close

COVID-19, lower gas prices could cut into Impact fees

3 min read
1 / 3

Rick Shrum/For the Observer-Reporter

Corey Young is director of Washington & Jefferson Center for Energy Policy & Management, which will kick off its 11th energy series Oct. 4.

2 / 3

Mark Marietta/For the Observer-Reporter

Wellheads – also known as frac stacks – abound at well pads like the one Range Resources operates in Imperial.

3 / 3

These sandboxes are not mere child’s play – they’re for fracking on the Ziolkowski Pad that Range Resources operates in Imperial.

Mark Marietta/For the Observer-Reporter

The pandemic is impacting impact fees.

In a report released Jan. 5, the state Independent Fiscal Office estimated fees imposed on unconventional natural gas operators in Pennsylvania will total $144.85 million for 2020 – a 28% decline from 2019 and a 42% dropoff from 2018.

That figure also would be the lowest since the impact fee was enacted by the Legislature in 2012. The previous low – $173.25 million in 2016 – is $28.4 million higher.

Municipalities and counties, of course, would not share in the entire $144.85 million. They would collectively receive $75.87 million, down about 29% from $109.18 million in 2019.

These are not positive projections for governing bodies across Pennsylvania, especially in Washington and Greene counties, which ranked No. 1 and No. 4 statewide in impact fee money collected in 2019. That was the last year for which final countywide figures have been tabulated.

The Center for Energy Policy and Management at Washington & Jefferson College featured the report in its weekly Shale Gas Knowledge Hub weekly newsletter. IFO, based in Harrisburg, specializes in providing revenue projections that can be used in the state budget process and in analyzing other economic issues.

This annual fee is imposed on wells that were drilled or operating during the previous calendar year. Proceeds are disbursed to local governments and state agencies to provide for infrastructure, emergency services, environmental initiatives and other programs. Funds are based on the number of wells operating within geographic boundaries.

Corey Young, director of the CEPM, said a reduction in Act 13 funding “could be a tremendous loss” for all Pennsylvania counties, “but it could impact Washington County even harder.”

Many municipalities there rely on this funding source, he said, for many reasons, from “filling budget holes” to tackling infrastructure projects.

COVID-19 is not the primary reason for the projected low impact fee total, according to IFO. The report cited lower commodity prices, caused by oversupply, which had occurred before the pandemic hit the state in March. That resulted in plummeting demand.

IFO reported the average annual price on the New York Mercantile Exchange was $2.08 per British Thermal Unit, and because it fell below $2.25, the impact fee schedule decreased by $5,000 per horizontal well compared with 2019. That translated to a loss of $52.1 million. The report added that fewer collections from aging wells resulted in another $3.8 million reduction.

In 2019, Washington County got more impact fee money – $6.62 million – than Pennsylvania’s other 66 counties. Greene got a formidable $4.67 million.

These counties, and the municipalities within, may not have as many financial resources available at budget time this year – and perhaps for several years – if these projections prove to be accurate.

AHN

Robert Twaddle has been named vice president of Prehospital Care Services, Allegheny Health Network announced Thursday. He succeeds Bob McCaughan, who will retire Feb. 2.

Twaddle has served in Emergency Medical Services in the region for many years. He has been director of Prehospital Care Services for AHN for the past five years, helping to lead AHN’s Prehospital Care Coordinators and Emergency Medicine physicians in providing clinical oversight to more than 90 affiliated EMS agencies. He served in the Navy for eight years, providing front-line medical support.

CUSTOMER LOGIN

If you have an account and are registered for online access, sign in with your email address and password below.

NEW CUSTOMERS/UNREGISTERED ACCOUNTS

Never been a subscriber and want to subscribe, click the Subscribe button below.

Starting at $3.75/week.

Subscribe Today