content: UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                                Washington, DC 20549
                                      FORM 10-Q
  
              THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL
     INSTRUCTION H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM
                         WITH THE REDUCED DISCLOSURE FORMAT
  
            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
  
                    For the quarterly period ended March 31, 1999
  
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
                               SECURITIES ACT OF 1934
  
                          Commission file number: 333-58055
  
                            PECO Energy Transition Trust
               (Exact name of registrant as specified in its charter)
  
                    Delaware                           51-0382130
           (State or other jurisdiction of          (I.R.S. Employer
            incorporation or organization)         Identification No.)
  
                        c/o First Union Trust Company, N. A.
                         One Rodney Square, 920 King Street
                          Wilmington, Delaware              19801
                 (Address of principal executive offices) (Zip Code)
  
                                   (302) 888-7532
                (Registrant's telephone number, including area code)
  
           Indicate by check mark whether the registrant (1) has filed all reports
           required to be filed by Section 13 or 15(d) of the Securities  Exchange
           Act of 1934 during the preceding 12 months (or for such shorter  period
           that the  registrant  was required to file such  reports),  and (2) has
           been subject to such filing requirements for the past 90 days.
  
                                        Yes ____      No _X__ 
  
  <PAGE>
                            PART I. FINANCIAL INFORMATION
  
  ITEM 1.           FINANCIAL STATEMENTS
  
                            PECO ENERGY TRANSITION TRUST
               STATEMENTS OF NET ASSETS AVAILABLE FOR TRUST ACTIVITIES
                                (Millions of Dollars)
  <TABLE>
  <CAPTION>
                                                        March 31,      December 31,
                                                          1999             1998
                                                       ----------        -------
                                                      (Unaudited)
  ASSETS
  <S>                                                  <C>                 <C> 
  Cash                                                 $     20.0          $ --
  Unamortized Debt Issuance Costs                            25.0           2.1
  Intangible Transition Property                          4,080.2            --
                                                       ----------          ----
       Total Assets                                       4,125.2           2.1
                                                       ----------          ----
  LIABILITIES
  
  Due to Related Party                                      110.7           1.9
  Accrued Expenses                                            4.1           0.2
  Transition Bonds                                        3,995.2            --
                                                       ----------          ----
       Total Liabilities                                  4,110.0           2.1
                                                       ----------          ----
  
  NET ASSETS AVAILABLE FOR TRUST ACTIVITIES            $     15.2          $ --
                                                       ==========          ====
  </TABLE>
  
  
                         See Notes to Financial Statements.
  
                                         2
  <PAGE>
                            PECO ENERGY TRANSITION TRUST
          STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR TRUST ACTIVITIES
                                     (Unaudited)
                                (Millions of Dollars)
  <TABLE>
  <CAPTION>
                                                                                  Three Months Ended
                                                                                        March 31,
                                                                           -------------------------------
                                                                                  1999           1998(a) 
                                                                           -------------------------------
  ADDITIONS:
  <S>                                                                         <C>                 <C> 
  Contributions by Trust Grantor                                              $     20.0          $ --
  Deferred Debt Issuance Costs                                                      23.1            --
  Deferred Discount on Transition Bonds                                              5.4            --
  Intangible Transition Property                                                 4,080.2            --
                                                                              ----------          ----
  TOTAL ADDITIONS                                                                4,128.7            --
                                                                              ----------          ----
  
  DEDUCTIONS:
  
  Due to Related Party                                                             108.8            --
  Transition Bonds                                                               4,000.0            --
  Accrued Interest on Transition Bonds                                               4.1            --
  Amortization of Debt Discount                                                      0.6            --
                                                                              ----------          ----
  TOTAL DEDUCTIONS                                                               4,113.5            --
                                                                              ----------          ----
  
  CHANGES IN NET ASSETS AVAILABLE FOR TRUST ACTIVITIES                              15.2            --
  
  NET ASSETS AVAILABLE FOR TRUST ACTIVITIES AT BEGINNING OF PERIOD                  --              --
                                                                              ----------          ----
  NET ASSETS AVAILABLE FOR TRUST ACTIVITIES AT END OF PERIOD                  $     15.2          $ --
                                                                              ==========          ====
  </TABLE>
  (a) PECO Energy Transition Trust was formed on June 23, 1998.
  
                         See Notes to Financial Statements.
  
                                         3
  <PAGE>
                            PECO ENERGY TRANSITION TRUST
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
  
  1.  NATURE OF OPERATIONS
           PECO  Energy  Transition  Trust  (PETT),  a  statutory  business  trust
  established  by PECO Energy Company (PECO Energy) under the laws of the State of
  Delaware, was formed on June 23, 1998 pursuant to a trust agreement between PECO
  Energy, as grantor,  First Union Trust Company, N.A., as issuer trustee, and two
  beneficiary  trustees  appointed by PECO  Energy.  PECO Energy  provides  retail
  electric  and  natural  gas  service  to the public in its  traditional  service
  territory  and  retail  electric  generation  service  throughout   Pennsylvania
  pursuant to Pennsylvania's  Customer Choice Program. PECO Energy also engages in
  the wholesale marketing of electricity on a national basis.
  
           PETT was  organized for the special  purpose of  purchasing  and owning
  Intangible  Transition  Property (ITP),  issuing  transition  bonds  (Transition
  Bonds), pledging its interest in ITP and other collateral to the bond trustee to
  secure the Transition  Bonds,  and performing  activities that are necessary and
  suitable to accomplish these purposes.  ITP represents the irrevocable  right of
  PECO  Energy,  or  its  successor  or  assignee,  to  collect  a  non-bypassable
  Intangible  Transition Charge (ITC) from customers  pursuant to a Qualified Rate
  Order (QRO) issued on May 14, 1998 by the Pennsylvania Public Utility Commission
  (PUC) in accordance with the Pennsylvania Electricity Generation Customer Choice
  and Competition Act (Competition  Act) enacted in Pennsylvania in December 1996.
  The QRO  authorizes the ITC to be sufficient to recover up to $4 billion of PECO
  Energy's  stranded  costs and an amount  sufficient  to  recover  the  aggregate
  principal amount of the Transition  Bonds,  plus an amount sufficient to provide
  for any credit enhancement, to fund any reserves and to pay interest, redemption
  premiums,  if any,  servicing fees and other expenses relating to the Transition
  Bonds.
  
