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Dave Roepke, Published October 24 2010

Jury sides against Moorhead utility

Moorhead’s public utility may appeal a recent jury award directing it to pay nearly $300,000 more than it hoped in a dispute over annexed service territory.

A Clay County jury sided with the Red River Valley Power Cooperative Association in a three-day trial earlier this month, issuing a verdict directing Moorhead Public Service to pay the co-op $339,865 for loss of revenue over 10 years.

Court filings show that’s the precise figure for lost revenue Red River maintained it was owed for MPS taking over service to 65 homes in Americana Estates, a 77-acre subdivision on Moorhead’s south side annexed by the city in 2006.

Lauren Brorby, CEO of Red River, wasn’t available for comment last week, but Red River’s attorney, Harold LeVander Jr., said the co-op was pleased.

“It’s a very nice result when the jury gives you everything you asked for,” LeVander said.

Kenneth Norman, commission president of Moorhead Public Service, said while he trusts juries, he thinks the six-person panel missed the mark in its Oct. 13 verdict.

“I think it’s a terribly complex question. I don’t know that the jury got it exactly right,” Norman said. “I don’t know if they got the full picture.”

Court records show the position of the city-owned utility was that it owed Red River $45,000 in lost revenue, a figure that included expenses the co-op avoided by not serving the area – maintenance and replacements costs, for example.

Judge Michael Kirk ruled against MPS in a pre-trial order in Clay County District Court, saying it could not introduce the fair market value of the property as evidence, Norman said.

LeVander said state law doesn’t call for using fair market value, a compensation standard in eminent domain proceedings, in electric-service disputes.

Bill Schwandt, general manager of the utility, said he expects the commission to consider an appeal in an executive session at its next meeting on Tuesday.

Commissioners haven’t talked about the next legal step if the utility wants to contest the ruling, which would call for asking state appellate courts to take the case, Norman said.

How much an appeal will cost will have a bearing on that discussion, he said.

“It’s a business decision for us on whether or not we want to do that,” he said. “We obviously don’t like to spend any more money than we have to.”

It wasn’t the first legal clash between Red River and Moorhead Public Service over annexed service territory, but it was the first time a jury was called upon to settle the matter.

In 2008, MPS paid the co-op $164,913, and in 2009, the payment was $181,029, said Nancy Lund, administration and finance manager for the city utility.

Readers can reach Forum reporter Dave Roepke at (701) 241-5535