UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~March~~June 3130, 2011

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

For the transition period from to

Commission	Registrant; State of Incorporation;	I.R.S. Employer
File Number	Address; and Telephone Number	Identification No.
333-21011	FIRSTENERGY CORP. ~~(An Ohio Corporation) 76 South Main Street Akron, OH 44308 Telephone (800)736-3402~~	34-1843785
000-53742	FIRSTENERGY SOLUTIONS CORP. (An Ohio Corporation) c/o FirstEnergy Corp. 76 South Main Street Akron, OH 44308 Telephone (800)736-3402	31-1560186
	(An Ohio Corporation)
1-2578	OHIO EDISON COMPANY (An Ohio Corporation) c/o FirstEnergy Corp. 76 South Main Street Akron, OH 44308 Telephone (800)736-3402	34-0437786
	76 South Main Street
1-2323	THE CLEVELAND ELECTRIC ILLUMINATING COMPANY (An Ohio Corporation) c/o FirstEnergy Corp. 76 South Main Street Akron, OH 44308 Telephone (800)736-3402	34-0150020
	Akron, OH 44308
1-3583	THE TOLEDO EDISON COMPANY (An Ohio Corporation) c/o FirstEnergy Corp. 76 South Main Street Akron, OH 44308 Telephone (800)736-3402	34-4375005
	Telephone (800)736-3402
1-3141	JERSEY CENTRAL POWER & LIGHT COMPANY (A New Jersey Corporation) c/o FirstEnergy Corp. 76 South Main Street Akron, OH 44308 Telephone (800)736-3402	21-0485010
000-53742	FIRSTENERGY SOLUTIONS CORP.	31-1560186
1-446	METROPOLITAN EDISON COMPANY (A Pennsylvania Corporation) c/o FirstEnergy Corp. 76 South Main Street Akron, OH 44308 Telephone (800)736-3402	23-0870160
	(An Ohio Corporation)
1-3522	PENNSYLVANIA ELECTRIC COMPANY (A Pennsylvania Corporation) c/o FirstEnergy Corp. 76 South Main Street Akron, OH 44308 Telephone (800)736-3402	25-0718085
	c/o FirstEnergy Corp.
	76 South Main Street
	Akron, OH 44308
	Telephone (800)736-3402
1-2578	OHIO EDISON COMPANY	34-0437786
	(An Ohio Corporation)
	c/o FirstEnergy Corp.
	76 South Main Street
	Akron, OH 44308
	Telephone (800)736-3402
1-2323	THE CLEVELAND ELECTRIC ILLUMINATING COMPANY	34-0150020
	(An Ohio Corporation)
	c/o FirstEnergy Corp.
	76 South Main Street
	Akron, OH 44308
	Telephone (800)736-3402
1-3583	THE TOLEDO EDISON COMPANY	34-4375005
	(An Ohio Corporation)
	c/o FirstEnergy Corp.
	76 South Main Street
	Akron, OH 44308
	Telephone (800)736-3402
1-3141	JERSEY CENTRAL POWER & LIGHT COMPANY	21-0485010
	(A New Jersey Corporation)
	c/o FirstEnergy Corp.
	76 South Main Street
	Akron, OH 44308
	Telephone (800)736-3402
1-446	METROPOLITAN EDISON COMPANY	23-0870160
	(A Pennsylvania Corporation)
	c/o FirstEnergy Corp.
	76 South Main Street
	Akron, OH 44308
	Telephone (800)736-3402
1-3522	PENNSYLVANIA ELECTRIC COMPANY	25-0718085
	(A Pennsylvania Corporation)
	c/o FirstEnergy Corp.
	76 South Main Street
	Akron, OH 44308
	Telephone (800)736-3402

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes þ No o		FirstEnergy Corp., FirstEnergy Solutions Corp., Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power & Light Company, Metropolitan Edison Company and Pennsylvania Electric Company

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No o FirstEnergy Corp., FirstEnergy Solutions Corp., Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power & Light Company, Metropolitan Edison Company, and Pennsylvania Electric Company

Yes o No o FirstEnergy Solutions Corp., Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power & Light Company, Metropolitan Edison Company, and Pennsylvania Electric Company

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ FirstEnergy Corp. Accelerated Filer o N/A Non-accelerated Filer (Do not check if a smaller reporting company) þ FirstEnergy Solutions Corp., Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power & Light Company, Metropolitan Edison Company and Pennsylvania Electric Company Smaller Reporting Company o N/A

Smaller Reporting Company o N/A

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).


Yes o No þ		FirstEnergy Corp., FirstEnergy Solutions Corp., Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power & Light Company, Metropolitan Edison Company and Pennsylvania Electric Company

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

	OUTSTANDING
CLASS	AS OF ~~April~~JULY 29, 2011
FirstEnergy Corp., $.10 par value		418,216,437
FirstEnergy Solutions Corp., no par value		7
Ohio Edison Company, no par value		60
The Cleveland Electric Illuminating Company, no par value		67,930,743
The Toledo Edison Company, $5 par value		29,402,054
Jersey Central Power & Light Company, $10 par value		13,628,447
Metropolitan Edison Company, no par value		740,905
Pennsylvania Electric Company, $20 par value		4,427,577

FirstEnergy Corp. is the sole holder of FirstEnergy Solutions Corp., Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power & Light Company, Metropolitan Edison Company and Pennsylvania Electric Company common stock.

This combined Form 10-Q is separately filed by FirstEnergy Corp., FirstEnergy Solutions Corp., Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power & Light Company, Metropolitan Edison Company and Pennsylvania Electric Company. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. No registrant makes any representation as to information relating to any other registrant, except that information relating to any of the FirstEnergy subsidiary registrants is also attributed to FirstEnergy Corp.

FirstEnergy Web Site

Each of the registrants’ Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are also made available free of charge on or through FirstEnergy’s Internet web site at www.firstenergycorp.com.

These reports are posted on the web site as soon as reasonably practicable after they are electronically filed with the SEC. Additionally, the registrants routinely post important information on FirstEnergy’s Internet web site and recognize FirstEnergy’s Internet web site as a channel of distribution to reach public investors and as a means of disclosing material non-public information for complying with disclosure obligations under SEC Regulation FD. Information contained on FirstEnergy’s Internet web site shall not be deemed incorporated into, or to be part of, this report.

OMISSION OF CERTAIN INFORMATION

FirstEnergy Solutions Corp., Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, Jersey Central Power & Light Company, Metropolitan Edison Company and Pennsylvania Electric Company meet the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) to Form 10-Q.

Forward-Looking Statements: This Form 10-Q includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management’s intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “believe,” “estimate” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Actual results may differ materially due to:

•

The speed and nature of increased competition in the electric utility industry.

•

The impact of the regulatory process on the pending matters in the various states in which we do business including, but not limited to, matters related to rates.

•

The status of the PATH project in light of PJM’s direction to suspend work on the project pending review of its planning process, its re-evaluation of the need for the project and the uncertainty of the timing and amounts of any related capital expenditures.

•

Business and regulatory impacts from ATSI’s realignment into PJM Interconnection, L.L.C.

•

Economic or weather conditions affecting future sales and margins.

•

Changes in markets for energy services.

•

Changing energy and commodity market prices and availability.

•

Financial derivative reforms that could increase our liquidity needs and collateral costs.

• Replacement power costs being higher than anticipated or inadequately hedged.

•

The continued ability of FirstEnergy’s regulated utilities to collect transition and other costs.

•

Operation and maintenance costs being higher than anticipated.

• Other legislative and regulatory changes, and revised environmental requirements, including possible GHG emission, water intake and coal combustion residual regulations, the potential impacts of any laws, rules or regulations that ultimately replace CAIR, including the Cross-State Air Pollution Rule (CSAPR), and the effects of the EPA’s recently released MACT proposal to establish certain mercury and other emission standards for electric generating units.

•

The uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any NSR litigation or potential regulatory initiatives or rulemakings (including that such expenditures could result in our decision to shut down or idle certain generating units).

• Adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to, the revocation or non-renewal of necessary licenses, approvals or operating permits) ~~and oversight~~ by the NRC, including as a result of the incident at Japan’s Fukushima Daiichi Nuclear Plant).

• Adverse legal decisions and outcomes related to Met-Ed’s and Penelec’s ~~transmission~~ability ~~service~~to ~~charge~~recover ~~appeal~~certain attransmission ~~the~~costs ~~Commonwealth~~through ~~Court~~their oftransmission ~~Pennsylvania~~service charge riders.

•

The continuing availability of generating units and changes in their ability to operate at or near full capacity.

•

Replacement power costs being higher than anticipated or inadequately hedged.

•

The ability to comply with applicable state and federal reliability standards and energy efficiency mandates.

•

Changes in customers’ demand for power, including but not limited to, changes resulting from the implementation of state and federal energy efficiency mandates.

•

The ability to accomplish or realize anticipated benefits from strategic goals.

•

Efforts and our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of coal and coal transportation on such margins.

•

The ability to experience growth in the distribution business.

• The changing market conditions that could affect the value of assets held in ~~the registrants~~FirstEnergy’s nuclear decommissioning trusts, pension trusts and other trust funds, and cause ~~FirstEnergy~~us to make additional contributions sooner, or in amounts that are larger than currently anticipated.

~~Table~~• The ability to access the public securities and other capital and credit markets in accordance with FirstEnergy’s financing plan, the cost of ~~Contents~~such capital and overall condition of the capital and credit markets affecting FirstEnergy and its subsidiaries.

• ~~The~~Changes ~~ability to access the public securities and other capital and credit markets~~ in ~~accordance~~general ~~with~~economic ~~FirstEnergy’s~~conditions ~~financing plan, the cost of such capital and overall condition of the capital and credit markets~~ affecting ~~the~~FirstEnergy ~~registrants~~ and ~~other~~its ~~FirstEnergy~~ subsidiaries.

• ~~Changes~~Interest inrates ~~general~~and ~~economic~~any ~~conditions~~actions ~~affecting~~taken ~~the~~by ~~registrants~~credit ~~and~~rating ~~other~~agencies that could negatively affect FirstEnergy’s and its subsidiaries’ access to financing or their costs and increase requirements to post additional collateral to support outstanding commodity positions, LOCs and other financial guarantees.

• ~~Interest~~The ~~rates~~continuing ~~and~~uncertainty ~~any~~of ~~actions~~the ~~taken~~national byand ~~credit~~regional ~~rating~~economy ~~agencies~~and ~~that~~its ~~could~~impact ~~negatively~~on ~~affect the registrants~~FirstEnergy’s ~~access to financing or their costs~~ and ~~increase~~its ~~requirements~~subsidiaries’ tomajor ~~post~~industrial ~~additional collateral to support outstanding commodity positions, LOCs~~ and ~~other~~commercial ~~financial guarantees~~customers.

• ~~The~~Issues ~~continuing~~concerning ~~uncertainty of~~ the ~~national~~soundness ~~and~~of ~~regional~~financial ~~economy~~institutions and ~~its~~counterparties ~~impact~~with onwhich ~~the~~FirstEnergy ~~registrants’ major industrial~~ and ~~commercial~~its ~~customers~~subsidiaries ~~and~~do ~~those of other FirstEnergy subsidiaries~~business.

• Issues concerning the soundness of financial institutions and counterparties with which the registrants and FirstEnergy’s other subsidiaries do business.

•

Issues arising from the recently completed merger of FirstEnergy and Allegheny Energy, Inc. and the ongoing coordination of their combined operations including FirstEnergy’s ability to maintain relationships with customers, employees or suppliers, as well as the ability to successfully integrate the businesses and realize cost savings and any other synergies and the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect.

•

The risks and other factors discussed from time to time in the registrants’ SEC filings, and other similar factors.

Dividends declared from time to time on FirstEnergy’s common stock during any annual period may in aggregate vary from the indicated amount due to circumstances considered by FirstEnergy’s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy, or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on the registrants’ business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. The registrants expressly disclaim any current intention to update any forward-looking statements contained herein as a result of new information, future events or otherwise.

TABLE OF CONTENTS

	Page
Part I. Financial Information
Glossary of Terms	~~iii-v~~	iii
Item 1. Financial Statements
FirstEnergy Corp.
Consolidated Statements of Income		1
Consolidated Statements of Comprehensive Income		2
Consolidated Balance Sheets		3
Consolidated Statements of Cash Flows		4
FirstEnergy Solutions Corp.
Consolidated Statements of Income and Comprehensive Income		5
Consolidated Balance Sheets		6
Consolidated Statements of Cash Flows		7
Ohio Edison Company
Consolidated Statements of Income and Comprehensive Income		8
Consolidated Balance Sheets		9
Consolidated Statements of Cash Flows		10
The Cleveland Electric Illuminating Company
Consolidated Statements of Income (Loss) and Comprehensive Income		11
Consolidated Statements of Income and Comprehensive Income		11
Consolidated Balance Sheets		12
Consolidated Statements of Cash Flows		13
The Toledo Edison Company
Consolidated Statements of Income and Comprehensive Income		14
Consolidated Balance Sheets		15
Consolidated Statements of Cash Flows		16
Jersey Central Power & Light Company
Consolidated Statements of Income and Comprehensive Income		17
Consolidated Balance Sheets		18
Consolidated Statements of Cash Flows		19
Metropolitan Edison Company
Consolidated Statements of Income and Comprehensive Income		20
Consolidated Balance Sheets		21
Consolidated Statements of Cash Flows		22
Pennsylvania Electric Company
Consolidated Statements of Income and Comprehensive Income		23
Consolidated Balance Sheets		24
Consolidated Statements of Cash Flows		25

TABLE OF CONTENTS (Cont’d)

	Page
Combined Notes To Consolidated Financial Statements		2627
Item 2. Management’s Discussion and Analysis of Registrant and Subsidiaries		7884
Management’s Narrative Analysis of Results of Operations
FirstEnergy Solutions Corp.		~~117~~131
Ohio Edison Company		~~120~~134
The Cleveland Electric Illuminating Company		~~122~~136
The Toledo Edison Company		~~124~~138
Jersey Central Power & Light Company		~~126~~140
Metropolitan Edison Company		~~128~~142
Pennsylvania Electric Company		~~130~~144
Item 3. Quantitative and Qualitative Disclosures About Market Risk		~~132~~146
Item 4. Controls and Procedures — FirstEnergy		~~132~~146
Part II. Other Information
Item 1. Legal Proceedings		~~133~~147
Item 1A. Risk Factors		~~133~~147
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		~~134~~147
Item 5. Other Information		~~135~~147
Item 6. Exhibits		~~136~~148
Exhibit 10.1
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.8
Exhibit 10.9
Exhibit 10.10
Exhibit 12
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

GLOSSARY OF TERMS

The following abbreviations and acronyms are used in this report to identify FirstEnergy Corp. and its current and former subsidiaries:

AE		Allegheny Energy, Inc., a Maryland utility holding company that merged with a subsidiary of FirstEnergy on February 25, 2011
AESC		Allegheny Energy Service Corporation, a subsidiary of AE
AE Supply		Allegheny Energy Supply Company LLC, an unregulated generation subsidiary of AE
AET		Allegheny Energy Transmission, LLC, a parent of TrAIL and PATH
AGC		Allegheny Generating Company, a generation subsidiary of AE
Allegheny		Allegheny Energy, Inc., together with its consolidated subsidiaries
AVE		Allegheny Ventures, Inc.
ATSI		American Transmission Systems, Incorporated, which owns and operates transmission facilities
CEI		The Cleveland Electric Illuminating Company, an Ohio electric utility operating subsidiary
FENOC		FirstEnergy Nuclear Operating Company, which operates nuclear generating facilities
FES		FirstEnergy Solutions Corp., which provides energy-related products and services
FESC		FirstEnergy Service Company, which provides legal, financial and other corporate support services
FEV		FirstEnergy Ventures Corp., which invests in certain unregulated enterprises and business ventures
FGCO		FirstEnergy Generation Corp., which owns and operates non-nuclear generating facilities
FirstEnergy		FirstEnergy Corp., a public utility holding company
Global Rail		A joint venture between FEV and WMB Loan Ventures II LLC, that owns coal transportation operations near Roundup, Montana
GPU		GPU, Inc., former parent of JCP&L, Met-Ed and Penelec, that merged with FirstEnergy on November 7, 2001
JCP&L		Jersey Central Power & Light Company, a New Jersey electric utility operating subsidiary
Met-Ed		Metropolitan Edison Company, a Pennsylvania electric utility operating subsidiary
MP		Monongahela Power Company, a West Virginia electric utility operating subsidiary of AE
NGC		FirstEnergy Nuclear Generation Corp., owns nuclear generating facilities
OE		Ohio Edison Company, an Ohio electric utility operating subsidiary
Ohio Companies		CEI, OE and TE
PATH		Potomac-Appalachian Transmission Highline LLC, a joint venture between Allegheny and a subsidiary of American Electric Power Company, Inc.
PATH-VA		PATH Allegheny Virginia Transmission Corporation
PE		The Potomac Edison Company, a Maryland electric operating subsidiary of AE
Penelec		Pennsylvania Electric Company, a Pennsylvania electric utility operating subsidiary
Penn		Pennsylvania Power Company, a Pennsylvania electric utility operating subsidiary of OE
Pennsylvania Companies		Met-Ed, Penelec, Penn and WP
PNBV		PNBV Capital Trust, a special purpose entity created by OE in 1996
Shippingport		Shippingport Capital Trust, a special purpose entity created by CEI and TE in 1997
Signal Peak		A joint venture between FEV and WMB Loan Ventures LLC, that owns mining operations near Roundup, Montana
TE		The Toledo Edison Company, an Ohio electric utility operating subsidiary
TrAIL		Trans-Allegheny Interstate Line Company
Utilities		OE, CEI, TE, Penn, JCP&L, Met-Ed, Penelec, MP, PE and WP
Utility Registrants		OE, CEI, TE, JCP&L, Met-Ed and Penelec
WP		West Penn Power Company, a Pennsylvania electric utility operating subsidiary of AE
The following abbreviations and acronyms are used to identify frequently used terms in this report:
ALJ		Administrative Law Judge
AOCL		Accumulated Other Comprehensive Loss
AEP		American Electric Power
AQC		Air Quality Control
ARO		Asset Retirement Obligation
ARR		Auction Revenue Rights
BGS		Basic Generation Service
BMP		Bruce Mansfield Plant
CAA		Clean Air Act
CAIR		Clean Air Interstate Rule
CAMR		Clean Air Mercury Rule
CATR		Clean Air Transport Rule
CBP		Competitive Bid Process

The following abbreviations and acronyms are used to identify frequently used terms in this report:

ALJ		Administrative Law Judge
AOCL		Accumulated Other Comprehensive Loss
AEP		American Electric Power
AQC		Air Quality Control
ARO		Asset Retirement Obligation
BGS		Basic Generation Service
CAA		Clean Air Act
CAIR		Clean Air Interstate Rule
CAMR		Clean Air Mercury Rule
CATR		Clean Air Transport Rule
CBP		Competitive Bid Process
CDWR		California Department of Water Resources
CO2		Carbon Dioxide
CTC		Competitive Transition Charge

iii

GLOSSARY OF TERMS, Cont’d.

DCPD Deferred Compensation Plan for Outside Directors DOE United States Department of Energy DOJ United States Department of Justice DPA Department of the Public Advocate, Division of Rate Counsel (New Jersey) DSP Default Service Plan EDCP Executive Deferred Compensation Plan EE&C Energy Efficiency and Conservation EIS Energy Insurance Services, Inc. EMP Energy Master Plan ENEC Expanded Net Energy Cost EPA United States Environmental Protection Agency ESOP Employee Stock Ownership Plan ESP Electric Security Plan FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission FMB First Mortgage Bond FPA Federal Power Act FRR Fixed Resource Requirement FTRs Financial Transmission Rights GAAP Generally Accepted Accounting Principles in the United States RGGI Regional Greenhouse Gas Initiative GHG Greenhouse Gases IRS Internal Revenue Service JOA Joint Operating Agreement kV Kilovolt KWH Kilowatt-hours LED Light-Emitting Diode LOC Letter of Credit LTIP Long-Term Incentive Plan MACT Maximum Achievable Control Technology MDPSC Maryland Public Service Commission MEIUG Met-Ed Industrial Users Group MISO Midwest Independent Transmission System Operator, Inc. Moody’s Moody’s Investors Service, Inc. MRO Market Rate Offer MSHA Mine Safety and Health Administration MTEP MISO Regional Transmission Expansion Plan MW Megawatts MWH Megawatt-hours NAAQS National Ambient Air Quality Standards NDT Nuclear Decommissioning Trusts NERC North American Electric Reliability Corporation NJBPU New Jersey Board of Public Utilities NNSR Non-Attainment New Source Review NOAC Northwest Ohio Aggregation Coalition NOPEC Northeast Ohio Public Energy Council NOV Notice of Violation NOX Nitrogen Oxide NRC Nuclear Regulatory Commission NSR New Source Review NUG Non-Utility Generation NUGC Non-Utility Generation Charge NYSEG New York State Electric and Gas OCC Ohio Consumers’ Counsel OCI Other Comprehensive Income OPEB Other Post-Employment Benefits OVEC Ohio Valley Electric Corporation PADEP Pennsylvania Department of Environmental Protection PCRB Pollution Control Revenue Bond PICA Pennsylvania Intergovernmental Cooperation Authority PJM PJM Interconnection L. L. C. POLR Provider of Last Resort; an electric utility’s obligation to provide generation service to customers Whose alternative supplier fails to deliver service PPUC Pennsylvania Public Utility Commission


CCB		Coal Combustion By-products
CDWR		California Department of Water Resources
CO₂		Carbon Dioxide
CSAPR		Cross-State Air Pollution Rule
CTC		Competitive Transition Charge
CWA		Clean Water Act
CWIP		Construction Work in Progress
DCPD		Deferred Compensation Plan for Outside Directors
DOE		United States Department of Energy
DOJ		United States Department of Justice
DPA		Department of the Public Advocate, Division of Rate Counsel (New Jersey)
DSP		Default Service Plan
EDCP		Executive Deferred Compensation Plan
EE&C		Energy Efficiency and Conservation
EIS		Energy Insurance Services, Inc.
EMP		Energy Master Plan
ENEC		Expanded Net Energy Cost
EPA		United States Environmental Protection Agency
ESOP		Employee Stock Ownership Plan
ESP		Electric Security Plan
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FMB		First Mortgage Bond
FPA		Federal Power Act
FRR		Fixed Resource Requirement
FTRs		Financial Transmission Rights
GAAP		Generally Accepted Accounting Principles in the United States
RGGI		Regional Greenhouse Gas Initiative
GHG		Greenhouse Gases
IRS		Internal Revenue Service
JOA		Joint Operating Agreement
kV		Kilovolt
KWH		Kilowatt-hours
LBR		Little Blue Run
LED		Light-Emitting Diode
LOC		Letter of Credit
LSE		Load Serving Entity
LTIP		Long-Term Incentive Plan
MACT		Maximum Achievable Control Technology
MDE		Maryland Department of the Environment
MDPSC		Maryland Public Service Commission
MEIUG		Met-Ed Industrial Users Group
MISO		Midwest Independent Transmission System Operator, Inc.
Moody’s		Moody’s Investors Service, Inc.
MRO		Market Rate Offer
MSHA		Mine Safety and Health Administration
MTEP		MISO Regional Transmission Expansion Plan
MVP		Multi-value Project
MW		Megawatts
MWH		Megawatt-hours
NAAQS		National Ambient Air Quality Standards
NDT		Nuclear Decommissioning Trusts
NERC		North American Electric Reliability Corporation
NJBPU		New Jersey Board of Public Utilities
NNSR		Non-Attainment New Source Review
NOAC		Northwest Ohio Aggregation Coalition
NOPEC		Northeast Ohio Public Energy Council
NOV		Notice of Violation
NO_X		Nitrogen Oxide
NPDES		National Pollutant Discharge Elimination System
NRC		Nuclear Regulatory Commission

GLOSSARY OF TERMS, Cont’d.

