FIRSTENERGY CORP.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Earnings available to FirstEnergy Corp. in the second quarter of 2012 were $187
million, or basic and diluted earnings of $0.45 per share of common stock,
compared with $203 million, or basic and diluted earnings of $0.48 per share of
common stock in the second quarter of 2011. Earnings available to FirstEnergy
Corp. in the first six months of 2012 were $493 million or basic and diluted
earnings of $1.18 per share of common stock, compared with $255 million or basic
and diluted earnings of $0.67 per share of common stock in the first six months
of 2011. The principal reasons for the changes in basic earnings per share are
summarized below.
Change In Basic Earnings Per Share From Prior
Year                                               Three Months Ended June 30      Six Months Ended June 30
Basic Earnings Per Share - 2011                  $                   0.48         $                0.67
Segment operating results(1) -
Regulated Distribution                                              (0.01 )                       (0.04 )
Regulated Transmission                                                  -                         (0.01 )
Competitive Energy Services                                         (0.06 )                       (0.04 )
Regulatory charges                                                      -                          0.02
Income Tax Charge - retiree prescription drug
subsidy                                                             (0.02 )                       (0.04 )
Merger-related costs                                                 0.02                          0.36
Impact of non-core asset sales / impairments                         0.03                          0.06
Mark-to-market adjustments                                           0.01                          0.09
Merger accounting - commodity contracts                              0.04                          0.04
Plant closing costs                                                 (0.07 )                       (0.13 )
Litigation resolution                                                0.05                          0.05
Net merger accretion(1)(2)                                              -                          0.17
Depreciation                                                        (0.01 )                           -
Interest expense, net of amounts capitalized                         0.01                          0.02
Investment Income                                                   (0.02 )                       (0.02 )
Other                                                                   -                         (0.02 )
Basic Earnings Per Share - 2012                  $                   0.45         $                1.18

(1) Excludes amounts that are shown separately. Allegheny results for the three months ended June 30, 2012 and 2011, are included in Segment Operating Results.

(2) Includes dilutive effect of shares issued in connection with the Allegheny merger, and three months of Allegheny results in the first three months of 2012 compared to one month during the same period of 2011.

Operational Matters

Enhancing Transmission System Reliability

On May 29, 2012, FirstEnergy announced plans to construct a series of transmission projects to enhance service reliability across its service area. The projects have been approved by PJM and will include specialized voltage regulating equipment in northern Ohio. In addition to the work in Ohio, approved transmission projects will also be undertaken in Pennsylvania, West Virginia, New Jersey and Maryland as part of FirstEnergy's ongoing commitment to enhance its transmission system reliability. FirstEnergy estimates spending between $700 million - $900 million through 2016 on these projects.

On June 14, 2012, JCP&L announced that it plans to begin work on 17 transmission construction projects over the next six months in its northern and central New Jersey service areas. These projects are part of the multi-year, $200 million LITE program, which began in 2011, to address New Jersey's growing demand for electricity and provide key enhancements to the transmission system designed to improve service reliability for JCP&L's 1.1 million customers. All of the LITE projects are being designed and built specifically to serve only JCP&L customers.

Beaver Valley Unit 1 Returns to Service After Refueling Outage

On May 11, 2012, Beaver Valley Power Station Unit 1 returned to service following an April 9, 2012 shutdown for refueling and maintenance. During the outage, 65 of the 157 fuel assemblies were exchanged and safety inspections were successfully conducted. In addition, maintenance and improvement projects were completed to ensure continued safe and reliable operations. Prior to the outage, Beaver Valley Unit 1 operated safely and reliably for 359 consecutive days during which time it generated more than 9.3 million MWH of electricity. The plant also posted an industry top-decile forced-loss rate of 0.01 percent during the 18 months of operation prior to the outage.

Davis-Besse Returns to Service After Refueling Outage

On June 13, 2012, Davis-Besse Nuclear Power Station returned to service following a May 6, 2012, shutdown for refueling and maintenance. During the outage, 68 of Davis-Besse's 177 fuel assemblies were exchanged and safety inspections, including inspections of the station's steam generators, were successfully conducted. Preventive maintenance and improvement projects also were completed that are designed to promote continued safe and reliable operations.

