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Pa. utility agency slapped by judge, admits error

Friday, 26 Oct 2012 | 4:03 PM ET

HARRISBURG, Pa. -- The Pennsylvania Public Utility Commission was ordered Friday by a state judge to stop reviewing or challenging municipal ordinances that affect natural gas drilling, the same day the agency admitted to miscalculating how much money some municipalities will receive from the booming drilling industry.

The ordinance reviews and the per-well fees were created by sweeping gas-drilling legislation signed in February by Gov. Tom Corbett, a Republican.

Utility commission spokeswoman Jennifer Kocher could not say exactly how the error occurred or which municipalities were affected Friday. She also declined comment on the order by Commonwealth Court Senior Judge Keith Quigley.

Several Pittsburgh-area towns had complained that the utility commission was illegally reviewing or challenging their ordinances. They cited a Commonwealth Court ruling in July in favor of their lawsuit that the law unconstitutionally limited the ability of municipalities to control natural gas drilling activity. Under the law, a municipality loses drilling-fee revenue if its ordinances are found by the utility commission to violate the law's limitations.

Among the most objectionable provisions cited by the towns were requirements that drilling, waste pits and pipelines be allowed in every zoning district, including residential districts, as long as certain buffers are observed. The natural gas industry, which has invested billions of dollars in Pennsylvania beginning in 2008 to exploit the Marcellus Shale formation, the nation's largest-known natural gas reservoir, had sought even stronger limitations than the ones approved by the Legislature.

The Corbett administration appealed the ruling to the state Supreme Court, which heard arguments earlier this month.

The law gave the utility commission the job of distributing fees collected from drilling companies and determining whether local zoning rules over gas drilling conflict with the law.

The miscalculation affected municipalities within 5 miles of a well, which will result in adjustments to some of the payments, Kocher said. But payments will still be made by the law's deadline of Dec. 1, she said.

The mistakes were discovered after the utility commission published the numbers on Oct. 15 and "a few entities" asked the agency to recheck their amount, Kocher said.

The agency believes the adjustment will affect less than 0.5 percent of the $204.4 million in drilling-fee revenue being distributed. Drillers were required to pay $50,000 for each horizontally drilled well and $10,000 for each vertical well drilled through 2011.

The state is taking about $25 million off the top. Sixty percent of what's left will be split among 37 counties and some 1,500 municipalities hosting gas wells. The money can be used to fix roads, bridges and other infrastructure, provide affordable housing, preserve open space and buy equipment for first responders, among other expenses.