NSR		New Source Review
NUG		Non-Utility Generation
NUGC		Non-Utility Generation Charge
NYSEG		New York State Electric and Gas
OCC		Ohio Consumers’ Counsel
OCI		Other Comprehensive Income
OPEB		Other Post-Employment Benefits
OSBA		Office of Small Business Advocate
OVEC		Ohio Valley Electric Corporation
PA DEP		Pennsylvania Department of Environmental Protection
PCRB		Pollution Control Revenue Bond
PICA		Pennsylvania Intergovernmental Cooperation Authority
PJM		PJM Interconnection L. L. C.
POLR		Provider of Last Resort; an electric utility’s obligation to provide generation service to customers whose alternative supplier fails to deliver service
PPUC		Pennsylvania Public Utility Commission
PSCWV		Public Service Commission of West Virginia
PSA		Power Supply Agreement
PSD		Prevention of Significant Deterioration
PUCO		Public Utilities Commission of Ohio
PURPA		Public Utility Regulatory Policies Act of 1978
RECs		Renewable Energy Credits
RFP		Request for Proposal
RGGI		Regional Greenhouse Gas Initiative
RPM		Reliability Pricing Model
RTEP		Regional Transmission Expansion Plan
RTC		Regulatory Transition Charge
RTO		Regional Transmission Organization
S&P		Standard & Poor’s Ratings Service
SB221		Amended Substitute Senate Bill 221
SBC		Societal Benefits Charge
SEC		U.S. Securities and Exchange Commission
SIP		State Implementation Plan(s) Under the Clean Air Act
SMIP		Smart Meter Implementation Plan
SNCR		Selective Non-Catalytic Reduction
SO2		Sulfur Dioxide
SOS		Standard Offer Service
TBC		Transition Bond Charge
TDS		Total Dissolved Solid
TMDL		Total Maximum Daily Load
TMI-2		Three Mile Island Unit 2
TSC		Transmission Service Charge
VIE		Variable Interest Entity
VSCC		Virginia State Corporation Commission
WVDEP		West Virginia Department of Environmental Protection
WVPSC		Public Service Commission of West Virginia

FIRSTENERGY CORP.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended
	Three Months						Six Months
	March 31
	Ended June 30						Ended June 30
In millions, except per share amounts	2011			2010			2011			2010
REVENUES:
Electric utilities	$	2,~~332~~590		$	2,~~543~~373		$	4,925		$	4,916
Unregulated businesses		1,~~244~~470			~~756~~766			2,711			1,522
Total revenues*		34,~~576~~060			3,~~299~~139			7,636			6,438
EXPENSES:
Fuel		~~453~~635			~~334~~350			1,088			684
Purchased power		1,~~186~~220			1,~~238~~063			2,406			2,301
Other operating expenses		1,~~033~~105			~~701~~673			2,138			1,374
Provision for depreciation		~~220~~282			~~193~~190			502			383
Amortization of regulatory assets		~~132~~90			~~212~~161			222			373
General taxes		~~237~~242			~~205~~176			479			381
Total expenses		3,~~261~~574			2,~~883~~613			6,835			5,496
OPERATING INCOME		~~315~~486			~~416~~526			801			942
OTHER INCOME (EXPENSE):
Investment income		2131			1631			52			47
Interest expense		(~~231~~265	)		(~~213~~207	)		(496	)		(420	)
Capitalized interest		1820			4140			38			81
Total other expense		(~~192~~214	)		(~~156~~136	)		(406	)		(292	)
INCOME BEFORE INCOME TAXES		~~123~~272			~~260~~390			395			650
INCOME TAXES		78101			~~111~~134			179			245
NET INCOME		45171			~~149~~256			216			405
Loss attributable to noncontrolling interest		(510	)		(69	)		(15	)		(15	)
EARNINGS AVAILABLE TO FIRSTENERGY CORP.	$	50181		$	~~155~~265		$	231		$	420
BASIC EARNINGS PER SHARE OF COMMON STOCK	$	0.15		$	0.51
EARNINGS PER SHARE OF COMMON STOCK:
WEIGHTED AVERAGE NUMBER OF BASIC SHARES OUTSTANDING		342			304
Basic	$	0.43		$	0.87		$	0.61		$	1.38
DILUTED EARNINGS PER SHARE OF COMMON STOCK	$	0.15		$	0.51
Diluted	$	0.43		$	0.87		$	0.61		$	1.37
WEIGHTED AVERAGE NUMBER OF DILUTED SHARES OUTSTANDING		343			306
AVERAGE SHARES OUTSTANDING:
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK	$	0.55		$	0.55
Basic		418			304			380			304
Diluted		420			305			382			305
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK		—			—		$	0.55		$	0.55

* Includes excise tax collections of $~~119~~116 million and $~~109~~99 million ofin ~~excise~~the ~~tax~~three ~~collections~~months ended June 30, 2011 and 2010, respectively, and $235 million and $208 million in the ~~three~~six months ended ~~March~~June 3130, 2011 and 2010, respectively.

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

FIRSTENERGY CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended
	Three Months						Six Months
	March 31
	Ended June 30						Ended June 30
(In millions)	2011			2010			2011			2010
NET INCOME	$	45171		$	~~149~~256		$	216		$	405
OTHER COMPREHENSIVE INCOME:
Pension and other postretirement benefits		19111			1317			130			30
Unrealized gain (loss) on derivative hedges		(6	)		4
Unrealized gain on derivative hedges		17			6			11			10
Change in unrealized gain on available-for-sale securities		910			6			19			12
Other comprehensive income		22138			2329			160			52
Income tax expense related to other comprehensive income		153			79			54			16
Other comprehensive income, net of tax		2185			1620			106			36
COMPREHENSIVE INCOME		66256			~~165~~276			322			441
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(5	)		(6	)
COMPREHENSIVE LOSS ATTRIBUTABLE
COMPREHENSIVE INCOME AVAILABLE TO FIRSTENERGY CORP.	$	71		$	171
TO NONCONTROLLING INTEREST		(10	)		(9	)		(15	)		(15	)
COMPREHENSIVE INCOME AVAILABLE TO FIRSTENERGY CORP.	$	266		$	285		$	337		$	456

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

FIRSTENERGY CORP.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,			December 31,
	June 30,			December 31,
(In millions)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	~~1,101~~476		$	1,019
Receivables-
Customers, net of allowance for uncollectible accounts of $38 in 2011 and $36 in 2010		1,636			1,392
Customers, net of allowance for uncollectible accounts of $35 in 2011 and $36 in 2010		1,578			1,392
Other, net of allowance for uncollectible accounts of $10 in 2011 and $8 in 2010		229			176
Other, net of allowance for uncollectible accounts of $8 in 2011 and 2010		256			176
Materials and supplies		852			638
Materials and supplies, at average cost		866			638
Prepaid taxes		~~241~~474			199
Derivatives		~~377~~265			182
Other		~~210~~203			92
		4,646			3,698
		4,118			3,698
PROPERTY, PLANT AND EQUIPMENT:
In service		3839,~~168~~568			29,451
Less — Accumulated provision for depreciation		11,~~345~~593			11,180
		26,823			18,271
		27,975			18,271
Construction work in progress		21,~~322~~465			1,517
Property, plant and equipment held for sale, net		~~490~~502			—
		29,635			19,788
		29,942			19,788
INVESTMENTS:
Nuclear plant decommissioning trusts		2,~~018~~051			1,973
Investments in lease obligation bonds		~~422~~414			476
Nuclear fuel disposal trust		~~207~~212			208
Other		~~434~~479			345
		3,081			3,002
		3,156			3,002
DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		6,~~527~~456			5,575
Regulatory assets		2,~~084~~182			1,826
Intangible assets		~~1,075~~973			256
Other		~~818~~769			660
		10,504			8,317
		10,380			8,317
	$	47,~~866~~596		$	34,805
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	12,~~385~~058		$	1,486
Short-term borrowings		~~486~~656			700
Accounts payable		1,~~080~~122			872
Accrued taxes		~~412~~399			326
Accrued compensation and benefits		~~312~~331			315
Derivatives		~~425~~287			266
Other		~~1,062~~691			733
		5,162			4,698
		5,544			4,698
CAPITALIZATION:
Common stockholders’ equity-
Common stock, $0.10 par value, authorized 490,000,000 shares- 418,216,437 shares outstanding		42			31
Common stock, $0.10 par value, authorized 490,000,000 and 375,000,000 shares, respectively- 418,216,437 and 304,835,407 shares outstanding, respectively		42			31
Other paid-in capital		9,~~779~~782			5,444
Accumulated other comprehensive loss		(1,~~518~~433	)		(1,539	)
Retained earnings		4,~~426~~607			4,609
Total common stockholders’ equity		12,~~729~~998			8,545
Noncontrolling interest		(4048	)		(32	)
Total equity		12,~~689~~950			8,513
Long-term debt and other long-term obligations		1716,~~535~~491			12,579
		30,224			21,092
		29,441			21,092
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		45,~~832~~219			2,879
Retirement benefits		2,~~313~~134			1,868
Asset retirement obligations		1,~~443~~459			1,407
Deferred gain on sale and leaseback transaction		~~951~~942			959
Power purchase contract liability		606			466
Adverse power contract liability		649			466
Other		2,~~335~~208			1,436
		12,480			9,015
		12,611			9,015
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 9)
	$	47,~~866~~596		$	34,805

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

FIRSTENERGY CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	Six Months Ended
	March 31
	June 30
(In millions)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	45216		$	~~149~~405
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		~~220~~502			~~193~~383
Amortization of regulatory assets		~~132~~222			~~212~~373
Nuclear fuel and lease amortization		4792			4176
Deferred purchased power and other costs		(58168	)		(77146	)
Deferred income taxes and investment tax credits, net		~~171~~552			59159
Deferred rents and lease market valuation liability		(1561	)		(1762	)
Accrued compensation and retirement benefits		~~(13~~49	)		(8127	)
Commodity derivative transactions, net		(2521	)		33(29	)
Pension trust contribution		(~~157~~262	)		—
Asset impairments		3141			1221
Cash collateral paid		(28	)		(46	)
Cash collateral paid, net		(31	)		(63	)
Interest rate swap transactions		—			43
Decrease (increase) in operating assets-
Receivables		~~164~~199			2(156	)
Materials and supplies		4024			(4217	)
Prepayments and other current assets		~~118~~(268	)		33(81	)
Increase (decrease) in operating liabilities-
Accounts payable		(9028	)		~~(57~~18	)
Accrued taxes		(~~182~~66	)		7(58	)
Accrued interest		76(4	)		6610
Other		1543			199
Net cash provided from operating activities		~~491~~1,031			~~506~~858
CASH FLOWS FROM FINANCING ACTIVITIES:
New financing-
New Financing-
Long-term debt		~~217~~503			—
Redemptions and repayments-
Short-term borrowings, net		—			281
Long-term debt		(359	)		(109	)
Redemptions and Repayments-
Short-term borrowings, net		(214	)		(295	)
Long-term debt		(1,002	)		(407	)
Common stock dividend payments		(190	)		(168	)
Short-term borrowings, net		(44	)		—
Other		(4	)		(22	)
Common stock dividend payments		(420	)		(335	)
Net cash used for financing activities		(550	)		(594	)
Other		(76	)		(23	)
Net cash used for financing activities		(1,039	)		(484	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(~~449~~1,018	)		(~~508~~997	)
Proceeds from asset sales		—			~~114~~116
Sales of investment securities held in trusts		~~969~~1,703			~~733~~1,915
Purchases of investment securities held in trusts		(~~993~~1,807	)		(~~755~~1,934	)
Customer acquisition costs		(12	)		(~~101~~105	)
Cash investments		4750			4959
Cash received in Allegheny merger		590			—
Other		(2251	)		(821	)
Net cash provided from (used for) investing activities		141			(476	)
Net cash used for investing activities		(535	)		(967	)
Net change in cash and cash equivalents		82(543	)		(~~564~~593	)
Cash and cash equivalents at beginning of period		1,019			874
Cash and cash equivalents at end of period	$	~~1,101~~476		$	~~310~~281
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash transaction: merger with Allegheny, common stock issued	$	4,354		$	—

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

FIRSTENERGY SOLUTIONS CORP.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended						Six Months Ended
	March 31
	June 30						June 30
(In thousands)	2011			2010
(In millions)	2011			2010			2011			2010
STATEMENTS OF INCOME
REVENUES:
Electric sales to non-affiliates	$	1,~~044,490~~052		$	~~668,685~~729		$	2,097		$	1,397
Electric sales to affiliates		~~260,874~~170			~~607,302~~539			431			1,146
Other		~~85,724~~70			~~112,106~~58			156			171
Total revenues		1,~~391,088~~292			1,~~388,093~~326			2,684			2,714
EXPENSES:
Fuel		~~343,109~~316			~~328,221~~343			659			671
Purchased power from affiliates		~~68,743~~65			~~60,953~~69			134			130
Purchased power from non-affiliates		~~296,938~~329			~~450,216~~310			626			760
Other operating expenses		~~495,935~~429			304~~,510~~			910			608
Provision for depreciation		68~~,452~~			~~62,918~~63			136			126
General taxes		~~29,105~~30			~~26,746~~22			60			49
Impairment of long-lived assets		~~13,800~~7			~~1,833~~—			20			2
Total expenses		1,~~316,082~~244			1,~~235,397~~111			2,545			2,346
OPERATING INCOME		~~75,006~~48			~~152,696~~215			139			368
OTHER INCOME (EXPENSE):
Investment income		~~5,861~~16			~~717~~13			22			14
Miscellaneous income		19,241			3,143
Miscellaneous income (expense)		4			4			8			7
Interest expense — affiliates		(~~1,017~~2	)		(2~~,305~~	)		(3	)		(5	)
Interest expense — other		(52~~,960~~	)		(~~49,644~~51	)		(105	)		(101	)
Capitalized interest		~~9,919~~10			~~19,690~~24			20			44
Total other expense		(~~18,956~~24	)		(~~28,399~~12	)		(58	)		(41	)
INCOME BEFORE INCOME TAXES		~~56,050~~24			~~124,297~~203			81			327
INCOME TAXES		~~20,116~~4			~~44,371~~69			25			113
NET INCOME	$	~~35,934~~20		$	~~79,926~~134		$	56		$	214
Loss attributable to noncontrolling interest		(76	)		—
STATEMENTS OF COMPREHENSIVE INCOME
EARNINGS AVAILABLE TO PARENT	$	36,010		$	79,926
NET INCOME	$	20		$	134		$	56		$	214
STATEMENTS OF COMPREHENSIVE INCOME
OTHER COMPREHENSIVE INCOME:
NET INCOME	$	35,934		$	79,926
Pension and other postretirement benefits		1			1			3			(9	)
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gain on derivative hedges		14			3			5			4
Pension and other postretirement benefits		1,512			(9,834	)
Change in unrealized gain on available-for-sale securities		8			6			15			11
Unrealized gain (loss) on derivative hedges		(8,879	)		1,274
Other comprehensive income		23			10			23			6
Change in unrealized gain on available-for-sale securities		7,807			5,028
Income taxes related to other comprehensive income		10			4			8			2
Other comprehensive income (loss)		440			(3,532	)
Other comprehensive income, net of tax		13			6			15			4
Income tax benefit related to other comprehensive income		(2,362	)		(1,340	)
COMPREHENSIVE INCOME	$	33		$	140		$	71		$	218
Other comprehensive income (loss), net of tax		2,802			(2,192	)
COMPREHENSIVE INCOME		38,736			77,734
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(76	)		—
COMPREHENSIVE INCOME ATTRIBUTABLE TO PARENT	$	38,812		$	77,734

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

FIRSTENERGY SOLUTIONS CORP. CONSOLIDATED BALANCE SHEETS (Unaudited)

CONSOLIDATED BALANCE SHEETS (Unaudited)


	June 30,			December 31,
(In millions)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6		$	9
Receivables-
Customers, net of allowance for uncollectible accounts of $18 in 2011 and $17 in 2010		450			366
Associated companies		490			478
Other, net of allowances for uncollectible accounts of $3 in 2011 and $7 in 2010		51			90
Notes receivable from associated companies		490			397
Materials and supplies, at average cost		499			545
Derivatives		221			182
Prepayments and other		49			59

		2,256			2,126

PROPERTY, PLANT AND EQUIPMENT:
In service		11,455			11,321
Less — Accumulated provision for depreciation		4,206			4,024

		7,249			7,297
Construction work in progress		694			1,063
Property, plant and equipment held for sale, net		487			—

		8,430			8,360

INVESTMENTS:
Nuclear plant decommissioning trusts		1,184			1,146
Other		10			12

		1,194			1,158

DEFERRED CHARGES AND OTHER ASSETS:
Customer intangibles		129			134
Goodwill		24			24
Property taxes		41			41
Unamortized sale and leaseback costs		76			73
Derivatives		135			98
Other		75			48

		480			418

	$	12,360		$	12,062

LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	1,088		$	1,132
Short-term borrowings-
Associated companies		541			12
Other		1			—
Accounts payable-
Associated companies		393			467
Other		191			241
Derivatives		242			266
Other		262			322

		2,718			2,440

CAPITALIZATION:
Common stockholder’s equity-
Common stock, without par value, authorized 750 shares- 7 shares outstanding		1,488			1,490
Accumulated other comprehensive loss		(105	)		(120	)
Retained earnings		2,474			2,418

Total common stockholder’s equity		3,857			3,788
Long-term debt and other long-term obligations		3,000			3,181

		6,857			6,969

NONCURRENT LIABILITIES:
Deferred gain on sale and leaseback transaction		942			959
Accumulated deferred income taxes		216			58
Asset retirement obligations		875			892
Retirement benefits		295			285
Lease market valuation liability		194			217
Derivatives		85			81
Other		178			161

		2,785			2,653

COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 9)
	$	12,360		$	12,062

	March 31,			December 31,
(In thousands)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,839		$	9,281
Receivables-
Customers, net of allowance for uncollectible accounts of $18,636 in 2011 and $16,591 in 2010		388,951			365,758
Associated companies		533,280			477,565
Other, net of allowances for uncollectible accounts of $6,702 in 2011 and $6,765 in 2010		86,711			89,550
Notes receivable from associated companies		478,418			396,770
Materials and supplies, at average cost		488,997			545,342
Derivatives		328,156			181,660
Prepayments and other		50,938			60,171
		2,362,290			2,126,097
PROPERTY, PLANT AND EQUIPMENT:
In service		11,239,565			11,321,318
Less — Accumulated provision for depreciation		4,107,542			4,024,280
		7,132,023			7,297,038
Construction work in progress		756,305			1,062,744
Property, plant and equipment held for sale, net		476,602			—
		8,364,930			8,359,782
INVESTMENTS:
Nuclear plant decommissioning trusts		1,159,903			1,145,846
Other		9,744			11,704
		1,169,647			1,157,550
DEFERRED CHARGES AND OTHER ASSETS:
Customer intangibles		131,870			133,968
Goodwill		24,248			24,248
Property taxes		41,112			41,112
Unamortized sale and leaseback costs		90,803			73,386
Derivatives		211,223			97,603
Other		53,057			48,689
		552,313			419,006
	$	12,449,180		$	12,062,435
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	986,863		$	1,132,135
Short-term borrowings-
Associated companies		360,543			11,561
Other		661			—
Accounts payable-
Associated companies		499,936			466,623
Other		189,144			241,191
Accrued taxes		66,493			70,129
Derivatives		380,744			266,411
Other		224,525			251,671
		2,708,909			2,439,721
CAPITALIZATION:
Common stockholders’ equity-
Common stock, without par value, authorized 750 shares- 7 shares outstanding		1,487,565			1,490,082
Accumulated other comprehensive loss		(117,612	)		(120,414	)
Retained earnings		2,454,587			2,418,577
Total common stockholders’ equity		3,824,540			3,788,245
Noncontrolling interest		16			(504	)
Total equity		3,824,556			3,787,741
Long-term debt and other long-term obligations		3,144,997			3,180,875
		6,969,553			6,968,616
NONCURRENT LIABILITIES:
Deferred gain on sale and leaseback transaction		950,726			959,154
Accumulated deferred income taxes		117,503			57,595
Accumulated deferred investment tax credits		53,181			54,224
Asset retirement obligations		866,643			892,051
Retirement benefits		289,285			285,160
Property taxes		41,112			41,112
Lease market valuation liability		205,366			216,695
Derivatives		168,409			81,393
Other		78,493			66,714
		2,770,718			2,654,098
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 9)
	$	12,449,180		$	12,062,435

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

FIRSTENERGY SOLUTIONS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	Six Months Ended
	March 31
	June 30
(In thousands)	2011			2010
(In millions)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	~~35,934~~56		$	~~79,926~~214
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		~~68,452~~136			~~62,918~~126
Nuclear fuel and lease amortization		~~46,653~~92			~~42,118~~78
Deferred rents and lease market valuation liability		(~~38,759~~58	)		(~~40,869~~59	)
Deferred income taxes and investment tax credits, net		~~61,268~~126			~~37,773~~114
Asset impairments		~~18,791~~28			~~11,439~~21
Commodity derivative transactions, net		(35,293	)		32,900
Accrued compensation and retirement benefits		8			7
Cash collateral paid		(27,063	)		(21,411	)
Commodity derivative transactions, net		(60	)		(29	)
Cash collateral paid, net		(40	)		(38	)
Decrease (increase) in operating assets-
Receivables		(~~76,069~~36	)		(~~158,288~~193	)
Materials and supplies		~~60,633~~50			(~~8,700~~29	)
Prepayments and other current assets		~~8,728~~12			~~13,516~~25
Increase (decrease) in operating liabilities-
Decrease in operating liabilities-
Accounts payable		(~~18,734~~124	)		(~~41,057~~32	)
Accrued taxes		(~~3,164~~29	)		(~~16,300~~8	)
Accrued interest		(11,845	)		(14,930	)
Other		21			21
Other		4,093			12,069
Net cash provided from operating activities		182			218
Net cash provided from (used for) operating activities		93,625			(8,896	)
CASH FLOWS FROM FINANCING ACTIVITIES:
New financing-
Long-term debt		~~150,190~~247			—
Short-term borrowings, net		~~349,643~~530			—76
Redemptions and repayments-
Long-term debt		(~~331,428~~472	)		(~~1,278~~295	)
Short-term borrowings, net		—			(9,237	)
Other		(11	)		(1	)
Other		(1,017	)		(731	)
Net cash provided from (used for) financing activities		294			(220	)
Net cash provided from (used for) financing activities		167,388			(11,246	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(~~159,006~~334	)		(~~301,603~~566	)
Proceeds from asset sales		—			~~114,272~~116
Sales of investment securities held in trusts		~~215,620~~513			~~272,094~~957
Purchases of investment securities held in trusts		(~~230,912~~545	)		(~~284,888~~979	)
Loans from (to) associated companies, net		(81,647	)		321,680
Loans to associated companies, net		(93	)		631
Customer acquisition costs		(~~1,103~~2	)		(~~100,615~~105	)
Other		(6,407	)		(799	)
Leasehold improvement payments to associated companies		—			(51	)
Net cash provided from (used for) investing activities		(263,455	)		20,141
Other		(18	)		(1	)
Net change in cash and cash equivalents		(2,442	)		(1	)
Net cash provided from (used for) investing activities		(479	)		2
Cash and cash equivalents at beginning of period		9,281			12
Net change in cash and cash equivalents		(3	)		—
Cash and cash equivalents at end of period	$	6,839		$	11
Cash and cash equivalents at beginning of period		9			—
Cash and cash equivalents at end of period	$	6		$	—

