Edgar Filing: CLEVELAND ELECTRIC ILLUMINATING CO

main_10kamended07.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K/A

Amendment No. 1

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

[ ] 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.

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

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

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ( ) No (X)

Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company and Pennsylvania Electric Company

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes (X) No ( )	The Cleveland Electric Illuminating Company and The Toledo Edison Company
Yes ( ) No (X)	Ohio Edison Company and Pennsylvania Electric Company

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

Yes (X) No ( )	Ohio Edison Company and Pennsylvania Electric Company
Yes ( ) No (X)	The Cleveland Electric Illuminating Company and The Toledo Edison Company

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

(X)	Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company and Pennsylvania Electric Company

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer ( )	N/A
Accelerated Filer ( )	N/A
Non-accelerated Filer (do not check if a Smaller Reporting Company) (X)	Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company and Pennsylvania Electric Company

Smaller Reporting Company

( )

N/A

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

Yes ( ) No (X)

Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company and Pennsylvania Electric Company

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and ask price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

None

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

	OUTSTANDING
CLASS	AS OF FEBRUARY 28, 2008
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
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.

Documents incorporated by reference (to the extent indicated herein):

		PART OF FORM 10-K INTO WHICH
DOCUMENT		DOCUMENT IS INCORPORATED

FirstEnergy Corp. Annual Report to Stockholders for
the fiscal year ended December 31, 2007		Part II

Proxy Statement for 2008 Annual Meeting of Stockholders
to be held May 20, 2008		Part III

This combined Form 10-K/A is separately filed by Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company and Pennsylvania Electric Company. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf.

OMISSION OF CERTAIN INFORMATION

Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company, and Pennsylvania Electric Company meet the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and are therefore filing this Form 10-K/A with the reduced disclosure format specified in General Instruction I(2) to Form 10-K.

Forward-Looking Statements: This Form 10-K/A 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 and legislative and regulatory changes affecting how generation rates will be determined following the expiration of existing rate plans in Ohio and Pennsylvania,

·	the impact of the PUCO’s rulemaking process on the Ohio Companies’ ESP and MRO filings,

·	economic or weather conditions affecting future sales and margins,

·	changes in markets for energy services,

·	changing energy and commodity market prices and availability,

·	replacement power costs being higher than anticipated or inadequately hedged,

·	the continued ability of FirstEnergy’s regulated utilities to collect transition and other charges or to recover increased transmission costs,

·	maintenance costs being higher than anticipated,

·	other legislative and regulatory changes, revised environmental requirements, including possible GHG emission regulations,

·	the impact of the U.S. Court of Appeals’ July 11, 2008 decision to vacate the CAIR rules and the scope of any laws, rules or regulations that may ultimately take their place,

the uncertainty of the timing and amounts of the capital expenditures needed to, among other things, implement the Air Quality Compliance Plan (including that such amounts could be higher than anticipated) or levels of emission reductions related to the Consent Decree resolving the NSR litigation or other potential regulatory initiatives,

·	adverse regulatory or legal decisions and outcomes (including, but not limited to, the revocation of necessary licenses or operating permits and oversight) by the NRC (including, but not limited to, the Demand for Information issued to FENOC on May 14, 2007),

the timing and outcome of various proceedings before the PUCO (including, but not limited to, the ESP and MRO proceedings as well as the distribution rate cases and the generation supply plan filing for the Ohio Companies and the successful resolution of the issues remanded to the PUCO by the Ohio Supreme Court regarding the RSP and RCP, including the recovery of deferred fuel costs),

·	Met-Ed’s and Penelec’s transmission service charge filings with the PPUC as well as the resolution of the Petitions for Review filed with the Commonwealth Court of Pennsylvania with respect to the transition rate plan for Met-Ed and Penelec,

·	the continuing availability of generating units and their ability to operate at or near full capacity,

·	the ability to comply with applicable state and federal reliability standards,

·	the ability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives),

·	the ability to improve electric commodity margins and to experience growth in the distribution business,

·	the changing market conditions that could affect the value of assets held in the registrants’ nuclear decommissioning trusts, pension trusts and other trust funds, and cause FirstEnergy to make additional contributions sooner, or in an amount that is larger than currently anticipated,

·	the ability to access the public securities and other capital and credit markets in accordance with FirstEnergy’s financing plan and the cost of such capital,

·	changes in general economic conditions affecting the registrants,

·	the state of the capital and credit markets affecting the registrants, and

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

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. Also, a security rating is not a recommendation to buy, sell or hold securities, and it may be subject to revision or withdrawal at any time and each such rating should be evaluated independently of any other rating. 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.

