Impact fee payments for natural gas drilling in the state will reach a record level this year, the Pennsylvania Public Utility Commission said.
The agency expects to distribute $251.8 million in impact fees in accordance with the state’s Act 13 provisions. That would be $33.4 million more than last year and the most ever distributed in a single year.
The impact fee is the annual fee that the state applies to each new unconventional well drilled into the Marcellus shale. Some of the money is distributed directly to counties to offset the costs of increased drilling activity. Some is made available to individual communities through grants.
The fee for the previous year’s well activity usually is collected from producers in April and distributed in early July.
Of the 2018 total, $134.7 million will be distributed to counties and municipalities directly affected by drilling, $89.8 million will be transferred to the Marcellus Legacy Fund and $18.3 million will go to state agencies, according to PUC.
The legacy fund provides financial support for environmental, highway, water and sewer projects, rehabilitation of greenways and other projects throughout the state. It is distributed to all counties, regardless of the presence of wells within their borders.
Also this year, another $8.8 million is being distributed to municipalities and counties where producer payments had been withheld during a long-running court case concerning the definition of a “stripper well,” PUC said.
The commission said the record revenue was driven primarily by an increase in the number of Pennsylvania wells paying impact fees this year — 9,560 in 2018 compared to 8,518 in 2017. The price of natural gas remained relatively stable last year and was not a factor in well fee calculations.
Westmoreland County will receive $1.5 million in impact fee revenue, and municipalities within the county will receive more than $2 million, for a total of $3.6 million, according to the Marcellus Shale Coalition.
The state’s oil and gas industry reacted positively to the PUC announcement.
“With a record $251.8 million generated last year, the impact tax empowers and supports key local initiatives and community projects that benefit every Pennsylvanian,” said David Spigelmyer, president of the Marcellus Shale Coalition. “Unique to our state, Pennsylvania’s impact tax continues to be a winning policy solution for the commonwealth.”
State Rep. Jim Struzzi, R-Indiana, said, “I’m happy to see that natural gas drilling and subsequent impact fees are directly benefiting our local communities in Indiana County and across the Commonwealth.”
The PUC announcement came at a time when Gov. Tom Wolf is promoting an additional natural gas severance tax. Such a tax would be paid based on how much gas is produced and “severed” from the ground.
Wolf wants severance tax revenue to fund his Restore Pennsylvania initiative to the tune of $300 million a year, which would be used to pay down $4.5 billion in bonds over 20 years.
Over the past eight years, PUC has collected and distributed almost $1.7 billion in natural gas impact fees to communities across Pennsylvania.
The Act 13 distributions for individual counties and municipalities are detailed on the PUC’s Act 13 website.