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

OHIO EDISON COMPANY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended						Six Months Ended
	March 31
	June 30						June 30
(In thousands)	2011			2010			2011			2010
STATEMENTS OF INCOME
REVENUES:
Electric sales	$	~~363~~360,~~831~~203		$	~~479~~415,~~925~~437		$	724,034		$	895,362
Excise and gross receipts tax collections		2824,~~195~~941			2823,~~475~~949			53,136			52,424
Total revenues		~~392~~385,~~026~~144			~~508~~439,~~400~~386			777,170			947,786
EXPENSES:
Purchased power from affiliates		9369,~~262~~134			~~153~~134,~~677~~050			162,396			287,727
Purchased power from non-affiliates		6062,~~379~~667			9478,~~231~~826			123,046			173,057
Other operating costs		101,462			88,855
Other operating expenses		110,778			88,275			212,240			177,130
Provision for depreciation		2122,~~876~~470			2122,~~880~~014			44,346			43,894
Amortization of regulatory assets, net		~~774~~2,405			299,~~345~~424			3,179			38,769
General taxes		4945,~~426~~592			4743,~~492~~362			95,018			90,854
Total expenses		~~327~~313,~~179~~046			~~435~~375,~~480~~951			640,225			811,431
OPERATING INCOME		6472,~~847~~098			7263,~~920~~435			136,945			136,355
OTHER INCOME (EXPENSE):
Investment income		45,~~308~~043			56,~~244~~309			9,351			11,553
Miscellaneous income (expense)		~~290~~(477	)		~~(292~~1,295	)		(187	)		1,003
Interest expense		(22,~~145~~011	)		(22,~~310~~155	)		(44,156	)		(44,465	)
Capitalized interest		~~331~~510			~~208~~295			841			503
Total other expense		(1716,~~216~~935	)		(1714,~~150~~256	)		(34,151	)		(31,406	)
INCOME BEFORE INCOME TAXES		4755,~~631~~163			5549,~~770~~179			102,794			104,949
INCOME TAXES		1716,~~491~~538			1911,~~609~~856			34,029			31,465
NET INCOME		3038,~~140~~625			3637,~~161~~323			68,765			73,484
Income attributable to noncontrolling interest		~~116~~114			~~132~~130			230			262
EARNINGS AVAILABLE TO PARENT	$	3038,~~024~~511		$	3637,~~029~~193		$	68,535		$	73,222
STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$	3038,~~140~~625		$	3637,~~161~~323		$	68,765		$	73,484
OTHER COMPREHENSIVE INCOME (LOSS):
OTHER COMPREHENSIVE INCOME:
Pension and other postretirement benefits		~~339~~1,122			~~4,015~~322			1,461			4,337
Change in unrealized gain on available-for-sale securities		(22	)		291
Increase in unrealized gain on available-for-sale securities		1,591			520			1,569			811
Other comprehensive income		~~317~~2,713			~~4,306~~842			3,030			5,148
Income tax expense (benefit) related to other comprehensive income		(1,496	)		693
Income tax expense (benefit) related to other
Other comprehensive income, net of tax		1,813			3,613
comprehensive income		386			(26	)		(1,110	)		667
COMPREHENSIVE INCOME		31,953			39,774
Other comprehensive income, net of tax		2,327			868			4,140			4,481
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		116			132
COMPREHENSIVE INCOME		40,952			38,191			72,905			77,965
COMPREHENSIVE INCOME AVAILABLE TO PARENT	$	31,837		$	39,642
COMPREHENSIVE INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST		114			130			230			262
COMPREHENSIVE INCOME AVAILABLE TO PARENT	$	40,838		$	38,061		$	72,675		$	77,703

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

OHIO EDISON COMPANY

CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,			December 31,
	June 30,			December 31,
(In thousands)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	~~345,030~~176		$	420,489
Receivables-
Customers (net of allowance for uncollectible accounts of $3,774 in 2011 and $4,086 in 2010)		158,146			176,591
Customers, net of allowance for uncollectible accounts of $3,564 in 2011 and $4,086 in 2010		159,393			176,591
Associated companies		7468,~~125~~709			118,135
Other		1732,~~290~~798			12,232
Notes receivable from associated companies		1695,~~762~~884			16,957
Prepayments and other		2935,~~366~~339			6,393
		640,719			750,797
		392,299			750,797
UTILITY PLANT:
In service		3,~~156~~176,~~648~~455			3,136,623
Less — Accumulated provision for depreciation		1,~~217~~230,~~827~~570			1,207,745
		1,938,821			1,928,878
		1,945,885			1,928,878
Construction work in progress		4866,~~302~~656			45,103
		1,987,123			1,973,981
		2,012,541			1,973,981
OTHER PROPERTY AND INVESTMENTS:
Investment in lease obligation bonds		~~190~~177,~~340~~835			190,420
Nuclear plant decommissioning trusts		~~126~~133,~~826~~354			127,017
Other		9492,~~604~~440			95,563
		411,770			413,000
		403,629			413,000
DEFERRED CHARGES AND OTHER ASSETS:
Regulatory assets		~~385~~392,~~005~~580			400,322
Pension assets		5962,~~104~~612			28,596
Property taxes		71,331			71,331
Unamortized sale and leaseback costs		2827,~~877~~628			30,126
Other		1619,~~007~~041			17,634
		560,324			548,009
		573,192			548,009
	$	3,~~599~~381,~~936~~661		$	3,685,787
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	1,~~424~~429		$	1,419
Short-term borrowings-
Associated companies		~~103,071~~—			142,116
Other		~~320~~166			320
Accounts payable-
Associated companies		9694,~~003~~821			99,421
Other		2541,~~515~~417			29,639
Accrued taxes		6869,~~415~~364			78,707
Accrued interest		25,~~334~~374			25,382
Other		~~105~~79,~~315~~795			74,947
		425,397			451,951
		312,366			451,951
CAPITALIZATION:
Common stockholders’ equity-
Common stockholder’s equity-
Common stock, without par value, authorized 175,000,000 shares- 60 shares outstanding		951,802			951,866
Common stock, without par value, authorized 175,000,000 shares – 60 shares outstanding		783,871			951,866
Accumulated other comprehensive loss		(~~177~~174,~~263~~936	)		(179,076	)
Retained earnings		71110,~~645~~156			141,621
Total common stockholders’ equity		846,184			914,411
Total common stockholder’s equity		719,091			914,411
Noncontrolling interest		5,~~796~~313			5,680
Total equity		~~851~~724,~~980~~404			920,091
Long-term debt and other long-term obligations		1,~~152~~151,~~171~~720			1,152,134
		2,004,151			2,072,225
		1,876,124			2,072,225
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		~~719~~749,~~979~~687			696,410
Accumulated deferred investment tax credits		9,~~799~~439			10,159
Retirement benefits		~~182~~183,~~461~~345			183,712
Asset retirement obligations		69,~~793~~164			74,456
Other		~~188~~181,~~356~~536			196,874
		1,170,388			1,161,611
		1,193,171			1,161,611
COMMITMENTS AND CONTINGENCIES (Note 9)
	$	3,~~599~~381,~~936~~661		$	3,685,787

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

OHIO EDISON COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	Six Months Ended
	March 31
	June 30
(In thousands)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	3068,~~140~~765		$	3673,~~161~~484
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		2144,~~876~~346			2143,~~880~~894
Amortization of regulatory assets, net		~~774~~3,179			2938,~~345~~769
Purchased power cost recovery reconciliation		(48,~~926~~584	)		(51,~~908~~514	)
Amortization of lease costs		32(4,~~933~~696	)		32(4,~~934~~619	)
Deferred income taxes and investment tax credits, net		2662,~~682~~216			(24,~~489~~964	)
Accrued compensation and retirement benefits		(78,~~944~~328	)		(1216,~~160~~154	)
Accrued regulatory obligations		(3,309	)		(2,309	)
Cash collateral from (to) suppliers, net		(850	)		1,215
Pension trust contribution		(27,000	)		—
Decrease (increase) in operating assets-
Receivables		8280,~~291~~968			6549,~~141~~250
Prepayments and other current assets		(2228,~~973~~947	)		~~(21~~5,~~802~~072	)
Decrease in operating liabilities-
Accounts payable		(1922,~~625~~253	)		(3557,~~461~~208	)
Accrued taxes		(109,~~305~~360	)		(1525,~~849~~685	)
Accrued interest		(48	)		(226	)
Other		4,261			(114	)
Other		2,438			9,647
Net cash provided from operating activities		150,408			109,045
Net cash provided from operating activities		104,313			101,213
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemptions and repayments-
Redemptions and Repayments-
Long-term debt		(~~110~~707	)		(12,~~363~~957	)
Short-term borrowings, net		(39142,~~045~~270	)		(9293,~~863~~017	)
Common stock dividend payments		(~~100~~268,000	)		(250,000	)
Other		—(2,340	)		(~~113~~881	)
Net cash used for financing activities		(~~139~~413,~~155~~317	)		(~~344~~346,~~339~~855	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(3778,~~651~~894	)		(3571,~~680~~698	)
Sales of investment securities held in trusts		7,972			2,424
Leasehold improvement payments from associated companies		—			18,375
Purchases of investment securities held in trusts		(8,896	)		(2,971	)
Sales of investment securities held in trusts		19,595			59,804
Loan repayments from associated companies, net		195			14,469
Purchases of investment securities held in trusts		(25,547	)		(64,063	)
Cash investments		(136	)		(384	)
Loans to associated companies, net		(78,927	)		12,420
Other		(2,101	)		1,773
Cash investments		11,962			11,774
Net cash used for investing activities		(40,617	)		(20,369	)
Other		(5,593	)		(1,298	)
Net change in cash and cash equivalents		(75,459	)		(263,495	)
Net cash used for investing activities		(157,404	)		(34,686	)
Net change in cash and cash equivalents		(420,313	)		(272,496	)
Cash and cash equivalents at beginning of period		420,489			324,175
Cash and cash equivalents at end of period	$	~~345,030~~176		$	6051,~~680~~679

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended						Six Months Ended
	March 31
	June 30						June 30
(In thousands)	2011			2010			2011			2010
STATEMENTS OF INCOME
REVENUES:
Electric sales	$	~~206~~202,~~742~~148		$	~~312~~280,~~497~~180		$	408,890		$	592,677
Excise tax collections		1815,~~145~~706			1715,~~573~~495			33,851			33,068
Total revenues		~~224~~217,~~887~~854			~~330~~295,~~070~~675			442,741			625,745
EXPENSES:
Purchased power from affiliates		4636,~~168~~040			~~109~~99,~~393~~422			82,208			208,815
Purchased power from non-affiliates		1823,~~220~~099			3732,~~398~~651			41,319			70,049
Other operating expenses		3531,~~036~~625			3128,~~235~~937			66,661			60,172
Provision for depreciation		18,~~426~~488			18,~~111~~336			36,914			36,447
Amortization of regulatory assets		23,370			45,139
Amortization of regulatory assets, net		18,166			30,807			41,536			75,946
General taxes		4036,~~212~~954			3828,~~489~~840			77,166			67,329
Total expenses		~~181~~164,~~432~~372			~~279~~238,~~765~~993			345,804			518,758
OPERATING INCOME		4353,~~455~~482			5056,~~305~~682			96,937			106,987
OTHER INCOME (EXPENSE):
Investment income		65,~~597~~637			76,~~547~~605			12,234			14,152
Miscellaneous income		~~636~~1,038			~~581~~675			1,674			1,257
Interest expense		(3332,~~078~~135	)		(33,~~621~~262	)		(65,213	)		(66,883	)
Capitalized interest		2736			267			63			33
Total other expense		(25,~~818~~424	)		(25,~~467~~975	)		(51,242	)		(51,441	)
INCOME BEFORE INCOME TAXES		1728,~~637~~058			2430,~~838~~707			45,695			55,546
INCOME TAXES		46,~~436~~209			108,~~843~~785			10,645			19,628
NET INCOME		1321,~~201~~849			1321,~~995~~922			35,050			35,918
Income attributable to noncontrolling interest		~~366~~309			~~419~~366			675			785
EARNINGS AVAILABLE TO PARENT	$	1221,~~835~~540		$	1321,~~576~~556		$	34,375		$	35,133
STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$	1321,~~201~~849		$	1321,~~995~~922		$	35,050		$	35,918
OTHER COMPREHENSIVE INCOME (LOSS):
Pension and other postretirement benefits		2,967			(22,585	)
Pension and other postretirement benefits (charges)		2,975			3,228			5,942			(19,357	)
Income tax benefit related to other comprehensive income		(462	)		(8,277	)
Income tax expense (benefit) related to other comprehensive income		860			976			398			(7,301	)
Other comprehensive income (loss), net of tax		32,~~429~~115			~~(14~~2,~~308~~252	)		5,544			(12,056	)
COMPREHENSIVE INCOME (LOSS)		16,630			(313	)
COMPREHENSIVE INCOME		23,964			24,174			40,594			23,862
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		~~366~~309			~~419~~366			675			785
TOTAL COMPREHENSIVE INCOME (LOSS) AVAILABLE TO PARENT	$	16,264		$	(732	)
COMPREHENSIVE INCOME AVAILABLE TO PARENT	$	23,655		$	23,808		$	39,919		$	23,077

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,			December 31,
	June 30,			December 31,
(In thousands)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	~~30,~~244		$	238
Receivables-
Customers (less allowance for doubtful accounts of $3,018 in 2011 and $4,589 in 2010, respectively)		107,418			183,744
Customers, net of allowance for uncollectible accounts of $2,801 in 2011 and $4,589 in 2010		97,997			183,744
Associated companies		3432,~~819~~348			77,047
Other		413,~~848~~476			11,544
Notes receivable from associated companies		2271,~~704~~911			23,236
Prepayments and other		13,894			3,656
Materials and supplies, at average cost		13,784			398
		213,927			299,465
Prepayments and other		6,431			3,258
		236,191			299,465
UTILITY PLANT:
In service		2,~~407~~417,~~827~~031			2,396,893
Less — Accumulated provision for depreciation		~~937~~944,~~105~~379			932,246
		1,470,722			1,464,647
		1,472,652			1,464,647
Construction work in progress		4859,~~572~~281			38,610
		1,519,294			1,503,257
		1,531,933			1,503,257
OTHER PROPERTY AND INVESTMENTS:
Investment in lessor notes		286,~~747~~745			340,029
Other		10,~~035~~048			10,074
		296,782			350,103
		296,793			350,103
DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		1,688,521			1,688,521
Regulatory assets		~~337~~320,~~189~~337			370,403
Pension assets		14,652			—
Property taxes		80,614			80,614
Other		1112,~~176~~884			11,486
		2,117,500			2,151,024
		2,117,008			2,151,024
	$	4,~~147~~181,~~503~~925		$	4,303,849
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	~~174~~188		$	161
Short-term borrowings-
Short-term borrowings from associated companies		23,303			105,996
Associated companies		23,303			105,996
Accounts payable-
Associated companies		4351,~~564~~001			32,020
Other		818,~~811~~700			14,947
Accrued taxes		7583,~~771~~265			84,668
Accrued interest		3918,~~256~~551			18,555
Other		4038,~~862~~685			44,569
		231,741			300,916
		233,693			300,916
CAPITALIZATION:
Common stockholder’s equity-
Common stock, without par value, authorized 105,000,000 shares- 67,930,743 shares outstanding		886,995			887,087
Common stock, without par value, authorized 105,000,000 shares, 67,930,743 shares outstanding		887,053			887,087
Accumulated other comprehensive loss		(~~149~~147,~~758~~643	)		(153,187	)
Retained earnings		~~531~~539,~~741~~280			568,906
Total common stockholder’s equity		1,~~268~~278,~~978~~690			1,302,806
Noncontrolling interest		1415,~~886~~195			18,017
Total equity		1,~~283~~293,~~864~~885			1,320,823
Long-term debt and other long-term obligations		1,831,~~011~~023			1,852,530
		3,114,875			3,173,353
		3,124,908			3,173,353
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		~~631~~640,~~507~~059			622,771
Accumulated deferred investment tax credits		10,~~784~~574			10,994
Retirement benefits		6076,~~682~~010			95,654
Other		9796,~~914~~681			100,161
		800,887			829,580
		823,324			829,580
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 9)
COMMITMENTS AND CONTINGENCIES (Note 9)
	$	4,~~147~~181,~~503~~925		$	4,303,849

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	Six Months Ended
	March 31
	June 30
(In thousands)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	1335,~~201~~050		$	1335,~~995~~918
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		1836,~~426~~914			1836,~~111~~447
Amortization of regulatory assets, net		2341,~~370~~536			4575,~~139~~946
Deferred income taxes and investment tax credits, net		417,~~140~~221			(1318,~~627~~083	)
Accrued compensation and retirement benefits		25,~~158~~421			25,~~282~~421
Accrued regulatory obligations		(~~863~~2,001	)		(26444	)
Cash collateral from suppliers, net		—			685
Pension trust contribution		(35,000	)		—
Decrease (increase) in operating assets-
Receivables		~~136~~140,~~887~~455			7051,~~633~~757
Prepayments and other current assets		(1017,~~236~~469	)		(95,~~133~~392	)
Increase (decrease) in operating liabilities-
Accounts payable		510,~~408~~135			(1434,~~387~~488	)
Accrued taxes		(~~8,898~~346	)		(1611,~~616~~317	)
Accrued interest		20,701			20,795
Other		(4,436	)		2,023
Other		(3,870	)		(2,636	)
Net cash provided from operating activities		227,480			149,257
Net cash provided from operating activities		165,424			114,530
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemptions and repayments-
Redemptions and Repayments-
Long-term debt		(3674	)		(2654	)
Short-term borrowings, net		(104,228	)		(~~126~~136,~~334~~013	)
Common stock dividend payments		(5064,000	)		(100,000	)
Other		(35,~~497~~239	)		(3,~~365~~367	)
Net cash used for financing activities		(~~157~~173,~~761~~541	)		(~~229~~239,~~725~~434	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(2952,~~334~~743	)		(1944,~~735~~373	)
Loans to associated companies, net		~~532~~(48,676	)		12,~~426~~322
Redemptions of lessor notes		53,~~282~~283			48,~~606~~608
Other		(25,~~137~~797	)		(12,~~085~~365	)
Net cash provided from investing activities		22,343			29,212
Net cash provided from (used for) investing activities		(53,933	)		4,192
Net change in cash and cash equivalents		~~30,006~~6			(85,~~983~~985	)
Cash and cash equivalents at beginning of period		238			86,230
Cash and cash equivalents at end of period	$	~~30,~~244		$	~~247~~245

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

THE TOLEDO EDISON COMPANY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended						Six Months Ended
	March 31
	June 30						June 30
(In thousands)	2011			2010			2011			2010
STATEMENTS OF INCOME
REVENUES:
Electric sales	$	~~106~~93,~~325~~048		$	~~125~~114,~~431~~691		$	199,373		$	240,122
Excise tax collections		76,~~302~~270			76,~~041~~059			13,572			13,100
Total revenues		~~113~~99,~~627~~318			~~132~~120,~~472~~750			212,945			253,222
EXPENSES:
Purchased power from affiliates		3517,~~517~~037			5447,~~618~~106			52,554			101,725
Purchased power from non-affiliates		1316,~~988~~114			1815,~~491~~223			30,102			33,713
Other operating expenses		3632,~~587~~549			25,~~545~~499			69,136			51,044
Provision for depreciation		7,~~931~~959			78,~~950~~013			15,890			15,963
Deferral of regulatory assets, net		(117,~~478~~054	)		(81,~~499~~800	)		(18,532	)		(10,299	)
General taxes		1412,~~452~~438			1312,~~461~~282			26,890			25,743
Total expenses		9679,~~997~~043			~~111~~106,~~566~~323			176,040			217,889
OPERATING INCOME		1620,~~630~~275			2014,~~906~~427			36,905			35,333
OTHER INCOME (EXPENSE):
Investment income		2,~~922~~599			35,~~800~~057			5,521			8,857
Miscellaneous expense		(1,629	)		(1,406	)
Miscellaneous income (expense)		396			(945	)		(1,233	)		(2,351	)
Interest expense		(10,~~443~~415	)		(10,~~487~~455	)		(20,858	)		(20,942	)
Capitalized interest		~~102~~135			7880			237			158
Total other expense		(97,~~048~~285	)		(86,~~015~~263	)		(16,333	)		(14,278	)
INCOME BEFORE INCOME TAXES		712,~~582~~990			128,~~891~~164			20,572			21,055
INCOME TAXES		1,~~735~~429			~~5,382~~948			3,164			6,330
NET INCOME		511,~~847~~561			7,~~509~~216			17,408			14,725
Income attributable to noncontrolling interest		2			32			4			5
EARNINGS AVAILABLE TO PARENT	$	511,~~845~~559		$	7,~~506~~214		$	17,404		$	14,720
STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$	511,~~847~~561		$	7,~~509~~216		$	17,408		$	14,725
OTHER COMPREHENSIVE INCOME:
Pension and other postretirement benefits		~~592~~575			~~296~~714			1,167			1,010
Change in unrealized gain on available-for-sale securities		1,305			369
Increase (decrease) in unrealized gain on available-for-sale securities		754			(330	)		2,059			39
Other comprehensive income		1,~~897~~329			~~665~~384			3,226			1,049
Income tax expense related to other comprehensive income		~~334~~351			~~170~~65			685			235
Other comprehensive income, net of tax		~~1,563~~978			~~495~~319			2,541			814
COMPREHENSIVE INCOME		712,~~410~~539			87,~~004~~535			19,949			15,539
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		2			32			4			5
COMPREHENSIVE INCOME AVAILABLE TO PARENT	$	712,~~408~~537		$	87,~~001~~533		$	19,945		$	15,534

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

THE TOLEDO EDISON COMPANY

CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,			December 31,
	June 30,			December 31,
(In thousands)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	~~150,014~~12		$	149,262
Receivables-
Customers (net of allowance for uncollectible accounts of $1,209 in 2011 and $1 in 2010)		45,749			29
Customers, net of allowance for uncollectible accounts of $1,142 in 2011 and $1 in 2010		45,931			29
Associated companies		5648,~~913~~340			31,777
Other (net of allowance for uncollectible accounts of $343 in 2011 and $330 in 2010)		18,752			18,464
Other, net of allowance for uncollectible accounts of $339 in 2011 and $330 in 2010		5,272			18,464
Notes receivable from associated companies		35128,~~489~~815			96,765
Prepayments and other		812,~~302~~052			2,306
		315,219			298,603
		240,422			298,603
UTILITY PLANT:
In service		~~952~~955,~~874~~002			947,203
Less — Accumulated provision for depreciation		~~449~~453,~~791~~517			446,401
		503,083			500,802
		501,485			500,802
Construction work in progress		1217,~~647~~386			12,604
		515,730			513,406
		518,871			513,406
OTHER PROPERTY AND INVESTMENTS:
Investment in lessor notes		82,~~133~~153			103,872
Nuclear plant decommissioning trusts		7779,~~141~~018			75,558
Other		1,~~469~~448			1,492
		160,743			180,922
		162,619			180,922
DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		500,576			500,576
Regulatory assets		8389,~~544~~112			72,059
Pension assets		24,~~427~~603			—
Property taxes		24,990			24,990
Other		3642,~~167~~341			23,750
		669,704			621,375
		681,622			621,375
	$	1,~~661~~603,~~396~~534		$	1,614,306
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	~~191~~188		$	199
Accounts payable-
Associated companies		3622,~~055~~144			17,168
Other		512,~~238~~524			7,351
Accrued taxes		23,~~043~~699			24,401
Accrued interest		155,~~983~~933			5,931
Lease market valuation liability		36,900			36,900
Other		5418,~~905~~060			23,145
		172,315			115,095
		119,448			115,095
CAPITALIZATION:
Common stockholders’ equity-
Common stockholder’s equity-
Common stock, $5 par value, authorized 60,000,000 shares- 29,402,054 shares outstanding		147,010			147,010
Common stock, $5 par value, authorized 60,000,000 shares, 29,402,054 shares outstanding		147,010			147,010
Other paid-in capital		178,~~122~~157			178,182
Accumulated other comprehensive loss		(4746,~~620~~642	)		(49,183	)
Retained earnings		~~108~~100,~~379~~937			117,534
Total common stockholders’ equity		385,891			393,543
Total common stockholder’s equity		379,462			393,543
Noncontrolling interest		2,~~591~~593			2,589
Total equity		~~388~~382,~~482~~055			396,132
Long-term debt and other long-term obligations		600,~~508~~524			600,493
		988,990			996,625
		982,579			996,625
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		~~157~~168,~~797~~429			132,019
Accumulated deferred investment tax credits		5,~~822~~715			5,930
Retirement benefits		51,~~253~~764			71,486
Asset retirement obligations		29,~~245~~737			28,762
Lease market valuation liability		~~190~~180,~~075~~850			199,300
Other		65,~~899~~012			65,089
		500,091			502,586
		501,507			502,586
COMMITMENTS AND CONTINGENCIES (Note 9)
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 9)
	$	1,~~661~~603,~~396~~534		$	1,614,306