           PETT's organizational  documents require it to operate in such a manner
  that it should not be  consolidated  in the bankruptcy  estate of PECO Energy in
  the event PECO Energy becomes subject to such a proceeding, and both PECO Energy
  and PETT will treat the transfer of ITP to PETT as a sale under the  Competition
  Act. The Transition Bonds will be treated as debt obligations of PETT.
  
           For financial  reporting and Federal and  Commonwealth  of Pennsylvania
  income and franchise  tax purposes,  the transfer of ITP to PETT will be treated
  as a  financing  arrangement  and not as a sale.  Furthermore,  the  results  of
  operations  of PETT will be  consolidated  with PECO  Energy for  financial  and
  income tax reporting purposes.
  
  2.  SIGNIFICANT ACCOUNTING POLICIES
  Basis of Presentation
           The accompanying  condensed  financial  statements as of March 31, 1999
  and for the three months then ended are unaudited,  but include all  adjustments
  that  PETT  considers  necessary  for a  fair  presentation  of  such  financial
  statements.  All adjustments  are of a normal,  recurring  nature.  The year-end
  condensed balance sheet data was derived from audited  financial  statements but
  do not  include  all  disclosures  required  by  generally  accepted  accounting
  principles. The preparation of financial statements in conformity with generally
  accepted  accounting  principles  requires  management  to  make  estimates  and
  
  
                                         4
  <PAGE>
  
  assumptions.  These  estimates  and  assumptions  affect the reported  amount of
  revenues, expenses, assets, and liabilities and disclosure of contingencies.
  Actual results could differ from these estimates.
  
  Cash and Cash Equivalents
           PETT considers all liquid debt instruments purchased with a maturity of
  three months or less to be cash equivalents.
  
  Unamortized Debt Issuance Costs
           The costs  associated  with the issuance of the  Transition  Bonds have
  been capitalized and are being amortized over the life of the Transition Bonds.
  
  Income Taxes
           PETT is a wholly owned subsidiary of PECO Energy and has elected not to
  be taxed as a corporation for federal income tax purposes. PETT is being treated
  as a division of PECO Energy and not as a separate taxable entity.
  
  Derivative Financial Instruments
           Hedge accounting is applied only if the derivative  reduces the risk of
  the underlying hedged item and is designed at inception as a hedge, with respect
  to the hedged item. If a derivative  instrument  ceased to meet the criteria for
  deferral, any gains or losses would be currently recognized in income. PETT does
  not hold or issue derivative financial instruments for trading purposes.
  
  3.  TRANSITION BONDS
           On March 25,  1999,  PETT,  an  independent  statutory  business  trust
  organized  under the laws of  Delaware  and a wholly  owned  subsidiary  of PECO
  Energy,  issued $4 billion  aggregate  principal  amount of Transition  Bonds to
  securitize a portion of PECO Energy's  authorized  stranded cost  recovery.  The
  Transition  Bonds are solely  obligations  of PETT,  secured by ITP sold by PECO
  Energy  to PETT  concurrently  with the  issuance  of the  Transition  Bonds and
  certain other collateral related thereto.
  
           The terms of the Transition Bonds are as follows:
  <TABLE>
  <CAPTION>
               Approximate
                Face Amount          Bond              Expected                  Final
  Class         (millions)           Rate              Maturity                  Maturity
  -----         ----------           ----              --------                  --------
  <S>           <C>                  <C>              <C>                       <C>    
  A-1           $244.5               5.48%             March 1, 2001             March 1, 2003
  A-2           $275.4               5.63%             March 1, 2003             March 1, 2005
  A-3           $667.0               5.18% (a)         March 1, 2004             March 1, 2006
  A-4           $458.5               5.80%             March 1, 2005             March 1, 2007
  A-5           $464.6               5.26% (a)         September 1, 2007         March 1, 2009
  A-6           $993.4               6.05%             March 1, 2007             March 1, 2009
  A-7           $896.7               6.13%             September 1, 2008         March 1, 2009
  <FN>
           (a) The Class A-3 and A-5 Transition  Bonds earn interest at a floating
           rate.  The rates provided for each such class above are as of March 31,
           1999.
  </FN>
  </TABLE>
  
                                         5
  <PAGE>
           PETT used the proceeds of the Transition Bonds to purchase the ITP from
  PECO Energy. In accordance with the terms of the Competition Act and the May 14,
  1998 QRO, PECO Energy will use the proceeds  principally  to reduce its stranded
  costs and related capitalization.
  
           PETT has  entered  into  interest  rate swaps to manage  interest  rate
  exposure  associated with the issuance of two floating rate series of Transition
  Bonds.  The swaps have a fair value of $3 million  which is based on the present
  value difference between the contracted rate (i.e.,  hedged rate) and the market
  rates at March 31,  1999.  The fixed  interest  rates of series  A-3 and A-5 are
  6.577% and 6.943%, respectively.
  
           The aggregate  change in fair value of the Transition  Bond  derivative
  instruments that would have resulted from a hypothetical 50 basis point decrease
  in the spot  yield at March  31,  1999 is  estimated  to be $5  million.  If the
  derivative instruments had been terminated at March 31, 1999, this estmated fair
  value represents the amount to be paid by PETT to the counterparties.
  
           The aggregate change in fair value of these derivative instruments that
  would have  resulted  from a  hypothetical  50 basis point  increase in the spot
  yield at March 31, 1999 is  estimated  to be $14.6  million.  If the  derivative
  instruments  had been  terminated at March 31, 1999,  this  estimated fair value
  represents the amount to be paid by the counterparties to PETT.
  
