Pennsylvania will generate $239.9 million in revenue from impact fee collections for 2025, a whopping $75.3 million, or 46 percent, increase over 2024, estimates the Independent Fiscal Office (IFO).
The state imposes an annual impact fee on unconventional (i.e., shale) natural gas wells that were drilled or operating in the previous calendar year.
The IFO estimates that the massive increase from the 2025 Act 12 shale gas impact fee is primarily due to the 51-percent increase in the price of natural gas over the last year, with the average annual price of natural gas on the New York Mercantile Exchange (NYMEX) for calendar year (CY) 2025 at $3.43, an increase of $1.16, or 51 percent, from the prior year.
“Due to the price exceeding $3, the fee schedule increased significantly for most wells,” the IFO reported Tuesday. “The fee schedule is also impacted by the statutorily required inflation adjustment (+3.1 percent) due to the year-over-year gain in wells drilled. After both adjustments, the fee level for wells in operating year four or greater (91 percent of wells) increased by 37 percent to 110 percent depending on the operating year.”
The IFO report uses recent data published by the state Department of Environmental Protection (DEP) to project CY 2025 impact fee collections, which will be remitted in April 2026 and distributed in July 2026.
Pennsylvania assesses the impact fee to raise revenues and proceeds that are then distributed to local governments and state agencies for infrastructure, emergency services, environmental initiatives, and other programs. Local governments receive funds based on the number of wells located within their boundaries or their proximity to jurisdictions where natural gas extraction occurred.
In addition to the increasing price of natural gas, the IFO said the number of drilled new wells — which pay the highest fees and help offset the impact of aging wells that pay lower fees — in 2025 increased by about 141, or a 46-percent increase over 2024.
“Based on well data from DEP through November, the IFO estimates that 450 wells will be drilled in CY 2025, an increase of 141 wells (+46%) from the prior year and the most wells drilled in a year since CY 2022,” the office’s report says.
At the same time, the average fee per well generated also rose to $19,056 in 2025 from $13,560 in 2024, a 41-percent increase, according to the IFO.
The expected increase in revenue is positive for the state because revenue from these impact fees has been dropping since 2022, when total impact fee revenue stood at a record $278.9 million. In 2023 that total sank to $179.6 million, and then fell further in 2024 to $164.6 million, the IFO reported.