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

THE TOLEDO EDISON COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	Six Months Ended
	March 31
	June 30
(In thousands)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	517,~~847~~408		$	714,~~509~~725
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		715,~~931~~890			715,~~950~~963
Deferral of regulatory assets, net		(1118,~~478~~532	)		(810,~~499~~299	)
Deferred rents and lease market valuation liability		6(43,~~141~~851	)		6(42,~~141~~264	)
Deferred income taxes and investment tax credits, net		2541,~~046~~457			1116,~~287~~503
Accrued compensation and retirement benefits		~~(142~~1,085	)		~~837~~2,600
Accrued regulatory obligations		(1,193	)		(632	)
Pension trust contribution		(45,000	)		—
Decrease (increase) in operating assets-
Cash collateral from (to) suppliers, net		(14	)		343
Receivables		(70,694	)		45,376
Increase (decrease) in operating assets-
Prepayments and other current assets		(5,996	)		(4,569	)
Receivables		(48,807	)		52,754
Prepayments and other current assets		(9,758	)		3,608
Increase (decrease) in operating liabilities-
Accounts payable		163,~~774~~661			(3561,~~414~~195	)
Accrued taxes		(~~1,358~~701	)		(4,~~933~~007	)
Accrued interest		10,052			10,050
Other		5,771			(8,960	)
Other		6,098			(4,578	)
Net cash used for operating activities		(82,584	)		(20,861	)
Net cash provided from (used for) operating activities		(56,779	)		31,157
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemptions and repayments-
Redemptions and Repayments-
Long-term debt		(56105	)		(56111	)
Short-term borrowings, net		—			(225,975	)
Common stock dividend payments		(1534,000	)		(130,000	)
Other		—(1,742	)		(2112	)
Net cash used for financing activities		(1535,~~056~~847	)		(356,~~033~~198	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(917,~~507~~386	)		(920,~~597~~237	)
Loan repayments from (loans to) associated companies, net		61,276			(33,587	)
Leasehold improvement payments from associated companies		—			32,829
Redemptions of lessor notes		21,739			20,509
Loans to associated companies, net		(32,050	)		(10,818	)
Sales of investment securities held in trusts		13,883			31,067
Redemptions of lessor notes		21,739			20,485
Purchases of investment securities held in trusts		(14,338	)		(31,705	)
Sales of investment securities held in trusts		28,401			106,814
Other		(466	)		(1,227	)
Purchases of investment securities held in trusts		(30,050	)		(107,978	)
Net cash provided from (used for) investing activities		72,587			(24,540	)
Other		(1,473	)		(2,905	)
Net change in cash and cash equivalents		752			(349,416	)
Net cash provided from (used for) investing activities		(30,819	)		18,190
Net change in cash and cash equivalents		(149,250	)		(358,869	)
Cash and cash equivalents at beginning of period		149,262			436,712
Cash and cash equivalents at end of period	$	~~150,014~~12		$	8777,~~296~~843

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

JERSEY CENTRAL POWER & LIGHT COMPANY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended						Six Months Ended
	March 31
	June 30						June 30
(In thousands)	2011			2010			2011			2010
STATEMENTS OF INCOME
REVENUES:
Electric sales	$	~~634~~576,~~023~~977		$	~~691~~709,~~392~~606		$	1,211,000		$	1,400,998
Excise tax collections		1211,~~487~~120			1211,~~352~~012			23,607			23,364
Total revenues		~~646~~588,~~510~~097			~~703~~720,~~744~~618			1,234,607			1,424,362
EXPENSES:
Purchased power		~~370~~328,~~168~~463			~~414~~410,~~016~~470			698,631			824,486
Other operating expenses		8678,~~079~~603			9575,~~660~~177			164,682			170,837
Provision for depreciation		2526,~~314~~773			27,~~971~~093			52,087			55,064
Amortization of regulatory assets, net		8140,~~587~~046			6981,~~448~~326			121,633			150,774
General taxes		1715,~~411~~115			1614,~~436~~902			32,526			31,338
Total expenses		~~580~~489,~~559~~000			~~623~~608,~~531~~968			1,069,559			1,232,499
OPERATING INCOME		6599,~~951~~097			80111,~~213~~650			165,048			191,863
OTHER INCOME (EXPENSE):
Miscellaneous income		13,~~910~~554			1,~~833~~649			5,464			3,482
Interest expense		(3031,~~657~~125	)		(2930,~~423~~041	)		(61,782	)		(59,464	)
Capitalized interest		~~427~~618			~~133~~156			1,045			289
Total other expense		(2826,~~320~~953	)		(2728,~~457~~236	)		(55,273	)		(55,693	)
INCOME BEFORE INCOME TAXES		3772,~~631~~144			5283,~~756~~414			109,775			136,170
INCOME TAXES		1830,~~078~~383			2333,~~530~~521			48,461			57,051
NET INCOME	$	1941,~~553~~761		$	2949,~~226~~893		$	61,314		$	79,119
STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$	1941,~~553~~761		$	2949,~~226~~893		$	61,314		$	79,119
OTHER COMPREHENSIVE INCOME:
Pension and other postretirement benefits		4,~~221~~290			154,~~928~~135			8,511			20,063
Unrealized gain on derivative hedges		69			69			138			138
Other comprehensive income		4,~~290~~359			154,~~997~~204			8,649			20,201
Income tax expense related to other comprehensive income		1,~~590~~612			61,~~558~~441			3,202			7,999
Other comprehensive income, net of tax		2,~~700~~747			92,~~439~~763			5,447			12,202
COMPREHENSIVE INCOME	$	2244,~~253~~508		$	3852,~~665~~656		$	66,761		$	91,321

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

JERSEY CENTRAL POWER & LIGHT COMPANY

CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,			December 31,
	June 30,			December 31,
(In thousands)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	142		$	4
Receivables-
Customers (net of allowance for uncollectible accounts of $3,842 in 2011 and $3,769 in 2010)		268,171			323,044
Customers, net of allowance for uncollectible accounts of $3,306 in 2011 and $3,769 in 2010		259,313			323,044
Associated companies		2766,~~144~~069			53,780
Other		2125,~~269~~580			26,119
Notes receivable — associated companies		~~298~~16,~~274~~288			177,228
Prepaid taxes		10135,~~968~~679			10,889
Other		1615,~~357~~421			12,654
		642,184			603,718
		518,392			603,718
UTILITY PLANT:
In service		4,~~579~~589,~~753~~369			4,562,781
Less — Accumulated provision for depreciation		1,~~667~~682,~~017~~577			1,656,939
		2,912,736			2,905,842
		2,906,792			2,905,842
Construction work in progress		78112,~~819~~573			63,535
		2,991,555			2,969,377
		3,019,365			2,969,377
OTHER PROPERTY AND INVESTMENTS:
Nuclear fuel disposal trust		~~206~~212,~~833~~419			207,561
Nuclear plant decommissioning trusts		190,~~424~~422			181,851
Other		2,~~111~~118			2,104
		399,368			391,516
		404,959			391,516
DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		1,810,936			1,810,936
Regulatory assets		~~460~~469,~~156~~490			513,395
Other		2534,~~243~~028			27,938
		2,296,335			2,352,269
		2,314,454			2,352,269
	$	6,~~329~~257,~~442~~170		$	6,316,880
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	3233,~~855~~315		$	32,402
Short-term borrowings-
Associated companies		360,917			—
Other		50,000			—
Accounts payable-
Associated companies		1656,~~983~~544			28,571
Other		~~123~~159,~~814~~720			158,442
Accrued compensation and benefits		3335,~~415~~578			35,232
Customer deposits		23,~~494~~684			23,385
Accrued taxes		151,~~142~~346			2,509
Accrued interest		2918,~~926~~059			18,111
Other		2513,~~663~~487			22,263
		301,292			320,915
		752,650			320,915
CAPITALIZATION:
Common stockholders’ equity-
Common stockholder’s equity-
Common stock, $10 par value, authorized 16,000,000 shares- 13,628,447 shares outstanding		136,284			136,284
Other paid-in capital		2,~~508~~008,~~754~~847			2,508,874
Accumulated other comprehensive loss		(~~250~~248,~~842~~095	)		(253,542	)
Retained earnings		~~246~~288,~~723~~484			227,170
Total common stockholder’s equity		2,~~640~~185,~~919~~520			2,618,786
Long-term debt and other long-term obligations		1,~~762~~754,~~365~~582			1,769,849
		4,403,284			4,388,635
		3,940,102			4,388,635
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		~~729~~761,~~478~~844			715,527
Power purchase contract liability		~~238~~239,~~677~~943			233,492
Nuclear fuel disposal costs		196,~~843~~868			196,768
Retirement benefits		~~175~~71,~~175~~711			182,364
Asset retirement obligations		~~110~~111,~~050~~831			108,297
Other		~~174~~182,~~643~~221			170,882
		1,624,866			1,607,330
		1,564,418			1,607,330
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 9)
	$	6,~~329~~257,~~442~~170		$	6,316,880

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

JERSEY CENTRAL POWER & LIGHT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	Six Months Ended
	March 31
	June 30
(In thousands)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	1961,~~553~~314		$	2979,~~226~~119
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		2552,~~314~~087			2755,~~971~~064
Amortization of regulatory assets, net		81121,~~587~~633			69150,~~448~~774
Deferred purchased power and other costs		(2670,~~516~~998	)		(3267,~~775~~664	)
Deferred income taxes and investment tax credits, net		2551,~~560~~222			(21,~~082~~425	)
Accrued compensation and retirement benefits		(41,~~776~~319	)		(52,~~847~~608	)
Cash collateral returned to suppliers		(250	)		(23,400	)
Cash collateral paid, net		(235	)		(23,400	)
Pension trust contribution		(105,000	)		—
Decrease (increase) in operating assets-
Receivables		8658,~~359~~466			33(46,~~257~~788	)
Prepayments and other current assets		(1,687	)		16,472
Prepaid taxes		(124,790	)		(111,968	)
Increase (decrease) in operating liabilities-
Accounts payable		~~(61~~13,~~612~~856	)		~~(40~~11,~~992~~924	)
Accrued taxes		12(1,~~631~~167	)		5010,~~857~~368
Accrued interest		11,815			11,816
Other		612			(6,446	)
Tax collections payable		7,084			14,544
Net cash provided from operating activities		58,319			52,166
Other		7,448			466
Net cash provided from operating activities		182,510			148,961
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemptions and repayments-
New Financing-
Long-term debt		(7,190	)		(6,773	)
Short-term borrowings, net		410,917			57,850
Redemptions and Repayments-
Long-term debt		(14,671	)		(13,830	)
Common stock dividend payments		—			(90,000	)
Net cash used for financing activities		(7,190	)		(96,773	)
Equity payment to parent		(500,000	)		—
Other		(1,452	)		—
Net cash used for financing activities		(105,206	)		(45,980	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(4798,~~604~~153	)		(3780,~~338~~727	)
Loans to associated companies, net		~~(121~~160,~~046~~940	)		(785,~~620~~049	)
Sales of investment securities held in trusts		~~217~~375,~~103~~885			~~190~~281,~~198~~242
Purchases of investment securities held in trusts		(~~221~~385,~~695~~448	)		(~~194~~289,~~748~~454	)
Other		(26,~~081~~299	)		(2,~~706~~224	)
Net cash used for investing activities		(175,323	)		(52,214	)
Net cash provided from (used for) investing activities		46,925			(6,114	)
Net change in cash and cash equivalents		(338	)		~~(26~~72	)
Cash and cash equivalents at beginning of period		4			27
Cash and cash equivalents at end of period	$	142		$	199

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

METROPOLITAN EDISON COMPANY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended						Six Months Ended
	March 31
	June 30						June 30
(In thousands)	2011			2010			2011			2010
STATEMENTS OF INCOME
REVENUES:
REVENUES:
Electric sales	$	265,363		$	422,030		$	603,779		$	873,590
Electric sales	$	338,416		$	451,560
Gross receipts tax collections		14,601			20,629			33,401			42,196
Gross receipts tax collections		18,800			21,567
Total revenues		279,964			442,659			637,180			915,786
Total revenues		357,216			473,127
EXPENSES:
EXPENSES:
Purchased power from affiliates		34,935			149,000			84,824			310,080
Purchased power from affiliates		49,889			161,080
Purchased power from non-affiliates		100,836			85,276			253,879			177,204
Purchased power from non-affiliates		153,043			91,928
Other operating expenses		50,075			90,151			97,307			192,134
Other operating expenses		47,232			101,983
Provision for depreciation		12,766			13,440			25,189			26,198
Provision for depreciation		12,423			12,758
Amortization of regulatory assets, net		22,167			48,589			54,261			97,389
Amortization of regulatory assets, net		32,094			48,800
General taxes		17,152			19,894			39,302			41,634
General taxes		22,150			21,740
Total expenses		237,931			406,350			554,762			844,639
Total expenses		316,831			438,289
OPERATING INCOME		42,033			36,309			82,418			71,147
OPERATING INCOME		40,385			34,838
OTHER INCOME (EXPENSE):
OTHER INCOME (EXPENSE):
Interest income		13			880			106			2,097
Interest income		93			1,217
Miscellaneous income		915			1,381			1,885			3,554
Miscellaneous income		970			2,173
Interest expense		(13,130	)		(13,002	)		(26,187	)		(26,775	)
Interest expense		(13,057	)		(13,773	)
Capitalized interest		228			159			375			285
Capitalized interest		147			126
Total other expense		(11,974	)		(10,582	)		(23,821	)		(20,839	)
Total other expense		(11,847	)		(10,257	)
INCOME BEFORE INCOME TAXES		30,059			25,727			58,597			50,308
INCOME BEFORE INCOME TAXES		28,538			24,581
INCOME TAXES		13,281			8,618			19,232			20,884
INCOME TAXES		5,951			12,266
NET INCOME	$	16,778		$	17,109		$	39,365		$	29,424
NET INCOME	$	22,587		$	12,315
STATEMENTS OF COMPREHENSIVE INCOME
STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$	16,778		$	17,109		$	39,365		$	29,424
NET INCOME	$	22,587		$	12,315
OTHER COMPREHENSIVE INCOME
OTHER COMPREHENSIVE INCOME:
Pension and other postretirement benefits		2,227			2,162			4,190			11,871
Pension and other postretirement benefits		1,963			9,709
Unrealized gain on derivative hedges		84			84			168			168
Unrealized gain on derivative hedges		84			84
Other comprehensive income		2,311			2,246			4,358			12,039
Other comprehensive income		2,047			9,793
Income tax expense related to other comprehensive income		869			724			1,632			4,901
Income tax expense related to other comprehensive income		763			4,177
Other comprehensive income, net of tax		1,442			1,522			2,726			7,138
Other comprehensive income, net of tax		1,284			5,616
COMPREHENSIVE INCOME	$	18,220		$	18,631		$	42,091		$	36,562
COMPREHENSIVE INCOME	$	23,871		$	17,931

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

METROPOLITAN EDISON COMPANY

CONSOLIDATED BALANCE SHEETS ~~(Unaudited)~~

	March 31,			December 31,
(In thousands)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	117		$	243,220
Receivables-
Customers (less allowance for doubtful accounts of $3,841 in 2011 and $3,868 in 2010, respectively)		159,801			178,522
Associated companies		23,110			24,920
Other		16,836			13,007
Notes receivable from associated companies		9,542			11,028
Prepaid taxes		40,883			343
Other		1,973			2,289
		252,262			473,329
UTILITY PLANT:
In service		2,260,156			2,247,853
Less — Accumulated provision for depreciation		852,326			846,003
		1,407,830			1,401,850
Construction work in progress		27,714			23,663
		1,435,544			1,425,513
OTHER PROPERTY AND INVESTMENTS:
Nuclear plant decommissioning trusts		303,906			289,328
Other		881			884
		304,787			290,212
DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		416,499			416,499
Regulatory assets		285,300			295,856
Power purchase contract asset		107,055			111,562
Other		51,939			31,699
		860,793			855,616
	$	2,853,386		$	3,044,670
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	42,450		$	28,760
Short-term borrowings-
Associated companies		109,709			124,079
Accounts payable-
Associated companies		35,758			33,942
Other		47,450			29,862
Accrued taxes		14,514			60,856
Accrued interest		11,738			16,114
Other		29,543			29,278
		291,162			322,891
CAPITALIZATION:
Common stockholders’ equity-
Common stock, without par value, authorized 900,000 shares- 740,905 shares outstanding		1,046,970			1,197,076
Accumulated other comprehensive loss		(141,099	)		(142,383	)
Retained earnings		29,994			32,406
Total common stockholder’s equity		935,865			1,087,099
Long-term debt and other long-term obligations		705,125			718,860
		1,640,990			1,805,959
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		481,530			473,009
Accumulated deferred investment tax credits		6,761			6,866
Nuclear fuel disposal costs		44,465			44,449
Asset retirement obligations		195,883			192,659
Retirement benefits		22,405			29,121
Power purchase contract liability		118,123			116,027
Other		52,067			53,689
		921,234			915,820
COMMITMENTS AND CONTINGENCIES (Note 9)
	$	2,853,386		$	3,044,670

(Unaudited)


	June 30,			December 31,
(In thousands)	2011			2010
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	157		$	243,220
Receivables-
Customers, net of allowance for uncollectible accounts of $3,087 in 2011 and $3,868 in 2010		143,820			178,522
Associated companies		12,849			24,920
Other		16,437			13,007
Notes receivable from associated companies		10,432			11,028
Prepaid taxes		27,083			343
Other		1,443			2,289

		212,221			473,329

UTILITY PLANT:
In service		2,266,437			2,247,853
Less — Accumulated provision for depreciation		859,055			846,003

		1,407,382			1,401,850
Construction work in progress		42,604			23,663

		1,449,986			1,425,513

OTHER PROPERTY AND INVESTMENTS:
Nuclear plant decommissioning trusts		301,188			289,328
Other		840			884

		302,028			290,212

DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		416,499			416,499
Regulatory assets		341,488			295,856
Power purchase contract asset		65,861			111,562
Other		54,587			31,699

		878,435			855,616

	$	2,842,670		$	3,044,670

LIABILITIES AND CAPITALIZATION

CURRENT LIABILITIES:
Currently payable long-term debt	$	28,760		$	28,760
Short-term borrowings-
Associated companies		238,399			124,079
Other		50,000			—
Accounts payable-
Associated companies		24,377			33,942
Other		48,262			29,862
Accrued taxes		12,844			60,856
Accrued interest		16,011			16,114
Other		29,605			29,278

		448,258			322,891

CAPITALIZATION:
Common stockholder’s equity-
Common stock, without par value, authorized 900,000 shares, 740,905 and 859,500 shares outstanding, respectively		842,023			1,197,076
Accumulated other comprehensive loss		(139,657	)		(142,383	)
Retained earnings		46,772			32,406

Total common stockholder’s equity		749,138			1,087,099
Long-term debt and other long-term obligations		704,486			718,860

		1,453,624			1,805,959

NONCURRENT LIABILITIES:
Accumulated deferred income taxes		494,716			473,009
Accumulated deferred investment tax credits		6,656			6,866
Nuclear fuel disposal costs		44,471			44,449
Asset retirement obligations		199,162			192,659
Retirement benefits		22,276			29,121
Power purchase contract liability		121,924			116,027
Other		51,583			53,689

		940,788			915,820

COMMITMENTS AND CONTINGENCIES (Note 9)
	$	2,842,670		$	3,044,670

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

METROPOLITAN EDISON COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS ~~(Unaudited)~~

	Three Months Ended
	March 31
(In thousands)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	22,587		$	12,315
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		12,423			12,758
Amortization of regulatory assets, net		32,094			48,800
Deferred costs recoverable as regulatory assets		(12,082	)		(18,276	)
Deferred income taxes and investment tax credits, net		1,304			(10,308	)
Accrued compensation and retirement benefits		(1,433	)		(2,527	)
Cash collateral returned from (paid to) suppliers		1,000			(700	)
Pension trust contributions		(35,000	)		—
Decrease (increase) in operating assets-
Receivables		16,702			(5,083	)
Prepayments and other current assets		(40,225	)		(52,040	)
Increase (decrease) in operating liabilities-
Accounts payable		15,749			(7,279	)
Accrued taxes		(46,006	)		19,960
Accrued interest		(4,376	)		(5,674	)
Other		6,337			2,373
Net cash used for operating activities		(30,926	)		(5,681	)
CASH FLOWS FROM FINANCING ACTIVITIES:
New financing-
Short-term borrowings, net		—			48,793
Redemptions and repayments-
Long-term debt		—			(100,000	)
Short-term borrowings, net		(14,369	)		—
Common stock		(150,000	)		—
Common stock dividend payments		(25,000	)		—
Net cash used for financing activities		(189,369	)		(51,207	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(21,126	)		(25,526	)
Sales of investment securities held in trusts		335,860			143,713
Purchases of investment securities held in trusts		(337,632	)		(146,056	)
Loans repayments from associated companies, net		1,486			85,383
Other		(1,396	)		(618	)
Net cash provided from (used for) investing activities		(22,808	)		56,896
Net increase (decrease) in cash and cash equivalents		(243,103	)		8
Cash and cash equivalents at beginning of period		243,220			120
Cash and cash equivalents at end of period	$	117		$	128

(Unaudited)


	Six Months Ended
	June 30
(In thousands)	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	39,365		$	29,424
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		25,189			26,198
Amortization of regulatory assets, net		54,261			97,389
Deferred costs recoverable as regulatory assets		(41,699	)		(38,358	)
Deferred income taxes and investment tax credits, net		11,972			(12,079	)
Accrued compensation and retirement benefits		(510	)		(1,573	)
Cash collateral from suppliers, net		174			50
Pension trust contribution		(35,000	)		—
Decrease (increase) in operating assets-
Receivables		46,240			(29,439	)
Prepaid taxes		(26,740	)		(31,246	)
Increase (decrease) in operating liabilities-
Accounts payable		5,148			733
Accrued taxes		(47,676	)		9,519
Accrued interest		(103	)		(1,277	)
Other		10,903			7,553

