Atlantic City Electric customers have spent more than a year questioning unusually high electric bills. Now, a federal audit has added new scrutiny to the South Jersey utility after investigators found accounting problems that resulted in overbilling of transmission customers.
The Federal Energy Regulatory Commission, or FERC, reviewed Atlantic City Electric’s financial practices over a five-year period from Jan. 1, 2021, through Dec. 31, 2025. The audit identified five areas of noncompliance and resulted in 22 recommendations for the utility.
The findings come at a sensitive time for customers across South Jersey, many of whom have complained about sharply rising electric bills in recent years.
But whether the federal audit will translate into meaningful refunds for individual homeowners remains far less certain.
One of the most significant findings involved payments Atlantic City Electric made to settle claims involving alleged employment discrimination.
According to the audit findings, the company recorded those compromise settlement payments in operation, maintenance and administrative accounts rather than the proper accounting category.
FERC auditors concluded that the accounting treatment caused Atlantic City Electric to overstate its annual transmission revenue requirement and, as a result, overbill transmission customers.
Auditors also found problems with how Atlantic City Electric accounted for materials and supplies.
The company did not properly assign inventory write-offs to the appropriate accounts based on how those materials—including equipment used within the electric system—were intended to be used. Auditors said that error may also have inflated the utility’s transmission revenue requirement and resulted in overbilling of wholesale transmission customers.
Three additional findings dealt primarily with accounting and reporting practices.
FERC found Atlantic City Electric used incorrect accounts to record certain bank fees, affecting the accuracy of information included in the utility’s federal filings.
Auditors also identified problems involving accumulated deferred income taxes connected to the federal Tax Cuts and Jobs Act of 2017. According to the audit, Atlantic City Electric improperly combined certain excess and deficient deferred tax amounts, reducing the transparency and accuracy of information reported to federal regulators.
A fifth finding involved the accounting treatment of deferred taxes associated with funds used during construction.
FERC lists the Atlantic City Electric review, docket FA25-4, among its completed 2026 financial audits. The agency says its audit program is intended to evaluate compliance with federal regulations, accounting requirements and rate practices and to require corrective measures when problems are found.
Does this mean customers were overcharged? That question is more complicated.
Atlantic City Electric has emphasized that the audit focused on transmission rates and federal accounting standards rather than directly reviewing individual residential electric bills.
Company spokesman Brian Ahrens told the media that the audit did not conclude Atlantic City Electric violated federal tax law and did not identify specific amounts of residential customer overbilling.
“Of the audit’s five findings, only two require additional review to determine whether any impacts to customers occurred and whether refunds may be warranted,” Ahrens said.
Atlantic City Electric said it accepted FERC’s recommendations and is implementing corrective measures.
By Sept. 4, the company said its initial analysis, confirmed with FERC staff, indicated that any refund associated with the identified transmission overbilling would amount to less than two cents per month over a 12-month period, or less than 25 cents for the year.
That figure drew immediate criticism from U.S. Rep. Jeff Van Drew, who has been one of the utility’s most vocal critics.
“The only thing worth two cents is Atlantic City Electric’s response,” Van Drew said.
Van Drew argued that transmission charges are ultimately included in the costs customers pay and said he intends to continue pressing FERC and the New Jersey Board of Public Utilities for more answers.
He has called for customers to receive any money they are owed and has accused state regulators of failing to adequately respond to residents’ concerns.
State Sen. Carmen Amato Jr. and Assemblymen Brian Rumpf and Gregory Myhre have also called on Atlantic City Electric to refund any overbilling identified by regulators, saying residents already struggling with the cost of electricity should not be responsible for erroneous charges.
The audit is separate from many of the complaints customers have raised about dramatically higher residential bills. Atlantic City Electric has been criticized for exorbitant rate hikes in recent years.
In 2024, Atlantic City Electric told 6abc that it had received hundreds of high-bill complaints over a two-month period as some customers reported bills that doubled, tripled or increased even more.
At the time, the utility attributed much of the increase to several factors, including greater electricity use, warmer weather and a combination of supply, distribution and seasonal rate increases.
Atlantic City Electric also said its smart meters were not generally responsible for the increases and promised to test meters when customers raised concerns about their accuracy.
The company has continued to stress that energy supply costs make up a significant portion of customers’ bills and that those costs are largely passed through to customers rather than generating profit for the utility.
Still, the federal findings are likely to intensify scrutiny of Atlantic City Electric because they confirm that at least some accounting practices did lead to inflated transmission charges.
FERC made nearly two dozen recommendations following the audit, while Atlantic City Electric says it is cooperating with regulators and implementing the required changes.
For customers hoping the audit would uncover the source of hundreds of dollars in higher residential bills, however, the findings may not provide a simple explanation.
Customers who believe their Atlantic City Electric bills are unusually high should start by comparing recent bills with the same months from previous years, paying close attention to electricity usage, supply charges and delivery charges rather than looking only at the total amount due.
Atlantic City Electric customers can also contact the utility directly to question a bill, request an explanation of charges or ask whether their meter should be tested. Customers should keep copies of bills, payment records and any correspondence with the company in case the issue requires further review.
If a billing dispute is not resolved through Atlantic City Electric, customers can file a complaint with the New Jersey Board of Public Utilities, which regulates electric utilities in the state. Complaints can involve billing disputes, service problems and other utility-related concerns.
Customers struggling to afford their bills may also want to ask about payment arrangements, budget billing and available energy assistance programs.
The federal audit itself does not mean that every residential customer was substantially overcharged, and Atlantic City Electric has said the potential refunds tied directly to the audit could be very small. Still, customers who notice unexplained spikes or charges that do not match their usage should document the issue and ask questions rather than assuming the bill is correct.
The federal review found legitimate accounting violations and overbilling within Atlantic City Electric’s transmission operations, but it did not determine that those errors were responsible for the dramatic increases many households have experienced.
That leaves two related but separate questions hanging over South Jersey’s electric provider: whether customers will receive refunds from the accounting errors identified by FERC, and what is driving electricity bills that many residents say remain increasingly difficult to afford.