  4.  SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS
           Under the  Master  Servicing  Agreement  entered  into by PETT and PECO
  Energy dated as of March 25,  1999,  PECO  Energy,  as servicer,  is required to
  manage  and  administer  the ITP sold to PETT  and to  collect  the ITC  related
  thereto on behalf of PETT. PETT will pay an annual  servicing fee based upon the
  outstanding  principal amount of the Transition  Bonds. Upon closing of the Bond
  issuance transaction,  PETT recorded an intercompany liability to PECO Energy in
  the amount of $110.7 million consisting of: (1)  Overcollateralization  Deposits
  of $60.1 million,  (2) Servicing Fees of $49.2 million,  and (3) Trustee Fees of
  $1.4  million.  This  liability is  reflected on PETT's  Statement of Net Assets
  Available for Trust Activities as Due to Related Party.
  
           Copies of the executed form of the sale agreement  between PECO Energy,
  as seller,  and PETT,  as purchaser,  the Master  Servicing  Agreement,  and the
  Indenture were filed with the  Securities  and Exchange  Commission in a Current
  Report on Form 8-K dated March 31, 1999.
  
  5.  LITIGATION
           Indianapolis Power and Light Company (IPL) filed an action which sought
  to  invalidate  the  Competition  Act and  thereby  preclude  PECO  Energy  from
  recovering and  securitizing  stranded costs.  IPL asserted that the Competition
  Act  discriminates  against  interstate  commerce in  violation  of the Commerce
  Clause of the United States Constitution. The Commonwealth Court of Pennsylvania
  dismissed this action.  IPL sought review of this dismissal by the United States
  Supreme  Court.  The IPL petition for certiorari was denied by the United States
  Supreme Court as reported on PECO Energy  Company's  Current  Report on Form 8-K
  dated  March 8, 1999.  All  appeals of the PUC's  Final Order dated May 14, 1998
  that were being pursued have been resolved and all other appeals that were being
  held in abeyance have been withdrawn with prejudice from the Commonwealth  Court
  of Pennsylvania and the United States District Court.
  
                                         6
  <PAGE>
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS
  
  GENERAL
  
           PECO  Energy  Transition  Trust  (PETT)  was  formed  under the laws of
  Delaware  pursuant to a trust agreement  between PETT, PECO Energy Company (PECO
  Energy),  First  Union  Trust  Company,  N.A.,  acting  thereunder  not  in  its
  individual  capacity but solely as issuer trustee of PETT,  and two  beneficiary
  trustees appointed by PECO Energy.  PETT is currently governed by an amended and
  restated trust agreement among the same parties.
  
  RESULTS OF OPERATIONS
  
           For the three months ended March 31, 1999,  PETT  incurred $4.7 million
  of interest  expense  associated with the transition  bonds  (Transition  Bonds)
  issued on March 25, 1999.
  
  DISCUSSION OF LIQUIDITY AND CAPITAL RESOURCES
  
           On March 25,  1999,  PETT issued  $244.5  million  aggregate  principal
  amount of 5.48% Transition Bonds, Class A-1, $275.4 million aggregate  principal
  amount of 5.63% Transition Bonds, Class A-2, $667.0 million aggregate  principal
  amount of LIBOR+0.125%  (5.18% on March 31, 1999) Transition  Bonds,  Class A-3,
  $458.5 million aggregate  principal amount of 5.80% Transition Bonds, Class A-4,
  $464.6 million  aggregate  principal amount of LIBOR+0.200%  (5.26% on March 31,
  1999) Transition Bonds, Class A-5, $993.4 million aggregate  principal amount of
  6.05% Transition Bonds, Class A-6, $896.7 million aggregate  principal amount of
  6.13% Transition Bonds, Class A-7.
  
  YEAR 2000 COMPLIANCE
  
           PETT relies on the  computer  systems of PECO Energy in its capacity as
  servicer  under the Master  Servicing  Agreement.  PECO Energy is faced with the
  task of  addressing  the Year 2000  issue.  The Year 2000 issue is the result of
  computer  programs being written using two digits rather than four to define the
  applicable  year  and  other   programming   techniques   which  constrain  date
  calculations or assign special  meanings to certain dates.  Any of PECO Energy's
  computer  systems  that have  date-sensitive  software  of  microprocessors  may
  recognize  a date using "00" as the year 1900  rather  than the year 2000.  This
  could  result in a system  failure or  miscalculations  causing  disruptions  of
  operations,  including,  among other  things,  a temporary  inability to measure
  usage,  read  meters,  process  transactions,  send  bills or  operate  electric
  generation stations.  In addition,  the Year 2000 issue could affect the ability
  of  Customers  to receive  bills sent by PECO  Energy or make  payments  on such
  bills.
  
           PECO  Energy  has  determined  that it will be  required  to  modify or
  replace  significant  portions of its software so that its computer systems will
  properly use dates beyond  December 31,  1999.  PECO Energy  presently  believes
  that, with  modifications to existing  software and conversions to new software,
  the Year  2000  issue  can be  mitigated.  However,  if such  modifications  and
  conversions are not made or are not completed in a timely manner,  the Year 2000
  issue  could  have  material  adverse  impact on the  operations  and  financial
  condition of PECO Energy.  The costs  associated with this potential  impact are
  speculative and not presently quantifiable. PECO Energy has not investigated and
  has no  intention  of  investigating  the Year 2000  issue as it  relates to any
  Customer's  ability to receive  bills sent by PECO  Energy or make  payments  on
  bills.
  
  
  
                                         7
  <PAGE>
  ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
           MARKET RISK
  
  Omitted with respect to PETT pursuant to Instruction H of Form 10-Q.
  