Net cash provided from operating activities		41,524			56,894


CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing-
Short-term borrowings, net		164,320			17,898
Redemptions and Repayments-
Common stock		(150,000	)		—
Long-term debt		(14,784	)		(100,000	)
Common stock dividend payments		(80,000	)		—
Equity payment to parent		(150,000	)		—

Net cash used for financing activities		(230,464	)		(82,102	)


CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(46,647	)		(54,405	)
Sales of investment securities held in trusts		501,260			376,610
Purchases of investment securities held in trusts		(506,220	)		(381,219	)
Loans to associated companies, net		596			85,943
Other		(3,112	)		(1,715	)

Net cash provided from (used for) investing activities		(54,123	)		25,214


Net change in cash and cash equivalents		(243,063	)		6
Cash and cash equivalents at beginning of period		243,220			120

Cash and cash equivalents at end of period	$	157		$	126

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

PENNSYLVANIA ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME ~~(Unaudited)~~

	Three Months Ended
	March 31
(In thousands)	2011			2010
STATEMENTS OF INCOME
REVENUES:
Electric sales	$	308,316		$	385,936
Gross receipts tax collections		16,529			17,524
Total revenues		324,845			403,460
EXPENSES:
Purchased power from affiliates		47,484			168,400
Purchased power from non-affiliates		141,436			91,423
Other operating expenses		41,328			72,394
Provision for depreciation		14,573			14,682
Amortization (deferral) of regulatory assets, net		13,007			(9,966	)
General taxes		20,736			16,534
Total expenses		278,564			353,467
OPERATING INCOME		46,281			49,993
OTHER INCOME (EXPENSE):
Miscellaneous income		25			1,613
Interest expense		(17,234	)		(17,290	)
Capitalized interest		22			140
Total other expense		(17,187	)		(15,537	)
INCOME BEFORE INCOME TAXES		29,094			34,456
INCOME TAXES		11,788			17,157
NET INCOME	$	17,306		$	17,299
STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$	17,306		$	17,299
OTHER COMPREHENSIVE INCOME:
Pension and other postretirement benefits		1,585			8,547
Unrealized gain on derivative hedges		16			16
Other comprehensive income		1,601			8,563
Income tax expense related to other comprehensive income		555			3,284
Other comprehensive income, net of tax		1,046			5,279
COMPREHENSIVE INCOME	$	18,352		$	22,578

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30						June 30
(In thousands)	2011			2010			2011			2010

STATEMENTS OF INCOME
REVENUES:
Electric sales	$	238,942		$	350,335		$	547,258		$	736,271
Gross receipts tax collections		12,727			16,162			29,256			33,686

Total revenues		251,669			366,497			576,514			769,957


EXPENSES:
Purchased power from affiliates		54,635			152,945			102,119			321,345
Purchased power from non-affiliates		64,459			86,829			205,895			178,252
Other operating expenses		44,570			67,070			85,898			139,464
Provision for depreciation		15,770			16,605			30,343			31,287
Amortization (deferral) of regulatory assets, net		12,608			(10,522	)		25,615			(20,488	)
General taxes		14,665			18,647			35,401			35,181

Total expenses		206,707			331,574			485,271			685,041


OPERATING INCOME		44,962			34,923			91,243			84,916


OTHER INCOME (EXPENSE):
Miscellaneous income		644			1,310			669			2,923
Interest expense		(17,361	)		(17,630	)		(34,595	)		(34,920	)
Capitalized interest		41			183			63			323

Total other expense		(16,676	)		(16,137	)		(33,863	)		(31,674	)


INCOME BEFORE INCOME TAXES		28,286			18,786			57,380			53,242

INCOME TAXES		13,568			5,812			25,356			22,969


NET INCOME	$	14,718		$	12,974		$	32,024		$	30,273


STATEMENTS OF COMPREHENSIVE INCOME

NET INCOME	$	14,718		$	12,974		$	32,024		$	30,273


OTHER COMPREHENSIVE INCOME:
Pension and other postretirement benefits		1,890			1,830			3,475			10,377
Unrealized gain on derivative hedges		17			16			33			32

Other comprehensive income		1,907			1,846			3,508			10,409
Income tax expense related to other comprehensive income		678			483			1,233			3,767

Other comprehensive income, net of tax		1,229			1,363			2,275			6,642


COMPREHENSIVE INCOME	$	15,947		$	14,337		$	34,299		$	36,915

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

PENNSYLVANIA ELECTRIC COMPANY

CONSOLIDATED BALANCE SHEETS ~~(Unaudited)~~

	March 31,			December 31,
(In thousands)	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3		$	5
Receivables-
Customers (net of allowance for uncollectible accounts of $3,395 in 2011 and $3,369 in 2010)		139,058			148,864
Associated companies		16,921			54,052
Other		12,142			11,314
Notes receivable from associated companies		12,334			14,404
Prepaid taxes		47,126			14,026
Other		1,843			1,592
		229,427			244,257
UTILITY PLANT:
In service		2,545,211			2,532,629
Less — Accumulated provision for depreciation		939,247			935,259
		1,605,964			1,597,370
Construction work in progress		40,799			30,505
		1,646,763			1,627,875
OTHER PROPERTY AND INVESTMENTS:
Nuclear plant decommissioning trusts		159,999			152,928
Non-utility generation trusts		80,275			80,244
Other		294			297
		240,568			233,469
DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		768,628			768,628
Regulatory assets		179,092			163,407
Power purchase contract asset		4,169			5,746
Other		15,140			19,287
		967,029			957,068
	$	3,083,787		$	3,062,669
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	45,000		$	45,000
Short-term borrowings-
Associated companies		90,363			101,338
Accounts payable-
Associated companies		41,231			35,626
Other		33,125			41,420
Accrued taxes		4,262			5,075
Accrued interest		24,069			17,378
Other		23,467			22,541
		261,517			268,378
CAPITALIZATION:
Common stockholders’ equity-
Common stock, $20 par value, authorized 5,400,000 shares- 4,427,577 shares outstanding		88,552			88,552
Other paid-in capital		913,439			913,519
Accumulated other comprehensive loss		(162,480	)		(163,526	)
Retained earnings		58,299			60,993
Total common stockholder’s equity		897,810			899,538
Long-term debt and other long-term obligations		1,072,339			1,072,262
		1,970,149			1,971,800
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		393,088			371,877
Retirement benefits		187,888			187,621
Power purchase contract liability		121,558			116,972
Asset retirement obligations		99,773			98,132
Other		49,814			47,889
		852,121			822,491
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 9)
	$	3,083,787		$	3,062,669

(Unaudited)


	June 30,			December 31,
(In thousands)	2011			2010

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	2		$	5
Receivables-
Customers, net of allowance for uncollectible accounts of $2,856 in 2011 and $3,369 in 2010		121,511			148,864
Associated companies		65,989			54,052
Other		11,420			11,314
Notes receivable from associated companies		13,498			14,404
Prepaid taxes		26,372			14,026
Other		1,423			1,592

		240,215			244,257

UTILITY PLANT:
In service		2,552,303			2,532,629
Less — Accumulated provision for depreciation		947,315			935,259

		1,604,988			1,597,370
Construction work in progress		62,592			30,505

		1,667,580			1,627,875

OTHER PROPERTY AND INVESTMENTS:
Nuclear plant decommissioning trusts		162,154			152,928
Non-utility generation trusts		126,786			80,244
Other		292			297

		289,232			233,469

DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		768,628			768,628
Regulatory assets		222,804			163,407
Power purchase contract asset		4,000			5,746
Other		15,272			19,287

		1,010,704			957,068

	$	3,207,731		$	3,062,669

LIABILITIES AND CAPITALIZATION

CURRENT LIABILITIES:
Currently payable long-term debt	$	45,000		$	45,000
Short-term borrowings-
Associated companies		159,902			101,338
Accounts payable-
Associated companies		77,121			35,626
Other		29,217			41,420
Accrued taxes		3,397			5,075
Accrued interest		17,454			17,378
Other		23,280			22,541

		355,371			268,378

CAPITALIZATION:
Common stockholder’s equity-
Common stock, $20 par value, authorized 5,400,000 shares- 4,427,577 shares outstanding		88,552			88,552
Other paid-in capital		913,486			913,519
Accumulated other comprehensive loss		(161,251	)		(163,526	)
Retained earnings		23,017			60,993

Total common stockholder’s equity		863,804			899,538
Long-term debt and other long-term obligations		1,072,417			1,072,262

		1,936,221			1,971,800

NONCURRENT LIABILITIES:
Accumulated deferred income taxes		415,899			371,877
Retirement benefits		188,407			187,621
Power purchase contract liability		160,130			116,972
Asset retirement obligations		101,441			98,132
Other		50,262			47,889

		916,139			822,491

COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 9)
	$	3,207,731		$	3,062,669

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

PENNSYLVANIA ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS ~~(Unaudited)~~

	Three Months Ended
	March 31
(In thousands)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	17,306		$	17,299
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		14,573			14,682
Amortization (deferral) of regulatory assets, net		13,007			(9,966	)
Deferred costs recoverable as regulatory assets		(17,771	)		(20,461	)
Deferred income taxes and investment tax credits, net		16,648			21,772
Accrued compensation and retirement benefits		1,551			(169	)
Cash collateral paid, net		(2,124	)		(400	)
Decrease (increase) in operating assets-
Receivables		46,100			(4,641	)
Prepayments and other current assets		(33,350	)		(50,186	)
Increase (decrease) in operating liabilities-
Accounts payable		(8,534	)		(1,348	)
Accrued taxes		(813	)		(2,142	)
Accrued interest		6,691			6,882
Other		10,204			7,162
Net cash provided from (used for) operating activities		63,488			(21,516	)
CASH FLOWS FROM FINANCING ACTIVITIES:
New financing-
Short-term borrowings, net		—			51,334
Redemptions and repayments-
Short-term borrowings, net		(10,975	)		—
Common stock dividend payments		(20,000	)		—
Other		26			(6	)
Net cash provided from (used for) financing activities		(30,949	)		51,328
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(31,128	)		(27,388	)
Loan repayments from associated companies, net		2,070			279
Sales of investment securities held in trusts		178,927			93,057
Purchases of investment securities held in trusts		(180,411	)		(94,464	)
Other		(1,999	)		(1,298	)
Net cash used for investing activities		(32,541	)		(29,814	)
Net change in cash and cash equivalents		(2	)		(2	)
Cash and cash equivalents at beginning of period		5			14
Cash and cash equivalents at end of period	$	3		$	12

(Unaudited)


	Six Months Ended
	June 30
(In thousands)	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	32,024		$	30,273
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		30,343			31,287
Amortization (deferral) of regulatory assets, net		25,615			(20,488	)
Deferred costs recoverable as regulatory assets		(38,291	)		(38,955	)
Deferred income taxes and investment tax credits, net		46,687			42,943
Accrued compensation and retirement benefits		4,733			4,216
Cash collateral paid, net		(1,276	)		(3,613	)
Decrease (increase) in operating assets-
Receivables		19,561			3,266
Prepaid taxes		(12,346	)		(37,504	)
Increase (decrease) in operating liabilities-
Accounts payable		23,449			(4,603	)
Accrued taxes		(12,373	)		(1,339	)
Other		13,153			10,227

Net cash provided from operating activities		131,279			15,710


CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing-
Long-term debt		25,000			—
Short-term borrowings, net		58,564			25,313
Redemptions and Repayments-
Long-term debt		(25,000	)		—
Common stock dividend payments		(70,000	)		—
Other		(1,353	)		5

Net cash provided from (used for) financing activities		(12,789	)		25,318


CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(64,177	)		(58,293	)
Loans to associated companies, net		906			498
Sales of investment securities held in trusts		265,223			133,934
Purchases of investment securities held in trusts		(314,738	)		(113,067	)
Other		(5,707	)		(4,104	)

Net cash used for investing activities		(118,493	)		(41,032	)


Net change in cash and cash equivalents		(3	)		(4	)
Cash and cash equivalents at beginning of period		5			14

Cash and cash equivalents at end of period	$	2		$	10

The accompanying Combined Notes to the Consolidated Financial Statements are an integral part of these financial statements.

FIRSTENERGY CORP. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


Note		Page
Number		Number

1	Organization and Basis of Presentation		27

2	Merger		27

3	Earnings Per Share		31

4	Fair Value of Instruments		31

5	Derivative Instruments		45

6	Pension Benefits and Other Postretirement Benefits		50

7	Variable Interest Entities		52

8	Income Taxes		53

9	Commitments, Guarantees and Contingencies		54

10	Regulatory Matters		61

11	Stock-Based Compensation Plans		70

12	New Accounting Standards and Interpretations		72

13	Segment Information		72

14	Impairment of Long-Lived Assets		74

15	Asset Retirement Obligations		75

16	Supplemental Guarantor Information		75

COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION

FirstEnergy is a diversified energy company that holds, directly or indirectly, all of the outstanding common stock of its principal subsidiaries: OE, CEI, TE, Penn (a wholly owned subsidiary of OE), ATSI, JCP&L, Met-Ed, Penelec, FENOC, AE and its principal subsidiaries (AE Supply, AGC, MP, PE, WP and TrAIL ~~Company~~), FES and its subsidiaries FGCO and NGC, and FESC. AE merged with a subsidiary of FirstEnergy on February 25, 2011, with AE ~~remaining~~continuing as the surviving ~~corporation~~ corporation and becoming a wholly-owned subsidiary of FirstEnergy (See Note 2, Merger).

FirstEnergy and its subsidiaries follow GAAP and comply with the related regulations, orders, policies and practices prescribed by the SEC, ~~the~~ FERC, ~~the NERC~~ and, as applicable, the PUCO, the PPUC, the MDPSC, the NYPSC, the WVPSC and the NJBPU. These unaudited interim financial statements and notes were prepared in accordance with GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. The preparation of financial statements in conformity with GAAP requires management to make periodic estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The reported results of operations are not indicative of results of operations for any future period. ~~In preparing the financial~~ ~~statements, FirstEnergy and its subsidiaries have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.~~

These unaudited interim financial statements should be read in conjunction with the financial statements and notes included in the combined Annual Report on Form 10-K for the year ended December 31, 2010 for FirstEnergy, FES and the Utility Registrants, as applicable~~, and the Current Report on Form 8-K filed by FirstEnergy on February 25, 2011, as amended on April 19, 2011~~. The consolidated unaudited financial statements of FirstEnergy, FES and each of the Utility Registrants reflect all normal recurring adjustments that, in the opinion of management, are necessary to fairly present results of operations for the interim periods. Certain prior year amounts have been reclassified to conform to the current year presentation. Unless otherwise indicated, defined terms used herein have the meanings set forth in the accompanying Glossary of Terms.

FirstEnergy and its subsidiaries consolidate all majority-owned subsidiaries over which they exercise control and, when applicable, entities for which they have a controlling financial interest. Intercompany transactions and balances are eliminated in consolidation. FirstEnergy consolidates a VIE when it is determined that it is the primary beneficiary (see Note 7, Variable Interest Entities). Investments in affiliates over which FirstEnergy and its subsidiaries have the ability to exercise significant influence, but with respect to which are not the primary beneficiary and do not exercise control, follow the equity method of accounting. Under the equity method, the interest in the entity is reported as an investment in the Consolidated Balance Sheets and the percentage share of the entity’s earnings is reported in the Consolidated Statements of Income.

2. MERGER

Merger

On February 25, 2011, the merger between FirstEnergy and Allegheny closed. Pursuant to the terms of the Agreement and Plan of Merger among FirstEnergy, Element Merger Sub, Inc., a Maryland corporation and a wholly-owned subsidiary of FirstEnergy (Merger Sub), and AE, Merger Sub merged with and into AE, with AE continuing as the surviving corporation and becoming a wholly-owned subsidiary of FirstEnergy. As part of the merger, AE shareholders received 0.667 of a share of FirstEnergy common stock for each share of AE common stock outstanding as of the date the merger was completed, and all outstanding AE equity-based employee compensation awards were converted into FirstEnergy equity-based awards on the same basis.

The merger created a combined company with increased scale and scope and greater diversification in energy delivery, generation and transmission. The combined company is the largest U.S. diversified electric utility by customers and operates one of the largest unregulated power generation fleets in the United States with FirstEnergy’s total current capacity of approximately 23,000 MW, which includes approximately 3,000 MW of regulated generation.

The total consideration in the merger was based on the closing price of a share of FirstEnergy common stock on February 24, 2011, the day prior to the date the merger was completed, and was calculated as follows (in millions, except per share data):


Shares of Allegheny common stock outstanding on February 24, 2011		170
Exchange ratio		0.667

Number of shares of FirstEnergy common stock issued		113
Closing price of FirstEnergy common stock on February 24, 2011	$	38.16

Fair value of shares issued by FirstEnergy	$	4,327
Fair value of replacement share-based compensation awards relating to pre-merger service		27

Total consideration transferred	$	4,354

The preliminary allocation of the total consideration transferred to the assets acquired and liabilities assumed includes adjustments for the fair value of coal contracts, energy supply contracts, emission allowances, unregulated property, plant and equipment, derivative instruments, goodwill, intangible assets, long-term debt and deferred income taxes. The preliminary allocation of the purchase price is as follows:

	Preliminary
	Purchase Price
(In millions)	Allocation
Current assets	$	1,509
Property, plant and equipment		9,656
Investments		138
Goodwill		952
Other noncurrent assets		1,262
Current liabilities		(714	)
Noncurrent liabilities		(3,453	)
Long-term debt and other long-term obligations		(4,996	)
	$	4,354

Assumptions and estimates underlying the fair value adjustments are subject to change pending further review of the assets acquired and liabilities assumed.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill. The Allegheny delivery, transmission and generation businesses have been assigned to the Regulated Distribution, Regulated Independent Transmission and Competitive Energy Services segments, respectively. The preliminary estimate of goodwill from the merger of $952 million was assigned entirely to the Competitive Energy Services segment based on expected synergies from the merger. The goodwill is not deductible for tax purposes.

Total goodwill recognized by segment in FirstEnergy’s Consolidated Balance Sheet is as follows:

			Competitive		Regulated
	Regulated		Energy		Independent		Other/
(In millions)	Distribution		Services		Transmission		Corporate		Consolidated
Balance at December 31, 2010	$	5,551	$	24	$	—	$	—	$	5,575
Merger with Allegheny		—		952		—		—		952
Balance at March 31, 2011	$	5,551	$	976	$	—	$	—	$	6,527

The allocation of the total consideration transferred to the assets acquired and liabilities assumed includes adjustments for the fair value of coal contracts, energy supply contracts, emission allowances, unregulated property, plant and equipment, derivative instruments, goodwill, intangible assets, long-term debt and accumulated deferred income taxes. The preliminary allocation of the purchase price is as follows:


(In millions)

Current assets	$	1,494
Property, plant and equipment		9,656
Investments		138
Goodwill		881
Other noncurrent assets		1,347
Current liabilities		(716	)
Noncurrent liabilities		(3,452	)
Long-term debt and other long-term obligations		(4,994	)

	$	4,354

The allocation of purchase price in the table above reflects a refinement made during the quarter ended June 30, 2011 in the determination of the fair values of income tax benefits, certain coal contracts and an adverse purchase power contract. This resulted in an increase in noncurrent assets of approximately $85 million and decreases in current assets and goodwill of $15 million and $71 million, respectively. The impact of the refinements on the amortization of purchase accounting adjustments recorded during the quarter ended March 31, 2011 was not significant. Further modifications to the purchase price allocation may occur as a result of continuing review of the assets acquired and liabilities assumed.

The estimated fair values of the assets acquired and liabilities assumed have been determined based on the accounting guidance for fair value measurements under GAAP, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill. The Allegheny delivery, transmission and generation businesses have been assigned to the Regulated Distribution, Regulated Independent Transmission and Competitive Energy Services segments, respectively. The preliminary estimate of goodwill from the merger of $881 million has been assigned to the Competitive Energy Services segment based on expected synergies from the merger. The goodwill is not deductible for tax purposes.

Total goodwill recognized by segment in FirstEnergy’s Consolidated Balance Sheet is as follows:


			Competitive		Regulated
	Regulated		Energy		Independent		Other/
(In millions)	Distribution		Services		Transmission		Corporate		Consolidated

Balance as of December 31, 2010	$	5,551	$	24	$	—	$	—	$	5,575

Merger with Allegheny		—		881		—		—		881


Balance as of June 30, 2011	$	5,551	$	905	$	—	$	—	$	6,456

The preliminary valuation of the additional intangible assets and liabilities recorded as result of the merger is as follows:

	Preliminary		Weighted Average
(In millions)	Valuation		Amortization Period
Above market contracts:
Energy supply contracts	$	189	10 years
Energy contracts	$	189	10 years
NUG contracts		124	25 years
Coal supply contracts		~~525~~516	8 years
		838
		829
Below market contracts:
NUG contracts		143	13 years
Coal supply contracts		8683	7 years
Transportation contract		35	8 years
		264
		261
	$	574
Net intangible assets	$	568

The fair value measurements of intangible assets and liabilities were ~~primarily~~ based on ~~significant~~ significant unobservable inputs and thus represent level 3 measurements as defined in accounting guidance for fair value measurements.

The fair value of Allegheny’s energy, NUG and gas transportation contracts, both above-market and below-market, were estimated based on the present value of the above/below market cash flows attributable to the contracts based on the contract type, discounted by a current market interest rate consistent with the overall credit quality of the portfolio. The above/below market cash flows were estimated by comparing the expected cash flow based on existing contracted prices and expected volumes with the cash flows from estimated current market contract prices for the same expected volumes. The estimated current market contract prices were derived considering current market prices, such as the price of energy and transmission, miscellaneous fees and a normal profit margin. The weighted average amortization period was determined based on the expected volumes to be delivered over the life of the contract.

The fair value of coal supply contracts was determined in a similar manner based on the present value of the above/below market cash flows attributable to the contracts. The fair value ofadjustment for these contracts ~~will~~is bebeing amortized based on expected deliveries under each contract.

~~Total~~As of June 30, 2011, intangible assets ~~recorded~~ on FirstEnergy’s Consolidated Balance Sheet, asincluding ofthose recorded ~~March 31~~in connection with the merger, ~~2011 are~~include asthe ~~follows~~following:

	Intangible
(In millions)	Assets
Purchase contract assets
NUG	$	~~241~~198
OVEC		5254
		293
		252
Intangible assets
Coal contracts		~~520~~487
FES customer intangible assets		~~132~~129
Energy contracts		~~130~~105
		782
		721
	$	1,075
Total intangible assets	$	973

~~Other~~Acquired ~~intangible assets acquired in the Allegheny merger include~~ land easements and software~~, having~~ with a fair value of $~~126~~169 million, are included in “Property, plant and equipment” on FirstEnergy’s Consolidated Balance Sheet as of ~~March~~June 3130, 2011.

In connection with the merger, FirstEnergy recorded merger transaction costs of approximately $82 7 million ($685 million net of tax) and $147 million ($105 million net of tax) during the three months ended June 30, 2011 and 2010, respectively and approximately $89 million ($72 million net of ~~merger~~tax) and ~~transaction~~$21 million ~~costs~~($15 million net of tax) during the first ~~quarter~~ six months of 2011 and 2010, respectively. These costs are included in “Other operating expenses” in the Consolidated ~~Statement~~ Statements of Income. Merger transaction costs recognized in the first ~~quarter~~six months of 2011 include $56 million ($47 net of tax) of change in control and other benefit payments to AE executives.

