Atlantic City Electric customers could see some money back after a federal audit found the utility improperly billed customers and mishandled tax write-offs between 2021 and 2025. The findings, issued by the Federal Energy Regulatory Commission in August, have prompted South Jersey lawmakers to demand immediate refunds for ratepayers who have watched their bills climb far above state and national averages.
The audit, conducted under Docket No. FA25-4-000 by FERC's Division of Audits and Accounting, examined Atlantic City Electric's financial practices from January 1, 2021, through December 31, 2025. According to NJ Spotlight News, the review was launched in spring 2025 after U.S. Rep. Jeff Van Drew formally requested it in October 2024 following constituent complaints about rising utility rates. Federal auditors ultimately found instances of overbilling and improper tax write-offs spanning the five-year window, as first reported by 6abc Philadelphia.
How the Overbilling Happened
Auditors determined that Atlantic City Electric improperly classified certain legal settlement payments as operating and administrative expenses, artificially inflating its annual transmission revenue requirement and resulting in overcharges to wholesale transmission customers, according to the same NJ Spotlight News report. That inflated figure fed directly into the formula rate system used by PJM Interconnection, the regional grid operator that oversees wholesale transmission pricing across the mid-Atlantic.
Beyond the settlement expenses, auditors found the utility failed to properly record the cost of materials and supplies — including electrical transformers and street-lighting equipment — in its financial write-offs, further inflating revenue requirement calculations. The audit also found Atlantic City Electric incorrectly interpreted provisions of the 2017 Federal Tax Cuts and Jobs Act, which lowered the federal corporate tax rate to 21 percent, and improperly accounted for various bank fees, the outlet reported.
FERC's recommendations, according to 6abc Philadelphia, addressed five separate areas of non-compliance, and the commission made nearly two dozen recommendations in total. Atlantic City Electric has told 6abc it is working to implement those recommendations but still needs to take action on two of them. The utility has maintained, per that report, that the audit did not conclude the company violated federal tax law, even as it has not specified the dollar amount of customer overbilling.
Corporate Response and Compliance Deadlines
Cynthia Holland, an executive at Exelon Corporation, Atlantic City Electric's parent company, submitted a formal letter to FERC on July 28 agreeing with the audit's findings, NJ Spotlight News reported. FERC has ordered the utility to perform a detailed analysis of its materials and supplies write-offs within 60 days of the audit report's August release, and to submit a formal refund analysis to federal regulators within 90 days.
That timeline sets up a critical distinction that has shaped the political response: the audit examined wholesale transmission formula rates governed by PJM Interconnection, not individual household meter accuracy, according to Jersey Shore Online. That means federal regulators have not yet calculated or ordered specific dollar refund totals for retail residential customers, whose rates fall under the jurisdiction of the New Jersey Board of Public Utilities rather than FERC.
Lawmakers Demand Refunds Amid High Rates
The findings landed against a backdrop of already steep electricity costs in South Jersey. Atlantic City Electric's average residential rate ran about 23 cents per kilowatt-hour in 2025 and 2026, compared with a statewide average of 19.73 cents and a national average under 15 cents, per the outlet's reporting — putting local costs roughly 18 percent above the state average.
Van Drew has urged both refunds for affected customers and resignations at the New Jersey Board of Public Utilities. He was joined by state Senator Carmen Amato Jr. and Assemblymen Brian Rumpf and Gregory Myhre of the 9th Legislative District, who publicly demanded immediate refunds for impacted ratepayers following the audit's release, Jersey Shore Online reported.
The pressure campaign is not new. Back in December 2024, Atlantic City Electric and Exelon executives pledged during a meeting with Van Drew to conduct internal billing system audits and host local office hours across South Jersey to address customer overcharging complaints, according to a release from Van Drew's congressional office. Whether the latest federal findings translate into refund checks for residential customers — or further scrutiny of the state Board of Public Utilities — remains an open question as the 90-day federal deadline approaches.
