Pennsylvania’s Gas Impact Fee Collection Dropped by 20 Percent Last Year

The Pennsylvania Public Utility Commission on June 17 announced that this year’s distribution of impact fees collected from natural gas producers totaled $200 million, nearly 43 million lower than the prior year. The commission attributed the change to the lower average price of natural gas in 2019, resulting in lower impact fee payment for each well. Since 2012, the commission has collected and distributed more than $1.9 billion to communities across the state.

The fee paid by each producer is determined by a multi-year fee schedule based on the average price of natural gas. Since the average price of natural gas in 2019 is $2.63 per million British thermal unit, much lower than the level of $3.09 per million British thermal unit in 2018, this year’s distribution is around $42.6 million lower than last year.

The impact fee, also known as unconventional gas well fee, is paid by all producers with spud wells in the Commonwealth as mandated in the law Act 13 passed in 2012. The commission is responsible for the collection and distribution of the fee for the purpose of covering the statewide impacts of drilling.

The fees will be allocated as follows:

• More than half of the total fees, or approximately $110 million will be given to the counties and municipal governments who were directly affected by the drilling.
• Around $72 million will be transferred to the Marcellus Legacy Fund, which provides financial support for public infrastructure construction, environmental initiatives, and water and sewer projects across the state.
• The remaining $18 million will be allocated to state agencies guided by the law.