2829

FirstEnergy also recorded approximately $7510 million ($6 million net of tax) and $85 million ($66 million net of tax) in merger integration costs during the ~~first quarter~~three ofand six months ended June 30 2011, respectively, including an inventory valuation adjustment. In connection with the merger, FirstEnergy reviewed its inventory levels as a result of combining the inventory of both companies. Following this review, FirstEnergy management determined that the combined inventory stock contained excess and duplicative items. FirstEnergy management also adopted a consistent excess and obsolete inventory practice for the combined entity. Application of the revised practice, in conjunction with those items identified as excess and duplicative, resulted in an inventory valuation adjustment of $67 million ($42 million net of tax) in the first quarter of 2011.

~~The~~Revenues ~~amounts of revenue~~ and earnings of Allegheny ~~since the merger date~~ included in FirstEnergy’s Consolidated Statement of Income for the ~~quarter~~periods ~~ended~~subsequent ~~March~~to the February 3125, 2011 merger date are as follows:

	February 26 -
	April 1 –			February 26 –
(In millions, except per share amounts)	~~March~~June 3130, 2011			June 30, 2011
Total revenues	$	~~437~~1,181		$	1,618
Net Income(1)		(46	)
Earnings available to FirstEnergy Corp.(1)		63			17
Basic Earnings Per Share	$	(0.1315	)	$	0.04
Diluted Earnings Per Share	$	(0.1315	)	$	0.04

(1) Includes Allegheny’s after-tax merger costs of $524 million and $56 million, respectively.

Pro Forma Financial Information

The following unaudited pro forma financial information reflects the consolidated results of operations of FirstEnergy as if the merger with Allegheny had taken place on January 1, 2010. The unaudited pro forma information has been calculated after applying FirstEnergy’s accounting policies and adjusting Allegheny’s results to reflect the depreciation and amortization that would have been charged assuming fair value adjustments to property, plant and equipment, debt and intangible assets had been applied on January 1, 2010, together with the consequential tax effects.

FirstEnergy and Allegheny both incurred non-recurring costs directly related to the merger that have been included in the pro forma earnings presented below. ~~Approximately~~Combined pre-tax transaction costs incurred were approximately $837 million and $27 11 million ofin ~~combined~~the ~~pre-tax~~three ~~transaction~~months ~~costs~~ended ~~were~~June 30, ~~incurred~~2011 and 2010, respectively, and approximately $90 million and $39 million in the ~~three~~six months ended ~~March~~June 3130, 2011 and ~~March 31,~~ 2010, respectively. In addition, induring the ~~three~~six months ended ~~March~~June 3130, 2011, $75 85 million of pre-tax merger integration costs and $2432 million of charges from merger settlements approved by regulatory agencies ~~have~~were ~~been~~ recognized. Charges resulting from merger settlements are not expected to be material in future periods.

The unaudited pro forma financial information has been presented below for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved ~~had the pro~~or ~~forma events taken place on~~ the ~~dates indicated, or the~~ future consolidated results of operations of the combined company.

	Three Months Ended				Six Months Ended
	March 31
(Pro forma amounts in millions, except	June 30				June 30
(Pro forma amounts in millions, except per share amounts)	2011		2010
per share amounts)	2011		2010		2011		2010
Revenues	$	4,~~786~~062	$	4,~~685~~401	$	8,848	$	9,086
Net income attributable to FirstEnergy	$	137	$	255
Earnings available to FirstEnergy	$	186	$	389	$	323	$	644
Basic Earnings Per Share	$	0.3344	$	0.6193	$	0.77	$	1.54
Diluted Earnings Per Share	$	0.3344	$	0.6193	$	0.77	$	1.53

2930

3. EARNINGS PER SHARE

Basic earnings per share of common stock are computed using the weighted average of actual common shares outstanding during the relevant period as the denominator. The denominator for diluted earnings per share of common stock reflects the weighted average of common shares outstanding plus the potential additional common shares that would be issued if dilutive securities and other agreements to issue common stock were exercised. The following table reconciles basic and diluted earnings per share of common stock:

	Three Months Ended
	Three Months				Six Months
Reconciliation of Basic and Diluted	March 31
Reconciliation of Basic and Diluted Earnings per Share	Ended June 30				Ended June 30
Earnings per Share of Common Stock	2011		2010
of Common Stock	2011		2010		2011		2010
	(In millions, except per
	(In millions, except per share amounts)
	share amounts)
Earnings available to FirstEnergy Corp.	$	181	$	265	$	231	$	420
Earnings available to FirstEnergy Corp.	$	50	$	155
Weighted average number of basic shares outstanding(1)		418		304		380		304
Weighted average number of basic shares outstanding(1)		342		304
Assumed exercise of dilutive stock options and awards		2		1		2		1
Assumed exercise of dilutive stock options and awards		1		2
Weighted average number of diluted shares outstanding(1)		420		305		382		305
Weighted average number of diluted shares outstanding(1)		343		306
Basic earnings per share of common stock	$	0.43	$	0.87	$	0.61	$	1.38
Basic earnings per share of common stock	$	0.15	$	0.51
Diluted earnings per share of common stock	$	0.43	$	0.87	$	0.61	$	1.37
Diluted earnings per share of common stock	$	0.15	$	0.51

(1) Includes 113 million shares issued to AE stockholders for the ~~period~~periods subsequent to the merger date. (See Note 2~~, Merger~~)

4. FAIR VALUE ~~OF FINANCIAL INSTRUMENTS~~MEASUREMENTS

(A) LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONS

All borrowings with initial maturities of less than one year are defined as short-term financial instruments under GAAP and are reported on the Consolidated Balance Sheets at cost, which approximates their fair market value, in the caption “short-term borrowings.”. The following table provides the approximate fair value and related carrying amounts of long-term debt and other long-term obligations as of ~~March~~June 3130, 2011 and December 31 2010:

	March 31, 2011				December 31, 2010
	June 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
	(In millions)
FirstEnergy(1)	$	18,~~743~~371	$	19,~~776~~436	$	13,928	$	14,845
FES		4,~~099~~056		4,~~227~~310		4,279		4,403
OE		1,~~159~~158		1,~~334~~367		1,159		1,321
CEI		1,831		2,~~035~~083		1,853		2,035
TE		600		~~666~~690		600		653
JCP&L		1,~~802~~795		12,~~980~~008		1,810		1,962
Met-Ed		~~742~~729		~~826~~828		742		821
Penelec		1,120		1,~~190~~231		1,120		1,189

(1) Includes debt assumed in the Allegheny merger (See Note 2) with a carrying value and a fair value as of ~~March~~June 3130, 2011 of $4,~~995~~530 million and $54,~~004~~127 million, respectively.

The fair values of long-term debt and other long-term obligations reflect the present value of the cash outflows relating to those obligations based on the current call price, the yield to maturity or the yield to call, as deemed appropriate at the end of each respective period. The yields assumed were based on debt with similar characteristics offered by corporations with credit ratings similar to those of FirstEnergy, FES, the Utilities and other subsidiaries.

(B) INVESTMENTS

All temporary cash investments purchased with an initial maturity of three months or less are reported as cash equivalents on the Consolidated Balance Sheets at cost, which approximates their fair market value. Investments other than cash and cash equivalents include held-to-maturity securities, available-for-sale securities and notes receivable.

FES and the Utilities periodically evaluate their investments for other-than-temporary impairment. They first consider their intent and ability to hold an equity investment until recovery and then consider, among other factors, the duration and the extent to which the security’s fair value has been less than cost and the near-term financial prospects of the security issuer when evaluating an investment for impairment. For debt securities, FES and the Utilities consider their intent to hold the security, the likelihood that they will be required to sell the security before recovery of their cost basis, and the likelihood of recovery of the security’s entire amortized cost basis.

Available-For-Sale Securities

FES and the Utilities hold debt and equity securities within their nuclear decommissioning trusts, nuclear fuel disposal trusts and NUG trusts. These trust investments are considered as available-for-sale at fair market value. FES and the Utilities have no securities held for trading purposes.

The following table summarizes the amortized cost basis, unrealized gains and losses and fair values of investments held in nuclear decommissioning trusts, nuclear fuel disposal trusts and NUG trusts as of March 31, 2011 and December 31, 2010:

	March 31, 2011(1)								December 31, 2010(2)
	Cost		Unrealized		Unrealized		Fair		Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value		Basis		Gains		Losses		Value
	(In millions)
Debt securities
FirstEnergy	$	1,985	$	32	$	—	$	2,017	$	1,699	$	31	$	—	$	1,730
FES		1,012		18		—		1,030		980		13		—		993
OE		124		1		—		125		123		1		—		124
TE		51		—		—		51		42		—		—		42
JCP&L		358		7		—		365		281		9		—		290
Met-Ed		240		4		—		244		127		4		—		131
Penelec		200		2		—		202		145		4		—		149
Equity securities
FirstEnergy	$	186	$	7	$	—	$	193	$	268	$	69	$	—	$	337
FES		88		5		—		93		—		—		—		—
TE		24		1		—		25		—		—		—		—
JCP&L		21		—		—		21		80		17		—		97
Met-Ed		33		1		—		34		125		35		—		160
Penelec		20		—		—		20		63		16		—		79

(1)		Excludes cash investments, receivables, payables, deferred taxes and accrued income: FirstEnergy — $97 million; FES — $37 million; OE — $2 million; TE — $1 million; JCP&L — $12 million; Met-Ed — $27 million and Penelec — $18 million.
(2)		Excludes cash investments, receivables, payables, deferred taxes and accrued income: FirstEnergy — $193 million; FES — $153 million; OE — $3 million; TE — $34 million; JCP&L — $3 million; Met-Ed — $(3) million and Penelec — $4 million.

~~Proceeds~~Unrealized ~~from~~gains applicable to the ~~sale~~decommissioning trusts of ~~investments~~FES, inOE ~~available-for-sale~~and ~~securities,~~TE ~~realized~~are ~~gains~~recognized ~~and~~in OCI ~~losses~~because onfluctuations ~~those~~in ~~sales~~fair ~~net~~value ofwill ~~adjustments~~eventually impact earnings while unrealized losses are recorded to earnings. The decommissioning trusts of JCP&L, Met-Ed and ~~interest~~Penelec are subject to regulatory accounting. Net unrealized gains and ~~dividend~~losses ~~income~~are ~~for~~recorded as regulatory assets or liabilities because the ~~three~~difference ~~months~~between ~~ended~~investments ~~March 31,~~held ~~2011~~in the trust and ~~2010~~the ~~were~~decommissioning asliabilities ~~follows:~~will be recovered from or refunded to customers.

								Interest and
March 31, 2011	Sales Proceeds		Realized Gains		Realized Losses			Dividend Income
	(In millions)
FirstEnergy	$	970	$	100	$	(29	)	$	24
FES		216		12		(15	)		15
OE		8		—		—			1
TE		14		1		(1	)		1
JCP&L		217		22		(4	)		4
Met-Ed		336		43		(5	)		2
Penelec		179		22		(4	)		1

The investment policy for the nuclear decommissioning trust funds restricts or limits the trusts’ ability to hold certain types of assets including private or direct placements, warrants, securities of FirstEnergy, investments in companies owning nuclear power plants, financial derivatives, preferred stocks, securities convertible into common stock and securities of the trust funds’ custodian or managers and their parents or subsidiaries.

								Interest and
March 31, 2010	Sales Proceeds		Realized Gains		Realized Losses			Dividend Income
	(In millions)
FirstEnergy	$	733	$	37	$	(51	)	$	22
FES		272		13		(24	)		13
OE		2		—		—			1
TE		31		1		(1	)		1
JCP&L		190		8		(8	)		4
Met-Ed		144		9		(11	)		2
Penelec		93		6		(7	)		1

Available-For-Sale Securities

~~Unrealized~~FES ~~gains~~and ~~applicable to~~ the ~~decommissioning~~Utilities ~~trusts~~hold ofdebt ~~FES, OE~~ and TEequity ~~are~~securities ~~recognized~~within ~~in OCI~~their ~~because~~NDT, ~~fluctuations~~nuclear infuel ~~fair value will eventually impact earnings. The decommissioning trusts~~disposal oftrusts ~~JCP&L, Met-Ed~~ and ~~Penelec~~NUG ~~are subject to regulatory accounting~~trusts. ~~Net~~These ~~unrealized~~trust ~~gains~~investments ~~and losses~~ are ~~recorded~~considered as ~~regulatory~~available-for-sale ~~assets~~at orfair ~~liabilities because the difference between investments held in~~market ~~trust~~value. FES and the ~~decommissioning~~Utilities ~~liabilities~~have ~~will~~no besecurities ~~recovered~~held ~~from~~for ortrading ~~refunded to customers~~purposes.

The ~~investment~~following ~~policy~~table ~~for~~summarizes the ~~nuclear~~amortized ~~decommissioning~~cost ~~trust~~basis, ~~funds~~unrealized ~~restricts~~gains orand ~~limits~~losses ~~the~~and ~~plans’ ability~~fair tovalues ~~hold certain types~~ of ~~assets~~investments ~~including~~held ~~private~~in ~~or direct placements~~NDT, ~~warrants, securities of FirstEnergy, investments in companies owning~~ nuclear ~~power~~fuel ~~plants,~~disposal ~~financial~~trusts ~~derivatives,~~and ~~preferred stocks,~~NUG ~~securities~~trusts ~~convertible~~as ~~into common stock and securities~~ of ~~the~~June 30, ~~trust fund’s custodian or~~2011 ~~managers~~ and ~~their~~December 31, ~~parents or subsidiaries.~~2010:

FirstEnergy recognized $3 million and $11 million of net realized losses for the three-month period ended March 31, 2011 and 2010, respectively, resulting from the sale of securities held in nuclear decommissioning trusts.


	June 30, 2011⁽¹⁾								December 31, 2010⁽²⁾
	Cost		Unrealized		Unrealized		Fair		Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value		Basis		Gains		Losses		Value
	*(In millions)*
Debt securities
FirstEnergy	$	2,015	$	48	$	—	$	2,063	$	1,699	$	31	$	—	$	1,730
FES		1,023		26		—		1,049		980		13		—		993
OE		128		3		—		131		123		1		—		124
TE		52		1		—		53		42		—		—		42
JCP&L		353		9		—		362		281		9		—		290
Met-Ed		249		5		—		254		127		4		—		131
Penelec		210		4		—		214		145		4		—		149

Equity securities
FirstEnergy	$	187	$	11	$	—	$	198	$	268	$	69	$	—	$	337
FES		90		6		—		96		—		—		—		—
TE		24		2		—		26		—		—		—		—
JCP&L		21		1		—		22		80		17		—		97
Met-Ed		32		1		—		33		125		35		—		160
Penelec		20		1		—		21		63		16		—		79

Held-To-Maturity Securities


⁽¹⁾		Excludes cash investments, receivables, payables, deferred taxes and accrued income: FirstEnergy – $130 million; FES – $39 million; OE – $3 million; JCP&L – $19 million; Met-Ed – $14 million and Penelec – $55 million.

⁽²⁾		Excludes cash investments, receivables, payables, deferred taxes and accrued income: FirstEnergy – $193 million; FES – $153 million; OE – $3 million; TE – $34 million; JCP&L – $3 million; Met-Ed – $(3) million and Penelec – $4 million.

The following table provides the amortized cost basis, unrealized gains and losses, and approximate fair values of investments in held-to-maturity securities as of March 31, 2011 and December 31, 2010:

	March 31, 2011								December 31, 2010
	Cost		Unrealized		Unrealized		Fair		Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value		Basis		Gains		Losses		Value
	(In millions)
Debt Securities
FirstEnergy	$	422	$	79	$	—	$	501	$	476	$	91	$	—	$	567
OE		190		45		—		235		190		51		—		241
CEI		287		33		—		320		340		41		—		381

Investments in emission allowances, employee benefits and cost and equity method investments totaling $345 million as of March 31, 2011 and $259 million as of December 31, 2010 are not required to be disclosed and are excluded from the amounts reported above.

Proceeds from the sale of investments in available-for-sale securities, realized gains and losses on those sales net of adjustments recorded to earnings and interest and dividend income for the three months and six months ended June 30, 2011 and 2010 were as follows:


Three Months Ended June 30,

								Interest and
2011	Sales Proceeds		Realized Gains		Realized Losses			Dividend Income
	*(In millions)*
FirstEnergy	$	734	$	22	$	(16	)	$	28
FES		297		10		(7	)		17
OE		12		—		—			1
TE		15		1		(1	)		1
JCP&L		159		4		(2	)		4
Met-Ed		165		4		(3	)		3
Penelec		86		3		(3	)		2


								Interest and
2010	Sales Proceeds		Realized Gains		Realized Losses			Dividend Income
	*(In millions)*
FirstEnergy	$	1,183	$	46	$	(36	)	$	16
FES		685		41		(35	)		9
OE		57		2		—			—
TE		76		2		—			—
JCP&L		91		—		—			3
Met-Ed		233		1		(1	)		2
Penelec		41		—		—			2


Six Months Ended June 30,

								Interest and
2011	Sales Proceeds		Realized Gains		Realized Losses			Dividend Income
	*(In millions)*
FirstEnergy	$	1,703	$	122	$	(45	)	$	52
FES		513		22		(23	)		32
OE		20		—		—			2
TE		28		1		(2	)		1
JCP&L		376		26		(6	)		8
Met-Ed		501		48		(7	)		5
Penelec		265		25		(7	)		4


								Interest and
2010	Sales Proceeds		Realized Gains		Realized Losses			Dividend Income
	*(In millions)*
FirstEnergy	$	1,915	$	83	$	(86	)	$	37
FES		957		54		(58	)		22
OE		60		2		—			1
TE		107		3		—			1
JCP&L		281		9		(9	)		7
Met-Ed		377		9		(12	)		3
Penelec		134		6		(7	)		3

Held-To-Maturity Securities

The following table provides the amortized cost basis, unrealized gains and losses, and approximate fair values of investments in held-to-maturity securities as of June 30, 2011 and December 31, 2010:


	June 30, 2011								December 31, 2010
	Cost		Unrealized		Unrealized		Fair		Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value		Basis		Gains		Losses		Value
	*(In millions)*
Debt Securities
FirstEnergy	$	414	$	84	$	—		498	$	476	$	91	$	—	$	567
OE		178		45		—		223		190		51		—		241
CEI		287		39		—		326		340		41		—		381

Investments in emission allowances, employee benefits and cost and equity method investments totaling $345 million as of June 30, 2011 and $259 million as of December 31, 2010, are not required to be disclosed and are excluded from the amounts reported above.

Notes Receivable

The table below provides the approximate fair value and related carrying amounts of notes receivable as of ~~March~~June 3130, 2011 and December 31, 2010. The fair value of notes receivable ~~represents~~ represents the present value of the cash inflows based on the yield to maturity. The yields assumed were based on financial instruments with similar characteristics and terms. The maturity dates range from 2013 to 2021.

	March 31, 2011				December 31, 2010
	June 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
	(In millions)
Notes Receivable
FirstEnergy	$	76	$	87	$	7	$	8
TE		82		94		104		118

(C) RECURRING FAIR VALUE MEASUREMENTS

~~Fair~~Authoritative ~~value~~accounting isguidance ~~the~~establishes ~~price that would be received for an asset or paid to transfer~~ a ~~liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants on the measurement date. A~~ fair value hierarchy ~~has been established~~ that prioritizes the inputs used to measure fair value. ~~The~~This hierarchy gives the highest priority to ~~unadjusted quoted market prices in active markets for identical assets or liabilities (~~Level 1) ~~and~~measurements and the lowest priority to ~~unobservable inputs (~~Level 3). ~~The three levels of~~measurements. ~~the fair value hierarchy are as follows:~~

~~Level~~The 1three —levels ~~Quoted prices are available in active markets for identical assets or liabilities as~~ of the ~~reporting~~fair ~~date.~~value ~~Active~~hierarchy ~~markets~~ are ~~those~~as ~~in which transactions for the asset or liability occur~~follows: ~~in sufficient frequency and volume to provide pricing information on an ongoing basis.~~

Level 2 — Pricing inputs are either directly or indirectly observable in the market as of the reporting date, other than quoted prices in active markets included in Level 1. Additionally, Level 2 includes those financial instruments that are valued using models or other valuation methodologies based on assumptions that are observable in the marketplace throughout the full term of the instrument and can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Instruments in this category may include non-exchange-traded derivatives such as forwards and certain interest rate swaps.


Level 1		— Quoted prices for identical instruments in active markets.

Level 2		— Quoted prices for similar instruments in active markets;

		— quoted prices for identical or similar instruments in markets that are not active; and

		— model-derived valuations for which all significant inputs are observable market data.

Level 3		— Valuation inputs are unobservable and significant to the fair value measurement.

~~Level~~The 3following —tables ~~Pricing~~set ~~inputs~~forth ~~include~~financial ~~inputs~~assets ~~that~~and ~~are~~liabilities ~~generally~~measured ~~less~~at ~~observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of~~ fair value. ~~FirstEnergy~~on ~~develops its view of the future market price of key commodities~~a ~~through~~recurring abasis ~~combination~~by oflevel ~~market~~within ~~observation and assessment (generally for~~ the ~~short~~fair ~~term)~~value ~~and fundamental modeling (generally for the long term)~~hierarchy. ~~Key~~There ~~fundamental~~were ~~electricity~~no ~~model~~significant ~~inputs are~~transfers ~~generally~~between ~~directly~~levels ~~observable~~during in the ~~market~~three ormonths ~~derived from publicly available historic~~ and ~~forecast~~ ~~data.~~six ~~Some~~months ~~key~~ended ~~inputs reflect forecasts published by industry leading consultants who generally employ similar fundamental modeling approaches. Fundamental model inputs and results~~June 30, ~~as well as the selection of consultants, reflect the consensus of appropriate FirstEnergy management~~2011. ~~Level 3 instruments include those that may be more structured or otherwise tailored to customers’ needs.~~

~~FirstEnergy utilizes market data and assumptions that market participants would use in pricing the~~35 asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. FirstEnergy primarily applies the market approach for recurring fair value measurements using the best information available. Accordingly, FirstEnergy maximizes the use of observable inputs and minimizes the use of unobservable inputs.

The determination of the fair value measures takes into consideration various factors. These factors include nonperformance risk, including counterparty credit risk and the impact of credit enhancements (such as cash deposits, LOCs and priority interests). The impact of nonperformance risk was immaterial in the fair value measurements.

The following tables set forth financial assets and liabilities that are accounted for at fair value by level within the fair value hierarchy as of March 31, 2011 and December 31, 2010. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. FirstEnergy’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the fair valuation of assets and liabilities and their placement within the fair value hierarchy levels. The fair value of financial assets and liabilities as of March 31, 2011 assumed in the merger with Allegheny totaled $52 million and $51 million, respectively. There were no significant transfers between Level 1, Level 2 and Level 3 as of March 31, 2011 and December 31, 2010.

FirstEnergy Corp.

