Natural gas impact fee revenue expected to be up this year, agency says

A state agency projects that natural gas impact fee collections for 2018 will exceed those from 2017 by $37.4 million.

Total collections on the impact fee for 2018 are projected to be $247 million, according to the Pennsylvania Independent Fiscal Office.

Should the projection hold, it will be the largest annual amount generated, surpassing the 2013 total by $22 million.

“Pennsylvania’s tax on natural gas, the impact fee, is working as designed and is an important revenue source for statewide environmental and conservation programs, as well as communities in all 67 counties,” said David Spigelmyer, president of the Marcellus Shale Coalition.

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 in the form of grants.

The IFO projection means that distributions to Pennsylvania counties and municipalities could total $137 million this year.

Act 13 of 2012 stipulates that a portion of the fee revenue be transferred to the Commonwealth Financing Authority for initiatives such as abandoned mine drainage abatement, abandoned well plugging, sewage treatment, greenways, trails and recreation, baseline water quality data, watershed restoration and flood control.

The higher projections are attributed to the fact that the revenue from 779 new wells offsets reduced collections from older wells and newly exempt wells, the IFO said. The impact fee is highest in a well’s first operating year.

Collections from previously disputed wells and outstanding payments also are a factor, the IFO said.

Revenue from the impact fee was its lowest in 2016 ($173.2 million) and its highest in 2013 ($225.7 million).

The fee will be collected in April.