  
  
  
                             PART II. OTHER INFORMATION
  
  ITEM 1.  LEGAL PROCEEDINGS
  
           Indianapolis Power and Light Company (IPL) filed an action which sought
  to  invalidate  the  Competition  Act and  thereby  preclude  PECO  Energy  from
  recovering and  securitizing  stranded costs.  IPL asserted that the Competition
  Act  discriminates  against  interstate  commerce in  violation  of the Commerce
  Clause of the United States Constitution. The Commonwealth Court of Pennsylvania
  dismissed this action.  IPL sought review of this dismissal by the United States
  Supreme  Court.  The IPL petition for certiorari was denied by the United States
  Supreme Court as reported on PECO Energy  Company's  Current  Report on Form 8-K
  dated  March 8, 1999.  All  appeals of the PUC's  Final Order dated May 14, 1998
  that were being pursued have been resolved and all other appeals that were being
  held in abeyance have been withdrawn with prejudice from the Commonwealth  Court
  Of Pennsylvania and the United States District Court.
  
  ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
  
           Omitted with respect to PETT pursuant to Instruction H of Form 10-Q.
  
  ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
  
           Omitted with respect to PETT pursuant to Instruction H of Form 10-Q.
  
  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
           Omitted with respect to PETT pursuant to Instruction H of Form 10-Q.
  
  ITEM 5.  OTHER INFORMATION
  
           There is nothing to report with regard to this item.
  
                                         8
  <PAGE>
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  (a)      Exhibits:
  
  Exhibit No.       Description
  ---------------   ---------------
  
  4.1.1               Trust   Agreement   for   PECO   Energy   Transition   Trust
                      (incorporated  by  reference  to the same titled  exhibit to
                      PETT's   Registration   Statement  on  Form  S-3,  File  No.
                      333-58055, filed with the Commission on June 29, 1998).
  
  4.1.2               Amended  and  Restated  Trust   Agreement  for  PECO  Energy
                      Transition  Trust  (incorporated  by  reference  to the same
                      titled  exhibit to PETT's  Current  Report on Form 8-K filed
                      with the Commission on March 31, 1999).
  
  4.2                 Certificate  of  Trust  for  PECO  Energy  Transition  Trust
                      (incorporated  by  reference  to the same titled  exhibit to
                      PETT's   Registration   Statement  on  Form  S-3,  File  No.
                      333-58055, filed with the Commission on June 29, 1998)
  
  4.3.1               Indenture  dated as of March 1,  1999  between  PECO  Energy
                      Transition  Trust and The Bank of New York  (incorporated by
                      reference  to the same  titled  exhibit  to  PETT's  Current
                      Report on Form 8-K filed  with the  Commission  on March 31,
                      1999).
  
  4.3.2               Series  Supplement  dated as of March 25, 1999  between PECO
                      Energy   Transition   Trust   and  The   Bank  of  New  York
                      (incorporated  by  reference  to the same titled  exhibit to
                      PETT's  Current Report on Form 8-K filed with the Commission
                      on March 31, 1999).
  
  10.1                Intangible  Transition  Property Sale Agreement  dated as of
                      March 25, 1999 between PECO Energy Transition Trust and PECO
                      Energy Company (incorporated by reference to the same titled
                      exhibit to PETT's  Current Report on Form 8-K filed with the
                      Commission on March 31, 1999).
  
  10.2                Master  Servicing  Agreement  dated  as of  March  25,  1999
                      between PECO Energy Transition Trust and PECO Energy Company
                      (incorporated  by  reference  to the same titled  exhibit to
                      PETT's  Current Report on Form 8-K filed with the Commission
                      on March 31, 1999).
  
  27                  Financial Data Schedule.
  
  99.1                Form of ISDA Master  Agreement  (PETT  entered into two such
                      agreements,  each dated as of March 18,  1999,  with Goldman
                      Sachs Mitsui Marine Derivative Products,  L.P. and Citibank,
                      N.A., New York, respectively,  with respect to the Class A-3
                      and Class A-5 Transition Bonds, respectively)  (incorporated
                      by  reference to the same titled  exhibit to PETT's  Current
                      Report on Form 8-K filed  with the  Commission  on March 31,
                      1999).
  
  99.2                Schedule to the Master  Agreement dated as of March 18, 1999
                      between  Goldman  Sachs Mitsui Marine  Derivative  Products,
                      L.P.  and PECO  Energy  Transition  Trust  (incorporated  by
                      reference  to the same  titled  exhibit  to  PETT's  Current
                      Report on Form 8-K filed  with the  Commission  on March 31,
                      1999).
  
                                         9
  <PAGE>
  99.3                Schedule to the Master  Agreement dated as of March 18, 1999
                      between Citibank,  N.A., New York and PECO Energy Transition
                      Trust  (incorporated by reference to the same titled exhibit
                      to  PETT's  Current  Report  on  Form  8-K  filed  with  the
                      Commission on March 31, 1999).
  
  99.4                Confirmation  Letter  Agreement  dated  March 18,  1999 from
                      Goldman Sachs Mitsui Marine  Derivative  Products,  L.P. and
                      confirmed by PECO Energy  Transition Trust  (incorporated by
                      reference  to the same  titled  exhibit  to  PETT's  Current
                      Report on Form 8-K filed with the  Commisssion  on March 31,
                      1999).
  
  99.5                Confirmation  Letter  Agreement  dated  March 18,  1999 from
                      Citibank,  N.A.,  New  York  and  confirmed  by PECO  Energy
                      Transition  Trust  (incorporated  by  reference  to the same
                      titled  exhibit to PETT's  Current  Report on Form 8-K filed
                      with the Commission on March 31, 1999).
  
  (b) Reports on Form 8-K filed during the reporting period:
  
      Report, dated March 31, 1999 reporting information under "ITEM 5. OTHER
            EVENTS"  regarding  the  issuance  and  sale  of  $4  billion  of
            Transition Bonds by PETT on March 25, 1999.
  
      Reports on Form 8-K filed subsequent to the reporting period:
  
      Report, dated May 12, 1999 reporting  information  under "ITEM 5. OTHER
            EVENTS"  regarding the Monthly Servicer  Certificates and Monthly
            Servicer Report for April 1999 .
  