EXPLANATORY NOTE

This combined Amendment No. 1 on Form 10-K/A for the fiscal year ended December 31, 2007 is being filed by Ohio Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison Company and Pennsylvania Electric Company (the “registrants”) to correct common stock dividend payments reported in their respective consolidated statements of cash flows for the year ended December 31, 2007, contained in Part II, Item 8, Financial Statements and Supplementary Data. This correction does not affect the respective registrants’ previously reported consolidated statements of income for the year ended December 31, 2007, nor the consolidated balance sheets, consolidated statements of capitalization and consolidated statements of common stockholder's equity as of December 31, 2007 contained in the combined Form 10-K for the fiscal year ended December 31, 2007, as originally filed on February 29, 2008 (the “original Form 10-K”). Except for Part II, Items 8 and 9(A)T and certain exhibits under Part IV, Item 15, no other information included in the Form 10-K as originally filed is being revised by, or repeated in this amendment.

As discussed under “Restatement of the Consolidated Statements of Cash Flows” in Note 1 to the revised Combined Notes to Consolidated Financial Statements of the registrants included in this Form 10-K/A, the registrants have restated their respective consolidated statements of cash flows to correct common stock dividend payments reported in cash flows from financing activities. The consolidated statements of cash flows for those registrants, as originally filed, erroneously reflected the dividends declared in the third quarter of 2007 applicable to future quarters' payments as dividends paid in the quarter that they were declared. The corrections resulted in a corresponding change in operating liabilities - accounts payable, included in cash flows from operating activities.

The original Form 10-K was a combined Form 10-K representing separate filings by each of the registrants and their affiliates, FirstEnergy Corp., FirstEnergy Solutions Corp., Jersey Central Power & Light Company and Metropolitan Edison Company (the “affiliates”). However, this Form 10-K/A constitutes an amendment only to Part II, Items 8 and 9(A)T and Part IV, Item 15 of the original Form 10-K filed by each registrant. In addition, information contained herein relating to any individual registrant is filed by such registrant on its own behalf and no registrant makes any representation as to information contained herein relating to any other registrant or any of the affiliates, including, but not limited to, any such information contained in the revised Combined Notes to Consolidated Financial Statements included herein.

Please note that the information contained in this Amendment No. 1, including the consolidated financial statements and notes thereto, does not reflect events occurring after the date of the original Form 10-K filing on February 29, 2008, except to the extent described above.

TABLE OF CONTENTS

Contents		Page

Glossary of Terms		ii-iv

Part II. Item 8. Financial Statements and Supplementary Data.		1

Ohio Edison Company

	Report of Independent Registered Public Accounting Firm	2
	Consolidated Statements of Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Capitalization	5
	Consolidated Statements of Common Stockholder’s Equity	6
	Consolidated Statements of Cash Flows	7

The Cleveland Electric Illuminating Company

	Report of Independent Registered Public Accounting Firm	8
	Consolidated Statements of Income	9
	Consolidated Balance Sheets	10
	Consolidated Statements of Capitalization	11
	Consolidated Statements of Common Stockholder’s Equity	12
	Consolidated Statements of Cash Flows	13

The Toledo Edison Company

	Report of Independent Registered Public Accounting Firm	14
	Consolidated Statements of Income	15
	Consolidated Balance Sheets	16
	Consolidated Statements of Capitalization	17
	Consolidated Statements of Common Stockholder’s Equity	18
	Consolidated Statements of Cash Flows	19

Pennsylvania Electric Company

	Report of Independent Registered Public Accounting Firm	20
	Consolidated Statements of Income	21
	Consolidated Balance Sheets	22
	Consolidated Statements of Capitalization	23
	Consolidated Statements of Common Stockholder’s Equity	24
	Consolidated Statements of Cash Flows	25