Storm Costs

During the last weekend of June 2012, MP, PE, WP and OE experienced significant customer outages due to a rare "derecho" wind storm. While projections for restoration costs are not finalized, estimated costs incurred in the third quarter related to this storm are expected to exceed $130 million. Approximately 70% of these estimated expenditures are anticipated to be capital-related. Most of the remaining maintenance costs are expected to be deferred for future recovery. MP and PE do not currently have regulatory authority to defer storm costs, but expect to make a filing in the third quarter of 2012 with the WVPSC requesting deferral of those costs. MP and PE can provide no assurance that they will be successful in getting WVPSC authorization for the deferral of storm costs.

Regulatory Matters

Ohio Electric Security Plan Update

On July 18, 2012, the PUCO approved the Ohio Companies' ESP allowing the Ohio Companies to essentially extend the terms of the current ESP for two additional years and establish electricity prices for their customers through May 31, 2016.

The approved ESP 3 plan will maintain the substantial benefits from the current ESP including:
• Freezing current base distribution rates through May 31, 2016;

• Continuing to provide economic development and assistance to low-income customers for the two-year extension period at the levels established in the existing ESP;

• Providing Percentage of Income Payment Plan customers with a 6 percent generation rate discount;

• Continuing to provide power to shopping and to non-shopping customers as part of the market-based price set through an auction process; and

• Continuing Rider DCR that allows continued investment in the distribution system for the benefit of customers.

The approved ESP 3 plan provides significant additional benefits including:
• Securing generation supply for a longer period of time by conducting an auction for a three-year period rather than a one-year period, in October 2012 and January 2013, to mitigate any potential price spikes for FirstEnergy Ohio utility customers who do not switch to a competitive generation supplier; and

• Extending the recovery period for costs associated with purchasing renewable energy credits mandated by SB 221 through the end of the new ESP 3 period. This is expected to initially reduce the monthly renewable energy charge for all FirstEnergy Ohio non-shopping utility customers by spreading out the costs over the entire ESP period.

The approved plan reflects the diverse interests and concerns of 19 signatories, including parties that represent residential, low-income, commercial and industrial customers, as well as competitive retail electric suppliers, schools and hospitals.

Ohio Companies Solar Renewable Energy

On April 26, 2012, FirstEnergy announced that its Ohio Companies have met the 2012 benchmarks for in-state solar renewable energy that were established under Ohio's energy law. The benchmarks were met through a successful RFP to secure 10-year SRECs. In Ohio, FirstEnergy supports the development of solar energy resources by purchasing SRECs, which represent the environmental attributes of solar renewable electricity generation. For every MWH of solar renewable electricity generated, an equivalent amount of SRECs are produced. The RFP sought and procured the delivery of 1,000 SRECs produced by generating facilities throughout Ohio for each calendar year beginning in 2012 and continuing through 2021. There were 38 qualified bids received, offering over 15 times the required SRECs being sought under the RFP.

NJBPU Update

In its written Order issued July 31, 2012, affirming the determination made at its July 18, 2012 agenda meeting, the NJBPU found that a base rate proceeding "will assure that JCP&L's rates are just and reasonable and that the Company is investing sufficiently to assure the provision of safe, adequate and proper utility service to its customers" and ordered JCP&L to file a base rate case using a historical 2011 test year on or before November 1, 2012. JCP&L is unable to predict the outcome of this matter.

Financial Matters

In the second quarter of 2012, FirstEnergy executed a total of $1.6 billion forward starting swap agreements expiring December 31, 2013, with sixteen separate counterparties in order to lock in interest rates on planned debt issuances, which includes refinancings. The total portfolio of swaps carries a weighted average 10-year fixed rate of 2.315%.

On May 8, 2012, FET entered into a new $1 billion revolving credit facility. In conjunction with this action, an existing $450 million TrAIL revolving credit facility was terminated. On May 9, 2012, FET drew the entire amount to repay $171.3 million of short-term borrowings and to pay $3.2 million in expenses related to the closing. The balance was invested in the unregulated money pool. On May 10, 2012, FE repaid $1.0 billion under the existing $2.0 billion facility. Additionally, FirstEnergy and FES/AE Supply amended their existing $2.0 billion and $2.5 billion revolving credit facilities, respectively. The termination date on both facilities was extended from June 2016 to May 2017 and pricing was reduced to reflect current market conditions.

On August 1, 2012, FGCO mandatorily repurchased approximately $106.5 million of 4.75% PCRBs, which it is holding for future remarketing or refinancing subject to market and other conditions.

