Federal Audit Says Atlantic City Electric Overbilled Transmission Charges; FERC Orders Refund Report

A federal audit found accounting errors at Atlantic City Electric Co. that appear to have led to transmission overcharges at a time when many New Jersey households are already coping with rising electricity costs. The Federal Energy Regulatory Commission (FERC) identified multiple compliance failures, issued recommendations and instructed the utility to file a formal refund report detailing amounts to be returned to customers.

Key Findings

FERC auditors identified five areas of financial noncompliance over a five-year period at the South Jersey utility that serves roughly 556,000 customers. The commission issued 22 recommendations and told the company to calculate and report any refunds tied to customer overcharges.

Among the audit findings:

• Improperly Recorded Settlement Payments: Auditors said the company "improperly recorded compromise settlement payments made to settle claims of alleged employment discrimination," an accounting error that contributed to transmission overbilling.
• Materials and Supply Tracking Problems: The utility’s controls for tracking materials and supplies — including transformers and street-lighting equipment — were flagged as inadequate.
• Tax Law Misinterpretation: Auditors found a misreading of the 2017 federal tax law that affected accounting treatment.
• Bank Fees and Other Accounting Errors: The review noted instances of improperly accounted bank fees and related bookkeeping issues.

Responses and Context

Jessica Grullón, a spokesperson for Atlantic City Electric, told NJ Spotlight News: "The audit does not identify or quantify a specific overbilling amount" and said the company is still determining any required refunds. She added the report "does not identify impacts to retail residential electric bills or quantify any effects on residential customers," so it remains unclear whether households were overcharged.

In a July 28 email, Cynthia Holland, an Exelon executive, said she agreed with the audit’s findings.

The audit began in spring 2025 and followed concerns raised by Rep. Jeff Van Drew, who asked FERC in October 2024 to review the utility’s rate increases. Van Drew told the commission that constituents had raised concerns the rate hikes may be "economically burdensome" and potentially predatory.

Why This Matters

The review arrives as New Jersey residents contend with sharply higher electricity bills: statewide power bills rose by about 20% in 2025, and average retail electricity prices in June reached 21.24 cents per kilowatt-hour versus a national average of 14.48 cents. Corporate filings show Exelon Corp. posted $2.77 billion in profit for 2025, while Atlantic City Electric reported $188 million that year, up from $155 million in 2024.

The audit is part of a broader national debate over how utilities recover costs and what portion of those costs are borne by customers. Regulators and watchdogs across the country have scrutinized transmission spending, accounting practices, and cost-recovery mechanisms, noting cases — such as PacifiCorp’s request to pass roughly $1.7 billion in wildfire costs to customers — that raise concerns about the impact on household bills.

FERC’s instruction to file a refund report will require Atlantic City Electric to quantify any overcharges and detail proposed repayments. The review does not yet specify how much money is at stake or whether residential customers will receive refunds.