In an effort to help out the school district, which has been drawing down its savings to balance its budget, the borough assembly agreed to charge a much lower wholesale rate for electricity used at the school buildings.

The switch from the large-commercial rate to wholesale rate will cut about in half the district’s expenses for electricity, Kristy Andrews, the school district business manager, confirmed in an email Nov. 14.

The district budgeted $187,000 this year to pay the electric bills at the high school, middle school and elementary school.

The high school campus is the biggest power user, lighting up about 75% of the district’s total bill.

The borough had previously agreed to help out the district’s finances by billing at the lower electricity rate. The assembly voted unanimously Nov. 12 to follow through on the commitment.

The wholesale rate of 7.3 cents per kilowatt hour is what it costs the municipal utility to buy power from the Southeast Alaska Power Agency, which operates the Tyee Lake hydroelectric project to serve Wrangell and Petersburg.

The large commercial rate in Wrangell is 13.5 cents; the residential rate is between 10.75 cents and 15.5 cents, depending on use.

Charging the school district for the actual cost of power, rather than the standard commercial and residential rates, means the Municipal Light and Power Fund will essentially be subsidizing the schools by not collecting for the cost of operating and maintaining the power distribution system in town.

“It’s something we committed to the school board to reduce costs for them,” Borough Manager Mason Villarma said in an interview the day after the assembly vote.

“It takes a little bit of a toll” on the Municipal Light and Power Fund, he said. The electric utility is self-supporting, covering its operating and maintenance expenses from utility billings, not general tax dollars. The account is budgeted to collect about $4.7 million from selling electricity this fiscal year.

The rate reduction for the schools took effect Nov. 1, leaving the district short of a full 12 months of savings for the 2025-2026 budget year.

The school district operating budget for 2025-2026 totals about $6 million, with several hundred thousand dollars coming from reserves to balance the spending plan.

The district’s finances have been tight the past several years. A significant enrollment decline from the 2010s, coupled with state funding that has been far short of inflation, has added to the budget woes. State aid covers almost 60% of the district’s annual operating budget.

During discussion before the vote to approve the lower power rate, assembly members questioned whether the additional financial help would count against the limit in state law for how much a municipality can contribute to its schools. Wrangell is not at the cap but has contributed the maximum in several past years.

The state is considering counting such indirect aid as part of the local contribution but has made no decision. The assembly decided to go ahead with the lower electricity rate and then deal with any changes in state rules if and when they happen.