The Municipal Authority of Westmoreland County will forfeit $785,000 in revenues generated from Marcellus shale gas royalties that were erroneously paid to the water utility in the past several years.
“We were overpaid. The money was for a tract of land that should have been paid to the heirs of a former owner,” authority solicitor Scott Avolio said.
The authority will not have to pay back the royalties in a lump sum. The company leasing the property has agreed to withhold about $43,000 a month in royalties through September 2017, starting in April, Avolio said.
The authority leases property to Consol Energy at the utility’s water reservoir in Bell, where gas wells have been erected. A title search done by the energy company failed to show that mineral rights for one piece of that property belonged to the land’s former owners. As a result, the authority has improperly received royalty payments for wells on that tract of land, Avolio said.
Royalties from gas wells have been a major revenue stream for the authority, which this year expects to earn about $5 million from 52 wells on the utility’s 8,000 acres.
Officials said the Marcellus shale royalties balanced the utility’s $75 million budget.
“It’s helped to subsidize water rates, and the authority hopes to continue to do that,” said authority Manager Chris Kerr.
The authority last increased water rates in 2013.
During the past decade, the authority has purchased smaller municipal water and sewer systems as part of an effort to become a dominant regional provider of those services. It sells water to more than 120,000 customers and sewer service to 9,000 in five counties.
This article was written by Rich Cholodofsky from Tribune-Review, Greensburg, Pa. and was legally licensed through the NewsCred publisher network.