  
  
                                         10
  <PAGE>
                            PECO ENERGY TRANSITION TRUST
  
  
                                     SIGNATURES
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  
  
  
  
  Date:  May 14, 1999                             By:  /s/ Diana Moy Kelly
                                                       -----------------------
                                                       Diana Moy Kelly
                                                       Beneficiary Trustee
  
  
  
  
  
  
  
                                         11
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text: UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                                Washington, DC 20549
                                      FORM 10-Q
  
              THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL
     INSTRUCTION H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM
                         WITH THE REDUCED DISCLOSURE FORMAT
  
            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
  
                    For the quarterly period ended March 31, 1999
  
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
                               SECURITIES ACT OF 1934
  
                          Commission file number: 333-58055
  
                            PECO Energy Transition Trust
               (Exact name of registrant as specified in its charter)
  
                    Delaware                           51-0382130
           (State or other jurisdiction of          (I.R.S. Employer
            incorporation or organization)         Identification No.)
  
                        c/o First Union Trust Company, N. A.
                         One Rodney Square, 920 King Street
                          Wilmington, Delaware              19801
                 (Address of principal executive offices) (Zip Code)
  
                                   (302) 888-7532
                (Registrant's telephone number, including area code)
  
           Indicate by check mark whether the registrant (1) has filed all reports
           required to be filed by Section 13 or 15(d) of the Securities  Exchange
           Act of 1934 during the preceding 12 months (or for such shorter  period
           that the  registrant  was required to file such  reports),  and (2) has
           been subject to such filing requirements for the past 90 days.
  
                                        Yes ____      No _X__
  PART I. FINANCIAL INFORMATION
  
  ITEM 1.           FINANCIAL STATEMENTS
  
                            PECO ENERGY TRANSITION TRUST
               STATEMENTS OF NET ASSETS AVAILABLE FOR TRUST ACTIVITIES
                                (Millions of Dollars)
  March 31,      December 31,
                                                          1999             1998
                                                       ----------        -------
                                                      (Unaudited)
  ASSETS
  Cash                                                 $     20.0          $ --
  Unamortized Debt Issuance Costs                            25.0           2.1
  Intangible Transition Property                          4,080.2            --
                                                       ----------          ----
       Total Assets                                       4,125.2           2.1
                                                       ----------          ----
  LIABILITIES
  
  Due to Related Party                                      110.7           1.9
  Accrued Expenses                                            4.1           0.2
  Transition Bonds                                        3,995.2            --
                                                       ----------          ----
       Total Liabilities                                  4,110.0           2.1
                                                       ----------          ----
  
  NET ASSETS AVAILABLE FOR TRUST ACTIVITIES            $     15.2          $ --
                                                       ==========          ====
  See Notes to Financial Statements.
  
                                         2
  PECO ENERGY TRANSITION TRUST
          STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR TRUST ACTIVITIES
                                     (Unaudited)
                                (Millions of Dollars)
  Three Months Ended
                                                                                        March 31,
                                                                           -------------------------------
                                                                                  1999           1998(a) 
                                                                           -------------------------------
  ADDITIONS:
  Contributions by Trust Grantor                                              $     20.0          $ --
  Deferred Debt Issuance Costs                                                      23.1            --
  Deferred Discount on Transition Bonds                                              5.4            --
  Intangible Transition Property                                                 4,080.2            --
                                                                              ----------          ----
  TOTAL ADDITIONS                                                                4,128.7            --
                                                                              ----------          ----
  
  DEDUCTIONS:
  
  Due to Related Party                                                             108.8            --
  Transition Bonds                                                               4,000.0            --
  Accrued Interest on Transition Bonds                                               4.1            --
  Amortization of Debt Discount                                                      0.6            --
                                                                              ----------          ----
  TOTAL DEDUCTIONS                                                               4,113.5            --
                                                                              ----------          ----
  
  CHANGES IN NET ASSETS AVAILABLE FOR TRUST ACTIVITIES                              15.2            --
  
  NET ASSETS AVAILABLE FOR TRUST ACTIVITIES AT BEGINNING OF PERIOD                  --              --
                                                                              ----------          ----
  NET ASSETS AVAILABLE FOR TRUST ACTIVITIES AT END OF PERIOD                  $     15.2          $ --
                                                                              ==========          ====
  (a) PECO Energy Transition Trust was formed on June 23, 1998.
  
                         See Notes to Financial Statements.
  
                                         3
  PECO ENERGY TRANSITION TRUST
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
  
  1.  NATURE OF OPERATIONS
           PECO  Energy  Transition  Trust  (PETT),  a  statutory  business  trust
  established  by PECO Energy Company (PECO Energy) under the laws of the State of
  Delaware, was formed on June 23, 1998 pursuant to a trust agreement between PECO
  Energy, as grantor,  First Union Trust Company, N.A., as issuer trustee, and two
  beneficiary  trustees  appointed by PECO  Energy.  PECO Energy  provides  retail
  electric  and  natural  gas  service  to the public in its  traditional  service
  territory  and  retail  electric  generation  service  throughout   Pennsylvania
  pursuant to Pennsylvania's  Customer Choice Program. PECO Energy also engages in
  the wholesale marketing of electricity on a national basis.
  
           PETT was  organized for the special  purpose of  purchasing  and owning
  Intangible  Transition  Property (ITP),  issuing  transition  bonds  (Transition
  Bonds), pledging its interest in ITP and other collateral to the bond trustee to
  secure the Transition  Bonds,  and performing  activities that are necessary and
  suitable to accomplish these purposes.  ITP represents the irrevocable  right of
  PECO  Energy,  or  its  successor  or  assignee,  to  collect  a  non-bypassable
  Intangible  Transition Charge (ITC) from customers  pursuant to a Qualified Rate
  Order (QRO) issued on May 14, 1998 by the Pennsylvania Public Utility Commission
  (PUC) in accordance with the Pennsylvania Electricity Generation Customer Choice
  and Competition Act (Competition  Act) enacted in Pennsylvania in December 1996.
  The QRO  authorizes the ITC to be sufficient to recover up to $4 billion of PECO
  Energy's  stranded  costs and an amount  sufficient  to  recover  the  aggregate
  principal amount of the Transition  Bonds,  plus an amount sufficient to provide
  for any credit enhancement, to fund any reserves and to pay interest, redemption
  premiums,  if any,  servicing fees and other expenses relating to the Transition
  Bonds.
  