Combined Notes to Consolidated Financial Statements		26-86

Item 9A(T). Controls and Procedures.		87

Item 15. Exhibits.		88

GLOSSARY OF TERMS

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

ATSI	American Transmission Systems, Inc., owns and operates transmission facilities
CEI	The Cleveland Electric Illuminating Company, an Ohio electric utility operating subsidiary
Centerior	Centerior Energy Corporation, former parent of CEI and TE, which merged with OE to form FirstEnergy on November 8, 1997
Companies	OE, CEI, TE, Penn, JCP&L, Met-Ed and Penelec
FENOC	FirstEnergy Nuclear Operating Company, operates nuclear generating facilities
FES	FirstEnergy Solutions Corp., provides energy-related products and services
FESC	FirstEnergy Service Company, provides legal, financial and other corporate support services
FGCO	FirstEnergy Generation Corp., owns and operates non-nuclear generating facilities
FirstEnergy	FirstEnergy Corp., a public utility holding company
GPU	GPU, Inc., former parent of JCP&L, Met-Ed and Penelec, which merged with FirstEnergy on November 7, 2001
JCP&L	Jersey Central Power & Light Company, a New Jersey electric utility operating subsidiary
JCP&L Transition Funding	JCP&L Transition Funding LLC, a Delaware limited liability company and issuer of transition bonds
JCP&L Transition Funding II	JCP&L Transition Funding II LLC, a Delaware limited liability company and issuer of transition bonds
Met-Ed	Metropolitan Edison Company, a Pennsylvania electric utility operating subsidiary
MYR	MYR Group, Inc., a utility infrastructure construction service company
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
Pennsylvania Companies	Met-Ed, Penelec and Penn
Penelec	Pennsylvania Electric Company, a Pennsylvania electric utility operating subsidiary
Penn	Pennsylvania Power Company, a Pennsylvania electric utility operating subsidiary of OE
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
TE	The Toledo Edison Company, an Ohio electric utility operating subsidiary

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

AEP	American Electric Power Company, Inc.
ALJ	Administrative Law Judge
AOCI	Accumulated Other Comprehensive Income
AOCL	Accumulated Other Comprehensive Loss
APIC	Additional Paid-In Capital
AQC	Air Quality Control
ARB	Accounting Research Bulletin
ARO	Asset Retirement Obligation
BGS	Basic Generation Service
BPJ	Best Professional Judgment
CAA	Clean Air Act
CAIR	Clean Air Interstate Rule
CAMR	Clean Air Mercury Rule
CAVR	Clean Air Visibility Rule
CAT	Commercial Activity Tax
CBP	Competitive Bid Process
CO2	Carbon Dioxide
CTC	Competitive Transition Charge
DFI	Demand for Information
DOE	United States Department of Energy
DOJ	United States Department of Justice
DRA	Division of Ratepayer Advocate
ECAR	East Central Area Reliability Coordination Agreement
ECO	Electro-Catalytic Oxidation

GLOSSARY OF TERMS Cont’d.

EIS	Energy Independence Strategy
EITF	Emerging Issues Task Force
EITF 06-11	EITF 06-11, “Accounting for Income Tax Benefits of Dividends or Share-based Payment Awards”
EMP	Energy Master Plan
EPA	Environmental Protection Agency
EPACT	Energy Policy Act of 2005
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FIN	FASB Interpretation
FIN 39-1	FIN 39-1, “Amendment of FASB Interpretation No. 39”
FIN 46R	FIN 46 (revised December 2003), "Consolidation of Variable Interest Entities"
FIN 47	FIN 47, "Accounting for Conditional Asset Retirement Obligations - an interpretation of FASB Statement No. 143"
FIN 48	FIN 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109”
FMB	First Mortgage Bonds
FSP	FASB Staff Position
FSP SFAS 115-1 and SFAS 124-1	FSP SFAS 115-1 and SFAS 124-1, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments”
FTR	Financial Transmission Rights
GAAP	Accounting Principles Generally Accepted in the United States
GHG	Greenhouse Gases
HVAC	Heating, Ventilation and Air-conditioning
IRS	Internal Revenue Service
ISO	Independent System Operator
kv	Kilovolt
KWH	Kilowatt-hours
LOC	Letter of Credit
MEIUG	Met-Ed Industrial Users Group
MISO	Midwest Independent Transmission System Operator, Inc.
MTC	Market Transition Charge
MW	Megawatts
NAAQS	National Ambient Air Quality Standards
NERC	North American Electric Reliability Corporation
NJBPU	New Jersey Board of Public Utilities
NOPR	Notice of Proposed Rulemaking
NOV	Notice of Violation
NOX	Nitrogen Oxide
NRC	Nuclear Regulatory Commission
NSR	New Source Review
NUG	Non-Utility Generation
NUGC	Non-Utility Generation Charge
OCA	Office of Consumer Advocate
OCI	Other Comprehensive Income
OPEB	Other Post-Employment Benefits
PICA	Penelec Industrial Customer Alliance
PJM	PJM Interconnection L. L. C.
PLR	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
PRP	Potentially Responsible Party
PSA	Power Supply Agreement
PUCO	Public Utilities Commission of Ohio
PUHCA	Public Utility Holding Company Act of 1935
RCP	Rate Certainty Plan
REC	Renewable Energy Certificate
RECB	Regional Expansion Criteria and Benefits
RFP	Request for Proposal
ROP	Reactor Oversight Process
RSP	Rate Stabilization Plan
RTC	Regulatory Transition Charge
RTO	Regional Transmission Organization

