Natural Gas Impact Fees Drop For Second Year

Natural gas impact fees paid to counties and municipalities across Pennsylvania will be lower in 2025 as the Public Utility Commission announced that $164.5 million was collected from gas well operators in 2024, a drop of about $15 million from the previous year.

The 2024 collections, which will be distributed in July, are well below the record of $278.9 million collected in 2022, as the economy rebounded from the pandemic and the price of natural gas soared. The only recent year with a lower total impact fee was during the pandemic in 2020, when $146.3 million was collected.

Of the $164.5 million collected in 2024, $86.5 million will be shared by counties and municipalities, while $57.8 million will go to the Marcellus Legacy Fund to help pay for environmental projects, and another $20 million will go to state agencies and conservation districts.

The impact fee was instituted in 2013 as part of Act 13 after the surge in 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.

The PUC and the Independent Fiscal Office attributed the 2024 drop to a lower number of new wells being drilled and a continued low price for natural gas. In 2024, 314 new wells were spud in Pennsylvania, down from 421 in 2023. The price of natural gas remained nearly the same as 2023 at $2.74 per MMBtu.

“Because new wells (‘Year One’ wells) are subject to the highest impact fee, fluctuations in their number can significantly affect annual collections,” the PUC release states.

Washington County, which is located in the heart of the Marcellus region, again holds the top spot among counties for impact fee revenue according to the PUC Act 13 website and will receive $4.96 million. Susquehanna County in northeastern Pennsylvania is the second highest at   $4.77 million, followed by Bradford County with $3.94 million, and Greene County with $3.44 million. Counties and municipalities can use these funds for infrastructure and capital projects and public safety.

Auburn Township in Susquehanna County again held the top spot among municipalities receiving the most money with $776,467, while Center Township in Greene County was second with $759,249. Amwell Township in Washington County is fourth, at $621,812.

Over the history of the program, a total of $2.88 billion has been collected in impact fees. While counties and municipalities anticipate yearly revenue from the impact fee distribution, it is important that they not rely on these payments as a core part of their budgeting process, since the amounts can vary significantly by year depending on natural gas production and prices.

The top producer payments were from EQT at $25.5 million, followed by Chesapeake Appalachia at $23.8 million, and Range Resources at $21.5 million.