           PETT's organizational  documents require it to operate in such a manner
  that it should not be  consolidated  in the bankruptcy  estate of PECO Energy in
  the event PECO Energy becomes subject to such a proceeding, and both PECO Energy
  and PETT will treat the transfer of ITP to PETT as a sale under the  Competition
  Act. The Transition Bonds will be treated as debt obligations of PETT.
  
           For financial  reporting and Federal and  Commonwealth  of Pennsylvania
  income and franchise  tax purposes,  the transfer of ITP to PETT will be treated
  as a  financing  arrangement  and not as a sale.  Furthermore,  the  results  of
  operations  of PETT will be  consolidated  with PECO  Energy for  financial  and
  income tax reporting purposes.
  
  2.  SIGNIFICANT ACCOUNTING POLICIES
  Basis of Presentation
           The accompanying  condensed  financial  statements as of March 31, 1999
  and for the three months then ended are unaudited,  but include all  adjustments
  that  PETT  considers  necessary  for a  fair  presentation  of  such  financial
  statements.  All adjustments  are of a normal,  recurring  nature.  The year-end
  condensed balance sheet data was derived from audited  financial  statements but
  do not  include  all  disclosures  required  by  generally  accepted  accounting
  principles. The preparation of financial statements in conformity with generally
  accepted  accounting  principles  requires  management  to  make  estimates  and
  
                                         4
  assumptions.  These  estimates  and  assumptions  affect the reported  amount of
  revenues, expenses, assets, and liabilities and disclosure of contingencies.
  Actual results could differ from these estimates.
  
  Cash and Cash Equivalents
           PETT considers all liquid debt instruments purchased with a maturity of
  three months or less to be cash equivalents.
  
  Unamortized Debt Issuance Costs
           The costs  associated  with the issuance of the  Transition  Bonds have
  been capitalized and are being amortized over the life of the Transition Bonds.
  
  Income Taxes
           PETT is a wholly owned subsidiary of PECO Energy and has elected not to
  be taxed as a corporation for federal income tax purposes. PETT is being treated
  as a division of PECO Energy and not as a separate taxable entity.
  
  Derivative Financial Instruments
           Hedge accounting is applied only if the derivative  reduces the risk of
  the underlying hedged item and is designed at inception as a hedge, with respect
  to the hedged item. If a derivative  instrument  ceased to meet the criteria for
  deferral, any gains or losses would be currently recognized in income. PETT does
  not hold or issue derivative financial instruments for trading purposes.
  
  3.  TRANSITION BONDS
           On March 25,  1999,  PETT,  an  independent  statutory  business  trust
  organized  under the laws of  Delaware  and a wholly  owned  subsidiary  of PECO
  Energy,  issued $4 billion  aggregate  principal  amount of Transition  Bonds to
  securitize a portion of PECO Energy's  authorized  stranded cost  recovery.  The
  Transition  Bonds are solely  obligations  of PETT,  secured by ITP sold by PECO
  Energy  to PETT  concurrently  with the  issuance  of the  Transition  Bonds and
  certain other collateral related thereto.
  
           The terms of the Transition Bonds are as follows:
  Approximate
                Face Amount          Bond              Expected                  Final
  Class         (millions)           Rate              Maturity                  Maturity
  -----         ----------           ----              --------                  --------
  A-1           $244.5               5.48%             March 1, 2001             March 1, 2003
  A-2           $275.4               5.63%             March 1, 2003             March 1, 2005
  A-3           $667.0               5.18% (a)         March 1, 2004             March 1, 2006
  A-4           $458.5               5.80%             March 1, 2005             March 1, 2007
  A-5           $464.6               5.26% (a)         September 1, 2007         March 1, 2009
  A-6           $993.4               6.05%             March 1, 2007             March 1, 2009
  A-7           $896.7               6.13%             September 1, 2008         March 1, 2009
  (a) The Class A-3 and A-5 Transition  Bonds earn interest at a floating
           rate.  The rates provided for each such class above are as of March 31,
           1999.
  5
  PETT used the proceeds of the Transition Bonds to purchase the ITP from
  PECO Energy. In accordance with the terms of the Competition Act and the May 14,
  1998 QRO, PECO Energy will use the proceeds  principally  to reduce its stranded
  costs and related capitalization.
  
           PETT has  entered  into  interest  rate swaps to manage  interest  rate
  exposure  associated with the issuance of two floating rate series of Transition
  Bonds.  The swaps have a fair value of $3 million  which is based on the present
  value difference between the contracted rate (i.e.,  hedged rate) and the market
  rates at March 31,  1999.  The fixed  interest  rates of series  A-3 and A-5 are
  6.577% and 6.943%, respectively.
  
           The aggregate  change in fair value of the Transition  Bond  derivative
  instruments that would have resulted from a hypothetical 50 basis point decrease
  in the spot  yield at March  31,  1999 is  estimated  to be $5  million.  If the
  derivative instruments had been terminated at March 31, 1999, this estmated fair
  value represents the amount to be paid by PETT to the counterparties.
  
           The aggregate change in fair value of these derivative instruments that
  would have  resulted  from a  hypothetical  50 basis point  increase in the spot
  yield at March 31, 1999 is  estimated  to be $14.6  million.  If the  derivative
  instruments  had been  terminated at March 31, 1999,  this  estimated fair value
  represents the amount to be paid by the counterparties to PETT.
  