The following tables summarize assets and liabilities recorded on FirstEnergy’s Consolidated Balance Sheets at fair value as of ~~March~~June 3130, 2011 and December 31, 2010:

March 31, 2011	Level 1		Level 2			Level 3			Total
June 30, 2011	Level 1		Level 2			Level 3			Total
	(In millions)
Assets
Corporate debt securities	$	—	$	~~877~~868		$	—		$	~~877~~868
Derivative assets — commodity contracts		—		~~524~~312			—			~~524~~312
Derivative assets — FTRs		—		—			113			113
Derivative assets — interest rate swaps		—		4			—			4
Derivative assets — NUG contracts(1)		—		—			~~117~~75			~~117~~75
Equity securities(2)		~~194~~198		—			—			~~194~~198
Foreign government debt securities		—		~~150~~206			—			~~150~~206
U.S. government debt securities		—		~~681~~673			—			~~681~~673
U.S. state debt securities		—		~~297~~306			—			~~297~~306
Other(4)		—		~~148~~146			—			~~148~~146
Total assets	$	~~194~~198	$	2,~~681~~515		$	~~118~~88		$	2,~~993~~801
Liabilities
Derivative liabilities — commodity contracts	$	—	$	(~~583~~362	)	$	—		$	(~~583~~362	)
Derivative liabilities — FTRs		—		—			(127	)		(127	)
Derivative liabilities — interest rate swaps		—		(5	)		—			(5	)
Derivative liabilities — NUG contracts(1)		—		—			(~~478~~522	)		(~~478~~522	)
Total liabilities	$	—	$	(~~588~~367	)	$	(~~490~~529	)	$	(~~1,078~~896	)
Net assets (liabilities)(3)	$	~~194~~198	$	2,~~093~~148		$	(~~372~~441	)	$	1,~~915~~905


December 31, 2010	Level 1		Level 2			Level 3			Total
	*(In millions)*
Assets
Corporate debt securities	$	—	$	597		$	—		$	597
Derivative assets — commodity contracts		—		250			—			250
Derivative assets — NUG contracts⁽¹⁾		—		—			122			122
Equity securities⁽²⁾		338		—			—			338
Foreign government debt securities		—		149			—			149
U.S. government debt securities		—		595			—			595
U.S. state debt securities		—		379			—			379
Other⁽⁴⁾		—		219			—			219

Total assets	$	338	$	2,189		$	122		$	2,649


Liabilities
Derivative liabilities — commodity contracts	$	—	$	(348	)	$	—		$	(348	)
Derivative liabilities — NUG contracts⁽¹⁾		—		—			(466	)		(466	)

Total liabilities	$	—	$	(348	)	$	(466	)	$	(814	)


Net assets (liabilities)⁽³⁾	$	338	$	1,841		$	(344	)	$	1,835

(1)		NUG contracts are generally subject to regulatory accounting and do not materially impact earnings.
(2)		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.
(3)		Excludes $~~(31)~~6 million and $(7) million as of ~~March~~June 3130, 2011 and December 31, 2010, respectively, of receivables, payables, deferred taxes and accrued income associated with the financial instruments reflected within the fair value table.
(4)		Primarily consists of cash and cash equivalents.

3436

Rollforward of Level 3 Measurements

The following table provides a reconciliation of changes in the fair value of NUG contracts held by the Utilities and FTRs held by FirstEnergy and classified as Level 3 in the fair value hierarchy ~~for~~during the periods ending ~~March~~June 3130, 2011 and December 31, 2010~~, respectively~~:

	Derivative Asset(1)			Derivative Liability(1)			Net(1)
	(In millions)
January 1, 2011 Balance	$	122		$	(466	)	$	(344	)
Realized gain (loss)		—			—			—
Unrealized gain (loss)		(140	)		(89203	)		(90243	)
Purchases		—13			—(3	)		—10
Issuances		—			—			—
Sales		—			—			—
Settlements		(36	)		77154			74148
Transfers in (out) of Level 3		—			(12	)		(12	)
Transfers into Level 3		—			(12	)		(12	)
March 31, 2011 Balance	$	118		$	(490	)	$	(372	)
June 30, 2011 Balance	$	89		$	(530	)	$	(441	)
January 1, 2010 Balance	$	200		$	(643	)	$	(443	)
Realized gain (loss)		—			—			—
Unrealized gain (loss)		(71	)		(110	)		(181	)
Purchases		—			—			—
Issuances		—			—			—
Sales		—			—			—
Settlements		(7	)		287			280
Transfers in (out) of Level 3		—			—			—
Transfers into Level 3		—			—			—
December 31, 2010 Balance	$	122		$	(466	)	$	(344	)

(1) Changes in the fair value of NUG contracts are generally subject to regulatory accounting and do not materially impact earnings.

~~FirstEnergy Solutions Corp.~~37

The following tables summarize assets and liabilities recorded on FES’ Consolidated Balance Sheets at fair value as of March 31, 2011 and December 31, 2010:

March 31, 2011	Level 1		Level 2			Level 3		Total
	(In millions)
Assets
Corporate debt securities	$	—	$	567		$	—	$	567
Derivative assets — commodity contracts		—		476			—		476
Derivative assets — FTRs		—		—			1		1
Equity securities(3)		93		—			—		93
Foreign government debt securities		—		148			—		148
U.S. government debt securities		—		304			—		304
U.S. state debt securities		—		8			—		8
Other(2)		—		43			—		43
Total assets	$	93	$	1,546		$	1	$	1,640
Liabilities
Derivative liabilities — commodity contracts	$	—	$	(549	)	$	—	$	(549	)
Total liabilities	$	—	$	(549	)	$	—	$	(549	)
Net assets (liabilities)(1)	$	93	$	997		$	1	$	1,091

December 31, 2010	Level 1		Level 2			Level 3		Total
	(In millions)
Assets
Corporate debt securities	$	—	$	528		$	—	$	528
Derivative assets — commodity contracts		—		241			—		241
Foreign government debt securities		—		147			—		147
U.S. government debt securities		—		308			—		308
U.S. state debt securities		—		6			—		6
Other(2)		—		148			—		148
Total assets	$	—	$	1,378		$	—	$	1,378
Liabilities
Derivative liabilities – commodity contracts	$	—	$	(348	)	$	—	$	(348	)
Total liabilities	$	—	$	(348	)	$	—	$	(348	)
Net assets (liabilities)(1)	$	—	$	1,030		$	—	$	1,030

FirstEnergy Solutions Corp.

(1)		Excludes $(3) million and $7 million as of March 31, 2011 and December 31, 2010, respectively, of receivables, payables, deferred taxes and accrued income associated with the financial instruments reflected within the fair value table.
(2)		Primarily consists of cash and cash equivalents.
(3)		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.

The following tables summarize assets and liabilities recorded on FES’ Consolidated Balance Sheets at fair value as of June 30, 2011 and December 31, 2010:


June 30, 2011	Level 1		Level 2			Level 3		Total
	*(In millions)*
Assets
Corporate debt securities	$	—	$	562		$	—	$	562
Derivative assets — commodity contracts		—		283			—		283
Derivative assets — FTRs		—		—			2		2
Equity securities⁽³⁾		96		—			—		96
Foreign government debt securities		—		160			—		160
U.S. government debt securities		—		316			—		316
U.S. state debt securities		—		7			—		7
Other⁽²⁾		—		42			—		42

Total assets	$	96	$	1,370		$	2	$	1,468


Liabilities
Derivative liabilities — commodity contracts	$	—	$	(327	)	$	—	$	(327	)

Total liabilities	$	—	$	(327	)	$	—	$	(327	)


Net assets (liabilities)⁽¹⁾	$	96	$	1,043		$	2	$	1,141


December 31, 2010	Level 1		Level 2			Level 3		Total
	*(In millions)*
Assets
Corporate debt securities	$	—	$	528		$	—	$	528
Derivative assets — commodity contracts		—		241			—		241
Foreign government debt securities		—		147			—		147
U.S. government debt securities		—		308			—		308
U.S. state debt securities		—		6			—		6
Other⁽²⁾		—		148			—		148

Total assets	$	—	$	1,378		$	—	$	1,378


Liabilities
Derivative liabilities — commodity contracts	$	—	$	(348	)	$	—	$	(348	)

Total liabilities	$	—	$	(348	)	$	—	$	(348	)


Net assets (liabilities)⁽¹⁾	$	—	$	1,030		$	—	$	1,030


⁽¹⁾		Excludes $7 million as of December 31, 2010 of receivables, payables, deferred taxes and accrued income associated with the financial instruments reflected within the fair value table.

⁽²⁾		Primarily consists of cash and cash equivalents.

⁽³⁾		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.

Rollforward of Level 3 Measurements

The following table provides a reconciliation of changes in the fair value of FTRs held by FES and classified as Level 3 in the fair value hierarchy ~~for~~during the period ending ~~March~~June 3130, 2011:

	Derivative Asset			Derivative Liability		Net
	FTRs			FTRs		FTRs
	(In millions)
January 1, 2011 Balance	$	—		$	—	$	—
Realized gain (loss)		—			—		—
Unrealized gain (loss)		1			—		1
Purchases		—2			—		—2
Issuances		—			—		—
Sales		—			—		—
Settlements		—(1	)		—		—(1	)
Transfers in (out) of Level 3		—			—		—
March 31, 2011 Balance	$	1		$	—	$	1
June 30, 2011 Balance	$	2		$	—	$	2

Ohio Edison Company

The following tables summarize assets and liabilities recorded on OE’s Consolidated Balance Sheets at fair value as of ~~March~~June 3130, 2011 and December 31, 2010:

March 31, 2011	Level 1		Level 2		Level 3		Total
June 30, 2011	Level 1		Level 2		Level 3		Total
	(In millions)
Assets
U.S. government debt securities	$	—	$	~~125~~131	$	—	$	~~125~~131
Other		—		62		—		62
Total assets(1)	$	—	$	~~131~~133	$	—	$	~~131~~133


December 31, 2010	Level 1		Level 2		Level 3		Total
	*(In millions)*
Assets
U.S. government debt securities	$	—	$	124	$	—	$	124
Other		—		2		—		2

Total assets⁽¹⁾	$	—	$	126	$	—	$	126

(1) Excludes $~~(3)~~2 million and $1 million as of ~~March~~June 3130, 2011 and December 31, 2010, respectively, of receivables, payables, deferred taxes and accrued income associated with the financial instruments reflected within the fair value table.

36The Toledo Edison Company

~~Table~~The following tables summarize assets and liabilities recorded on TE’s Consolidated Balance Sheets at fair value as of ~~Contents~~June 30, 2011 and December 31, 2010:

Toledo Edison Company


June 30, 2011	Level 1		Level 2		Level 3		Total
	*(In millions)*
Assets
Corporate debt securities	$	—	$	16	$	—	$	16
Equity securities⁽³⁾		26		—		—		26
U.S. government debt securities		—		33		—		33
U.S. state debt securities		—		1		—		1
Other⁽²⁾		—		3		—		3

Total assets⁽¹⁾	$	26	$	53	$	—	$	79

The following tables summarize assets and liabilities recorded on TE’s Consolidated Balance Sheets at fair value as of March 31, 2011 and December 31, 2010:

March 31, 2011	Level 1		Level 2		Level 3		Total
	(In millions)
Assets
Corporate debt securities	$	—	$	16	$	—	$	16
Equity securities(3)		25		—		—		25
U.S. government debt securities		—		32		—		32
U.S. state debt securities		—		2		—		2
Other(2)		—		3		—		3
Total assets(1)	$	25	$	53	$	—	$	78


December 31, 2010	Level 1		Level 2		Level 3		Total
	*(In millions)*
Assets
Corporate debt securities	$	—	$	7	$	—	$	7
U.S. government debt securities		—		33		—		33
U.S. state debt securities		—		1		—		1
Other⁽²⁾		—		35		—		35

Total assets⁽¹⁾	$	—	$	76	$	—	$	76

(1)		Excludes $(1) million and $2 million as of ~~March~~June 3130, 2011 and December 31, 2010, respectively of receivables, payables, deferred taxes and accrued income associated with the financial instruments reflected within the fair value table.
(2)		Primarily consists of cash and cash equivalents.
(3)		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.

Jersey Central Power & Light Company

The following tables summarize assets and liabilities recorded on JCP&L’s Consolidated Balance Sheets at fair value as of ~~March~~June 3130, 2011 and December 31, 2010:

March 31, 2011	Level 1		Level 2		Level 3			Total
June 30, 2011	Level 1		Level 2		Level 3			Total
	(In millions)
Assets
Corporate debt securities	$	—	$	9281	$	—		$	9281
Derivative assets — commodity contracts		—		—		—			—
Derivative assets — NUG contracts(1)		—		—		5			5
Derivative assets — NUG contracts(1)		—		—		6			6
Equity securities(2)		21		—		—			21
Foreign government debt securities		—		113		—			113
U.S. government debt securities		—		6054		—			6054
U.S. state debt securities		—		~~214~~215		—			~~214~~215
Other		—		1614		—			1614
Total assets	$	21	$	~~383~~377	$	65		$	~~410~~403
Liabilities
Derivative liabilities – NUG contracts(1)	$	—	$	—	$	(239	)	$	(239	)
Derivative liabilities — NUG contracts(1)	$	—	$	—	$	(240	)	$	(240	)
Total liabilities	$	—	$	—	$	(~~239~~240	)	$	(~~239~~240	)
Net assets (liabilities)(3)	$	21	$	~~383~~377	$	(~~233~~235	)	$	~~171~~163


December 31, 2010	Level 1		Level 2		Level 3			Total
	*(In millions)*
Assets
Corporate debt securities	$	—	$	23	$	—		$	23
Derivative assets — commodity contracts		—		2		—			2
Derivative assets — NUG contracts⁽¹⁾		—		—		6			6
Equity securities⁽²⁾		96		—		—			96
U.S. government debt securities		—		33		—			33
U.S. state debt securities		—		236		—			236
Other		—		4		—			4

Total assets	$	96	$	298	$	6		$	400


Liabilities
Derivative liabilities — NUG contracts⁽¹⁾	$	—	$	—	$	(233	)	$	(233	)

Total liabilities	$	—	$	—	$	(233	)	$	(233	)


Net assets (liabilities)⁽³⁾	$	96	$	298	$	(227	)	$	167


⁽¹⁾		NUG contracts are subject to regulatory accounting and do not impact earnings.

⁽²⁾		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.

⁽³⁾		Excludes $5 million and $(3) million as of June 30, 2011 and December 31, 2010, respectively, of receivables, payables, deferred taxes and accrued income associated with the financial instruments reflected within the fair value table.

December 31, 2010	Level 1		Level 2		Level 3			Total
	(In millions)
Assets
Corporate debt securities	$	—	$	23	$	—		$	23
Derivative assets — commodity contracts		—		2		—			2
Derivative assets — NUG contracts(1)		—		—		6			6
Equity securities(2)		96		—		—			96
U.S. government debt securities		—		33		—			33
U.S. state debt securities		—		236		—			236
Other		—		4		—			4
Total assets	$	96	$	298	$	6		$	400
Liabilities
Derivative liabilities – NUG contracts(1)	$	—	$	—	$	(233	)	$	(233	)
Total liabilities	$	—	$	—	$	(233	)	$	(233	)
Net assets (liabilities)(3)	$	96	$	298	$	(227	)	$	167

(1)		NUG contracts are subject to regulatory accounting and do not impact earnings.
(2)		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.
(3)		Excludes $(8) million and $(3) million as of March 31, 2011 and December 31, 2010 of receivables, payables, deferred taxes and accrued income associated with the financial instruments reflected within the fair value table.

Rollforward of Level 3 Measurements

The following table provides a reconciliation of changes in the fair value of NUG contracts held by JCP&L and classified as Level 3 in the fair value hierarchy ~~for~~during the periods ending ~~March~~June 3130, 2011 and December 31, 2010:

	Derivative Asset			Derivative Liability			Net
	NUG Contracts(1)			NUG Contracts(1)			NUG Contracts(1)
	(In millions)
January 1, 2011 Balance	$	6		$	(233	)	$	(227	)
Realized gain (loss)		—			—			—
Unrealized gain (loss)		—(1	)		(4271	)		(4272	)
Purchases		—			—			—
Issuances		—			—			—
Sales		—			—			—
Settlements		—			3664			3664
Transfers in (out) of Level 3		—			—			—
March 31, 2011 Balance	$	6		$	(239	)	$	(233	)
June 30, 2011 Balance	$	5		$	(240	)	$	(235	)
January 1, 2010 Balance	$	8		$	(399	)	$	(391	)
Realized gain (loss)		—			—			—
Unrealized gain (loss)		(1	)		36			35
Purchases		—			—			—
Issuances		—			—			—
Sales		—			—			—
Settlements		(1	)		130			129
Transfers in (out) of Level 3		—			—			—
December 31, 2010 Balance	$	6		$	(233	)	$	(227	)


⁽¹⁾		Changes in the fair value of NUG contracts are subject to regulatory accounting and do not impact earnings.

3841

Metropolitan Edison Company

The following tables summarize assets and liabilities recorded on Met-Ed’s Consolidated Balance Sheets at fair value as of ~~March~~June 3130, 2011 and December 31, 2010:

March 31, 2011	Level 1		Level 2		Level 3			Total
June 30, 2011	Level 1		Level 2		Level 3			Total
	(In millions)
Assets
Corporate debt securities	$	—	$	~~131~~138	$	—		$	~~131~~138
Derivative assets — commodity contracts		—		—		—			—
Derivative assets — NUG contracts(1)		—		—		66			66
Derivative assets — NUG contracts(1)		—		—		107			107
Equity securities(2)		33		—		—			33
Equity securities(2)		34		—		—			34
Foreign government debt securities		—		20		—			20
Foreign government debt securities		—		2		—			2
U.S. government debt securities		—		87		—			87
U.S. government debt securities		—		100		—			100
U.S. state debt securities		—		2		—			2
Other		—		3722		—			3722
Total assets	$	3433	$	~~272~~269	$	~~107~~66		$	~~413~~368
Liabilities
Derivative liabilities – NUG contracts(1)	$	—	$	—	$	(118	)	$	(118	)
Derivative liabilities — NUG contracts(1)	$	—	$	—	$	(122	)	$	(122	)
Total liabilities	$	—	$	—	$	(~~118~~122	)	$	(~~118~~122	)
Net assets (liabilities)(3)	$	3433	$	~~272~~269	$	(1156	)	$	~~295~~246

December 31, 2010	Level 1		Level 2		Level 3			Total
	(In millions)
Assets
Corporate debt securities	$	—	$	32	$	—		$	32
Derivative assets — commodity contracts		—		5		—			5
Derivative assets — NUG contracts(1)		—		—		112			112
Equity securities(2)		160		—		—			160
Foreign government debt securities		—		1		—			1
U.S. government debt securities		—		88		—			88
U.S. state debt securities		—		2		—			2
Other		—		14		—			14
Total assets	$	160	$	142	$	112		$	414
Liabilities
Derivative liabilities – NUG contracts(1)	$	—	$	—	$	(116	)	$	(116	)
Derivative liabilities — NUG contracts(1)	$	—	$	—	$	(116	)	$	(116	)
Total liabilities	$	—	$	—	$	(116	)	$	(116	)
Net assets (liabilities)(3)	$	160	$	142	$	(4	)	$	298

(1)		NUG contracts are subject to regulatory accounting and do not impact earnings.
(2)		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.
(3)		Excludes $(1) million and $(9) million as of ~~March~~June 3130, 2011 and December 31, 2010, respectively, of receivables, payables, deferred taxes and accrued income associated with the financial instruments reflected within the fair value table.

3942

Rollforward of Level 3 Measurements

The following table provides a reconciliation of changes in the fair value of NUG contracts held by Met-Ed and classified as Level 3 in the fair value hierarchy ~~for~~during the periods ending ~~March~~June 3130, ~~2011~~ 2011 and December 31, 2010:

	Derivative Asset			Derivative Liability			Net
	NUG Contracts(1)			NUG Contracts(1)			NUG Contracts(1)
	(In millions)
January 1, 2011 Balance	$	112		$	(116	)	$	(4	)
Realized gain (loss)		—			—			—
Unrealized gain (loss)		(242	)		(1636	)		(1878	)
Purchases		—			—			—
Issuances		—			—			—
Sales		—			—			—
Settlements		(34	)		1430			1126
Transfers in (out) of Level 3		—			—			—
March 31, 2011 Balance	$	107		$	(118	)	$	(11	)
June 30, 2011 Balance	$	66		$	(122	)	$	(56	)
January 1, 2010 Balance	$	176		$	(143	)	$	33
Realized gain (loss)		—			—			—
Unrealized gain (loss)		(59	)		(38	)		(97	)
Purchases		—			—			—
Issuances		—			—			—
Sales		—			—			—
Settlements		(5	)		65			60
Transfers in (out) of Level 3		—			—			—
December 31, 2010 Balance	$	112		$	(116	)	$	(4	)


⁽¹⁾		Changes in the fair value of NUG contracts are subject to regulatory accounting and do not impact earnings.

Pennsylvania Electric Company

The following tables summarize assets and liabilities recorded on Penelec’s Consolidated Balance Sheets at fair value as of ~~March~~June 3130, 2011 and December 31, 2010:

March 31, 2011	Level 1		Level 2		Level 3			Total
June 30, 2011	Level 1		Level 2		Level 3			Total
	(In millions)
Assets
Corporate debt securities	$	—	$	7069	$	—		$	7069
Derivative assets — commodity contracts		—		—		—			—
Derivative assets — NUG contracts(1)		—		—		4			4
Equity securities(2)		20		—		—			20
Foreign government debt securities		—		—12		—			—12
U.S. government debt securities		—		6052		—			6052
U.S. state debt securities		—		7281		—			7281
Other		—		3253		—			3253
Total assets	$	20	$	~~234~~267	$	4		$	~~258~~291
Liabilities
Derivative liabilities – NUG contracts(1)	$	—	$	—	$	(122	)	$	(122	)
Derivative liabilities — NUG contracts(1)	$	—	$	—	$	(160	)	$	(160	)
Total liabilities	$	—	$	—	$	(~~122~~160	)	$	(~~122~~160	)
Net assets (liabilities)(3)	$	20	$	~~234~~267	$	(~~118~~156	)	$	~~136~~131


December 31, 2010	Level 1		Level 2		Level 3			Total
	*(In millions)*
Assets
Corporate debt securities	$	—	$	8	$	—		$	8
Derivative assets — commodity contracts		—		2		—			2
Derivative assets — NUG contracts⁽¹⁾		—		—		4			4
Equity securities⁽²⁾		81		—		—			81
U.S. government debt securities		—		9		—			9
U.S. state debt securities		—		133		—			133
Other		—		5		—			5

Total assets	$	81	$	157	$	4		$	242


Liabilities
Derivative liabilities — NUG contracts⁽¹⁾	$	—	$	—	$	(117	)	$	(117	)

Total liabilities	$	—	$	—	$	(117	)	$	(117	)


Net assets (liabilities)⁽³⁾	$	81	$	157	$	(113	)	$	125


⁽¹⁾		NUG contracts are subject to regulatory accounting and do not impact earnings.

⁽²⁾		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.

⁽³⁾		Excludes $1 million and $(3) million as of June 30, 2011 and December 31, 2010, respectively, of receivables, payables and accrued income associated with the financial instruments reflected within the fair value table.

December 31, 2010	Level 1		Level 2		Level 3			Total
	(In millions)
Assets
Corporate debt securities	$	—	$	8	$	—		$	8
Derivative assets — commodity contracts		—		2		—			2
Derivative assets — NUG contracts(1)		—		—		4			4
Equity securities(2)		81		—		—			81
U.S. government debt securities		—		9		—			9
U.S. state debt securities		—		133		—			133
Other		—		5		—			5
Total assets	$	81	$	157	$	4		$	242
Liabilities
Derivative liabilities – NUG contracts(1)	$	—	$	—	$	(117	)	$	(117	)
Total liabilities	$	—	$	—	$	(117	)	$	(117	)
Net assets (liabilities)(3)	$	81	$	157	$	(113	)	$	125

(1)		NUG contracts are subject to regulatory accounting and do not impact earnings.
(2)		NDT funds hold equity portfolios the performance of which is benchmarked against the S&P 500 Index or Russell 3000 Index.
(3)		Excludes $(15) million and $(3) million as of March 31, 2011 and December 31, 2010, respectively, of receivables, payables and accrued income associated with the financial instruments reflected within the fair value table.