iii

GLOSSARY OF TERMS Cont’d.

S&P	Standard & Poor’s Ratings Service
SBC	Societal Benefits Charge
SCR	Selective Catalytic Reduction
SEC	U.S. Securities and Exchange Commission
SECA	Seams Elimination Cost Adjustment
SERP	Supplemental Executive Retirement Plan
SFAS	Statement of Financial Accounting Standards
SFAS 13	SFAS No. 13, “Accounting for Leases”
SFAS 71	SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation"
SFAS 101	SFAS No. 101, "Accounting for Discontinuation of Application of SFAS 71"
SFAS 107	SFAS No. 107, “Disclosure about Fair Value of Financial Instruments”
SFAS 109	SFAS No. 109, “Accounting for Income Taxes”
SFAS 115	SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
SFAS 123(R)	SFAS No. 123(R), "Share-Based Payment"
SFAS 133	SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”
SFAS 141(R)	SFAS No. 141(R), “Business Combinations”
SFAS 142	SFAS No. 142, "Goodwill and Other Intangible Assets"
SFAS 143	SFAS No. 143, "Accounting for Asset Retirement Obligations"
SFAS 144	SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
SFAS 157	SFAS No. 157, “Fair Value Measurements”
SFAS 158	SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132(R)”
SFAS 159	SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”
SFAS 160	SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements – an Amendment of ARB No. 51”
SIP	State Implementation Plan(s) Under the Clean Air Act
SNCR	Selective Non-Catalytic Reduction
SO2	Sulfur Dioxide
TBC	Transition Bond Charge
TMI-1	Three Mile Island Unit 1
TMI-2	Three Mile Island Unit 2
VIE	Variable Interest Entity

PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Stockholder and Board of

Directors of Ohio Edison Company:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, capitalization, common stockholder’s equity, and cash flows present fairly, in all material respects, the financial position of Ohio Edison Company and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in the notes to the consolidated financial statements, the Company changed the manner in which it accounts for uncertain tax positions as of January 1, 2007 (Note 8), defined benefit pension and other postretirement plans as of December 31, 2006 (Note 4) and conditional asset retirement obligations as of December 31, 2005 (Note 2(G) and Note 11).

As discussed in Note 1 to the consolidated financial statements, the Company has restated its 2007 financial statements to correct an error.

PricewaterhouseCoopers LLP

Cleveland, Ohio

February 28, 2008, except as to the error correction described in Note 1,

which is as of November 24, 2008.

OHIO EDISON COMPANY

CONSOLIDATED STATEMENTS OF INCOME



For the Years Ended December 31,	2007			2006			2005
	(In thousands)
REVENUES (Note 3):
Electric sales	$	2,375,306		$	2,312,956		$	2,861,043
Excise and gross receipts tax collections		116,223			114,500			114,510
Total revenues		2,491,529			2,427,456			2,975,553

EXPENSES (Note 3):
Fuel		11,691			11,047			53,113
Purchased power		1,359,783			1,275,975			939,193
Nuclear operating costs		174,696			186,377			337,901
Other operating costs		381,339			378,717			404,763
Provision for depreciation		77,405			72,982			108,583
Amortization of regulatory assets		191,885			190,245			457,205
Deferral of new regulatory assets		(177,633	)		(159,465	)		(151,032	)
General taxes		181,104			180,446			193,284
Total expenses		2,200,270			2,136,324			2,343,010