  4.  SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS
           Under the  Master  Servicing  Agreement  entered  into by PETT and PECO
  Energy dated as of March 25,  1999,  PECO  Energy,  as servicer,  is required to
  manage  and  administer  the ITP sold to PETT  and to  collect  the ITC  related
  thereto on behalf of PETT. PETT will pay an annual  servicing fee based upon the
  outstanding  principal amount of the Transition  Bonds. Upon closing of the Bond
  issuance transaction,  PETT recorded an intercompany liability to PECO Energy in
  the amount of $110.7 million consisting of: (1)  Overcollateralization  Deposits
  of $60.1 million,  (2) Servicing Fees of $49.2 million,  and (3) Trustee Fees of
  $1.4  million.  This  liability is  reflected on PETT's  Statement of Net Assets
  Available for Trust Activities as Due to Related Party.
  
           Copies of the executed form of the sale agreement  between PECO Energy,
  as seller,  and PETT,  as purchaser,  the Master  Servicing  Agreement,  and the
  Indenture were filed with the  Securities  and Exchange  Commission in a Current
  Report on Form 8-K dated March 31, 1999.
  
  5.  LITIGATION
           Indianapolis Power and Light Company (IPL) filed an action which sought
  to  invalidate  the  Competition  Act and  thereby  preclude  PECO  Energy  from
  recovering and  securitizing  stranded costs.  IPL asserted that the Competition
  Act  discriminates  against  interstate  commerce in  violation  of the Commerce
  Clause of the United States Constitution. The Commonwealth Court of Pennsylvania
  dismissed this action.  IPL sought review of this dismissal by the United States
  Supreme  Court.  The IPL petition for certiorari was denied by the United States
  Supreme Court as reported on PECO Energy  Company's  Current  Report on Form 8-K
  dated  March 8, 1999.  All  appeals of the PUC's  Final Order dated May 14, 1998
  that were being pursued have been resolved and all other appeals that were being
  held in abeyance have been withdrawn with prejudice from the Commonwealth  Court
  of Pennsylvania and the United States District Court.
  
                                         6
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS
  
  GENERAL
  
           PECO  Energy  Transition  Trust  (PETT)  was  formed  under the laws of
  Delaware  pursuant to a trust agreement  between PETT, PECO Energy Company (PECO
  Energy),  First  Union  Trust  Company,  N.A.,  acting  thereunder  not  in  its
  individual  capacity but solely as issuer trustee of PETT,  and two  beneficiary
  trustees appointed by PECO Energy.  PETT is currently governed by an amended and
  restated trust agreement among the same parties.
  
  RESULTS OF OPERATIONS
  
           For the three months ended March 31, 1999,  PETT  incurred $4.7 million
  of interest  expense  associated with the transition  bonds  (Transition  Bonds)
  issued on March 25, 1999.
  
  DISCUSSION OF LIQUIDITY AND CAPITAL RESOURCES
  
           On March 25,  1999,  PETT issued  $244.5  million  aggregate  principal
  amount of 5.48% Transition Bonds, Class A-1, $275.4 million aggregate  principal
  amount of 5.63% Transition Bonds, Class A-2, $667.0 million aggregate  principal
  amount of LIBOR+0.125%  (5.18% on March 31, 1999) Transition  Bonds,  Class A-3,
  $458.5 million aggregate  principal amount of 5.80% Transition Bonds, Class A-4,
  $464.6 million  aggregate  principal amount of LIBOR+0.200%  (5.26% on March 31,
  1999) Transition Bonds, Class A-5, $993.4 million aggregate  principal amount of
  6.05% Transition Bonds, Class A-6, $896.7 million aggregate  principal amount of
  6.13% Transition Bonds, Class A-7.
  
  YEAR 2000 COMPLIANCE
  
           PETT relies on the  computer  systems of PECO Energy in its capacity as
  servicer  under the Master  Servicing  Agreement.  PECO Energy is faced with the
  task of  addressing  the Year 2000  issue.  The Year 2000 issue is the result of
  computer  programs being written using two digits rather than four to define the
  applicable  year  and  other   programming   techniques   which  constrain  date
  calculations or assign special  meanings to certain dates.  Any of PECO Energy's
  computer  systems  that have  date-sensitive  software  of  microprocessors  may
  recognize  a date using "00" as the year 1900  rather  than the year 2000.  This
  could  result in a system  failure or  miscalculations  causing  disruptions  of
  operations,  including,  among other  things,  a temporary  inability to measure
  usage,  read  meters,  process  transactions,  send  bills or  operate  electric
  generation stations.  In addition,  the Year 2000 issue could affect the ability
  of  Customers  to receive  bills sent by PECO  Energy or make  payments  on such
  bills.
  
           PECO  Energy  has  determined  that it will be  required  to  modify or
  replace  significant  portions of its software so that its computer systems will
  properly use dates beyond  December 31,  1999.  PECO Energy  presently  believes
  that, with  modifications to existing  software and conversions to new software,
  the Year  2000  issue  can be  mitigated.  However,  if such  modifications  and
  conversions are not made or are not completed in a timely manner,  the Year 2000
  issue  could  have  material  adverse  impact on the  operations  and  financial
  condition of PECO Energy.  The costs  associated with this potential  impact are
  speculative and not presently quantifiable. PECO Energy has not investigated and
  has no  intention  of  investigating  the Year 2000  issue as it  relates to any
  Customer's  ability to receive  bills sent by PECO  Energy or make  payments  on
  bills.
  
                                         7
  ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
           MARKET RISK
  
  Omitted with respect to PETT pursuant to Instruction H of Form 10-Q.
  
                             PART II. OTHER INFORMATION
  
  ITEM 1.  LEGAL PROCEEDINGS
  
           Indianapolis Power and Light Company (IPL) filed an action which sought
  to  invalidate  the  Competition  Act and  thereby  preclude  PECO  Energy  from
  recovering and  securitizing  stranded costs.  IPL asserted that the Competition
  Act  discriminates  against  interstate  commerce in  violation  of the Commerce
  Clause of the United States Constitution. The Commonwealth Court of Pennsylvania
  dismissed this action.  IPL sought review of this dismissal by the United States
  Supreme  Court.  The IPL petition for certiorari was denied by the United States
  Supreme Court as reported on PECO Energy  Company's  Current  Report on Form 8-K
  dated  March 8, 1999.  All  appeals of the PUC's  Final Order dated May 14, 1998
  that were being pursued have been resolved and all other appeals that were being
  held in abeyance have been withdrawn with prejudice from the Commonwealth  Court
  Of Pennsylvania and the United States District Court.
  
  ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
  
           Omitted with respect to PETT pursuant to Instruction H of Form 10-Q.
  
  ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
  
           Omitted with respect to PETT pursuant to Instruction H of Form 10-Q.
  
  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
           Omitted with respect to PETT pursuant to Instruction H of Form 10-Q.
  
  ITEM 5.  OTHER INFORMATION
  
           There is nothing to report with regard to this item.
  
                                         8
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  (a)      Exhibits:
  
  Exhibit No.       Description
  ---------------   ---------------
  
  4.1.1               Trust   Agreement   for   PECO   Energy   Transition   Trust
                      (incorporated  by  reference  to the same titled  exhibit to
                      PETT's   Registration   Statement  on  Form  S-3,  File  No.
                      333-58055, filed with the Commission on June 29, 1998).
  
  4.1.2               Amended  and  Restated  Trust   Agreement  for  PECO  Energy
                      Transition  Trust  (incorporated  by  reference  to the same
                      titled  exhibit to PETT's  Current  Report on Form 8-K filed
                      with the Commission on March 31, 1999).
  
  4.2                 Certificate  of  Trust  for  PECO  Energy  Transition  Trust
                      (incorporated  by  reference  to the same titled  exhibit to
                      PETT's   Registration   Statement  on  Form  S-3,  File  No.
                      333-58055, filed with the Commission on June 29, 1998)
  
  4.3.1               Indenture  dated as of March 1,  1999  between  PECO  Energy
                      Transition  Trust and The Bank of New York  (incorporated by
                      reference  to the same  titled  exhibit  to  PETT's  Current
                      Report on Form 8-K filed  with the  Commission  on March 31,
                      1999).
  
  4.3.2               Series  Supplement  dated as of March 25, 1999  between PECO
                      Energy   Transition   Trust   and  The   Bank  of  New  York
                      (incorporated  by  reference  to the same titled  exhibit to
                      PETT's  Current Report on Form 8-K filed with the Commission
                      on March 31, 1999).
  
  10.1                Intangible  Transition  Property Sale Agreement  dated as of
                      March 25, 1999 between PECO Energy Transition Trust and PECO
                      Energy Company (incorporated by reference to the same titled
                      exhibit to PETT's  Current Report on Form 8-K filed with the
                      Commission on March 31, 1999).
  
  10.2                Master  Servicing  Agreement  dated  as of  March  25,  1999
                      between PECO Energy Transition Trust and PECO Energy Company
                      (incorporated  by  reference  to the same titled  exhibit to
                      PETT's  Current Report on Form 8-K filed with the Commission
                      on March 31, 1999).
  
  27                  Financial Data Schedule.
  
  99.1                Form of ISDA Master  Agreement  (PETT  entered into two such
                      agreements,  each dated as of March 18,  1999,  with Goldman
                      Sachs Mitsui Marine Derivative Products,  L.P. and Citibank,
                      N.A., New York, respectively,  with respect to the Class A-3
                      and Class A-5 Transition Bonds, respectively)  (incorporated
                      by  reference to the same titled  exhibit to PETT's  Current
                      Report on Form 8-K filed  with the  Commission  on March 31,
                      1999).
  
  99.2                Schedule to the Master  Agreement dated as of March 18, 1999
                      between  Goldman  Sachs Mitsui Marine  Derivative  Products,
                      L.P.  and PECO  Energy  Transition  Trust  (incorporated  by
                      reference  to the same  titled  exhibit  to  PETT's  Current
                      Report on Form 8-K filed  with the  Commission  on March 31,
                      1999).
  
                                         9
  99.3                Schedule to the Master  Agreement dated as of March 18, 1999
                      between Citibank,  N.A., New York and PECO Energy Transition
                      Trust  (incorporated by reference to the same titled exhibit
                      to  PETT's  Current  Report  on  Form  8-K  filed  with  the
                      Commission on March 31, 1999).
  
  99.4                Confirmation  Letter  Agreement  dated  March 18,  1999 from
                      Goldman Sachs Mitsui Marine  Derivative  Products,  L.P. and
                      confirmed by PECO Energy  Transition Trust  (incorporated by
                      reference  to the same  titled  exhibit  to  PETT's  Current
                      Report on Form 8-K filed with the  Commisssion  on March 31,
                      1999).
  
  99.5                Confirmation  Letter  Agreement  dated  March 18,  1999 from
                      Citibank,  N.A.,  New  York  and  confirmed  by PECO  Energy
                      Transition  Trust  (incorporated  by  reference  to the same
                      titled  exhibit to PETT's  Current  Report on Form 8-K filed
                      with the Commission on March 31, 1999).
  
  (b) Reports on Form 8-K filed during the reporting period:
  
      Report, dated March 31, 1999 reporting information under "ITEM 5. OTHER
            EVENTS"  regarding  the  issuance  and  sale  of  $4  billion  of
            Transition Bonds by PETT on March 25, 1999.
  
      Reports on Form 8-K filed subsequent to the reporting period:
  
      Report, dated May 12, 1999 reporting  information  under "ITEM 5. OTHER
            EVENTS"  regarding the Monthly Servicer  Certificates and Monthly
            Servicer Report for April 1999 .
  
                                         10
  PECO ENERGY TRANSITION TRUST
  
                                     SIGNATURES
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  Date:  May 14, 1999                             By:  /s/ Diana Moy Kelly
                                                       -----------------------
                                                       Diana Moy Kelly
                                                       Beneficiary Trustee
  
                                         11