At their Oct. 27 meeting, the borough assembly voted unanimously to indefinitely shelve the proposal of providing a three-month sales tax waiver for residents who heat their homes with diesel fuel.

Borough Manager Mason Villarma said his recommendation to abandon the proposal was driven by private conversations with assembly members and residents who highlighted concerns over discounting fuel oil heat over other energy sources.

“A lot of folks had switched over to heat pumps or electrical boilers back in the day, there was a cost associated with doing that,” Villarma said in an interview on Oct. 28. “For the city to offer an incentive for those folks that are on diesel or heating oil was kind of counterintuitive and counterproductive to our overall goal of trying to get more folks to use electric heat.”

The proposed temporary ordinance would have waived Wrangell’s 7% general sales tax for kerosene and diesel heating fuels delivered between Nov. 15, 2026, and Feb. 15, 2027. The borough’s intention was to help alleviate the burden of rising diesel costs — driven by the Iran war — on Wrangell residents, but it would have contradicted prior initiatives pushing users toward electric heat.

The assembly approved the ordinance at its first reading Oct. 13, setting it up for a public hearing and decision on second reading Oct. 27. There was no public testimony at the Oct. 27 assembly meeting.

There have been a variety of incentives aimed at encouraging residents to transition to electric heat systems over the years.

They have included a lower electric heat rate starting in 2002, which separately meters power for heat and hot water as an incentive to transition to electric heat systems. The administration this past spring recommended eliminating that lower rate effective July 1, 2027, which would require the assembly to take action before then.

More recently, the Southeast Conference received a federal grant and teamed up with Alaska Heat Smart to offer rebates for households that transition from heating fuel or wood stoves to electric heat pumps.

Villarma had cited rising diesel prices as a good incentive to transition to electric heat at a borough assembly meeting this past April during a discussion on implementing a flat electric rate for residential users.

In the Oct. 28 interview, he said that all residents would benefit from more people transitioning to electricity, as it would help to drive down the collective rates for everyone.

“That certainly benefits the borough and we’re able to drive rates down collectively when we have a maximization or max utilization of our shared resource at Tyee,” Villarma said of output from the hydropower project.