Natural Gas Impact Fees Drop in 2023

About $100 million less in natural gas impact fees will be distributed to municipalities and state programs in Pennsylvania this year after the Public Utility Commission announced that $179.6 million was collected in 2023.

That amount is much lower than the record $278.9 million collected in 2022 from natural gas producers. The drop was not unexpected, however, as Independent Fiscal Office estimates showed a sharp decrease.

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 and 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 majority of the money is distributed to counties and municipalities based on the amount of drilling there, with portions going to the Marcellus Legacy Fund to help finance environmental and infrastructure projects, and other amounts used to help fund several state agencies and conservation districts.

n 2022, the average price of natural gas reached $6.64 per MMBtu, over the threshold for the highest level of impact fee. The jump was in part due to the increase in liquefied natural gas exports to help Europe meet its energy needs in the wake of Russia’s invasion of Ukraine, but also because of increased demand and economic activity post-pandemic. But in 2023, the average price of gas fell to $2.74 per MMBtu. In addition, production was down due to the low prices, with just 423 new wells drilled, according to the PUC release.

The only recent year with a lower total impact fee was during the pandemic in 2020, when $146.3 million was collected.

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 $5.5 million, followed by Susquehanna County in northeastern Pennsylvania at $5.4 million, Bradford County with $4.3 million, and Greene County with $3.8 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 $882,437, while Center Township in Greene County was second with $847,636. Amwell Township in Washington County fell to fifth, at $692,358.

The top producer payments were from EQT at $26.75 million, followed by Chesapeake Appalachia at $25.5 million, and Range Resources at $22.4 million.