OPERATING INCOME		291,259			291,132			632,543

OTHER INCOME (EXPENSE) (Note 3):
Investment income		85,848			130,853			99,269
Miscellaneous income (expense)		4,409			1,751			(25,190	)
Interest expense		(83,343	)		(90,355	)		(75,388	)
Capitalized interest		266			2,198			10,849
Subsidiary's preferred stock dividend requirements		-			(597	)		(1,689	)
Total other income		7,180			43,850			7,851

INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE		298,439			334,982			640,394

INCOME TAXES		101,273			123,343			309,996

INCOME BEFORE CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING PRINCIPLE		197,166			211,639			330,398

Cumulative effect of a change in accounting principle
(net of income tax benefit of $9,223,000) (Note 2(G))		-			-			(16,343	)

NET INCOME		197,166			211,639			314,055

PREFERRED STOCK DIVIDEND REQUIREMENTS
AND REDEMPTION PREMIUM		-			4,552			2,635

EARNINGS ON COMMON STOCK	$	197,166		$	207,087		$	311,420


The accompanying Combined Notes to Consolidated Financial Statements as they relate to Ohio Edison Company
are an integral part of these statements.

OHIO EDISON COMPANY

CONSOLIDATED BALANCE SHEETS

As of December 31,	2007		2006
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	732	$	712
Receivables-
Customers (less accumulated provisions of $8,032,000 and $15,033,000, respectively,
for uncollectible accounts)		248,990		234,781
Associated companies		185,437		141,084
Other (less accumulated provisions of $5,639,000 and $1,985,000, respectively,
for uncollectible accounts)		12,395		13,496
Notes receivable from associated companies		595,859		458,647
Prepayments and other		10,341		13,606
		1,053,754		862,326
UTILITY PLANT:
In service		2,769,880		2,632,207
Less - Accumulated provision for depreciation		1,090,862		1,021,918
		1,679,018		1,610,289
Construction work in progress		50,061		42,016
		1,729,079		1,652,305
OTHER PROPERTY AND INVESTMENTS:
Long-term notes receivable from associated companies		258,870		1,219,325
Investment in lease obligation bonds (Note 6)		253,894		291,393
Nuclear plant decommissioning trusts		127,252		118,209
Other		36,037		38,160
		676,053		1,667,087
DEFERRED CHARGES AND OTHER ASSETS:
Regulatory assets		737,326		741,564
Pension assets		228,518		68,420
Property taxes		65,520		60,080
Unamortized sale and leaseback costs		45,133		50,136
Other		48,075		18,696
		1,124,572		938,896
	$	4,583,458	$	5,120,614
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	333,224	$	159,852
Short-term borrowings-
Associated companies		50,692		113,987
Other		2,609		3,097
Accounts payable-
Associated companies		174,088		115,252
Other		19,881		13,068
Accrued taxes		89,571		187,306
Accrued interest		22,378		24,712
Other		65,163		64,519
		757,606		681,793
CAPITALIZATION (See Consolidated Statements of Capitalization):
Common stockholder's equity		1,576,175		1,972,385
Long-term debt and other long-term obligations		840,591		1,118,576
		2,416,766		3,090,961
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		781,012		674,288
Accumulated deferred investment tax credits		16,964		20,532
Asset retirement obligations		93,571		88,223
Retirement benefits		178,343		167,379
Deferred revenues - electric service programs		46,849		86,710
Other		292,347		310,728
		1,409,086		1,347,860
COMMITMENTS AND CONTINGENCIES (Notes 6 and 13)
	$	4,583,458	$	5,120,614


The accompanying Combined Notes to Consolidated Financial Statements as they relate to Ohio Edison Company are an integral part of
these balance sheets.

OHIO EDISON COMPANY

CONSOLIDATED STATEMENTS OF CAPITALIZATION

As of December 31,	2007			2006
	(In thousands)
COMMON STOCKHOLDER'S EQUITY:
Common stock, without par value, 175,000,000 shares authorized,
60 and 80 shares outstanding, respectively	$	1,220,512		$	1,708,441
Accumulated other comprehensive income (Note 2(F))		48,386			3,208
Retained earnings (Note 10(A))		307,277			260,736
Total		1,576,175			1,972,385

LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONS (Note 10(C)):
Ohio Edison Company-
Secured notes:
5.375% due 2028		13,522			13,522
* 3.780% due 2029		-			100,000
* 3.750% due 2029		-			6,450
7.008% weighted average interest rate due 2007-2010		3,900			8,253
Total		17,422			128,225

