MOORHEAD — Decades of wrangling between the city of Moorhead and its public utility culminated this past week with the resignation of Bill Schwandt, general manager of Moorhead Public Service.

Schwandt, who headed the utility for nearly three decades before giving his two-week notice Monday night, said he decided to go in a new direction after concluding the Moorhead City Council was going in a new direction by appointing one of its members to a voting seat on the Moorhead Public Service Commission, by all accounts the first time that happened in the history of the city-owned utility established more than a century ago.

All of which has left many wondering what is going on with the city and its utility.

People could be found who would speak on the record about their views, but few were willing to share publicly everything they wanted to say.

What is clear is a contingent in Moorhead, largely among the business community, views Moorhead Public Service as a successful utility that provides good service at reasonable rates.

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Many in that camp also feel the utility, though publicly owned, was intended to be an independent agency largely free of the influence of politics.

That view was underscored by Jim Steen during the recent city council meeting where council member Heidi Durand was appointed to a voting seat on the MPS board.

Steen, a member of both the Moorhead Business Association and Moorhead's charter commission, questioned the appropriateness of the appointment and said the charter commission, which guides city governance rules, would likely discuss the issue in the near future.

The transfer of money

Schwandt has been reticent over the years to talk about the relationship between MPS and the city council, but he stated following his resignation that he believes the city charter makes it clear the city council has important, albeit limited, powers when it comes to the city utility.

According to Schwandt's reading of the charter, the city council's powers are basically limited to appointing citizens to the MPS board and the authority to transfer up to 25% of MPS electric division gross revenues and up to 10% of water division gross revenues to city coffers each year.

The transfer from the electric division is currently about $9 million, or about 21% of gross revenues, while the transfer from the water division is about $1 million, or about 8% of gross revenues.

The transfer issue has long been a point of contention between the city and MPS, but the waters calmed somewhat several years ago when representatives from both sides reached an understanding on how the transfer was to be formulated.

The initial three-year agreement has since been renewed and Schwandt said it has worked well.

His worry, he said, is that the city could someday do away with the agreement and also that more city council members would be named voting members of the MPS board, which he said could adversely affect how the utility is run and make it difficult for MPS to provide quality services at reasonable rates. Schwandt said he also feels such appointments represent a conflict of interest.

Durand, who served for eight years as a non-voting council liaison on the MPS board, said Schwandt's resignation came as a surprise.

She said her purpose in wanting to serve as a voting member of the MPS board was to improve relations between the city and the utility and perhaps help transform the city's role from a supervisory one to more of a partnership.

Durand was part of the group that came up with the transfer agreement, which she said has improved the situation from what it was in the past.

She said a low point in relations between the city and utility occurred a number of years ago, when the city approached the utility late in the year looking for transfer funds to help it deal with a budget problem.

Today, she said, the city and utility have a better understanding of each other's needs and she said expanding that understanding even more is one of the main reasons she decided to accept her appointment to the MPS board, a position for which she said she will not accept additional pay.

Other issues

Durand and former mayor Del Rae Williams say the city's issues with MPS go beyond the transfer and include things like how the utility responds to residents' concerns.

Williams said there is sometimes friction when city officials attempt to communicate with MPS officials regarding customer service concerns and things like halting service for nonpayment of bills, which Williams said can happen abruptly and without regard for the difficulties it creates for people's lives.

Williams and Durand say another issue the city has been concerned about is duplication of costs when it comes to things like separate human resources and information technology offices.

Schwandt said cutting off service is more a collections issue than it is a customer service issue and he compared a power bill to a cell phone or internet service bill; if the bill isn't paid, he said, service is cut off.

Durand said when a counsel workshop was held last fall, a good share of the event was devoted to issues raised by new council members who came with stories about residents who raised concerns about the utility.

She said the new council members asked about naming council members to voting seats on the utility board, which traditionally has included a non-voting city council member and a non-voting council member alternate.

Durand said council members were reluctant to appoint council members to the MPS board in a major way, but she said the idea of one member having a voting seat gained traction, primarily as a way to stabilize things and improve communication and understanding.

"The fact that I am able to see both sides is another reason we thought, if somebody is going to volunteer, perhaps it should be me, because I have seen and I do understand some of the dynamics within that entity," Durand said, referring to MPS.

Ken Norman, who served on the Moorhead Public Service Commission for three decades before retiring from the board in the fall of 2017, said the city council has the authority to appoint whomever it wants to the commission, but he stressed council members should be careful when they exercise that authority.

Proponents of an independent MPS say the more it can be left to operate as a business, the better it can serve customers and, in the long run, the city.

They point to the utility's reserves as important for things like future equipment purchases as well as the utility's bond rating for when it borrows money.

Business group backs status quo

Some may look at the city and utility squabble and wonder what the fuss is all about.

After all, they might ask, whether money is paid to a utility through fees, or to the city through property taxes, doesn't it all amount to a city tax?

Not so, Schwandt said, adding that if he had his druthers MPS would operate more like a private company so that it can better retain experienced workers, which he said sometimes leave MPS for greener pastures.

Schwandt acknowledged it can be difficult to understand the utility's rate structure, especially when people try to compare what a homeowner pays compared to a large company.

According to Schwandt, the utility rates someone pays in Moorhead are based on what it costs MPS to provide service to that customer.

Many of the voices that have questioned the council's appointment of Durand to a voting spot on the MPS board have come from the business community.

When the council's appointment plans became known, Sheri Larson, executive director of the Moorhead Business Association, sent a letter to the council letting members know of the group's concerns.

Larson said MPS has operated for decades as an independent branch of the city, "quietly going about its business of providing reliable electrical power and clean water to the businesses and residents of Moorhead, all while contributing significant revenue to the city.

"We would like that independence to remain and for MPS to operate as they have for many years," Larson added.

Brian Gramer, a resident of Moorhead and a former city council member, echoed that sentiment.

As an MPS customer, Gramer said he wants to see the utility remain financially healthy so it can provide quality service at a reasonable cost.

And Gramer is an advocate for keeping MPS as independent from the political process as possible.

"There's a reason you have two boards," he said.