The borough assembly has approved changing to a single residential rate for electricity used, which officials say will result in savings for most customers.

The assembly on April 14 approved a proposal from Borough Manager Mason Villarma to shift away from the current tiered billing system, which charges lower rates the more electricity a residence uses, to a uniform rate of 12.65 cents per kilowatt-hour.

Currently, Wrangell uses a “declining block” structure where the first 300 kilowatt-hours (kWh) cost 15.5 cents each, with prices dropping to 13 cents and then 10.75 cents as use increases.

Villarma said the average household in town consumes about 900 kWh per month.

“While this structure has historically supported higher energy use, it results in lower average rates for higher-consumption households and higher effective rates for low-to-moderate users,” he said in his report to the assembly.

“Essentially, what we are proposing,” he said, “is the average user will see a rate decrease based off the residential flat rate,” he said. He estimated the change would save the average consumer about $10.65 per month, or $127 annually.

The new rate would put Wrangell among the lowest in the state.

Residential customers would see a savings on their monthly bills to about 1,750 kWh, at which point their bills would be higher than under the current tiered structure of lower rates for higher users.

The flat rate structure will take effect July 1.

The new structure does not change the rates charged to commercial customers.

Assembly Member Phillip Mach expressed concern that a flat rate might inadvertently penalize year-round residents who use more power during harsh winter months.

“I’d hate to hurt those who are here and use more during the winter to benefit the rest,” he said.

While the assembly approved the change in residential rates, it deferred a decision on eliminating the 24-year-old discount for separately metered power for heat and hot water, referred to as the “heat rate.”

The lower rate was adopted to provide an incentive for residents to switch to electric boilers from diesel.

“This incentive was originally established in 2002 and intended to sunset at the individual customer level after five years. However, this provision was not consistently implemented, resulting in the incentive being extended beyond its intended duration,” Villarma reported to the assembly.

“Given the borough’s continued investments in grid expansion, system resiliency and expected increases in electrical demand, the administration believes it is appropriate to phase out this legacy incentive.”

Resident Terri Henson urged the assembly to not to eliminate the heat rate. She explained that residents invested significantly in separate meters and wiring to qualify for the program.

“The heat rate is not something that was supposed to ever be phased out,” Henson said. “For me ... it would make a difference of about $100 a month in just my heat rate. I want you guys to realize it’s not just $20 that you’re looking at.”

Villarma acknowledged that while the high price of diesel — currently around $6.50 per gallon in town — already provides a natural incentive to use electric heat, he was open to further study.

“I think that it’d be prudent to amend that portion out of this, and then we can bring it back with further information on the demand from those consumers specifically,” he said.

Mayor Patty Gilbert reminded the public that the electric utility operates as a self-sufficient enterprise fund, meaning it relies entirely on ratepayer money rather than general tax dollars.

“We’ve got to maintain the integrity of that utility,” Gilbert said.

The administration will give the assembly a more detailed presentation of the heat rate in May.