i ARTHUR ANDERSEN LLP Cleveland, Ohio March 29,1999 64

/. 3 EXHIBIT 23.2 THE CLEVELAND ELECTRIC ILLUMINATING COMPANY CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporebon of our reports included or incorporated by reference in this Form 10-K, into The Cleveland Electric illurninaang Company's previously filed Registrabon Statements, Flie No. 33-55513, No. 333-47651 and No. 333-72891. ARTHUR ANDERSEN LLP Cleveland, Ohio March 29,1999 65

t. s EXHIBIT 23.3 0 PENNSYLVANIA POWER COMPANY CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent putsc accountants, we hweby consent to the irs-sen of our reports induded or s incorporated by reference in this Form 10-K, into Pennsylvanis Power Company's previously filed Registration Statements, Flie No. 33-47372, No. 33-62450 and No. 33-65156. ARTHUR ANDERSEN LLP Cleveland, Ohio March 29,1999 1

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