Unsecured notes:
4.000% due 2008		175,000			175,000
* 3.400% due 2014		50,000			50,000
5.450% due 2015		150,000			150,000
6.400% due 2016		250,000			250,000
* 3.850% due 2018		33,000			33,000
* 3.800% due 2018		23,000			23,000
* 3.750% due 2023		50,000			50,000
6.875% due 2036		350,000			350,000
Total		1,081,000			1,081,000

Pennsylvania Power Company-
First mortgage bonds:
9.740% due 2007-2019		11,721			12,695
7.625% due 2023		6,500			6,500
Total		18,221			19,195

Secured notes:
5.400% due 2013		1,000			1,000
5.375% due 2028		1,734			1,734
Total		2,734			2,734

Unsecured notes:
5.390% due 2010 to associated company		62,900			62,900
Total		62,900			62,900

Capital lease obligations (Note 6)		329			362
Net unamortized discount on debt		(8,791	)		(15,988	)
Long-term debt due within one year		(333,224	)		(159,852	)
Total long-term debt and other long-term obligations		840,591			1,118,576
TOTAL CAPITALIZATION	$	2,416,766		$	3,090,961

* Denotes variable rate issue with applicable year-end interest rate shown.

The accompanying Combined Notes to Consolidated Financial Statements as they relate to Ohio Edison Company are an
integral part of these statements.

OHIO EDISON COMPANY

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY

										Accumulated
				Common Stock						Other
	Comprehensive			Number			Carrying			Comprehensive			Retained
	Income			of Shares			Value			Income (Loss)			Earnings
	(Dollars in thousands)
Balance, January 1, 2005					100		$	2,098,729		$	(47,118	)	$	442,198
Net income	$	314,055												314,055
Minimum liability for unfunded retirement
benefits, net of $49,027,000 of income taxes		69,463									69,463
Unrealized loss on investments, net of
$13,068,000 of income tax benefits		(18,251	)								(18,251	)
Comprehensive income	$	365,267
Affiliated company asset transfers								198,147						(106,774	)
Restricted stock units								32
Preferred stock redemption adjustment								345
Cash dividends on preferred stock														(2,635	)
Cash dividends on common stock														(446,000	)
Balance, December 31, 2005					100			2,297,253			4,094			200,844
Net income	$	211,639												211,639
Unrealized gain on investments, net of
$4,455,000 of income taxes		7,954									7,954
Comprehensive income	$	219,593
Net liability for unfunded retirement benefits
due to the implementation of SFAS 158, net
of $22,287,000 of income tax benefits (Note 4)											(8,840	)
Affiliated company asset transfers								(87,893	)
Restricted stock units								58
Stock based compensation								82
Repurchase of common stock					(20	)		(500,000	)
Preferred stock redemption adjustments								(1,059	)					604
Preferred stock redemption premiums														(2,928	)
Cash dividends on preferred stock														(1,423	)
Cash dividends on common stock														(148,000	)
Balance, December 31, 2006					80			1,708,441			3,208			260,736
Net income	$	197,166												197,166
Unrealized gain on investments, net of
$2,784,000 of income taxes		3,874									3,874
Pension and other postretirement benefits, net
of $37,820,000 of income taxes (Note 4)		41,304									41,304
Comprehensive income	$	242,344
Restricted stock units								129
Stock based compensation								17
Repurchase of common stock					(20	)		(500,000	)
Consolidated tax benefit allocation								11,925
FIN 48 cumulative effect adjustment														(625	)
Cash dividends on common stock														(150,000	)
Balance, December 31, 2007					60		$	1,220,512		$	48,386		$	307,277

The accompanying Combined Notes to Consolidated Financial Statements as the relate to Ohio Edison Company are an integral
part of these statements.

