Counties, Municipalities to Receive More in Impact Fees for 2025

Impact fees on natural gas drilling are increasing by 48% in 2025 to the highest amount since 2022, largely due to higher prices that raised the fee imposed on each well.

The Pennsylvania Independent Fiscal Office and the Public Utility Commission recently reported that the state collected $243.9 million for 2025 from unconventional well drilling, an increase of $79.3 million from 2024’s $164.6 million. The total is higher than an IFO estimate released late last year.

The increase comes after two years of decline due to low prices and a decrease in new wells being drilled. That is good news for municipalities in the region who will benefit from higher annual impact fee payments for hosting wells in their communities. Impact fee payments are distributed in July.

Of the $243.9 million collected, $134 million will go to counties and municipalities, while $89.4 million will go the Marcellus Legacy Fund, and $20 million to state agencies and conservation districts.

The IFO attributes the jump in revenue to an increase in the price of natural gas and consequently in well drilling. The average fee per well paid to the state was $19,056, a 41% increase from the previous year. The price of natural gas increased to $3.43 per MMBtu (million British thermal units), a 51% increase from the previous year, and more than the $3 threshold at which operators pay a higher fee under the schedule. An 3.9% inflation adjustment based on the year-over-year gain in wells drilled also contributed to a boost in the per-well fee.

There were 442 new wells drilled, a 51% increase from 2024. A total of 12,504 operating wells were subject to an average fee of $19,504.

The impact fee was instituted in 2013 as part of Act 13 after the rise of unconventional drilling in the Marcellus and Utica plays in the state. It is based on a formula that takes in the average annual price of natural gas, production amounts, and the age of the well, with new wells being taxed at a higher rate than aging wells.

In the past few years, the amount of impact fees distributed has been a roller coaster due to the aftermath of the COVID-19 pandemic and geopolitical tensions. Impact fees reached an all-time high in 2022 at $278.9 million as economic activity surged after the pandemic ended and demand from European countries increased.  That led to a spike in natural gas prices to more than $6 per MMBtu, triggering the highest fee that operators must pay. That was followed by a significant dropoff to $179.6 million in 2023, and $164.6 million in 2024

Western Pennsylvania counties and communities, which are in the heart of the Marcellus shale play, receive large amounts of impact fee revenue yearly. Washington County continues to hold the top spot, receiving $7.8 million for 2025, followed by Susquehanna, Bradford and Greene counties. Greene County is set to receive $5.5 million. Municipalities within those counties also receive substantial payments. The money is used by the counties and municipalities for public safety, infrastructure, and other capital projects.