FIRSTENERGY'S BUSINESS
During the second quarter of 2012, FirstEnergy successfully completed the integration of AE into its IT business networks and financial systems. An important element of this system integration was the capability to modify the segment reporting to reflect how management now views and makes investment decisions regarding the distribution and transmission operations of FirstEnergy. The external segment reporting is now consistent with the internal financial reports used by FirstEnergy's chief executive officer (its chief operating decision maker) to regularly assess the performance of the business and allocate resources. Disclosures for FirstEnergy's operating segments for 2011 have been reclassified to conform to the current presentation.
The key changes in FirstEnergy's reportable segments during the second quarter of 2012 consisted principally of including the federally-regulated transmission assets and operations of JCP&L, ME, PN, MP, PE and WP, that were previously reported within the Regulated Distribution segment, with the renamed Regulated Transmission Segment. There were no changes to the Competitive Energy Services or Other / Corporate Segments. FirstEnergy continues to have three reportable operating segments - Regulated Distribution, Regulated Transmission and Competitive Energy Services.
Financial information for each of FirstEnergy's reportable segments is presented in the tables below, which includes financial results for the Allegheny subsidiaries beginning February 25, 2011. FES, OE and JCP&L do not have separate reportable operating segments.
The Regulated Distribution segment distributes electricity through FirstEnergy's ten utility operating companies, serving approximately 6 million customers within 65,000 square miles of Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York, and purchases power for its POLR, SOS and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. This segment also includes regulated electric generation facilities in West Virginia and New Jersey that MP and JCP&L, respectively, own or contractually control. Its results reflect the commodity costs of securing electric generation and the deferral and amortization of certain fuel costs.
The Regulated Transmission segment, previously known in part as the Regulated Independent Transmission Segment, transmits electricity through transmission lines owned and operated by certain of FirstEnergy's utilities (JCP&L, ME, PN, MP, PE and WP) and independent transmission companies (ATSI, TrAIL and PATH). Its revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Revenues are also derived from providing transmission services to electric energy providers, power marketers and revenue from operating the FirstEnergy transmission system. Its results reflect the net transmission expenses related to the delivery of the respective generation loads.
The Competitive Energy Services segment, through FES and AE Supply, supplies electricity to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Michigan, New Jersey and Maryland, and the provision of partial POLR and default service for some utilities in Ohio, Pennsylvania and Maryland, including the Utilities. This business segment controls approximately 17,000 MWs of capacity, excluding approximately 2,700 MWs from unregulated plants expected to be deactivated, (see Note 8, Regulatory Matters, of the Combined Notes to Consolidated Financial Statements) and also purchases electricity to meet sales obligations. The segment's net income is primarily derived from electric generation sales less the related costs of electricity generation, including purchased power and net transmission (including congestion) and ancillary costs charged by PJM and MISO (prior to June 1, 2011) to deliver energy to the segment's customers.

Other and Reconciling Adjustments contains corporate items and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment as well as reconciling adjustments for the elimination of intersegment transactions. See Note 11, Segment Information, of the Combined Notes to Consolidated Financial Statements for further information on FirstEnergy's reportable operating segments.

RESULTS OF OPERATIONS

The financial results discussed below include revenues and expenses from transactions among FirstEnergy's business segments. Results of operations for the six months ended June 30, 2011, include only four months of Allegheny results which have been segregated from the pre-merger companies (FirstEnergy and its subsidiaries prior to the merger) for variance reporting and analysis. In addition, Allegheny's results were affected by many of the same factors that influenced the operating results of the pre-merger companies. A reconciliation of segment financial results is provided in Note 11, Segment Information, to the Combined Notes to Consolidated Financial Statements. Earnings available to FirstEnergy by business segment were as follows:

                                          Three Months                             Six Months
                                          Ended June 30                          Ended June 30
                                                        Increase
                                2012        2011       (Decrease)       2012        2011        Increase
                                                  (In millions, except per share data)
Earnings (Loss) By Business
Segment:
Regulated Distribution        $   161     $   171     $       (10 )   $   318     $   267     $       51
Competitive Energy Services        25          21               4         166          36            130
Regulated Transmission             52          57              (5 )       112          80             32
Other and reconciling
adjustments (1)                   (51 )       (46 )            (5 )      (103 )      (128 )           25
Earnings available to
FirstEnergy Corp.             $   187     $   203     $       (16 )   $   493     $   255     $      238

Basic Earnings Per Share      $  0.45     $  0.48     $     (0.03 )   $  1.18     $  0.67     $     0.51
Diluted Earnings Per Share    $  0.45     $  0.48     $     (0.03 )   $  1.18     $  0.67     $     0.51

(1) Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses, noncontrolling interests and the elimination of intersegment transactions.