Rollforward of Level 3 Measurements

The following table provides a reconciliation of changes in the fair value of NUG and commodity contracts held by Penelec and classified as Level 3 in the fair value hierarchy ~~for~~during the periods ended ~~March~~June 3130, 2011 and December 31, 2010:

	Derivative Asset			Derivative Liability			Net
	NUG Contracts(1)			NUG Contracts(1)			NUG Contracts(1)
	(In millions)
January 1, 2011 Balance	$	4		$	(117	)	$	(113	)
Realized gain (loss)		—			—			—
Unrealized gain (loss)		—			(3088	)		(3088	)
Purchases		—			—			—
Issuances		—			—			—
Sales		—			—			—
Settlements		—			2545			2545
Transfers in (out) of Level 3		—			—			—
March 31, 2011 Balance	$	4		$	(122	)	$	(118	)
June 30, 2011 Balance	$	4		$	(160	)	$	(156	)
January 1, 2010 Balance	$	16		$	(101	)	$	(85	)
Realized gain (loss)		—			—			—
Unrealized gain (loss)		(11	)		(108	)		(119	)
Purchases		—			—			—
Issuances		—			—			—
Sales		—			—			—
Settlements		(1	)		92			91
Transfers in (out) of Level 3		—			—			—
December 31, 2010 Balance	$	4		$	(117	)	$	(113	)


⁽¹⁾		Changes in the fair value of NUG contracts are subject to regulatory accounting and do not impact earnings.

5. DERIVATIVE INSTRUMENTS

FirstEnergy is exposed to financial risks resulting from fluctuating interest rates and commodity prices, including prices for electricity, natural gas, coal and energy transmission. To manage the volatility relating to these exposures, FirstEnergy’s ~~established a~~ Risk Policy Committee, comprised of ~~members~~ of senior management, ~~which~~ provides general management oversight for risk management activities throughout FirstEnergy. The Committee is responsible for promoting the effective design and implementation of sound risk management programs and oversees compliance with corporate risk management policies and established risk management practice. FirstEnergy also uses a variety of derivative instruments for risk management purposes including forward contracts, options, futures contracts and swaps. In addition to derivatives, FirstEnergy also enters into master netting agreements with certain third parties.

FirstEnergy accounts for derivative instruments on its Consolidated Balance Sheets at fair value unless they meet the normal purchases and normal sales criteria. Derivatives that meet those criteria are accounted for under the accrual method of accounting, and their effects are included in earnings at the time of contract performance. Changes in the fair value of derivative instruments that qualify and are designated as cash flow hedge instruments are recorded toin AOCL. ~~Change~~Changes in the fair value of derivative instruments that are not designated as cash flow hedge instruments are recorded in ~~the~~net income ~~statement~~ on a mark-to-market basis. FirstEnergy’s has ~~contractual~~ contractual derivative agreements through December 2018.

Cash Flow Hedges

FirstEnergy has used cash flow hedges for risk management purposes to manage the volatility related to exposures associated with fluctuating interest rates and commodity prices. The effective portion of gains and losses on the derivative contract are reported as a component of AOCL with subsequent reclassification to earnings in the period during which the hedged forecasted transaction affects earnings.

As of December 31, 2010, commodity derivative contracts designated in cash flow hedging relationships were $104 million of assets and $101 million of liabilities. In February 2011, FirstEnergy elected to dedesignate all outstanding cash flow hedge relationships. Total net unamortized ~~losses~~gains included in AOCL associated with dedesignated cash flow hedges totaled $6 8 million as of ~~March~~June 3130, 2011. Since the forecasted transactions remain probable of occurring, these ~~amounts~~ ~~were “frozen” in AOCL and~~ amounts will be amortized into earnings over the life of the hedging instruments. Reclassifications from AOCL into other operating ~~expense~~expenses totaled $514 million ~~for~~and $19 million during the three- months and six months ended ~~March~~June 3130, 2011, respectively. Approximately $163 million ~~will~~is beexpected ~~amortized~~ to ~~earnings~~be asamortized to expense during the next twelve months.

FirstEnergy has used forward starting swap agreements to hedge a portion of the consolidated interest rate risk associated with anticipated issuances of fixed-rate, long-term debt securities of its subsidiaries. These derivatives were treated as cash flow hedges, protecting against the risk of changes in future interest payments resulting from changes in benchmark U.S. Treasury rates between the date of hedge inception and the date of the debt issuance. As of ~~March~~June 3130, 2011, no forward starting swap agreements were outstanding. Total unamortized losses included in AOCL associated with prior interest rate cash flow hedges totaled $8784 million ($5755 million net of tax) as of ~~March~~June 3130, 2011. Based on current estimates, approximately $10 million will be amortized to interest expense during the next twelve months. Reclassifications from AOCL into interest expense totaled $3 million ~~for~~during the three- months ended June 30, ~~March~~2011 and 2010 and $6 31million during the six months ended June 30, 2011 and 2010.

Fair Value Hedges

FirstEnergy has used fixed-for-floating interest rate swap agreements to hedge a portion of the consolidated interest rate risk associated with the debt portfolio of its subsidiaries. These derivative instruments were treated as fair value hedges of fixed-rate, long-term debt issues, protecting against the risk of changes in the fair value of fixed-rate debt instruments due to lower interest rates. As of ~~March~~June 3130, 2011, no fixed-for-floating interest rate swap agreements were outstanding.

AsUnamortized ofgains ~~March 31,~~included ~~2010,~~in ~~FirstEnergy~~long-term ~~held~~debt associated with prior fixed-for-floating interest rate swap agreements ~~with combined~~totaled ~~notional~~$113 million ~~amounts~~($73 million net of tax) as of June 30, 2011. Based on current estimates, approximately $~~950~~22 million. ~~The~~will ~~gains~~be ~~included~~amortized into interest expense ~~related~~during tothe next ~~interest~~twelve ~~rate~~months. ~~swaps~~Reclassifications from long-term debt into interest expense totaled approximately $1 6 million and ~~the~~$2 million ~~fair~~during ~~value of~~ the ~~derivative~~three ~~instruments~~months ~~totaled $(3)~~ended ~~million.~~June 30, ~~There~~2011 ~~was~~and no2010, ~~impact~~respectively onand ~~the~~$11 million ~~results~~and of$3 million ~~operations~~during asthe asix ~~result~~months ofended ~~ineffectiveness~~June 30, ~~from fair~~2011 ~~value~~and ~~hedges~~2010, respectively.

Total unamortized gains included in long-term debt associated with prior fixed-for-floating interest rate swap agreements totaled $118 million ($77 million net of tax) as of March 31, 2011. Based on current estimates, approximately $22 million will be amortized to interest expense during the next twelve months. Reclassifications from long-term debt into interest expense totaled approximately $5 million and $1 million for the three-months ended March 31, 2011 and 2010, respectively.

Commodity Derivatives

FirstEnergy uses both physically and financially settled derivatives to manage its exposure to volatility in commodity prices. Commodity derivatives are used for risk management purposes to hedge exposures when it makes economic sense to do so, including circumstances where the hedging relationship does not qualify for hedge accounting.

42Electricity forwards are used to balance expected sales with expected generation and purchased power. Natural gas futures are entered into based on expected consumption of natural gas; primarily natural gas is used in FirstEnergy’s peaking units. Heating oil futures are entered into based on expected consumption of oil and the financial risk in FirstEnergy’s coal transportation contracts. Interest rate swaps include two interest rate swap agreements that expire during 2011 with an aggregate notional value of $200 million that were entered into during 2003 to substantially offset two existing interest rate swaps with the same counterparty. The 2003 agreements effectively locked in a net liability and substantially eliminated future income volatility from the interest rate swap positions but do not qualify for cash flow hedge accounting. Derivative instruments are not used in quantities greater than forecasted needs.

~~Table~~As of ~~Contents~~June 30, 2011, FirstEnergy’s net liability position under commodity derivative contracts was $45 million, which primarily related to FES positions. Under these commodity derivative contracts, FES posted $81 million and Allegheny posted $2 million in collateral. Certain commodity derivative contracts include credit risk related contingent features that would require FES to post $49 million of additional collateral if the credit rating for its debt were to fall below investment grade.

~~Electricity~~Based ~~forwards~~on ~~are~~derivative ~~used~~contracts toheld ~~balance~~as ~~expected sales with expected generation and purchased power. Natural gas futures are entered into based on expected consumption~~ of ~~natural~~June 30, ~~gas~~2011, ~~primarily natural~~an ~~gas~~adverse ~~used~~10% inchange ~~FirstEnergy’s peaking units. Heating oil futures are entered into based on expected consumption of oil and the financial risk~~ in ~~FirstEnergy’s~~commodity ~~coal transportation contracts.~~prices ~~Interest~~would ~~rate~~decrease ~~swaps~~net ~~include~~income ~~two~~by ~~interest~~approximately ~~rate~~$31 million ~~swap agreements that expire during 2011 with an aggregate notional value of~~ ($~~200~~20 million ~~that~~net ~~were~~of ~~entered~~tax) ~~into~~ during ~~2003 to substantially offset two existing interest rate swaps with~~ the ~~same counterparty. The 2003 agreements effectively locked~~next intwelve ~~a net liability and substantially eliminated future income volatility from the interest rate swap positions but do not qualify for cash flow hedge accounting~~months. ~~Derivative instruments are not~~ ~~used in quantities greater than forecasted needs.~~

As of March 31, 2011, FirstEnergy’s net liability position under commodity derivative contracts was $59 million, which primarily related to FES positions. Under these commodity derivative contracts, FES posted $120 million and Allegheny posted $1 million in collateral. Certain commodity derivative contracts include credit risk related contingent features that would require FES to post $24 million of additional collateral if the credit rating for its debt were to fall below investment grade.

Based on derivative contracts held as of March 31, 2011, an adverse 10% change in commodity prices would decrease net income by approximately $12 million ($7 million net of tax) during the next twelve months.

FTRs

FirstEnergy holds FTRs that generally represent an economic hedge of future congestion charges that will be incurred in connection with FirstEnergy’s load obligations. ~~These future obligations are reflected on the Consolidated Balance Sheets; and have not been designated as cash flow hedge instruments.~~ FirstEnergy acquires the majority of its FTRs in an annual auction through a self-scheduling process involving the use of ARRs ~~auction revenue rights~~ allocated to members of an RTO that have load serving obligations. ~~FirstEnergy~~and ~~initially~~through ~~records FTRs at~~ the ~~FTR~~direct allocation ~~auction~~of ~~price less~~FTRs from the ~~obligation~~PJM ~~due~~RTO. toThe ~~the~~PJM RTO, ~~and~~has ~~subsequently~~a ~~adjusts~~rule ~~the~~that ~~carrying~~allows ~~value~~directly ofallocated ~~remaining~~ FTRs to be ~~their~~granted ~~estimated~~to ~~fair~~LSEs ~~value~~in atzones ~~the~~that ~~end~~have ofnewly ~~each~~entered ~~accounting~~PJM. ~~period~~For ~~prior~~the tofirst ~~settlement.~~two ~~Changes~~planning inyears, PJM permits the ~~fair~~LSEs ~~value~~to request a direct allocation of FTRs ~~held~~in bythese ~~FirstEnergy’s~~new ~~unregulated~~zones ~~subsidiaries~~at ~~are~~no ~~included~~cost inas ~~other~~opposed to ~~operating~~receiving ~~expenses~~ARRs. asThe ~~unrealized~~directly ~~gains~~allocated orFTRs ~~losses.~~differ ~~Unrealized~~from ~~gains~~traditional FTRs in that the ownership of all or ~~losses~~part onof the FTRs ~~held~~may ~~by FirstEnergy’s~~shift ~~regulated~~to ~~subsidiaries~~another ~~are~~LSE ~~recorded~~if ascustomers ~~regulatory~~choose ~~assets~~to orshop ~~liabilities~~with the other LSE.

The future obligations for the FTRs acquired at auction are reflected on the Consolidated Balance Sheets and have not been designated as cash flow hedge instruments. FirstEnergy initially records these FTRs at the auction price less the obligation due to the RTO, and subsequently adjusts the carrying value of remaining FTRs to their estimated fair value at the end of each accounting period prior to settlement. Changes in the fair value of FTRs held by FirstEnergy’s unregulated subsidiaries are included in other operating expenses as unrealized gains or losses. Unrealized gains or losses on FTRs held by FirstEnergy’s regulated subsidiaries are recorded as regulatory assets or liabilities. Directly allocated FTRs are accounted for under the accrual method of accounting, and their effects are included in earnings at the time of contract performance.

The following tables summarize the fair value of derivative instruments in FirstEnergy’s Consolidated Balance Sheets:

Derivatives not designated as hedging instruments as of ~~March~~June 3130, 2011:

Derivative Assets
	Fair Value
	March 31,		December 31,
	June 30,		December 31,
	2011		2010
	(In millions)
Power Contracts
Current Assets	$	~~332~~210	$	~~151~~96
Noncurrent Assets		~~192~~102		8940
FTRs
Current Assets		113		—
Noncurrent Assets		—		—
NUGs
Current Assets		34		3
Noncurrent Assets		~~114~~71		119
Interest Rate Swaps
Current Assets		4		—
Noncurrent Assets		—		—
Other
Current Assets		—		10
Noncurrent Assets		—		—
Total Derivatives	$	~~646~~404	$	~~372~~268

Derivative Liabilities
	Fair Value
	March 31,		December 31,
	June 30,		December 31,
	2011		2010
	(In millions)
Power Contracts
Current Liabilities	$	~~408~~274	$	~~266~~209
Noncurrent Liabilities		~~175~~88		8138
FTRs
Current Liabilities		127		—
Noncurrent Liabilities		—		—
NUGs
Current Liabilities		~~277~~317		229
Noncurrent Liabilities		~~202~~205		238
Interest Rate Swaps
Current Liabilities		5		—
Noncurrent Liabilities		—		—
Other
Current Liabilities		—		—
Noncurrent Liabilities		—		—
Total Derivatives	$	~~1,079~~896	$	~~814~~714

43The following table summarizes the volumes associated with FirstEnergy’s outstanding derivative transactions as of June 30, 2011:


	Purchases		Sales			Net			Units
	*(In thousands)*
Power Contracts		45,573		(59,549	)		(13,976	)	MWH
FTRs		53,656		—			53,656		MWH
Interest Rate Swaps		200,000		(200,000	)		—		notional dollars
NUGs		26,903		—			26,903		MWH

The ~~following~~effect ~~table~~of ~~summarizes~~derivative instruments on the ~~volume~~Consolidated Statements of ~~FirstEnergy’s~~Income ~~outstanding~~during ~~derivative~~the ~~transactions~~three asmonths ofand ~~March~~six months ended June 3130, 2011 and 2010, are summarized in the following tables:

	Purchases			Sales			Net			Units
	Three Months Ended June 30,
	(In thousands)
	Power						Interest
Power Contracts		83,603			(100,407	)		(16,804	)	MWH
	Contracts			FTRs			Rate Swaps			Other			Total
FTRs		18,199			(130	)		18,069		MWH
	(In millions)
Interest Rate Swaps		200,000			(200,000	)		—		notional dollars
Derivatives in a Hedging Relationship
NUGs		29,824			—			29,824		MWH
2011
Gain (Loss) Recognized in AOCL (Effective Portion)	$	14		$	—		$	—		$	—		$	14
Effective Gain (Loss) Reclassified to: (1)
Purchase Power Expense		—			—			—			—			—
Revenues		—			—			—			—			—
2010
Gain (Loss) Recognized in AOCL (Effective Portion)	$	—		$	—		$	—		$	3		$	3
Effective Gain (Loss) Reclassified to:(1)
Purchase Power Expense		(3	)		—			—			—			(3	)
Revenues		(5	)		—			—			—			(5	)
Fuel Expense		—			—			—			(4	)		(4	)

The effect of derivative instruments on the consolidated statements of income for the three months ended March 31, 2011 and 2010, are summarized in the following tables:



Derivatives Not in a Hedging Relationship
2011
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	33		$	—		$	—	$	—	$	33
Revenues		(4	)		—			—		—		(4	)
Other Operating Expense		(34	)		13			—		—		(21	)

Realized Gain (Loss) Reclassified to:
Purchase Power Expense		1			—			—		—		1
Revenues		(39	)		18			—		—		(21	)
Other Operating Expense		—			(59	)		—		—		(59	)

2010
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	66		$	—		$	—	$	—	$	66

Realized Gain (Loss) Reclassified to:
Purchase Power Expense		(26	)		—			—		—		(26	)

	Three Months Ended March 31,
Derivatives Not in a Hedging	Three Months Ended June 30,
	Power						Interest
Relationship with Regulatory Offset(2)	NUGs			Other			Total
	Contracts			FTRs			Rate Swaps			Other		Total
	(In millions)
	(In millions)
2011
Derivatives in a Hedging Relationship
Unrealized Gain (Loss) to Derivative Instrument:	$	(147	)	$	2		$	(145	)
2011
Unrealized Gain (Loss) to Regulatory Assets:		147			(2	)		145
Gain (Loss) Recognized in AOCL (Effective Portion)	$	(9	)	$	—		$	—			—	$	(9	)
Realized Gain (Loss) to Derivative Instrument:		62			—			62
Effective Gain (Loss) Reclassified to: (1)
Realized Gain (Loss) to Regulatory Assets:		(62	)		—			(62	)
Purchase Power Expense		14			—			—			—		14
2010
Wholesale Revenue		(3	)		—			—			—		(3	)
Unrealized Gain (Loss) to Derivative Instrument:	$	(35	)		—		$	(35	)
2010
Unrealized Gain (Loss) to Regulatory Assets:		35			—			35
Gain (Loss) Recognized in AOCL (Effective Portion)	$	(2	)		—			—			3	$	1
Realized Gain (Loss) to Derivative Instrument:		68			—			68
Effective Gain (Loss) Reclassified to:(1)
Realized Gain (Loss) to Regulatory Assets:		(68	)		—			(68	)
Purchase Power Expense		2			—			—			—		2
Fuel Expense		—			—			—			4		4
Derivatives Not in a Hedging Relationship
2011
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	29			—			—			—	$	29
Wholesale Revenue		—			—			—			—		—
Other Operating Expense		(20	)		1			—			—		(19	)
Realized Gain (Loss) Reclassified to:
Purchase Power Expense		(19	)		(2	)		—			—		(21	)
Wholesale Revenue		(2	)		—			(1	)		—		(3	)
2010
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	(27	)		—			—			—	$	(27	)
Realized Gain (Loss) Reclassified to:
Purchase Power Expense		(25	)		—			—			—		(25	)

4448

Derivatives Not in a Hedging	Three Months Ended March 31,
	Six Months Ended June 30,
Relationship with Regulatory Offset(2)	NUGs			Other			Total
	Power						Interest
	(In millions)
	Contracts			FTRs			Rate Swaps			Other			Total
2011
	(In millions)
Unrealized Loss to NUG Liability:	$	(89	)	$	—		$	(89	)
Derivatives in a Hedging Relationship
Unrealized Gain to Regulatory Assets:		89			—			89
2011
Realized Gain to NUG Liability:		72			—			72
Gain (Loss) Recognized in AOCL (Effective Portion)	$	5		$	—		$	—		$	—		$	5
Realized Loss to Regulatory Assets:		(72	)		—			(72	)
Effective Gain (Loss) Reclassified to: (1)
Realized Loss to Deferred Charges		—			(10	)		(10	)
Purchase Power Expense		16			—			—			—			16
Realized Gain to Regulatory Assets:		—			10			10
Revenues		(12	)		—			—			—			(12	)
2010
Unrealized Loss to NUG Liability:	$	(224	)		—		$	(224	)
Gain (Loss) Recognized in AOCL (Effective Portion)	$	(2	)	$	—		$	—		$	6		$	4
Unrealized Gain to Regulatory Assets:		224			—			224
Effective Gain (Loss) Reclassified to:(1)
Realized Gain to NUG Liability:		78			—			78
Purchase Power Expense		(7	)		—			—			—			(7	)
Realized Loss to Regulatory Assets:		(78	)		—			(78	)
Revenues		(5	)		—			—			—			(5	)
Realized Loss to Deferred Charges		—			(9	)		(9	)
Fuel Expense		—			—			—			(8	)		(8	)
Realized Gain to Regulatory Assets:		—			9			9
Derivatives Not in a Hedging Relationship
2011
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	61		$	—		$	—		$	—		$	61
Revenues		(3	)		—			—			—			(3	)
Other Operating Expense		(54	)		13			1			—			(40	)
Realized Gain (Loss) Reclassified to:
Purchase Power Expense		(36	)		—			—			—			(36	)
Revenues		(29	)		26			—			—			(3	)
Other Operating Expense		—			(87	)		—			—			(87	)
2010
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	39		$	—		$	—		$	—		$	39
Realized Gain (Loss) Reclassified to:
Purchase Power Expense		(49	)		—			—			—			(49	)


Derivatives Not in a Hedging	Six Months Ended June 30,
Relationship with Regulatory Offset⁽²⁾	NUGs			Other			Total
	*(In millions)*
2011
Unrealized Gain (Loss) to Derivative Instrument:	$	(236	)	$	2		$	(234	)
Unrealized Gain (Loss) to Regulatory Assets:		236			(2	)		234

Realized Gain (Loss) to Derivative Instrument:		134			(10	)		124
Realized Gain (Loss) to Regulatory Assets:		(134	)		10			(124	)

2010
Unrealized Gain (Loss) to Derivative Instrument:	$	(259	)		—		$	(259	)
Unrealized Gain (Loss) to Regulatory Assets:		259			—			259

Realized Gain (Loss) to Derivative Instrument:		146			(9	)		137
Realized Gain (Loss) to Regulatory Assets:		(146	)		9			(137	)


⁽¹⁾		The ineffective portion was immaterial.

⁽²⁾		Changes in the fair value of certain contracts are deferred for future recovery from (or refund to) customers.

~~The following table provides a reconciliation of changes in the fair value of certain contracts~~49 ~~that are deferred for future recover from (or refund to) customers.~~

	Three Months Ended March 31,
Derivatives Not in a Hedging Relationship with Regulatory Offset(1)	NUGs			Other			Total
	(In millions)
Outstanding net asset (liability) as of January 1, 2011	$	(345	)	$	10		$	(335	)
Additions/Change in value of existing contracts		(89	)		—			(89	)
Settled contracts		72			(10	)		62
Outstanding net asset (liability) as of March 31, 2011	$	(362	)	$	—		$	(362	)
Outstanding net asset (liability) as of January 1, 2010	$	(444	)	$	19		$	(425	)
Additions/Change in value of existing contracts		(224	)		—			(224	)
Settled contracts		78			(9	)		69
Outstanding net asset (liability) as of March 31, 2010	$	(590	)	$	10		$	(580	)

The following table provides a reconciliation of changes in the fair value of certain contracts that are deferred for future recovery from (or refund to) customers during the three months and six months ended June 30, 2011 and 2010:


	Three Months Ended June 30,
Derivatives Not in a Hedging Relationship with Regulatory Offset⁽¹⁾	NUGs			Other		Total
	*(In millions)*
Outstanding net asset (liability) as of April 1, 2011	$	(362	)	$	—	$	(362	)
Additions/Change in value of existing contracts		(147	)		2		(145	)
Settled contracts		62			—		62

Outstanding net asset (liability) as of June 30, 2011	$	(447	)	$	2	$	(445	)


Outstanding net asset (liability) as of April 1, 2010	$	(590	)	$	10	$	(580	)
Additions/Change in value of existing contracts		(35	)		—		(35	)
Settled contracts		68			—		68

Outstanding net asset (liability) as of June 30, 2010	$	(557	)	$	10	$	(547	)

Six Months Ended June 30,

Derivatives Not in a Hedging Relationship with Regulatory Offset⁽¹⁾

NUGs

Other

Total

(In millions)

Outstanding net asset (liability) as of January 1, 2011

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