OHIO EDISON COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Restated
For the Years Ended December 31,	2007			2006			2005
				(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	197,166		$	211,639		$	314,055
Adjustments to reconcile net income to net cash from operating activities-
Provision for depreciation		77,405			72,982			108,583
Amortization of regulatory assets		191,885			190,245			457,205
Deferral of new regulatory assets		(177,633	)		(159,465	)		(151,032	)
Nuclear fuel and lease amortization		33			735			45,769
Amortization of lease costs		(7,425	)		(7,928	)		(6,365	)
Deferred income taxes and investment tax credits, net		423			(68,259	)		(29,750	)
Accrued compensation and retirement benefits		(46,313	)		5,004			14,506
Cumulative effect of a change in accounting principle		-			-			16,343
Pension trust contributions		(20,261	)		-			(106,760	)
Decrease (increase) in operating assets-
Receivables		(57,461	)		103,925			84,688
Materials and supplies		-			-			(3,367	)
Prepayments and other current assets		3,265			1,275			(1,778	)
Increase (decrease) in operating liabilities-
Accounts payable		15,649			(53,798	)		45,149
Accrued taxes		(81,079	)		23,436			10,470
Accrued interest		(2,334	)		16,379			(3,659	)
Electric service prepayment programs		(39,861	)		(34,983	)		121,692
Other		6,096			5,882			(464	)
Net cash provided from operating activities		59,555			307,069			915,285

CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing-
Long-term debt		-			592,180			146,450
Short-term borrowings, net		-			-			26,404
Redemptions and Repayments-
Common stock		(500,000	)		(500,000	)		-
Preferred stock		-			(78,480	)		(37,750	)
Long-term debt		(112,497	)		(613,002	)		(414,020	)
Short-term borrowings, net		(114,475	)		(186,511	)		-
Dividend Payments-
Common stock		(100,000	)		(148,000	)		(446,000	)
Preferred stock		-			(1,423	)		(2,635	)
Net cash used for financing activities		(826,972	)		(935,236	)		(727,551	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions		(145,311	)		(123,210	)		(266,823	)
Sales of investment securities held in trusts		37,736			39,226			283,816
Purchases of investment securities held in trusts		(43,758	)		(41,300	)		(315,356	)
Loan repayments from (loans to) associated companies, net		(79,115	)		78,101			(35,553	)
Collection of principal on long-term notes receivable		960,327			553,734			199,848
Cash investments		37,499			112,584			(49,270	)
Other		59			8,815			(4,697	)
Net cash provided from (used for) investing activities		767,437			627,950			(188,035	)

Net increase (decrease) in cash and cash equivalents		20			(217	)		(301	)
Cash and cash equivalents at beginning of year		712			929			1,230
Cash and cash equivalents at end of year	$	732		$	712		$	929

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid During the Year-
Interest (net of amounts capitalized)	$	80,958		$	57,243		$	67,239
Income taxes	$	133,170		$	156,610		$	285,819

The accompanying Combined Notes to Consolidated Financial Statements as the relate to Ohio Edison Company are an integral part of
these statements.

Report of Independent Registered Public Accounting Firm

To the Stockholder and Board of Directors of

The Cleveland Electric Illuminating Company:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, capitalization, common stockholder’s equity, and cash flows present fairly, in all material respects, the financial position of The Cleveland Electric Illuminating Company and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, the Company has restated its 2007 financial statements to correct an error.

PricewaterhouseCoopers LLP

Cleveland, Ohio

February 28, 2008, except as to the error correction described in Note 1,

which is as of November 24, 2008.

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

CONSOLIDATED STATEMENTS OF INCOME




For the Years Ended December 31,	2007			2006			2005
	(In thousands)
REVENUES (Note 3):
Electric sales	$	1,753,385		$	1,702,089		$	1,799,211
Excise tax collections		69,465			67,619			68,950
Total revenues		1,822,850			1,769,708			1,868,161

EXPENSES (Note 3):
Fuel		40,551			50,291			85,993
Purchased power		748,214			704,517			557,593
Nuclear operating costs		-			-			142,698
Other operating costs		310,274			290,904			301,366
Provision for depreciation		75,238			63,589			127,959
Amortization of regulatory assets		144,370			127,403			227,221
Deferral of new regulatory assets		(149,556	)		(128,220	)		(163,245	)
General taxes		141,551			134,663			152,678
Total expenses		1,310,642			1,243,147			1,432,263

OPERATING INCOME		512,208			526,561			435,898

OTHER INCOME (EXPENSE) (Note 3):
Investment income		57,724			100,816			86,898
Miscellaneous income (expense)		7,902			6,428			(9,031	)
Interest expense		(138,977	)		(141,710	)		(132,226	)
Capitalized interest		918			2,618			2,533
Total other expense		(72,433	)		(31,848	)		(51,826	)

INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE		439,775			494,713			384,072

INCOME TAXES		163,363			188,662			153,014

INCOME BEFORE CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING PRINCIPLE		276,412			306,051			231,058

Cumulative effect of a change in accounting principle (net of income
tax benefit of $2,101,000) (Note 2(G))		-			-			(3,724	)

NET INCOME		276,412			306,051			227,334

PREFERRED STOCK DIVIDEND REQUIREMENTS		-			-			2,918

EARNINGS ON COMMON STOCK	$	276,412		$	306,051		$	224,416


The accompanying Combined Notes to Consolidated Financial Statements as they relate to The Cleveland Electric Illuminating Company
are an integral part of these statements.

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

CONSOLIDATED BALANCE SHEETS

As of December 31,	2007		2006
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	232	$	221
Receivables-
Customers (less accumulated provisions of $7,540,000 and		251,000		245,193
$6,783,000, respectively, for uncollectible accounts)
Associated companies		166,587		249,735
Other		12,184		14,240
Notes receivable from associated companies		52,306		27,191
Prepayments and other		2,327		2,314
		484,636		538,894
UTILITY PLANT:
In service		2,256,956		2,136,766
Less - Accumulated provision for depreciation		872,801		819,633
		1,384,155		1,317,133
Construction work in progress		41,163		46,385
		1,425,318		1,363,518
OTHER PROPERTY AND INVESTMENTS:
Long-term notes receivable from associated companies		-		486,634
Investment in lessor notes (Note 7)		463,431		519,611
Other		10,285		13,426
		473,716		1,019,671
DEFERRED CHARGES AND OTHER ASSETS:
Goodwill		1,688,521		1,688,521
Regulatory assets		870,695		854,588
Pension assets (Note 4)		62,471		-
Property taxes		76,000		65,000
Other		32,987		33,306
		2,730,674		2,641,415
	$	5,114,344	$	5,563,498
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	207,266	$	120,569
Short-term borrowings-
Associated companies		531,943		218,134
Accounts payable-
Associated companies		169,187		365,678
Other		5,295		7,194
Accrued taxes		94,991		128,829
Accrued interest		13,895		19,033
Lease market valuation liability		-		60,200
Other		34,350		52,101
		1,056,927		971,738
CAPITALIZATION (See Consolidated Statements of Capitalization):
Common stockholder's equity		1,489,835		1,468,903
Long-term debt and other long-term obligations		1,459,939		1,805,871
		2,949,774		3,274,774
NONCURRENT LIABILITIES:
Accumulated deferred income taxes		725,523		470,707
Accumulated deferred investment tax credits		18,567		20,277
Lease market valuation liability		-		547,800
Retirement benefits		93,456		122,862
Deferred revenues - electric service programs		27,145		51,588
Lease assignment payable to associated companies		131,773		-
		111,179		103,752
		1,107,643		1,316,986
COMMITMENTS AND CONTINGENCIES (Notes 6 and 13)
	$	5,114,344	$	5,563,498


The accompanying Combined Notes to Consolidated Financial Statements as they relate to The Cleveland Electric Illuminating
Company are an integral part of these balance sheets.

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

CONSOLIDATED STATEMENTS OF CAPITALIZATION

As of December 31,	2007			2006
	(In thousands)

COMMON STOCKHOLDER'S EQUITY:
Common stock, without par value, 105,000,000 shares authorized,
67,930,743 shares outstanding	$	873,536		$	860,133
Accumulated other comprehensive loss (Note 2(F))		(69,129	)		(104,431	)
Retained earnings (Note 10(A))		685,428			713,201
Total		1,489,835			1,468,903


LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONS (Note 10(C)):
First mortgage bonds-
6.860% due 2008		125,000			125,000
Total		125,000			125,000

Secured notes-
7.130% due 2007		-			120,000
7.430% due 2009		150,000			150,000
7.880% due 2017		300,000			300,000
6.000% due 2020		-			62,560
6.100% due 2020		-			70,500
5.375% due 2028		5,993			5,993
* 3.750% due 2030		81,640			81,640
* 3.650% due 2035		-			53,900
Total		537,633			844,593

Unsecured notes-
6.000% due 2013		-			78,700
5.650% due 2013		300,000			300,000
5.700% due 2017		250,000			-
9.000% due 2031		-			103,093
5.950% due 2036		300,000			300,000